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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 0-5703
Siebert Financial Corp.
(Exact name of registrant as specified in its charter)
New York 11-1796714
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
885 Third Avenue, New York , New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (212) 644-2400
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
---- ----
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X] No
Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-K (ss. 229.405) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
The number of shares of the Registrant's outstanding Common Stock, as
of March 17, 2000, was 22,894,745 shares. The aggregate market value of the
Registrant's Common Stock held by non-affiliates of the Registrant (based on the
closing price of the Common Stock as reported by the NASDQ National Market on
March 17, 2000 and the assumption for this computation only that all directors
and executive officers are affiliates) was $278,301,800.
Documents Incorporated by Reference: Proxy Statement to be filed
pursuant to Regulation 14A of the Exchange Act on or before April 30, 2000,
incorporated by reference into Parts II and III.
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Special Note Regarding Forward-Looking Statements
Except for historical information contained in this Annual Report on
Form 10-K, the matters discussed in this report contain certain forward-looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward-looking statements.
Factors that may cause such differences include, but are not limited to: the
volume of trading of securities on stock exchanges and in the over-the-counter
markets; the method of placing trades by our customers; computer and telephone
system failures; the effects of competitors pricing and technology developments,
telephone waiting time for servicing of accounts; the effects of industry
regulation and changing industry practices, customs; changes in revenues and
profit margin due to the cyclical securities markets; the level of spending on
advertising and promotion; short or long-term decline in securities prices and
trading volumes; and, the effect of losses from customer non-payment of balances
due.
PART I
Item 1. BUSINESS
General
Siebert Financial Corp. (the "Company") is a holding company that
conducts all of its business activities in the retail discount brokerage and
investment banking business through its wholly-owned subsidiary, Muriel Siebert
& Co., Inc., a Delaware corporation ("Siebert"). Muriel Siebert, the first woman
member of the New York Stock Exchange, is the Chairwoman and President and owns
approximately 87% of the outstanding common stock, par value $.01 per share (the
"Common Stock") of the Company.
The Company was ranked first among discount brokerage firms in the July
1999 issue of Smart Money Magazine based in part on Web reliability and customer
service and was one of two top ranked, five star on-line brokers in Kiplinger's
Personal Finance Magazine's November 1999 issue, based in part upon
responsiveness and good executions. In addition, unlike many discount brokerage
firms, Siebert offers a wide variety of underwriting and investment banking
services. These services offered through its Capital Markets division, include
acting as senior manager, co-manager or otherwise participating in the
underwriting or sales syndicates of municipal, corporate debt and equity,
government agency and mortgage/asset back securities issues.
Siebert Financial Corp. became a reporting company through a merger,
effective on November 8, 1996, with J. Michaels, Inc. ("JMI"), a company
incorporated in the State of New York in 1934, with which it was not previously
associated.
Following the merger, JMI's fiscal year was changed to December 31 and
its name was changed to Siebert Financial Corp.
Business Overview
Siebert's principal activity is providing Internet and traditional
discount brokerage and related services to retail investors. Through its Capital
Markets division, Siebert also offers institutional clients equity execution
services on an agency basis as well as equity and fixed income underwriting and
investment banking services. The Company believes that it is the largest
Woman-Owned Business Enterprise ("WBE") in the capital markets business in the
country through Siebert and the largest Minority and Women's Business Enterprise
("MWBE") in the tax-exempt underwriting business in the country through its 49%
interest in Siebert,Brandford, Shank & Co., LLC ("SBS"), which was formed in
Delaware in 1998.
-2-
The Retail Division
Discount Brokerage and Related Services. Siebert became a discount
broker on May 1, 1975, a date that would later come to be known as "May Day."
Siebert believes that it has been in business and a member of The New York Stock
Exchange, Inc. (the "NYSE") longer than any other discount broker. In 1998
Siebert began to offer its customers access to their accounts through
SiebertNet, its Internet website.
Siebert's focus in its discount brokerage business is to serve retail
clients seeking a wide selection of quality investment services, including
trading with a broker on the telephone or via the Internet, at commissions that
are substantially lower than those of full-commission firms and competitive with
the national discount brokerage firms. Siebert clears all securities
transactions on a fully disclosed basis through National Financial Services
Corp. ("NFSC"), a wholly owned subsidiary of Fidelity Investments. NFSC, with
over $9 billion in assets, adds state-of-the-art technology as well as
back-office experience to the operations of Siebert supplementing Siebert's
in-house systems.
Siebert serves investors who make their own investment decisions.
Siebert seeks to assist its customers in their investment decisions by offering
a number of value added services, including easy access to account information.
The firm provides its customers with information via toll-free 800 service
direct to its representatives, Monday through Friday between 7:30 a.m. and 7:30
p.m. Eastern Time. Through its SiebertNet, Mobile Broker, inter-active voice
recognition and Siebert MarketPhone services, 24-hour access is available to
customers.
