If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of ~~May 25,~~November 16, 2020, there were ~~30,653,710~~30,953,710 shares of the registrant’s ~~outstanding~~ common stock.

~~EXPLANATORY NOTE~~

As previously reported in a Form 8-K filed on May 15, 2020, the registrant relied on the Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) to delay filing its Quarterly Report on Form 10-Q for the three months ended March 31, 2020 (“2020 Q1 10Q”).

The impact of the coronavirus (“COVID-19”) pandemic on the registrant has caused disruptions to the registrant’s operations including requiring key personnel to devote considerable time and resources to manage emerging issues impacting its business as well as transitioning such personnel to work remotely, all of which has slowed the registrant’s routine quarterly close process. Considering the lack of time for the compilation, dissemination and review of the information required to be presented and the importance of markets and investors receiving materially accurate information, additional time was required to complete the 2020 Q1 10Q.

SIEBERT FINANCIAL CORP.

INDEX

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

	March 31, 2020		December 31, 2019*		September 30, 2020		December 31, 2019*
ASSETS

Current assets
Cash and cash equivalents	$	5,220,000	$	4,670,000	$	4,536,000	$	4,670,000
Cash and securities segregated for regulatory purposes		227,581,000		224,924,000		263,980,000		224,924,000
Receivables from customers		70,447,000		86,331,000		91,842,000		86,331,000
Receivables from broker-dealers and clearing organizations		3,311,000		3,524,000		3,312,000		3,524,000
Other receivables		1,035,000		762,000		873,000		762,000
Prepaid expenses and other assets		653,000		970,000		1,444,000		970,000
Securities borrowed		62,223,000		193,529,000		283,757,000		193,529,000
Securities owned, at fair value		3,680,000		3,018,000		3,480,000		3,018,000
Total Current assets		374,150,000		517,728,000		653,224,000		517,728,000

Deposits with broker-dealers and clearing organizations		5,273,000		4,951,000		5,094,000		4,951,000
Prepaid service contract – non-current						1,890,000		—
Furniture, equipment and leasehold improvements, net		1,048,000		1,150,000		850,000		1,150,000
Software, net		1,792,000		1,888,000		1,503,000		1,888,000
Lease right-of-use assets		3,430,000		3,951,000		2,813,000		3,951,000
Deferred tax assets		5,096,000		5,388,000		5,239,000		5,388,000
Intangible assets, net		956,000		1,022,000		850,000		1,022,000
Goodwill		1,989,000		1,989,000		1,989,000		1,989,000
Total Assets	$	393,734,000	$	538,067,000	$	673,452,000	$	538,067,000

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities
Current liabilities
Payables to customers	$	285,070,000	$	308,091,000	$	342,156,000	$	308,091,000
Payables to non-customers		7,404,000		8,063,000		9,346,000		8,063,000
Drafts payable		2,621,000		2,834,000		1,635,000		2,834,000
Payables to broker-dealers and clearing organizations		1,033,000		523,000		356,000		523,000
Accounts payable and accrued liabilities		2,657,000		2,443,000		2,754,000		2,443,000
Securities loaned		48,836,000		170,443,000		266,777,000		170,443,000
Securities sold, not yet purchased, at fair value		31,000		116,000		25,000		116,000
Interest payable		40,000		10,000		—		10,000
Notes payable - related party		8,000,000		8,000,000
Taxes payable		86,000		—
Current portion of notes payable - related party						3,000,000		8,000,000
Current portion of lease liabilities		2,135,000		2,227,000		1,633,000		2,227,000
Current portion of long-term debt						997,000		—
Total Current liabilities		357,913,000		502,750,000		628,679,000		502,750,000

Lease liabilities, less current portion		1,710,000		2,182,000		1,548,000		2,182,000
Notes payable – related party, less current portion						3,000,000		—
Long-term debt, less current portion						3,907,000		—
Total Liabilities		359,623,000		504,932,000		637,134,000		504,932,000

Commitments and Contingencies
Stockholders’ equity
Common stock, $.01 par value; 100 million shares authorized; 30,459,804 shares issued and outstanding as of March 31, 2020 and December 31, 2019**		304,000		304,000
Common stock, $.01 par value; 100 million shares authorized; 30,653,710 and 30,459,804 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively**						306,000		304,000
Additional paid-in capital		19,897,000		19,897,000		21,022,000		19,897,000
Retained earnings		13,910,000		12,934,000		14,990,000		12,934,000
Total Stockholders’ equity		34,111,000		33,135,000		36,318,000		33,135,000

Total Liabilities and stockholders' equity	$	393,734,000	$	538,067,000	$	673,452,000	$	538,067,000

*Statement of financial condition as of December 31, 2019 represents the pro forma combination of Siebert and StockCross balances. See “Note 3 – Acquisitions” for additional detail.

**Shares outstanding as of December 31, 2019 represents the combined total of the Company’s shares outstanding and the shares issued for the Company’s acquisition of StockCross. See “Note 1 – Organization and Basis of Presentation” for additional detail.

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

~~-1-~~- 1 -

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended March 31,				Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019		2020			2019		2020		2019
Revenue
Commissions and fees	$	5,583,000	$	2,268,000	$	4,679,000		$	2,273,000	$	15,149,000	$	7,132,000
Margin interest, marketing and distribution fees		3,294,000		3,556,000		2,311,000			3,912,000		7,730,000		11,161,000
Principal transactions		3,203,000		1,890,000		2,342,000			2,327,000		8,126,000		6,138,000
Interest income		1,331,000		1,173,000		915,000			1,061,000		3,155,000		3,417,000
Market making		470,000		563,000		423,000			330,000		1,508,000		1,303,000
Stock borrow / stock loan		444,000		581,000		1,267,000			349,000		2,482,000		1,353,000
Advisory fees		262,000		168,000		305,000			211,000		810,000		572,000
Other income		214,000		79,000		333,000			290,000		1,035,000		633,000
Total Revenue		14,801,000		10,278,000		12,575,000			10,753,000		39,995,000		31,709,000

Expenses
Employee compensation and benefits		7,291,000		4,528,000		6,584,000			4,809,000		20,489,000		13,812,000
Clearing fees, including execution costs		1,298,000		802,000		1,270,000			798,000		3,907,000		2,325,000
Technology and communications		981,000		422,000		1,322,000			441,000		3,256,000		1,264,000
Other general and administrative		854,000		733,000		455,000			868,000		1,710,000		2,787,000
Data processing		849,000		543,000		784,000			527,000		2,387,000		1,487,000
Rent and occupancy		727,000		531,000		694,000			630,000		2,119,000		1,754,000
Professional fees		655,000		883,000		760,000			783,000		2,159,000		2,568,000
Depreciation and amortization		448,000		194,000		368,000			244,000		1,193,000		689,000
Referral fees		111,000		—		154,000			—		427,000		—
Interest expense		76,000		21,000		89,000			31,000		253,000		84,000
Total Expenses		13,290,000		8,657,000		12,480,000			9,131,000		37,900,000		26,770,000

Income before provision for income taxes		1,511,000		1,621,000
Provision for income taxes		535,000		397,000
Income before provision (benefit) for (from) income taxes						95,000			1,622,000		2,095,000		4,939,000
Provision (benefit) for (from) income taxes						(486,000	)		349,000		39,000		1,365,000
Net income	$	976,000	$	1,224,000	$	581,000		$	1,273,000	$	2,056,000	$	3,574,000

Net income per share of common stock
Basic and diluted	$	0.03	$	0.04	$	0.02		$	0.04	$	0.07	$	0.12

Weighted average shares outstanding
Basic and diluted		30,459,804		30,459,804		30,653,710			30,455,962		30,565,822		30,455,962

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

~~-2-~~- 2 -

~~SIEBERT FINANCIAL CORP. & SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~(unaudited)~~

Three Months Ended March 31, 2020

Number of Shares
Issued
$.01 Par Value
Additional Paid-
In Capital
Retained Earnings Total
Balance – January 1, 2020
27,157,188

$
271,000

$
7,641,000

$
12,869,000

$
20,781,000

Shares issued for StockCross purchase
3,302,616

33,000

12,256,000

65,000

12,354,000

Net income
—

—

—

976,000

976,000

Balance – March 31, 2020
30,459,804

$
304,000

$
19,897,000

$
13,910,000

$
34,111,000

Three Months Ended March 31, 2019

Number of Shares
Issued
$.01 Par Value
Additional Paid-
In Capital
Retained Earnings Total
Balance – January 1, 2019
27,157,188

$
271,000

$
7,641,000

$
9,262,000

$
17,174,000

Shares issued for StockCross purchase
3,302,616

33,000

14,037,000

—

14,070,000

Net income
—

—

—

1,224,000

1,224,000

Balance – March 31, 2019
30,459,804

$
304,000

$
21,678,000

$
10,486,000

$
32,468,000

~~Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.~~

~~-3-~~

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

Three Months Ended
March 31,

2020 2019
Cash Flows From Operating Activities

Net income
$
976,000

$
1,224,000

Adjustments to reconcile net income to net cash provided by / (used in) operating activities:

Deferred income tax expense
291,000

90,000

Depreciation and amortization
448,000

194,000

Changes in
Receivables from customers
15,884,000

(5,063,000
)
Receivables from non-customers
—

(146,000
)
Receivables from and deposits with broker-dealers and clearing organizations
(109,000
)

199,000

Securities borrowed
131,306,000

(65,259,000
)
Securities owned, at fair value
(662,000
)

(1,711,000
)
Prepaid expenses and other assets
44,000

(198,000
)
Payables to customers
(23,021,000
)

(2,344,000
)
Payables to non-customers
(659,000
)

4,305,000

Drafts payable
(213,000
)

1,910,000

Payables to broker-dealers and clearing organizations
510,000

453,000

Accounts payable and accrued liabilities
214,000

(274,000
)
Securities loaned
(121,607,000
)

58,449,000

Securities sold, not yet purchased, at fair value
(85,000
)

11,000

Interest payable
30,000

—

Lease liabilities
(43,000
)

273,000

Taxes payable
86,000

185,000

Net cash provided by / (used in) operating activities

3,390,000

(7,702,000
)

Cash Flows From Investing Activities

Purchase of furniture, equipment, and leasehold improvements
—

(579,000
)
Purchase of software
(183,000
)

(387,000
)
Net cash used in investing activities

(183,000
)

(966,000
)

Cash Flows From Financing Activities

Purchase of StockCross common stock
—

(3,665,000
)
Treasury stock sales - StockCross
—

172,000

Net cash used in financing activities

—

(3,493,000
)

Net increase / (decrease) in cash and cash equivalents, and cash and securities segregated for regulatory purposes

3,207,000

(12,161,000
)
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - beginning of year
229,594,000

214,038,000

Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period

$
232,801,000

$
201,877,000

Cash and cash equivalents - end of period

$
5,220,000

$
5,892,000

Cash and securities segregated for regulatory purposes - end of period

227,581,000

195,985,000

Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period

$
232,801,000

$
201,877,000

Supplemental cash flow information

Cash paid during the period for income taxes
$
17,000

$
5,500

Cash paid during the period for interest
$
116,000

$
103,000


	Number of Shares Issued		$.01 Par Value		Additional Paid-In Capital		Retained Earnings		Total
Balance – January 1, 2020		27,157,188	$	271,000	$	7,641,000	$	12,869,000	$	20,781,000
Shares issued for StockCross purchase		3,302,616		33,000		12,256,000		65,000		12,354,000
Net income		—		—		—		976,000		976,000
Balance – March 31, 2020		30,459,804	$	304,000	$	19,897,000	$	13,910,000	$	34,111,000
Shares issued for payment of professional services		193,906		2,000		1,125,000		—		1,127,000
Net income		—		—		—		499,000		499,000
Balance – June 30, 2020		30,653,710	$	306,000	$	21,022,000	$	14,409,000	$	35,737,000
Net income		—		—		—		581,000		581,000
Balance – September 30, 2020		30,653,710	$	306,000	$	21,022,000	$	14,990,000	$	36,318,000


