SIEBERT FINANCIAL CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION June 30, 2025 (unaudited) December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 28,949,000 $ 32,629,000 Cash and securities segregated for regulatory purposes; (Cash of $ 101.2 million, securities with a fair value of $ 44.8 million as of June 30, 2025; Cash of $ 135.8 million, securities with a fair value of $ 68.8 million as of December 31, 2024) 146,051,000 204,587,000 Receivables from customers 79,858,000 84,367,000 Receivables from broker-dealers and clearing organizations 5,600,000 3,920,000 Receivables from non-customers 1,411,000 607,000 Other receivables 4,869,000 2,744,000 Prepaid expenses and other assets 2,317,000 2,257,000 Securities borrowed 238,721,000 139,040,000 Securities owned, at fair value 19,475,000 21,385,000 Total Current assets 527,251,000 491,536,000 Deposits with broker-dealers and clearing organizations 6,877,000 4,227,000 Property, office facilities, and equipment, net 10,124,000 10,245,000 Software, net 5,956,000 4,836,000 Other intangible assets, net 1,040,000 697,000 Lease right-of-use assets 2,025,000 2,390,000 Investments, cost 2,000,000 — Deferred tax assets 2,920,000 3,418,000 Goodwill 2,319,000 2,319,000 Total Assets $ 560,512,000 $ 519,668,000 LIABILITIES AND EQUITY Liabilities Current liabilities Payables to customers $ 217,870,000 $ 227,129,000 Payables to non-customers 226,000 3,297,000 Drafts payable 1,179,000 1,331,000 Payables to broker-dealers and clearing organizations 1,179,000 444,000 Accounts payable and accrued liabilities 4,995,000 5,240,000 Taxes payable 1,163,000 2,183,000 Securities loaned 235,674,000 184,962,000 Securities sold, not yet purchased, at fair value 7,000 26,000 Deferred contract incentive 71,000 496,000 Current portion of contract termination liability 1,673,000 1,748,000 Current portion of lease liabilities 867,000 886,000 Current portion of long-term debt 90,000 88,000 Total Current liabilities 464,994,000 427,830,000 Lease liabilities, less current portion 1,416,000 1,787,000 Long-term debt, less current portion 4,094,000 4,140,000 Contract termination liability, less current portion — 819,000 Other deferred revenue 20,000 — Total Liabilities 470,524,000 434,576,000 Equity Stockholders’ equity Common stock, $ .01 par value; 100,000,000 shares authorized; 41,419,936 shares issued and 40,419,936 shares outstanding as of June 30, 2025, respectively. 41,120,936 shares issued and 40,120,936 shares outstanding as of December 31, 2024, respectively. 415,000 412,000 Treasury stock, at cost; 1,000,000 shares held as of both June 30, 2025 and December 31, 2024 ( 2,510,000 ) ( 2,510,000 ) Additional paid-in capital 47,076,000 46,090,000 Retained earnings 44,039,000 40,094,000 Total Stockholders’ equity 89,020,000 84,086,000 Noncontrolling interests 968,000 1,006,000 Total Equity 89,988,000 85,092,000 Total Liabilities and Equity $ 560,512,000 $ 519,668,000 Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements. - 1 - SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue Commissions and fees $ 2,014,000 $ 2,603,000 $ 4,116,000 $ 4,903,000 Interest, marketing and distribution fees 6,869,000 7,835,000 13,814,000 16,598,000 Principal transactions and proprietary trading ( 3,771,000 ) 3,574,000 9,190,000 7,080,000 Market making 497,000 437,000 1,049,000 1,109,000 Stock borrow / stock loan 7,522,000 4,696,000 12,359,000 8,794,000 Advisory fees 791,000 551,000 1,539,000 1,041,000 Other income 952,000 1,167,000 1,726,000 1,794,000 Total Revenue 14,874,000 20,863,000 43,793,000 41,319,000 Expenses Employee compensation and benefits 13,388,000 10,307,000 25,310,000 20,683,000 Clearing fees, including execution costs 448,000 238,000 902,000 666,000 Technology and communications 1,045,000 880,000 2,150,000 1,756,000 Other general and administrative 1,840,000 1,070,000 3,349,000 2,099,000 Data processing 1,147,000 732,000 2,096,000 1,483,000 Rent and occupancy 442,000 378,000 909,000 875,000 Professional fees 1,451,000 1,240,000 2,810,000 2,277,000 Depreciation and amortization 629,000 336,000 1,044,000 591,000 Interest expense 98,000 60,000 187,000 111,000 Advertising and promotion 218,000 43,000 372,000 97,000 Total Expenses 20,706,000 15,284,000 39,129,000 30,638,000 Operating income (loss) ( 5,832,000 ) 5,579,000 4,664,000 10,681,000 Income (loss) before provision for income taxes ( 5,832,000 ) 5,579,000 4,664,000 10,681,000 Provision for (benefit from) income taxes ( 1,113,000 ) 1,532,000 722,000 2,947,000 Net income (loss) ( 4,719,000 ) 4,047,000 3,942,000 7,734,000 Less net income (loss) attributable to noncontrolling interests — 7,000 ( 3,000 ) 6,000 Net income (loss) available to common stockholders $ ( 4,719,000 ) $ 4,040,000 $ 3,945,000 7,728,000 Net income (loss) available to common stockholders per share of common stock Basic and diluted $ ( 0.12 ) $ 0.10 $ 0.10 $ 0.19 Weighted average shares outstanding Basic and diluted 40,399,958 39,890,606 40,296,571 39,830,002 Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements. - 2 - SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited) 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, 2024 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 50,000 1,000 — — 84,000 — 85,000 — 85,000 Net income (loss) — — — — — 3,688,000 3,688,000 ( 1,000 ) 3,687,000 Balance – March 31, 2024 40,830,936 $ 409,000 1,000,000 $ ( 2,510,000 ) $ 45,448,000 $ 30,496,000 $ 73,843,000 $ 988,000 $ 74,831,000 Share-based compensation 120,000 1,000 — — 299,000 — 300,000 — 300,000 Net income — — — — — 4,040,000 4,040,000 7,000 4,047,000 Balance – June 30, 2024 40,950,936 $ 410,000 1,000,000 $ ( 2,510,000 ) $ 45,747,000 $ 34,536,000 $ 78,183,000 $ 995,000 $ 79,178,000 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, 2025 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 Share-based compensation 237,000 2,000 — — 552,000 — 554,000 — 554,000 RISE Cash Distribution — — — — — — — ( 35,000 ) ( 35,000 ) Net income (loss) — — — — — 8,664,000 8,664,000 ( 3,000 ) 8,661,000 Balance – March 31, 2025 41,357,936 $ 414,000 1,000,000 $ ( 2,510,000 ) $ 46,642,000 $ 48,758,000 $ 93,304,000 $ 968,000 $ 94,272,000 Share-based compensation 62,000 1,000 — — 434,000 — 435,000 — 435,000 Net income (loss) — — — — — ( 4,719,000 ) ( 4,719,000 ) — ( 4,719,000 ) Balance – June 30, 2025 41,419,936 415,000 1,000,000 $ ( 2,510,000 ) $ 47,076,000 $ 44,039,000 $ 89,020,000 $ 968,000 $ 89,988,000 Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements. - 3 - SIEBERT FINANCIAL CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, 2025 2024 Cash Flows From Operating Activities Net income $ 3,942,000 $ 7,734,000 Adjustments to reconcile net income to net cash used in