Core Perspective - Siebert Financial Corp. has launched Siebert.Valor, a Financial Technology initiative aimed at democratizing wealth-building for Active Duty Military, Veterans, Law Enforcement, and First Responders [1][4] Group 1: Initiative Overview - Siebert.Valor is a result of Siebert's acquisition of Guild Financial, which focuses on providing financial education and investment services to the military community [2][3] - Kaj Larsen, co-founder of Guild Financial, will lead the Siebert.Valor initiative, leveraging his expertise in both military and financial sectors [2][4] Group 2: Mission and Values - The initiative aims to honor and serve military service members, veterans, and their families by providing tailored financial education and investment services [3][4] - Siebert.Valor seeks to extend financial literacy and opportunity across underserved communities, aligning with the legacy of Muriel Siebert, the first woman to own a seat on the New York Stock Exchange [3][6] Group 3: Community Engagement - Siebert.Valor pre-launched by sponsoring events during Fleet Week in Miami, including financial literacy talks and community activities [6] - The initiative embodies values of service, integrity, and commitment, aiming to make the American Dream accessible to clients [4][6] Group 4: Future Directions - In addition to leading Siebert.Valor, Kaj Larsen will also play a significant role in Gebbia Entertainment, focusing on content production for financial education [7] - Gebbia Entertainment will support Siebert Financial with entertainment investments across various projects [7]

Core Viewpoint - Siebert Financial Corp. has launched Siebert.Valor, a Financial Technology initiative aimed at democratizing wealth-building for Active Duty Military, Veterans, Law Enforcement, and First Responders [1][3]. Group 1: Initiative Overview - Siebert.Valor is a continuation of Guild Financial's mission to serve military service members and their families by providing tailored financial education and investment services [3][4]. - The initiative is led by Kaj Larsen, co-founder of Guild Financial, who brings expertise from both military and financial sectors [2][4]. Group 2: Strategic Goals - Siebert.Valor aims to enhance financial literacy and opportunity for underserved communities, aligning with the legacy of Muriel Siebert, the first woman to own a seat on the NYSE [3][5]. - The platform will integrate Siebert's financial expertise with Guild's innovative and community-focused approach to investing and education [4][5]. Group 3: Community Engagement - Siebert.Valor pre-launched by sponsoring events during Fleet Week in Miami, including financial literacy talks and community activities [5]. - The initiative embodies values of service, integrity, and commitment, focusing on empowering those who have served the country [6]. Group 4: Company Background - Guild Financial was founded on Veterans Day 2021, focusing on the financial needs of the military community [7]. - Siebert Financial Corp. has been a diversified financial services company since 1967, providing a full range of brokerage and financial advisory services [8][9].

Financial Performance - Total revenue for Q1 2024 was $20,456,000, an increase of 26.5% compared to $16,170,000 in Q1 2023[19] - Net income available to common stockholders for Q1 2024 was $3,688,000, up from $3,196,000 in Q1 2023, representing a 15.4% increase[19] - Commissions and fees increased to $2,300,000 in Q1 2024, a rise of 24.5% from $1,847,000 in Q1 2023[19] - Interest, marketing, and distribution fees rose to $8,763,000, up 25.6% from $6,973,000 in the same period last year[19] - Net income for the three months ended March 31, 2024, was $3,687,000, an increase of 14.7% compared to $3,215,000 for the same period in 2023[22] - The company reported a basic and diluted net income per share of $0.09 for Q1 2024, compared to $0.10 in Q1 2023[19] - Retail customer net worth increased to $16.6 billion as of March 31, 2024, up from $15.9 billion at the end of 2023, representing a growth of approximately 4.4%[140] Assets and Liabilities - Total current assets decreased to $713,022,000 as of March 31, 2024, down from $773,850,000 at the end of 2023, a decline of 7.8%[18] - Total liabilities decreased to $667,472,000 as of March 31, 2024, compared to $731,091,000 at the end of 2023, a reduction of 8.7%[18] - Stockholders' equity increased to $73,843,000 as of March 31, 2024, up from $69,720,000 at the end of 2023, an increase of 5.1%[18] - Total assets as of March 31, 2024, were $742.303 million, a decrease of $59.497 million or 7.4% from December 31, 2023, primarily due to reduced cash and regulatory securities[159] - Liabilities decreased to $667.472 million as of March 31, 2024, down by $63.619 million or 8.7% from the end of 2023, mainly due to lower payables to customers[160] Cash Flow and Investments - Net cash used in operating activities was $62,041,000 for Q1 2024, compared to $39,014,000 in Q1 2023, indicating a significant increase in cash outflow[22] - Cash and cash equivalents at the end of the period were $2,856,000, down from $3,927,000 a year earlier, reflecting a decrease of 27.3%[22] - Total cash and cash equivalents, and cash and securities segregated for regulatory purposes decreased to $221,029,000 from $259,544,000, a decline of 14.8%[22] - The company reported a net cash used in investing activities of $1,761,000 for Q1 2024, compared to $1,017,000 in Q1 2023, showing an increase in investment expenditures[22] - Cash used in operating activities increased by $23.0 million for the three months ended March 31, 2024, primarily due to changes in receivables and securities transactions[174] - Cash used in investing activities rose by $0.7 million compared to the prior year, driven by the New York office build-out and Retail Platform development[175] Employee Compensation and Benefits - Employee compensation and benefits for Q1 2024 were $10,376,000, a significant increase of 48.5% compared to $6,967,000 in Q1 2023[19] - The Company recognized $394,000 in expenses for employee health claims for the three months ended March 31, 2024, compared to $180,000 for the same period in 2023[107] - The Company granted 50,000 restricted stock units at a price of $1.70, recognizing an equity stock compensation expense of $85,000 for the three months ended March 31, 2024[111] - The Company incurred $135,000 in expenses for 401(k) employee contribution matching for the three months ended March 31, 2024, compared to $0 for the same period in 2023[109] Regulatory and Compliance - The company expects considerable changes to its income tax footnote due to the new accounting standard ASU 2023-09, effective for annual periods beginning after December 15, 2024[42] - The company recorded an uncertain tax position of $1,405,000 related to various tax matters as of March 31, 2024[182] - The Company has suspended the use of its registration statement on Form S-3 due to late filing of its 2023 Form 10-K[126] - The Company is in the process of selecting a new independent registered public accounting firm following the resignation of Baker Tilly US, LLP[127] - Management is implementing measures to remediate material weaknesses in internal controls, expected to be completed by the end of 2024[191] Financing Activities - Draws on bank loans totaled $4,800,000 in Q1 2024, with repayments of long-term debt at $21,000, reflecting a net cash inflow from financing activities of $4,779,000[22] - The net capital infusion from Kakaopay was approximately $14.8 million after issuance costs, enhancing the company's regulatory capital[162] - The Company had an outstanding loan balance of $4.8 million as of March 31, 2024, under a line of credit with BMO Harris Bank[103] - Operating lease commitments total $3,187,000, with significant payments due in 2024 ($669,000) and 2025 ($861,000)[166] - Kakaopay fee obligations amount to $4,500,000, with a $5 million payment scheduled in ten quarterly installments starting March 29, 2024[166] Technology and Development - The Company incurred approximately $1.8 million out of a total budget of $3.3 million for technology vendor development projects related to its Retail Platform as of March 31, 2024[106] - The company has incurred approximately $664,000 of the estimated $800,000 build-out costs for the New York office as of March 31, 2024[168] - The company invested $58,000 in the Miami office building during the three months ended March 31, 2024, compared to $565,000 for the same period in 2023[66] - The company recorded a total rent and occupancy cost of $497,000 for the three months ended March 31, 2024, compared to $478,000 in 2023[73] Securities Transactions - Securities borrowed amounted to $383,670,000 as of March 31, 2024, while securities loaned were $389,474,000, indicating significant activity in securities transactions[40] - Total payables to broker-dealers and clearing organizations increased to $2,003,000 as of March 31, 2024, from $481,000 as of December 31, 2023[49] - Stock borrow/stock loan revenue for the three months ended March 31, 2024, was $4,098,000, compared to $3,442,000 in 2023[86] - Principal transactions and proprietary trading increased to $3.506 million in Q1 2024, a rise of $706,000 or 20.1% from Q1 2023, attributed to improved market conditions[143]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-5703 Siebert Financial Corp. (Exact name of registrant as specified in its charter) New York 11-1796714 (State or other jurisdiction of i ...