	Number of Shares Issued		$.01 Par Value		Additional Paid-In Capital			Retained Earnings		Total
Balance – January 1, 2019		27,157,188	$	271,000	$	7,641,000		$	9,262,000	$	17,174,000
Shares issued for StockCross purchase		3,302,616		33,000		14,037,000			—		14,070,000
Net income		—		—		—			1,224,000		1,224,000
Balance – March 31, 2019		30,459,804	$	304,000	$	21,678,000		$	10,486,000	$	32,468,000
Net income		—		—		—			1,079,000		1,079,000
Balance – June 30, 2019		30,459,804	$	304,000	$	21,678,000		$	11,565,000	$	33,547,000
Return of capital distribution		—		—		(1,600,000	)		—		(1,600,000	)
Net income		—		—		—			1,273,000		1,273,000
Balance – September 30, 2019		30,459,804	$	304,000	$	20,078,000		$	12,838,000	$	33,220,000

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

~~-4-~~- 3 -

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended September 30,
	2020			2019
Cash Flows From Operating Activities
Net income	$	2,056,000		$	3,574,000
Adjustments to reconcile net income to net cash provided by / (used in) operating activities:
Deferred income tax expense		148,000			672,000
Depreciation and amortization		1,193,000			689,000

Changes in
Receivables from customers		(5,511,000	)		(15,339,000	)
Receivables from non-customers		—			(103,000	)
Receivables from and deposits with broker-dealers and clearing organizations		69,000			(14,000	)
Securities borrowed		(90,228,000	)		43,382,000
Securities owned, at fair value		(462,000	)		1,671,000
Prepaid expenses and other assets		(586,000	)		167,000
Prepaid service contract – non-current		(763,000	)		—
Payables to customers		34,065,000			(3,541,000	)
Payables to non-customers		1,283,000			(3,847,000	)
Drafts payable		(1,199,000	)		234,000
Payables to broker-dealers and clearing organizations		(167,000	)		1,004,000
Accounts payable and accrued liabilities		311,000			(143,000	)
Securities loaned		96,334,000			(35,905,000	)
Securities sold, not yet purchased, at fair value		(91,000	)		(4,000	)
Interest payable		(10,000	)		—
Lease liabilities		(90,000	)		334,000
Taxes payable		—			14,000
Other liabilities		—			91,000
Net cash provided by / (used in) operating activities		36,352,000			(7,064,000	)

Cash Flows From Investing Activities
Escrow deposit		—			(2,000,000	)
Purchase of furniture, equipment, and leasehold improvements		—			(783,000	)
Purchase of software		(334,000	)		(1,086,000	)
Net cash used in investing activities		(334,000	)		(3,869,000	)

Cash Flows From Financing Activities
Notes payable – related party		(2,000,000	)		2,000,000
Long-term debt		4,904,000			—
Purchase of StockCross common stock		—			(3,425,000	)
Return of capital distribution - StockCross		—			(1,600,000	)
Treasury stock sales - StockCross		—			172,000
Net cash provided by / (used in) financing activities		2,904,000			(2,853,000	)

Net increase / (decrease) in cash and cash equivalents, and cash and securities segregated for regulatory purposes		38,922,000			(13,786,000	)
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - beginning of year		229,594,000			214,038,000
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period	$	268,516,000		$	200,252,000

Cash and cash equivalents - end of period	$	4,536,000		$	5,883,000
Cash and securities segregated for regulatory purposes - end of period		263,980,000			194,369,000
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period	$	268,516,000		$	200,252,000

Supplemental cash flow information
Cash paid during the period for income taxes	$	133,000		$	635,000
Cash paid during the period for interest	$	263,000		$	84,000

Non-cash investing and financing activities
Shares issued for payment of professional services	$	1,127,000		$	—

Numbers are rounded for presentation purposes. See notes to condensed consolidated financial statements.

- 4 -

SIEBERT FINANCIAL CORP. & SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Basis of Presentation

Organization

Overview

Siebert Financial Corp., a New York corporation incorporated in 1934, is a holding company that conducts its retail brokerage business through its wholly-owned subsidiary, Muriel Siebert & Co., Inc. (“MSCO”), a Delaware corporation and registered broker-dealer, its investment advisory business through its wholly-owned subsidiary, Siebert AdvisorNXT, Inc. (“SNXT”), a New York corporation registered with the U.S. Securities and Exchange Commission (“SEC”) as a Registered Investment Adviser under the Investment Advisers Act of 1940, as amended, and its insurance business through its wholly-owned subsidiary, Park Wilshire Companies, Inc. (“PWC”), a Texas corporation and licensed insurance agency. Siebert conducts operations through its wholly-owned subsidiary, Siebert Technologies, LLC. (“STCH”), a Nevada limited liability company and developer of robo-advisory technology. Siebert offers prime brokerage services through its ~~fifth~~ wholly-owned subsidiary, ~~Weeden~~WPS Prime Services, LLC, (“WP”), a Delaware limited liability company and a broker-dealer registered with the SEC. As of the beginning of May 2020, the Company filed for the name of Weeden Prime Services, LLC to be changed to WPS Prime Services, LLC, pursuant to the terms of an agreement the Company had with the previous owners of WP. The CompanySiebert also owns StockCross Digital Solutions, Ltd. (“STXD”), an inactive subsidiary headquartered in ~~Bermuda~~.Bermuda. For purposes of this Quarterly Report on Form 10-Q, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp., MSCO, SNXT, PWC, STCH, WP, and STXD collectively, unless the context otherwise requires.

The Company is headquartered in New York, NY, with primary operations in New Jersey, Florida, and California. The Company has 1816 branch offices throughout the U.S. and clients around the world. The Company’s SEC filings are available through the Company’s website at www.siebert.com, where investors can obtain copies of the Company’s public filings free of charge. The Company’s common stock, par value $.01 per share, trades on the Nasdaq Capital Market under the symbol “SIEB.”

The Company primarily operates in the securities brokerage and asset management industry and has no other reportable segments. All of the Company's revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019 were derived from its operations in the U.S.

As ~~a result~~ of ~~its acquisitions of StockCross Financial Services, Inc. (“StockCross”) in January 2020 and WP in December 2019, the Company re-evaluated its reportable segments and concluded that as of March 31,~~September 30, 2020, the Company is comprised of a single operating segment based on the factors related to management’s decision-making framework as well as management evaluating performance and allocating resources based on assessments of the Company from a consolidated perspective.

WPS Prime Services, LLC

As previously disclosed in a Current Report on Form 8-K filed on June 26, 2020, on June 22, 2020, the Company and WPS Acquisitions, LLC entered into an agreement pursuant to which the Company at closing would have sold all of the member interests in WP to WPS Acquisitions, LLC for a purchase price of $7.3 million. As reported in a Current Report on Form 8-K filed on July 30, 2020, effective July 24, 2020, the agreement was terminated by the Company.

Acquisition of StockCross

As previously disclosed in a Current Report on Form 8-K filed on January 25, 2019, the Company purchased approximately 15% of the outstanding shares of ~~StockCross.~~StockCross Financial Services, Inc. (“StockCross”). Subsequently, as previously disclosed in a Current Report on Form 8-K filed on January 7, 2020, the Company acquired the remaining 85% of StockCross’ outstanding shares in exchange for 3,298,774 shares of the Company’s common stock. Effective January 1, 2020, StockCross was merged with and into MSCO, and as of January 1, 2020, all clearing and other services provided by StockCross are performed by MSCO.

Change in Reporting Entity

As of the date of the Company’s acquisition of StockCross, the Company and StockCross were entities under common control of Gloria E. Gebbia, the Company’s principal stockholder, and members of her immediate family (collectively, the “Gebbia Family”). The acquisition represented a change in reporting entity and as such, the companies have been presented on a combined basis for all periods presented in the unaudited condensed consolidated financial statements (“financial statements”). See “Note 3 – Acquisitions” for additional detail on the transaction with StockCross and the corresponding accounting.

- 5 -

COVID-19

The challenges posed by the COVID-19 pandemic on the global economy increased significantly asstarting in the first quarter of ~~2020 progressed.~~2020. COVID-19 has spread across the globe during 2020 and ~~is impacting~~has impacted economic activity worldwide. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing.

The Company instituted a number of temporary closures of branch offices; however, as of the date of the filing of this report, all of the Company’s branch offices have been re-opened while maintaining compliance with federal, state and local mandates and guidelines. The Company has taken significant steps to ensure that its employees and customers are operating in a safe environment by implementing measures such as social distancing, sanitizing workstations, temperature checks, requiring masks, and alternating staff. The impact from the COVID-19 pandemic has caused the revenue and income of the Company to decrease; however, the Company has implemented various initiatives to offset this decline.

The Company is actively monitoring the impact of COVID-19 on the Company’s business, financial condition, liquidity, operations, employees, clients and business partners. Based on management’s assessment as of ~~March 31,~~September 30, 2020, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time.

See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional detail on COVID-19 and its impact on the Company.

~~-5-~~

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of ~~the Company’s~~ management, the accompanying financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These financial statements should be read in conjunction with the financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”). The financial statements include the accounts of Siebert and its wholly-owned subsidiaries and upon consolidation, all intercompany balances and transactions are eliminated. The U.S. dollar is the functional currency of the Company and numbers are rounded for presentation purposes.

Significant Accounting Policies

The Company’s significant accounting policies are included in “Note 2 – Summary of Significant Accounting Policies” in the Company’s 2019 Form 10-K. The following changes to the Company’s significant accounting policies as of ~~March 31,~~September 30, 2020 are primarily due to the acquisition of StockCross. Other than the updates indicated below and in “Note 2 – New Accounting Standards,” there have been no significant changes to the Company’s significant accounting policies.

Cash and Securities Segregated For Regulatory Purposes

MSCO is subject to ~~Customer Account~~Exchange Act Rule 15c3-3, ofreferred to as the ~~SEC~~“Customer Protection Rule,” which requires segregation of funds in a special reserve account for the exclusive benefit of customers. Effective upon the Company’s acquisition of StockCross on January 1, 2020, the requirements and special reserve accounts of MSCO and StockCross were combined. See “Note 1315 – Capital Requirements” for additional detail.

Receivables From and Payables To Customers

Accounts receivable from and payable to customers include amounts due and owed on cash and margin transactions. Securities owned by customers are held as collateral for receivables. Receivables from customers are reported at their outstanding principal balance, adjusted for any allowance for doubtful accounts. An allowance is established when collectability is not reasonably assured. When the receivable from a brokerage client is considered to be impaired, the amount of impairment is generally measured based on the fair value of the securities acting as collateral, which is measured based on current prices from independent sources such as listed market prices or broker-dealer price quotations. Securities beneficially owned by customers, including those that collateralize margin or other similar transactions, are not reflected in the statements of financial condition. No valuation allowance for doubtful accounts was necessary as of ~~March 31,~~September 30, 2020 and December 31, 2019.

- 6 -

Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations

Accounts receivable from and payable to broker-dealers and clearing organizations includes amounts due from / to introducing broker-dealers, fail-to-deliver and fail-to-receive items, and amounts receivable for unsettled regular-way transactions. Deposits with broker-dealers and clearing organizations include amounts held on deposit with broker-dealers and clearing organizations and are included in the line item “Deposits with broker-dealers and clearing organizations.”

MSCO customer transactions for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 were both self-cleared and cleared on a fully disclosed basis through National Financial Services Corp. (“NFS”). MSCO customer transactions for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 were cleared on a fully disclosed basis through NFS and StockCross, the former of which was an affiliate. As of January 1, 2020, all clearing and other services provided by StockCross are performed by MSCO.

The Company operates on a month to month basis with its broker-dealers and clearing organizations and their fees are offset against the Company's revenues on a monthly basis. As of ~~March 31,~~September 30, 2020, the Company’s cash clearing deposits with NFS were $50,000. As of December 31, 2019, MSCO’s cash clearing deposits with NFS and StockCross were $50,000 and $75,000, respectively. Upon the closing of the Company’s acquisition of StockCross on January 1, 2020, all MSCO deposits with StockCross were eliminated. As of ~~March 31,~~September 30, 2020 and December 31, 2019, ~~the Company~~MSCO had deposits with and other ~~non current~~non-current receivables from multiple broker-dealers and clearing organizations of approximately ~~$2.2~~$2.1 million and ~~$1.8~~$1.9 million, respectively.

~~-6-~~

~~Institutional~~WP’s customer transactions clear on a fully disclosed basis through two clearing broker-dealers, The Goldman Sachs Group, Inc. (“Goldman Sachs”) and Pershing LLC (“Pershing”). Amounts payable to broker-dealers and clearing organizations are offset against amounts receivables from broker-dealers and clearing organizations. Receivables from these broker-dealers and clearing organizations are subject to ~~clearance~~clearing agreements and include the net receivable from net monthly revenues as well as cash on deposit. As of both ~~March 31,~~September 30, 2020 and December 31, 2019, WP’s cash clearing deposits with Goldman Sachs and Pershing were approximately $2 million and $1 ~~million.~~million, respectively.