operating activities: Deferred income tax expense 498,000 832,000 Depreciation and amortization 1,044,000 591,000 Share-based compensation (1) 989,000 184,000 Interest related to contract termination liability payment 109,000 31,000 Changes in Securities segregated for regulatory purposes 23,921,000 28,961,000 Receivables from customers 4,509,000 ( 2,052,000 ) Receivables from non-customers ( 804,000 ) ( 214,000 ) Receivables from and deposits with broker-dealers and clearing organizations ( 4,330,000 ) ( 4,251,000 ) Securities borrowed ( 99,681,000 ) 140,928,000 Securities owned, at fair value 1,910,000 1,270,000 Prepaid expenses and other assets ( 2,185,000 ) ( 1,666,000 ) Payables to customers ( 9,259,000 ) ( 55,904,000 ) Payables to non-customers ( 3,071,000 ) ( 527,000 ) Drafts payable ( 152,000 ) ( 199,000 ) Payables to broker-dealers and clearing organizations 735,000 4,534,000 Accounts payable and accrued liabilities ( 245,000 ) 464,000 Securities loaned 50,712,000 ( 146,918,000 ) Securities sold, not yet purchased, at fair value ( 19,000 ) — Net lease liabilities ( 25,000 ) ( 2,000 ) Taxes payable ( 1,020,000 ) ( 732,000 ) NFS business development credits ( 425,000 ) ( 425,000 ) Other deferred revenue 20,000 — Contract termination liability payment ( 1,003,000 ) ( 1,000,000 ) Net cash used in operating activities ( 33,830,000 ) ( 28,361,000 ) Cash Flows From Investing Activities Purchase of office facilities and equipment ( 124,000 ) ( 68,000 ) Purchase of software ( 1,578,000 ) ( 1,667,000 ) Additions to property, office facilities, and equipment ( 243,000 ) ( 1,082,000 ) Acquisition of BMLG assets ( 441,000 ) — Investment in FusionIQ ( 2,000,000 ) — Transaction with J2 Financial — ( 35,000 ) Net cash used in investing activities ( 4,386,000 ) ( 2,852,000 ) Cash Flows From Financing Activities RISE cash distribution ( 35,000 ) — Repayments of long-term debt ( 44,000 ) ( 43,000 ) Net cash used in financing activities ( 79,000 ) ( 43,000 ) Net change in cash and cash equivalents, and cash segregated for regulatory purposes ( 38,295,000 ) ( 31,256,000 ) Cash and cash equivalents, and cash segregated for regulatory purposes - beginning of period 168,458,000 164,537,000 Cash and cash equivalents, and cash segregated for regulatory purposes - end of period $ 130,163,000 $ 133,281,000 Reconciliation of cash, cash equivalents, and cash segregated for regulatory purposes Cash and cash equivalents - end of period 28,949,000 5,200,000 Cash segregated for regulatory purposes - end of period 101,214,000 128,081,000 Cash and cash equivalents, and cash segregated for regulatory purposes - end of period $ 130,163,000 $ 133,281,000 Supplemental cash flow information Cash paid during the period for income taxes $ 1,243,000 $ 3,137,000 Cash paid during the period for interest $ 78,000 $ 80,000 Non-cash investing and financing activities Transaction with J2 Financial (2) $ — $ 350,000 Share-based compensation $ — $ 201,000 Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements. (1) Refer to Note 20 – Employee Benefit Plans for further detail. (2) Refer to Note 10 – Software, Net in the Company’s 2024 10-K for further information. - 4 - SIEBERT FINANCIAL CORP. & SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Organization and Basis of Presentation Organization 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., LLC (“MSCO”) provides retail brokerage and investment banking 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 the Financial Industry Regulatory Authority (“FINRA”), the New York Stock Exchange (“NYSE”), the Securities Investor Protection Corporation (“SIPC”), and the National Futures Association (“NFA”). ● Siebert AdvisorNXT, LLC (“SNXT”) provides investment advisory services. SNXT is a New York corporation registered with the SEC as a Registered Investment Advisor (“RIA”) under the Investment Advisers Act of 1940. ● 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 corporation and broker-dealer registered with the SEC under the Exchange Act and the Commodity Exchange Act of 1936, and member of the FINRA, SIPC, and the NFA. ● StockCross Digital Solutions, Ltd. (“STXD”) is an inactive subsidiary headquartered in Bermuda. ● Gebbia Media, LLC (“GM”) is a Florida limited liability company and provides management and promotion of sports and music talent and as well as in-house production and marketing for the Company. For purposes of this Report on Form 10-Q, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp., MSCO, SNXT, PW, STCH, RISE, STXD, and GM collectively, unless the context otherwise requires. Effective May 2025, GM changed its name from Gebbia Entertainment to Gebbia Media. The Company is headquartered in Miami Beach, FL with primary operations in Florida, New York, and California. The Company has 12 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, investment banking, 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 three and six months ended June 30, 2025 and 2024 were derived from its operations in the U.S. The Company has evaluated the impact of its recent acquisition of GM on its consolidated financial statements and has determined that the acquisition is immaterial. As of June 30, 2025, 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 GM acquisition and may report additional segments in accordance with the Financial Accounting Standards Board (“FASB”) ASC Topic 280 – “Improvements to Reportable Segment Disclosures” (“Topic 280”). - 5 - Basis of Presentation The accompanying unaudited condensed consolidated financial statements (“financial statements”) of the Company have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. The U.S. dollar is the functional currency of the Company and numbers are rounded for presentation purposes. In the opinion of management, the financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These financial statements should be read in conjunction with the financial statements and notes thereto in the Company’s 2024 Form 10-K. Reclassification Certain amounts for the three and six months ended June 30, 2024 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 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 financial statements include the accounts of Siebert and its wholly-owned and majority-owned consolidated subsidiaries. Upon consolidation, all intercompany balances and transactions are eliminated. The Company’s ownership in RISE was 68 % as of both June 30, 2025 and December 31, 2024. Refer to Note 5 – RISE in the Company’s 2024 Form 10-K for further 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 statements of operations. The portion of total equity that is attributable to noncontrolling interests for such subsidiaries is