Independent Retail Execution Services. Siebert offers what it believes
to be the best possible trade executions for customers. Siebert does not make
markets in securities, nor does it position against customer orders. Siebert's
listed orders are routed in a manner to afford all customers the opportunity for
price improvement on all orders. Through a service called NYSE Prime1, Siebert
also has the ability to document to customers all price improvements received on
orders executed on the NYSE when orders are filled at better than the National
Best Bid/Offer.
The firm's OTC orders are executed through a network of NASDAQ market
makers with no single market maker executing all trades. Additionally, the firm
offers customers execution services through the SelectNet2 and Instinet3 systems
for an additional fee. These systems give customers access to all Electronic
Communication Networks listed on SelectNet and to Instinet before and after
regular market hours. Siebert believes that its OTC executions afford its
customers the best possible opportunity for consistent price improvement.
Siebert does not have any affiliation with market makers and therefore does not
execute OTC trades through affiliated market makers.
Representatives assist clients in buying, selling or shopping for
competitive yields of fixed income securities, including municipal bonds,
corporate bonds, U.S. Treasuries, mortgage-backed securities, Government
Sponsored Enterprises, Unit Investment Trusts or Certificates of Deposit.
Retail Customer Service. Siebert believes that superior customer
service enhances its ability to compete with larger discount brokerage firms and
therefore provides retail customers, at no additional charge, with personal
service via toll-free access to dedicated customer support personnel for all of
its products and services. Customer service personnel are located in each branch
office of the firm.
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1 NYSE Prime is a service mark of the New York Stock Exchange, Inc.
2 SelectNet is a trademark of NASDAQ Stock Market, Inc.
3 Instinet is a trademark of Reuters Group PLC.
-3-
Retirement Accounts. Siebert offers customers a variety of
self-directed retirement accounts for which it acts as agent on all
transactions. Custodial services are provided through an affiliate of NFSC, the
firm's clearing agent, which also serves as trustee for such accounts. Each IRA,
SEP IRA, ROTH IRA, 401(k) and KEOGH account can be invested in mutual funds,
stocks, bonds and other investments in a consolidated account.
Customer Financing. Customers margin accounts are carried through
Siebert's clearing agent, which lends customers a portion of the market value of
certain securities held in the customer's account. Margin loans are
collateralized by these securities. Customers may sell securities short in a
margin account, subject to minimum equity and applicable margin requirements,
and the availability of such securities to be borrowed.
In permitting a customer to engage in transactions, Siebert assumes the
risk of its customers' failure to meet the customer's obligations in the event
of adverse changes in the market value of the securities positions. Both Siebert
and its clearing agent reserve the right to set margin requirements higher than
those established by the Federal Reserve Board.
Risk Management. Major risks facing the Company fall into two principal
categories: systems and credit. Systems, including communications and trading,
are critical to the Company's operations. Although the Company maintains
redundancy in certain systems, failures could have a material adverse affect on
the Company's operations. Customers who fail to pay for their purchases or who
fail to maintain the minimum required collateral for amounts borrowed against
securities positions represent the principal credit risk facing the Company
Information Systems. Siebert's operations rely heavily on information
processing and communications systems. The system for processing securities
transactions is highly automated. Registered representatives equipped with
computer terminals that can access customer account information, obtain
securities prices and related information and enter and confirm orders online.
To support its customer service delivery systems, as well as other
applications such as clearing functions, account administration, record keeping
and direct customer access to investment information, Siebert maintains a
computer network. Through its clearing agent, Siebert's computers are also
linked to the major registered United States securities exchanges, the National
Securities Clearing Corporation and The Depository Trust Company. Failure of the
information processing or communication systems for a significant period of time
could limit the ability to process a large volume of transactions accurately and
rapidly. This could cause Siebert to be unable to satisfy its obligations to
customers and other securities firms, and could result in regulatory violations.
External events, such as an earthquake or power failure, loss of external
information feeds, such as security price information, as well as internal
malfunctions, such as those that could occur during the implementation of system
modifications, could render part or all of such systems inoperative.
To enhance the reliability of the system and integrity of data, Siebert
maintains carefully monitored backup and recovery functions. These include
logging of all critical files intra-day, duplication and storage of all critical
data outside of its central computer site each evening, and trading facilities
for backup and communications in each of its branches.
Credit Management. Siebert has established policies with respect to
maximum purchase commitments for new customers or customers with inadequate
collateral to support a requested purchase. Managers have some flexibility in
the allowance of certain transactions. When transactions occur outside normal
guidelines, accounts are monitored closely until their payment obligation is
completed; if the customer does not meet the commitment, steps are taken to
close out the position and minimize any loss. Siebert has not had significant
credit losses in the last five years.
-4-
Capital Markets Division
In 1991, Siebert created its Capital Markets division, which serves as
a co-manager, underwriting syndicate member, selling group member on a wide
spectrum of securities offerings for corporations and Federal agencies.
Principal activities of the Capital Markets Division are investment
banking and institutional equity execution services.
During 1996, Siebert formed the Siebert, Brandford, Shank division of
the investment banking group to enhance the activities of Siebert's tax exempt
underwriting. The operations of the Siebert, Brandford, Shank division were
moved on July 1, 1998 to a newly formed entity, SBS. Two individuals, Mr.