The Company evaluates receivables from broker-dealers and clearing organizations and other receivables for collectability noting no amount was considered uncollectable as of ~~March 31,~~September 30, 2020 and December 31, 2019. No valuation allowance is recognized for these receivables as the Company does not have a history of losses from these receivables and does not anticipate losses in the future. See “Note 911 – Revenue Recognition” for additional detail on the accounting policies for the revenue related to these receivables.

Securities Borrowed and Securities Loaned

Securities borrowed are recorded at the amount of cash collateral advanced. Securities borrowed transactions require the Company to deposit cash, letters of credit, or other collateral with the lender. Securities loaned are recorded at the amount of cash collateral received. For securities borrowed and loaned, the Company monitors the market value of the securities and obtains or refunds collateral as necessary.

Securities Owned, at Fair Value

Securities owned, at fair value represent marketable securities owned by the Company at trade-date valuation. See “Note 56 – Fair Value Measurements” for additional detail.

Payables to Non-Customers

Accounts payable to non-customers includes amounts due on cash and margin transactions on accounts owned and controlled by principal officers, directors and stockholders of the Company. Payables to non-customers amounts include any amounts received from interest on credit balances.

Payables to non-customers also include amounts due on cash transactions owned and controlled by the Company’s proprietary accounts of introducing broker-dealers. Effective upon the Company’s acquisition of StockCross on January 1, 2020, the Company no longer had any proprietary accounts of introducing broker-dealers.

Securities Sold, Not Yet Purchased, at Fair Value

Securities sold, not yet purchased, at fair value represent marketable securities sold by the Company prior to purchase at trade-date valuation. See “Note 56 – Fair Value Measurements” for additional detail.

- 7 -

2. New Accounting Standards

Recently Adopted Accounting Pronouncements

ASU 2018-15 - In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-15, ~~Intangibles—~~Intangibles, Goodwill and ~~Other—~~Other Internal-Use Software, (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires customers to apply the same criteria for capitalizing implementation costs incurred in a cloud computing arrangement that is hosted by the vendor as they would for an arrangement that has a software license. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The standard can be adopted prospectively or retrospectively. The Company adopted this new standard on January 1, ~~2020 and determined it was immaterial to the Company’s financial statements as of March 31,~~ 2020.See “Note 5 – Prepaid Service Contract” for additional detail.

ASU 2018-13 - In August 2018, the FASB issued ASU 2018-13, Fair value Measurement (Accounting Standards Codification (“ASC”) 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. The standard is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019 and early adoption is permitted. The Company adopted the new standard on its effective date, January 1, 2020, and determined it was immaterial to the Company’s financial statements as of ~~March 31,~~September 30, 2020.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s financial statements and related disclosures as of March 31, 2020.

~~-7-~~

~~Recently Issued Accounting Pronouncements~~

ASU 2018-07 - In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718). ASU 2018-07 is intended to reduce cost and complexity of financial reporting for non-employee share-based payments. Currently, the accounting requirements for non-employee and employee share-based payments are significantly different. ASU 2018-07 expands the scope of Topic 718, which currently only includes share-based payments to employees, to include share-based payments to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, “Equity - Equity-Based Payments to Nonemployees.” The amendments to ASU 2018-07 are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of ASU No. 2014-09, (Topic 606), “Revenue from Contracts with Customers.” The Company ~~determined the impact from~~adopted this accounting pronouncement ~~was immaterial to~~on January 1, 2020.

3. Acquisitions

StockCross

Overview of Acquisition

Established in 1971, StockCross was one of the largest privately-owned brokerage firms in the nation and its operations ~~consist~~consisted primarily of market making, fixed-income products distribution, online or broker-assisted equity trading, securities lending, and equity stock plan services.

Prior to being acquired by the Company, StockCross and the Company were affiliated entities through common ownership and had various related party transactions. In January 2019, the Company acquired approximately 15% ownership of StockCross. Effective January 1, 2020, pursuant to an Agreement and Plan of Merger, the Company acquired the remaining 85% of StockCross’ outstanding shares and StockCross was merged with and into MSCO. The purchase price paid was approximately $29,750,000 or 3,298,774 shares of the Company’s restricted common stock which was issued in connection with the acquisition. Prior to the acquisition, MSCO had a clearing agreement with StockCross whereby StockCross provided custody and clearing services to MSCO for its securities broker-dealer business; however, as of January 1, 2020, all clearing and other services provided by StockCross are performed by MSCO.

The acquisition of StockCross provides new business lines to the Company such as market making, equity stock plan services, self-clearing and custody, and securities lending. Merging StockCross into MSCO increases MSCO’s total net capital and assets under management as well as adds two offices. In addition, StockCross provides an equity stock plan service business line that offers integrated and comprehensive solutions to corporate service clients and employee participants.

Accounting for Acquisition

Prior to and as of the date of the acquisition, the Company and StockCross were entities under common control of the Gebbia ~~Family~~.Family. As such, the acquisition was accounted for as a transaction between entities under common control.

A common-control transaction is similar to a business combination for the Company as it is the entity that received the net assets of StockCross; however, this common-control transaction does not meet the definition of a business combination in accordance with GAAP because there is no change in control over the net assets.

- 8 -

The acquisition represented a change in reporting entity. As such, upon the closing of the acquisition, the net assets of the Company were combined with those of StockCross at their historical carrying ~~amounts and the~~amounts. The companies have been presented on a combined basis for all periods presented in the financial statements in a manner similar to a pooling of interests, as the period of common control existed prior to the periods presented in the financial statements. Accordingly, the historical financial statements of the Company have been presented under the “as if pooling” method.

Prior to the Company’s acquisition of StockCross, StockCross sold its treasury stock totaling $172,000 to third parties and ~~as indicated above,~~ the Company purchased approximately 15% of the outstanding shares of StockCross from an unrelated party for ~~$3,665,000. These~~$3,665,000. On September 5, 2019, StockCross made a return of capital distribution in the aggregate amount of $1.6 million, of which the Company received approximately 15%, or $241,000. All of these cash transactions are reflected in the “Cash flows from financing activities” section of the statements of cash ~~flows.~~flows for the nine months ended September 30, 2019.

Assets Acquired and Liabilities Assumed

The Company acquired various assets and liabilities from StockCross which were recorded at their historical carrying amounts and summarized below:

~~-8-~~

	Historical Carrying Value		Historical Carrying Value

Assets acquired
Cash and cash equivalents	$	1,588,000	$	1,588,000
Cash and securities segregated for regulatory purposes		224,814,000		224,814,000
Receivables from customers		86,331,000		86,331,000
Receivables from broker-dealers and clearing organizations		3,105,000		3,105,000
Other receivables		627,000		627,000
Prepaid expenses and other assets		346,000		346,000
Securities borrowed		193,529,000		193,529,000
Securities owned, at fair value		3,018,000		3,018,000
Furniture, equipment and leasehold improvements, net		19,000		19,000
Lease right-of-use assets		1,141,000		1,141,000
Deferred tax assets		407,000		407,000
Total Assets acquired		514,925,000		514,925,000

Liabilities acquired
Liabilities assumed
Payables to customers		308,091,000		308,091,000
Payables to non-customers		9,151,000		9,151,000
Drafts payable		2,834,000		2,834,000
Payables to broker-dealers and clearing organizations		1,406,000		1,406,000
Accounts payable and accrued liabilities		963,000		963,000
Securities loaned		170,443,000		170,443,000
Securities sold, not yet purchased, at fair value		28,000		28,000
Notes payable – related party		5,000,000		5,000,000
Lease liabilities		1,295,000		1,295,000
Total Liabilities acquired		499,211,000
Total Liabilities assumed				499,211,000

Net Assets acquired	$	15,714,000	$	15,714,000

Pro Forma Statements

The following pro forma financial statements present the statements of income of the Company as if the acquisition of StockCross had occurred on January 1, 2019, inclusive of pro forma adjustments (unaudited). The combined results of these pro forma financial statements are also reflected in the Company’s financial ~~statements.~~statements for the periods presented for 2019. StockCross’ ~~statement of income and statement of~~ financial ~~condition~~statements have already been consolidated in the Company’s financial statements for the periods presented for 2020:

~~-9-~~- 9 -

Statements of Operations

Three Months Ended September 30, 2019 (unaudited)

	Three Months Ended March 31, 2019									Three Months Ended September 30, 2019
	Siebert		StockCross		Pro Forma Adjustments			Total Combined Siebert		Siebert		StockCross		Pro Forma Adjustments			Total Combined Siebert

Revenue
Commissions and fees	$	1,864,000	$	404,000	$	—		$	2,268,000	$	1,925,000	$	348,000	$	—		$	2,273,000
Margin interest, marketing and distribution fees		2,772,000		784,000		—			3,556,000		2,944,000		968,000		—			3,912,000
Principal transactions		1,610,000		280,000		—			1,890,000		2,041,000		286,000		—			2,327,000
Interest income		15,000		1,158,000		—			1,173,000		23,000		1,038,000		—			1,061,000
Market making		—		563,000		—			563,000		—		330,000		—			330,000
Stock borrow / stock loan		—		581,000		—			581,000		—		349,000		—			349,000
Advisory fees		168,000		—		—			168,000		211,000		—		—			211,000
Other income		—		138,000		(59,000	)		79,000		—		351,000		(61,000	)		290,000
Total Revenue		6,429,000		3,908,000		(59,000	)		10,278,000		7,144,000		3,670,000		(61,000	)		10,753,000

Expenses
Employee compensation and benefits		2,835,000		1,693,000		—			4,528,000		3,157,000		1,652,000		—			4,809,000
Clearing fees, including execution costs		654,000		207,000		(59,000	)		802,000		617,000		242,000		(61,000	)		798,000
Technology and communications		247,000		175,000		—			422,000		291,000		150,000		—			441,000
Other general and administrative		385,000		348,000		—			733,000		589,000		279,000		—			868,000
Data processing		—		543,000		—			543,000		—		527,000		—			527,000
Rent and occupancy		295,000		236,000		—			531,000		380,000		250,000		—			630,000
Professional fees		502,000		381,000		—			883,000		439,000		344,000		—			783,000
Depreciation and amortization		175,000		19,000		—			194,000		244,000		—		—			244,000
Interest expense		—		21,000		—			21,000		—		31,000		—			31,000
Total Expenses		5,093,000		3,623,000		(59,000	)		8,657,000		5,717,000		3,475,000		(61,000	)		9,131,000

Earnings of equity method investment in related party		39,000		—		(39,000	)		—		30,000		—		(30,000	)		—

Income before provision (benefit) for (from) income taxes		1,375,000		285,000		(39,000	)		1,621,000		1,457,000		195,000		(30,000	)		1,622,000
Provision (benefit) for (from) income taxes		369,000		39,000		(11,000	)		397,000		353,000		4,000		(8,000	)		349,000
Net income / (loss)	$	1,006,000	$	246,000	$	(28,000	)	$	1,224,000	$	1,104,000	$	191,000	$	(22,000	)	$	1,273,000

Net income per share of common stock
Basic and diluted	$	0.04	$	0.04				$	0.04	$	0.04	$	0.03				$	0.04

Weighted average shares outstanding
Basic and diluted		27,157,188		6,152,500							27,157,188		6,152,500

Pro forma shares used to compute net income per share									30,459,804									30,455,962

~~-10-~~- 10 -

Nine Months Ended September 30, 2019 (unaudited)

	Nine Months Ended September 30, 2019
	Siebert		StockCross		Pro Forma Adjustments			Total Combined Siebert

Revenue
Commissions and fees	$	6,030,000	$	1,102,000	$	—		$	7,132,000
Margin interest, marketing and distribution fees		8,499,000		2,662,000		—			11,161,000
Principal transactions		5,479,000		659,000		—			6,138,000
Interest income		54,000		3,363,000		—			3,417,000
Market making		—		1,303,000		—			1,303,000
Stock borrow / stock loan		—		1,353,000		—			1,353,000
Advisory fees		572,000		—		—			572,000
Other income		—		816,000		(183,000	)		633,000
Total Revenue		20,634,000		11,258,000		(183,000	)		31,709,000

