SIEBERT FINANCIAL CORP 10-K/A

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS SIEBERT FINANCIAL CORP. Page Report of Independent Registered Public Accounting Firm (PCAOB ID 173 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID 23) F -4 Consolidated Statements of Financial Condition as of December 31, 2024 and 2023 F-6 Consolidated Statements of Operations for each of the years in the two-year period ended December 31, 2024 F-7 Consolidated Statements of Changes in Stockholders’ Equity for each of the years in the two-year period ended December 31, 2024 F-8 Consolidated Statements of Cash Flows for each of the years in the two-year period ended December 31, 2024 F-9 Notes to Consolidated Financial Statements F-10 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 173) Shareholders and the Board of Directors of Siebert Financial Corp. and Subsidiaries Miami, Florida Opinion on the Financial Statements We have audited the accompanying consolidated statement of financial condition of Siebert Financial Corp. and Subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the period then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F- 2 Revenue Recognition As described in Note 2 to the consolidated financial statements, the Company recognizes revenue from the following types of services: Commissions and Fees; Principal Transactions and Proprietary Trading; Market Making; Stock Borrow and Stock Loan; Advisory Services; Interest, Marketing and Distribution Fees; and Other Income. Some of the revenue streams are related to revenues from contracts with customers, which falls under the scope of the accounting standard for revenue from contracts with customers (ASC 606) while certain revenue streams are generated from financial instruments and are not in the scope of ASC 606. The principal considerations for our determination that revenue recognition is a critical audit matter are the complexities and challenges related to auditing the significant number of revenue streams with different applications of revenue recognition, the automated processes to record revenue involving multiple information systems, and the significant volume of information used in the calculation of each revenue stream supported by automated systems to process and record these transactions. As previously disclosed by management, there was a material weakness identified over the Company's Information Technology General Controls (ITGCs) that are used to process the high volume of revenue transactions that existed during the year. These factors resulted in a high level of audit effort required and involvement of professionals with expertise in information technology (IT) necessary for us to identify, test, and evaluate the Company’s systems and automated controls. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included: Performing substantive test of details over all relevant assertions for revenue streams which included: o Evaluating management’s revenue recognition policies for compliance with ASC 606 for contracts with customers. o Evaluating management's revenue recognition policies for compliance with relevant accounting standards for revenue from financial instruments. o Performing transaction testing by agreeing amounts recognized to contractual agreements and testing the mathematical accuracy of the recorded revenue. o Confirming related accounts receivable balances directly with counterparties and vouched cash collection. o Testing the fair values for applicable revenue lines including the fair value of underlying instruments utilized in the recognition of revenue. o Testing the completeness of revenue recognized within the period through performing cut-off procedures around period-end. o Testing completeness and accuracy of reports utilized in our audit procedures. /s/ Crowe LLP We have served as the Company's auditor since 2024. New York, New York March 31, 2025 F- 3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 23) To the Shareholders and the Board of Directors of Siebert Financial Corp. Opinion on the Financial Statements We have audited the accompanying consolidated statement of financial condition of Siebert Financial Corp. (the Company) as of December 31, 2023, the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described in Note 22 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. F- 4 Revenue Recognition As described in Note 2 to the consolidated financial statements, the Company recognizes revenue from the following types of services: commissions and fees; principal transactions and proprietary trading; market making; stock borrow and stock loan; advisory fees; interest, marketing, and distribution fees; and other income. The principal considerations for our determination that revenue recognition is a critical audit matter are (i) the significant number of revenue streams and (ii) the volume of information used in the calculation of each revenue stream. This required an increased extent of audit effort when performing audit procedures. How We Addressed the Matter in Our Audit Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included: o Reviewed management’s revenue recognition policies and related contracts. o Performed substantive tests of details for a sample of transactions for each material revenue stream. o As a result of the Company’s material weakness related to Information Technology General Controls (ITGCs), we increased the extent of substantive tests of details we would have otherwise made if the Company’s controls were designed and operating effectively. In addition, we utilized original source documents for audit evidence, rather than system reports or other information generated by the Company’s information technology (IT) systems. For any reports obtained from the IT systems, the engagement team designed specific audit procedures to substantively test the completeness and accuracy of such reports. /s/ Baker Tilly US, LLP We have served as the Company's auditor since 2017. New York, New York May 10, 2024 F- 5 SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $ 32,629,000 $ 5,735,000 Cash and securities segregated for regulatory purposes; (Cash of $ 135.8 million, securities with a fair value of $ 68.8 million as of December 31, 2024; Cash of $ 158.8 million, securities with a fair value of $ 115.5 million as of December 31, 2023) 204,587,000 274,317,000 Receivables from customers 84,367,000 72,823,000 Receivables from broker-dealers and clearing organizations 3,920,000 3,863,000 Receivables from non-customers 607,000 241,000 Other receivables 2,744,000 2,424,000 Prepaid expenses and other assets 2,257,000 1,700,000 Securities borrowed 139,040,000 394,709,000 Securities owned, at fair value 21,385,000 18,038,000 Total Current assets 491,536,000 773,850,000 Deposits with broker-dealers and clearing organizations 4,227,000 7,885,000 Property, office facilities, and equipment, net 10,245,000 9,404,000 Software, net 4,836,000 1,432,000 Intangible assets, net 697,000 — Lease right-of-use assets 2,390,000 2,736,000 Deferred tax assets 3,418,000 4,504,000 Goodwill 2,319,000 1,989,000 Total Assets $ 519,668,000 $ 801,800,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Current liabilities Payables to customers $ 227,129,000 $ 289,777,000 Payables to non-customers 3,297,000 713,000 Drafts payable 1,331,000 1,726,000 Payables to broker-dealers and clearing organizations 444,000 481,000 Accounts payable and accrued liabilities 5,240,000 3,639,000 Taxes payable 2,183,000 2,313,000 Securities loaned 184,962,000 419,433,000 Securities sold, not yet purchased, at fair value 26,000 2,000 Current portion of lease liabilities 886,000 759,000 Current portion of long-term debt 88,000 84,000 Current portion of deferred contract incentive 496,000 808,000 Current portion of contract termination liability 1,748,000 1,898,000 Total Current liabilities 427,830,000 721,633,000 Lease liabilities, less current portion 1,787,000 2,227,000 Long-term debt, less current portion 4,140,000 4,229,000 Deferred contract incentive, less current portion — 438,000 Contract termination liability, less current portion 819,000 2,564,000 Total Liabilities 434,576,000 731,091,000 Commitments and Contingencies Equity Stockholders’ equity Common stock, $ .01 par value; 100,000,000 shares authorized; 41,120,936 shares issued and 40,120,936 shares outstanding as of December 31, 2024, respectively. 40,580,936 shares issued and 39,580,936 shares outstanding as of December 31, 2023. 412,000 406,000 Treasury stock, at cost; 1,000,000 and 1,000,000 shares held as of December 31, 2024 and 2023, respectively. ( 2,510,000 ) ( 2,510,000 ) Additional paid-in capital 46,090,000 45,016,000 Retained earnings 40,094,000 26,808,000 Total Stockholders’ equity 84,086,000 69,720,000 Noncontrolling interests 1,006,000 989,000 Total Equity 85,092,000 70,709,000 Total Liabilities and Equity $ 519,668,000 $ 801,800,000 Numbers are rounded for presentation purposes. See notes to consolidated financial statements. F- 6 SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2024 2023 Revenue Commissions and fees $ 9,615,000 $ 7,276,000 Interest, marketing and distribution fees 32,407,000 29,577,000 Principal transactions and proprietary trading 14,616,000 13,094,000 Market making 2,255,000 1,304,000 Stock borrow / stock loan 19,249,000 16,172,000 Advisory fees 2,369,000 1,928,000 Other income 3,390,000 2,163,000 Total Revenue 83,901,000 71,514,000 Expenses Employee compensation and benefits 43,999,000 31,936,000 Clearing fees, including execution costs 1,607,000 1,672,000 Technology and communications 3,940,000 3,364,000 Other general and administrative 4,488,000 4,410,000 Data processing 3,200,000 3,236,000 Rent and occupancy 1,631,000 1,873,000 Professional fees 5,578,000 4,459,000 Depreciation and amortization 1,380,000 2,020,000 Interest expense 262,000 263,000 Advertising and promotion 348,000 155,000 Total Expenses 66,433,000 53,388,000 Operating income 17,468,000 18,126,000 Earnings of equity method investment in related party — 111,000 Impairment of investments — ( 1,035,000 ) Transaction termination costs — ( 5,943,000 ) Non-operating loss — ( 6,867,000 ) Income (loss) before provision for (benefit from) income taxes 17,468,000 11,259,000 Provision for (benefit from) income taxes 4,165,000 3,415,000 Net income (loss) 13,303,000 7,844,000 Less net income (loss) attributable to noncontrolling interests 17,000 18,000 Net income (loss) available to common stockholders $ 13,286,000 $ 7,826,000 Net income (loss) available to common stockholders per share of common stock Basic and diluted $ 0.33 $ 0.21 Weighted average shares outstanding Basic and diluted 39,951,510 37,070,366 Numbers are rounded for presentation purposes. See notes to consolidated financial statements. F- 7 SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Common Stock Treasury Stock Number of Shares Issued $.01 Par Value Number of Shares Amount Additional Paid-In Capital Retained Earnings Total Stockholders’ Equity Noncontrolling Interest Total Equity Balance – January 1, 2023 32,505,329 $ 325,000 — $ — $ 29,642,000 $ 18,982,000 $ 48,949,000 $ 971,000 $ 49,920,000 Kakaopay transaction, net of issuance cost 8,075,607 81,000 — — 14,814,000 — 14,895,000 — 14,895,000 Non-cash consideration due to Kakaopay transaction — — — — 560,000 — 560,000 — 560,000 Reacquisition of shares outstanding — — 1,000,000 ( 2,510,000 ) — — ( 2,510,000 ) — ( 2,510,000 ) Net income — — — — — 7,826,000 7,826,000 18,000 7,844,000 Balance – December 31, 2023 40,580,936 $ 406,000 1,000,000 $ ( 2,510,000 ) $ 45,016,000 $ 26,808,000 $ 69,720,000 $ 989,000 $ 70,709,000 Transaction with J2 Financial 200,000 2,000 — — 348,000 — 350,000 — 350,000 Share-based compensation 340,000 4,000 — — 726,000 — 730,000 — 730,000 Net income — — — — — 13,286,000 13,286,000 17,000 13,303,000 Balance – December 31, 2024 41,120,936 $ 412,000 1,000,000 $ ( 2,510,000 ) $ 46,090,000 $ 40,094,000 $ 84,086,000 $ 1,006,000 $ 85,092,000 Numbers are rounded for presentation purposes. See notes to consolidated financial statements. F- 8 SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2024 2023 Cash Flows from Operating Activities Net income (loss) $ 13,303,000 $ 7,844,000 Adjustments to reconcile net income (loss) to net cash (used in) operating activities: Deferred income tax expense 1,086,000 ( 107,000 ) Depreciation and amortization 1,380,000 2,020,000 Share-based compensation 460,000 — Interest related to contract termination liability payment 102,000 — Earnings of equity method investment in related party — ( 111,000 ) Impairment of investments — 1,035,000 Transaction termination costs - Kakaopay fee — 4,462,000 Changes in Securities segregated for regulatory purposes 46,757,000 25,463,000 Receivables from customers ( 11,544,000 ) ( 20,766,000 ) Receivables from non-customers ( 366,000 ) ( 141,000 ) Receivables from and deposits with broker-dealers and clearing organizations 3,601,000 ( 1,343,000 ) Securities borrowed 255,669,000 ( 57,800,000 ) Securities owned, at fair value ( 3,347,000 ) ( 14,834,000 ) Prepaid expenses and other assets ( 862,000 ) ( 269,000 ) Payables to customers ( 62,648,000 ) ( 31,614,000 ) Payables to non-customers 2,584,000 ( 10,793,000 ) Drafts payable ( 395,000 ) ( 658,000 ) Payables to broker-dealers and clearing organizations ( 37,000 ) ( 179,000 ) Accounts payable and accrued liabilities 1,601,000 1,132,000 Securities loaned ( 234,471,000 ) 92,253,000 Securities sold, not yet purchased, at fair value 24,000 — Net lease liabilities 33,000 69,000 Taxes payable ( 130,000 ) 1,261,000 Deferred contract incentive ( 750,000 ) ( 750,000 ) Contract termination payment ( 1,997,000 ) — Technology platform integration — ( 978,000 ) Net cash used in operating activities 10,053,000 ( 4,804,000 ) Cash Flows from Investing Activities Purchase of office facilities and equipment ( 223,000 ) ( 223,000 ) Purchase of software ( 3,234,000 ) ( 894,000 ) Additions to property, office facilities, and equipment ( 1,432,000 ) ( 1,442,000 ) Transaction with J2 Financial ( 35,000 ) — Cash paid for GE acquisition, net of cash acquired ( 1,123,000 ) — Net cash used in investing activities ( 6,047,000 ) ( 2,559,000 ) Cash Flows from Financing Activities Kakaopay issuance cost — ( 1,589,000 ) Shares issued for Kakaopay transaction — 17,363,000 Repayments of long-term debt ( 85,000 ) ( 2,734,000 ) Net cash provided by (used in) financing activities ( 85,000 ) 13,040,000 Net change in cash and cash equivalents, and cash segregated for regulatory purposes 3,921,000 5,677,000 Cash and cash equivalents, and cash segregated for regulatory purposes - beginning of year 164,537,000 158,860,000 Cash and cash equivalents, and cash segregated for regulatory purposes - end of year $ 168,458,000 $ 164,537,000 Reconciliation of cash, cash equivalents, and cash and securities segregated for regulatory purposes Cash and cash equivalents - end of year $ 32,629,000 $ 5,735,000 Cash segregated for regulatory purposes - end of year 135,829,000 158,802,000 Cash and cash equivalents, and cash segregated for regulatory purposes - end of year $ 168,458,000 $ 164,537,000 Supplemental cash flow information Cash paid during the year for income taxes $ 3,210,000 $ 2,260,000 Cash paid during the year for interest $ 160,000 $ 263,000 Non-cash investing and financing activities Kakaopay issuance cost (1) $ — $ ( 318,000 ) Transaction with J2 Financial (2) $ 350,000 $ — Share-based compensation (3) $ 270,000 $ — Treasury stock (4) $ — $ ( 2,510,000 ) Non-cash consideration due to Kakaopay transaction (1) $ — $ ( 560,000 ) Non-cash consideration due to Kakaopay transaction (1) $ — $ 560,000 Numbers are rounded for presentation purposes. See notes to consolidated financial statements. (1) Refer to Note 6 – Kakaopay Transaction for further detail (2) Refer to Note 10 – Software, net for further detail (3) Refer to Note 23 – Employee Benefit Plans for further detail (4) Refer to Note 4 – Transaction with Tigress for further detail F- 9 SIEBERT FINANCIAL CORP. