Siebert(SIEB) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements, including the statements of financial condition, operations, changes in equity, and cash flows, along with detailed notes explaining the company's accounting policies, significant transactions, and financial position for the periods ended June 30, 2025, and December 31, 2024 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time, highlighting changes in financial position - | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :------------------------------------------------ | :------------------------ | :------------------ | | Total Assets | $560,512,000 | $519,668,000 | | Total Liabilities | $470,524,000 | $434,576,000 | | Total Equity | $89,988,000 | $85,092,000 | | Cash and cash equivalents | $28,949,000 | $32,629,000 | | Securities segregated for regulatory purposes | $146,051,000 | $204,587,000 | | Securities borrowed | $238,721,000 | $139,040,000 | | Payables to customers | $217,870,000 | $227,129,000 | | Securities loaned | $235,674,000 | $184,962,000 | - Total Assets increased by $40.8 million (7.9%) from December 31, 2024, to June 30, 2025, primarily driven by an increase in securities borrowed, partially offset by a decrease in cash and securities segregated for regulatory purposes[16][191] - Total Liabilities increased by $35.9 million (8.3%) from December 31, 2024, to June 30, 2025, mainly due to an increase in securities loaned, partially offset by a decrease in payables to customers[16][192] CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS This statement details the company's revenues, expenses, and net income (loss) over specific periods, reflecting operational performance - | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------- | | Total Revenue | $14,874,000 | $20,863,000 | -28.7% | | Operating income (loss) | $(5,832,000) | $5,579,000 | -204.7% | | Net income (loss) | $(4,719,000) | $4,047,000 | -216.6% | | Net income (loss) available to common stockholders | $(4,719,000) | $4,040,000 | -216.3% | | Basic and diluted EPS | $(0.12) | $0.10 | -220.0% | - | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Total Revenue | $43,793,000 | $41,319,000 | 6.0% | | Operating income (loss) | $4,664,000 | $10,681,000 | -56.3% | | Net income (loss) | $3,942,000 | $7,734,000 | -49.0% | | Net income (loss) available to common stockholders | $3,945,000 | $7,728,000 | -48.9% | | Basic and diluted EPS | $0.10 | $0.19 | -47.4% | - The significant operating loss for the three months ended June 30, 2025, was primarily due to a realized and unrealized loss of $6.8 million on the Investment in Equity Security[150][152] CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY This statement tracks changes in the company's equity over time, including net income, share-based compensation, and noncontrolling interests - | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | 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 Stockholders' equity increased by $4.9 million from December 31, 2024, to June 30, 2025, primarily due to share-based compensation and net income (loss) for the period[17][20] - Share-based compensation contributed $989,000 to additional paid-in capital for the six months ended June 30, 2025[20] CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS This statement summarizes the cash inflows and outflows from operating, investing, and financing activities, showing changes in liquidity - | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(33,830,000) | $(28,361,000) | | Net cash used in investing activities | $(4,386,000) | $(2,852,000) | | 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 - end of period | $130,163,000 | $133,281,000 | - Cash used in operating activities increased by $5.5 million for the six months ended June 30, 2025, compared to the prior year, primarily due to changes in securities loaned, securities borrowed, and payables to customers[21][211] - Cash used in investing activities increased by $1.5 million for the six months ended June 30, 2025, driven by an investment in FusionIQ, partially offset by less investment in office facilities[21][211] NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1. Organization and Basis of Presentation This note describes the company's structure, business operations, and the accounting principles used in preparing the financial statements - Siebert Financial Corp. operates as a single reportable segment, providing comprehensive brokerage services including custody and clearing of retail accounts, investment banking, insurance, advisory services, principal transaction and proprietary trading, market making, and securities lending[25][26] - The company's subsidiaries include Muriel Siebert & Co., LLC (MSCO), Siebert AdvisorNXT, LLC (SNXT), Park Wilshire Companies, Inc. (PW), Siebert Technologies, LLC (STCH), RISE Financial Services, LLC (RISE), StockCross Digital Solutions, Ltd. (STXD), and Gebbia Media, LLC (GM)[27] - In June 2025, the company sold the majority of its Investment in Equity Security for an average price of $19.00 per share, recognizing a total loss of $6.8 million for the three months ended June 30, 2025, and a total gain of $2.4 million for the six months ended June 30, 2025[36] Note 2. New Accounting Standards This note outlines recently issued accounting standards and their expected impact on the company's financial reporting - ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, is expected to cause considerable changes to income tax footnotes[40] - ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures,' effective for annual periods beginning after December 15, 2025, is anticipated to require significant changes to expense disclosures[41] - The Company did not adopt any new accounting standards during the three and six months ended June 30, 2025, and does not believe other recently issued standards will have a material impact[42] Note 3. Asset Acquisition This note details the acquisition of specific assets, including their cost and amortization policy - On April 30, 2025, the Company acquired certain assets from Big Machine Label Group RLS LLC (BMLG) related to music masters, including copyrights and artwork, for $441,000[43] - The acquisition cost was allocated entirely to the recorded masters intangible asset, which will be amortized on a straight-line basis over an estimated useful life of 8.5 years[43][44] Note 4. Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations This note provides a breakdown of balances with broker-dealers and clearing organizations, reflecting intercompany and operational financial positions - | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Total Receivables from and deposits with broker-dealers and clearing organizations | $12,477,000 | $8,147,000 | | Total Payables to broker-dealers and clearing organizations | $1,179,000 | $444,000 | - Receivables from and deposits with broker-dealers and clearing organizations increased by $4.33 million, primarily due to higher balances with DTCC/OCC/NSCC and underwriting fees receivable[45] - Payables to broker-dealers and clearing organizations increased by $0.735 million, mainly due to an increase in securities fail-to-receive and payables to broker-dealers[45] Note 5. Fair Value Measurements This note details the fair value hierarchy and measurement techniques used for financial assets and liabilities - | Asset/Liability (June 30, 2025) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------------ | :---------- | :-------- | :-------- | :---------- | | U.S. government securities (segregated) | $44,837,000 | $— | $— | $44,837,000 | | Securities owned, at fair value | $18,936,000 | $539,000 | $— | $19,475,000 | | Securities sold, not yet purchased, at fair value | $7,000 | $— | $— | $7,000 | - | U.S. Government Securities Market Value | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Maturing in 2025 | $44,837,000 | $80,739,000 | | Maturing in 2026 | $16,542,000 | $8,019,000 | | Accrued interest | $89,000 | $86,000 | | Total Market value | $61,468,000 | $88,844,000 | - The Company's financial assets not measured at fair value, such as cash and cash equivalents, securities borrowed, and various receivables, are recorded at carrying value, which approximates fair value due to their short-term nature[54] Note 6. Property, Office Facilities, and Equipment, Net This note provides details on the company's fixed assets, including their carrying value and depreciation - | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Property, office facilities, and equipment, net | $10,124,000 | $10,245,000 | | Accumulated depreciation | $(2,168,000) | $(1,680,000) | - Total depreciation expense for property, office facilities, and equipment was $629,000 for the three months ended June 30, 2025, an increase of $293,000 from the prior year[56][174] - The Company invested $188,000 in the six months ended June 30, 2025, to build out its Miami office building, where depreciation commenced in April 2023[59] Note 7. Software, Net This note details the company's capitalized software costs, including development expenses and amortization - | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Software, net | $5,956,000 | $4,836,000 | | Retail Platform capitalized cost | $5,450,000 | $4,093,000 | | Accumulated amortization | $(1,489,000) | $(1,031,000) | - Software development costs related to the Retail Platform totaled $5.45 million as of June 30, 2025, with $3.872 million placed into service during the six months ended June 30, 2025[60][61] - Total amortization of software was $458,000 for the six months ended June 30, 2025, an increase of $226,000 from the prior year[61] Note 8. Leases This note provides information on the company's lease arrangements, including lease terms, discount rates, and future payment obligations - | Lease Metric | June 30, 2025 | 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% | - | Lease