Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Siebert Financial Corp | |
Entity Central Index Key | 65,596 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 27,157,188 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 7,341,000 | $ 3,765,000 |
Receivables from brokers | 2,177,000 | 1,396,000 |
Deferred tax asset | 1,393,000 | |
Receivable from related party | 1,000,000 | 283,000 |
Software | 678,000 | |
Furniture, equipment and leasehold improvements, net | 528,000 | 347,000 |
Prepaid expenses and other assets | 376,000 | 234,000 |
Securities owned, at fair value | ||
Total assets | 13,493,000 | 6,025,000 |
Liabilities: | ||
Income taxes payable | 908,000 | 125,000 |
Accounts payable and accrued liabilities | 761,000 | 561,000 |
Due to related party | 127,000 | |
Total liabilities | 1,669,000 | 813,000 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Common stock, $.01 par value; 49,000,0000 shares authorized, 27,157,188 shares issued and outstanding as of September 30, 2018 and December 31, 2017 | 271,000 | 271,000 |
Additional paid-in capital | 7,641,000 | 7,641,000 |
Retained earnings/(Accumulated deficit) | 3,912,000 | (2,700,000) |
Total stockholders' equity | 11,824,000 | 5,212,000 |
Total liabilities and stockholders' equity | $ 13,493,000 | $ 6,025,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholder's equity: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 49,000,000 | 49,000,000 |
Common stock, issued shares | 27,157,188 | 27,157,188 |
Common stock, outstanding shares | 27,157,188 | 27,157,188 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Margin interest, marketing and distribution fees | $ 2,731,000 | $ 1,850,000 | $ 7,953,000 | $ 4,477,000 |
Principal transactions | 2,634,000 | 154,000 | 7,838,000 | 360,000 |
Commissions and fees | 2,465,000 | 1,077,000 | 7,651,000 | 3,295,000 |
Interest | 34,000 | 4,000 | 69,000 | 9,000 |
Advisory fees | 20,000 | 4,000 | 38,000 | 16,000 |
Total revenue | 7,884,000 | 3,089,000 | 23,549,000 | 8,157,000 |
Expenses: | ||||
Employee compensation and benefits | 3,668,000 | 1,031,000 | 10,619,000 | 3,069,000 |
Other general and administrative | 650,000 | 275,000 | 1,874,000 | 1,020,000 |
Clearing fees, including floor brokerage | 631,000 | 252,000 | 2,212,000 | 819,000 |
Professional fees | 477,000 | 372,000 | 1,572,000 | 1,265,000 |
Occupancy | 248,000 | 86,000 | 737,000 | 306,000 |
Communications | 120,000 | 56,000 | 369,000 | 192,000 |
Advertising and promotion | 6,000 | 16,000 | 40,000 | 61,000 |
Total Expenses | 5,800,000 | 2,088,000 | 17,423,000 | 6,732,000 |
Income before (benefit) from income taxes | 2,084,000 | 1,001,000 | 6,126,000 | 1,425,000 |
(Benefit) from income taxes | (1,035,000) | (485,000) | ||
Net Income | $ 3,119,000 | $ 1,001,000 | $ 6,611,000 | $ 1,425,000 |
Net income per share of common stock - Basic and diluted | $ 0.11 | $ 0.05 | $ 0.24 | $ 0.06 |
Weighted average shares outstanding - Basic and diluted | 27,157,188 | 22,085,126 | 27,157,188 | 22,085,126 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 6,611,000 | $ 1,425,000 |
Adjustments to reconcile net income to net cash provided by/(used in) operating activities: | ||
Reduction in valuation allowance related to deferred tax asset | (1,393,000) | |
Depreciation and amortization | 91,000 | 90,000 |
Changes in: | ||
Securities owned, at fair value | 92,000 | |
Receivables from brokers | (781,000) | (494,000) |
Prepaid expenses and other assets | (142,000) | (12,000) |
Income taxes payable | 784,000 | |
Due to related party | (127,000) | |
Receivable from related party | (717,000) | |
Accounts payable and accrued liabilities | 200,000 | (266,000) |
Net cash provided by operating activities | 4,526,000 | 835,000 |
Cash flows from investing activities: | ||
Purchase of furniture, equipment, and leasehold improvements | (272,000) | (350,000) |
Software | (678,000) | |
Net cash used in investing activities | (950,000) | (350,000) |
Net increase in cash and cash equivalents | 3,576,000 | 485,000 |
Cash and cash equivalents - beginning of period | 3,765,000 | 2,730,000 |
Cash and cash equivalents - end of period | 7,341,000 | 3,215,000 |
Supplemental Schedule Of Non-Cash Financing Activities: | ||
Payment by related party of expenses | 803,000 | |
Supplemental Cash Flow Information: | ||
Taxes paid | $ 126,000 | $ 39,000 |
Business and Basis of Presentat
Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | 1. Business and Basis of Presentation Siebert Financial Corp., a New York corporation, incorporated in 1934, is a holding company that conducts its retail discount 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. (“NXT”), a New York corporation registered with the Securities and Exchange Commission (“SEC”) as a Registered Investment Advisor, its insurance business through its wholly-owned subsidiary, Park Wilshire Companies Inc. (“PWC”), a Texas corporation and licensed insurance agency, and KCA Technologies, LLC, (“KCAT”), a Nevada limited liability company and owner of certain intellectual property and related computer software for optimizing investment portfolios (“robo technology”). For purposes of this Quarterly Report on Form 10-Q, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp., MSCO, NXT, PWC, and KCAT collectively, unless the context otherwise requires. Our principal offices are located at 120 Wall Street, New York, NY 10005, and our phone number is (212) 644-2400. Our Internet address is www.siebertnet.com. Our SEC filings are available through our website at www.siebertnet.com The condensed consolidated financial statements presented herein are unaudited and include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of our management, necessary for a fair presentation of the financial position and results of operations of the interim periods pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”) have been condensed or omitted pursuant to the SEC rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The balance sheet as of December 31, 2017 has been derived from the consolidated statements of financial condition at that date, but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”). Due to the nature of our business, the results of operations for the three months and nine months ended September 30, 2018 are not necessarily indicative of operating results for the full year. As further disclosed in our 2017 Form 10-K, the Company acquired certain retail broker-dealer assets of StockCross Financial Services, Inc. (“StockCross”), an affiliate of the Company. The impact of this acquisition has resulted in a significant improvement in operations for the three months and nine months ended September 30, 2018 as compared to the three months and the nine months ended September 30, 2017. Recent Developments As of June 25, 2018, Siebert joined the broad-market Russell 3000® Index. Annual Russell U.S. Indexes reconstitution captures the 4,000 largest U.S. stocks as of May 11, ranking them by total market capitalization. Membership in the Russell 3000® Index, which remains in place for one year, means automatic inclusion in the large-cap Russell 1000® Index or small-cap Russell 2000® Index as well as the appropriate growth and value style indexes. Russell U.S. Indexes are widely used by investment managers and institutional investors as the basis for index funds and as benchmarks for active investment strategies and approximately $9 trillion in assets are benchmarked against Russell U.S. Indexes. On August 21, 2018, Siebert acquired all of the issued and outstanding membership interests of KCAT from Kennedy Cabot Acquisition, LLC (“KCA”), a certain related party of Siebert, for approximately $690,000. KCAT is a robo technology company initially tasked with developing a sophisticated robo product for Siebert AdvisorNXT (“Robo Platform”). The Robo Platform provides clients with an automated wealth management solution intended to maximize portfolio returns based on the client’s specific risk tolerance. The Robo Platform utilizes Modern Portfolio Theory to create optimal portfolios for each client by selecting low-cost, well-managed exchange traded funds (“ETFs”) and exchange traded notes (“ETNs”), and automatically rebalances portfolios in light of prevailing market conditions. Within the Robo Platform, the client has the option of using a pure robo track, or can opt for a hybrid approach, which combines the robo track with a traditional wealth manager to help manage their portfolio and make investment recommendations. See footnote 12 for additional information on the KCAT acquisition and the Robo Platform. |
Per Share Data
Per Share Data | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Per Share Data | 2. Per Share Data Basic earnings per share is calculated by dividing net income by the weighted average of the number of outstanding common shares during the period. The Company had net income of $3,119,000 for the three months ended September 30, 2018 as compared to net income of $1,001,000 for the three months ended September 30, 2017. The Company had net income of $6,611,000 for the nine months ended September 30, 2018 as compared to net income of $1,425,000 for the nine months ended September 30, 2017. |