Napoleon Brandford and Ms. Suzanne F. Shank, own 51% of the equity and are
entitled to 51% of the net profits of SBS and Siebert is entitled to the
balance. SBS has made Siebert a more significant factor in the tax exempt
underwriting area, and is expected to enhance Siebert's government and
institutional relationships as well as the breadth of products that can be made
available to retail clients.
In addition to occupying a portion of Siebert's existing offices in New
York, SBS operates out of offices in San Francisco, Seattle, Houston, Chicago,
Detroit, Los Angeles, Washington, DC and Dallas.
To date, the Siebert, Brandford, Shank division and SBS have co-managed
offerings of approximately $63 billion and senior managed offerings of
approximately $2.2 billion. Clients include the States of California, Texas and
Washington and the Cities of Chicago, Detroit and St. Louis.
Certain risks are involved in the underwriting of securities.
Underwriting syndicates agree to purchase securities at a discount from the
initial public offering price. If the securities must be sold below the
syndicate cost, an underwriter is exposed to losses on the securities that it
has committed to purchase. In the last several years, investment banking firms
have increasingly underwritten corporate and municipal offerings with fewer
syndicate participants or, in some cases, without an underwriting syndicate. In
these cases, the underwriter assumes a larger part or all of the risk of an
underwriting transaction. Under Federal securities laws, other laws and court
decisions, an underwriter is exposed to substantial potential liability for
material misstatements or omissions of fact in the prospectus used to describe
the securities being offered. While municipal securities are exempt from the
registration requirements of the Securities Act of 1933, underwriters of
municipal securities nevertheless are exposed to substantial potential liability
in connection with material misstatements or omissions of fact in the offering
documents prepared in connection with offerings of such securities.
Current Developments.
On January 15, 1999, the Company completed a rights offering in which
existing stockholders received the right to purchase one share of Common Stock
at $7.50 for each share of Common Stock owned of record as of July 29,1998.
Approximately 961,000 shares of Common Stock were issued pursuant to the rights
offering, generating net proceeds to the Company of approximately $7,000,000,
after payment of offering expenses of approximately $270,000.
-5-
In January 1999, the Company, through its clearing agent, unveiled its
new interactive two-way pager service, MobileBroker that allows customers to
make equity trades, receive confirmations, get real-time quotes and alerts,
access account data, send and receive e-mail and more. In September 1999,
Siebert, through its clearing agent, introduced its voice recognition technology
allowing customers to use "natural language" to obtain stock quotes, make trades
and check balances.
Siebert's commission income per customer trade continues to trend down
as the number of trades executed on SiebertNet increases. For the year, 1999
SiebertNet trades accounted for approximately 46% of all Siebert retail trades,
excluding trades of customers of the Andrew Peck division, because customers of
that division do not yet have access to SiebertNet.
On May 28, 1999, the Company consummated the acquisition of Andrew Peck
Associates, Inc. ("Peck"). Under the terms of the acquisition agreement, Peck
was merged with and into Siebert and the separate existence of Peck ceased. All
of the common stock of Peck outstanding was converted into 600,000 shares of the
Company's common stock. The merger is accounted for as a pooling of interests.
Accordingly, the Company's financial statements have been restated to include
the results of Peck for all periods presented.
On August 11, 1999, the Company's common stock was approved for
quotation on the NASDAQ National Market System.
Advertising, Marketing and Promotion
Siebert develops and maintains its retail customer base through printed
advertising in financial publications, broadcast commercials over national and
local cable TV channels, as well as promotional efforts and public appearances
by Ms. Siebert. Additionally, a significant portion of the firm's new business
is developed directly from referrals by satisfied customers.
Competition
Siebert encounters significant competition from full-commission, online
and discount brokerage firms, as well as from financial institutions, mutual
fund sponsors and other organizations many of which are significantly larger and
better capitalized than Siebert. There are currently over 150 online brokerage
firms. The general financial success of the securities industry over the past
several years has strengthened existing competitors. Siebert believes that such
success will continue to attract additional competitors such as banks, insurance
companies, providers of online financial and information services and others as
they expand their product lines. Many of these competitors are larger, more
diversified, have greater capital resources, and offer a wider range of services
and financial products than Siebert. Some such firms are offering their services
over the facilities of the Internet and have devoted more resources to and have
more elaborate web sites than the Company. Siebert competes with a wide variety
of vendors of financial services for the same customers. Siebert believes that
its main competitive advantages are excellent executions, high quality customer
service, responsiveness, cost and products offered and the breadth of product
line.
Regulation
The securities industry in the United States is subject to extensive
regulation under both Federal and state laws. The SEC is the Federal agency
charged with administration of the Federal securities laws. Siebert is
registered as a broker-dealer with the SEC, the NYSE and the National
Association of Securities Dealers ("NASD"). Much of the regulation of
broker-dealers has been delegated to self-regulatory organizations, principally
the NASD and national securities exchanges such as the NYSE which is Siebert's
primary regulator with respect to financial and operational compliance. These
self-regulatory organizations adopt rules (subject to approval by the SEC)
governing the industry and conduct periodic examinations of broker-dealers.
