Siebert Financial Corp: Form 10-Q for the period ended Mar 31, 2025

The following discussion provides a narrative of our financial performance and condition that should be read in conjunction with the accompanying financial statements and related notes included under Part I, Item 1 of this Report. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in our 2024 Form 10-K, particularly in Part I, Item 1A – Risk Factors.

Overview

We are a financial services company and provide a wide variety of financial services to our clients. We operate in business lines such as retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries.

Results in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of the U.S. equity and fixed-income markets. Market volatility, overall market conditions, interest rates, economic, political, and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control. These factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation in the financial markets. In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and occupancy expenses. Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other period.

Financial Overview

In the first quarter of 2025, earnings per share were $0.22, compared to earnings per share of $0.09 in the first quarter of 2024. In the first quarter of 2025, our net revenues were $28.9 million and operating income before taxes was $10.5 million, compared to net revenues of $20.5 million and operating income before taxes of $5.1 million in the first quarter of 2024.

Financial highlights as of March 31, 2025:

• Principal transactions increased by 270% to $12.9 million compared to the prior-year quarter
• Stock borrow / stock loan increased by 18% to 4.8 million compared to the prior-year quarter
• Advisory fees increased by 53% to $0.7 million compared to the prior-year quarter

Investment in Equity Security

During the three months ended March 31, 2025, Siebert acquired the Investment in Equity Security in connection with a private placement from a private U.S company that subsequently completed an initial public offering. These shares are subject to resale restrictions until they are registered with the SEC or an exemption from such registration requirements becomes available. The date of the registration of such resale is uncertain as of the date of this Report.

Siebert valued the restricted shares of the Investment in Equity Security using a Finnerty option-pricing model including a discount of approximately 40% which included the lack of marketability and other factors. Refer to Note 4 – Fair Value Measurements for additional details.

For the three months ended March 31, 2025, Siebert recorded an unrealized gain of approximately $9.2 million in relation to the Investment in Equity Security. However, due to the volatility of the price of the shares, which has declined significantly since March 31, 2025, we are uncertain as to the total unrealized or realized gain or loss that will be recognized from the Investment in Equity Security. Solely for illustrative purposes, on May 7, 2025, the closing share price of the Investment in Equity Security fell to $25.24 per share, compared with $83.51 per share ($50.11 per share after the 40% discount) as of March 31, 2025. Had the Company sold its shares on May 7, 2025, the total gain would have been approximately $3.9 million, instead of the $9.2 million unrealized gain recognized during the three months ended March 31, 2025. Because the decline reflects conditions arising after March 31, 2025, no adjustment has been made to the accompanying financial statements. The potential change in the market value of the Investment in Equity Security may materially impact the results of future periods.

Trends and Key Factors Affecting our Operations

Market Risk

Market risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory and investment positions. We have exposure to market risk primarily through our broker-dealer trading operations. Through our broker-dealer subsidiary, we trade debt obligations and equity securities and maintain trading inventories to ensure availability of securities to facilitate client transactions. Inventory levels may fluctuate daily as a result of client demand. Our primary market risks relate to interest rates and equity prices. Equity risk results from changes in prices of equity securities, affecting the value of the equity securities and other instruments that derive their value from a particular stock.

We may enter into underwriting commitments and, as a result, we may be subject to market risk on any unsold securities issued in the offerings to which we are committed. Risk exposure is controlled by limiting our participation, the transaction size, or through the syndication process.

Interest Rates

We are exposed to market risk from changes in interest rates. Such changes in interest rates primarily impact revenue from interest, marketing, and distribution fees. We primarily earn interest, marketing and distribution fees from margin interest charged on clients’ margin balances, interest on cash and securities segregated for regulatory purposes, and distribution fees from money market mutual funds in clients’ accounts. Securities segregated for regulatory purposes consist solely of U.S. government securities. If prices of U.S. government securities within our portfolio decline, we anticipate the impact to be temporary as we intend to hold these securities to maturity. We seek to mitigate this risk by managing the average maturities of our U.S. government securities portfolio and setting risk parameters for securities owned, at fair value.