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization Overview 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: ● Muriel Siebert & Co., Inc. (“MSCO”) provides retail brokerage services. MSCO is a Delaware corporation and broker-dealer registered with the SEC under the Exchange Act and the Commodity Exchange Act of 1936, and member of FINRA, NYSE, SIPC, Euroclear, NFA, and CFTC. ● Siebert AdvisorNXT, Inc. (“SNXT”) provides investment advisory services. SNXT is a New York corporation registered with the SEC as an RIA under the Advisers Act. ● Park Wilshire Companies, Inc. (“PW”) provides insurance services. PW is a Texas corporation and licensed insurance agency. ● Siebert Technologies, LLC (“STCH”) provides technology development. STCH is a Nevada limited liability company. ● RISE Financial Services, LLC (“RISE”) is a Delaware limited liability company and a broker-dealer registered with the SEC, CFTC, FINRA, SIPC, and NFA. ● StockCross Digital Solutions, Ltd. (“STXD”) is an inactive subsidiary headquartered in Bermuda. ● Gebbia Entertainment, LLC (“GE”) is a Florida limited liability company and provides media entertainment services. For purposes of this Report, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp., MSCO, SNXT, PW, STCH, RISE, STXD, and GE, collectively, unless the context otherwise requires. Effective January 1, 2024, MSCO changed its name from Muriel Siebert & Co., Inc. to Muriel Siebert & Co., LLC, and SNXT changed its name to from Siebert AdvisorNXT, Inc. to Siebert AdvisorNXT, LLC with their tax status changing from C-Corporations to LLCs under state law. The Company is headquartered in Miami Beach, FL, with primary operations in Florida, New York and California. The Company has 10 branch offices throughout the U.S. and clients around the world. The Company’s SEC filings are available through the Company’s website at www.siebert.com, where investors can obtain copies of the Company’s public filings free of charge. The Company’s common stock, par value $ .01 per share, trades on the Nasdaq Capital Market under the symbol “SIEB.” The Company engages in a single line of business as a securities broker-dealer, providing comprehensive brokerage services including custody and clearing of retail accounts, insurance and advisory services, principal transaction and proprietary trading, market making, and securities lending. The Company currently has no other reportable segments. All of the Company’s revenues for the years ended December 31, 2024 and 2023 were derived from its operations in the U.S. The Company has evaluated the impact of its recent acquisition of GE on its consolidated financial statements and has determined that the acquisition is immaterial. As of December 31, 2024, the Company operates as a single reportable 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. Management will continue to monitor the financial significance of the GE acquisition and may report additional segments in accordance with FASB ASC Topic 280 – “Improvements to Reportable Segment Disclosures” (“Topic 280”). F- 10 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements are prepared on the accrual basis of accounting in conformity with U.S. GAAP as established by the FASB to ensure consistent reporting of financial condition. The consolidated financial statements include the accounts of Siebert and its wholly-owned and majority-owned subsidiaries. Upon consolidation, all intercompany balances and transactions are eliminated. The U.S. dollar is the functional currency of the Company and numbers are rounded for presentation purposes. Reclassification Certain amounts for the year ended December 31, 2024 and 2023, and certain cash flows within the Investing Activities section have been reclassified to conform to the presentation of the current period. The reclassification has not materially impacted the Company’s consolidated financial statements, and did not result in a change in total revenue, net income or cash flows from operations or investing activities for the periods presented. Principles of Consolidation The consolidated financial statements include the accounts of Siebert and all other entities in which we have a controlling financial interest. The Company determines whether it has controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”). Upon consolidation, all intercompany balances and transactions are eliminated. The Company’s ownership in RISE was 68 % as of both December 31, 2024 and 2023. Refer to Note 5 – RISE for more information. For consolidated subsidiaries that are not wholly-owned, the third-party holdings of equity interests are referred to as noncontrolling interests. The net income or loss attributable to noncontrolling interests for such subsidiaries is presented as net income or loss attributable to noncontrolling interests in the consolidated statements of operations. The portion of total equity that is attributable to noncontrolling interests for such subsidiaries is presented as noncontrolling interests in the consolidated statements of financial condition. For investments in entities in which the Company does not have a controlling financial interest but has significant influence over its operating and financial decisions, the Company applies the equity method of accounting with net income and losses recorded in earnings of equity method investment in related party. Voting Interest Entities The Company evaluates whether an entity qualifies as a VOE and determines the appropriateness of consolidation on a quarterly basis. The Company consolidates a VOE when it holds a majority voting interest, directly or indirectly, and has the power to direct the activities of the entity that most significantly impact its economic performance. When assessing consolidation under the voting interest model, the Company considers all relevant facts and circumstances, including its ability to exercise control through voting rights and the extent of its ownership interest. If the Company determines it holds a controlling financial interest in the VOE, the entity is consolidated in the Company’s financial statements. F- 11 Variable Interest Entities The Company evaluates whether an entity is a VIE and determines if the primary beneficiary status is appropriate on a quarterly basis. The Company consolidates a VIE for which it is the primary beneficiary. When assessing the determination of the primary beneficiary, the Company considers all relevant facts and circumstances, including factors such as the power to direct the activities of the VIE that most significantly impact its economic performance, the obligation to absorb the losses and/or the right to receive the expected returns of the VIE. If the Company determines that it is the primary beneficiary, the Company will consolidate the entity under the VIE model. Segment Information The Company operates and reports financial information in one operating segment, consistent with the way the Chief Operating Decision Maker (CODM) allocates resources and evaluates performance. Operating segments are determined based on how management organizes the business for decision-making, and the CODM regularly reviews the Company’s financial information as a whole. The Company is engaged in a single line of business as a securities broker-dealer, providing various brokerage services, including custody and clearing of retail accounts, insurance and advisory services, principal transaction and proprietary trading, market making, and securities lending. In accordance with Topic 280, the Company discloses significant expense categories that are regularly reviewed by the CODM. The CODM evaluates performance primarily based on net income and considers excess net capital as an operational metric in maintaining capital adequacy. Since the Company has identified a single reportable segment, segment disclosures align with the consolidated financial statements, and duplicative information has been referenced where applicable. All of the Company’s revenues and substantially all of its assets are attributed to or located in the United States. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Accounting for Acquisitions FASB ASC Topic 805 – “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“Topic 805”) is used for accounting in business acquisitions. Topic 805 requires that goodwill be recognized separately from assets acquired and liabilities assumed at their acquisition date fair values. Goodwill, as of the date of acquisition, is determined as the excess of the consideration transferred net of the acquisition date fair values of assets acquired and liabilities assumed. Fair value estimates at acquisition date may be assessed internally or externally using third parties. As part of the valuation and appraisal process, the third-party appraiser prepares a report assigning estimated acquisition date fair values to assets and liabilities. These fair values estimations are subjective and require careful consideration and sound judgement. Management reviews the third-party reports for fairness of the assigned values. F- 12 Fair Value FASB ASC Topic 820 – “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“Topic 820”) defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy of fair value inputs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income, or cost approach, as specified by Topic 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1 - Quoted prices (unadjusted) in active markets for an identical asset or liability that the Company can assess at the measurement date. Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 - Unobservable inputs for the asset or liability. The availability of observable inputs can vary from security to security and is affected by a variety of factors, such as the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. As such, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that the Company believes market participants would use in pricing the asset or liability at the measurement date. A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows: Certificates of deposit: Certificates of deposit are included in investments which are recorded at fair value, which is determined based on estimates using observable market inputs like current market rates for similar deposits with comparable maturities. When certificates of deposit are held directly with banking institutions and issued directly to the Company, these are categorized within cash equivalents in level 2 of the fair value hierarchy. When certificates of deposit are available for trading, they are categorized within securities owned, at fair value in level 2 of the fair value hierarchy. Corporate bonds: The fair value of corporate bonds is determined using recently executed transactions, market price quotations (when observable), bond spreads, or credit default swap spreads obtained from independent external parties such as vendors and brokers, adjusted for any basis difference between cash and derivative instruments. The spread data used is for the same maturity as the bond. If the spread data does not reference the issuer, then data that references a comparable issuer is used. When position-specific external price data is not observable, fair value is determined based on either benchmarking to similar instruments or cash flow models with yield curves, bond, or single-name credit default swap spreads and recovery rates as significant inputs. Corporate bonds are generally categorized in level 2 of the fair value hierarchy. F- 13 Equity securities: Equity securities are valued based on quoted prices from the exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in level 1 of the fair value hierarchy. Securities quoted in inactive markets or with observable inputs are categorized into level 2. If there are no observable inputs or quoted prices, securities are categorized as level 3 assets in the fair value hierarchy. Level 3 assets are not actively traded and subjective estimates based on managements’ assumptions are utilized for valuation. Municipal securities: Municipal securities are valued using recently executed transactions, market price quotations (when observable), bond spreads from independent external parties such as vendors and brokers, adjusted for any basis difference between cash and derivative instruments. The spread data used is for the same maturity as the bond. Municipal securities are generally categorized in level 2 of the fair value hierarchy. Options: Options are valued based on quoted prices from the exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in level 1 of the fair value hierarchy. Securities quoted in inactive markets or with observable inputs are categorized into level 2. If there are no observable inputs or quoted prices, securities are categorized as level 3 assets in the fair value hierarchy. Level 3 assets are not actively traded and subjective estimates based on managements’ assumptions are utilized for valuation. U.S. government securities: U.S. government securities are valued using quoted market prices and as such, valuation adjustments are not applied. Accordingly, U.S. government securities are generally categorized in level 1 of the fair value hierarchy. Cash and Cash Equivalents Cash and cash equivalents are all cash balances that are unrestricted. The Company has defined cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business. As of December 31, 2024 and 2023, the Company did not hold any cash equivalents. As of December 31, 2024 and 2023, the Company maintained its cash balances at various financial institutions. These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per institution. The Company is subject to credit risk to the extent that the financial institution with which it conducts business is unable to fulfill its contractual obligations and deposits exceed FDIC limits. Cash and Securities Segregated for Regulatory Purposes MSCO is subject to Exchange Act Rule 15c3-3, referred to as the “Customer Protection Rule,” which requires segregation of funds in a special reserve account for the exclusive benefit of customers. As of December 31, 2024, the Company had approximately $ 135.8 million in cash segregated for regulatory purposes and $ 68.8 million in qualified securities segregated for regulatory purposes. As of December 31, 2023, the Company had approximately $ 158.8 million in cash segregated for regulatory purposes and $ 115.5 million in qualified securities segregated for regulatory purposes. Cash and securities segregated for regulatory purposes are held in special reserve accounts for the benefit of customers for regulatory purposes. Current Expected Credit Losses The Company accounts for estimated credit losses on financial assets measured at an amortized cost basis and certain off-balance sheet credit exposures in accordance with FASB ASC Subtopic 326-20 – “Financial Instruments – Credit Losses” (“Subtopic 326-20”). Subtopic 326-20 requires the Company to estimate expected credit losses over the life of its financial assets and certain off-balance sheet exposures as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts. The Company records the estimate of expected credit losses as an allowance for credit losses. For financial assets measured at an amortized cost basis the allowance for credit losses is reported as a valuation account in the statement of financial condition that adjusts the asset’s amortized cost basis. Changes in the allowance for credit losses if any are reported in credit loss expense. F- 14 Receivables from and Payables to Customers Receivables from and payables to customers include amounts due and owed on cash and margin transactions. Receivables from customers include margin loans to securities brokerage clients and other trading receivables. Margin loans are collateralized by customer securities