Expenses
Employee compensation and benefits		8,882,000		4,930,000		—			13,812,000
Clearing fees, including execution costs		1,849,000		659,000		(183,000	)		2,325,000
Technology and communications		800,000		464,000		—			1,264,000
Other general and administrative		1,861,000		926,000		—			2,787,000
Data processing		—		1,487,000		—			1,487,000
Rent and occupancy		995,000		759,000		—			1,754,000
Professional fees		1,388,000		1,180,000		—			2,568,000
Depreciation and amortization		670,000		19,000		—			689,000
Interest expense		—		84,000		—			84,000
Total Expenses		16,445,000		10,508,000		(183,000	)		26,770,000

Earnings of equity method investment in related party		84,000		—		(84,000	)		—

Income before provision (benefit) for (from) income taxes		4,273,000		750,000		(84,000	)		4,939,000
Provision (benefit) for (from) income taxes		1,171,000		218,000		(24,000	)		1,365,000
Net income / (loss)	$	3,102,000	$	532,000	$	(60,000	)	$	3,574,000

Net income per share of common stock
Basic and diluted	$	0.11	$	0.09				$	0.12

Weighted average shares outstanding
Basic and diluted		27,157,188		6,152,500

Pro forma shares used to compute net income per share									30,455,962

- 11 -

Statements of Financial Condition

	As of December 31, 2019									As of December 31, 2019
	Siebert		StockCross		Pro Forma Adjustments (unaudited)			Total Combined Siebert (unaudited)		Siebert		StockCross		Pro Forma Adjustments (unaudited)			Total Combined Siebert (unaudited)

ASSETS
Cash and cash equivalents	$	3,082,000	$	1,588,000	$	—		$	4,670,000	$	3,082,000	$	1,588,000	$	—		$	4,670,000
Cash and securities segregated for regulatory purposes		110,000		224,814,000		—			224,924,000		110,000		224,814,000		—			224,924,000
Receivables from customers		—		86,331,000		—			86,331,000		—		86,331,000		—			86,331,000
Receivables from broker-dealers and clearing organizations		3,067,000		1,265,000		(808,000	)		3,524,000		3,067,000		1,265,000		(808,000	)		3,524,000
Receivables from related party		1,000,000		—		(1,000,000	)		—		1,000,000		—		(1,000,000	)		—
Other receivables		223,000		627,000		(88,000	)		762,000		223,000		627,000		(88,000	)		762,000
Prepaid expenses and other assets		624,000		346,000		—			970,000		624,000		346,000		—			970,000
Securities borrowed		—		193,529,000		—			193,529,000		—		193,529,000		—			193,529,000
Securities owned, at fair value		—		3,018,000		—			3,018,000		—		3,018,000		—			3,018,000
Total Current assets		8,106,000		511,518,000		(1,896,000	)		517,728,000		8,106,000		511,518,000		(1,896,000	)		517,728,000

Deposits with broker-dealers and clearing organizations		3,186,000		1,840,000		(75,000	)		4,951,000		3,186,000		1,840,000		(75,000	)		4,951,000
Furniture, equipment and leasehold improvements, net		1,131,000		19,000		—			1,150,000		1,131,000		19,000		—			1,150,000
Software, net		1,888,000		—		—			1,888,000		1,888,000		—		—			1,888,000
Lease right-of-use assets		2,810,000		1,141,000		—			3,951,000		2,810,000		1,141,000		—			3,951,000
Equity method investment in related party		3,360,000		—		(3,360,000	)		—		3,360,000		—		(3,360,000	)		—
Deferred tax assets		4,981,000		407,000		—			5,388,000		4,981,000		407,000		—			5,388,000
Intangible assets, net		1,022,000		—		—			1,022,000		1,022,000		—		—			1,022,000
Goodwill		1,989,000		—		—			1,989,000		1,989,000		—		—			1,989,000
Total Assets	$	28,473,000	$	514,925,000	$	(5,331,000	)	$	538,067,000	$	28,473,000	$	514,925,000	$	(5,331,000	)	$	538,067,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
Payables to customers	$	—	$	308,091,000	$	—		$	308,091,000	$	—	$	308,091,000	$	—		$	308,091,000
Payables to non-customers		—		9,151,000		(1,088,000	)		8,063,000		—		9,151,000		(1,088,000	)		8,063,000
Drafts payable		—		2,834,000		—			2,834,000		—		2,834,000		—			2,834,000
Payables to broker-dealers and clearing organizations		—		1,406,000		(883,000	)		523,000		—		1,406,000		(883,000	)		523,000
Payables to related parties		7,000		—		(7,000	)		—		7,000		—		(7,000	)		—
Accounts payable and accrued liabilities		1,473,000		963,000		7,000			2,443,000		1,473,000		963,000		7,000			2,443,000
Securities loaned		—		170,443,000		—			170,443,000		—		170,443,000		—			170,443,000
Securities sold, not yet purchased		88,000		28,000		—			116,000
Securities sold, not yet purchased, at fair value											88,000		28,000		—			116,000
Interest payable		10,000		—		—			10,000		10,000		—		—			10,000
Notes payable - related party		3,000,000		5,000,000		—			8,000,000
Current portion of notes payable - related party											3,000,000		5,000,000		—			8,000,000
Current portion of lease liabilities		1,291,000		936,000		—			2,227,000		1,291,000		936,000		—			2,227,000
Total Current liabilities		5,869,000		498,852,000		(1,971,000	)		502,750,000		5,869,000		498,852,000		(1,971,000	)		502,750,000

Lease liabilities, less current portion		1,823,000		359,000		—			2,182,000		1,823,000		359,000		—			2,182,000
Total Liabilities		7,692,000		499,211,000		(1,971,000	)		504,932,000		7,692,000		499,211,000		(1,971,000	)		504,932,000

Commitments and Contingencies
Stockholders’ equity
Common stock, $.01 par value		271,000		10,000		23,000			304,000		271,000		10,000		23,000			304,000
Additional paid-in capital		7,641,000		12,436,000		(180,000	)		19,897,000		7,641,000		12,436,000		(180,000	)		19,897,000
Retained earnings		12,869,000		3,268,000		(3,203,000	)		12,934,000		12,869,000		3,268,000		(3,203,000	)		12,934,000
Total Stockholders’ equity		20,781,000		15,714,000		(3,360,000	)		33,135,000		20,781,000		15,714,000		(3,360,000	)		33,135,000

Total Liabilities and stockholders' equity	$	28,473,000	$	514,925,000	$	(5,331,000	)	$	538,067,000	$	28,473,000	$	514,925,000	$	(5,331,000	)	$	538,067,000

- 12 -

Pro Forma Adjustments

The pro forma results include adjustments made for the consolidation of both entities. The statements of income reflects the elimination of StockCross’ other income and the Company’s corresponding custody and clearing fees resulting from the fully disclosed clearing relationship between MSCO and StockCross. In addition, the Company’s earnings recognized as part of its equity method investment in StockCross for the three and nine months ended ~~March 31,~~September 30, 2019 ~~was~~were eliminated upon consolidation. These adjustments to pre-tax income were tax affected using an estimated effective tax rate of 28.0%.

~~-11-~~

The statements of financial condition reflects the elimination of intercompany payables and receivables between the Company and StockCross as part of their ongoing business relationship, as well as reflects the elimination of the Company’s 15% ownership of StockCross. The statements of financial condition reflects an adjustment to increase the Company’s common stock by the par value of the shares issued in connection with the transaction and to eliminate the par value of StockCross’ common stock. The adjustments also increase additional paid-in capital for the net difference, as well as the change in retained earnings from the adjustments in the statements of operations.

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

Overview of Acquisition

As previously disclosed in the Company’s 2019 Form 10-K, the Company completed ~~the~~its acquisition of 100% of the member interests in WP and effective December 1, 2019, WP became a wholly-owned subsidiary of the Company. The acquisition was accounted for under the acquisition method of accounting for business combinations pursuant to ASC 805 - Business Combinations and resulted in $1,989,000 of goodwill.

Pro Forma Statements

The following pro forma summary presents the ~~statement~~statements of income of the Company as if the acquisition of WP had occurred on January 1, 2019, inclusive of pro forma adjustments (unaudited). WP’s ~~statement of income and statement of~~ financial ~~condition~~statements have already been consolidated as part of the Company’s financial statements for the periods presented for ~~2020:~~2020.

	Three Months Ended March 31, 2019		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Revenue	$	13,014,000	$	14,372,000	$	41,191,000
Operating income	$	1,334,000	$	1,905,000	$	3,693,000
Net income	$	967,000	$	1,577,000	$	2,407,000

The pro forma results include adjustments made for the consolidation of both entities. These adjustments take into consideration the interest expense on the promissory note used in financing the acquisition, the amortization of the acquired intangible assets, as well as the tax effect of pro forma adjustments using an estimated combined statutory rate of 28.0%.

4. Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations

Amounts receivable from, payables to, and deposits with broker-dealers and clearing organizations consisted of the following as of the periods indicated:

~~-12-~~- 13 -

As of
March 31, 2020

As of
December 31, 2019

Receivables from and deposits with broker-dealers and clearing organizations
DTCC / OCC / NSCC
$
2,956,000

$
3,059,000

Goldman Sachs
2,763,000

2,841,000

Pershing Capital
1,467,000

1,192,000

NFS
1,348,000

1,328,000

Securities fail-to-deliver
24,000

43,000

Globalshares
16,000

2,000

ICBC
10,000

10,000

Total Receivables from and deposits with broker-dealers and clearing organizations
$
8,584,000

$
8,475,000

Payables to broker-dealers and clearing organizations
NFS
$
727,000

$
—

Securities fail-to-receive
306,000

523,000

Total Payables to broker-dealers and clearing organizations
$
1,033,000

$
523,000

	As of September 30, 2020		As of December 31, 2019
Receivables from and deposits with broker-dealers and clearing organizations
DTCC / OCC / NSCC	$	3,678,000	$	3,059,000
Goldman Sachs		2,105,000		2,841,000
Pershing Capital		1,279,000		1,192,000
NFS		1,113,000		1,328,000
Securities fail-to-deliver		207,000		43,000
Globalshares		24,000		2,000
ICBC		—		10,000
Total Receivables from and deposits with broker-dealers and clearing organizations	$	8,406,000	$	8,475,000

Payables to broker-dealers and clearing organizations
Securities fail-to-receive	$	356,000	$	523,000
Total Payables to broker-dealers and clearing organizations	$	356,000	$	523,000

5. Prepaid Service Contract

On April 21, 2020, MSCO entered into a Master Services Agreement (“MSA”), with InvestCloud, Inc. (“InvestCloud”). Pursuant to the MSA, InvestCloud agreed to provide MSCO with the InvestCloud Platform, a new client and back end interface and related functionalities for MSCO’s key operations. MSCO agreed to pay InvestCloud as consideration therefore during the initial three-year term an annual license fee of $600,000 as well as an upfront professional service fee of $1.0 million for one-time configuration, installation and customization of the software. Following the initial three year term, the MSA will automatically renew for additional one-year terms unless terminated by MSCO upon 120 days’ notice.

In connection with the MSA, InvestCloud entered into a Side Letter Agreement (“Side Letter”) with the Company pursuant to which InvestCloud acquired 193,906 shares of the Company’s restricted common stock (the “Shares”) at a per share price of $5.81 (the Company’s share price as of the close of May 12, 2020) for a total of $1.1 million for professional services to integrate the InvestCloud Platform into Siebert’s existing systems and Robo-Advisor. The Shares were issued to InvestCloud on May 12, 2020 without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(a)(2) thereunder. This transaction is reflected in the “Non-cash investing and financing activities” section of the statements of cash flows.

In accordance with ASU 2018-15, Intangibles, Goodwill and Other Internal-Use Software, the Company initially recorded a prepaid asset equal to the $2.1 million of the total professional services related to the development work performed by InvestCloud, which is within the line item “Prepaid service contract – non-current” on the statements of financial condition. The Company will amortize this asset over the 3-year term of the contract, a period during which the arrangement is noncancelable. The license fees related to Siebert’s use of the InvestCloud Platform are prepaid three months in advance and are within the line item “Prepaid expenses and other assets” on the statements of financial condition. These prepaid license fees are amortized over the three month term. The amortization for all the prepaid assets related to InvestCloud development is within the line item titled “Technology and Communications” on the statements of income.