presented as noncontrolling interests in the statements of financial condition. Significant Accounting Policies The Company’s significant accounting policies are included in Note 2 – Summary of Significant Accounting Policies in the Company’s 2024 Form 10-K. During the three and six months ended June 30, 2025, there were no significant changes made to the Company’s significant accounting policies. Except as set forth below, those policies were unchanged during the three and six months ended June 30, 2025. Asset Acquisitions An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business. Asset acquisitions are accounted for by using the cost accumulation model whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values. Refer to Note 3 – Asset Acquisition for further detail. Investment in Equity Security In the first quarter of 2025, the Company participated in a private placement and acquired restricted shares of a privately held U.S. company (the “Investment in Equity Security”). These shares were subject to restrictions on transferability and did not have a readily determinable fair value at the time of acquisition. On March 31, 2025, the issuer completed its initial public offering “(IPO”), and the Company’s restricted shares converted into restricted publicly traded shares as part of the IPO process. These shares remained subject to resale restrictions and could not be sold unless a registration statement was filed with SEC or an applicable exemption from registration became available. Additional details are provided in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2025. There was significant volatility in the price of the shares, and in the three months ended March 31, 2025, the Company recorded an unrealized gain of approximately $ 9.2 million as the per share price closed at $ 85.31 on March 31, 2025. In June 2025, after the lifting of contractual sale restrictions, the Company sold the majority of its Investment in Equity Security for an average price of $ 19.00 per share. The Company recognized a total loss of $ 6.8 million and a total gain of $ 2.4 million for three and the six months ended June 30, 2025, respectively. After the U.S. company’s IPO, the investment is now classified as a Level 1 asset in the fair value hierarchy since the investment is publicly traded with quoted prices in an active market, and is in the line item “Securities owned, at fair value” on the statements of financial condition. Refer to Note 5 – Fair Value Measurements and Item 2. – Management’s Discussions and Analysis of Financial Condition and Results of Operations for further details. The Company will continue to measure its other investment at fair value in accordance with ASC 321 “Investments – Equity Securities.” - 6 - 2. New Accounting Standards Recently Issued 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. The Company is still evaluating the impact that ASU 2024-03 will have on its consolidated financial statements, but the Company expects the amendments will require significant changes to its expense disclosures. Accounting Standards Adopted in Fiscal 2025 The Company did not adopt any new accounting standards during the three and six months ended June 30, 2025. In addition, the Company has evaluated other recently issued accounting standards and does not believe that any of these standards will have a material impact on the Company’s financial statements and related disclosures as of June 30, 2025. 3. Asset Acquisition On April 30, 2025, the Company acquired certain assets from Big Machine Label Group RLS LLC (“BMLG”) related to music masters, including associated copyrights and artwork. The Company acquired these assets to expand its music business line and was accounted for as an asset purchase, in accordance with ASC 805, Business Combinations, because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset which is the recorded masters. The total cost of the acquisition was $ 441,000 , which includes cash consideration of $ 337,000 and direct transaction costs of $ 104,000 . The entire cost was allocated to the recorded masters intangible asset, which is included in the line item “Intangible assets, net” and will be amortized on a straight-line basis over an estimated useful life of 8.5 years, reflecting the contractual licensing periods with the artists. The purchase price was allocated as follows: Consideration: Cash payment $ 337,000 Direct transaction costs 104,000 Total consideration $ 441,000 Assets acquired: Recorded masters $ 441,000 Total allocated costs $ 441,000 - 7 - 4. 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 June 30, 2025 As of December 31, 2024 Receivables from and deposits with broker-dealers and clearing organizations DTCC / OCC / NSCC (1) $ 9,725,000 $ 5,777,000 Goldman Sachs & Co. LLC ("GSCO") 57,000 50,000 National Financial Services, LLC (“NFS”) 2,391,000 2,102,000 Underwriting fees receivable 206,000 — Securities fail-to-deliver 45,000 90,000 Globalshares 53,000 68,000 Other receivables — 60,000 Total Receivables from and deposits with broker-dealers and clearing organizations $ 12,477,000 $ 8,147,000 Payables to broker-dealers and clearing organizations Securities fail-to-receive $ 825,000 $ 439,000 Payables to broker-dealers 354,000 5,000 Total Payables to broker-dealers and clearing organizations $ 1,179,000 $ 444,000 (1) Depository Trust & 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”). Under the DTCC shareholders’ agreement, MSCO is required to participate in the DTCC common stock mandatory purchase. As of June 30, 2025 and December 31, 2024, MSCO had shares of DTCC common stock valued at approximately $ 1.4 M and $ 1.1 M, respectively, which are included within the line item “Deposits with broker-dealers and clearing organizations” on the statements of financial condition. In September 2022, MSCO and RISE entered into a clearing agreement whereby RISE would introduce clients to MSCO. Refer to Note 21 – Related Party Disclosures for more detail. 