The following table presents simulated changes to net interest revenue over the next 12 months beginning as of March 31, 2025 and December 31, 2024, of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:

The difference in our simulated incremental increases and decreases in the market interest rates as of March 31, 2025 compared to December 31, 2024 is primarily due to an increase in the proportion of segregated cash to segregated securities and an increase in the proportion of margin debit balances to cash credit balances.

Technology Initiatives

At the end of 2023, we hired new technology personnel, changed our primary software development vendor, and made investments in technology development.

Some of these technology investments include the development of a Siebert mobile retail trading application, online platform for our retail customer base and corporate services clients, as well as upgrades to our technological and operational infrastructure to support these platforms and future growth. We believe that these ongoing investments in technology will be key in meeting the needs of our retail customers, correspondent clearing, corporate services as well as our expansion into new markets and demographics.

Client Account and Activity Metrics

The following tables set forth metrics we use in analyzing our client account and activity trends for the periods indicated.

Client Account Metrics– Retail Customers

• Retail customer net worth represents the total value of securities and cash in the retail customer accounts after deducting margin debits
• Retail customer margin debit balances represent credit extended to our customers to finance their purchases against current positions
• Retail customer credit balances represent client cash held in brokerage accounts
• Retail customer money market fund value represents all retail customers accounts invested in money market funds
• Retail customer accounts represent the number of retail customers

Statements of Operations and Financial Condition

Statements of Operations for the Three Months Ended March 31, 2025 and 2024

Revenue

Commissions and fees for the three months ended March 31, 2025 were $2,102,000 and decreased by $198,000 from the corresponding period in the prior year, primarily due to market conditions.

Interest, marketing and distribution fees for the three months ended March 31, 2025 were $6,945,000 and decreased by $1,818,000 from the corresponding period in the prior year primarily due to a decline in interest rates and change in customer asset mix.

Principal transactions and proprietary trading for the three months ended March 31, 2025 were $12,961,000 and increased by $9,455,000 from the corresponding period in the prior year, primarily due to the factors discussed below.

The increase in realized and unrealized gain on primarily riskless principal transactions was primarily due to the Company’s Investment in Equity Security. The income related to this investment is included in the “Unrealized gain on investment in equity security” line in the securities table below. Refer to Note 4 – Fair Value Measurement for additional detail.

Below is a summary of the change in the principal transactions and proprietary trading line item for the periods presented.

Market making for the three months ended March 31, 2025 was $552,000 and decreased by $120,000 from the corresponding period in the prior year, primarily due to market conditions.

Stock borrow / stock loan for the three months ended March 31, 2025 was $4,837,000 and increased by $739,000 from the corresponding period in the prior year, primarily due to growth in stock locate services and securities lending businesses.

Advisory fees for the three months ended March 31, 2025 were $748,000 and increased by $258,000 from the corresponding period in the prior year, primarily due to growth in platform assets.

Other income for the three months ended March 31, 2025 was 774,000 and increased by $147,000 from the corresponding period in the prior year, primarily due to fees related to administrative services.

Operating Expenses

Employee compensation and benefits for the three months ended March 31, 2025 were $11,992,000 and increased by $1,546,000 from the corresponding period in the prior year, primarily due to an increase in commission payouts and equity compensation, as well as additional personnel related to technology initiatives, and new business lines including our investment banking division.

Clearing fees, including execution costs for the three months ended March 31, 2025 were $454,000 and increased by $26,000 from the corresponding period in the prior year.

Technology and communications expenses for the three months ended March 31, 2025 were $1,105,000 and increased by $229,000 from the corresponding period in the prior year, primarily due to an expansion of technological infrastructure.

Other general and administrative expenses for the three months ended March 31, 2025 were $1,509,000 and increased by $480,000 from the corresponding period in the prior year primarily due to fees related to expansion into new businesses.