Cost | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Operating lease cost | $538,000 | $534,000 | | Short-term lease cost | $196,000 | $221,000 | | Variable lease cost | $175,000 | $120,000 | | Total Rent and occupancy | $909,000 | $875,000 | - | Future Annual Minimum Lease Payments (Operating Leases) | | :------------------------------------------------ | :----------- | | 2025 | $503,000 | | 2026 | $864,000 | | 2027 | $613,000 | | 2028 | $522,000 | | 2029 | $58,000 | | Remaining balance of lease payments | $2,560,000 | | Lease liabilities | $2,283,000 | Note 9. Goodwill and Other Intangible Assets, Net This note outlines the company's goodwill and other intangible assets, including their carrying values and amortization schedules - Goodwill remained at $2.319 million as of June 30, 2025, with no impairment charges recognized during the period[67] - Other intangible assets include GM artist contracts ($778,000 fair value, 4-year useful life) and BMLG music masters ($441,000 cost, 8.5-year useful life)[68][69] - | Future Amortization of Other Intangible Assets | | :--------------------------------------------- | :----------- | | 2025 | $134,000 | | 2026 | $249,000 | | 2027 | $249,000 | | 2028 | $168,000 | | 2029 and after | $240,000 | | Total | $1,040,000 | Note 10. Investments, Cost This note describes the company's cost-method investments, including details of new acquisitions and their valuation approach - In Q2 2025, the Company invested $2.0 million in IQvestment Holdings, LLC (FusionIQ), a cloud-native digital wealth management platform, acquiring a 3% ownership interest[71] - The investment is measured at cost, less impairment, and adjusted for observable price changes, as FusionIQ is a private company without a readily determinable fair value[71] Note 11. Long-Term Debt This note provides details on the company's long-term debt obligations, including mortgage balances, interest rates, and repayment schedules - The outstanding balance of the mortgage with East West Bank for the Miami office building was $4.184 million as of June 30, 2025, down from $4.228 million at December 31, 2024[73] - The mortgage has a 10-year term with a 30-year amortization period, an interest rate of 3.6% for the first 7 years, and requires a debt service coverage ratio of 1.4 to 1[74] - | Future Annual Minimum Principal Payments (Mortgage) | | :------------------------------------------------ | :----------- | | 2025 | $44,000 | | 2026 | $91,000 | | 2027 | $95,000 | | 2028 | $98,000 | | 2029 | $112,000 | | Thereafter | $3,744,000 | | Total | $4,184,000 | Note 12. Deferred Contract Incentive This note explains the deferred contract incentive related to the clearing agreement, including recognition as contra expense and remaining balance - MSCO's clearing agreement with NFS, extended to July 31, 2025, includes a $3 million business development credit and four annual $100,000 credits, recognized as contra expense[76][77] - The Company recognized $213,000 in contra expense for both the three months ended June 30, 2025 and 2024, and $425,000 for both six-month periods[78] - The balance of the deferred contract incentive was $71,000 as of June 30, 2025, down from $496,000 at December 31, 2024[78] Note 13. Revenue Recognition This note details the company's revenue streams, distinguishing between revenue from contracts with customers and other revenue sources - Revenue from contracts with customers increased to $12.377 million for the three months ended June 30, 2025, from $11.811 million in the prior year, and to $23.747 million for the six months ended June 30, 2025, from $22.252 million in the prior year[84] - Revenue outside the scope of Topic 606 decreased to $2.497 million for the three months ended June 30, 2025, from $9.052 million in the prior year, primarily due to a $6.8 million loss on the Investment in Equity Security[84] - For the six months ended June 30, 2025, revenue outside the scope of Topic 606 increased to $20.046 million from $19.067 million, driven by a $2.43 million gain on the Investment in Equity Security[84] Note 14. Income Taxes This note provides an analysis of the company's income tax provision, effective tax rates, and uncertain tax positions - | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Income tax (benefit) provision | $(1,113,000) | $722,000 | $1,532,000 | $2,947,000 | | Pre-tax book income (loss) | $(5,832,000) | $4,664,000 | $5,579,000 | $10,681,000 | | Effective tax rate | 19.1% | 15.5% | 27.5% | 27.6% | - The effective tax rate for the three and six months ended June 30, 2025, differed from the federal statutory rate of 21% primarily due to the utilization of deferred tax assets for capital loss carryforwards, resulting in an income tax benefit[86] - The Company recorded an uncertain tax position of $1.354 million as of both June 30, 2025, and December 31, 2024, included in 'Taxes payable'[88] Note 15. Capital Requirements This