6. Fair Value Measurements

Overview

ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy of fair value inputs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income, or cost approach, as specified by ASC 820, are used to measure fair value.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1 - Quoted prices (unadjusted) in active markets for an identical asset or liability that the Company can assess at the measurement date.

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

- 14 -

The availability of observable inputs can vary from security to security and is affected by a variety of factors, such as the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. As such, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that the Company believes market participants would use in pricing the asset or liability at the measurement date.

A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows:

U.S. ~~Government Securities:~~government securities: U.S. government securities are valued using quoted market prices and as such, valuation adjustments are not applied. Accordingly, U.S. government securities are generally categorized in level 1 of the fair value hierarchy.

Municipal ~~Securities:~~securities: Municipal securities are valued using recently executed transactions, market price quotations (when observable), bond spreads from independent external parties such as vendors and brokers, adjusted for any basis difference between cash and derivative instruments. The spread data used is for the same maturity as the bond. Municipal securities are generally categorized in level 2 of the fair value hierarchy.

~~-13-~~

Corporate ~~Bonds~~bonds and ~~Convertible Preferred Stock:~~convertible preferred stock: The fair value of corporate bonds and convertible preferred stock are determined using recently executed transactions, market price quotations (when observable), bond spreads, or credit default swap spreads obtained from independent external parties such as vendors and brokers, adjusted for any basis difference between cash and derivative instruments. The spread data used is for the same maturity as the bond. If the spread data does not reference the issuer, then data that references a comparable issuer is used. When position-specific external price data is not observable, fair value is determined based on either benchmarking to similar instruments or cash flow models with yield curves, bond, or single-name credit default swap spreads and recovery rates as significant inputs. Corporate bonds and convertible preferred stocks are generally categorized in level 2 of the fair value hierarchy.

Equity ~~Securities:~~securities: Equity securities are valued based on quoted prices from the exchange. To the extent these securities are actively traded, valuation adjustments are not applied, and they are categorized in level 1 of the fair value hierarchy. Securities quoted in inactive markets or with observable inputs are categorized into level 2. If there are no observable inputs or quoted prices, securities are categorized as level 3 assets in the fair value hierarchy. Level 3 assets are not actively traded and subjective estimates based on managements’ assumptions are utilized for valuation.

Mutual funds: Mutual funds are valued based on the closing net asset value of the publicly traded mutual funds. These securities are actively traded and therefore valuation adjustments are not applied. As such, mutual funds are categorized in level 1 of the fair value hierarchy.

Certificates of ~~Deposit:~~deposit: Certificates of deposit included in investments are valued at cost, which approximates fair value. ~~These~~When certificates of deposits are held directly with banking institutions and issued directly to the Company, these are categorized within cash and cash equivalents in level 2 of the fair value hierarchy.

~~Unit Investment Trusts:~~ ~~Units~~ When certificates of ~~unit investment trusts~~deposits are ~~carried at redemption value, which represents fair value. Units of unit investment trusts~~available for trading, they are categorized within securities owned, at fair value in level 12 of the fair value hierarchy.

Fair Value Hierarchy Tables

The following tables present the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of ~~March 31, 2020 and December 31, 2019.~~

the periods presented.

As of March 31, 2020
Level 1 Level 2 Level 3 Total
Assets
Cash and cash equivalents
Certificates of deposit
$
—

$
142,000

$
—

$
142,000

Securities owned, at fair value
U.S. government securities
$
2,040,000

$
—

$
—

$
2,040,000

Municipal securities
—

938,000

—

938,000

Corporate bonds
—

303,000

—

303,000

Equity securities
139,000

259,000

—

398,000

Unit investment trusts
1,000

—

—

1,000

Total Securities owned, at fair value
$
2,180,000

$
1,500,000

$
—

$
3,680,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities
$
—

$
31,000

$
—

$
31,000

Total Securities sold, not yet purchased, at fair value
$
—

$
31,000

$
—

$
31,000

~~-14-~~- 15 -

As of December 31, 2019
Level 1 Level 2 Level 3 Total
Assets
Cash and cash equivalents
Certificates of deposit
$
—

$
142,000

$
—

$
142,000

Segregated securities
U.S. government securities
1,311,000

—

—

1,311,000

Securities owned, at fair value
U.S. government securities
$
2,007,000

$
—

$
—

$
2,007,000

Corporate bonds
—

25,000

—

25,000

Equity securities
453,000

245,000

288,000

986,000

Total Securities owned, at fair value
$
2,460,000

$
270,000

$
288,000

$
3,018,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities
$
88,000

$
28,000

$
—

$
116,000

Total Securities sold, not yet purchased, at fair value
$
88,000

$
28,000

$
—

$
116,000

Changes in Level 3 Equity Assets

Three Months Ended March 31, 2020

Amount Valuation Technique Reason for Change
Balance – January 1, 2020
$
288,000
Liquidation value based on valuation report
Transfers out of level 3
(288,000
)
Sale of equity security
Balance – March 31, 2020
$
—

	As of September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents
Certificates of deposit	$	—	$	142,000	$	—	$	142,000

Securities owned, at fair value
U.S. government securities*	$	2,028,000	$	—	$	—	$	2,028,000
Certificates of deposit		—		91,000		—		91,000
Corporate bonds		—		120,000		—		120,000
Equity securities		765,000		343,000		—		1,108,000
Mutual funds		133,000		—		—		133,000
Total Securities owned, at fair value	$	2,926,000	$	554,000	$	—	$	3,480,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities	$	—	$	25,000	$	—	$	25,000
Total Securities sold, not yet purchased, at fair value	$	—	$	25,000	$	—	$	25,000

*As of September 30, 2020, U.S. government securities mature on 08/31/2021

	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents
Certificates of deposit	$	—	$	142,000	$	—	$	142,000

Segregated securities
U.S. government securities	$	1,311,000		—		—	$	1,311,000

Securities owned, at fair value
U.S. government securities	$	2,007,000	$	—	$	—	$	2,007,000
Corporate bonds		—		25,000		—		25,000
Equity securities		453,000		245,000		288,000		986,000
Total Securities owned, at fair value	$	2,460,000	$	270,000	$	288,000	$	3,018,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities	$	88,000	$	28,000	$	—	$	116,000
Total Securities sold, not yet purchased, at fair value	$	88,000	$	28,000	$	—	$	116,000

	Changes in Level 3 Equity Assets
	Nine Months Ended September 30, 2020
	Amount			Valuation Technique	Reason for Change
Balance – January 1, 2020	$	288,000		Liquidation value based on valuation report
Transfers out of level 3		(288,000	)		Sale of equity security
Balance – September 30, 2020	$	—

The following represents financial instruments in which the ending ~~balance~~balances as of ~~March 31,~~September 30, 2020 and December 31, 2019 isare not carried at fair value in the statements of financial condition:

Short-term financial instruments: The carrying value of short-term financial instruments, including cash and securities segregated for regulatory purposes are recorded at amounts that approximate the fair value of these instruments. These financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market rates. Cash and securities segregated for regulatory purposes are classified as level 1. Securities segregated for regulatory purposes consist of treasury notes which are categorized in the above tables as level 1 assets.

- 16 -

Receivables and other ~~assets:~~assets: Receivables from broker-dealers and clearing organizations, receivables from customers, other receivables, and other assets are recorded at amounts that approximate fair value and are classified as level 2 under the fair value hierarchy.

Securities borrowed and securities ~~loaned:~~loaned: Securities borrowed and securities loaned are recorded at amounts which approximate fair value and are primarily classified as level 2 under the fair value hierarchy. The Company’s securities borrowed and securities loaned balances represent amounts of equity securities borrow and loan contracts and are marked-to-market daily in accordance with standard industry practices which approximate fair value.

~~Payables:~~Payables: Payables to customers, payables to non-customers, drafts payable, payables to broker-dealers and clearing organizations, accounts payable and accrued liabilities, and interest payable are recorded at amounts that approximate fair value due to their short-term nature and are classified as level 2 under the fair value hierarchy.

Notes payable – related party: The carrying amount of the notes payable – related party approximates fair value due to the relative short-term nature of the borrowing. Under the fair value hierarchy, the notes payable – related party is classified as level 2.

6.Line of credit: The carrying amount of the line of credit with East West Bank approximates fair value due to the relative short-term nature of the borrowing. Under the fair value hierarchy, the line of credit is classified as level 2.

7. Leases

As of ~~March 31,~~September 30, 2020, the Company rents office space under operating leases expiring in ~~2020~~2021 through 2024, and the Company has no financing leases. The leases call for base rent plus escalations as well as other operating expenses. The following table represents the Company’s lease right-of-use assets and lease liabilities on the statements of financial condition. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the statements of financial condition. The Company acquired two leases from its acquisition of StockCross, the impact of which is reflected in the following disclosures.

~~-15-~~

As of ~~March 31,~~September 30, 2020, the Company does not believe that any of the renewal options under the existing leases are reasonably certain to be exercised; however, the Company will continue to assess and monitor the lease renewal options on an ongoing basis.

	As of March 31, 2020		As of December 31, 2019		As of September 30, 2020		As of December 31, 2019
Assets
Lease right-of-use assets	$	3,430,000	$	3,951,000	$	2,813,000	$	3,951,000
Liabilities
Lease liabilities	$	3,845,000	$	4,409,000	$	3,181,000	$	4,409,000

The calculated amounts of the lease right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company leases some miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment on the statements of income rather than capitalizing them as lease right-of-use assets. The Company determined a discount rate of 5.0% would approximate the Company’s cost to obtain financing given its size, growth, and risk profile.

Lease Term and Discount Rate	As of ~~March 31,~~September 30, 2020
Weighted average remaining lease term – operating leases (in years)		~~2.5~~2.3
Weighted average discount rate – operating leases		5.0	%

The following table represents lease costs and other lease information. The Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance and utilities which are usually determined by the leased square footage in proportion to the overall office building.

Three Months Ended
March 31,

2020 2019
Operating lease cost
$
571,000

$
363,000

Short-term lease cost
39,000

130,000

Variable lease cost
117,000

38,000

Sublease income
—

—

Total Rent and occupancy
$
727,000

$
531,000

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $
614,000
$
382,000

Lease right-of-use assets obtained in exchange for new lease liabilities
Operating leases
$
1,915,000

$
5,732,000

- 17 -

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease cost	$	609,000	$	509,000	$	1,755,000	$	1,268,000
Short-term lease cost		20,000		81,000		83,000		321,000
Variable lease cost		65,000		40,000		281,000		165,000
Sublease income		—		—		—		—
Total Rent and occupancy	$	694,000	$	630,000	$	2,119,000	$	1,754,000

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	614,000	$	512,000	$	1,845,000	$	1,338,000

Lease right-of-use assets obtained in exchange for new lease liabilities
Operating leases	$	278,000	$	—	$	2,353,000	$	4,943,000

Lease Commitments

Future annual minimum payments for operating leases with initial terms of greater than one year as of ~~March 31,~~September 30, 2020 were as follows:

Year	Amount
2020	$	606,000
2021		1,403,000
2022		755,000
2023		543,000
2024		56,000
Remaining balance of lease payments		3,363,000
Difference between undiscounted cash flows and discounted cash flows		182,000
Lease liabilities	$	3,181,000

~~-16-~~

As of September 30, 2020, the Company had an operating lease agreement for an office space in Beverly Hills, CA with a term of approximately 5 years. The total commitment of the lease is approximately $1.5 million, and the lease will commence on March 1, 2021.

To offset the first quarter of 2020, the Federal Reserve cut the federal funds target overnight rate twice for a total of 150 basis points to near zero. These developments have had, and may continue to have, a negative impact on the revenue from margin interest, marketing, and distribution fees as well as interest income. There has also been a decrease in our retail and institutional customer net worth corresponding to the market volatility and decrease in equity valuations. Our commissions and fees and principal transaction revenue may be reduced in light of less demand from our retail customer base; however, this may be offset by the increase in commissions and fees revenue from our institutional customers. In relation to our statements of financial condition, our securities borrowed and securities loaned amounts have decreased due to the market volatility.

~~In terms of expenses,~~earnings associated with COVID-19, we have reduced the salary of higher-level employees and wemade a reduction in force in certain areas of our business. In addition, all members of our board of directors have either reduced their annual fees or are currently functioning without an annual fee.