Securities firms are also subject to regulation by state securities authorities
in the states in which they do business. Siebert is registered as a
broker-dealer in 49 states, the District of Columbia and Puerto Rico.
-6-
The principal purpose of regulations and discipline of broker-dealers
is the protection of customers and the securities markets, rather than
protection of creditors and stockholders of broker-dealers. The regulations to
which broker-dealers are subject cover all aspects of the securities business,
including training of personnel, sales methods, trading practices among
broker-dealers, uses and safekeeping of customers' funds and securities, capital
structure of securities firms, record keeping, fee arrangements, disclosure to
clients, and the conduct of directors, officers and employees. Additional
legislation, changes in rules promulgated by the SEC and by self-regulatory
organizations or changes in the interpretation or enforcement of existing laws
and rules may directly affect the method of operation and profitability of
broker-dealers and investment advisers. The SEC, self-regulatory organizations
and state securities authorities may conduct administrative proceedings which
can result in censure, fine, cease and desist orders or suspension or expulsion
of a broker-dealer or an investment adviser, its officers or its employees.
Neither the Company nor Siebert has been the subject of any such administrative
proceedings.
As a registered broker-dealer and NASD member organization, Siebert is
required by Federal law to belong to the Securities Investor Protection
Corporation ("SIPC") which provides, in the event of the liquidation of a
broker-dealer, protection for securities held in customer accounts held by the
firm of up to $500,000 per customer, subject to a limitation of $100,000 on
claims for cash balances. The SIPC is funded through assessments on registered
broker-dealers. In addition, Siebert, through its clearing agent, has purchased
from private insurers additional account protection up to the net asset value of
each account. as defined, for customer securities positions only. Stocks, bonds,
mutual funds and money market funds are considered securities and are protected
on a share basis for the purposes of SIPC protection and the additional
protection. Neither SIPC protection nor the additional protection applies to
fluctuations in the market value of securities.
Siebert is also authorized by the Municipal Securities Rulemaking Board
to effect transactions in municipal securities on behalf of its customers and
has obtained certain additional registrations with the SEC and state regulatory
agencies necessary to permit it to engage in certain other activities incidental
to its brokerage business.
Margin lending arranged by Siebert is subject to the margin rules of
the Board of Governors of the Federal Reserve System and the NYSE. Under such
rules, broker-dealers are limited in the amount they may lend in connection with
certain purchases and short sales of securities and are also required to impose
certain maintenance requirements on the amount of securities and cash held in
margin accounts. In addition, those rules and rules of the Chicago Board Options
Exchange govern the amount of margin customers must provide and maintain in
writing uncovered options.
Certain States and their Agencies offer preferential treatment to Woman
and Minority owned firms. These programs are known as quotas or set-asides. Some
of the States are reconsidering the preferential programs. Ms. Siebert believes
that, irrespective of the legal requirements, as long as there is a "sensitivity
to diversity and competitive equality," opportunities will be available for WBEs
and MWBEs.
Net Capital Requirements
As a registered broker-dealer, Siebert is subject to the SEC's Uniform
Net Capital Rule (Rule 15c3-1) (the "Net Capital Rule"), which has also been
adopted through incorporation by reference in NYSE Rule 325. Siebert is a member
firm of the NYSE and the NASD. The Net Capital Rule specifies minimum net
capital requirements for all registered broker-dealers and is designed to
measure financial integrity and liquidity. Failure to maintain the required
regulatory net capital may subject a firm to suspension or expulsion by the NYSE
and the NASD, certain punitive actions by the SEC and other regulatory bodies
and, ultimately, may require a firm's liquidation.
-7-
Regulatory net capital is defined as net worth (assets minus
liabilities), plus qualifying subordinated borrowings, less certain deductions
that result from excluding assets that are not readily convertible into cash and
from conservatively valuing certain other assets. These deductions include
charges that discount the value of firm security positions to reflect the
possibility of adverse changes in market value prior to disposition.
The Net Capital Rule requires notice of equity capital withdrawals to
be provided to the SEC prior to and subsequent to withdrawals exceeding certain
sizes. The Net Capital Rule also allows the SEC, under limited circumstances, to
restrict a broker-dealer from withdrawing equity capital for up to 20 business
days.
The firm falls within the provisions of Rule 240.15c3-1(a)(1)(ii)
promulgated by the SEC. Siebert has elected to use the alternative method,
permitted by the rule, which requires that Siebert maintain minimum net capital,
as defined, equal to the greater of $250,000 or 2 percent of aggregate debit
balances arising from customer transactions, as defined. (The net capital rule
of the NYSE also provides that equity capital may not be withdrawn or cash
dividends paid if resulting net capital would be less than 5 percent of
aggregate debits.) At December 31, 1999 and 1998, Siebert had net capital of
$15.2 million and $11.1 million, respectively, and net capital requirements of
$250,000 under Regulation 240.15c3-1(a)(1)(ii). Siebert is not subject to SEC
Rule 15c3-3 and claims exemption from the reserve requirement under Section
15c3-3(k)(2)(ii). The firm maintains net capital in excess of the SEC Rule
17a-11 requirement.