Net Capital
Net Capital | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Net Capital | 3. Net Capital MSCO is subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1 or “Uniform Net Capital Rule”), which requires the maintenance of minimum net capital. MSCO has elected to use the alternative method, permitted by the Uniform Net Capital Rule, which requires that MSCO maintain minimum net capital, as defined, equal to the greater of $250,000 or 2% of aggregate debit balances arising from customer transactions, as defined. The Uniform Net Capital Rule also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital would be less than 5% of aggregate debits. As of September 30, 2018, MSCO had net capital of $9,701,000 as compared with net capital requirement of $250,000. MSCO claims exemption from the reserve requirement under Section 15c3-3(k)(2)(ii). |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 4. Revenue Recognition On January 1, 2018, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 by applying the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The adoption of FASB ASC Topic 606 did not have an impact on the recognition of our primary sources of revenue such as principal transactions, commissions and fees, as well as margin interest, marketing and distribution fees. The timing of recognition of substantially all of our remaining revenue was also not impacted, and we therefore did not record any cumulative effect adjustment to opening equity. Disaggregation of Revenue Below is a breakdown of the Company’s revenue: Three Months Ended September 30, Nine Months Ended September 30, Revenue Stream Statements of Operations 2018 2017 2018 2017 Revenue from Principal transactions: Principal transactions – non StockCross Principal transactions $ 437,000 $ 154,000 $ 1,514,000 $ 360,000 Principal transactions attributed to assets acquired from StockCross Principal transactions 2,197,000 — 6,324,000 — Total Revenue from Principal transactions 2,634,000 154,000 7,838,000 360,000 Revenue from Commissions and fees: Commissions and fees – non StockCross Commissions and fees 2,068,000 1,077,000 6,185,000 3,295,000 Commissions and fees attributed to assets acquired from StockCross Commissions and fees 397,000 — 1,466,000 — Total Revenue from Commissions and fees 2,465,000 1,077,000 7,651,000 3,295,000 Revenue from Margin interest, marketing and distribution fees: Margin interest, marketing and distribution fees – non StockCross Margin interest, marketing and distribution fees 2,409,000 1,850,000 7,049,000 4,477,000 Margin interest, marketing and distribution fees attributed Margin interest, marketing and distribution fees 322,000 — 904,000 — Total Revenue from Margin interest, marketing and distribution fees 2,731,000 1,850,000 7,953,000 4,477,000 Other Revenue: Interest – non StockCross Interest 34,000 4,000 69,000 9,000 Advisory fees – non StockCross Advisory fees 20,000 4,000 38,000 16,000 Total Revenue Total Revenue $ 7,884,000 $ 3,089,000 $ 23,549,000 $ 8,157,000 Principal transactions are recorded on a trade-date basis and primarily represent riskless principal transactions in which the Company, after receiving an order, buys or sells securities as principal and at the same time buys or sells the securities with a markup or markdown to complete the order. Commission and fees, margin interest, marketing and distribution fees, and related clearing expenses are recorded on a trade-date basis. Fees, consisting primarily of revenue participation with the Company’s clearing brokers in distribution fees and interest, are recorded as earned. Advisory fees are earned typically on a quarterly basis in accordance with the terms of the client agreements. Interest is recorded on the accrual basis. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements FASB 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 FASB 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. 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: Municipal Securities: Corporate Bonds and Convertible Preferred Stock: Exchange-Traded Equity Securities: Certificates of Deposit: Unit Investment Trusts: There were no inventory positions as of September 30, 2018 and as of December 31, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Retail customer transactions are cleared, on a fully disclosed basis, through two clearing brokers, one of which is a related party. If customers do not fulfill their contractual obligations, the clearing broker may charge MSCO for any loss incurred in connection with the purchase or sale of securities at prevailing market prices to satisfy the customers’ obligations. MSCO regularly monitors the activity in its customer accounts for compliance with its margin requirement. MSCO is exposed to the risk of loss on unsettled customer transactions if customers fail to fulfill their contractual obligations. There were no material losses for unsettled customer transactions for the nine months ended September 30, 2018 and September 30, 2017. |