We are strategically evaluating our ~~compensation structure and vendor arrangements~~clearing relationship opportunities within our institutional operations to gain more income. We are assessing all of our vendors to identify areas where we can optimize our cost structure while maintaining operational efficiency and quality of the customer experience. As of the date of this report, we are actively involved in contract negotiations with key vendors to reduce many of our fixed costs.

In addition, we have evaluated our branch offices and are ~~evaluating~~transitioning out of legacy office space into more cost-efficient locations. We anticipate the benefits of these transitions to provide cost reductions beginning in the second quarter of 2021 and are looking into ways to further consolidate our office ~~spaces and various lease agreements especially in light~~space.

We do not believe any of the changes listed above will have a negative impact on the operations or financials of our ~~ability to work remotely.~~business.

~~Financial Reporting~~

~~As previously reported in a Form 8-K filed on May 15, 2020, we relied on the Securities~~Liquidity and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) to delay filing of our 2020 Q1 10Q.Capital Resources

The ~~impact of~~situation surrounding COVID-19 has ~~caused disruptions~~not materially impacted our position or future outlook related to ~~our operations including requiring key personnel~~liquidity as we have been able to ~~devote considerable time~~meet all obligations and ~~resources~~believe we will be able to ~~manage emerging issues impacting our business as well as transitioning such personnel to work remotely, all of which has slowed our routine quarterly close process. Considering~~do so in the lack of time for the compilation, dissemination and review of the information required to be presented and the importance of markets and investors receiving materially accurate information, additional time was required to complete the 2020 Q1 10Q.foreseeable future.

Conclusion

Overall, the impact from COVID-19 on our business as well as financial statements was relatively minor in the three months ended March 31, 2020; however, these developments will likely have a more pronounced impact in future periods. We note that the ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. We are currently monitoring the COVID-19 situation and will continue to respond to meet the demands of our clients as well as protect our employees.

- 28 -

Acquisitions

StockCross

Overview

In January 2019, we acquired approximately 15% ownership of StockCross which was accounted for under the equity method. Effective January 1, 2020, we acquired the remaining 85% of StockCross’ outstanding shares in exchange for 3,298,774 shares of our common stock and StockCross was merged with and into MSCO. As of January 1, 2020, the business and operations of StockCross became part of MSCO, and all clearing and other services provided by StockCross are performed by MSCO. In addition, as of January 1, 2020, ~~the Company’s~~our equity method investment in StockCross was eliminated.

The acquisition of StockCross provides new business lines such as market making, equity stock plan services, self-clearing and custody, and securities lending. Merging StockCross into MSCO increased our total net capital and assets under management as well as added two offices. StockCross provides an equity stock plan service business line that offers integrated and comprehensive solutions to corporate service clients and employee participants.

~~-26-~~

Accounting for Acquisition

Prior to and as of the date of our acquisition of StockCross, Siebert and StockCross were entities under common control of the Gebbia Family. The acquisition represented a change in reporting entity and as such, the companies have been presented on a combined basis for all periods presented in the financial statements. This presentation is reflected in the section below comparing statements of income and statements of financial condition to prior periods.

~~The Company~~We acquired various assets and liabilities from StockCross as of the acquisition date, the fair values of which were assumed to be the historical carrying amounts. The excess of the purchase price over the fair value of the net assets acquired was eliminated due to the transaction being between entities under common control. See “Note 3 – Acquisitions” for additional detail on the transaction with StockCross and the corresponding accounting.

Recent Results

The new business lines acquired from StockCross have added ~~incremental~~additional revenue streams to our statements of income. These new revenue streams include interest income from clearing operations, market making, and stock borrow / stock loan, all of which have contributed approximately ~~$2.2~~$5.3 million of revenue for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. In terms of our existing revenue streams, StockCross added incremental commissions and fees, margin interest, marketing and distribution fees, and principal transactions from their client base and operations. Our existing expenses primarily related to compensation, occupancy as well as clearing and technology costs have also increased from the corresponding increase in StockCross ~~revenue.~~revenue and operations. See “Note 911 – Revenue Recognition” for further detail on our revenue streams and corresponding accounting policies.

The acquisition of StockCross has also impacted our statements of financial condition as the nature of StockCross’ business requires the presentation of various customer and securities assets and corresponding liabilities on the statements of financial condition. StockCross has added new assets to our statements of financial condition such as cash and securities segregated for regulatory purposes, ~~as well as~~ receivables from customers, and securities borrowed as well as new liabilities such as payables to customers, payables to non-customers and securities loaned. StockCross has also added incremental assets and liabilities to the majority of our existing items within our statements of financial condition ~~the most material being~~such as receivables from broker-dealers and clearing organizations and notes payable – related party.

Further, as of January 1, 2020, the acquisition of StockCross added approximately $1.5 billion in retail customer net worth and approximately 30,000 retail ~~accounts.~~accounts to Siebert.

Overview

Effective December 1, 2019, we acquired all of the issued and outstanding membership interests of WP, a ~~leading~~ prime brokerage services provider, for a cash consideration of approximately $7.1 million, and WP became a wholly-owned subsidiary of Siebert.

The acquisition resulted in approximately $1,989,000 of goodwill and we acquired two intangible assets, WP’s customer relationships and WP’s trade name. We also acquired other assets consisting mostly of receivables from broker-dealers and clearing organizations and assumed liabilities consisting mostly of accounts payable and accrued expenses. ~~Pursuant to our agreement with the original owners of WP, we agreed to discontinue using the name of Weeden Prime Services, LLC and filed to change it to WPS Prime Services, LLC in May 2020.~~

~~Recent Results~~

As previously disclosed in a Current Report on Form 8-K filed on June 26, 2020, on June 22, 2020, we entered into an agreement pursuant to which upon closing we would have sold all our member interests in WP to WPS Acquisitions, LLC for a purchase price of $7.3 million. As reported in a Current Report on Form 8-K filed on July 30, 2020, effective July 24, 2020, we terminated the agreement.

For the first full quarter under our ownership, WP has added approximately $3.7 million in revenue consisting primarily of commissions and fees, margin interest, marketing and distribution fees, and interest income. In addition, we are starting to see the benefits from our recent initiatives to streamline WP’s operations and optimize its cost structure. WP had its best quarter in terms of revenue and net income of the past year, and we are continuing to find opportunities to leverage the strength of both firms.

We are also seeing the benefit of the diversification of our revenue streams through WP’s largely institutional customer base. WP’s institutional customers increasing their activity during market volatility has led to an increase in WP’s revenue during the recent periods of market volatility.

~~-27-~~- 29 -

~~In terms of customer assets, WP has added over $1.2 billion of institutional customer assets to Siebert as of March 31, 2020.~~

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. Retail customers are customers who have accounts with MSCO; institutional customers were acquired from WP as part of the acquisition effective December 1, 2019.

We acquired StockCross in January 2020; however, the client account and client activity metrics for Siebert and StockCross have been presented on a combined basis for all periods shown below to maintain consistency to the presentation of the financial statements. As such, the results of StockCross are included in metrics for the 2019 data shown below.

Client Account Metrics – ~~Retail Customers~~Total Assets Under Management

As of March 31,
2020 2019
Retail customer margin debit balances (in billions) $ 0.3 $ 0.3
Retail customer credit balances (in billions) $ 0.6 $ 0.5
Retail customer money market fund value (in billions)
$
0.7

$
0.6

Retail customer net worth (in billions)
$
10.6

$
12.3

Retail customer accounts
108,163

103,641

	As of September 30,
	2020		2019
Total assets under management (in billions)	$	14.5	$	12.5

●	~~Retail customer margin debit balances represents credit extended to our customers to finance their purchases against current positions~~

●	~~Retail customer credit balances represents client cash held in brokerage accounts~~

●	~~Retail customer money market fund value represents all retail customers accounts invested in money market funds~~

●	~~Retail customer net worth represents the total value of securities and cash in the retail customer accounts after deducting margin debits~~

●	~~Retail customer accounts represents the number of retail customers~~

Below is a breakout of the account and activity metrics of our various customer bases.

~~We note that the decline in retail~~Client Account Metrics – Retail Customers

	As of September 30,
	2020		2019
Retail customer net worth (in billions)	$	13.1	$	12.5
Retail customer margin debit balances (in billions)	$	0.4	$	0.4
Retail customer credit balances (in billions)	$	0.6	$	0.6
Retail customer money market fund value (in billions)	$	0.7	$	0.6
Retail customer accounts		110,044		105,470

Retail customer net worth ~~was primarily a result~~represents the total value of securities and cash in the retail customer accounts after deducting margin debits

Retail customer margin debit balances represents credit extended to our customers to finance their purchases against current positions

Retail customer credit balances represents client cash held in brokerage accounts

Retail customer money market ~~decline due to~~fund value represents all retail customers accounts invested in money market funds

Retail customer accounts represents the ~~COVID-19 pandemic.~~number of retail customers

Client Account Metrics – Institutional Customers

As of
March 31, 2020

Institutional customer net worth (in billions)
$
1.2

		As of September 30, 2020
Institutional customer net worth (in billions)		$	1.4

●	~~Institutional customer net worth represents the total value of securities and cash in the institutional customer accounts after deducting margin debits and short positions~~

Institutional customer net worth represents the total value of securities and cash in the institutional customer accounts after deducting margin debits and short positions. We did not have institutional customers until our purchase of WP in December 2019.

Client Activity Metrics

	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019		2020		2019
Total retail trades		120,495		79,354		112,264		75,969		353,580		230,267
Average commission per retail trade	$	15.46	$	18.90	$	15.55	$	17.38	$	15.32	$	18.35

●	~~Total retail trades represents retail trades that generate commissions~~

Total retail trades represents retail trades that generate commissions

●	~~Average commission per retail trade represents the average commission generated for all types of retail customer trades~~

Average commission per retail trade represents the average commission generated for all types of retail customer trades

- 30 -

Statements of Income and Financial Condition

Overview

We acquired StockCross in January 2020; however, Siebert and StockCross have been presented on a combined basis for all periods presented. As such, the results of StockCross are included in the statements of income and statements of financial condition discussed below.

We acquired WP in December 2019 which added various revenue streams and corresponding expenses to our statement of income for the three and nine months ended ~~March 31,~~September 30, 2020. As such, the results of WP’s operations impact our comparisons for the statements of income and statements of financial condition discussed below.

~~-28-~~

Statements of Income for the Three Months Ended ~~March 31,~~September 30, 2020 and 2019

~~Net Income~~

Net income for the three months ended March 31, 2020 was $976,000, decreasing by $248,000 or 20% from the corresponding period in 2019, primarily due to the incremental expenses from WP’s operations, as well as an increase in commission payouts, technology and communication expense, and taxes. This increase in expenses was partially offset by the increase in revenue from commissions and fees and interest income as a result of the acquisition of WP as well as revenue from principal transactions related to market conditions.

Revenue

~~Total revenue for the three months ended~~ ~~March 31, 2020~~ ~~was $14,801,000 and increased by $4,523,000 or 44% from~~ ~~the corresponding period in the~~ ~~prior year~~ primarily due to an increase in revenue from commissions and fees and interest income as a result of the acquisition of WP as well as revenue from principal transactions related to market conditions.

Commissions and fees for the three months ended ~~March 31,~~September 30, 2020 were ~~$5,583,000~~$4,679,000 and increased by ~~$3,315,000 or 146%~~$2,406,000 from the corresponding period in the prior year,, primarily due to the ~~increase~~addition of WP’s commissions and fees in ~~trading activities from WP’s institutional clients.~~2020.

Margin interest, marketing and distribution fees for the three months ended ~~March 31,~~September 30, 2020 were ~~$3,294,000~~$2,311,000 and decreased by ~~$262,000 or 7%~~$1,601,000 from the corresponding period in the prior year, primarily due to the ~~decrease~~declining interest rate environment, partially offset by the addition of WP’s margin interest income in ~~interest rates.~~2020.

Principal transactions for the three months ended ~~March 31,~~September 30, 2020 were ~~$3,203,000~~$2,342,000 and increased by ~~$1,313,000 or 69%~~$15,000 from the corresponding period in the prior year.

Interest income for the three months ended September 30, 2020 was $915,000 and decreased by $146,000 from the corresponding period in the prior year, primarily due to ~~market conditions during~~ the ~~first quarter~~declining interest rate environment, partially offset by the addition of WP’s interest income in 2020.