Employees
As of March 10, 2000, the Company had approximately 138 employees, five
of whom were corporate officers. None of the employees is represented by a
union, and the Company believes that relations with its employees are good.
-8-
Item 2. PROPERTIES.
Siebert currently maintains seven retail discount brokerage offices and
will shortly open its eighth in Fort Lauderdale. Customers can visit the offices
to obtain market information, place orders, open accounts, deliver and receive
checks and securities, and obtain related customer services in person.
Nevertheless, most of Siebert's activities are conducted by telephone and mail.
Siebert operates its business out of the following fifteen leased offices:
Approximate Expiration
Office Area Date of Current Renewal
Location in Square Feet Lease Terms
- -------- -------------- ----- -----
Corporate Headquarters, Retail and
Investment Banking Office
885 Third Ave. 7,828 SF 4/30/03 None
New York, NY 10022
Retail Offices 1,000 SF 12/31/00 None
9693 Wilshire Boulevard
Beverly Hills, CA 90212
4400 North Federal Highway 1,038 SF 2/28/02 None
Boca Raton, FL 33431
111 Pavonia Avenue
Jersey City, NJ 07310 6/30/04 Partial
7,700 SF to 5 year option
6/30/06
400 Fifth Avenue - South 1,008 SF 4/30/02 None
Naples, FL 33940
240A South County Road 770 SF 10/14/00 2 year option
Palm Beach, FL 33480
9569 Harding Avenue 1,150 SF Month to month None
Surfside, FL 33154
Investment Banking Offices
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30 N. LaSalle Street 1,613 SF 8/1/02 None
Chicago, IL 60602
1845 Woodall Rodgers Freeway 224 SF Month to month None
Dallas, TX 75201
400 Renaissance Center 1,500 SF Month to month None
Detroit, MI 48243
1,513 SF 7/29/01 None
-9-
Approximate Expiration
Office Area Date of Current Renewal
Location in Square Feet Lease Terms
- -------- -------------- ----- -----
400 Louisiana
Houston, TX 77002
523 West 6th Street 1,138 SF Month to month None
Los Angeles, CA 90014
220 Sansome Street 3,250 SF Month to month None
San Francisco, CA 94104
601 Union
Street 325 SF Month to month None
Seattle, WA 98101
1155 Connecticut Avenue 300SF Month to month None
Washington, DC 20036
The Company believes that its properties are in good condition and are
suitable and adequate for the Company's business operations.
Item 3. LEGAL PROCEEDINGS
Siebert is involved in various routine litigation that it believes is
customary and incidental to its business. In the opinion of management, the
ultimate disposition of these actions will not, in the aggregate, have a
material adverse effect on its financial position or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Company held its annual meeting on December 21, 1999. At that
meeting, the following matters were voted on and received the votes indicated:
(1) Election of Directors For Against Withheld
--- ------- --------
Muriel F. Siebert 22,624,612 111,690 1,019
Nicholas P. Dermigny 22,624,612 111,690 1,019
Patricia L. Francy 22,624,612 111,690 1,019
Jane H. Macon 22,624,612 111,690 1,019
Daniel Jacobson 22,624,612 111,690 1,019
(2) Ratification and approval of the selection of Richard A. Eisner & Company,
LLP as independent auditor for 1999:
For Against
--- -------
22,629,628 110,446
-10-
PART II
Item 5. PRICE RANGE OF COMMON STOCK
The Common Stock trades on the NASDAQ National Market System under the
symbol "SIEB". The high and low sales prices of the Common Stock reported by
NASDAQ SmallCap Market during the following periods were:
High Low
First Quarter - 1998........................... $12.06 $2.42
Second Quarter - 1998.......................... $19.00 $7.38
Third Quarter - 1998........................... $13.50 $5.75
Fourth Quarter - 1998.......................... $19.00 $5.75
First Quarter - 1999........................... $70.63 $8.50
Second Quarter - 1999.......................... $58.00 $18.56
Third Quarter - 1999........................... $30.44 $14.50
Fourth Quarter - 1999.......................... $22.84 $13.50
January 1, 2000 - March 10, 2000............... $17.00 $9.00
The closing bid price of the Common Stock on the NASDAQ National System on March
16, 2000 was $ 12.375 per share and there were 181 holders of record of the
Common Stock.
Dividend Policy
The Company paid cash dividends of $.04 to its shareholders on January
18, April 15, July 16, and October 29, 1999; and $.0225, $.0225, $.03 and $.03
on March 16, June 23, September 25 and December 30, 1998, respectively. On March
23, 2000, the Company declared a dividend of $.04 payable to shareholders of
record on March 31, 2000. Ms. Siebert, as the majority shareholder of the
Company, waived her right to receive the dividends declared by the Company to
date. The Board of Directors of the Company considers the declaration of
dividends quarterly.
Subject to statutory and regulatory constraints, prevailing financial conditions
and future earnings, the Company may pay cash dividends on its Common Stock. In
considering whether to pay such dividends, the Company's Board of Directors will
review the earnings of the Company, its capital requirements, its economic
forecasts and such other factors as are deemed relevant. Some portion of the
Company's earnings will be retained to provide capital for the operation and
expansion of its business.