and are carried at the amount receivable, net of an allowance for credit losses. Collateral is required to be maintained at specified minimum levels at all times. The Company monitors margin levels and requires customers to provide additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. The Company expects the borrowers will continually replenish the collateral as necessary because the Company subjects the borrowers to an internal qualification process to align investing objectives and risk tolerance in addition to monitoring customer activity. Receivables from and payables to customers amounts include any amounts received from interest on credit balances or paid on margin debit balances. The Company elected the practical expedient for FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“Topic 326”) which permits it to compare the amortized cost basis of the loaned amount with the fair value of collateral received at the reporting date to measure the estimate of expected credit losses. The Company had no expectation of credit losses for its receivables from customers as of December 31, 2024 and 2023. Management actively monitors its exposure to credit risk through daily reviews of customer receivables and all transactions are either fully collateralized or subject to credit risk management protocols, ensuring that no material unsecured or uncollateralized balances exist. Additionally, the Company has no historical material credit losses and has not incurred any material credit losses as of December 31, 2024 and 2023. Securities beneficially owned by customers, including those that collateralize margin or other similar transactions, are not reflected in the consolidated statements of financial condition. Receivables from and Payables to Non-Customers Receivables from and payables to non-customers include amounts due and owed on cash and margin transactions on non-customer accounts owned and controlled by principal officers and directors of MSCO. Receivables from non-customers include margin loans to securities brokerage clients and other trading receivables. Margin loans are collateralized by non-customer securities and are carried at the amount receivable, net of an allowance for credit losses. Collateral is required to be maintained at specified minimum levels at all times. The Company monitors margin levels and requires non-customers to provide additional collateral, or reduce margin positions, to meet minimum collateral requirements if the fair value of the collateral changes. The Company expects the borrowers will continually replenish the collateral as necessary because the Company subjects the borrowers to an internal qualification process to align investing objectives and risk tolerance in addition to monitoring non-customer activity. Receivables from and payables to non-customers amounts include any amounts received from interest on credit balances or paid on margin debit balances. The Company elected the practical expedient for Topic 326 which permits it to compare the amortized cost basis of the loaned amount with the fair value of collateral received at the reporting date to measure the estimate of expected credit losses. The Company has no expectation of credit losses for its receivables from non-customers as of December 31, 2024 and 2023. Securities beneficially owned by non-customers, including those that collateralize margin or other similar transactions, are not reflected in the consolidated statements of financial condition. Receivables from, Payables to, and Deposits with Broker-Dealers and Clearing Organizations Receivables from and payables to broker-dealers and clearing organizations includes amounts receivables from or payables to MSCO and RISE clearing broker-dealers, fail-to-deliver and fail-to-receive items, and amounts receivable for unsettled regular-way transactions. Deposits with broker-dealers and clearing organizations include amounts held on deposit with broker-dealers and clearing organizations. Amounts payables to broker-dealers and clearing organizations are offset against corresponding amounts receivables from broker-dealers and clearing organizations. Receivables from these broker-dealers and clearing organizations are subject to clearing agreements and include the net receivable from net monthly revenues as well as cash on deposit. MSCO customer transactions for the years ended December 31, 2024 and 2023 were both self-cleared and cleared on a fully disclosed basis through NFS. RISE maintained a fully disclosed clearing agreement with MSCO for customer transactions for the years ended December 31, 2024 and 2023; however, there were no customer transactions related to this clearing agreement during those years. F- 15 Receivables from and deposits with broker-dealers and clearing organizations are in scope of the amended guidance for Topic 326. The Company continually reviews the credit quality of its counterparties and historically has not experienced a default. A portion of the Company’s trades and contracts are cleared through a clearing organization and settled daily between the clearing organization and the Company. Because of this daily settlement, the amount of unsettled credit exposures is limited to the amount owed to the Company for a very short period of time. The Company continually reviews the credit quality of its counterparties. Further, management reassessed the risk characteristics of its receivables and applied the collateral maintenance practical expedient for the secured receivables in line with the CECL guidance. As a result, the Company had no expectation of credit losses for these arrangements as of December 31, 2024 and 2023. Securities Borrowed and Securities Loaned Securities borrowed transactions are recorded at the amount of cash collateral delivered to the counterparty. Securities loaned transactions are recorded at the amount of cash collateral received. For securities borrowed and loaned, the Company monitors the market value of the securities and obtains or refunds collateral as necessary. The Company can elect to use an approach to measure the allowance for credit losses using the fair value of collateral where the borrower is required to, and reasonably expected to, continually adjust and replenish the amount of collateral securing the instrument to reflect changes in the fair value of such collateral. The Company has elected to use this approach for its allowance for credit losses on securities borrowed. As a result of this election, and the fully collateralized nature of these arrangements, the Company had no expectation of credit losses on its securities borrowed balances as of December 31, 2024 and 2023. Netting of Financial Assets and Financial Liabilities Substantially all of the Company’s securities borrowing and securities lending activity is transacted under master agreements that may allow for net settlement in the ordinary course of business, as well as offsetting of all contracts with a given counterparty in the event of default by one of the parties. However, for financial statement purposes, the Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the consolidated statements of financial condition. The Company accounts for securities lending transactions in accordance with FASB ASC Subtopic 210-20 – “Disclosures about Offsetting Assets and Liabilities” (“Subtopic 210-20”). Refer to Note 19 – Financial Instruments with Off-Balance Sheet Risk for further detail. Securities Owned and Securities Sold, Not Yet Purchased at Fair Value Securities owned, at fair value represent marketable securities owned by the Company at trade-date valuation. Securities sold, not yet purchased, at fair value represent marketable securities sold by the Company prior to purchase at trade-date valuation. These securities are classified as trading securities and in accordance with FASB ASC Topic 940 – “Financial Services – Brokers and Dealers” (“Topic 940”), these securities are measured initially at fair value and any realized or unrealized gains or losses to fair value are included in profit or loss. Below is a table with further detail on the Company’s securities. Type of Security Classification Consolidated Statements of Financial Condition Recording of Realized and Unrealized Gain or Loss Certificates of deposit, Corporate bonds, municipal securities, options Trading Securities owned, at fair value Principal transactions and proprietary trading Equities Trading Securities owned, at fair value; Securities sold, not yet purchased at fair value Market making, Principal transactions and proprietary trading U.S. government securities Trading Securities owned, at fair value Principal transactions and proprietary trading U.S. government securities Trading Cash and securities segregated for regulatory purposes Principal transactions and proprietary trading F- 16 Property, Office Facilities, and Equipment, Net Property, office facilities, and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation for property, office facilities, and equipment are calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows: Type Useful Life Property 40 years Property improvements 10 years Leasehold improvements Lesser of useful life or lease term Office facilities and equipment 4 to 5 years Software, Net The Company capitalizes certain costs for certain software and amortizes them over their useful life, generally not exceeding five years . Depending on the terms of the contract, the Company either records costs from software hosting arrangements as prepaid assets and amortizes them over the contract term, or the costs are expensed as incurred. The Company enters into certain software hosting arrangements where the associated professional development services work is capitalized and then amortized over the term of the contract. Other software costs such as routine maintenance and various data services are expensed as incurred. Leases The Company reviews all relevant contracts to determine if the contract contains a lease at its inception date. A contract contains a lease if the contract conveys the right to control the use of an underlying asset for a period of time in exchange for consideration. If the Company determines that a contract contains a lease, it recognizes, in the consolidated statements of financial condition, a lease liability and a corresponding right-of-use asset on the commencement date of the lease. The lease liability is initially measured at the present value of the future lease payments over the lease term using the rate implicit in the lease or, if not readily determinable, the Company’s secured incremental borrowing rate. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent. The Company’s leases are classified as operating leases and consist of real estate leases for office space, data centers and other facilities. Each lease liability is measured using the Company’s secured incremental borrowing rate, which is based on an internally developed rate based on the Company’s size, growth, risk profile and a duration similar to the lease term. The Company’s leases have remaining terms of approximately 1 to 5 years as of December 31, 2024. The Company does not include renewal options as the renewal options are not reasonably certain to be exercised; however, the Company continues to monitor the lease renewal options. The Company’s operating leases contain both lease components and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance and utilities which are usually determined by the leased square footage in proportion to the overall office building. F- 17 Operating lease expense is recognized on a straight-line basis over the lease term and is included in line item “Rent and occupancy” in the consolidated statements of operations. Equity Method Investments Investments in which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method of accounting and are included in the line item “Equity method investment in related party” in the consolidated statements of financial condition. Under this method of accounting, the Company’s share of the net income or loss of the investee is presented before the income before provision for income taxes in the consolidated statements of operations. The Company evaluates its equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired. If the impairment is determined to be other-than-temporary, the Company will recognize an impairment loss equal to the difference between the expected realizable value and the carrying value of the investment. Investments, Cost Investments in equity shares without a readily determinable fair value and for which the Company does not have the ability to exercise significant influence are accounted for at cost adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer, and impairments. As of December 31, 2024 and 2023, the Company had no investments. Other Intangible Assets, Net The Company accounts for intangible assets acquired in business combinations or asset acquisitions in accordance with FASB ASC Topic 350 – “Intangibles – Goodwill and Other” (“Topic 350”). Certain identifiable intangible assets acquired by the Company, including artist contracts, are recognized at fair value at the acquisition date and are amortized over their estimated useful lives on a straight-line basis. The estimated useful lives of these intangible assets are determined based on contractual terms. The Company assesses intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Additionally, the Company reviews the estimated useful lives of intangible assets annually or whenever circumstances suggest that the remaining amortization period should be revised. If a change in useful life is necessary, the asset’s remaining carrying amount is amortized prospectively over the revised useful life. Goodwill Goodwill represents the excess purchase price of businesses acquired over the fair value of the identifiable net assets acquired. Goodwill is not subject to amortization but rather is evaluated for impairment annually, or more frequently if events occur or circumstances change indicating it would more likely than not result in a reduction of the fair value of the reporting unit below its carrying value, including goodwill. Goodwill may be evaluated for impairment by performing a qualitative assessment. This qualitative assessment considers various financial, macroeconomic, industry, and reporting unit specific qualitative factors. If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill, or, if for any other reason the Company determines to it be appropriate, then a quantitative assessment will be performed. The quantitative assessment process utilizes an income and market approach to arrive at an indicated fair value range for the reporting unit. The fair value calculated for the reporting unit is compared to its carrying amount, including goodwill, to ascertain if goodwill impairment exists. If the fair value exceeds the carrying amount, including goodwill for the reporting unit, it is not considered impaired. If the fair value is below the carrying amount, including goodwill for the reporting unit, then an impairment charge is recognized for the amount by which the carrying amount exceeds the calculated fair value, up to but not exceeding the amount of goodwill allocated to the reporting unit. The Company’s annual impairment test date is December 31. The Company completed a qualitative assessment for its reporting unit during its most recent annual impairment review. The Company concluded that it has one reportable segment and tests goodwill on a consolidated basis. Based on this qualitative assessment, the Company determined that there was no evidence of impairment to the balance of its goodwill as of both December 31, 2024 and 2023. F- 18 Drafts Payable Drafts payable represent checks drawn by the Company against customer accounts which remained outstanding and had not cleared the bank as of the end of the period. Deferred