note details the regulatory capital requirements for the company's broker-dealer subsidiaries and their compliance status - | Entity | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------------------------------ | :------------ | :---------------- | | MSCO | Net capital | $62,400,000 | $63,900,000 | | MSCO | Required net capital | $1,900,000 | $1,900,000 | | MSCO | Excess net capital | $60,500,000 | $62,000,000 | | MSCO | Percentage of aggregate debit balances to net capital | 66.45% | 65.84% | | MSCO | Special reserve account deposits | $144,700,000 | $203,300,000 | | MSCO | Special reserve account deposit requirement | $140,900,000 | $193,800,000 | | RISE | Regulatory net capital | $1,200,000 | $1,300,000 | | RISE | Minimum requirement (15c3-1) | $250,000 | $250,000 | - MSCO maintained net capital of $62.4 million as of June 30, 2025, exceeding its $1.9 million requirement by $60.5 million[90] - RISE's regulatory net capital was approximately $1.2 million as of June 30, 2025, exceeding its minimum requirement of $250,000 by $0.9 million[97] Note 16. Financial Instruments with Off-Balance Sheet Risk This note describes the company's exposure to off-balance sheet risks, such as margin loans and securities borrowing/lending activities - The Company had margin loans extended to customers of approximately $394.2 million as of June 30, 2025, with $79.9 million included in 'Receivables from customers'[99] - | Securities Borrowing and Lending Activity (June 30, 2025) | | :------------------------------------------------ | :-------------------- | | Gross Amounts of Recognized Assets (Securities borrowed) | $238,721,000 | | Net Amounts Presented in Consolidated Statements of Financial Condition (Securities borrowed) | $238,721,000 | | FMV - Collateral Received or Pledged (Securities borrowed) | $227,061,000 | | Net Amount (Securities borrowed) | $11,660,000 | | Gross Amounts of Recognized Liabilities (Securities loaned) | $235,674,000 | | Net Amounts Presented in Consolidated Statements of Financial Condition (Securities loaned) | $235,674,000 | | FMV - Collateral Received or Pledged (Securities loaned) | $223,407,000 | | Net Amount (Securities loaned) | $12,267,000 | - No material losses were incurred for unsettled customer transactions for the three and six months ended June 30, 2025 and 2024[99] Note 17. Earnings Per Common Share This note presents the calculation of basic and diluted earnings per common share, including the impact of antidilutive shares - | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) 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 | | Basic EPS | $(0.12) | $0.10 | $0.10 | $0.19 | | Diluted EPS | $(0.12) | $0.10 | $0.10 | $0.19 | - For the three and six months ended June 30, 2025, the Company had 0 and 300,000 antidilutive shares outstanding, respectively, which were excluded from diluted EPS computation[106] Note 18. Commitments, Contingencies, and Other This note discloses the company's various commitments, contingencies, and other significant events, including credit facilities and legal matters - MSCO has an available line of credit for short-term overnight demand borrowing with BMO Harris Bank of up to $25 million, with no outstanding balance as of June 30, 2025[108] - MSCO entered into a BMO Credit Agreement on November 22, 2024, providing a revolving credit facility of up to $20 million, with an annual commitment fee of 0.50% of the unused portion[110][111] - The Company filed a shelf registration statement on Form S-3 on May 30, 2025, for the potential offering of up to $100.0 million in various securities, with $50 million allocated to an At the Market program[115][206] - The NFS clearing agreement, extended to July 31, 2025, includes an early termination fee of $3.25 million if terminated before August 1, 2025, though the Company believes early termination is unlikely[117] Note 19. Segment Reporting This note clarifies that the company operates as a single reportable segment, reflecting its consolidated management approach - The Company operates as a single reportable segment, a securities broker-dealer, as its Chief Operating Decision Maker (CODM) manages business activities and evaluates performance from a consolidated perspective[123] Note 20. Employee Benefit Plans This note provides details on the company's employee benefit plans, including 401(k) contributions and stock-based compensation - The Company incurred $184,000 in 401(k) employee contribution matching expense for the six months ended June 30, 2025, up from $163,000 in the prior year[124] - The Siebert Financial Corp. 2021 Equity Incentive Plan had 1,075,000 nonvested shares as of June 30, 2025, with $2.607 million in unrecognized compensation cost expected to be recognized over 2.61 years[125][128] - Stock-based compensation expense was $989,000 for the six months ended June 30, 2025, an increase from $385,000 in the prior year, included in 'Employee compensation and