~~Interest income~~Market making for the three months ended ~~March 31,~~September 30, 2020 was ~~$1,331,000~~$423,000 and increased by ~~$158,000 or 13%~~$93,000 from the corresponding period in the prior year, primarily due to ~~an increase in the revenue share with WP’s institutional clients.~~

~~Market making for~~favorable market conditions during the three months ended ~~March 31, 2020 was $470,000 and decreased by $93,000 or 17% from the corresponding period in the prior year, primarily due to market conditions during the first quarter of~~September 30, 2020.

Stock borrow / stock loan for the three months ended ~~March 31,~~September 30, 2020 was ~~$444,000~~$1,267,000 and ~~decreased~~increased by ~~$137,000 or 24%~~$918,000 from the corresponding period in the prior year, primarily due to the ~~decrease in securities borrowed balances due to~~organic growth of the business, the expansion of our stock locate function, and strong market conditions.

Advisory fees for the three months ended ~~March 31,~~September 30, 2020 were ~~$262,000~~$305,000 and increased by $94,000 ~~or 56%~~ from the corresponding period in the prior year, primarily due to overall expansion of the advisory business line which included revenue growth related to our Robo-Advisor.

Other income for the three months ended ~~March 31,~~September 30, 2020 was ~~$214,000~~$333,000 and increased by ~~$135,000 or 171%~~$43,000 from the corresponding period in the prior year, primarily due to an increase in miscellaneous account fees.

Operating Expenses

Employee compensation and benefits for the three months ended September 30, 2020 were $6,584,000 and increased by $1,775,000 from the corresponding period in the prior year, primarily due to the addition of WP salaries and commission payouts in 2020.

Clearing fees, including execution costs for the three months ended September 30, 2020 were $1,270,000 and increased by $472,000 from the corresponding period in the prior year, primarily due to the addition of WP’s ~~business.~~operations in 2020.

~~Operating Expenses~~

~~Total operating~~Technology and communications expenses for the three months ended ~~March 31,~~September 30, 2020 were ~~$13,290,000~~$1,322,000 and increased by $4,633,000 or 54% from the corresponding period in the prior year primarily due to the incremental expenses from WP’s operations, an increase in payouts corresponding to the increase in principal transactions, and an increase in technology and communication expenses due to a higher level of technology infrastructure expansion.

Employee compensation and benefits for the three months ended March 31, 2020 were $7,291,000 and increased by $2,763,000 or 61% from the corresponding period in the prior year, primarily due to incremental WP salaries and commission payouts as well as increased commission payouts corresponding to the increase in principal transaction revenue.

~~Clearing fees, including execution costs for the three months ended March 31, 2020 were $1,298,000 and increased by $496,000 or 62%~~$881,000 from the corresponding period in the prior year, primarily due to the addition of WP’s ~~operations.~~technology operations in 2020 as well as development work with InvestCloud related to our online platform and Robo-Advisor.

~~Technology~~Other general and ~~communications~~administrative expenses for the three months ended ~~March 31,~~September 30, 2020 were ~~$981,000~~$455,000 and ~~increased~~decreased by ~~$559,000 or 132%~~$413,000 from the corresponding period in the prior year, primarily due to a ~~higher level of technology infrastructure expansion.~~reduction in office expense as well as travel-related expenses due to COVID-19.

~~-29-~~- 31 -

Other general and administrative expenses for the three months ended March 31, 2020 were $854,000 and increased by $121,000 or 17% from the corresponding period in the prior year, primarily due to incremental miscellaneous expenses from the addition of WP’s operations.

Data processing expenses for the three months ended ~~March 31,~~September 30, 2020 were ~~$849,000~~$784,000 and increased by ~~$306,000 or 56%~~$257,000 from the corresponding period in the prior year, primarily due to increased technology costs related to ~~service bureaus.~~clearing operations.

Rent and occupancy expenses for the three months ended ~~March 31,~~September 30, 2020 were ~~$727,000~~$694,000 and increased by ~~$196,000 or 37%~~$64,000 from the corresponding period in the prior year, primarily due to the increase in rent from the addition of WP’s ~~offices.~~offices in 2020.

Professional fees for the three months ended ~~March 31,~~September 30, 2020 were ~~$655,000~~$760,000 and decreased by ~~$228,000 or 26%~~$23,000 from the corresponding period in the prior year, primarily due to a reduction in legal fees.

Depreciation and amortization expenses for the three months ended ~~March 31,~~September 30, 2020 were ~~$448,000~~$368,000 and increased by ~~$254,000 or 131%~~$124,000 from the corresponding period in the prior year, primarily due to the depreciation and amortization of incremental purchases of fixed assets and software as well as the amortization related to the intangible assets acquired from WP.

Referral fees for the three months ended ~~March 31,~~September 30, 2020 were ~~$111,000~~$154,000 and increased by ~~100%~~$154,000 from the corresponding period in the prior year, primarily due to the commission payouts to other institutional brokers ~~as referral fees related to WP’s institutional client activity.~~for WP in 2020.

Interest expense for the three months ended ~~March 31,~~September 30, 2020 was ~~$76,000~~$89,000 and increased by ~~$55,000 or 262%~~$58,000 from the corresponding period in the prior year, primarily due to the interest on the promissory note to finance part of the acquisition of WP.

Provision ~~for~~(Benefit) For (From) Income Taxes

~~Provision for~~Benefit from income taxes for the three months ended ~~March 31,~~September 30, 2020 ~~were $535,000 and increased by $138,000 or 35%~~was $486,000, a decrease of income tax expense of $835,000 from the corresponding period in the prior year, primarily due to ~~changes~~a discrete tax benefit related to the anticipated filing of amended 2017 through 2019 federal tax returns in order to claim a refund of previously paid taxes coupled with the recognition of additional deferred tax ~~expense calculated by using~~assets for federal ~~and state~~ net operating ~~losses.~~losses as we determined that we can utilize additional net operating losses under Section 382.

Statements of Income for the Nine Months Ended September 30, 2020 and 2019

Revenue

Commissions and fees for the nine months ended September 30, 2020 were $15,149,000 and increased by $8,017,000 from the corresponding period in the prior year, primarily due to the addition of WP’s commissions and fees in 2020.

Margin interest, marketing and distribution fees for the nine months ended September 30, 2020 were $7,730,000 and decreased by $3,431,000 from the corresponding period in the prior year, primarily due to the declining interest rate environment, partially offset by the addition of WP’s margin interest income in 2020.

Principal transactions for the nine months ended September 30, 2020 were $8,126,000 and increased by $1,988,000 from the corresponding period in the prior year, primarily due to strong market conditions during early 2020.

Interest income for the nine months ended September 30, 2020 was $3,155,000 and decreased by $262,000 from the corresponding period in the prior year, primarily due to the declining interest rate environment, partially offset by the addition of WP’s interest income in 2020.

Market making for the nine months ended September 30, 2020 was $1,508,000 and increased by $205,000 from the corresponding period in the prior year, primarily due to favorable market conditions during 2020.

Stock borrow / stock loan for the nine months ended September 30, 2020 was $2,482,000 and increased by $1,129,000 from the corresponding period in the prior year, primarily due to the organic growth of the business, the expansion of our stock locate function, and strong market conditions.

Advisory fees for the nine months ended September 30, 2020 were $810,000 and increased by $238,000 from the corresponding period in the prior year, primarily due to overall expansion of the advisory business line which included revenue growth related to our Robo-Advisor.

Other income for the nine months ended September 30, 2020 was $1,035,000 and increased by $402,000 from the corresponding period in the prior year, primarily due to the addition of WP’s business in 2020 and an increase in miscellaneous account fees.

- 32 -

Operating Expenses

Employee compensation and benefits for the nine months ended September 30, 2020 were $20,489,000 and increased by $6,677,000 from the corresponding period in the prior year, primarily due to the addition of WP salaries and commission payouts in 2020 as well as increased commission payouts corresponding to the increase in principal transaction revenue.

Clearing fees, including execution costs for the nine months ended September 30, 2020 were $3,907,000 and increased by $1,582,000 from the corresponding period in the prior year, primarily due to the addition of WP’s operations in 2020.

Technology and communications expenses for the nine months ended September 30, 2020 were $3,256,000 and increased by $1,992,000 from the corresponding period in the prior year, primarily due to the addition of WP’s technology operations in 2020 as well as development work with InvestCloud related to our online platform and Robo-Advisor.

Other general and administrative expenses for the nine months ended September 30, 2020 were $1,710,000 and decreased by $1,077,000 from the corresponding period in the prior year, primarily due to the expansion of our Jersey City branch office and the establishment of our Miami branch office occurring in the corresponding period in the prior year as well as a reduction in travel related expenses in 2020 due to COVID-19.

Data processing expenses for the nine months ended September 30, 2020 were $2,387,000 and increased by $900,000 from the corresponding period in the prior year, primarily due to increased technology costs related to clearing operations.

Rent and occupancy expenses for the nine months ended September 30, 2020 were $2,119,000 and increased by $365,000 from the corresponding period in the prior year, primarily due to the increase in rent from the addition of WP’s offices in 2020.

Professional fees for the nine months ended September 30, 2020 were $2,159,000 and decreased by $409,000 from the corresponding period in the prior year, primarily due to a reduction in legal fees.

Depreciation and amortization expenses for the nine months ended September 30, 2020 were $1,193,000 and increased by $504,000 from the corresponding period in the prior year, primarily due to the depreciation and amortization of incremental purchases of fixed assets and software as well as the amortization related to the intangible assets acquired from WP.

Referral fees for the nine months ended September 30, 2020 were $427,000 and increased by $427,000 from the corresponding period in the prior year, primarily due to the commission payouts to other institutional brokers for WP in 2020.

Interest expense for the nine months ended September 30, 2020 was $253,000 and increased by $169,000 from the corresponding period in the prior year, primarily due to the interest on the promissory note to finance part of the acquisition of WP.

Provision (Benefit) For (From) Income Taxes

Provision for income taxes for the nine months ended September 30, 2020 was $39,000 and decreased by $1,326,000 from the corresponding period in the prior year, primarily due to a discrete tax benefit related to the anticipated filing of amended 2017 through 2019 federal tax returns in order to claim a refund of previously paid taxes coupled with the recognition of additional deferred tax assets for federal net operating losses as we determined that we can utilize additional net operating losses under Section 382.

Statements of Financial Condition as of ~~March 31,~~September 30, 2020 and December 31, 2019

Assets

Assets as ~~March 31,~~of September 30, 2020 were ~~$393,734,000~~$673,452,000 and ~~decreased~~increased by ~~$144,333,000 or 27%~~$135,385,000 from December 31, 2019, primarily due to the ~~decrease~~increase in securities borrowed ~~balances due to recent market conditions.~~and cash and securities segregated for regulatory purposes.

Liabilities

Liabilities as of ~~March 31,~~September 30, 2020 were ~~$359,623,000~~$637,134,000 and ~~decreased~~increased by ~~$145,309,000 or 29%~~$132,202,000 from December 31, 2019, primarily due to the ~~decrease~~increase in securities loaned ~~balances due~~and payables to ~~recent market conditions.~~customers.

- 33 -

Liquidity and Capital Resources

Overview

We believe that our operating cash flows, cash and cash equivalents, borrowing capacity under the notes payable – related party, line of credit with East West Bank, and overall access to capital markets are sufficient to fund our operating, investing and financing requirements for the next twelve months.

Net Capital and Special Reserve Account

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) of the Securities Exchange Act of 1934. Under the alternate method permitted by this rule, net capital, as defined, shall not be less than the lower of $1 million or 2% of aggregate debit items arising from customer transactions. Since MSCO’s aggregate debits may fluctuate, MSCO’s minimum net capital requirements may also fluctuate from period to period. In addition, MSCO is subject to Customer ~~Account~~Protection Rule 15c3-3 ~~of the SEC~~ which requires segregation of funds in a special reserve account for the exclusive benefit of customers.

WP, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. WP is also subject to the CFTC's minimum financial requirements which require that WP maintain net capital, as defined, equal to the greater of its requirements under Regulation 1.17 under the Commodity Exchange Act or Rule 15c3-1.

~~-30-~~

See “Note 1315 – Capital Requirements” for more detail on our capital requirements.