-11-
Offerings of Shares
In January 1997, the Company offered to "odd lot" shareholders the
opportunity to round up to the closest 100 shares any holdings of an odd amount
at a price of $9.375 per share. The offer expired March 21, 1997. 1,713 shares
were issued pursuant to the offer.
On January 15, 1999 the Company completed a rights offering, in which
existing shareholders received one right to purchase one share of the Company's
common at $7.50 for each share that they owned as of the record date, July 29,
1998. Approximately 961,000 shares were exercised raising approximately
$7,000,000, net of expenses of approximately $270,000; the balance expired
unexercised. The proceeds will be used to build up and promote the Company's
Internet trading service and for general purposes.
On May 28, 1999, the Company consummated the acquisition of Andrew Peck
Associates, Inc. Under the terms of the acquisition agreement, Peck was merged
with and into Siebert and the separate existence of Peck ceased. All of the
common stock of Peck outstanding was converted into 600,000 shares of the
Company's common stock.
Item 6. SELECTED FINANCIAL INFORMATION
(In thousands except per share data)
Year Ended December 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Income statement data:
Total Revenues........................................... $36,118 $30,491 $31,266 $29,665 $26,041
Net income (1) .......................................... 4,603 4,313 2,618 1,964 819
Net income per share of common stock (1)
Basic................................................. .20 .20 .12 .09 .04
Diluted............................................... .20 .19 .12 .09 .04
Weighted average shares outstanding(basic)............... 2,725,452 21,598,406 21,549,484 21,543,588 21,543,588
Weighted average shares outstanding(diluted).............23,238,100 22,241,860 21,549,484 21,543,588 21,543,588
Statement of financial condition data (at year-end):
Total assets........................................... $32,305 $21,494 $18,510 $15,354 $16,939
Total liabilities excluding subordinated borrowings.... $2,851 $4,194 $5,493 $4,918 $9,456
Subordinated borrowings to majority shareholder........ $ - $3,000 $3,000 $3,000 $2,000
Stockholders' equity................................... $29,454 $14,300 $10,017 $7,446 $5,482
(1) Amounts for 1996 and 1995 give effect to the income taxes that would have
been paid if the Company did not elect to be treated as an S Corporation for
those years.
-12-
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion should be read in conjunction with the Company's
audited Consolidated Financial Statements and the Notes thereto contained
elsewhere in this Annual Report.
Market conditions during the first four months of 1999 reflected a
continuation of the 1996 bull market characterized by record volume, record high
market levels and large daily swings in the market averages, while interest rate
concerns coupled with normal seasonal summer slowdown led to lower trading
volume in the markets overall during the second and third quarters. The fourth
quarter saw a return of the bull market in NASDAQ traded stocks and again
brought record high volumes, record high market levels in the technology sector,
which substantially outperformed "old economy" stocks.
Meanwhile, competition continued to intensify among all types of
brokerage firms including established discount brokers and new firms entering
the on-line brokerage business. Electronic trading continues to account for an
increasing amount of trading activity with some firms offering very low or even
free flat rate trading execution fees that are difficult for any conventional
discount firm to meet. Some of these flat fee or free brokers, however impose
asset based charges for services such as mailing, transfers and handling
exchanges which the Company does not currently impose, and also direct their
executions to captive market makers. Continued competition could limit the
Company's growth or even lead to a decline in the Company's customer base, which
would adversely affect its results of operations. Industry-wide changes in
trading practices, such as the advent of decimal pricing and the increasing use
of Electronic Communications Networks, are expected to put continuing pressure
on fees earned by discount brokers for the sale of order flow while increasing
volatility.
The Company, like other securities firms, is directly affected by
general economic and market conditions including fluctuations in volume and
prices of securities, changes and prospects for changes in interest rates and
demand for brokerage and investment banking services, all of which can affect
the Company's relative profitability. In periods of reduced market activity,
profitability is likely to be adversely affected because certain expenses,
including salaries and related costs, portions of communications costs and
occupancy expenses, remain relatively fixed. Accordingly, earnings for any
period should not be considered representative of any other period.
Results of Operations
All periods prior to June 30, 1999 have been restated to include the operations
of Peck.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Revenues. Total revenues for 1999 were $36.1 million, an increase of
$5.6 million or 18.5%, over 1998. Commission and fee income increased $8.4
million, or 34.9%, over the prior year to $32.5 million due to higher trading
volume partially offset by lower commissions earned per trade resulting from the
increased lower priced electronic trading, reductions on other related services
caused by increased competition from ultra low cost flat fee brokers and a
reduction of per share order flow fees. The portion of trades executed on
SiebertNet continues to increase, amounting to approximately 46% of retail
trades executed for the year ending December 31, 1999 compared to 16% for 1998.
Investment banking revenues decreased $1.9 million, or 59.6%, from the
prior year to $1.3 in 1998, which included investment-banking revenues of SBS
for the six months, ended June 30, 1998. SBS generates a majority of its
revenues in the tax-exempt underwriting area.