Financial Performance - Commissions and fees for Q3 2023 were $1,986,000, an increase of $236,000 compared to Q3 2022, primarily due to market conditions [161]. - Interest, marketing, and distribution fees for Q3 2023 were $7,194,000, up by $1,990,000 from the same period last year, driven by rising interest rates [162]. - Principal transactions and proprietary trading for Q3 2023 totaled $3,753,000, an increase of $2,800,000 from Q3 2022 [163]. - Employee compensation and benefits for Q3 2023 were $8,723,000, an increase of $1,433,000 from the prior year, mainly due to higher commission payouts [170]. - Commissions and fees for the nine months ended September 30, 2023 were $5,839,000, a decrease of $104,000 (2%) from the prior year [178]. - Interest, marketing, and distribution fees for the nine months ended September 30, 2023 were $21,583,000, an increase of $10,866,000 (101%) from the prior year [179]. - Principal transactions and proprietary trading for the nine months ended September 30, 2023 were $9,207,000, an increase of $7,440,000 (404%) from the prior year [180]. - The provision for income taxes for the nine months ended September 30, 2023 was $3,621,000, an increase of $4,457,000 from the prior year [193]. Customer Metrics - Retail customer net worth increased to $14.6 billion as of September 30, 2023, up from $13.5 billion at the end of 2022 [158]. - Retail customer accounts grew to 128,727 as of September 30, 2023, compared to 122,394 at the end of 2022 [158]. Assets and Liabilities - Total assets as of September 30, 2023 were $771,146,000, an increase of $43,098,000 (6%) from December 31, 2022 [196]. - Total liabilities as of September 30, 2023 were $699,581,000, an increase of $21,453,000 (3%) from December 31, 2022 [197]. - Cash and cash equivalents decreased to $4.9 million as of September 30, 2023, down from $23.7 million as of December 31, 2022 [201]. Capital and Funding - The net capital infusion from Kakaopay to Siebert from the First Tranche was approximately $15.4 million, enhancing regulatory capital [199]. - The company maintains capital and segregated cash reserves in excess of regulatory requirements, ensuring compliance with SEC rules [207]. - The company has adequate reserves and contingency funding plans to meet regulatory requirements, with sufficient net capital reported for both MSCO and RISE [208]. Expenses - Rent and occupancy expenses for Q3 2023 were $467,000, a decrease of $95,000 from the prior year due to the termination of certain short-term leases [172]. - Professional fees for the three months ended September 30, 2023 were $979,000, an increase of $105,000 (12%) from the prior year [173]. - Interest expense for the three months ended September 30, 2023 was $40,000, a decrease of $68,000 (63%) from the prior year [174]. Cash Flow - For the nine months ended September 30, 2023, the company reported negative operating cash flow primarily due to changes in receivables and payables, as well as securities borrowed and loaned [210]. - The company had investing cash outflows related to the build-out of the Miami office building and technology initiatives for both the nine months ended September 30, 2023 and 2022 [210][211]. Tax Matters - As of September 30, 2023, the company recorded an uncertain tax position of $1,596,000 related to various tax matters, included in "Taxes payable" on the financial statements [217]. Regulatory Compliance - Customer transactions are cleared through brokers on a fully disclosed basis, with regular monitoring for compliance with margin requirements [224]. - The company does not engage in derivative transactions and has no liabilities for the debt of another entity [221]. - There were no material losses for unsettled customer transactions for the three and nine months ended September 30, 2023 and 2022 [214]. Agreements and Contracts - MSCO entered into a five-year service agreement with Broadridge Securities Processing Solutions, with a total minimum expense estimated at approximately $1.3 million [213]. - The company entered into a Capital on Demand Sales Agreement with JonesTrading for an aggregate offering amount of up to $9.6 million, but did not sell any shares under this agreement for the three and nine months ended September 30, 2023 and 2022 [206]. Shareholder Information - Siebert's largest stockholders, the Gebbia Stockholders, control approximately 43% of the outstanding equity securities prior to the closing of the Second Tranche [149].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission file number 0-5703 Siebert Financial Corp. New York 11-1796714 (I.R.S. Employer Identification No.) 535 Fif ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Siebert Financial Corp. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation or Organization) New York 11-1796714 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ ...

PART I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) Siebert Financial Corp. is a diversified financial services firm offering brokerage, investment advisory, insurance, and corporate stock plan administration - Siebert Financial Corp. is a diversified financial services firm providing brokerage, investment advisory, insurance, and corporate stock plan administration services through its subsidiaries[12](index=12&type=chunk) - Key subsidiaries include MSCO (retail brokerage, clearing), SNXT (robo-advisory), PW (insurance), and STCH (technology development)[18](index=18&type=chunk) - The company operates 12 branch offices across the U.S. and had 117 full-time employees as of March 20, 2023[14](index=14&type=chunk)[64](index=64&type=chunk) - MSCO expanded its clearing services in May 2022 to act as a correspondent clearing firm for institutional and online broker-dealers, RIAs, and other asset managers[16](index=16&type=chunk) - SNXT offers proprietary robo-advisory technology utilizing Nobel Prize-winning Modern Portfolio Theory (MPT) to create optimal portfolios for clients[34](index=34&type=chunk) - The company faces significant competition from various financial institutions and is subject to extensive regulation, including the Dodd-Frank Act, Regulation Best Interest, and net capital requirements[42](index=42&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[59](index=59&type=chunk) [ITEM 1A. RISK FACTORS](index=15&type=page&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant regulatory, technological, operational, market, and common stock risks impacting its business and financial performance - New laws, rules, and regulations, or changes in their interpretation, could negatively impact business and financial results, increasing compliance costs and potentially limiting business lines[68](index=68&type=chunk)[71](index=71&type=chunk) - The company is subject to extensive government regulation by bodies like the SEC, FINRA, and MSRB, covering all aspects of the securities business, and faces risks of third-party litigation and regulatory proceedings[73](index=73&type=chunk)[74](index=74&type=chunk)[77](index=77&type=chunk) - Reliance on information processing and communications systems, including third-party platforms, poses risks of system failures, data breaches, and cybersecurity attacks, which could lead to significant liabilities and reputational damage[79](index=79&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - Acquisitions and business growth strategies involve risks such as integration difficulties, failure to achieve synergies, diversion of management attention, and assumption of unknown liabilities[93](index=93&type=chunk)[99](index=99&type=chunk) - The common stock may experience extreme price volatility due to factors beyond company fundamentals, including retail investor sentiment, speculation, and short squeezes, potentially leading to significant short-term price fluctuations[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - The business is highly susceptible to securities market volatility, interest rate changes, economic slowdowns, and intense competition from larger, more diversified firms, which can significantly impact revenues and operating results[114](index=114&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=25&type=page&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments to report - No unresolved staff comments[123](index=123&type=chunk) [ITEM 2. PROPERTIES](index=25&type=section&id=ITEM%202.