Provision for Income Taxes
Provision for Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | 7. Provision for Income Taxes Income taxes consist of the following: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Current income taxes Federal $ 300,000 $ 847,000 State 58,000 61,000 358,000 908,000 Deferred tax benefit Federal (423,000 ) (423,000 ) State (970,000 ) (970,000 ) (1,393,000 ) (1,393,000 ) Total (Benefit) from income taxes $ (1,035,000 ) $ (485,000 ) For interim financial reporting, we estimate the effective tax rate for tax jurisdictions which is applied to the year to date income before taxes. For the three months and nine months ended September 30, 2018, our effective tax rate was -50% and -8%, respectively, due to the reversal of the valuation allowance for the deferred tax asset. As of September 30, 2018, we adjusted a portion of our valuation allowance against our deferred tax asset arising in U.S. federal and state jurisdictions as the realization of such asset is considered to be more likely than not realizable at this time. As a result, we recognized a net deferred tax asset amounting to approximately $1,393,000 as of September 30, 2018, and our income tax expense decreased $1,393,000 for the three months and nine months ended September 30, 2018. A deferred tax asset of approximately $6,619,000 is reported net of a valuation allowance of $5,226,000. In a future period, the Company’s assessment of the realizability of deferred tax assets and therefore the appropriateness of the valuation allowance could change based on an assessment of all available evidence, both positive and negative, in that future period. If the Company’s conclusion about the realizability of its deferred tax assets and therefore the appropriateness of the valuation allowance changes in a future period, the Company could record an additional substantial tax benefit or expense when that occurs. As of September 30, 2018, the Company had federal and state net operating loss carryforwards of $22,657,000 and $15,834,000, respectively, which expire between 2029 and 2036. Utilization of the Company’s net operating loss carryforwards for federal tax purposes and certain state jurisdictions are subject to annual limitations of approximately $900,000 per year under Internal Revenue Code Section 382 due to a previous change in ownership. In regard to the effect of the Tax Cuts and Jobs Act, we determined that the primary change applicable to us will result in lower income tax expense in 2018 as well as subsequent years. The statutory federal income rates in effect of 34% as of December 31, 2017 and 21% in subsequent periods were utilized to calculate the income tax provision and this provision will result in lower income tax expense in 2018 as well as subsequent years. In addition, the change in federal income tax rates affected the valuation of our gross deferred tax asset; however, there was no material impact to the financials as of December 31, 2017 through June 30, 2018 as there was a full valuation allowance during those periods." The reconciliation between the income tax provision and income taxes computed by applying the statutory federal income tax rate to income before income taxes for the three months and nine months ended September 30, 2018 is as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Expected income tax at statutory federal tax rate (21%) $ 438,000 $ 1,286,000 Tax amortization of intangible assets (70,000 ) (210,000 ) Depreciation 8,000 19,000 Net operating loss (47,000 ) (141,000 ) Temporary differences - charitable contributions 4,000 (57,000 ) State taxes 25,000 11,000 Reversal of valuation allowance (1,393,000 ) (1,393,000 ) Total (Benefit) from income taxes $ (1,035,000 ) $ (485,000 ) The primary item giving rise to the deferred tax asset is as follows: Net operating loss carryforwards $ 6,619,000 Valuation allowance (5,226,000 ) Net deferred tax asset $ 1,393,000 As of