Income from equity investee decreased $1.1 million or 91.5% from the
prior year to $100,000 due in part to the decreased number of municipal bond
offerings as interest rates trended higher.
-13-
Trading profits declined $249,000, or 19.4%, from the prior year to
$1.0 million primarily due to reduced income opportunities in the trading of
listed bond funds, the firm's principal trading activity. Additionally, In July
1999, management curtailed proprietary trading activity and invested the
Company's capital in lower risk investments, including money market funds.
Income from interest and dividends increased $527,000, or 78.7%, from
the prior year to $1,197,000 primarily due to higher cash balances as a result
of the Company's rights offering.
Expenses. Total expenses for 1999 were $28.1 million, an increase of
$5.1 million, or 22.3%, from the prior year.
Employee compensation and benefit costs increased $258,000, or 2.4%,
from the prior year to $11.2 million primarily due to increase in the Company's
headcount, offset in part by the treatment of SBS as a separate entity from
July, 1998.
Clearing and floor brokerage fees increased $1.9 million, or 46.6%,
from the prior year to $5.9 million due to increased volume of tickets executed,
offset in part by lower per ticket charges. Additionally, the Company received a
refund of $1 million in connection with a renegotiated clearing agreement during
1998, the effect of which was to decrease clearing and floor brokerage fees
during 1998.
Advertising and promotion expense increased $1.4 million, or 69.5%,
from the prior year to $3.4 million primarily due to increased spot television
advertising and increased media costs.
Communications expense increased $665,000, or 36.8%, over the prior
year, to $2.5 million primarily due to increased quote usage by customers and
news services offered by the Company, coupled with an increase in the volume of
the Company's business.
Occupancy costs decreased $112,000, or 16.8%, from the prior year to
$553,000 principally due to the treatment of SBS as a separate entity from July
1998, partially offset by a lease extension option cancellation fee of
approximately $33,000 paid during 1998.
Interest expense decreased $172,000, or 52.6%, from the prior year to
$155,000, primarily due to decreased activity in the Company's proprietary
trading accounts. In July 1999, management curtailed proprietary trading
activity and invest the Company's capital in lower risk investments, including
money market funds.
General and Administrative. General and administrative expenses
increased $1.2 million, or 37.7%, from the prior year to $4.5 million primarily
due to merger costs in connection with the acquisition of Peck, higher
consulting fees and the cost of outsourcing fulfillment of an increased number
of new account leads.
Taxes. Provision for income taxes increased $191,000, or 6.1%, from the
prior year to $3.3 million primarily due to an increase in net income before
income tax to $7.9 million in 1999 from $7.5 million in 1998.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Revenues. Total revenues for 1998 were $30.5 million, a decrease of
$775,000, or 2.5%, over 1997. Income from equity investee and commission and fee
income increased as compared to the prior year partially offset by decreases in
investment banking, trading and interest and dividends revenues. Commission and
fee income decreased $177,000, or 0.7%, to $24.1 million despite increased
trading volume, due to lower commissions earned per trade resulting from the
increase of lower priced electronic trading, reductions on other related
services caused by increased competition from ultra low cost flat fee brokers
and a reduction of order flow fees.
-14-
Investment banking revenues decreased $1.2 million or 26.6% to $3.3
million as the Company's began reporting its investment in, and the operations
of, SBS using the equity method of accounting in July 1998. Prior to that time,
the operations of what is now SBS were fully consolidated with those of the
Company. SBS generates a majority of its revenue in the tax-exempt underwriting
area.
Income from equity investee increased $1.2 million as the Company
accounted for its investment on SBS on the equity method starting on July 1,
1998.
Trading profits declined $509,000, or 28.4% to $1.3 million primarily
due to reduced income opportunities in the trading of listed bond funds, the
firm's principal trading activity.
Income from interest and dividends decreased $77,000, or 10.3%, to
$670,000 primarily due to trading strategies, which generated lower dividend
income, coupled with generally lower interest rates.
Expenses. Total expenses for 1998 were $23.0 million, a decrease of
$3.6, million or 13.4%, from 1997. Communications and general and administrative
expenses increased while all other categories decreased.
Employee compensation and benefit costs decreased $256,000 or, 2.3%, to
$10.9 million primarily due to the commencement of SBS as a separate entity,
with a commensurate decrease in the number of employees on the Company's
payroll.
Clearing and floor brokerage fees decreased $2.4 million, or 37.0%, to
$4.1 million primarily due to the retroactive effect given to the Company's new
clearing agreement with its clearing broker which, among other things, reduced
ticket charges, execution fees and a resulted in a refund to the Company of $1.0
million.
Advertising and promotion expense decreased $943,000, or 32.1%, to $2.0
million due to a decreased level of promotional advertising.
Communications expense increased $161,000, or 9.8%, to $1.8 million
primarily due increased quote and news services.
General and administrative. Occupancy costs decreased $49,000, or 6.9%,
to $665,000 principally due to commencement of operations of SBS as a separate
entity partially offset by a lease extension option cancellation fee paid during
1998.