%20PROPERTIES) The company operates 12 branch offices across the U.S., with its corporate headquarters in New York, NY, and other key locations - The company operates 12 branch offices across the U.S., with its corporate headquarters in New York, NY[124](index=124&type=chunk) Company Branch Offices and Approximate Square Footage | Location | Approximate Square Feet | | :--- | :--- | | Corporate Headquarters: New York, NY - 535 Fifth Avenue | 300 | | Beverly Hills, CA – 190 N Canon | 900 | | Beverly Hills, CA – 9378 Wilshire | 3,500 | | Boca Raton, FL | 1,600 | | Boston, MA | 1,700 | | Calabasas, CA | 3,200 | | Horsham, PA | 2,000 | | Jersey City, NJ | 11,000 | | Miami, FL | 11,600 | | Omaha, NE | 2,900 | | Seal Beach, CA | 800 | | Tampa, FL | 1,000 | | Troy, MI | 300 | [ITEM 3. LEGAL PROCEEDINGS](index=25&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course legal claims, including a material FINRA investigation into prior UIT transactions by acquired entity StockCross - FINRA is investigating UIT transactions executed by StockCross prior to the company's acquisition, believing they were terminated early[126](index=126&type=chunk) - The outcome of the FINRA investigation is uncertain, and sanctions or restitution offers could be material[127](index=127&type=chunk) - Management believes all other legal matters are without merit or would not materially impact financial results[128](index=128&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[129](index=129&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=27&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Siebert Financial Corp.'s common stock trades on Nasdaq, experiencing volatility, with dividends considered and shares available under an equity incentive plan - Common stock trades on the Nasdaq Capital Market under the symbol "SIEB"[132](index=132&type=chunk) - As of March 20, 2023, there were 75 holders of record and approximately 4,304 beneficial holders of common stock[132](index=132&type=chunk) - The Board of Directors considers dividends based on earnings, capital requirements, and economic forecasts[133](index=133&type=chunk) - The common stock has been relatively thinly traded and subject to price volatility, with an average daily trading volume of approximately 25,010 shares from January 1, 2022, to December 31, 2022[134](index=134&type=chunk) Equity Compensation Plan Information (as of December 31, 2022) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | — | NA | 2,704,000 | | Equity compensation plans not approved by security holders | — | NA | NA | | Total | — | NA | 2,704,000 | - Unregistered sales of equity securities in 2022 included 186,000 restricted stock units as compensation and 1,449,525 shares issued to Tigress in 2021[136](index=136&type=chunk)[137](index=137&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=29&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSIONS%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) The company's financial results, highly correlated with market conditions, showed a net loss in 2022 due to decreased revenue and impairment losses, despite expense reductions - The company's financial results are highly correlated to general economic conditions and the direction of U.S. equity and fixed-income markets[146](index=146&type=chunk) - Transactions with Tigress and Hedge Connection resulted in a one-time loss of approximately $4.7 million for the year ended December 31, 2022, including a $4.0 million impairment of the investment in Tigress[152](index=152&type=chunk) - Termination of clearing arrangements with GSCO and Pershing led to a loss of approximately $12.6 million in revenue and $1.8 million in pre-tax income from institutional customers in 2021[154](index=154&type=chunk) - The company is enhancing its retail trading platform with a new technology provider to provide a seamless user experience and streamline operations[157](index=157&type=chunk) Client Account Metrics (in billions) | Metric | As of December 31, 2022 | As of December 31, 2021 | | :--- | :--- | :--- | | Retail and institutional customer net worth | $13.5 | $17.3 | | Retail customer net worth | $13.5 | $16.8 | | Retail customer margin debit balances | $0.4 | $0.5 | | Retail customer credit balances | $0.6 | $0.8 | | Retail customer money market fund value | $0.6 | $0.8 | | Retail customer accounts | 122,394 | 115,380 | | Institutional customer net worth | $— | $0.5 | Statements of Operations Summary (Year Ended December 31) | Revenue Category | 2022 ($000) | 2021 ($000) | Change ($000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Commissions and fees | 7,477 | 18,252 | (10,775) | -59.03% | | Interest, marketing and distribution fees | 17,234 | 12,897 | 4,337 | 33.63% | | Principal transactions | 3,743 | 15,647 | (11,904) | -76.08% | | Market making | 2,443 | 5,897 | (3,454) | -58.57% | | Stock borrow / stock loan | 14,518 | 11,864 | 2,654 | 22.37% | | Advisory fees | 1,862 | 1,668 | 194 | 11.63% | | Other income | 2,825 | 1,282 | 1,543 | 120.36% | | **Total Revenue** | **50,102** | **67,507** | **(17,405)** | **-25.78%** | | **Total Expenses** | **49,662** | **60,925** | **(11,263)** | **-18.49%** | | Operating income | 440 | 6,582 | (6,142) | -93.31% | | Net income (loss) | (2,990) | 5,033 | (8,023) | -159.40% | | Net income (loss) available to common stockholders | (1,990) | 5,063 | (7,053) | -139.30% | | Basic and diluted EPS | (0.06) | 0.16 | (0.22) | -137.50% | Statements of Financial Condition Summary (as of December 31) | Category | 2022 ($000) | 2021 ($000) | Change ($000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 728,048 | 1,404,235 | (676,187) | -48.15% | | Total Liabilities | 678,128 | 1,353,729 | (675,601) | -49.91% | | Total Stockholders' Equity | 48,949 | 49,263 | (314) | -0.64% | | Total Equity | 49,920 | 50,506 | (586) | -1.16% | Cash Requirements (as of December 31, 2022) | Category | 2023 ($000) | 2024 ($000) | 2025 ($000) | 2026 ($000) | Thereafter ($000) | Total ($000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease commitments | 1,246 | 588 | 450 | 234 | 48 | 2,566 | | Mortgage with East West Bank | 75 | 84 | 88 | 91 | 4,048 | 4,386 | | Loan with East West Bank | 998 | 1,661 | — | — | — | 2,659 | | **Total** | **2,319** | **2,333** | **538** | **325** | **4,096** | **9,611** | - MSCO's net capital was **$30.6 million** as of December 31, 2022, exceeding its **$1.4 million** requirement by **$29.2 million**. RISE's net capital was **$1.2 million**, exceeding its **$250,000** minimum by **$0.9 million**[422](index=422&type=chunk)[428](index=428&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=41&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company avoids derivatives, faces minimal interest rate risk on most assets, but manages credit risk from counterparties and customers through monitoring and collateral - The company does not directly engage in derivative transactions[217](index=217&type=chunk) - Cash and cash equivalents are invested in dollar-denominated bank accounts, which are not subject to material changes in value due to interest rate movements[218](index=218&type=chunk) - Securities segregated for regulatory purposes, including U.S. government securities, may be subject to temporary value changes due to interest rate movements, but the company intends to hold them to maturity[219](index=219&type=chunk) - The company is exposed to credit risk if customers or counterparties fail to fulfill obligations, but monitors activity and requires collateral to mitigate this risk, with no material losses in the last five years[220](index=220&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=42&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents audited consolidated financial statements, with an unqualified auditor opinion, and detailed notes on accounting policies, related party transactions, and capital - Baker Tilly US, LLP issued an unqualified opinion on the consolidated financial statements for 2022 and 2021[224](index=224&type=chunk) - The impairment of equity method investment in Tigress was identified as a critical audit matter due to significant management judgment in fair value determination[228](index=228&type=chunk)[231](index=231&type=chunk) Consolidated Statements of Financial Condition (as of December 31) | ASSETS | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Cash and cash equivalents | 23,672 | 3,758 | | Cash and securities segregated for regulatory purposes | 276,166 | 326,826 | | Receivables from customers | 52,057 | 85,327 | | Receivables from broker-dealers and clearing organizations | 9,094 | 8,185 | | Receivables from non-customers | 100 | 81 | | Other receivables | 2,119 | 2,242 | | Prepaid service contract - current | — | 709 | | Prepaid expenses and other assets | 2,055 | 1,596 | | Securities borrowed | 336,909 | 939,518 | | Securities owned, at fair value | 3,204 | 3,991 | | **Total Current assets** | **705,376** | **1,372,233** | | Deposits with broker-dealers and clearing organizations | 1,311 | 5,541 | | Prepaid service contract – non-current | — | 295 | | Property, office facilities, and equipment, net | 8,328 | 7,463 | | Software, net | 991 | 752 | | Lease right-of-use assets | 2,222 | 2,662 | | Equity method investments in related parties | 2,584 | 8,156 | | Investments, cost | 850 | 850 | | Deferred tax assets | 4,397 | 4,294 | | Goodwill | 1,989 | 1,989 | | **Total Assets** | **728,048** | **1,404,235** | | **LIABILITIES** | | | | Payables to customers | 321,391 | 376,670 | | Payables to non-customers | 11,506 | 17,430 | | Drafts payable | 2,384 | 1,804 | | Payables to broker-dealers and clearing organizations | 660 | 254 | | Accounts payable and accrued liabilities | 2,507 | 3,677 | | Taxes payable | 1,052 | 1,748 | | Securities loaned | 327,180 | 931,735 | | Securities sold, not yet purchased, at fair value | 2 | 24 | | Notes payable - related party | — | 7,000 | | Current portion of lease liabilities | 1,158 | 1,234 | | Current portion of long-term debt | 1,073 | 998 | | Current portion of deferred contract incentive | 808 | 808 | | **Total Current liabilities** | **669,721** | **1,343,382** | | Lease liabilities, less current portion | 1,245 | 1,699 | | Long-term debt, less current portion | 5,974 | 6,710 | | Deferred contract incentive, less current portion | 1,188 | 1,938 | | **Total Liabilities** | **678,128** | **1,353,729** | | **STOCKHOLDERS' EQUITY** | | | | Common stock | 325 | 324 | | Additional paid-in capital | 29,642 | 27,967 | | Retained earnings | 18,982 | 20,972 | | **Total Stockholders' equity** | **48,949** | **49,263** | | Noncontrolling interests | 971 | 1,243 | | **Total Equity** | **49,920** | **50,506** | | **Total Liabilities and Equity** | **728,048** | **1,404,235** | Consolidated Statements of Operations (Year Ended December 31) | Revenue | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Commissions and fees | 7,477 | 18,252 | | Interest, marketing and distribution fees | 17,234 | 12,897 | | Principal transactions | 3,743 | 15,647 | | Market making | 2,443 | 5,897 | | Stock borrow / stock loan | 14,518 | 11,864 | | Advisory fees | 1,862 | 1,668 | | Other income | 2,825 | 1,282 | | **Total Revenue** | **50,102** | **67,507** | | **Expenses** | | | | Employee compensation and benefits | 28,734 | 36,424 | | Clearing fees, including execution costs | 2,143 | 4,817 | | Technology and communications | 4,471 | 4,762 | | Other general and administrative | 4,010 | 3,686 | | Data processing | 3,169 | 2,849 | | Rent and occupancy | 1,955 | 1,930 | | Professional fees | 3,202 | 2,695 | | Depreciation and amortization | 995 | 1,445 | | Referral fees | — | 1,213 | | Impairment loss | — | 699 | | Interest expense | 440 | 361 | | Advertising and promotion | 543 | 44 | | **Total Expenses** | **49,662** | **60,925** | | Operating income | 440 | 6,582 | | Earnings of equity method investment in related parties | 4 | 172 | | Impairment of equity method investment in related party | (4,015) | — | | Loss on sale of equity method investment in related parties | (719) | — | | Non-operating income (loss) | (4,730) | 172 | | Income (loss) before provision for (benefit from) income taxes | (4,290) | 6,754 | | Provision for (benefit from) income taxes | (1,300) | 1,721 | | Net income (loss) | (2,990) | 5,033 | | Less net loss attributable to noncontrolling interests | (1,000) | (30) | | Net income (loss) available to common stockholders | (1,990) | 5,063 | | Net income (loss) available to common stockholders per share of common stock (Basic and diluted) | (0.06) | 0.16 | | Weighted average shares outstanding (Basic and diluted) | 32,408,449 | 31,316,119 | Consolidated Statements of Cash Flows (Year Ended December 31) | Cash Flows From Operating Activities | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Net income (loss) | (2,990) | 5,033 | | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | Deferred income tax expense (benefit) | (655) | 523 | | Depreciation and amortization | 995 | 1,445 | | Net lease liabilities | (90) | (51) | | Downward adjustment due to changes in observable prices | — | 63 | | Loss on impairment | — | 699 | | Earnings of equity method investment in related parties | (4) | (172) | | Impairment of equity method investment in related party | 4,015 | — | | Loss on sale of equity method investment in related parties | 719 | — | | Share-based compensation | 461 | — | | Changes in: | | | | Receivables from customers | 33,270 | 10,031 | | Receivables from non-customers | (19) | (81) | | Receivables from and deposits with broker-dealers and clearing organizations | 3,321 | 9,298 | | Securities borrowed | 602,609 | (33,733) | | Securities owned, at fair value | 787 | (1,368) | | Prepaid expenses and other assets | (335) | (51) | | Prepaid service contract | 711 | 809 | | Payables to customers | (55,279) | (3,854) | | Payables to non-customers | (5,924) | 5,860 | | Drafts payable | 580 | (2,217) | | Payables to broker-dealers and clearing organizations | 406 | (1,556) | | Accounts payable and accrued liabilities | (1,170) | (100) | | Securities loaned | (604,555) | 10,924 | | Securities sold, not yet purchased, at fair value | (22) | 3 | | Taxes payable | (696) | 1,292 | | Deferred contract incentive | (750) | 2,746 | | **Net cash provided by (used in) operating activities** | **(24,615)** | **5,543** | | **Cash Flows From Investing Activities** | | | | Equity method investment in related party | — | (64) | | Purchase of Openhand common stock | — | (850) | | Distribution from equity method investment in related party | 259 | — | | Purchase of office facilities and equipment | (284) | (296) | | Purchase of property | — | (6,815) | | Build out of property | (985) | — | | Purchase of software | (830) | (343) | | **Net cash (used in) investing activities** | **(1,840)** | **(8,368)** | | **Cash Flows From Financing Activities** | | | | Issuance of RISE membership interests | 600 | — | | Transfers of RISE membership interests | 240 | — | | Net change in notes payable – related party | (4,470) | 1,800 | | Net change in long-term debt | (661) | 3,053 | | **Net cash provided by (used in) financing activities** | **(4,291)** | **4,853** | | Net change in cash and cash equivalents, and cash and securities segregated for regulatory purposes | (30,746) | 2,028 | | Cash and cash equivalents, and cash and securities segregated for regulatory purposes - beginning of year | 330,584 | 328,556 | | Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of year | 299,838 | 330,584 | [Note 1. Organization](index=51&type=section&id=Note%201.%20Organization) Siebert Financial Corp. is a holding company incorporated in 1934, operating through wholly-owned and majority-owned subsidiaries in securities brokerage and asset management - Siebert Financial Corp. is a holding company incorporated in 1934, operating through wholly-owned and majority-owned subsidiaries in securities brokerage and asset management[244](index=244&type=chunk)[245](index=245&type=chunk) - Key subsidiaries include MSCO (retail brokerage), SNXT (investment advisory), PW (insurance), STCH (technology development), RISE (broker-dealer), and STXD (inactive)[251](index=251&type=chunk) - The company operates as a single operating segment, with all revenues derived from U.S. operations[246](index=246&type=chunk)[254](index=254&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=51&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements are prepared in conformity with U.S. GAAP, consolidating Siebert and its subsidiaries, with investments in non-majority-owned affiliates using the equity method - Financial statements are prepared in conformity with U.S. GAAP, consolidating Siebert and its wholly-owned/majority-owned subsidiaries, eliminating intercompany balances[247](index=247&type=chunk)[249](index=249&type=chunk) - Investments in non-majority-owned partnerships and affiliates are accounted for using the equity method[248](index=248&type=chunk)[252](index=252&type=chunk) - The company evaluates entities as Variable Interest Entities (VIEs) quarterly and consolidates those for which it is the primary beneficiary, as was the case for RISE from March 31, 2022[249](index=249&type=chunk)[253](index=253&type=chunk) - Fair value measurements are categorized into a three-level hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[259](index=259&type=chunk)[260](index=260&type=chunk) - Revenue recognition policies vary by stream: commissions, principal transactions, and market making are recognized on trade date; stock borrow/loan on contract date; advisory fees over time; and interest, marketing, and distribution fees as earned[307](index=307&type=chunk)[308](index=308&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[314](index=314&type=chunk)[316](index=316&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) - The company accounts for income taxes under the asset and liability method, recognizing deferred tax assets and liabilities, and evaluates their realization based on future taxable income and tax-planning strategies[326](index=326&type=chunk)[327](index=327&type=chunk) [Note 3. Transactions with Tigress and Hedge Connection](index=64&type=section&id=Note%203.