December 31, 2017, March 31, 2018 and June 30, 2018, the Company’s deferred tax asset was primarily the result of U.S. and state net operating loss carryforwards. A full valuation allowance was recorded against the gross deferred tax asset as of December 31, 2017, March 31, 2018 and June 30, 2018. For the three months and nine months ended September 30, 2018, the Company recorded a net valuation allowance reversal of $1,393,000 related to net operating losses, on the basis of management’s reassessment of the amount of its deferred tax asset that is more likely than not to be realized. As of each reporting date, management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. As of September 30, 2018, the Company had achieved a full year of positive earnings in 2017 as well as three consecutive quarters of positive earnings in 2018. In addition, the 2018 results included almost a full year of the results post-acquisition of the retail assets from StockCross. Based on our analysis of the positive and negative evidence, management determined that sufficient positive evidence existed as of September 30, 2018 to conclude that a portion of deferred tax asset was realizable. Therefore, we reduced the valuation allowance and income tax expense accordingly. |
Non-Recurring Charges
Non-Recurring Charges | 9 Months Ended |
Sep. 30, 2018 | |
Non-Recurring Charges [Abstract] | |
Non Recurring Charges | 8. Non-Recurring Charges There were no non-recurring charges for the three months ended September 30, 2017. Included in the nine months ended September 30, 2017 is $342,000 primarily due to relocating the firm’s call center and costs associated with staff reductions. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions The Company earned revenue and incurred expenses of $2,916,000 and $307,000, respectively, from StockCross for the three months ended September 30, 2018. The Company earned revenue and incurred expenses of $8,694,000 and $1,271,000, respectively, from StockCross for the nine months ended September 30, 2018. As of September 30, 2018, the Company is owed a receivable from StockCross of $1,625,000. For the three months and nine months ended September 30, 2018, the Company received $14,000 in commissions and fees for a StockCross insurance policy. |
Liabilities
Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Liabilities | 10. Liabilities Included in the September 30, 2018 condensed consolidated statements of financial condition is $312,000 of commissions payable as part of accounts payable and accrued liabilities. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Leases | 11. Leases In addition to the leases stated in our 2017 Form 10-K, the Company committed to the below lease. The future minimum base rental payments under this operating lease are as follows: Total 2019 2020 2021 2022 2023 Later Years Jersey City Office $ 2,212,000 $ 382,000 $ 428,000 $ 441,000 $ 454,000 $ 468,000 $ 39,000 |
KCAT Acquisition and Software
KCAT Acquisition and Software | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
KCAT Acquisition and Software | 12. KCAT Acquisition and Software On August 21, 2018, the Company signed a purchase agreement to acquire from KCA all of the issued and outstanding membership interests of KCAT. The net assets of KCAT included cash and capitalized software related to the Robo Platform. We have concluded that KCAT did not constitute a business in accordance with ASC Topic 805 and thus we accounted for this transaction as an asset acquisition. The majority of the shares of KCA were owned by the same shareholders who owned the majority of the shares of the Company. The Company's Board of Directors unanimously approved the acquisition of KCAT. The acquisition of KCAT was completed on August 21, 2018. The total consideration for the acquisition of KCAT was approximately $690,000. We believe that the Robo Platform will increase the breadth of our product offering and will generate substantial opportunity for the Company by appealing to customers within new demographics. The software acquired from KCAT is accounted for under ASC Topic 985, Software, and shall be amortized over a 3 year period beginning in Q2 of 2019, the date we estimate the software will launch for commercial purposes. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | Below is a breakdown of the Company’s revenue: Three Months Ended September 30, Nine Months Ended September 30, Revenue Stream Statements of Operations 2018 2017 2018 2017 Revenue from Principal transactions: Principal transactions – non StockCross Principal transactions $ 437,000 $ 154,000 $ 1,514,000 $ 360,000 Principal transactions attributed to assets acquired from StockCross Principal transactions 2,197,000 — 6,324,000 — Total Revenue from Principal transactions 2,634,000 154,000 7,838,000 360,000 Revenue from Commissions and fees: Commissions and fees – non StockCross Commissions and fees 2,068,000 1,077,000 6,185,000 3,295,000 Commissions and fees attributed to assets acquired from StockCross Commissions and fees 397,000 — 1,466,000 — Total Revenue from Commissions and fees 2,465,000 1,077,000 7,651,000 3,295,000 Revenue from Margin interest, marketing and distribution fees: Margin interest, marketing and distribution fees – non StockCross Margin interest, marketing and distribution fees 2,409,000 1,850,000 7,049,000 4,477,000 Margin interest, marketing and distribution fees attributed Margin interest, marketing and distribution fees 322,000 — 904,000 — Total Revenue from Margin interest, marketing and distribution fees 2,731,000 1,850,000 7,953,000 4,477,000 Other Revenue: Interest – non StockCross Interest 34,000 4,000 69,000 9,000 Advisory fees – non StockCross Advisory fees 20,000 4,000 38,000 16,000 Total Revenue Total Revenue $ 7,884,000 $ 3,089,000 $ 23,549,000 $ 8,157,000 |
Provision for Income Taxes (Tab
Provision for Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Taxes | Income taxes consist of the following: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Current income taxes Federal $ 300,000 $ 847,000 State 58,000 61,000 358,000 908,000 Deferred tax benefit Federal (423,000 ) (423,000 ) State (970,000 ) (970,000 ) (1,393,000 ) (1,393,000 ) Total (Benefit) from income taxes $ (1,035,000 ) $ (485,000 ) |
Schedule of Reconciliation of Income Tax Provision and Statutory Federal Tax Rate | The reconciliation between the income tax provision and income taxes computed by applying the statutory federal income tax rate to income before income taxes for the three months and nine months ended September 30, 2018 is as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Expected income tax at statutory federal tax rate (21%) $ 438,000 $ 1,286,000 Tax amortization of intangible assets (70,000 ) (210,000 ) Depreciation 8,000 19,000 Net operating loss (47,000 ) (141,000 ) Temporary differences - charitable contributions 4,000 (57,000 ) State taxes 25,000 11,000 Reversal of valuation allowance (1,393,000 ) (1,393,000 ) Total (Benefit) from income taxes $ (1,035,000 ) $ (485,000 ) |
Schedule of Deferred Tax Assets | The primary item giving rise to the deferred tax asset is as follows: Net operating loss carryforwards $ 6,619,000 Valuation allowance (5,226,000 ) Net deferred tax asset $ 1,393,000 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Schedule of future minimum base rental payments | In addition to the leases stated in our 2017 Form 10-K, the Company committed to the below lease. The future minimum base rental payments under this operating lease are as follows: Total 2019 2020 2021 2022 2023 Later Years Jersey City Office $ 2,212,000 $ 382,000 $ 428,000 $ 441,000 $ 454,000 $ 468,000 $ 39,000 |
Business and Basis of Present_2
Business and Basis of Presentation (Details) | 1 Months Ended |
Aug. 21, 2018USD ($) | |
Kennedy Cabot Acquisition [Member] | |
Value of issued and outstanding membership interests | $ 690,000 |
Per Share Data (Details)
Per Share Data (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 3,119,000 | $ 1,001,000 | $ 6,611,000 | $ 1,425,000 |
Net Capital (Details)
Net Capital (Details) | Sep. 30, 2018USD ($) |
Stockholders' Equity Note [Abstract] | |
Net capital | $ 9,701,000 |
Net capital requirements | $ 250,000 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of revenue) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Principal transactions | $ 2,634,000 | $ 154,000 | $ 7,838,000 | $ 360,000 |
Total revenue from Commissions and fees | 2,465,000 | 1,077,000 | 7,651,000 | 3,295,000 |
Total revenue from Margin interest, marketing and distribution fees | 2,731,000 | 1,850,000 | 7,953,000 | 4,477,000 |
Total revenue from Interest | 34,000 | 4,000 | 69,000 | 9,000 |
Total revenue from Advisory fees | 20,000 | 4,000 | 38,000 | 16,000 |
Total Revenue | 7,884,000 | 3,089,000 | 23,549,000 | 8,157,000 |
Non StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Interest | 34,000 | 4,000 | 69,000 | 9,000 |
Total revenue from Advisory fees | 20,000 | 4,000 | 38,000 | 16,000 |
Principal transactions [Member] | Non StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Principal transactions | 437,000 | 154,000 | 1,514,000 | 360,000 |