Data processing expenses for the three months ended March 31, 2025 were $949,000 and increased by $198,000 from the corresponding period in the prior year, primarily due to increased market activities.

Rent and occupancy expenses for the three months ended March 31, 2025 were $467,000 and decreased by $30,000 from the corresponding period in the prior year.

Professional fees for the three months ended March 31, 2025 were $1,359,000 and increased by $322,000 from the corresponding period in the prior year primarily due to the establishment of the investment advisory committee.

Depreciation and amortization expenses for the three months ended March 31, 2025 were $415,000 and increased by $160,000 from the corresponding period in the prior year, primarily due to an increase in depreciation related to the expansion of the technology infrastructure.

Interest expense for the three months ended March 31, 2025 was $89,000 and increased by $38,000 from the corresponding period in the prior year.

Advertising and promotion expense for the three months ended March 31, 2025 was $154,000 and increased by $100,000 from the corresponding period in the prior year, primarily due to an increase in marketing initiatives.

Provision For (Benefit From) Income Taxes

The provision from income taxes for the three months ended March 31, 2025 was $1,835,000 and increased by $420,000 from the corresponding period in the prior year. The change from the corresponding period in the prior year is primarily due to an increase in pre-tax earnings in the first quarter of 2025. Refer to Note 12 – Income Taxes for additional detail.

Net Income (Loss) Attributable to Noncontrolling Interests

As further discussed in Note 1 – Organization and Basis of Presentation, we consolidate RISE’s financial results into our financial statements and reflect the portion of RISE not held by Siebert as a noncontrolling interest in our financial statements. The net loss attributable to noncontrolling interests for the three months ended March 31, 2025 was $3,000 and increased by $2,000 from the corresponding period in the prior year.

Statements of Financial Condition As of March 31, 2025 and December 31, 2024

Assets

Assets as of March 31, 2025 were $534,187,000 and decreased by $14,519,000 from December 31, 2024, primarily due to a decrease in securities borrowed.

Liabilities

Liabilities as of March 31, 2025 were $439,915,000 and increased by $5,339,000 from December 31, 2024, primarily due to an increase in securities loaned partially offset by a decrease in payables to customers.

Liquidity and Capital Resources

Overview

As of March 31, 2025, a significant portion of our assets were liquid in nature, providing us with flexibility in financing our business. A significant portion of our assets not held by customers or used for stock borrow / stock loan consisted primarily of cash and cash equivalents, securities owned, at fair value, which are marked-to-market daily, and receivables from and deposits with broker-dealers and clearing organizations.

We expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance of new debt or equity, to support and invest in our core business, including investing in new ways to serve our customers, potentially seeking strategic acquisitions to leverage existing capabilities, and for general capital needs (including capital, deposit, and collateral requirements imposed by regulators and SROs).

Based on our current level of operations, we believe our available cash, available lines of credit, overall access to capital markets, and cash provided by operations will be adequate to meet our current liquidity needs for the foreseeable future. As of the date of this Report, other than the items detailed in the section below, there are no known or material events that would require us to use large amounts of our liquid assets to cover expenses.

Kakaopay

The net capital infusion from Kakaopay to Siebert from the First Tranche transaction was approximately $14.8 million after the issuance cost. This capital is currently being used to enhance our regulatory capital, and is primarily invested in U.S. government securities and is in the line item “Securities owned, at fair value” on the statements of financial condition. Refer to Note 6 – Kakaopay Transaction in our 2024 Form 10-K for further detail.

Cash and Cash Equivalents

Our cash and cash equivalents were $25.7 million and $32.6 million as of March 31, 2025 and December 31, 2024, respectively.