%20Transactions%20with%20Tigress%20and%20Hedge%20Connection) The company engaged in complex transactions with Tigress and Hedge Connection, including equity exchanges and an impairment charge on the Tigress investment - In November 2021, the company acquired 24% of Tigress in exchange for 24% of RISE and Siebert common stock[333](index=333&type=chunk) - A Reorganization Agreement on October 18, 2022, resulted in the company exchanging 7% of Tigress for all of Tigress's ownership in RISE, leading to a net loss of **$92,000**[334](index=334&type=chunk)[335](index=335&type=chunk) - An impairment test on October 18, 2022, due to adverse market conditions and declining performance, led to a **$4.015 million** impairment charge on the investment in Tigress[336](index=336&type=chunk) - In January 2022, RISE acquired 20% of Hedge Connection and an option for the remainder, in exchange for **$600,000** and 3.33% of RISE[338](index=338&type=chunk) - The Hedge Connection agreement was terminated on October 18, 2022, with the company re-conveying its interest in Hedge Connection in exchange for 3.17% of RISE and cancellation of a **$250,000** note payable, resulting in a net loss of **$627,000**[339](index=339&type=chunk)[341](index=341&type=chunk) [Note 4. RISE](index=65&type=section&id=Note%204.%20RISE) Siebert's ownership in RISE fluctuated through equity exchanges and asset increases, leading to its consolidation as a Variable Interest Entity - During Q1 2022, RISE issued 8.3% of its membership interests for a **$1 million** asset increase, and Siebert sold 2% of RISE to employees/affiliates[343](index=343&type=chunk) - On March 31, 2022, Siebert exchanged **$2.88 million** in notes payable to Gloria E. Gebbia for 24% ownership in RISE, reducing Siebert's direct ownership to approximately 44%[344](index=344&type=chunk) - Siebert consolidated RISE as a Variable Interest Entity (VIE) from March 31, 2022, to October 18, 2022, and continued consolidation under the Voting Interest Entity (VOE) model thereafter as its ownership increased to 68%[345](index=345&type=chunk)[346](index=346&type=chunk) - As of December 31, 2022, RISE reported assets of **$1.3 million** and liabilities of **$0.1 million**[347](index=347&type=chunk) [Note 5. Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations](index=65&type=section&id=Note%205.%20Receivables%20From%2C%20Payables%20To%2C%20and%20Deposits%20With%20Broker-Dealers%20and%20Clearing%20Organizations) This note details receivables from and payables to broker-dealers and clearing organizations, with ongoing termination of certain clearing relationships Receivables From and Deposits With Broker-Dealers and Clearing Organizations (as of December 31) | Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | DTCC / OCC / NSCC | 8,187 | 10,968 | | GSCO | 31 | 335 | | Pershing | 96 | 1,193 | | NFS | 2,006 | 974 | | Securities fail-to-deliver | 3 | 174 | | Globalshares | 82 | 55 | | Other receivables | — | 27 | | **Total Receivables from and deposits with broker-dealers and clearing organizations** | **10,405** | **13,726** | Payables to Broker-Dealers and Clearing Organizations (as of December 31) | Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Securities fail-to-receive | 396 | 254 | | Payables to broker-dealers | 264 | — | | **Total Payables to broker-dealers and clearing organizations** | **660** | **254** | - The company is in the process of terminating its clearing relationships with GSCO and Pershing, with full termination anticipated by the end of Q1 2023[353](index=353&type=chunk) [Note 6. Prepaid Service Contract](index=67&type=section&id=Note%206.%20Prepaid%20Service%20Contract) The company terminated a technology development agreement, resulting in a write-off of a prepaid balance and recognition of other income - In April 2020, the company entered an agreement with a technology partner for **$2.1 million** (cash and restricted stock) to develop a new client and back-end interface[354](index=354&type=chunk) - In September 2022, the company and the technology partner mutually agreed to terminate their services, resulting in the write-off of a **$532,000** prepaid service contract balance and receipt of **$950,000** in other income[356](index=356&type=chunk) - Total expense related to the technology partner was **$711,000** in 2022, down from **$959,000** in 2021[357](index=357&type=chunk) [Note 7. Fair Value Measurements](index=67&type=section&id=Note%207.%20Fair%20Value%20Measurements) This note details financial assets and liabilities measured at fair value, including an impairment charge on the Tigress investment using Level 3 inputs Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (as of December 31, 2022) | Assets | Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | | :--- | :--- | :--- | :--- | :--- | | Cash and securities segregated for regulatory purposes: U.S. government securities | 140,978 | — | — | 140,978 | | Securities owned, at fair value: U.S. government securities | 2,808 | — | — | 2,808 | | Securities owned, at fair value: Certificates of deposit | — | 92 | — | 92 | | Securities owned, at fair value: Municipal securities | — | 52 | — | 52 | | Securities owned, at fair value: Corporate bonds | — | 7 | — | 7 | | Securities owned, at fair value: Equity securities | 63 | 182 | — | 245 | | **Total Securities owned, at fair value** | **2,871** | **333** | **—** | **3,204** | | Liabilities | | | | | | Securities sold, not yet purchased, at fair value: Equity securities | 2 | — | — | 2 | | **Total Securities sold, not yet purchased, at fair value** | **2** | **—** | **—** | **2** | Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (as of December 31, 2021) | Assets | Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | | :--- | :--- | :--- | :--- | :--- | | Securities owned, at fair value: U.S. government securities | 2,966 | — | — | 2,966 | | Securities owned, at fair value: Certificates of deposit | — | 91 | — | 91 | | Securities owned, at fair value: Corporate bonds | — | 12 | — | 12 | | Securities owned, at fair value: Equity securities | 489 | 433 | — | 922 | | **Total Securities owned, at fair value** | **3,455** | **536** | **—** | **3,991** | | Liabilities | | | | | | Securities sold, not yet purchased, at fair value: Equity securities | — | 24 | — | 24 | | **Total Securities sold, not yet purchased, at fair value** | **—** | **24** | **—** | **24** | - The company recognized an impairment charge of approximately **$4.015 million** for its investment in Tigress for the year ended December 31, 2022, measured using income and market approaches (Level 3 inputs)[362](index=362&type=chunk) - Short-term financial instruments, receivables, payables, securities borrowed/loaned, notes payable – related party, deferred contract incentive, and long-term debt are recorded at amounts approximating fair value, primarily classified as Level 2[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk) [Note 8. Property, Office Facilities, and Equipment, Net](index=70&type=section&id=Note%208.%20Property%2C%20Office%20Facilities%2C%20and%20Equipment%2C%20Net) This note details the company's property, office facilities, and equipment, including the Miami office building purchase and related depreciation Property, Office Facilities, and Equipment, Net (as of December 31) | Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Property | 6,815 | 6,815 | | Office facilities | 2,616 | 1,608 | | Equipment | 674 | 413 | | **Total Property, office facilities, and equipment** | **10,105** | **8,836** | | Less accumulated depreciation | (1,777) | (1,373) | | **Total Property, office facilities, and equipment, net** | **8,328** | **7,463** | - Total depreciation expense for property, office facilities, and equipment was **$404,000** in 2022 and **$410,000** in 2021[371](index=371&type=chunk) - The company purchased the Miami office building for approximately **$6.8 million** in December 2021 and invested **$985,000** in its build-out in 2022, with depreciation to commence in Q1 2023[372](index=372&type=chunk)[373](index=373&type=chunk) [Note 9. Software, Net](index=71&type=section&id=Note%209.