benefits'[130] Note 21. Related Party Disclosures This note discloses transactions and relationships with related parties, including executive compensation and credit facility guarantees - Compensation for the sons of Gloria E. Gebbia and John J. Gebbia, who hold executive positions, aggregated $1.859 million for the six months ended June 30, 2025, up from $1.539 million in the prior year[135] - The Company's obligations under a $20 million revolving credit facility with East West Bank are guaranteed by John J. Gebbia, Gloria E. Gebbia, and their living trust[113][139] - On June 27, 2025, Siebert Financial Corp. entered into a Sales Agreement with MSCO and Ladenburg Thalmann & Co. Inc. for an 'at-the-market' offering of up to $50 million in common stock, with agents receiving a 3.0% commission[144] Note 22. Subsequent Events This note reports on significant events that occurred after the reporting period but before the financial statements were issued - No material subsequent events occurred between June 30, 2025, and August 12, 2025, that would require disclosure or recognition in the financial statements[145] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial performance and condition, discussing key factors affecting operations, detailed revenue and expense analysis, liquidity, capital resources, and critical accounting policies Overview This overview introduces the company's business model and the external factors influencing its financial results - The Company is a financial services firm offering retail brokerage, investment advisory, insurance, and technology development services through its subsidiaries[148] - Financial results are highly correlated to general economic conditions, U.S. equity and fixed-income markets, market volatility, interest rates, and regulatory trends, which are unpredictable and beyond the company's control[149] Financial Overview This section summarizes the company's key financial performance metrics for the reporting period, highlighting significant changes and their drivers - | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :------------------------------------ | :------ | :------ | :----------- | | Loss per share | $(0.12) | $0.10 | -220.0% | | Revenues | $14,900,000 | $20,900,000 | -28.7% | | Operating loss before taxes | $(5,800,000) | $5,600,000 | -203.6% | - The operating loss in Q2 2025 was substantially due to a $6.8 million realized and unrealized loss on the Investment in Equity Security[150][152] - For the six months ended June 30, 2025, the Investment in Equity Security resulted in a total gain of $2.4 million[152] Trends and Key Factors Affecting our Operations This section discusses market trends, economic conditions, and strategic initiatives that influence the company's operational performance and future outlook - The Company is exposed to market risk primarily through its broker-dealer trading operations, with primary risks related to interest rates and equity prices[157] - | Simulated Change in Market Interest Rates | Impact on Net Interest Revenue (June 30, 2025) | Impact on Net Interest Revenue (December 31, 2024) | | :---------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Increase of 200 basis points | 31% | 32% | | Increase of 100 basis points | 16% | 18% | | Increase of 50 basis points | 8% | 11% | | Decrease of 50 basis points | (7)% | (4)% | | Decrease of 100 basis points | (15)% | (11)% | | Decrease of 200 basis points | (30)% | (26)% | - Investments in Siebert's Retail Platform, including an online platform and mobile trading application, are anticipated to go live by the end of 2025, aiming to meet customer needs and support market expansion[161] Client Account and Activity Metrics This section provides key metrics related to customer accounts and activity, offering insights into client engagement and business growth - | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Retail customer net worth (in billions) | $17.4 | $18.0 | | Retail customer margin debit balances (in billions) | $0.4 | $0.4 | | Retail customer credit balances (in billions) | $0.4 | $0.4 | | Retail customer money market fund value (in billions) | $0.8 | $0.8 | | Retail customer accounts | 163,616 | 160,054 | - Retail customer accounts increased to 163,616 as of June 30, 2025, from 160,054 at December 31, 2024[163] Statements of Operations for the Three Months Ended June 30, 2025 and 2024 This section provides a detailed comparative analysis of the company's revenues and expenses for the three-month periods, highlighting key changes and their causes - Commissions and fees decreased by $589,000 to $2.014 million, primarily due to weaker market conditions[164] - Principal transactions and proprietary trading decreased by $7.345 million to negative $3.771 million, mainly due to a $6.803 million loss on the Investment in Equity Security[166] - Stock borrow / stock loan increased by $2.826 million to $7.522 million, driven by growth in stock