Contract Incentive The Company entered into an amendment with its agreement with NFS whereby the Company received a one-time business development credit of $ 3 million, and NFS will pay the Company four annual credits of $ 100,000 , which are both recorded in the line item “Deferred contract incentive” in the consolidated statements of financial condition. Annual credits shall be paid on the anniversary of the date on which the first credit was paid. The business development credit and annual credits will be recognized as contra expense over four years and one year , respectively, in the line item “Clearing fees, including execution costs” in the consolidated statements of operations. Contract Termination Liability The Company entered into a settlement agreement with Kakaopay whereby it will pay Kakaopay $ 5 million, payable in ten quarterly installments that began in the first quarter of 2024. The Company accounted for this transaction as an exit or disposal cost obligation in accordance with FASB ASC Topic 420 – “Exit or Disposal Cost Obligations” (“Topic 420”). Accordingly, the Company recognized the liability at fair value by using a present value technique that used a discount rate equivalent to the bank prime rate as of the date of the agreement. The liability is recorded on the line item “Contract termination liability” in the consolidated statements of financial condition. The expense was recorded in the line item “Transaction termination costs” in the consolidated statements of operations. Refer to Note 6 – Transaction with Kakaopay for further detail. Revenue Recognition The Company generated a significant portion of its revenue from financial instruments comprising of margin revenue, securities lending, principal transactions and proprietary trading, and interest revenue. These net interest and other revenues are not within the scope of FASB ASC Topic 606 – “Revenue from Contracts with Customers” (“Topic 606”), because they are generated from financial instruments covered by various other areas of GAAP. Market making activities are not within the scope of Topic 606, as they do not meet the definition of a contract with a customer under the standard. Consequently, revenue and expenses related to market making activity are accounted for separately and not included in the revenue figures presented in accordance with Topic 606. The Company also has fee revenue and transaction revenue which are within the scope of Topic 606. Revenue from contracts with customers includes commission income charged to retail clients for executing transactions, markups on riskless principal transactions charged to retail clients for executing transactions, distribution income received from mutual funds for client transactions, stock locate fees charged to counterparties for providing locate services, payment for order flow received for executing transactions, and administrative fees to retail clients including for maintenance and other ancillary services. Under Topic 606, Revenue from Contracts with Customers, requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. F- 19 The table below presents detailed information on the Company’s recognition of revenue from contracts with customers as well as revenues from financial instruments, which are outside the scope of Topic 606, by major types of services for the periods indicated. Year Ended December 31, 2024 2023 Revenues from Contracts with Customers Principal transactions and proprietary trading Riskless principal transactions with customers $ 14,130,000 $ 9,096,000 Commissions and fees Brokerage commissions 7,629,000 5,927,000 Distribution fees 1,365,000 1,167,000 Insurance commissions 621,000 447,000 Stock borrow / stock loan Retail fees (rebates) ( 5,000 ) ( 78,000 ) Stock locate services 16,892,000 12,901,000 Other income Administrative fees 1,888,000 519,000 Payment for order flow 1,454,000 1,114,000 Other commissions 48,000 265,000 Advisory fees 2,369,000 1,928,000 Total revenues from contracts with customers $ 46,391,000 $ 33,286,000 Revenue outside the scope of Topic 606 Principal transactions and proprietary trading Proprietary trading 486,000 3,997,000 Interest, marketing and distribution fees Margin interest 15,440,000 16,236,000 Interest income 14,933,000 11,618,000 Marketing and distribution fees 2,034,000 1,724,000 Stock borrow / stock loan Stock rebate revenue 2,362,000 3,349,000 Market making 2,255,000 1,304,000 Total revenue outside the scope of Topic 606 37,510,000 38,228,000 Total revenue $ 83,901,000 $ 71,514,000 F- 20 The primary sources of revenue for the Company are as follows: Principal Transactions and Proprietary Trading Principal transactions and proprietary trading primarily represent two revenue streams. The first revenue stream is riskless transactions in which the Company, after executing a solicited order, buys or sells securities as principal and at the same time buys or sells the securities with a markup or markdown to satisfy the order. Principal transactions and proprietary trading related to riskless principal transactions are recognized at a point in time on the trade date when the performance obligation is satisfied. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the customer or trading counterparty. The second revenue stream is proprietary trading whereby the company enters into transactions where securities are traded by the Company as investments and for use as collateral for depositories or customer reserve requirements. Proprietary trading consists of trading in securities classified as trading securities and in accordance with Topic 940, these securities are measured initially at fair value and any realized or unrealized gains or losses to fair value are included in profit or loss. Commissions and Fees The Company earns commission revenue for executing trades for clients in individual equities, options, insurance products, futures, fixed income securities, as well as certain third-party mutual funds and ETFs. Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, is recognized at a point in time on the trade date when the performance obligation is satisfied. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the customer. The Company enters into arrangements with managed accounts of other pooled investment vehicles (funds) to distribute shares to investors (“distribution fees”). The Company may receive distribution fees paid by the fund up front, over time, upon the investor’s exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur until the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company’s influence, the Company recognizes revenue once the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Distribution fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods. Stock Borrow / Stock Loan The Company borrows securities on behalf of retail clients to facilitate short trading, loans excess margin and fully-paid securities from client accounts, facilitates borrow and loan contracts for broker-dealer counterparties. The Company records revenues net of operating expenses related to stock borrow / stock loan. Stock borrow / stock loan also includes any revenues generated from the Company’s fully paid lending programs on a self-clearing or introducing basis. The Company does not utilize stock borrow / stock loan activities for the purpose of financing transactions. The Company also pays rebates and charges fees to/from retail clients for borrowing securities based on the daily balance of the securities borrowed. Revenue from fees charged to clients and rebates paid to clients are recognized over the term as services are provided. F- 21 For the year ended December 31, 2024, stock borrow / stock loan revenue was $ 19,249,000 ($ 40,714,000 gross revenue less $ 21,465,000 expenses). For the year ended December 31, 2023, stock borrow / stock loan revenue was $ 16,172,000 ($ 47,166,000 gross revenue less $ 30,994,000 expenses). Securities borrowed and securities loaned transactions are recorded at the amount of cash collateral advanced or received, respectively, with all related securities, collateral, and cash both held at and moving through DTC or OCC as appropriate for each counterparty. Securities borrowed transactions require the Company to deposit cash or other collateral with the lender. Securities loaned transactions require the receipt of collateral by the Company in the form of cash in an amount generally in excess of the fair value of securities loaned. The Company monitors the fair value of securities borrowed and loaned daily, with additional collateral obtained or returned as necessary. Securities borrow and loan fees represent interest or (rebate) on the cash received or paid as collateral on the securities borrowed or loaned. The Company applies a practical expedient to Topic 326 regarding its securities borrowed and loaned balances and their underlying collateral. Inherent in this activity, the Company and its counterparties to securities borrowed and loaned transactions, mark to market the collateral, securing these transactions on a daily basis through DTC or OCC. The counterparty continually replenishes the collateral securing the asset in accordance with standard industry practice. Rates on securities lending programs are based on the current market demand for each security borrow or loan contract and are set on a per-contract basis. Based on the above factors, there is no material current expected credit loss under Topic 326 for securities borrowed and loaned transactions is not needed as of December 31, 2024. The Company also provides securities locate services to broker dealer counterparties. The Company charges a fee to their counterparties each time a locate is placed and the inventory is decremented by such locate quantity. The Company believes that the performance obligation is satisfied on the day that the security is located for the customer as that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of locate identification have been transferred to the counterparty. Revenue is recognized at that point in time. Other Income Other income primarily represents fees generated from consulting services to a technology provider, payment for order flow, and transactional fees generated from client accounts. The performance obligation for consulting services to a technology provider is providing consulting services and is satisfied over time in line with the duration of the consulting contract. The performance obligation related to payment for order flow is providing financial services and is satisfied at a point in time. The performance obligation related to transactional fees generated from client accounts is providing financial services to clients and is satisfied over time. The Company also earns revenue from an agreement with JonesTrading Institutional Service, LLC (“JonesTrading”) whereby J onesTrading pays the Company a percentage of the net revenue produced by certain historical institutional customers less any related expenses. Revenue from JonesTrading is determined based on the factors outside of the Company’s control and the Company records the income amount on a monthly basis when the actual amount of income is known. F- 22 Advisory Fees The Company earns advisory fees associated with managing client assets. The performance obligation related to this revenue stream is satisfied over time, as clients receive and consume the benefits as the services are provided. The advisory fees are variable and calculated as a percentage of the client’s total asset value, determined as of the last business day of each quarter. These fees are primarily billed in advance, based on the average daily balance of the previous quarter and recognized ratably over the period in which services are provided. For new accounts or terminated accounts, fees may be prorated based on the number of days the account was active during the quarter, in accordance with the advisory agreement. Interest, Marketing and Distribution Fees The Company earns interest from clients’ accounts, net of interest expense which consists of payments to clients’ accounts, and on the Company’s bank balances and securities. Interest income also includes interest payouts from introducing relationships related to short interest, net of charges. The Company also earns margin interest which is the net interest charged to customers for holding financed margin positions. Marketing and distribution fees consist of 12b-1 fees which are trailing payments from money market funds. The Company enters into arrangements with money market mutual funds to distribute shares to investors (“Marketing and Distribution Fees”). The Company may receive distribution fees paid by the fund over time. The Company receives Marketing and Distribution Fees based upon the total amount deposited with the money market mutual fund based on a published interest rate. Interest, marketing and distribution fees are recorded as earned. Market Making Market making revenue is generated from the buying and selling of securities. Market making transactions are recorded on a trade-date basis as the securities transactions occur. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the counterparty. Costs to Obtain or Fulfill a Contract; Other For the periods presented, there were no costs capitalized related to obtaining or fulfilling a contract with a customer, and thus the Company has no balances for contract assets or contract liabilities. Share-based Compensation The Company grants share-based compensation and accounts for share-based compensation in accordance with FASB ASC Topic 718 – “ Compensation – Stock Compensation” (“Topic 718”), which establishes accounting for share-based compensation to employees for services. Under the provisions of FASB ASC Subtopic 718-10-35 – “Compensation – Stock Compensation” (“Subtopic 718-10-35”), share-based compensation cost is measured at the grant date, based on the fair value of the award on that date and is expensed at the grant date (for the portion that vests immediately) or on a straight-line basis over the requisite service period, aligning with vesting conditions. The Company accounts for forfeitures based on actual experience rather than estimating them at grant date, recognizing adjustments as they occur. Changes in estimates or modifications to share-based awards, if any, are accounted for in accordance with Topic 718. Refer to Note 23 – Employee Benefit Plans for further detail. Advertising and Promotion Advertising and promotion costs are expensed as incurred and were $ 348,000 and $ 155,000 for the years ended December 31, 2024, and 2023, respectively. F- 23 Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred taxes in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with Topic 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the provision for income taxes line in the consolidated statements of operations. Accrued interest and penalties would be included on the related tax liability line in the consolidated statements of financial condition. Capital Stock The authorized capital stock of the Company consists of a single class of common stock. Shares authorized were 100 million as of both December 31, 2024 and 2023. Per Share Data Basic earnings per share (“EPS”) is calculated by dividing net income available to the Company’s common stockholders by the weighted average number of common shares outstanding during the period. The Company’s Restricted Stock Awards (“RSA”s) and Restricted Stock Units (“RSU”s) do not receive dividends or dividend equivalents prior to vesting and are therefore not considered participating securities under FASB ASC Topic 260 – “Earnings Per Share” (“Topic 260”). Diluted EPS is calculated using the treasury stock method by dividing net income available to the Company’s common stockholders by the weighted average number of common shares outstanding, adjusted for the potential dilutive effect of unvested RSAs and RSUs, if applicable. New Accounting Standards In December 2023, the 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 the Company for annual periods beginning after December 15, 2024, though early adoption is permitted. The Company is still evaluating the presentational effect that ASU 2023-09 will have on its consolidated financial statements, but the Company expects considerable changes to its income tax footnote. In November 2024, the FASB issued ASU “2024-03”, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU 2024-03”). The ASU is intended to enhance the transparency and decision usefulness of income statement expense disclosures by requiring greater disaggregation of certain expense categories. ASU 2024-03 will be effective for us for annual periods beginning after December 15, 2025, though early adoption is permitted. We are currently evaluating the impact that ASU 2024-03 will have on our consolidated financial statements and we anticipate the amendments will require significant changes to our expense disclosures. F- 24 Accounting Standards Adopted in Fiscal 2024 In November 2023, the FASB issued ASU 2023-07, Topic 280, which requires all public entities, including those with a single reportable segment, to disclose additional information about a reportable segment’s significant expense categories in interim and annual periods, as identified in the information regularly provided to the CODM, among other requirements. The new guidance does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments. The guidance also clarifies that when a single operating segment is identified, entities may reference primary financial statements for overlapping disclosures. This ASU is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance effective for the year ended December 31, 2024. The adoption of this guidance did not have a material impact on our financial condition or financial performance. Refer to Note 22 – Segment Reporting for further detail. 