%20Software%2C%20Net) This note details the company's software assets, including robo-advisor and other software, with ongoing development for a new retail trading platform Software, Net (as of December 31) | Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Robo-advisor | 763 | 763 | | Other software | 3,342 | 2,512 | | **Total Software** | **4,105** | **3,275** | | Less accumulated amortization – robo-advisor | (763) | (763) | | Less accumulated amortization – other software | (2,351) | (1,760) | | **Total Software, net** | **991** | **752** | - Total amortization of software was **$590,000** in 2022, down from **$925,000** in 2021[375](index=375&type=chunk) - The company partnered with a technology partner in Q4 2022 to develop a new retail trading platform, with **$241,000** in development work incurred in 2022 and amortization to begin in Q2 2023[374](index=374&type=chunk) [Note 10. Leases](index=71&type=section&id=Note%2010.%20Leases) All leases are operating leases, primarily for office space, with details on lease terms, discount rates, costs, and future minimum payments - All leases are classified as operating leases, primarily for office space, expiring between 2023 and 2027[376](index=376&type=chunk) Lease Term and Discount Rate (as of December 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Weighted average remaining lease term – operating leases (in years) | 2.7 | 2.9 | | Weighted average discount rate – operating leases | 5.0% | 5.0% | Lease Costs (Year Ended December 31) | Cost Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Operating lease cost | 1,299 | 1,653 | | Short-term lease cost | 366 | 97 | | Variable lease cost | 290 | 180 | | **Total Rent and occupancy** | **1,955** | **1,930** | Future Annual Minimum Payments for Operating Leases (as of December 31, 2022) | Year | Amount ($000) | | :--- | :--- | | 2023 | 1,246 | | 2024 | 588 | | 2025 | 450 | | 2026 | 234 | | 2027 | 48 | | **Remaining balance of lease payments** | **2,566** | | Less: Difference between undiscounted cash flows and discounted cash flows | 163 | | **Lease liabilities** | **2,403** | [Note 11. Equity Method Investments in Related Parties](index=72&type=section&id=Note%2011.%20Equity%20Method%20Investments%20in%20Related%20Parties) This note details the company's equity method investment in Tigress, including ownership changes, recognized losses, and cash distributions - The company's investment in Tigress is accounted for under the equity method, with a 17% ownership interest as of December 31, 2022, following a reorganization[379](index=379&type=chunk)[380](index=380&type=chunk) - The loss recognized from the investment in Tigress was **$16,000** in 2022, compared to earnings of **$172,000** in 2021[381](index=381&type=chunk) - Cash distributions received from Tigress were **$259,000** in 2022; none in 2021[382](index=382&type=chunk) Tigress Summary Consolidated Statements (Unaudited) | Metric | Year Ended December 31, 2022 ($000) | Year Ended December 31, 2021 ($000) | | :--- | :--- | :--- | | Revenue | 8,432 | 15,000 | | Operating income (loss) | (132) | 4,800 | | Net income (loss) | (132) | 4,800 | | Assets | 8,169 | 10,793 | | Liabilities | 5,301 | 6,096 | | Stockholders' Equity | 2,868 | 4,697 | - The investment in Hedge Connection was accounted for under the equity method prior to its termination, recognizing **$20,000** in earnings in 2022[385](index=385&type=chunk) [Note 12. Investments, Cost](index=73&type=section&id=Note%2012.%20Investments%2C%20Cost) This note details the company's cost investment in OpenHand, including its acquisition, partial termination, and recognized loss on sale - In January 2021, the company acquired 5% of OpenHand common stock for **$2.231 million** (cash and restricted shares)[387](index=387&type=chunk) - The agreement with OpenHand was terminated in August 2021, resulting in the company retaining 2% of OpenHand for **$850,000** cash and rescinding the stock issuance[389](index=389&type=chunk) - A loss on sale of **$63,000** was recognized in 2021 due to the amendment[392](index=392&type=chunk) - The carrying value of the investment in OpenHand remained **$850,000** as of December 31, 2022 and 2021, with no impairment[392](index=392&type=chunk) [Note 13. Long-Term Debt](index=75&type=section&id=Note%2013.%20Long-Term%20Debt) This note details the company's long-term debt, including a mortgage and a loan with East West Bank, and compliance with covenants - The company has a **$4.386 million** mortgage with East West Bank, partially financing the Miami office building, with a 3.6% interest rate for the first 7 years and a 30-year amortization period[393](index=393&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk) Mortgage with East West Bank - Remaining Principal Payments (as of December 31, 2022) | Year | Amount ($000) | | :--- | :--- | | 2023 | 75 | | 2024 | 84 | | 2025 | 88 | | 2026 | 91 | | Thereafter | 4,048 | | **Total** | **4,386** | - A loan with East West Bank had an outstanding balance of **$2.659 million** as of December 31, 2022, with a 7.5% interest rate and a four-year term[396](index=396&type=chunk)[401](index=401&type=chunk) Loan with East West Bank - Remaining Principal Payments (as of December 31, 2022) | Year | Amount ($000) | | :--- | :--- | | 2023 | 998 | | 2024 | 1,661 | | **Total** | **2,659** | - The company was in compliance with all covenants related to its debt agreements as of December 31, 2022[394](index=394&type=chunk)[399](index=399&type=chunk) [Note 14. Notes Payable - Related Party](index=76&type=section&id=Note%2014.%20Notes%20Payable%20-%20Related%20Party) This note details the company's notes payable to related parties, including Gloria E. Gebbia and Hedge Connection, and associated interest expense - As of December 31, 2022, the company had no outstanding balance on notes payable to Gloria E. Gebbia and Hedge Connection, which totaled **$3.6 million** in 2022[402](index=402&type=chunk) Notes Payable – Related Party (as of December 31, 2021) | Description | Issuance Date | Face Amount ($000) | Unpaid Principal Amount ($000) | | :--- | :--- | :--- | :--- | | 4.00% due December 30, 2022 | December 30, 2021 | 2,000 | 2,000 | | 4.00% due June 30, 2022 | December 31, 2021 | 2,000 | 2,000 | | 4.00% due November 30, 2022 | November 30, 2020 | 3,000 | 3,000 | | **Total Notes payable – related party** | | **7,000** | **7,000** | - Interest expense for these notes payable was **$151,000** in 2022, down from **$206,000** in 2021[404](index=404&type=chunk) [Note 15. Deferred Contract Incentive](index=77&type=section&id=Note%2015.%20Deferred%20Contract%20Incentive) This note details the deferred contract incentive from the NFS clearing agreement amendment, including credits received and recognized contra expense - An amendment to the NFS clearing agreement, effective August 1, 2021, extended the term to July 31, 2025[405](index=405&type=chunk) - The company received a one-time **$3 million** business development credit and four annual **$100,000** credits from NFS, recorded as deferred contract incentive[406](index=406&type=chunk) - The company recognized **$850,000** in contra expense in 2022, up from **$354,000** in 2021[407](index=407&type=chunk) - The balance of the deferred contract incentive was approximately **$2.0 million** as of December 31, 2022, down from **$2.7 million** in 2021[407](index=407&type=chunk) [Note 16. Principal Transactions and Proprietary Trading](index=77&type=section&id=Note%2016.%20Principal%20Transactions%20and%20Proprietary%20Trading) This note details principal transactions and proprietary trading activities, including investments in treasury bills and unrealized losses on government securities - In 2022, the company invested in treasury bills and notes to enhance yield on excess 15c3-3 deposits[408](index=408&type=chunk) - An increase in U.S. government securities yields in 2022 resulted in an unrealized loss of approximately **$3.9 million** on the government securities portfolio[408](index=408&type=chunk) Principal Transactions and Proprietary Trading (Year Ended December 31) | Category | 2022 ($000) | 2021 ($000) | Year over Year Decrease ($000) | | :--- | :--- | :--- | :--- | | Realized and unrealized gain on primarily riskless principal transactions | 7,643 | 15,675 | (8,032) | | Unrealized loss on portfolio of U.S. government securities | (3,900) | (28) | (3,872) | | **Total Principal transactions and proprietary trading** | **3,743** | **15,647** | **(11,904)** | [Note 17. Soft Dollar Arrangement](index=77&type=section&id=Note%2017.