locate services and securities lending[167] - Employee compensation and benefits increased by $3.081 million to $13.388 million, due to higher equity compensation and additional personnel for technology and business expansion[169] - Depreciation and amortization expenses increased by $293,000 to $629,000, primarily due to increased amortization for technology projects placed in service[174] Statements of Operations for the Six Months Ended June 30, 2025 and 2024 This section provides a detailed comparative analysis of the company's revenues and expenses for the six-month periods, highlighting key changes and their causes - Commissions and fees decreased by $787,000 to $4.116 million, primarily due to weaker market conditions[178] - Principal transactions and proprietary trading increased by $2.110 million to $9.190 million, mainly due to a $2.430 million gain on the Investment in Equity Security[179] - Stock borrow / stock loan increased by $3.565 million to $12.359 million, driven by growth in stock locate services and securities lending[180] - Employee compensation and benefits increased by $4.627 million to $25.310 million, due to higher equity compensation and additional personnel for technology and business expansion[182] - Depreciation and amortization expenses increased by $453,000 to $1.044 million, primarily due to increased amortization for technology projects placed in service[186] Statements of Financial Condition As of June 30, 2025 and December 31, 2024 This section analyzes the company's financial position at specific dates, detailing changes in assets, liabilities, and equity - Total Assets increased by $40.844 million to $560.512 million as of June 30, 2025, primarily due to an increase in securities borrowed, partially offset by a decrease in cash and securities segregated for regulatory purposes[191] - Total Liabilities increased by $35.948 million to $470.524 million as of June 30, 2025, primarily due to an increase in securities loaned, partially offset by a decrease in payables to customers[192] Liquidity and Capital Resources This section discusses the company's ability to meet its short-term and long-term financial obligations, including cash position and available credit facilities - As of June 30, 2025, the Company's cash and cash equivalents were $28.9 million, down from $32.6 million at December 31, 2024[197] - The Company has a $20 million revolving credit facility with East West Bank (entered August 15, 2024) and another $20 million revolving credit facility with BMO Harris Bank (entered November 22, 2024) to support strategic initiatives and meet regulatory requirements[198][199] - | Material Cash Requirements (as of June 30, 2025) | | :------------------------------------------------ | :----------- | | Operating lease commitments | $2,560,000 | | Kakaopay fee | $2,000,000 | | Mortgage with East West Bank | $4,184,000 | | Technology vendors | $144,000 | | Broadridge contract | $373,000 | | Total | $9,261,000 | Off-Balance Sheet Arrangements This section describes the company's off-balance sheet activities and potential exposures, such as customer transaction risks - The Company is exposed to off-balance sheet risk from customer activities involving the execution, settlement, and financing of securities transactions, where customers or brokers may fail to fulfill obligations[215] - No material losses for unsettled customer transactions occurred for the three and six months ended June 30, 2025 and 2024[215] Uncertain Tax Positions This section details the company's uncertain tax positions and their impact on financial statements - The Company recorded an uncertain tax position of $1.354 million as of both June 30, 2025, and December 31, 2024, included in 'Taxes payable'[217] Tax Legislation This section discusses the potential impact of new tax legislation on the company's financial results - President Trump signed H.R. 1, the One Big Beautiful Bill Act (OBBBA), into law on July 4, 2025; the Company is analyzing its tax impacts but does not expect a material effect on its effective tax rate[218] Critical Accounting Policies and Estimates This section highlights the accounting policies and estimates that require significant judgment and can materially affect financial reporting - There have been no changes to the Company's critical accounting policies or estimates as of June 30, 2025[218] New Accounting Standards This section provides an update on new accounting standards and their expected implications for the company's financial disclosures - ASU 2023-09 (Improvements to Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) are expected to require significant changes to disclosures when effective in fiscal years 2025 and 2026, respectively[219][220] Recent Accounting Pronouncements This section directs readers to a specific note for further details on recently issued accounting pronouncements - Refer to Note 2 – Summary of Significant Accounting