5. Fair Value Measurements Overview ASC 820 defines fair value, establishes a framework for measuring fair value as well as a hierarchy of fair value inputs. Refer to the below as well as Note 2 – Summary of Significant Accounting Policies in the Company’s 2024 Form 10-K for further information regarding fair value hierarchy, valuation techniques and other items related to fair value measurements. - 8 - 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 ASC 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 June 30, 2025 Level 1 Level 2 Level 3 Total Assets Cash and securities segregated for regulatory purposes U.S. government securities $ 44,837,000 $ — $ — $ 44,837,000 Securities owned, at fair value U.S. government securities $ 16,631,000 $ — $ — $ 16,631,000 Certificates of deposit — 112,000 — 112,000 Municipal securities — 325,000 — 325,000 Equity securities 2,305,000 102,000 — 2,407,000 Total Securities owned, at fair value $ 18,936,000 $ 539,000 $ — $ 19,475,000 Liabilities Securities sold, not yet purchased, at fair value Options $ 7,000 $ — $ — $ 7,000 Total Securities sold, not yet purchased, at fair value $ 7,000 $ — $ — $ 7,000 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 - 9 - The Company had U.S. government securities with the market values and maturity dates for the periods indicated below. As of June 30, 2025 Maturing in 2025 $ 44,837,000 Maturing in 2026 16,542,000 Accrued interest 89,000 Total Market value $ 61,468,000 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 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 June 30, 2025 and December 31, 2024 are not carried at fair value in the statements of financial condition: As of June 30, 2025 Carrying Value Fair Value Level 1 Level 2 Level 3 Financial assets, not measured at fair value Cash and cash equivalents $ 28,949,000 $ 28,949,000 $ 28,949,000 $ — $ — Cash – segregated for regulatory purposes 101,214,000 101,214,000 101,214,000 — — Securities borrowed 238,721,000 238,721,000 — 238,721,000 — Receivables from customers 79,858,000 79,858,000 — 79,858,000 — Receivables from non-customers 1,411,000 1,411,000 — 1,411,000 — Receivables from broker-dealers and clearing organizations 5,600,000 5,600,000 — 5,600,000 — Other receivables 4,869,000 4,869,000 — 4,869,000 — Deposits with broker-dealers and clearing organizations 6,877,000 6,877,000 — 6,877,000 — Total financial assets, not measured at fair value $ 467,499,000 $ 467,499,000 $ 130,163,000 $ 337,336,000 $ — Financial liabilities, not measured at fair value Securities loaned $ 235,674,000 $ 235,674,000 $ — $ 235,674,000 $ — Payables to customers 217,870,000 217,870,000 — 217,870,000 — Payables to non-customers 226,000 226,000 — 226,000 — Drafts payable 1,179,000 1,179,000 — 1,179,000 — Payables to broker-dealers and clearing organizations 1,179,000 1,179,000 — 1,179,000 — Deferred contract incentive 71,000 71,000 — 71,000 — Other deferred revenue 20,000 20,000 — 20,000 — Long-term debt 4,184,000 4,184,000 — 4,184,000 — Contract termination liability 1,673,000 1,673,000 — 1,673,000 — Total financial liabilities, not measured at fair value $ 462,076,000 $ 462,076,000 $ — $ 462,076,000 $ — - 10 - 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 $ — 6. Property, Office Facilities, and Equipment, Net Property, office facilities, and equipment consisted of the following as of the periods indicated: As of June 30, 2025 As of December 31, 2024 Property $ 6,815,000 $ 6,815,000 Office facilities 4,407,000 4,165,000 Equipment 1,070,000 945,000 Total Property, office facilities, and equipment 12,292,000 11,925,000 Less accumulated depreciation ( 2,168,000 ) ( 1,680,000 ) Total Property, office facilities, and equipment, net $ 10,124,000 $ 10,245,000 Total depreciation expense for property, office facilities, and equipment was $ 247,000 and $ 213,000 for the three months ended June 30, 2025 and 2024, respectively. Total depreciation expense for property, office facilities, and equipment was $ 489,000 and $ 359,000 for the six months ended June 30, 2025 and 2024, respectively. The Company invested $ 75,000 and $ 175,000 to build out its office in Omaha, Nebraska, for the three and six months ended June 30, 2024, respectively. The Company invested $ 5,000 and $ 28,000 to build out the New York office space in the World Financial Center for the three and six months ended June 30, 2025, respectively. The Company invested $ 145,000 and $ 809,000 in the three and six months ended June 30, 2024 to build out the New York office space. Depreciation expense commenced in March 2024, when the New York office space was placed into service. Miami Office Building On December 30, 2021, the Company purchased an office building located at 653 Collins Ave, Miami Beach, FL (“Miami office building”). The Miami office building contains approximately 12,000 square feet of office space and serves as the headquarters of the Company. - 11 - The Company invested $ 68,000 and $ 40,000 in the three months ended June 30, 2025 and 2024, respectively, to build out the Miami office building. The Company invested $ 188,000 and $ 98,000 in the six months ended June 30, 2025 and 2024, respectively, to build out the Miami office building. Depreciation expense commenced in April 2023 when the Miami office building was completed and placed in service. 7. Software, Net Software consisted of the following as of the periods indicated: As of June 30, 2025 As of December 31, 2024 Software $ 1,995,000 $ 1,774,000 Retail Platform 5,450,000 4,093,000 Total Software 7,445,000 5,867,000 Less accumulated amortization ( 1,489,000 ) ( 1,031,000 ) Total Software, net $ 5,956,000 $ 4,836,000 The Company contracted with a technology vendor in the fourth quarter of 2023 to support the development of an online platform for the Company’s retail customer base and corporate services clients, a mobile retail trading application, as well as upgrades to the Company’s technological and operational infrastructure to support these platforms and future growth (“Retail Platform”). The total software development cost related to the Retail Platform was $ 5,450,000 as of June 30, 2025, all of which was capitalized. Software development totaling $ 3,872,000 of the Retail Platform were placed into service in the six months ended June 30, 2025, and the amortization associated with these projects was $ 205,000 for both the three months and six months ended June 30, 2025. Total amortization of software was $ 333,000 and $ 123,000 for the three months ended June 30, 2025 and 2024, respectively. Total amortization of software was $ 458,000 and $ 232,000 for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, the Company estimates the following future amortization of software assets: Year Amount 2025 $ 690,000 2026 1,422,000 2027 1,226,000 2028 1,106,000 2029 and after 1,512,000 Total $ 5,956,000 8. Leases As of June 30, 2025, 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) on the 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 on the 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 on the statements of financial condition and the below tables display further detail on the Company’s leases. Lease Term and Discount Rate As of June 30, 2025 As of December 31, 2024 Weighted average remaining lease term – operating leases (in years) 3.0 3.3 Weighted average discount rate – operating leases 7.5 % 7.3 % - 12 - Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease cost $ 268,000 $ 251,000 $ 538,000 $ 534,000 Short-term lease cost 96,000 61,000 196,000 221,000 Variable lease cost 78,000 66,000 175,000 120,000 Total Rent and occupancy $ 442,000 $ 378,000 $ 909,000 $ 875,000 Operating cash flows from operating leases $ 290,000 $ 267,000 $ 557,000 $ 536,000 Lease Commitments Future annual minimum payments for operating leases with initial terms of greater than one year as of June 30, 2025 were as follows: Year Amount 2025 $ 503,000 2026 864,000 2027 613,000 2028 522,000 2029 58,000 Remaining balance of lease payments 2,560,000 Less: difference between undiscounted cash flows and discounted cash flows 277,000 Lease liabilities $ 2,283,000 9. Goodwill and Other Intangible Assets, Net Goodwill As of June 30, 2025 and December 31, 2024, the Company’s carrying amount of goodwill was both $ 2,319,000 . As of June 30, 2025, $ 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 GM. As of June 30, 2025, management concluded that there have been no impairments to the carrying value of the Company’s goodwill and no impairment charges related to goodwill were recognized during the three and six months ended June 30, 2025 and 2024. Refer to Note 2 – Summary of Significant Accounting Policies in the Company’s 2024 Form 10-K for further information. Other Intangible Assets, Net As a result of the Company’s acquisition of GM, the Company acquired intangible assets consisting of GM 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 $ 49,000 and $ 97,000 for the three and six months ended June 30, 2025. On April 30, 2025, the Company acquired certain assets from BMLG related to music masters, including associated copyrights and artwork. The acquisition was accounted for as an asset purchase, in accordance with ASC 805, Business Combinations, because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset which is the recorded masters. The entire cost of $ 441,000 was allocated to the recorded masters intangible asset, which will be amortized on a straight-line basis over an estimated useful life of 8.5 years, reflecting the contractual licensing periods with the artists. - 13 - As of June 30, 2025, the Company estimates the following future amortization of other intangible assets: Year Amount 2025 $ 134,000 2026 249,000 2027 249,000 2028 168,000 2029 and after 240,000 Total $ 1,040,000 10. Investments, Cost In the second quarter of 2025, the Company made strategic investments for a total of $ 2.0 million in IQvestment Holdings, LLC, (“FusionIQ”) a cloud-native digital wealth management platform for financial advisors and institutions. As of June 30, 2025, the Company maintained a 3 % ownership interest in FusionIQ. As part of its investment in FusionIQ, the Company has certain voting rights as protective provisions requiring the Company’s consent to amend the operating agreement, pay dividends, incur indebtedness in excess of $ 750,000 or enter into a related party transaction of $ 100,000 or more. The investment does not have a readily determinable fair value since FusionIQ is a private company and its shares are not publicly traded. Accordingly, the Company elected the measurement alternative under ASC 321, whereby the investment is measured at cost, less impairment, if any, and adjusted for observable price changes in orderly transactions for the identical or similar investment of the same issuer. As of June 30, 2025, management concluded that its investment in FusionIQ was not impaired and that no additional events or changes in circumstances were identified that could have a significant effect on the original valuation of the investment. 11. 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, and the Company entered into a mortgage with East West Bancorp, Inc. (“East West Bank”) for approximately $ 4 million to finance part of the purchase of the Miami office building as well as $ 338,000 to finance part of the build out of the Miami office building. As of June 30, 2025 and December 31, 2024, the Company’s outstanding balance of the mortgage was $ 4,184,000 and $ 4,228,000 , 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 June 30, 2025, the Company was in compliance with all of its covenants related to this agreement. Remaining Payments Future remaining annual minimum principal payments for the mortgage with East West Bank as of June 30, 2025 were as follows: Year Amount 2025 $ 44,000 2026 91,000 2027 95,000 2028 98,000 2029 112,000 Thereafter 3,744,000 Total $ 4,184,000 The interest expense related to this mortgage was $ 39,000 and $ 38,000 for the three months ended June 30, 2025, and 2024, respectively. The interest expense related to this mortgage was $ 77,000 for both the six months ended June 30, 2025, and 2024. As of June 30, 2025, the interest rate for this mortgage was 3.6 %. - 14 - 12. Deferred Contract Incentive Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extended the term of the 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” on the statements of financial condition. Annual credits shall be paid on the anniversary of the date on which the first credit was paid. The business development credit and annual credits will be recognized as contra expense over four years and one year , respectively, in the line item “Clearing fees, including execution costs” on the statements of 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 $ 213,000 in contra expense for both the three months ended June 30, 2025 and 2024. For both the six months ended June 30, 2025 and 2024, the Company recognized $ 425,000 in contra expense. As of June 30, 2025 and December 31, 2024, the balance of the deferred contract incentive was $ 71,000 and $ 496,000 , respectively. 13. Revenue Recognition Refer to Note 2 – Summary of Significant Accounting Policies in Company’s 2024 Form 10-K for detail on the Company’s primary sources of revenue and the corresponding accounting treatment. There were no significant changes to the accounting policies for revenue recognition, and except as set forth below, the Company’s accounting policies were unchanged during the three and six months ended June 30, 2025. Principal Transactions and Proprietary Trading The Company continuously invests in treasury bill and treasury notes as part of its normal operations to meet deposit requirements, which are primarily in the line item “Cash and securities segregated for regulatory purposes” on the statements of financial condition, in order to enhance its yield on its excess 15c3-3 deposits. In the first quarter of 2025, the Company recorded an unrealized gain of approximately $ 9.2 million in relation to the Investment in Equity Security. In the second quarter of 2025, the Company sold the majority of its Investment in Equity Security realizing a gain of approximately $ 2.4 million for the six months ended June 30, 2025. Refer to Note 1 – Organization and Basis of Presentation, Note 5 – Fair Value Measurements, and Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations for further detail. Disaggregation of Revenue 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, administrative fees to retail clients including for maintenance and other ancillary services, advisory fee revenue from investment management services provided to clients, investment banking fees for underwriting, advisory, and capital markets services, and income generated from digital streaming, licensing fees, physical music sales, and other performance-rights sources. 