Principal transactions [Member] | Assets acquired from StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Principal transactions | 2,197,000 | 6,324,000 | ||
Commissions and fees [Member] | Non StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Commissions and fees | 2,068,000 | 1,077,000 | 6,185,000 | 3,295,000 |
Commissions and fees [Member] | Assets acquired from StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Commissions and fees | 397,000 | 1,466,000 | ||
Margin interest, marketing and distribution fees [Member] | Non StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Margin interest, marketing and distribution fees | 2,409,000 | 1,850,000 | 7,049,000 | 4,477,000 |
Margin interest, marketing and distribution fees [Member] | Assets acquired from StockCross [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from Margin interest, marketing and distribution fees | $ 322,000 | $ 904,000 |
Provision for Income Taxes (Nar
Provision for Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | ||||
Effective tax rate from continuing operations | (50.00%) | (8.00%) | ||
Applicable federal income tax rate | 21.00% | 21.00% | 34.00% | |
Changes in deferred tax asset | $ (1,393,000) | $ (1,393,000) | ||
Deferred tax asset | 6,619,000 | 6,619,000 | ||
Valuation allowance | 5,226,000 | 5,226,000 | ||
Reversal of valuation allowance | (1,393,000) | (1,393,000) | ||
Internal Revenue Code [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforward, annual limitation | 900,000 | |||
Federal [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforward | 22,657,000 | 22,657,000 | ||
State [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforward | $ 15,834,000 | $ 15,834,000 |
Provision for Income Taxes (Sch
Provision for Income Taxes (Schedule of Income Taxes) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Current income taxes | ||||
Federal | $ 300,000 | $ 847,000 | ||
State | 58,000 | 61,000 | ||
Current income taxes | 358,000 | 908,000 | ||
Deferred tax benefit | ||||
Federal | (423,000) | (423,000) | ||
State | (970,000) | (970,000) | ||
Deferred tax benefit | (1,393,000) | (1,393,000) | ||
Total (Benefit) from income taxes | $ (1,035,000) | $ (485,000) |
Provision for Income Taxes (S_2
Provision for Income Taxes (Schedule of Reconciliation of Income Tax Provision and Statutory Federal Tax Rate) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Expected income tax at statutory federal tax rate, percentage | 21.00% | 21.00% | 34.00% | ||
Expected income tax at statutory federal tax rate | $ 438,000 | $ 1,286,000 | |||
Tax amortization of intangible assets | (70,000) | (210,000) | |||
Depreciation | 8,000 | 19,000 | |||
Net operating loss | (47,000) | (141,000) | |||
Temporary differences - charitable contributions | 4,000 | (57,000) | |||
State taxes | 25,000 | 11,000 | |||
Reversal of valuation allowance | (1,393,000) | (1,393,000) | |||
Total (Benefit) from income taxes | $ (1,035,000) | $ (485,000) |
Provision for Income Taxes (S_3
Provision for Income Taxes (Schedule of Deferred Tax Assets) (Details) | Sep. 30, 2018USD ($) |
Operating Loss Carryforwards [Line Items] | |
Valuation allowance | $ (5,226,000) |
Net Operating Loss Carryforward [Member] | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 6,619,000 |
Valuation allowance | (5,226,000) |
Net deferred tax asset | $ 1,393,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||
Due to related party | $ 127,000 | ||
StockCross [Member] | |||
Related Party Transaction [Line Items] | |||
Related party revenues | 2,916,000 | 8,694,000 | |
Related party expenses | 307,000 | 1,271,000 | |
Due from Stockcross | 1,625,000 | 1,625,000 | |
Insurance commissions and fees received from related party | $ 14,000 | $ 14,000 |
Liabilities (Details)
Liabilities (Details) | Sep. 30, 2018USD ($) |
Other Liabilities Disclosure [Abstract] | |
Commissions payable | $ 312,000 |
Leases (Schedule of future mini
Leases (Schedule of future minimum base rental payment) (Details) | Sep. 30, 2018USD ($) |
Leases [Abstract] | |
2,019 | $ 382,000 |
2,020 | 428,000 |
2,021 | 441,000 |
2,022 | 454,000 |
2,023 | 468,000 |
Later Years | 39,000 |
Total | $ 2,212,000 |
KCAT Acquisition and Software (
KCAT Acquisition and Software (Details) - Kennedy Cabot Acquisition [Member] | 1 Months Ended |
Aug. 21, 2018USD ($) | |
Business Acquisition [Line Items] | |
Total consideration of Acquisition | $ 690,000 |
Intangible assets acquired, useful life | 3 years |