Policies for information regarding new Accounting Standards Updates (ASUs) issued by the FASB[221] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details the company's exposure to market risk from financial instruments, including those held for trading and non-trading purposes. It clarifies that the company does not engage in derivatives or special purpose entities and monitors customer accounts for margin compliance to mitigate risk - The Company does not directly engage in derivative transactions, has no interest in any special purpose entity, and no liabilities for the debt of another entity[222] - Market risk primarily arises from investments in U.S. government securities held for regulatory purposes and to enhance yields, with any value reduction anticipated to be temporary as securities mature at par[224] - The Company is exposed to risk of loss on unsettled customer transactions if customers or counterparties fail to fulfill obligations, but no material losses have occurred in the last five years[225] ITEM 4. CONTROLS AND PROCEDURES This section reports on the effectiveness of the company's disclosure controls and procedures and confirms no material changes in internal control over financial reporting during the most recent fiscal quarter Disclosure Controls and Procedures This section assesses the effectiveness of the company's controls designed to ensure timely and accurate disclosure of financial information - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[227] Changes in Internal Control over Financial Reporting This section reports on any changes in the company's internal control over financial reporting during the most recent fiscal quarter - There were no changes in internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[228] PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section addresses the company's involvement in various legal and regulatory proceedings, stating that, based on current information, the ultimate resolution of these matters is not expected to have a material adverse impact on its financial position or results of operations - The Company is subject to various legal and regulatory proceedings in the normal course of business, including lawsuits, arbitration claims, and regulatory matters[230] - Management believes 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[230] ITEM 1A. RISK FACTORS This section refers investors to the risk factors discussed in the company's 2024 Form 10-K and confirms that there have been no material changes to these risk factors as of the current report's date, except for an additional noted risk factor - Investors should consider the risk factors discussed in Part I, Item 1A - Risk Factors of the 2024 Form 10-K[231] - As of the date of this Report, there have been no material changes from the risk factors disclosed in the 2024 Form 10-K, except for an additional risk factor noted[231] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities and use of proceeds to report[232] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities to report[233] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the Company[234] ITEM 5. OTHER INFORMATION This section discloses that several executives and directors entered into Rule 10b5-1 trading plans in May 2025 for the sale of common stock, with some plans subsequently terminated - Andrew H. Reich (EVP, CFO) entered into a Rule 10b5-1 trading plan on May 19, 2025, for the sale of 300,000 shares of common stock, expiring May 19, 2027[235] - Francis V. Cuttita (Director) entered a 10b5-1 trading plan on May 19, 2025, for 120,000 shares, expiring May 19, 2027[236] - A trust jointly owned by John J. Gebbia (CEO) and Gloria E. Gebbia (Director) entered a 10b5-1 trading plan on May 19, 2025, for 400,000 shares, which was terminated on June 2, 2025[237] ITEM 6. EXHIBITS This section lists the exhibits filed as part of the Form 10-Q, including the Sales Agreement, certifications from principal officers, and Inline XBRL documents - Exhibit 10.50 is the Sales Agreement dated June 27, 2025, between Siebert Financial Corp., Muriel Siebert & Co., LLC, and Ladenburg Thalmann & Co. Inc[240] - Exhibits 31.1 and 31.2 are certifications of the Principal Executive Officer and Principal Financial Officer, respectively, pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)[240] - Exhibits 32.1 and 32.2 are certifications of the Principal Executive Officer and Principal Financial Officer, respectively, pursuant to 18 U.S.C. Section 1350[240] SIGNATURES This section contains the required signatures of the registrant's principal executive officer and principal financial and accounting officer, certifying the filing of the report - The report is signed by John J. Gebbia, Chief Executive Officer (Principal executive officer), and Andrew H. Reich, Executive Vice President, Chief Operating Officer, Chief Financial Officer, and Secretary (Principal financial and accounting officer)[245]