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. - 15 - 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. Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues from Contracts with Customers Principal transactions and proprietary trading Riskless principal transactions with customers $ 2,453,000 $ 3,285,000 $ 6,161,000 $ 6,720,000 Investment banking and advisory fees 206,000 — 206,000 — Commissions and fees Brokerage commissions 1,515,000 1,950,000 3,058,000 3,842,000 Distribution fees 343,000 379,000 701,000 705,000 Insurance commissions 156,000 274,000 357,000 356,000 Stock borrow / stock loan Retail fees (rebates) 4,000 ( 3,000 ) 10,000 ( 12,000 ) Stock locate services 5,957,000 4,208,000 9,989,000 7,806,000 Other income Administrative fees 426,000 823,000 857,000 1,164,000 Payment for order flow 413,000 317,000 756,000 612,000 Other commissions — 27,000 — 18,000 Recorded music revenue 113,000 — 113,000 — Advisory fees 791,000 551,000 1,539,000 1,041,000 Total Revenues from Contracts with Customers $ 12,377,000 $ 11,811,000 $ 23,747,000 $ 22,252,000 Revenue Outside the Scope of Topic 606 Principal transactions and proprietary trading Proprietary trading $ 373,000 $ 289,000 $ 393,000 $ 360,000 Principal transactions – Investment in Equity Security ( 6,803,000 ) — 2,430,000 — Interest, marketing and distribution fees Margin interest 3,513,000 3,831,000 6,908,000 7,807,000 Interest income 2,838,000 3,498,000 5,888,000 7,779,000 Marketing and distribution fees 518,000 506,000 1,018,000 1,012,000 Stock borrow / stock loan Stock rebate revenue 1,561,000 491,000 2,360,000 1,000,000 Market making 497,000 437,000 1,049,000 1,109,000 Total Revenue Outside the Scope of Topic 606 2,497,000 9,052,000 20,046,000 19,067,000 Total Revenue $ 14,874,000 $ 20,863,000 $ 43,793,000 $ 41,319,000 14. Income Taxes The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary. As of June 30, 2025, the Company has concluded that its deferred tax assets are realizable on a more-likely-than-not basis with the exception of investments that are expected to generate capital losses when realized. - 16 - For the three and six months ended June 30, 2025, the Company recorded an income tax benefit of $ 1,113,000 and an income tax provision of $ 722,000 on pre-tax book loss of $ 5,832,000 and pre-tax book income of $ 4,664,000 , respectively. The effective tax rate for the three and six months ended June 30, 2025 was 19.1 % and 15.5 % respectively. The effective tax rate differs from the federal statutory rate of 21 % primarily related to the Company’s ability to utilize certain deferred tax assets for capital loss carryforwards to offset expected capital gains on its Investment in Equity Security. These capital loss carryforwards were not previously realizable on a more-likely-than-not basis and the Company has reversed a portion of its valuation allowance resulting in an income tax benefit. For the three and six months ended June 30, 2024, the Company recorded an income tax provision of $ 1,532,000 and $ 2,947,000 on pre-tax book income of $ 5,579,000 and $ 10,681,000 . The effective tax rate for the three and six months ended June 30, 2024 was 27.5 % and 27.6 % respectively. The effective tax rate differs from the federal statutory rate of 21 % primarily related to certain permanent tax differences and state and local taxes. As of both June 30, 2025 and December 31, 2024, the Company recorded an uncertain tax position of $ 1,354,000 related to various tax matters, which is included in the line item “Taxes payable” in the statements of financial condition. On July 4, 2025, President Trump signed H.R. 1, the One Big Beautiful Bill Act (“OBBBA”), into law. In accordance with U.S. GAAP, specifically ASC 740 – Income Taxes, we will account for the tax effects of changes in tax law in the period of enactment which is in the third quarter of 2025. We are currently in the process of analyzing the tax impacts of the law change but we do not expect a material impact on our effective tax rate. 15. 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 June 30, 2025, MSCO’s net capital was $ 62.4 million, which was approximately $ 60.5 million in excess of its required net capital of $ 1.9 million, and its percentage of aggregate debit balances to net capital was 66.45 %. 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 %. 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 June 30, 2025, MSCO had cash and securities deposits of $ 144.7 million (cash of $ 99.9 million, securities with a fair value of $ 44.8 million) in the special reserve accounts which was $ 3.8 million in excess of the deposit requirement of $ 140.9 million. MSCO had no adjustments for deposit(s) and / or withdrawal(s) made on July 1, 2025. 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 June 30, 2025, the Company was subject to the PAB Account Rule 15c3-3 of the SEC which requires segregation of funds in a special reserve account for the exclusive benefit of proprietary accounts of introducing broker-dealers. As of June 30, 2025, the Company had $ 1.3 million in the special reserve account which was approximately $ 0.2 million in excess of the deposit requirement of approximately $ 1.1 million. The Company made no subsequent deposits or withdrawals on July 1, 2025. 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. - 17 - 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 June 30, 2025, RISE’s regulatory net capital was approximately $ 1.2 million which was $ 0.9 million in excess of its minimum requirement of $ 250,000 under 15c3-1. As of December 31, 2024, RISE’s regulatory net capital was approximately $ 1.3 million which was $ 1.0 million in excess of its minimum requirement of $ 250,000 under 15c3-1. 