Credit Agreement

On August 15, 2024, we entered into the Credit Agreement with East West Bank providing a $20 million revolving credit facility, which offers substantial financial flexibility to support our strategic initiatives. This credit facility allows the Company to fund acquisitions, execute stock buybacks, and meet general corporate needs up to $10 million, ensuring access to capital for both growth and operational purposes. The two-year term of the Credit Agreement, combined with a competitive interest rate structure that is tied to either the one-month Term SOFR plus 3.15% or a minimum of 7.50%, provides a stable and predictable financing source. The personal guarantees provided by key executives, John J. Gebbia and Gloria E. Gebbia, and their trust, further strengthen the Company’s borrowing position and help secure favorable terms.

BMO Credit Agreement

On November 22, 2024, MSCO entered into a Credit Agreement (the “BMO Credit Agreement”) with BMO Harris Bank (“BMO Harris”). The BMO Credit Agreement provides for a revolving credit facility of up to $20,000,000. We may use any borrowings under the BMO Credit Agreement to finance NSCC Deposit Requirements (other than an Adequate Assurance Deposit) and withdrawals from a Reserve Account. As part of the agreement, we entered into a Parent Guaranty agreement guaranteeing repayment of any debt issued to MSCO.

Borrowings under the BMO Credit Agreement bears interest on the outstanding daily balance at a rate of interest per annum equal 2.5% plus the greater of: (a) Term SOFR for such day plus 0.11448% and (b) Federal Funds Target Range – Upper Limit and (c) 0.25%. The annual commitment fee is equal to one half of one percent (0.50%) of the average daily unused portion of the commitment of $20,000,000. The BMO Credit Agreement contains customary affirmative covenants and negative covenants and requires MSCO maintain minimum total regulatory capital of $45,000,000, excess net capital of 20,000,000, assets to total regulatory capital ratio of not more than 5.0 to 1.0, and a minimum liquidity ratio of not less than 1.0.

Debt Agreements

We have $4.2 million outstanding on our mortgage with East West Bank and an unutilized line of credit for short term overnight demand borrowing of up to $25 million with BMO Harris as of March 31, 2025. As of March 31, 2025, we were in compliance with all covenants related to our mortgage agreement.

Cash Requirements

The following table summarizes our short- and long-term material cash requirements as of March 31, 2025.

(1) Pursuant to the Settlement Agreement with Kakaopay, we will pay Kakaopay a fee of $5 million payable in ten quarterly installments that began in the first quarter of 2024. Refer to Note 6 – Kakaopay Transaction in our 2024 Form 10-K for further detail.

(2) On December 30, 2021, we purchased the Miami office building and financed part of the purchase price with a mortgage with East West Bank.

(3) We have entered into agreements with technology vendors for certain development projects related to our Retail Platform. As of March 31, 2025, we have incurred approximately $4.1 million out of the $4.4 million total budget for these vendors.

(4) In June 2023, we entered into an amendment to its service agreement with Broadridge Securities Processing Solutions, LLC with a total minimum expense of approximately $1.2 million for this arrangement.

Net Capital, Reserve Accounts, Segregation of Funds, and Other Regulatory Requirements

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Exchange Act and maintains capital and segregated cash reserves in excess of regulatory requirements. Requirements under these regulations may vary; however, MSCO has adequate reserves and contingency funding plans in place to sufficiently meet any regulatory requirements. In addition to net capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses, such as the DTCC and OCC, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility. RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1 and the corresponding regulatory capital requirements.

MSCO can transfer funds to Siebert as long as MSCO maintains its liquidity and regulatory capital requirements. RISE can transfer funds to its shareholders, of which Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements. For the three ended March 31, 2025 and 2024, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory capital requirements. Refer to Note 13 – Capital Requirements for more detail about our capital requirements.

Cash Flows

Cash used in operating activities consisted of net income adjusted for certain non-cash items. Net operating assets and liabilities at any specific point in time are subject to many variables, including variability in customer activity, the timing of cash receipts and payments, and vendor payment terms. The total changes in our statements of cash flows, especially our operating cash flow, are not necessarily indicative of the ongoing results of our business as we have customer assets and liabilities on our statements of financial condition.