3. Business Combinations Overview of Acquisition On August 12, 2024, the Company entered into a Membership Interest Purchase Agreement by and among the Company, GE and members of the Gebbia family, the (“Gebbia Entertainment Purchase Agreement”), pursuant to which the Company acquired all of the outstanding equity of GE for a purchase price of $ 1,250,000 . The acquisition will be accounted for under the acquisition method of accounting for business combinations pursuant to Topic 805 which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the proposed acquisition date. Allocation of Purchase Price The Company was required to allocate the GE purchase price to tangible and identifiable intangible assets acquired based on their fair values as of August 12, 2024. The excess of the purchase price over those fair values is recorded as goodwill. The Company acquired intangible assets consisting of GE artist contracts, the fair value of which was $ 778,000 as of the acquisition date. The fair value of identifiable intangible assets and goodwill was determined primarily through a Discounted Cash Flow (“DCF”) analysis, which falls under the income approach. The valuation included the projection of future cash flows from the intangible asset, discounted at a rate that reflected the company’s weighted average cost of capital and accounting for a company-specific risk premium. Additionally, a perpetuity growth rate was applied beyond the forecast period. Goodwill was calculated as the excess of the acquisition price over the fair value of separable assets, capturing anticipated synergies from the business combination. The following table summarizes the Company’s allocation of the purchase price as of the date of acquisition: Estimated Fair Value Cash and cash equivalents $ 127,000 Accounts receivable 5,000 Security deposits 10,000 Other Intangible assets, net 778,000 Total Assets acquired 920,000 Goodwill 330,000 Purchase price $ 1,250,000 Since the date of acquisition, there has been no material impact on the Company’s consolidated financial statements for the year ended December 31, 2024. Additionally, on a pro forma basis, the acquisition would not have had a material impact on the Company’s consolidated revenues or net income for the year ended December 31, 2024. F- 25 4. Transaction with Tigress Tigress Initial Transaction On November 16, 2021, the Company entered into an agreement with Tigress, a Delaware limited liability company, and a disabled and woman-owned financial services firm. As part of the agreement, (i) Tigress transferred to the Company limited liability company membership interests representing 24 % of the outstanding membership interests in Tigress; and (ii) the Company transferred to Tigress limited liability company membership interests representing 24 % of the outstanding membership interests of RISE and 1,449,525 shares of the Company’s common stock. The Company’s common stock was issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. Reorganization Agreement On October 18, 2022, the Company entered into a Reorganization Agreement (“Reorganization Agreement”) with Tigress whereby the Company exchanged 7 % of the outstanding membership interests in Tigress for all of Tigress’ ownership interest in RISE. As a result of the Reorganization Agreement, the Company’s ownership interest of Tigress decreased 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. Share Redemption Agreement On 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. The Company accounted for the Share Redemption Agreement as a sale of a financial asset in accordance with FASB ASC Topic 860 – “Transfers and Servicing” (“Topic 860”). The one million shares of Company common stock that the Company received from Ms. DiBartolo had a fair value of $ 2,510,000 which was equal to the fair value of the Company’s 17 % interest in Tigress sold to Ms. DiBartolo. As such, no gain or loss was recognized as a result of the transaction. Following the transaction, the Company had no remaining interest in Tigress. Refer to Note 12 – Equity Method Investment in Related Party for more detail on these transactions and information that impacted the periods presented. Impairment As a result of the Share Redemption Agreement described above, the Company recognized an impairment charge for its investment in Tigress of approximately $ 185,000 for the year ended December 31, 2023. Refer to Note 8 – Fair Value Measurements for more detail. 5. RISE As of both December 31, 2024 and 2023, the Company’s ownership in RISE was 68 % and Siebert consolidated RISE under the voting interest model (“VOE model”). As of both December 31, 2024 and 2023, RISE reported assets of $ 1.3 million and liabilities of $ 0 . There are no restrictions on RISE’s assets. 6. Kakaopay Transaction On April 27, 2023, the Company entered into a Stock Purchase Agreement with Kakaopay (the “First Tranche Stock Purchase Agreement”), pursuant to which Siebert agreed to issue to 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 and, in connection therewith, Siebert entered into a Registration Rights and Lock-Up Agreement (the “Registration Rights Agreement”) and a Stockholders’ Agreement (the “Original Stockholders’ Agreement”) with Kakaopay. Concurrent 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 would 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). F- 26 On December 19, 2023, Siebert 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 the Company will pay Kakaopay a fee of $ 5,000,000 (payable in ten quarterly installments that began on March 29, 2024) and (iii) to customary releases. Kakaopay continues to own the 8,075,607 shares of the Company’s common stock that it purchased from the Company in May 2023, and Kakaopay agreed to certain standstill restrictions with respect to its ownership of the Company’s common stock, subject to certain conditions. In connection with the foregoing, on December 19, 2023, Siebert 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’ Agreement. Under the A&R Stockholders’ Agreement, Kakaopay retains its right to designate one director to the Company’s board of directors, subject to certain conditions, but the additional board designation rights in the Original Stockholders’ Agreement that would have applied following the closing of the Second Tranche have been removed. The A&R Stockholders’ Agreement also, among other things, modifies various specified events requiring the prior written consent of Kakaopay, which provided the Company’s management with additional flexibility to grow the Company with reduced restrictions. The A&R Stockholders’ Agreement also adds tag-along rights in favor of Kakaopay and the Gebbia Stockholders. At the time of the issuance, the total deferred issuance cost of $ 2,467,000 related to the First Tranche was reclassified as a reduction to “Additional paid-in capital” in stockholders’ equity in the consolidated statements of financial condition. This amount consisted of $ 2,149,000 which was recorded within the line item “Prepaid expenses and other assets” in the consolidated statements of financial condition as of December 31, 2023. Of the amount incurred during the year ended December 31, 2023, $ 560,000 was part of non-cash consideration. The Company incurred $ 5,943,000 for the year ended December 31, 2023 associated with the termination of the transaction with Kakaopay which was recorded in the line item “Transaction termination cost” in the consolidated statements of operations. This amount consisted of the $ 5,000,000 fee to Kakaopay (payable in ten quarterly installments that began on March 29, 2024) adjusted for the present value of the payments as of the date of the agreement, as well as legal and other consulting costs associated with the transaction of approximately $ 1,481,000 . The discount rate used for the calculation of the present value of the cash flows was 8.5 %. On May 22, 2023, Gloria E. Gebbia issued a warrant to BCW Securities LLC, a Delaware limited liability company (“BCW”), to purchase 403,780 shares of common stock of the Company held by Ms. Gebbia at an exercise price of $ 2.15 per share. Ms. Gebbia issued the warrant pursuant to that certain agreement, dated March 27, 2023, by and among Ms. Gebbia, the Company and BCW relating to the investment by Kakaopay in the Company. The fair value of the warrant of $ 560,000 was recorded as non-cash consideration in the consolidated statements of changes in stockholders’ equity and the consolidated statements of cash flows, as well as for the deferred issuance cost related to the First Tranche as described above. 7. 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: As of December 31, 2024 As of December 31, 2023 Receivables from and deposits with broker-dealers and clearing organizations DTCC / OCC / NSCC (1) $ 5,777,000 $ 9,332,000 Goldman Sachs & Co. LLC (“GSCO”) 50,000 38,000 National Financial Services, LLC (“NFS”) 2,102,000 2,212,000 Securities fail-to-deliver 90,000 119,000 Globalshares 68,000 47,000 Other receivables 60,000 — Total Receivables from and deposits with broker-dealers and clearing organizations $ 8,147,000 $ 11,748,000 Payables to broker-dealers and clearing organizations Securities fail-to-receive $ 439,000 $ 399,000 Payables to broker-dealers 5,000 82,000 Total Payables to broker-dealers and clearing organizations $ 444,000 $ 481,000 (1) Depository Trust and Clearing Corporation is referred to as (“DTCC”), Options Clearing Corporation is referred to as (“OCC”), and National Securities Clearing Corporation is referred to as (“NSCC”). F- 27 Under the DTCC shareholders’ agreement, MSCO is required to participate in the DTCC common stock mandatory purchase. As of December 31, 2024 and 2023, MSCO had shares of DTCC common stock valued at approximately $ 1,145,000 and $ 1,236,000 , respectively, which are included in the line item “Deposits with broker-dealers and clearing organizations” in the consolidated statements of financial condition. The share value is updated annually, as of March 20, 2024 and for the year ended December 31, 2024, based on the release of DTCC’s annual amended and restated shareholder agreement. In September 2022, MSCO and RISE entered into a clearing agreement whereby RISE would introduce clients to MSCO. Refer to Note 24 – Related Party Disclosures for more detail. 8. Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present, by level within the fair value hierarchy, financial assets and liabilities measured at fair value on a recurring basis for the periods indicated. As required by Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement. As of December 31, 2024 Level 1 Level 2 Level 3 Total Assets Cash and securities segregated for regulatory purposes U.S. government securities $ 68,758,000 $ — $ — $ 68,758,000 Securities owned, at fair value U.S. government securities $ 20,086,000 $ — $ — $ 20,086,000 Certificates of deposit — 112,000 — 112,000 Corporate bonds — 2,000 — 2,000 Options 58,000 — — 58,000 Equity securities 1,055,000 72,000 — 1,127,000 Total Securities owned, at fair value $ 21,199,000 $ 186,000 $ — $ 21,385,000 Liabilities Securities sold, not yet purchased, at fair value Equity securities $ 1,000 $ — $ — $ 1,000 Options 25,000 25,000 Total Securities sold, not yet purchased, at fair value $ 26,000 $ — $ — $ 26,000 As of December 31, 2023 Level 1 Level 2 Level 3 Total Assets Cash and securities segregated for regulatory purposes U.S. government securities $ 115,515,000 $ — $ — $ 115,515,000 Securities owned, at fair value U.S. government securities $ 17,636,000 $ — $ — $ 17,636,000 Certificates of deposit — 114,000 — 114,000 Corporate bonds — 3,000 — 3,000 Options 2,000 — — 2,000 Equity securities 146,000 137,000 — 283,000 Total Securities owned, at fair value $ 17,784,000 $ 254,000 $ — $ 18,038,000 Liabilities Securities sold, not yet purchased, at fair value Equity securities $ 2,000 $ — $ — $ 2,000 Total Securities sold, not yet purchased, at fair value $ 2,000 $ — $ — $ 2,000 F- 28 The Company had U.S. government securities with the market values and maturity dates for the periods indicated below: As of December 31, 2024 Maturing in 2025 $ 80,739,000 Maturing in 2026 8,019,000 Accrued interest 86,000 Total Market value $ 88,844,000 As of December 31, 2023 Maturing in 2023 $ 30,000,000 Maturing in 2024 98,931,000 Maturing in 2025 3,965,000 Accrued interest 255,000 Total Market value $ 133,151,000 Financial Assets Measured at Fair Value on a Non-Recurring Basis As a result of the 2023 transaction discussed in Note 3 – Transactions with Tigress, the Company recognized an impairment charge for its investment in Tigress of approximately $ 185,000 during the year ended December 31, 2023, which is included in “Impairment of investments” in the consolidated 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 transaction, the Company had no remaining interest in Tigress as of December 31, 2024. Financial Assets and Liabilities Not Carried at Fair Value Financial assets and liabilities not measured at fair value are recorded at carrying value, which approximates fair value either due to their short-term nature, or in the case of long-term assets or liabilities, management has determined the difference in the carrying value and fair value is immaterial. The tables below represents financial instruments in which the ending balances as of December 31, 2024 and 2023 are not carried at fair value in the statements of financial condition: As of December 31, 2024 Carrying Value Fair Value Level 1 Level 2 Level 3 Financial assets, not measured at fair value Cash and cash equivalents $ 32,629,000 $ 32,629,000 $ 32,629,000 $ — $ — Cash – segregated for regulatory purposes 135,829,000 135,829,000 135,829,000 — — Securities borrowed 139,040,000 139,040,000 — 139,040,000 — Receivables from customers 84,367,000 84,367,000 — 84,367,000 — Receivables from non-customers 607,000 607,000 — 607,000 — Receivables from broker-dealers and clearing organizations 