16. Financial Instruments with Off-Balance Sheet Risk The Company enters into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and is, therefore, subject to varying degrees of market and credit risk. Refer to the below as well as Note 19 – Financial Instruments with Off-Balance Sheet Risk in the Company’s 2024 Form 10-K for further information. As of June 30, 2025, the Company had margin loans extended to its customers of approximately $ 394.2 million, of which $ 79.9 million is within the line item “Receivables from customers” on the statements of financial condition. 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” on the statements of financial condition. There were no material losses for unsettled customer transactions for the three and six months ended June 30, 2025 and 2024. 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 June 30, 2025 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 FMV - Collateral Received or Pledged 2 Net Amount 3 Assets Securities borrowed $ 238,721,000 $ — $ 238,721,000 $ 227,061,000 $ 11,660,000 Liabilities Securities loaned $ 235,674,000 $ — $ 235,674,000 $ 223,407,000 $ 12,267,000 - 18 - 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 FMV - 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 (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 June 30, 2025 or December 31, 2024. (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 financial statements less the fair market value of the collateral received or pledged. 17. Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share for the three and six months ended June 30, 2025 and 2024. Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income (loss) $ ( 4,719,000 ) $ 4,047,000 $ 3,942,000 $ 7,734,000 Less net income (loss) attributable to noncontrolling interests — 7,000 ( 3,000 ) 6,000 Net income available to common stockholders $ ( 4,719,000 ) $ 4,040,000 $ 3,945,000 $ 7,728,000 Weighted-average common shares outstanding - basic 40,399,958 39,890,606 40,296,571 39,830,002 Dilutive effect of unvested shares 422,481 — 239,021 — Weighted-average common shares used to compute diluted loss per share 40,822,439 39,890,606 40,535,592 39,830,002 Net income (loss) per share attributable to common stockholders: Basic $ ( 0.12 ) $ 0.10 $ 0.10 $ 0.19 Diluted $ ( 0.12 ) $ 0.10 $ 0.10 $ 0.19 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, if applicable. For the three and six months ended June 30, 2025, the Company had 0 and 300,000 antidilutive shares outstanding, respectively. These restricted stock units were excluded from the computation of diluted net income per share because the effect would be anti-dilutive. The Company had no anti-dilutive shares outstanding as of December 31, 2024. - 19 - 18. 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 June 30, 2025. 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 June 30, 2025 and December 31, 2024, MSCO had an available line of credit for short term overnight demand borrowing with BMO Harris Bank (“BMO Harris”) of up to $ 25 million. As of those dates, MSCO had no outstanding loan balance and there were no commitment fees or other restrictions on 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 $ 0 and $ 1,000 for the three months ended June 30, 2025 and 2024, respectively. The interest expense for this credit line was $ 1,000 and $ 3,000 for the six months ended June 30, 2025 and 2024, respectively. There were no fees related to this line of credit for the three or six months ended June 30, 2025 and 2024. BMO Credit Agreement 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. Borrowings under the BMO Credit Agreement bears 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 three and six months ended June 30, 2025 and 2024. The fee for this credit line was $ 38,000 and $ 0 for the three months ended June 30, 2025 and 2024. The fee for this credit line was $ 61,000 and $ 0 for the six months ended June 30, 2025 and 2024. - 20 - 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 bears 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 . Shelf Registration Statement and At the Market Offering On May 30, 2025, the Company filed a shelf registration statement on Form S-3 that was declared effective on June 9, 2025 by the SEC for the potential offering, issuance and sale of up to $ 100.0 million of our common stock, preferred stock, warrants to purchase the Company’s common stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these securities. For the three and six months ended June 2025, the Company did not sell any shares pursuant to this Sales Agreement. For the three and six months ended June 30, 2025, the Company incurred approximately $ 0 and $ 79,000 , respectively, in legal and audit fees related to the shelf registration statement and Sales Agreement. 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 for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. If the Company chooses to exit this agreement before the end of the contract term, the Company is under the obligation to pay an early termination fee upon occurrence pursuant to the table below: Date of Termination Early Termination Fee Prior to August 1, 2025 $ 3,250,000 For the three and six months ended June 30, 2025 and 2024, there has been no expense recognized for any early termination fees. The Company believes that it is unlikely it will have to make material payments related to early termination fees and has not recorded any contingent liability in the financial statements related to this arrangement. Technology Vendor The Company has entered into agreements with primary technology vendors for software development related to its Retail Platform. As of June 30, 2025, the Company incurred costs of approximately $ 4.5 million for these vendors. - 21 - General Contingencies The Company’s general contingencies are included in Note 21 – Commitments, Contingencies, and Other in the Company’s 2024 Form 10-K. Other than the below, there have been no material updates to the Company’s general contingencies during the three and six months ended June 30, 2025. The Company is self-insured with respect to employee health claims. As part of this plan, the Company recognized expenses of $ 249,000 and $ 332,000 for the three months ended June 30, 2025 and 2024, respectively. The Company had an accrual of $ 120,000 and $ 76,000 as of June 30, 2025 and December 31, 2024, respectively, which represents the estimate of future expense to be recognized for claims incurred during the periods. For the six months ended June 30, 2025 and 2024, the Company recognized expenses of $ 634,000 and $ 726,000 , respectively. 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. 19. Segment Reporting The Company operates 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 Chief Operating Decision Maker (“CODM”), its Chief Financial Officer, reviews operating and financial information of the Company as a whole as presented on the statements of operations as well as the financial table in Note 13 – Revenue Recognition, and uses 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. 