%20Soft%20Dollar%20Arrangement) The company had soft dollar and commission sharing arrangements for certain RISE clients, recognizing revenue net of costs in commissions and fees - For certain RISE clients, the company had soft dollar and commission sharing arrangements, charging additional fees on trades to pay third parties for research and brokerage services[411](index=411&type=chunk)[412](index=412&type=chunk) - Revenue from these arrangements was recognized net of cost in "Commissions and fees" on the statements of operations[412](index=412&type=chunk) - Client expenses related to these arrangements decreased significantly from **$625,000** in 2021 to **$8,000** in 2022[413](index=413&type=chunk) [Note 18. Referral Fees](index=77&type=section&id=Note%2018.%20Referral%20Fees) Referral fees, primarily related to RISE operations, significantly decreased to zero in 2022 - Referral fees, primarily related to RISE operations, decreased from **$1.213 million** in 2021 to **$0** in 2022[414](index=414&type=chunk) [Note 19. Income Taxes](index=78&type=section&id=Note%2019.%20Income%20Taxes) This note details the company's income tax provision, effective tax rate reconciliation, net deferred tax assets, and unrecognized tax benefits - The Inflation Reduction Act and CHIPS and Science Act had limited and immaterial impact on the company's financial statements[415](index=415&type=chunk) Provision For (Benefit From) Income Taxes (Year Ending December 31) | Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Current Federal | (749) | 1,084 | | Current State and local | 104 | 114 | | **Total Current** | **(645)** | **1,198** | | Deferred Federal | (305) | 96 | | Deferred State and local | (350) | 427 | | **Total Deferred** | **(655)** | **523** | | **Total Provision for (benefit from) income taxes** | **(1,300)** | **1,721** | Effective Tax Rate Reconciliation (Year Ending December 31) | Factor | 2022 | 2021 | | :--- | :--- | :--- | | Federal statutory income tax rate | 21.0% | 21.0% | | Tax amortization of intangible assets | 6.5% | (4.1%) | | Non-deductible fines and penalties | —% | 0.8% | | Share based compensation | —% | 1.0% | | Permanent differences | (6.1%) | 0.8% | | State and local taxes, net of federal benefit | 9.4% | 5.6% | | Change in valuation allowance | 2.0% | —% | | Other | (2.5%) | (0.4%) | | **Effective tax rate** | **30.3%** | **25.5%** | Net Deferred Tax Assets (as of December 31) | Category | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Deferred tax assets: Net operating losses | 5,023 | 5,437 | | Deferred tax assets: Lease liabilities | 648 | 749 | | Deferred tax assets: Investment in Tigress | 775 | — | | Deferred tax assets: Investment in RISE | 10 | 140 | | Deferred tax assets: Accrued compensation | — | 62 | | Deferred tax assets: Other | 45 | 13 | | **Subtotal Deferred tax assets** | **6,501** | **6,401** | | Less: valuation allowance | (978) | (1,070) | | **Total Deferred tax assets** | **5,523** | **5,331** | | Deferred tax liabilities: Fixed assets | (1,126) | (892) | | Deferred tax liabilities: Share-based compensation | — | (145) | | **Total Deferred tax liabilities** | **(1,126)** | **(1,037)** | | **Net Deferred tax assets** | **4,397** | **4,294** | - The company's valuation allowance decreased by **$92,000** in 2022, reflecting the realizability of U.S. deferred tax assets[418](index=418&type=chunk) Reconciliation of Unrecognized Tax Benefits (excluding interest and penalties) | Item | Amount ($000) | | :--- | :--- | | Balance as of December 31, 2020 | 1,105 | | Additions for tax positions taken during current year | 1,315 | | Reductions for tax positions taken during prior years | (2) | | **Balance as of December 31, 2021** | **2,418** | | Additions for tax positions taken during prior year | 12 | | Reductions for tax positions taken during prior years | (834) | | **Balance as of December 31, 2022** | **1,596** | [Note 20. Capital Requirements](index=80&type=section&id=Note%2020.%20Capital%20Requirements) This note details the regulatory capital requirements for MSCO and RISE, both exceeding their minimum net capital and reserve account requirements - MSCO's net capital was **$30.6 million** as of December 31, 2022, exceeding its **$1.4 million** requirement by **$29.2 million**[422](index=422&type=chunk) - MSCO maintained **$276.2 million** in cash and securities deposits in special reserve accounts, exceeding the **$264.3 million** requirement by **$11.9 million** as of December 31, 2022[424](index=424&type=chunk) - RISE's net capital was approximately **$1.2 million** as of December 31, 2022, exceeding its minimum requirement of **$250,000** by **$0.9 million**[428](index=428&type=chunk) [Note 21. Financial Instruments With Off-Balance Sheet Risk](index=81&type=section&id=Note%2021.%20Financial%20Instruments%20With%20Off-Balance%20Sheet%20Risk) The company faces credit risk from counterparties and off-balance sheet risks from customer activities, mitigated by collateral requirements and monitoring - The company is exposed to credit risk from counterparties in trading and brokerage activities, but has experienced no material historical losses[429](index=429&type=chunk)[430](index=430&type=chunk) - Off-balance sheet risks arise from customer activities involving execution, settlement, and financing of securities transactions, particularly in margin accounts and short sales[432](index=432&type=chunk)[433](index=433&type=chunk) - The company mitigates these risks by requiring customers to maintain margin collateral, monitoring levels daily, and adjusting collateral as needed[435](index=435&type=chunk) - Margin loans extended to customers were approximately **$365.4 million** as of December 31, 2022, with no material losses for unsettled customer transactions[438](index=438&type=chunk) [Note 22. Commitments, Contingencies and Other](index=82&type=section&id=Note%2022.%20Commitments%2C%20Contingencies%20and%20Other) This note details various commitments and contingencies, including a FINRA investigation, credit lines, potential stock sales, and clearing agreement termination fees - FINRA is investigating StockCross's UIT transactions prior to acquisition, with potential for sanctions or restitution offers[440](index=440&type=chunk)[441](index=441&type=chunk) - MSCO has an unutilized line of credit for short-term overnight demand borrowing with BMO Harris Bank, increased to **$25 million** in May 2022[443](index=443&type=chunk) - The company entered into a Capital on Demand Sales Agreement in May 2022 to potentially sell up to **$9.6 million** of common stock, but made no sales in 2022[445](index=445&type=chunk)[446](index=446&type=chunk) - The NFS clearing agreement includes early termination fees ranging from **$3.25 million** to **$7.25 million** depending on the termination date, but the company believes material payments are unlikely[447](index=447&type=chunk) - The company is self-insured for employee health claims through KCA, with stop-loss insurance capped at **$65,000** per employee[450](index=450&type=chunk) [Note 23. Employee Benefit Plans](index=85&type=section&id=Note%2023.%20Employee%20Benefit%20Plans) This note details the company's 401(k) plan and equity incentive plan, including shares reserved and restricted stock units granted to employees - The company sponsors a 401(k) plan for employees, but made no contributions in 2022 or 2021[454](index=454&type=chunk) - The Siebert Financial Corp. 2021 Equity Incentive Plan reserved **3 million** shares, with **296,000** shares issued in 2022 and **2.704 million** remaining[455](index=455&type=chunk) - **296,000** restricted stock units were granted to employees and consultants in 2022, resulting in **$461,000** in equity stock compensation expense[456](index=456&type=chunk) [Note 24. Related Party Disclosures](index=85&type=section&id=Note%2024.%20Related%20Party%20Disclosures) This note details transactions with related parties, including KCA for payroll, licensing fees, revenue from PW, and notes payable exchanges with Gloria E. Gebbia - KCA, an affiliate under common ownership, serves as a paymaster for payroll and related functions, passing through costs to subsidiaries[457](index=457&type=chunk) - KCA charges the company **$60,000** annually for the license to use the names "Muriel Siebert & Co., Inc." and "Siebert"[458](index=458&type=chunk) - PW, the insurance subsidiary, generated **$129,000** in revenue from related parties in 2022, up from **$70,000** in 2021[459](index=459&type=chunk) - Gloria E. Gebbia, the principal stockholder, exchanged approximately **$2.9 million** of her notes payable to the company for 24% ownership in RISE on March 31, 2022[460](index=460&type=chunk) - Sons of Gloria E. Gebbia and John J. Gebbia hold executive positions, with their aggregate compensation increasing from **$1.179 million** in 2021 to **$2.427 million** in 2022[463](index=463&type=chunk) [Note 25. Subsequent Events](index=86&type=section&id=Note%2025.