3,920,000 3,920,000 — 3,920,000 — Other receivables 2,744,000 2,744,000 — 2,744,000 — Deposits with broker-dealers and clearing organizations 4,227,000 4,227,000 — 4,227,000 — Total financial assets, not measured at fair value $ 403,363,000 $ 403,363,000 $ 168,458,000 $ 234,905,000 $ — Financial liabilities, not measured at fair value Securities loaned $ 184,962,000 $ 184,962,000 $ — $ 184,962,000 $ — Payables to customers 227,129,000 227,129,000 — 227,129,000 — Payables to non-customers 3,297,000 3,297,000 — 3,297,000 — Drafts payable 1,331,000 1,331,000 — 1,331,000 — Payables to broker-dealers and clearing organizations 444,000 444,000 — 444,000 — Deferred contract incentive 496,000 496,000 — 496,000 — Long-term debt 4,228,000 4,228,000 — 4,228,000 — Contract termination liability 2,567,000 2,567,000 — 2,567,000 — Total financial liabilities, not measured at fair value $ 424,454,000 $ 424,454,000 $ — $ 424,454,000 $ — F- 29 As of December 31, 2023 Carrying Value Fair Value Level 1 Level 2 Level 3 Financial assets, not measured at fair value Cash and cash equivalents $ 5,735,000 $ 5,735,000 $ 5,735,000 $ — $ — Cash – segregated for regulatory purposes 158,802,000 158,802,000 158,802,000 — — Securities borrowed 394,709,000 394,709,000 — 394,709,000 — Receivables from customers 72,823,000 72,823,000 — 72,823,000 — Receivables from non-customers 241,000 241,000 — 241,000 — Receivables from broker-dealers and clearing organizations 3,863,000 3,863,000 — 3,863,000 — Other receivables 2,424,000 2,424,000 — 2,424,000 — Deposits with broker-dealers and clearing organizations 7,885,000 7,885,000 — 7,885,000 — Total financial assets, not measured at fair value $ 646,482,000 $ 646,482,000 $ 164,537,000 $ 481,945,000 $ — Financial liabilities, not measured at fair value Securities loaned $ 419,433,000 $ 419,433,000 $ — $ 419,433,000 $ — Payables to customers 289,777,000 289,777,000 — 289,777,000 — Payables to non-customers 713,000 713,000 — 713,000 — Drafts payable 1,726,000 1,726,000 — 1,726,000 — Payables to broker-dealers and clearing organizations 481,000 481,000 — 481,000 — Deferred contract incentive 1,246,000 1,246,000 — 1,246,000 — Long-term debt 4,313,000 4,313,000 — 4,313,000 — Contract termination liability 4,462,000 4,462,000 — 4,462,000 — Total financial liabilities, not measured at fair value $ 722,151,000 $ 722,151,000 $ — $ 722,151,000 $ — 9. Property, Office Facilities, and Equipment, Net Property, office facilities, and equipment consisted of the following as of the periods indicated: As of December 31, 2024 2023 Property $ 6,815,000 $ 6,815,000 Office facilities 4,165,000 2,475,000 Equipment 945,000 726,000 Total Property, office facilities, and equipment 11,925,000 10,016,000 Less accumulated depreciation ( 1,680,000 ) ( 612,000 ) Total Property, office facilities, and equipment, net $ 10,245,000 $ 9,404,000 Total depreciation expense for property, office facilities, and equipment was $ 814,000 and $ 589,000 for the years ended December 31, 2024 and 2023, respectively. On July 7, 2023, the Company entered into a new lease agreement for office space in the World Financial Center in New York City. For the years ended December 31, 2024 and 2023, the Company invested $ 828,000 and $ 129,000 to build out the New York office space, respectively. Depreciation expense commenced in March 2024, when the New York office space was placed into service. In the second quarter of 2024, the Company completed the construction of its office in Omaha, Nebraska, investing $ 211,000 during the year ended December 31, 2024. Miami Office Building On December 30, 2021, the Company purchased the Miami 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 the headquarters of the Company. Depreciation expense commenced in April 2023 when the Miami office building was completed and placed in service. The Company invested $ 393,000 and $ 1,313,000 in the years ended December 31, 2024 and 2023, respectively, to build out the Miami office building. F- 30 10. Software, Net Software consisted of the following as of the periods indicated: As of December 31, 2024 2023 Software $ 1,774,000 $ 1,081,000 Retail Platform 4,093,000 635,000 Total Software 5,867,000 1,716,000 Less accumulated amortization – Software ( 1,031,000 ) ( 284,000 ) Less impairment – Technology Platform — ( 990,000 ) Total Software, net $ 4,836,000 $ 442,000 The Company capitalized $ 978,000 in software development costs for a technology platform integration as of December 31, 2023. In the fourth quarter of 2023, the Company reassessed the strategic direction of the technology platform and determined that an other than temporary impairment had occurred. The Company recognized an impairment loss of $ 990,000 for the year ended December 31 , 2023, which is included in “Depreciation and amortization” in the consolidated statements of operations. The Company contracted with a technology vendor in the fourth quarter of 2023 to support the development of the Retail Platform, supplementing its internal technology resources. The total software development expense related to the Retail Platform was $ 4,093,000 as of December 31, 2024, all of which was capitalized. Amortization for the Retail Platform will commence once it is placed in service, which is expected to be in the second quarter of 2025. Total amortization of software was $ 485,000 and $ 442,000 for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company estimates the following future amortization of software assets: Year Amount 2025 $ 1,036,000 2026 1,077,000 2027 881,000 2028 819,000 2029 and after 1,023,000 Total $ 4,836,000 Transaction with J2 Financial Technology On January 18, 2024, STCH entered into a Purchase Agreement (the “Purchase Agreement”) with J2 Financial Technology, Inc., d/b/a “Guild”, a Delaware corporation (“J2 Financial”). The transaction was accounted for as an asset acquisition in accordance with Topic 805. Under the Purchase Agreement, STCH purchased a mobile self-directed trading app for the total purchase price of $ 385,000 . The purchase price consisted of $ 35,000 of cash and 200,000 restricted shares of the Company’s common stock (priced at the historical 30-day moving average as of January 18, 2024) worth approximately $ 350,000 . This purchase is part of the software related to the Retail Platform and recorded in the line item “Software, net” in the statements of financial condition. 11. Leases As of December 31, 2024, all of the Company’s leases are classified as operating and primarily consist of office space leases expiring in 2025 through 2029. The Company elected not to include short-term leases (i.e., leases with initial terms of less than twelve months), or equipment leases (deemed immaterial) in the consolidated statements of financial condition. The Company leases some miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment in the consolidated statements of operations rather than capitalizing them as lease right-of-use assets. The balance of the lease right-of-use assets and lease liabilities are displayed in the consolidated statements of financial condition and the below tables display further detail on the Company’s leases. On 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 replaced 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. F- 31 In October 2024, the Company transitioned its branch office in Omaha, Nebraska from a month-to-month agreement to a fixed-term commitment of five years expiring in September 2029 . In November 2024, the Company entered into a new lease agreement expiring in February 2027 for office space in Chicago. This office is intended to support the expansion of our retail business and will be utilized upon commencement of operations. The total commitment of both leases is approximately 0.5 million. Lease Term and Discount Rate As of December 31, 2024 As of December 31, 2023 Weighted average remaining lease term – operating leases (in years) 3.3 3.9 Weighted average discount rate – operating leases 7.3 % 6.9 % Year Ended December 31, 2024 2023 Operating lease cost $ 1,019,000 $ 1,326,000 Short-term lease cost 369,000 392,000 Variable lease cost 243,000 155,000 Total Rent and occupancy $ 1,631,000 $ 1,873,000 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 985,000 $ 1,256,000 Lease right-of-use assets obtained in exchange for new lease liabilities Operating leases $ 493,000 $ 1,693,000 Lease Commitments Future annual minimum payments for operating leases with initial terms of greater than one year as of December 31, 2024 were as follows: Year Amount 2025 $ 1,048,000 2026 836,000 2027 594,000 2028 503,000 2029 45,000 Remaining balance of lease payments 3,026,000 Less: difference between undiscounted cash flows and discounted cash flows 353,000 Lease liabilities $ 2,673,000 12. Equity Method Investment in Related Party Transaction with Tigress The Company’s investment in Tigress was accounted for under the equity method of accounting. In determining whether the investment in Tigress should be accounted for under the equity method of accounting, the Company considered the guidance under FASB ASC 323 – “Investments – Equity Method and Joint Ventures” (“Topic 323”). Prior to the Reorganization Agreement, the Company maintained 24 % ownership interest in Tigress, which represented a significant ownership level, the Company and Tigress had common representation on their respective Board of Directors, and certain employees of Tigress were also employees of RISE. Based on these criteria, the Company determined that it was able to exercise significant influence over Tigress , and therefore the equity method of accounting applied for this investment. After the Reorganization Agreement, the Company owned 17 % of Tigress. The Company concluded that it still had significant influence over Tigress due to the representation of Gloria E. Gebbia on the Board of Directors of Tigress. 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. Under the equity method, the Company recognized its share of Tigress ’ income or loss in the line item “Earnings of equity method investment in related party” in the consolidated statements of operations. The Company has elected to classify distributions received from equity method investees using the cumulative earnings approach. The earnings recognized from the Company’s investment in Tigress was $ 0 and $ 111,000 for the years ended December 31, 2024 and 2023, respectively, which is in the line item “Earnings of equity method investment in related party” in the consolidated statements of operations. F- 32 The Company did not receive cash distributions from Tigress for the years ended December 31, 2024 and 2023. As of both December 31, 2024 and 2023, the carrying amount of the investment in Tigress was $ 0 . 13. Goodwill and Other Intangible Assets, Net Goodwill As of December 31, 2024 and 2023, the Company’s carrying amount of goodwill was $ 2,319,000 and $ 1,989,000 , respectively. As of December 31, 2024, $ 1,989,000 of the Company’s carrying amount of goodwill came from the Company’s acquisition of RISE and $ 330,000 came from the Company’s acquisition of GE. As of December 31, 2024 and 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 years ended December 31, 2024 and 2023. Refer to Note 2 – Summary of Significant Accounting Policies for further information. Other Intangible Assets, Net As a result of the Company’s acquisition of GE, the Company acquired intangible assets consisting of GE artist contracts, the fair value of which were $ 778,000 as of the acquisition date. Amortization commenced upon acquisition and is recognized over its estimated useful life of 4 years. Amortization expense for the intangible asset totaled $ 81,000 for the year ended December 31, 2024. As of December 31, 2024, the Company estimates the following future amortization of other intangible assets: Year Amount 2025 $ 194,000 2026 194,000 2027 194,000 2028 115,000 Total $ 697,000 14. Investments, Cost As of both December 31, 2024 and 2023, the Company maintained a 2 % ownership interest in the Trading Technology Provider. In June 2023, in view of the Trading Technology Provider’s business performance and near-term business outlook that were below the Company’s previous expectations, as well as observed market transactions of the Trading Technology Provider’s equity that were below the carrying value of the Company’s investment of the Trading Technology Provider, the Company determined that an other than temporary impairment existed. For the year ended December 31, 2024, the Company did not recognize any impairment charges related to its investment in the Trading Technology Provider. For the year ended December 31 , 2023, the Company recognized an impairment charge for its investment in the Trading Technology Provider of $ 850,000 , which is included in “Impairment of investments” in the consolidated statements of operations. As of December 31, 2024 and 2023, the Company had no investment basis in the Trading Technology Provider. 15. Long-Term Debt Mortgage with East West Bank Overview On December 30, 2021, the Company purchased the Miami office building for approximately $ 6.8 million, which was partially financed through a mortgage with East West Bancorp, Inc. (“East West Bank”). The mortgage was for approximately $ 4 million with a commitment for another $ 338,000 to finance part of the build out of the Miami office building. As of December 31, 2024 and 2023, the Company’s outstanding balance of the mortgage was $ 4,228,000 and $ 4,313,000 , respectively. The Company’s obligations under the mortgage are secured by a lien on the Miami office building and the term of the loan is ten years . The repayment schedule will utilize a 30-year amortization period, with a balloon on the remaining amount due at the end of ten years. The interest rate is 3.6 % for the first 7 years, and thereafter the interest rate shall be at the prime rate as reported by the Wall Street Journal, provided that the minimum interest rate on any term loan will not be less than 3.6 %. As part of the agreement, the Company must maintain a debt service coverage ratio of 1.4 to 1. The loan is subject to a prepayment penalty over the first five years which is calculated as a percentage of the principal amount outstanding at the time of prepayment. This percentage is 5% in the first year and decreases by 1% each year thereafter, with the prepayment penalty ending after 5 years. As of December 31, 2024, the Company was in compliance with all of its covenants related to this agreement. F- 33 Remaining Payments Future remaining annual minimum principal payments for the mortgage with East West Bank as of December 31, 2024 were as follows: Year Amount 2025 $ 88,000 2026 91,000 2027 95,000 2028 98,000 2029 112,000 Thereafter 3,744,000 Total $ 4,228,000 The interest expense related to this mortgage was $ 155,000 and $ 159,000 for the years ended December 31, 2024, and 2023, respectively. As of December 31, 2024, the interest rate for this mortgage was 3.6 %. 16. Deferred Contract Incentive Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, the Company received a one-time business development credit of $ 3 million from NFS, and NFS will pay the Company four annual credits of $ 100,000 , which are recorded in the line item “Deferred contract incentive” in the consolidated statements of financial condition. Annual credits shall be paid on the anniversary of the date on which the first credit was paid. The business development credit and annual credits will be recognized as contra expense over four years and one year , respectively, in the line item “Clearing fees, including execution costs” in the consolidated statements of operations. The amendment also provides for an early termination fee if the Company chooses to end its agreement before the end of the contract term. In relation to this agreement, the Company recognized $ 850,000 in contra expense for both the years ended December 31, 2024, and 2023. The balance of the deferred contract incentive was approximately $ 0.5 million and $ 1.2 million as of December 31, 2024 and 2023, respectively. 