For the three months ended March 31, 2025, cash used in operating activities decreased by $12.5 million compared to the prior year period, which was primarily driven by net change in securities loaned, securities borrowed and payables to customers.

For the three months ended March 31, 2025, cash used in investing activities decreased by $0.6 million compared to the prior year period, which was primarily driven by the New York office build out occurring in the prior year period.

For the three months ended March 31, 2025, cash flows used in financing activities decreased by $4.8 million compared to 2024, which was primarily driven by the draws on the bank loan occurring in the prior year period.

Long Term Contracts

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, we received a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000 over the term of the agreement. The amendment also provides for an early termination fee; however, as of March 31, 2025, we do not expect to terminate the contract with NFS before the end of the contract term. Refer to Note 10 – Deferred Contract Incentive and Note 16 – Commitments, Contingencies and Other for additional detail.

Effective June 2023, MSCO entered into an amendment to its service agreement with Broadridge Securities Processing Solutions, LLC that, among other things, extends the term of their arrangement for a five-year period ending June 2028, with an option to terminate after three years. The total minimum expense for this arrangement is estimated at approximately $1.2 million over the duration of the contract.

Off-Balance Sheet Arrangements

We enter into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and are, therefore, subject to varying degrees of market and credit risk. In the normal course of business, our customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose us to off-balance sheet risk in the event the customer or other broker is unable to fulfill their contracted obligations and we are forced to purchase or sell the financial instrument underlying the contract at a loss. There were no material losses for unsettled customer transactions for the three months ended March 31, 2025 and 2024. Refer to Note 14 – Financial Instruments with Off-Balance Sheet Risk for additional detail.

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative guidance issued under ASC 740-10, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements.

We recognize interest and penalties related to unrecognized tax benefits on the provision for income taxes line on the statements of operations. Accrued interest and penalties would be included on the related tax liability line on the statements of financial condition.

As of both March 31, 2025 and December 31, 2024, the Company recorded an uncertain tax position of $1,354,000 related to various tax matters, which is included in the line item “Taxes payable” in the statements of financial condition.

Critical Accounting Policies and Estimates

Certain of our accounting policies that involve a higher degree of judgment and complexity are discussed in Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K. As of March 31, 2025, there have been no changes to our critical accounting policies or estimates.

New Accounting Standards

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”). The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for us for annual periods beginning after December 15, 2024, though early adoption is permitted. We are still evaluating the presentational effect that ASU 2023-09 will have on our consolidated financial statements, but we expect considerable changes to our income tax footnote.

In November 2024, the FASB issued ASU “2024-03”, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU 2024-03”). The ASU is intended to enhance the transparency and decision usefulness of income statement expense disclosures by requiring greater disaggregation of certain expense categories. ASU 2024-03 will be effective for us for annual periods beginning after December 15, 2025, though early adoption is permitted. We are currently evaluating the impact that ASU 2024-03 will have on our consolidated financial statements and we anticipate the amendments will require significant changes to our expense disclosures.

Recent Accounting Pronouncements

Refer to Note 2 – Summary of Significant Accounting Policies for information regarding new Accounting Standards Updates (“ASU”s) issued by the FASB.

Financial Instruments Held For Trading Purposes

We do not directly engage in derivative transactions, have no interest in any special purpose entity and have no liabilities, contingent or otherwise, for the debt of another entity.

Financial Instruments Held For Purposes Other Than Trading

We generally invest our cash and cash equivalents temporarily in dollar denominated bank account(s). These investments are not subject to material changes in value due to interest rate movements.

We invest cash and securities segregated for regulatory purposes in dollar denominated bank accounts which are not subject to material changes in value due to interest rate movements. We also invest cash and securities segregated for regulatory purposes and securities owned, at fair value in U.S. government securities which may be subject to material changes in value due to interest rate movements. Securities owned, at fair value invested in U.S. government securities are generally purchased to enhance yields on required regulatory deposits. While the value of the government securities may be subject to material changes in value, we believe any reduction in value would be temporary since the securities would mature at par value.