Line of Credit with East West Bank

On July 22, 2020, we entered into a Loan and Security Agreement with East West Bank. In accordance with the terms of this agreement, we have the ability to borrow term loans in an aggregate principal amount not to exceed $10 million during the two-year period after July 22, 2020. Our obligations under the agreement are guaranteed pursuant to a guarantee agreement by and among, John J. Gebbia, Gloria E. Gebbia and a trust for which they are mutually co-trustees.

As of September 30, 2020, we have drawn down approximately $4.9 million under this agreement. See “Note 9 – Long-Term Debt” for more detail on this agreement.

Contractual Obligations

Leases

Future annual minimum payments for operating leases with initial terms of greater than one year as of ~~March 31,~~September 30, 2020 were as follows:

Year	Amount		Amount
2020	$	1,772,000	$	606,000
2021		1,114,000		1,403,000
2022		599,000		755,000
2023		543,000		543,000
2024		56,000		56,000
Total	$	4,084,000	$	3,363,000

As of September 30, 2020, we had an operating lease agreement for an office space in Beverly Hills, CA with a term of approximately 5 years. The total commitment of the lease is approximately $1.5 million, and the lease will commence on March 1, 2021. See “Note 67 – Leases” for more detail on our lease arrangements and corresponding disclosures.

Notes Payable – Related Party

WeAs of September 30, 2020, we have $8$6 million in notes payable to Gloria E. Gebbia, ~~all~~$3 million of which matures in ~~2020.~~December 2020 and $3 million of which matures in November 2021. See “Note 810 – Notes Payable - Related Party” for more detail.

- 34 -

Prepaid Service Contract

We have entered into an agreement with InvestCloud for development work related to our online platform as well as Robo-Advisor. As part of this agreement, we have an obligation to pay for the license fees associated with the InvestCloud Platform for a three year term. See “Note 5 – Prepaid Service Contract” for more detail.

Off-Balance Sheet Arrangements

Customer transactions are cleared through our clearing firms on a fully disclosed basis. If customers do not fulfill their contractual obligations, we may incur loss in connection with the purchase or sale of securities at prevailing market prices to satisfy customer obligations. 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 for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019.

Impairment

We have concluded that as of ~~March 31,~~September 30, 2020, there have been no impairments to the carrying value of ~~the Company’s~~Siebert’s goodwill and other tangible and intangible assets.

Segment

~~As a result of our acquisitions, we re-evaluated our reportable segments and~~We concluded ~~that~~ as of ~~March 31,~~September 30, 2020, Siebert is comprised of a single operating segment based on the factors related to management’s decision-making framework as well as management evaluating performance and allocating resources based on assessments of Siebert from a consolidated perspective.

Related Party Disclosures

During the course of business, we enter into various agreements and transactions with related parties. See “Note 1618 – Related Party Disclosures” for more detail on our related party disclosures.

Critical Accounting Policies

Certain of our accounting policies that involve a higher degree of judgment and complexity are discussed in “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our 2019 Form 10-K. There have been no changes to critical accounting estimates as of ~~March 31,~~September 30, 2020.

~~-31-~~

~~New Accounting Pronouncements~~

~~We evaluated all recently issued and adopted accounting pronouncements and determined~~Uncertain Tax Positions

Income tax benefits are recognized for a tax position when, in management’s judgment, it is more likely than not that the ~~pronouncements did not~~position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a ~~material~~greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.

As of September 30, 2020, we recorded an uncertain tax position of $1,041,000 attributable to our 2017 to 2019 amended tax returns as our anticipated tax refunds exceed the amount that meets the more-likely-than-not recognition threshold. The net impact onfrom the uncertain tax position was recorded as a reduction of our ~~financial statements~~income tax receivable. We expect to receive an income tax refund of approximately $248,000 by the first quarter of 2021. In the event that we conclude that we are subject to interest and/or penalties arising from uncertain tax positions, we will present interest and penalties as a component of ~~March 31, 2020.~~income taxes.

We recognized the anticipated refunds in three months ended September 30, 2020, as this is the period we concluded we would amend our federal tax returns and file refund claims as well as calculated the amount of refund to be received.

Fair Value Measurements

We have securities that are valued using the fair value framework under ASC 820 within our assets and liabilities as of ~~March 31,~~September 30, 2020 and December 31, 2019. The majority of the assets are level 1 U.S. government securities and equity securities as well as level 2 equity securities that are in the line items “Cash and securities segregated for regulatory purposes” and “Securities owned, at fair value.” The liabilities consist of relatively small amounts of level 1 and level 2 equity securities in the line item “Securities sold, not yet purchased, at fair value.” See “Note 56 – Fair Value Measurements” for more detail.

~~Recent Developments~~

- 35 -

~~InvestCloud Agreement~~

In April 2020, we entered into a partnership agreement with InvestCloud, a leading innovative tech provider of flexible and fully integrated digital apps for financial services, to provide a variety of enhancements and upgrades to our client platform, back end functionality, as well as Robo Advisor product. InvestCloud will be designing unified front and back end experiences that supports all of our clients and operations in a manner that is scalable, mobile friendly, and reduces technology costs. This partnership with InvestCloud ensures our commitment to online technology and providing the best online client experience possible in a digital age. We are looking to launch this new technology by end of the first quarter of 2021.

~~WP Name Change~~

~~Pursuant to our agreement with the original owners of WP, we agreed to discontinue using the name of Weeden Prime Services, LLC and filed to change it to WPS Prime Services, LLC in May 2020.~~New Accounting Pronouncements

~~New Siebert Website~~

We have ~~redesigned~~adopted certain new accounting pronouncements during the reporting period. See “Note 2 – New Accounting Standards” for more detail on the new accounting pronouncements and their impact on our Siebert website to incorporate an updated Siebert brand design, enhanced layout and user experience. The website integrates all of our service offerings and is mobile friendly. The new website will be launching by the end of May 2020 under the domain name “www.siebert.com” (previous domain name was “www.siebertnet.com”).financial statements.

~~-32-~~- 36 -

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

Retail 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 the Company. 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.

~~-33-~~- 37 -

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including 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 Exchange Act. Based on that evaluation, our management, including the Executive Vice President / Chief Financial Officer, concluded that our disclosure controls and procedures are effective to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that information required to be disclosed is accumulated and communicated to our management, including our Executive Vice President / Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based on its evaluation, our management, including our Executive Vice President / Chief Financial Officer, concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) was identified during the end of the period covered by this report, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~-34-~~- 38 -

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is party to certain claims, suits and complaints arising in the ordinary course of business. In the opinion of our management, all such matters are without merit, or involve amounts which would not have a significant effect on the financial position of the Company.

ITEM 1A. RISK FACTORS

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 2019 Form 10-K, as supplemented by the risk factors included in our Quarterly Report on Form ~~8-K filed with~~10-Q for the ~~SEC on May 15, 2020 (the “Form 8-K), which are reproduced below for ease of reference.~~period ended March 31, 2020. Each of such risk factors could materially affect our business, financial position, and results of operations. Other than the supplemental risk factors provided in the Quarterly Report on Form ~~8-K (reproduced below),~~10-Q for the period ended March 31, 2020, there have been no material changes from the risk factors disclosed in our 2019 Form 10-K.

~~The onset and continuation~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None. See “Note 19 – Subsequent Events” for more detail on shares of our restricted common stock issued on November 10, 2020, subsequent to the end of the ~~COVID-19 pandemic has adversely affected, and will likely continue to adversely affect, our business, financial condition, liquidity and results of operations.~~reporting period.

We believe the worldwide COVID-19 pandemic has negatively affected our business and is likely to continue to do so. The outbreak has caused significant volatility and disruption in the financial markets both globally and in the U.S. If COVID-19, or another highly infectious or contagious disease, continues to spread or the response to contain it is unsuccessful, we could experience material adverse effects on our business, financial condition, liquidity, and results of operations. The extent of such effects will depend on future developments which are highly uncertain and cannot be predicted, including the geographic spread of the virus, the overall severity of the disease, the duration of the outbreak, the measures that may be taken by various governmental authorities in response to the outbreak (such as quarantines and travel restrictions) and the possible further impacts on the global economy. The continued spread of COVID-19 could also negatively impact the availability of key personnel necessary to conduct our business.

~~Certain actions taken by U.S. or other governmental authorities, including the Federal Reserve, to reduce interest rates may adversely affect our results of operations.~~

During the first quarter of 2020, the Federal Reserve cut the federal funds target overnight rate twice for a total of 150 basis points to near zero. These developments have had, and may continue to have, a negative impact on our revenue from margin interest, marketing, and distribution fees as well as interest income.

~~Investor behavior may fundamentally change as a result of COVID-19 in both the near and long term which could have an adverse effect on our operations.~~

We cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact. As such, impacts of COVID-19 to our business are highly uncertain and we will continue to assess the financial impacts. The disruptions to the U.S. and global economies and financial markets may cause investors to be more cautious and to limit their investments. Trading of securities may be materially and adversely affected with more investors seeking stability. Investment activity may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the impacts of job losses and any recession, resulting from the COVID-19 pandemic. Clients holding savings with us in retirement or investment accounts may be required to liquidate some or all of their savings to pay living expenses. All of this could materially and adversely impact our revenue streams.

~~-35-~~- 39 -

ITEM 6. EXHIBITS

Exhibit No.		Description of Document

31.1		Certification of Andrew H. Reich pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Andrew H. Reich of Periodic Financial Report under Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

~~-36-~~- 40 -

SIGNATURES~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SIEBERT FINANCIAL CORP.

	By:	/s/ Andrew H. Reich
		Andrew H. Reich
		Executive Vice President, Chief Operating Officer, Chief Financial Officer, and Secretary
		(Principal executive, financial and accounting officer)

	~~By:~~	~~/s/ Andrew H. Reich~~
		~~Andrew H. Reich~~
		~~Executive Vice President, Chief Operating Officer, Chief Financial Officer, and Secretary~~
		~~(Principal executive, financial and accounting officer)~~

	Dated: ~~May 28,~~November 16, 2020

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended	~~March 31,~~September 30, 2020

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

New York		11-1796714
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - $0.01 par value	SIEB	The Nasdaq Capital Market

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

Description	Issuance Date	Face Amount		Issuance Date	Face Amount
4% due December 2, 2020	December 2, 2019	$	3,000,000	December 2, 2019	$	3,000,000

Subordinated to MSCO*	Subordinated to MSCO*			Subordinated to MSCO*
4% due November 30, 2020**	November 30, 2018	$	3,000,000
4% due September 4, 2020	September 4, 2019	$	2,000,000
			5,000,000
4% due November 30, 2021**				November 30, 2018	$	3,000,000

Total Notes payable – related party		$	8,000,000		$	6,000,000

	Three Months Ended March 31, 2020
	Number of Shares Issued		$.01 Par Value		Additional Paid- In Capital		Retained Earnings		Total
Balance – January 1, 2020		27,157,188	$	271,000	$	7,641,000	$	12,869,000	$	20,781,000
Shares issued for StockCross purchase		3,302,616		33,000		12,256,000		65,000		12,354,000
Net income		—		—		—		976,000		976,000
Balance – March 31, 2020		30,459,804	$	304,000	$	19,897,000	$	13,910,000	$	34,111,000

	As of March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents
Certificates of deposit	$	—	$	142,000	$	—	$	142,000

Securities owned, at fair value
U.S. government securities	$	2,040,000	$	—	$	—	$	2,040,000
Municipal securities		—		938,000		—		938,000
Corporate bonds		—		303,000		—		303,000
Equity securities		139,000		259,000		—		398,000
Unit investment trusts		1,000		—		—		1,000
Total Securities owned, at fair value	$	2,180,000	$	1,500,000	$	—	$	3,680,000

Liabilities
Securities sold, not yet purchased, at fair value
Equity securities	$	—	$	31,000	$	—	$	31,000
Total Securities sold, not yet purchased, at fair value	$	—	$	31,000	$	—	$	31,000

Revenue Stream	Performance Obligation
Commissions and fees, Principal transactions, Market making, Stock borrow / stock loan, Advisory fees	Provide financial services to customers and counterparties
Margin interest, marketing and distribution fees, Interest income, Other income	n / a

	As of March 31,
	2020		2019
Retail customer margin debit balances (in billions)	$	0.3	$	0.3
Retail customer credit balances (in billions)	$	0.6	$	0.5
Retail customer money market fund value (in billions)	$	0.7	$	0.6
Retail customer net worth (in billions)	$	10.6	$	12.3
Retail customer accounts		108,163		103,641