17. Income Taxes The Company’s provision for (benefit from) income taxes is comprised of the following: Year Ended December 31, 2024 2023 Current Federal $ 2,607,000 $ 3,023,000 State and local 472,000 499,000 Total Current 3,079,000 3,522,000 Deferred Federal $ 520,000 $ ( 366,000 ) State and local 566,000 259,000 Total Deferred 1,086,000 ( 107,000 ) Total Provision for (benefit from) income taxes $ 4,165,000 $ 3,415,000 F- 34 The Company’s effective tax rate differs from the U.S. federal statutory income tax rate of 21 % for the periods indicated are as follows: Year Ended December 31, 2024 2023 Federal statutory income tax rate 21.0 % 21.0 % Goodwill amortization ( 1.6 )% ( 2.5 )% Permanent differences 0.4 % 2.7 % State and local taxes, net of federal benefit 5.4 % 5.7 % Change in valuation allowance ( 0.8 )% 2.4 % Other ( 0.5 )% 1.1 % Effective tax rate 23.9 % 30.4 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows: As of December 31, 2024 2023 Deferred tax assets: Net operating losses $ 2,971,000 $ 3,393,000 Lease liabilities 676,000 840,000 Share-based compensation 31,000 — Intangible assets 25,000 — Investment in RISE 122,000 123,000 Investment in Trading Technology Provider 215,000 239,000 R&D costs capitalization 187,000 142,000 Settlement liability related to Kakaopay termination 649,000 1,253,000 Capital loss carryover 719,000 803,000 Other 113,000 79,000 Subtotal 5,708,000 6,872,000 Less: valuation allowance ( 1,104,000 ) ( 1,243,000 ) Total Deferred tax assets $ 4,604,000 $ 5,629,000 Deferred tax liabilities: Fixed assets $ ( 1,186,000 ) $ ( 1,125,000 ) Total Deferred tax liabilities ( 1,186,000 ) ( 1,125,000 ) Net Deferred tax assets $ 3,418,000 $ 4,504,000 In assessing the Company’s ability to recover its deferred tax assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized. The Company considered all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Based on historical operating profitability, positive trend of earnings and projected future taxable income, the Company concluded as of December 31, 2024 that its U.S. deferred tax assets are realizable on a more-likely-than-not basis with the exception of capital loss carryforward and certain investments that will result in future capital losses. The amount of the Company’s valuation allowance decreased by $ 139,000 during 2024. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly. F- 35 As of December 31, 2024, the Company had U.S. federal net operating loss carryforwards of approximately $ 3.7 million which expire in varying amounts starting in 2035 to 2036 if not utilized. These net operating losses are available to offset 100 % of future taxable income. However, these U.S. federal net operating loss carryforwards are subject to annual limitation under Section 382. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows: Amount Balance as of December 31, 2022 $ 1,596,000 Additions for tax positions taken during current year 15,000 Additions for tax positions taken during prior year — Reductions for tax positions taken during prior years ( 2,000 ) Settlements — Expirations of statutes of limitations ( 204,000 ) Balance as of December 31, 2023 $ 1,405,000 Additions for tax positions taken during current year 19,000 Additions for tax positions taken during prior year — Reductions for tax positions taken during prior years — Settlements — Expirations of statutes of limitations ( 70,000 ) Balance as of December 31, 2024 $ 1,354,000 The unrecognized tax benefit of $ 1,354,000 and $ 1,405,000 as of December 31, 2024 and 2023, respectively, are recorded in the line item “Taxes payable” in the consolidated statements of financial condition. Of the amounts reflected above as of December 31, 2024 and 2023, the entire amount would reduce the Company’s effective tax rate if recognized. The Company records accrued interest and penalties related to income tax matters as part of the provision for income taxes. For the years ended December 31, 2024 and 2023, the Company recognized expense related to interest and penalties on unrecognized tax benefits of $ 153,000 and $ 118,000 , respectively. For the years ended December 31, 2024 and 2023, the accrued balance of interest and penalties on unrecognized tax benefits was $ 397,000 and $ 245,000 , respectively. In the next 12 months, the amount of unrecognized tax benefits is expected to decrease by $ 1,292,000 due to lapse in statute of limitations in 2025. The Company files a federal income tax return and income tax returns in various state tax jurisdictions. The Company is not currently under examination by the IRS or any state or local taxing authority for any tax year. The open tax years for the federal and state income tax filings are generally 2021 through 2024. On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting which agreed to a two-pillar solution to address tax challenges arising from digitalization of the economy. On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of a minimum rate of 15 % for multinational companies with consolidated revenue above € 750 million. The Company continues to evaluate the Pillar Two Framework and its potential impact on future periods, however based on the fact that the Company’s operations are all located within the United States and is below current revenue thresholds contained in the Pillar Two Model Rules, the Company expects to be outside the scope of the implementation of the reporting requirements. F- 36 18. Capital Requirements MSCO Net Capital MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) of the Exchange Act. Under the alternate method permitted by this rule, net capital, as defined, shall not be less than the lower of $ 1 million or 2 % of aggregate debit items arising from customer transactions. As of December 31, 2024, MSCO’s net capital was $ 63.9 million, which was approximately $ 62.0 million in excess of its required net capital of $ 1.9 million, and its percentage of aggregate debit balances to net capital was 65.84 %. As of December 31, 2023, MSCO’s net capital was $ 56.1 million, which was approximately $ 54.3 million in excess of its required net capital of $ 1.8 million, and its percentage of aggregate debit balances to net capital was 63.42 %. Special Reserve Account MSCO is subject to Customer Protection Rule 15c3-3 which requires segregation of funds in a special reserve account for the exclusive benefit of customers. As of December 31, 2024, MSCO had cash and securities deposits of $ 203.3 million (cash of $ 134.5 million, securities with a fair value of $ 68.8 million) in the special reserve accounts which was $ 9.5 million in excess of the deposit requirement of $ 193.8 million. After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2025, MSCO had $ 1.7 million in excess of the deposit requirement. As of December 31, 2023, MSCO had cash and securities deposits of $ 273.1 million (cash of $ 157.6 million, securities with a fair value of $ 115.5 million) in the special reserve accounts which was $ 26.2 million in excess of the deposit requirement of $ 246.9 million. After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2024, MSCO had $ 3.2 million in excess of the deposit requirement. As of December 31, 2024, 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 December 31, 2024, the Company had $ 1.3 million in the special reserve account which was approximately $ 0.1 million in excess of the deposit requirement of approximately $ 1.2 million. The Company made no subsequent deposits or withdrawals on January 2, 2025. As of December 31, 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 January 2, 2024. RISE Net Capital RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. RISE is also subject to the CFTC’s minimum financial requirements which require that RISE maintain net capital, as defined, equal to the greater of its requirements under Regulation 1.17 under the Commodity Exchange Act or Rule 15c3-1. As of both December 31, 2024 and 2023, RISE’s net capital was approximately $ 1.3 million which was $ 1.0 million in excess of its minimum requirement of $ 250,000 under 15c3-1. F- 37 19. Financial Instruments with Off-Balance Sheet Risk Credit Risk The Company is engaged in various trading and brokerage activities whose counterparties include broker-dealers, banks and other financial institutions. In the event the counterparties do not fulfill their obligations, the Company may sustain a loss if the market value of the instrument is different from the contract value of the transaction. The risk of default primarily depends upon the credit worthiness of the counterparties involved in the transactions. It is the Company’s policy to review, as necessary, the credit standing of each counterparty with which it conducts business. The Company experienced no material historical losses in relation to its counterparties for the years ended December 31, 2024 and 2023. Off-Balance Sheet Risks The Company enters into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and is, therefore, subject to varying degrees of market and credit risk. In the normal course of business, the Company’s customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose the Company to off-balance sheet risk in the event the customer or other broker is unable to fulfill their contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss. The Company’s customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company extends credit to its customers, subject to various regulatory and internal margin requirements, and is collateralized by cash and securities in the customers’ accounts. In connection with these activities, the Company executes and clears customer transactions involving the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations. Such transactions may expose the Company to off-balance sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event the customer fails to satisfy obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer’s obligations. The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory requirements and internal guidelines which meet or exceed regulatory requirements. The Company monitors required margin levels daily and pursuant to such guidelines, requires customers to deposit additional collateral or to reduce positions when necessary. The Company’s customer financing and securities settlement activities may require the Company to pledge customer securities as collateral in support of various secured financing sources such as bank loans and securities loaned. In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its customer obligations. The Company seeks to mitigate this risk by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral levels in the event of excess market exposure. In addition, the Company establishes credit limits for such activities and continuously monitors compliance. The Company’s securities lending transactions are subject to master netting agreements with other broker-dealers; however, amounts are presented gross in the consolidated statements of financial condition and as net in the consolidated statements of operations for both of the periods presented. The Company further mitigates risk by using a program with a clearing organization which guarantees the return of cash to the Company as well as using industry standard software to ensure daily changes to market value are continuously updated and any changes to collateralization are immediately covered. The Company accounts for securities lending transactions in accordance with Subtopic 210-20. F- 38 As of December 31 , 2024, the Company had margin loans extended to its customers of approximately $ 403.8 million, of which $ 84.4 million is in the line item “Receivables from customers” in the consolidated statements of financial condition. As of December 31, 2023, the Company had margin loans extended to its customers of approximately $ 338.1 million, of which 72.8 million is in the line item “Receivables from customers” in the consolidated statements of financial condition. There were no material losses for unsettled customer transactions for the years ended December 31, 2024 and 2023. The following table presents information about the Company’s securities borrowing and lending activity depicting the potential effect of rights of setoff between these recognized assets and liabilities. As of December 31, 2024 Gross Amounts of Recognized Assets and Liabilities Gross Amounts Offset in the Consolidated Statements of Financial Condition 1 Net Amounts Presented in the Consolidated Statements of Financial Condition Collateral Received or Pledged 2 Net Amount 3 Assets Securities borrowed $ 139,040,000 — $ 139,040,000 $ 126,484,000 $ 12,556,000 Liabilities Securities loaned $ 184,962,000 — $ 184,962,000 $ 170,780,000 $ 14,182,000 As of December 31, 2023 Gross Amounts of Recognized Assets and Liabilities Gross Amounts Offset in the Consolidated Statements of Financial Condition 1 Net Amounts Presented in the Consolidated Statements of Financial Condition Collateral Received or Pledged 2 Net Amount 3 Assets Securities borrowed $ 394,709,000 — $ 394,709,000 $ 371,076,000 $ 23,633,000 Liabilities Securities loaned $ 419,433,000 — $ 419,433,000 $ 404,312,000 $ 15,121,000 (1) Amounts represent recognized assets and liabilities that are subject to enforceable master agreements with rights of setoff. The Company did not net any securities borrowed or securities loaned as of December 31, 2024 or 2023. (2) Represents the fair value of collateral the Company had received or pledged under enforceable master agreements. (3) Represents the total contract value as presented in the consolidated financial statements less the fair market value of the collateral received or pledged. F- 39 20. Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31, 2024 and 2023. Year Ended December 31, 2024 2023 Net income $ 13,303,000 $ 7,844,000 Less net income attributable to noncontrolling interests 17,000 18,000 Net income available to common stockholders $ 13,286,000 $ 7,826,000 Weighted-average common shares outstanding - basic 39,951,510 37,070,366 Dilutive effect of unvested shares 223,170 — Weighted-average common shares used to compute diluted loss per share 40,174,680 37,070,366 Net income per share attributable to common stockholders: Basic $ 0.33 $ 0.21 Diluted $ 0.33 $ 0.21 Basic earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated by adjusting the weighted-average number of common shares outstanding for the potential dilutive effect of securities, including the effect of unvested shares, if applicable. For the years ended December 31, 2024 and 2023, the Company had no antidilutive shares outstanding. 