As noted in Item 2, Siebert valued the restricted shares of the Investment in Equity Security using a Finnerty option-pricing model, including a discount of approximately 40%, which included the lack of marketability and other factors. For the three months ended March 31, 2025, Siebert recorded an unrealized gain of approximately $9.2 million in relation to the Investment in Equity Security. However, due to the volatility of the price of the shares, which has declined significantly since March 31, 2025, we are uncertain as to the total unrealized or realized gain or loss that will be recognized from the Investment in Equity Security. Solely for illustrative purposes, on May 7, 2025, the closing share price of the Investment in Equity Security fell to $25.24 per share, compared with $83.51 per share ($50.11 per share after the 40% discount) as of March 31, 2025. Had the Company sold its shares on May 7, 2025, the total gain would have been approximately $3.9 million, instead of the $9.2 million unrealized gain recognized during the three months ended March 31, 2025. Because the decline reflects conditions arising after March 31, 2025, no adjustment has been made to the accompanying financial statements. The potential change in the market value of the Investment in Equity Security may materially impact the results of future periods.

Customer transactions are cleared through clearing brokers on a fully disclosed basis and are also self-cleared by MSCO. If customers do not fulfill their contractual obligations any loss incurred in connection with the purchase or sale of securities at prevailing market prices to satisfy customer obligations may be incurred by Siebert. We regularly monitor the activity in customer accounts for compliance with margin requirements. We are exposed to the risk of loss on unsettled customer transactions if customers and other counterparties are unable to fulfill their contractual obligations. There were no material losses for unsettled customer transactions in the last five years.

See Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations - Trends and Key Factors Affecting our Operations of this Report for our quantitative and qualitative disclosures about market risk.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Executive Vice President / Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report pursuant to Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange of 1934, as amended (the “Exchange Act”). Based on its evaluation, our management, including our Chief Executive Officer and our Executive Vice President / Chief Financial Officer, concluded that as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

In addition to the other information set forth in this Report, investors should carefully consider the risk factors discussed in Part I, Item 1A - Risk Factors in our 2024 Form 10-K. Each of such risk factors could materially affect our business, financial position, and results of operations. Except for the additional risk factor noted below, as of the date of this Report, there have been no material changes from the risk factors disclosed in our 2024 Form 10-K.

The total unrealized or realized gain or loss that will be recognized from the Investment in Equity Security is uncertain, and the potential change in the market value of the Investment in Equity Security, which has declined significantly since March 31, 2025, may materially impact the results of future periods.

During the three months ended March 31, 2025, Siebert acquired the Investment in Equity Security in connection with a private placement from a private U.S company that subsequently completed an initial public offering. These shares are subject to resale restrictions until the sale is registered with the SEC or an exemption from such registration requirements becomes available. The date of the registration of such resale is uncertain as of the date of this Report.

Siebert valued the restricted shares of the Investment in Equity Security using a Finnerty option-pricing model, including a discount of approximately 40%, which included the lack of marketability and other factors. Refer to Note 4 – Fair Value Measurements for additional details.

For the three months ended March 31, 2025, Siebert recorded an unrealized gain of approximately $9.2 million in relation to the Investment in Equity Security. However, due to the volatility of the price of the shares, which has declined significantly since March 31, 2025, we are uncertain as to the total unrealized or realized gain or loss that will be recognized from the Investment in Equity Security. Solely for illustrative purposes, on May 7, 2025, the closing share price of the Investment in Equity Security fell to $25.24 per share, compared with $83.51 per share ($50.11 per share after the 40% discount) as of March 31, 2025. Had the Company sold its shares on May 7, 2025, the total gain would have been approximately $3.9 million, instead of the $9.2 million unrealized gain recognized during the three months ended March 31, 2025. Because the decline reflects conditions arising after March 31, 2025, no adjustment has been made to the accompanying financial statements. The potential change in the market value of the Investment in Equity Security may materially impact the results of future periods.