20. 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 (“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 plan. For 401(k) employee contribution matching, the Company incurred expense of $ 32,000 and $ 28,000 for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, the Company incurred an expense of $ 184,000 and $ 163,000 , 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 990,000 and 2,214,000 and shares remained as of June 30, 2025 and December 31, 2024, respectively. - 22 - The table below presents the Plan awards granted and the related fair values for the six months ended June 30, 2025. Shares Weighted- Average Grant Date Fair Value Nonvested as of December 31, 2024 150,000 $ 1.65 Forfeited ( 50,000 ) 1.65 Granted 1,112,000 2.77 Vested ( 237,000 ) 2.27 Nonvested as of March 30, 2025 975,000 $ 2.78 Granted 162,000 2.91 Vested ( 62,000 ) 3.44 Nonvested as of June 30, 2025 1,075,000 $ 2.76 As of June 30, 2025, there was $ 2,607,000 of total unrecognized compensation cost related to nonvested shares granted. The cost is expected to be recognized over a weighted average period of 2.61 years. The Company recognized stock-based compensation expense of $ 435,000 and $ 300,000 for the three months ended June 30, 2025 and 2024, respectively. $ 435,000 and $ 99,000 of this expense is included in the line item “Employee compensation and benefits” for the three months ended June 30, 2025 and 2024, respectively. The Company did not capitalize any stock-based compensation expense for the three months ended June 30, 2025. $ 0 and $ 178,000 of this expense is fully capitalized within the line item “Software, net” in the consolidated statements of financial condition for the six months ended June 30, 2024. The Company recognized stock-based compensation expense of $ 989,000 and $ 385,000 for the six months ended June 30, 2025 and 2024, respectively. $ 989,000 and $ 184,000 of this expense is included in the line item “Employee compensation and benefits” for the six months ended June 30, 2025 and 2024, respectively. The Company did not capitalize any stock-based compensation expense for the six months ended June 30, 2025. $ 0 and $ 201,000 of this expense is fully capitalized within the line item “Software, net” in the consolidated statements of financial condition for the six months ended June 30, 2024. 21. Related Party Disclosures KCA KCA owns a license from the Muriel Siebert Estate / Foundation to use the names “Muriel Siebert & Co., Inc.” and “Siebert” within business activities, which expires in 2025. For the use of these names, KCA passed through to the Company its cost of $ 0 and $ 15,000 for the three months ended June 30, 2025 and 2024, respectively. For both the six months ended June 30, 2025 and 2024, KCA passed through to the Company its cost of $ 0 and $ 30,000 , respectively. Other than the above arrangements, KCA has earned no profit for providing any services to the Company as KCA passed through any revenue or expenses to the Company’s subsidiaries for the three and six months ended June 30, 2025 and 2024. - 23 - PW PW brokers the insurance policies for related parties. Revenue for PW from related parties was $ 56,000 and $ 45,000 for the three months ended June 30, 2025 and 2024, respectively. Revenue for PW from related parties was $ 62,000 and $ 49,000 for the six months ended June 30, 2025 and 2024, 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 $ 987,000 and $ 746,000 for the three months ended June 30, 2025 and 2024, respectively. The compensation for the sons of Gloria E. Gebbia and John J. Gebbia was in aggregate $ 1,859,000 and $ 1,539,000 for the six months ended June 30, 2025 and 2024, respectively. Part of their compensation includes payments related to key revenue streams. On May 22, 2023, Gloria E. Gebbia issued a warrant to BCW Securities LLC, a Delaware limited liability company, to purchase 403,780 shares of common stock of the Company held by Gloria E. Gebbia at an exercise price of $ 2.15 per share. Refer to Note 6 - Kakaopay Transaction in the Company’s 2024 Form 10-K for further information. Gebbia Sullivan County Land Trust The Company operates on a month-to-month lease agreement for its branch office in Omaha, Nebraska with the Gebbia Sullivan County Land Trust, the trustee of which is a member of the Gebbia Family. For both the three months ended June 30, 2025 and 2024, rent expense was $ 15,000 for this branch office. For both the six months ended June 30, 2025 and 2024, rent expense was $ 30,000 for this branch office. The Company has completed construction of its branch office in Omaha, Nebraska. Refer to Note 6 – 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 18 - Commitments, Contingencies, and Other for more information. Gebbia Media, LLC On August 12, 2024, the Company acquired 100 % of GM, a music and entertainment company owned by members of the Gebbia family. In addition to providing management and promotion of sports and music talent, and catalogue acquisition, it also provides in-house marketing and advertising services for the Company, Refer to Note 3 – Business Combinations in the Company’s 2024 Form 10-K for further information. - 24 - 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 in the Company’s 2024 Form 10-K for further information. 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. RISE In September 2022, MSCO and RISE entered into a clearing arrangement 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 $ 1.1 million and $ 1.2 million in its brokerage account at MSCO as of June 30, 2025 and December 31, 2024, respectively. The resulting assets of RISE and liabilities of MSCO are eliminated in consolidation. At the Market Offering On June 27, 2025, Siebert Financial Corp. entered into a Sales Agreement with MSCO and Ladenburg Thalmann & Co. Inc., allowing for the sale of up to $ 50 million in common stock through “at-the-market” offerings under an effective shelf registration. The agents will receive a 3.0 % commission of gross proceeds, and the Company may suspend or terminate sales at any time. Refer to Note 18 - Commitments, Contingencies, and Other for further information. 22. Subsequent Events The Company has evaluated events that have occurred subsequent to June 30, 2025 and through August 12, 2025, the date of the filing of this Report. Based on the Company’s assessment, there have been no material subsequent events that occurred during such period that would require disclosure in this Report or would be required to be recognized in the financial statements as of June 30, 2025. - 25 -