21. Commitments, Contingencies and Other Legal and Regulatory Matters In the normal course of business, the Company may be subject to various proceedings and claims arising from its business activities, including lawsuits, arbitration claims and regulatory matters. The Company is also involved in other reviews, investigations and proceedings by governmental and self-regulatory organizations regarding the business, which may result in adverse judgments, settlements, fines, penalties, injunctions and other relief. In many cases, however, it is inherently difficult to determine whether any loss is probable or reasonably possible or to estimate the amount or range of any potential loss, particularly where proceedings may be in relatively early stages. In the Company’s opinion, based on currently available information, the ultimate resolution of current matters will not have a material adverse impact on the Company’s financial position and results of operations as of December 31, 2024. However, resolution of one or more of these matters may have a material effect on the results of operations in any future period, depending upon the ultimate resolution of those matters and depending upon the level of income for such period. Overnight Financing As of both December 31, 2024 and 2023, MSCO had an available line of credit for short term overnight demand borrowings with BMO Harris of up to $ 25 million. As of those dates, MSCO had no outstanding loan balances with BMO Harris and there were no commitment fees or other restrictions on the line of credit. The Company utilizes customer or firm securities as a pledge for short-term borrowing needs. The interest expense for this credit line was $ 5,000 and $ 1,000 for the years ended December 31, 2024 and 2023, respectively. There were no fees associated with the utilization of this credit line for the years ended December 31, 2024 and 2023. Additionally, on November 22, 2024, MSCO entered into a Credit Agreement (the “BMO Credit Agreement”) with BMO Bank N.A. (the “Lender”), a national banking association. The BMO Credit Agreement provides for a revolving credit facility of up to $ 20,000,000 . The Company 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. As part of the agreement, the Company entered into a Parent Guaranty agreement guaranteeing repayment of any debt issued to MSCO. F- 40 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 . The Company satisfied its condition precedent to deliver a legal option to the Lender on December 18, 2024. There was no interest expense for the BMO Credit Agreement for the year ended December 31, 2024. There was a commitment fee of $ 3,000 for the year ended December 31, 2024. Credit Agreement On August 15, 2024, the Company entered into a Loan and Security Agreement (the “Credit Agreement”) with East West Bank (the “Lender”), a California banking corporation, dated as of July 29, 2024. The Credit Agreement provides for a revolving credit facility of up to $ 20,000,000 . The initial term of the Credit Agreement is two years. The Company may use any borrowings under the Credit Agreement for acquisitions, stock buybacks, and for general corporate purposes in an amount not to exceed $ 10,000,000 . Obligations under the Credit Agreement shall be guaranteed by John J. Gebbia, the Company’s Chief Executive Officer, Gloria E. Gebbia, a Director of the Company, and John J. Gebbia and Gloria E. Gebbia, as co-trustees of the John and Gloria Living Trust. Borrowings under the Credit Agreement will bear interest on the outstanding daily balance at a rate of interest per annum equal to the greater of: (a) the one-month Term Secured Overnight Financing Rate (“Term SOFR”), as administered by CME Group Benchmark Administration plus 3.15 % and (b) 7.50 %. The origination fee is equal to one half of one percent ( 0.50 %) of the $ 20,000,000 revolver cap. The Credit Agreement contains customary affirmative covenants and negative covenants and requires the Company to maintain a minimum debt service coverage ratio of not less than 1.35:1.00 and minimum net capital of $ 43,000,000 . At the Market Offering On May 27, 2022, the Company entered into a Capital on Demand TM Sales Agreement (the “Sales Agreement”) with JonesTrading as agent, pursuant to which the Company may offer and sell, from time to time through JonesTrading, shares of the Company’s common stock having an aggregate offering amount of up to $ 9.6 million under the Company’s shelf registration statement on Form S-3. The Company is not obligated to make any sales of shares under the Sales Agreement. The Company agreed to pay JonesTrading a commission rate equal to 3.0 % of the aggregate gross proceeds from each sale of shares. The Company or JonesTrading may suspend or terminate the offering upon notice to the other party and subject to other conditions. Whether the Company sells securities under the Sales Agreement will depend on a number of factors, including the market conditions at that time, the Company’s cash position at that time and the availability and terms of alternative sources of capital. For both the years ended December 31, 2024 and 2023, the Company did not sell any shares pursuant to this Sales Agreement. For both the years ended December 31, 2024 and 2023, the Company did not incur any legal or audit fees related to this Sales Agreement. Since the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 after its scheduled due date, the Company no longer satisfied the eligibility requirements for use of registration statements on Form S-3, which requires that the Company files in a timely manner all reports required to be filed during the prior twelve calendar months. As a result, the Company has suspended use of the shelf registration statement and the Company is not able to access the At the Market program as of the date of this Report. F- 41 NFS Contract Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of the arrangement through July 31, 2025, and NFS’s fees are offset against MSCO’s revenues on a monthly basis. If the MSCO chooses to exit this agreement before the end of the contract term, MSCO is under the obligation to pay an early termination fee upon occurrence pursuant to the table below: Date of Termination Early Termination Fee Prior to August 1, 2025 $ 3,250,000 For the years ended December 31, 2024 and 2023, there has been no expense recognized for any early termination fees. MSCO 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 consolidated financial statements related to this arrangement. Technology Vendors The Company has entered into agreements with technology vendors for software development related to its Retail Platform. As of December 31, 2024, the Company incurred costs of approximately $ 3.4 million for these vendors. General Contingencies In the normal course of its business, the Company indemnifies and guarantees certain service providers against specified potential losses in connection with their acting as an agent of, or providing services to, the Company. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated financial statements for these indemnifications. The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated financial statements for these indemnifications. The Company is self-insured with respect to employee health claims. The Company maintains stop-loss insurance for certain risks and has a health claim reinsurance limit capped at approximately $ 65,000 per employee as of December 31 , 2024. The estimated liability for self-insurance claims is initially recorded in the year in which the event of loss occurs and may be subsequently adjusted based upon new information and cost estimates. Reserves for losses represent estimates of reported losses and estimates of incurred but not reported losses based on past and current experience. Actual claims paid and settled may differ, perhaps significantly, from the provision for losses. This adds uncertainty to the estimated reserves for losses. Accordingly, it is at least possible that the ultimate settlement of losses may vary significantly from the amounts included in the consolidated financial statements. As part of this plan, the Company recognized expenses of $ 1,086,000 and $ 971,000 for the years ended December 31, 2024 and 2023 , respectively. The Company had an accrual of $ 76,000 and $ 64,000 as of December 31 , 2024 and 2023, respectively, which represents the estimate of future expenses to be recognized for claims incurred during the period. The Company believes that its present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that the Company will not incur liabilities in excess of recorded reserves or in excess of its insurance limits. F- 42 22. Segment Reporting The Company operates as a wholly-owned subsidiary of the Parent and is engaged in a single line of business as a securities broker-dealer providing comprehensive brokerage services including custody and clearance of retail accounts, principal transaction and proprietary trading, market making, and securities lending. The Company’s CODM, its Chief Financial Officer, reviews operating and financial information using net income as the key measure to evaluate the results of the business, predominately in the forecasting process, to manage the Company. The CODM has determined that all activities contribute to the core brokerage business and the Company operates as a single reportable segment. The Company’s operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies. Year Ended December 31, 2024 2023 Revenue Retail $ 62,388,000 $ 54,019,000 Stock loan 19,249,000 16,172,000 Market making 2,255,000 1,304,000 Consolidated overhead 9,000 19,000 Total Revenue 83,901,000 71,514,000 Expenses Retail 21,649,000 18,063,000 Stock loan 9,776,000 8,281,000 Market making 1,403,000 1,582,000 Consolidated overhead 33,605,000 25,462,000 Total Expenses 66,433,000 53,388,000 Operating income $ 17,468,000 $ 18,126,000 23. Employee Benefit Plans The Company sponsors a defined-contribution retirement plan under Section 401(k) of the Internal Revenue Code that covers substantially all employees of the Company (“401(k) plan”). Participant contributions to the 401(k) plan are voluntary and are subject to certain limitations. The Company may also make discretionary contributions to the 401(k) plan. For 401(k) employee contribution matching, the Company incurred an expense of $ 196,000 and $ 173,000 the years ended December 31, 2024 and 2023, respectively. On September 17, 2021, the Company’s shareholders approved the Siebert Financial Corp. 2021 Equity Incentive Plan (the “Plan”). The Plan provides for the grant of stock options, restricted stock, and other equity awards of the Company’s common stock to employees, officers, consultants, directors, affiliates and other service providers of the Company. There were 3 million shares reserved under the Plan and 2,214,000 and 2,704,000 shares remained as of December 31, 2024 and 2023, respectively. The table below presents the Plan restricted stock awards granted and the related fair values for the year ended December 31, 2024. Shares Weighted- Average Grant Date Fair Value Nonvested as of December 31, 2023 (1) — $ — Granted 490,000 1.74 Vested ( 340,000 ) 1.78 Nonvested as of December 31, 2024 150,000 $ 1.65 (1) The Company did not issue any share-based compensation for the year ended December 31, 2023. As of December 31, 2024, there was $ 124,000 of total unrecognized compensation cost related to nonvested shares granted. The cost is expected to be recognized over a weighted average period of 0.6 years. The Company recognized stock-based compensation expense of $ 730,000 for the year ended December 31, 2024, which included $ 460,000 within the line item “Employee compensation and benefits” and $ 270,000 fully capitalized within the line item “Software, net” in the consolidated statements of financial condition. F- 43 24. Related Party Disclosures KCA Gloria E. Gebbia, who is a director of Siebert, is the managing member of KCA. As a result, 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, during 2023 KCA had an agreement with the Company to serve as a paymaster for the Company for payroll and related functions including serving as the sponsor for the Company’s 401(k) plan. KCA passed through any expense or revenue related to this function to the subsidiaries of the Company proportionally. The Company incurred $ 40,000 of expenses related to these services for the year ended December 31, 2023. This agreement was terminated as of January 1, 2024. KCA owns a license from the Muriel Siebert Estate / Foundation to use the names “Muriel Siebert & Co., LLC” and “Siebert” within business activities, which expires in 2026. For the use of these names, KCA passed through to the Company its cost of $ 60,000 for both the years ended December 31, 2024 and 2023. Other than the above arrangements, KCA has earned no profit for providing any services to the Company for the years ended December 31, 2024 and 2023 as KCA passes through any revenue or expenses to the Company’s subsidiaries. PW PW brokers the insurance policies for related parties. Revenue for PW from related parties was $ 98,000 and $ 124,000 for the years ended December 31, 2024 and 2023, respectively. Gloria E. Gebbia, John J. Gebbia, and Gebbia Family Members The three sons of Gloria E. Gebbia and John J. Gebbia hold executive positions within the Company’s subsidiaries and their compensation was in aggregate $ 3,742,000 and $ 2,776,000 for the years ended December 31, 2024 and 2023, respectively. Part of their compensation includes payments related to key revenue streams. On May 22, 2023, Gloria E. Gebbia issued a warrant to BCW to purchase 403,780 shares of common stock of the Company held by Ms. Gebbia at an exercise price of $ 2.15 per share. Refer to Note 6 – Kakaopay Transaction for more detail. Gebbia Sullivan County Land Trust The Company operates on a five-year lease agreement for its branch office in Omaha, Nebraska with the Gebbia Sullivan County Land Trust, the trustee of which is a member of the Gebbia Family. For both the years ended December 31, 2024 and 2023, rent expense was $ 60,000 for this branch office. The Company has completed construction of its branch office in Omaha, Nebraska. Refer to Note 9 – Property, Office Facilities, and Equipment, net for further detail. Credit Agreement On August 15, 2024, the Company entered into the Credit Agreement with the Lender whereby John J. Gebbia and Gloria E. Gebbia, along with the John and Gloria Living Trust, are guaranteeing the Company’s obligations under the Credit Agreement with the Lender. Refer to Note 21 - Commitments, Contingencies, and Other for more information. Gebbia Entertainment, LLC On August 12, 2024, the Company acquired 100 % of GE, a music and entertainment company owned by John J. Gebbia, Gloria E. Gebbia, and David Gebbia. Refer to Note 3 – Business Combinations for further detail. F- 44 Kakaopay and Affiliates On 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 6 – Kakaopay Transaction for more detail. 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. Tigress The Company has entered into various agreements and subsequent terminations with Tigress. Refer to Note 4 – Transaction with Tigress for further detail. RISE In September 2022, MSCO and RISE entered into a clearing agreement whereby RISE would introduce clients to MSCO. As part of the agreement, RISE deposited a clearing fund escrow deposit of $ 50,000 to MSCO, and had excess cash of approximately $ 1.2 and $ 1.0 million in its brokerage account at MSCO as of December 31, 2024 and 2023, respectively. The resulting asset of RISE and liability of MSCO is eliminated in consolidation. There was an interest expense of $ 33,000 and $ 25,000 related to this clearing agreement for the years ended December 31, 2024 and 2023, respectively. 25. Subsequent Events The Company has evaluated events that have occurred subsequent to December 31, 2024 and through March 31, 2025, the date of the filing of this Report. During the first quarter of 2025, the Company established an Investment Banking and Capital Markets division as part of its strategic expansion. The Company has hired several experienced professionals to lead and develop this growth initiative. In connection with these hires, the Company granted an aggregate of 117,000 shares of RSUs and 950,000 RSAs under the Plan. These shares vest in accordance with the terms of the grant agreements, and the related compensation expense will be recognized over the respective vesting periods in accordance with Topic 718. These hires represent a significant investment in the Company’s future operations, however, as these employment decisions and grants occurred after the balance sheet date, they do not impact the financial position or results of operations presented in these consolidated financial statements. The Company has concluded that apart from the 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 December 31, 2024. F- 45 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None