%20Subsequent%20Events) No material subsequent events occurred between December 31, 2022, and March 29, 2023, requiring disclosure or recognition - No material subsequent events occurred between December 31, 2022, and March 29, 2023, requiring disclosure or recognition[467](index=467&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=87&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[468](index=468&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=87&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management, including the Executive Vice President/Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of December 31, 2022 - Disclosure controls and procedures were deemed effective as of December 31, 2022[468](index=468&type=chunk)[469](index=469&type=chunk) - No material changes in internal control over financial reporting were identified during 2022[470](index=470&type=chunk) - Management concluded that internal controls over financial reporting were effective as of December 31, 2022, based on the 2013 COSO Framework[473](index=473&type=chunk) [ITEM 9B. OTHER INFORMATION](index=87&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) There is no other information to report under this item - No other information to report[474](index=474&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=88&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section identifies the company's directors and executive officers, details Board meetings, and notes its status as a "Controlled Company" under Nasdaq rules - The Board of Directors includes Gloria E. Gebbia, John J. Gebbia, Charles A. Zabatta, Francis V. Cuttita, Andrew H. Reich, and Jerry M. Schneider[477](index=477&type=chunk)[478](index=478&type=chunk)[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk)[483](index=483&type=chunk) - Andrew H. Reich serves as Executive Vice President, Chief Operating Officer, Chief Financial Officer, and Secretary[485](index=485&type=chunk) - The company is a "Controlled Company" as Gloria E. Gebbia and her family members hold over 50% of the voting power, exempting it from certain Nasdaq independence requirements for the Board and committees[487](index=487&type=chunk) - The Audit Committee consists of Mr. Schneider (Chairman and financial expert), Mr. Zabatta, and Mr. Cuttita, all independent directors[488](index=488&type=chunk)[489](index=489&type=chunk) - The Board of Directors oversees risk management, receiving regular reports from senior management on operational, financial, legal, regulatory, strategic, and reputational risks[502](index=502&type=chunk)[503](index=503&type=chunk) - There were delinquent Section 16(a) reports for Ms. DiBartolo (Form 3) and Richard Gebbia (Form 4) in 2022[509](index=509&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=93&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) This section details compensation for the Named Executive Officer and directors, including salary, bonus, and equity awards, noting no employment or option agreements Summary Compensation Table (Named Executive Officer) | Name and Principal Position | Year | Salary ($000) | Bonus ($000) | Stock Awards ($000) | Option Awards | Non-Equity Incentive Plan Compensation | Non-Qualified Deferred Compensation Earnings | Other Compensation | Totals ($000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Andrew H. Reich | 2022 | 225 | 25 | 32 | — | — | — | — | 282 | | Andrew H. Reich | 2021 | 225 | 125 | — | — | — | — | — | 350 | - As of December 31, 2022, the company had **296,000** shares of common stock outstanding and fully vested as part of equity compensation[515](index=515&type=chunk) - The company is not party to employment agreements with Named Executive Officers, who are employees at will, and had no option agreements with them as of December 31, 2022[516](index=516&type=chunk)[517](index=517&type=chunk) Compensation of Directors (Year Ended December 31, 2022) | Name | Fees Earned or Paid in Cash ($000) | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total ($000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gloria E. Gebbia | — | — | — | — | — | — | — | | John J. Gebbia | — | — | — | — | — | — | — | | Andrew H. Reich | — | — | — | — | — | — | — | | Francis V. Cuttita | 106 | — | — | — | — | — | 106 | | Charles Zabatta | 106 | — | — | — | — | — | 106 | | Jerry M. Schneider | 106 | — | — | — | — | — | 106 | | Cynthia DiBartolo | — | — | — | — | — | — | — | [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=95&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details common stock ownership for directors, executive officers, and significant beneficial owners, highlighting the principal shareholders' control Security Ownership of Certain Beneficial Owners and Management (as of March 20, 2023) | Name and Address of Beneficial Owner | Shares of Common Stock | Percent of Class | | :--- | :--- | :--- | | Gloria E. Gebbia / John J. Gebbia | 17,539,200 | 54% | | Andrew H. Reich | 758,238 | 2% | | Charles Zabatta | 600,439 | 2% | | Francis V. Cuttita | 187,773 | 1% | | Jerry M. Schneider | 3,000 | <1% | | Directors and named executive officers as a group (6 persons) | 19,088,650 | 59% | | Kimberly Gebbia | 3,278,400 | 10% | | John M. Gebbia | 2,127,091 | 7% | | Andrew McDonald | 1,773,676 | 5% | - Gloria E. Gebbia and John J. Gebbia, as husband and wife, are the principal shareholders, controlling 54% of the common stock[523](index=523&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=96&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The Audit Committee reviews and approves all related party transactions, guided by the Code of Ethics to prevent conflicts of interest, with further details in Note 24 - The Audit Committee is responsible for reviewing and approving all related party transactions[524](index=524&type=chunk) - The Code of Ethics for Senior Financial Officers requires disclosure and approval of any actual or potential conflicts of interest by the Audit Committee[525](index=525&type=chunk) - Detailed related party disclosures are provided in Note 24 of the financial statements[526](index=526&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=96&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Baker Tilly US, LLP serves as the independent auditor, with the Audit Committee pre-approving all audit and non-audit services to ensure independence - Baker Tilly US, LLP is the independent registered public accounting firm[527](index=527&type=chunk) - The Audit Committee pre-approves all audit and non-audit services to maintain auditor independence[531](index=531&type=chunk) Audit and Audit-Related Fees Billed by Baker Tilly US, LLP | Fee Type | 2022 ($000) | 2021 ($000) | | :--- | :--- | :--- | | Audit Fees | 112 | 156 | | Audit-Related Fees | 184 | 194 | PART IV [ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES](index=97&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits and financial statement schedules required by Regulation S-K, including consolidated financial statements and various agreements - The section lists exhibits and financial statement schedules required by Regulation S-K, including consolidated financial statements[534](index=534&type=chunk) - Exhibits include merger agreements, certificates of incorporation, by-laws, equity incentive plans, acquisition agreements, clearing agreements, loan agreements, and various certifications[537](index=537&type=chunk)[538](index=538&type=chunk)[542](index=542&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=100&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) There is no Form 10-K summary provided - No Form 10-K summary is provided[542](index=542&type=chunk) SIGNATURES [SIGNATURES](index=101&type=section&id=SIGNATURES) The report is duly signed by Andrew H. Reich, as principal executive and financial officer, and other directors, all dated March 29, 2023 - The report is signed by Andrew H. Reich (Principal executive, financial and accounting officer) and directors Gloria E. Gebbia, John J. Gebbia, Charles Zabatta, Francis V. Cuttita, and Jerry M. Schneider[545](index=545&type=chunk)[546](index=546&type=chunk) - All signatures are dated March 29, 2023[546](index=546&type=chunk)

FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 For the transition period from ____________________ to ____________________ Commission file number 0-5703 Siebert Financial Corp. (Exact Name of Registrant as Specified in its Charter) (S ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 0-5703 Siebert Financial Corp. (Exact Name of Registrant as Specified in its Charter) (State ...