Interest expense decreased $91,000, or 21.8%, to $327,000, primarily
due to the decreased use of short positions in proprietary trading activity
coupled with generally lower interest rates.
Other general and administrative expenses remained relatively unchanged
at 3.2 million.
Provision for income taxes increased $1.1 million, or 52.8%, to $3.1
million, primarily due to an increase in net income before income tax to $7.5
million in 1988, partially offset by a refund of local taxes.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Total revenues for 1997 were $31.3 million, an increase of $1.6 million
or 5.4% over 1996. Investment banking revenues, trading and interest and
dividend revenues increased as compared to the prior year, however, commission
and fee income decreased.
-15-
Commission and fee income decreased $1.3 million or 4.9% to $24.2
million due to lower commissions earned per trade resulting from the increase of
lower priced electronic trading, price reductions on other related services
caused by increased competition from ultra low cost flat fee brokers and a
reduction of order flow fees.
Trading profits increased $854,000 or 90.8% to $1,795,000 primarily due
to increased activity in secondary municipal bond trading by the Siebert,
Brandford, Shank division and improved trading opportunities in the principal
listed bond funds trading activity.
Interest and dividends increased $54,000 or 7.8% to $747,000 primarily
due to trading strategies, which generated greater dividend income.
Investment banking revenues increased $2.0 million or 77.2% to $4.5
million primarily due to a whole year of tax exempt underwriting activity by the
Siebert, Brandford, Shank division in 1997. This division operated for only
three months of the year in 1996.
Total expenses for 1997 were $26.6 million, a decrease of $909,000 or
3.3% over 1996. Both employee compensation and benefits and advertising and
promotion decreased. All other categories of costs increased.
Employee compensation and benefit costs decreased $1.7 million or 13.4%
to $11.2 million primarily due to Muriel Siebert's compensation reduction,
offset by a full year's worth of compensation for the Siebert, Brandford, Shank
division principals, municipal investment banking staff and commission based
municipal trading personnel.
Clearing and brokerage fees increased $165,000 or 2.6% to $6.4 million.
Such costs increased due to a higher volume of tickets.
Advertising and promotion expense decreased $481,000 or 14.1% to $2.9
million due to decreased branch and service promotion; 1996 included several
one-time expenses related to branch expansion and on-line trading.
Communications expense increased $29,000 or 1.8% to $1.6 million as the
client base and volume increased, more services were offered directly on-line
and from activities of the investment banking staff. These increases were
partially offset by telephone contract price reductions.
Occupancy costs increased $246,000 or 52.6% to $714,000 principally due
to a full year's worth of rent in 1997 for new retail and investment banking
branch offices opened during 1996.
Interest expense increased $127,000 or 43.6% to $418,000 primarily due
to greater use of margin borrowings and short positions in proprietary trading
activity.
Other general and administrative expenses increased $734,000 or 29.1%
to $3.3 million primarily due to travel and entertainment expenses related to
the new municipal investment banking staff and a range of miscellaneous costs
associated with increased volume.
Current and pro forma provision for income taxes increased $1.1 million
or 116% to $2.1 million while net income for 1997 was $2.6 million, an increase
of $1.4 million or 116% over 1996, both proportional to a similar increase in
pre-tax income.
Liquidity and Capital Resources
The Company's assets are highly liquid, consisting generally of cash,
money market funds and securities freely salable in the open market. Siebert's
total assets at December 31, 1999 were $32.3 million. As of December 31, 1999,
the Company regarded $28.3 million or 87.6% of total assets as highly liquid.
-16-
Siebert is subject to the net capital requirements of the SEC, the NYSE
and other regulatory authorities. At December 31, 1999, Siebert's regulatory net
capital was $15.5 million, $15.2million in excess of its minimum capital
requirement of $250,000.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Instruments Held For Trading Purposes:
Through Siebert, the Company maintains inventories in Exchange-listed
and NASDAQ equity securities on both a long and short basis. The fair value of
all securities at December 31, 1999 was approximately $2.7 million in long
positions and approximately $50,000 in short positions. The fair value of all
securities at December 31, 1998 was approximately $5.4 million in long positions
and approximately $567,000 in short positions. Using a hypothetical 10% increase
or decrease in prices, the potential loss or gain in fair value, respectively,
could be approximately $260,000 and $481,000, respectively, due to the offset of
change in fair value in long and short positions.
Financial Instruments Held For Purposes Other Than Trading:
Working capital is generally temporarily invested in dollar denominated
money market funds and overnight certificates of deposits. These investments are
not subject to material changes in value due to interest rate movements.
Item 8. FINANCIAL STATEMENTS
See financial statements and supplementary data required pursuant
to this item beginning on page F-1 of this Report on Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS IN ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
-17-
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
This information is incorporated by reference from the company's
definitive proxy statements to be filed pursuant to regulation 14A on
or prior to April 30, 2000.
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from
the Company's definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to April 30, 2000
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from
the Company's definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to April 30, 2000.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from
the Company's definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to April 30, 2000.
Item 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits required by Item 601 of the Regulations S-K filed as part of,
or incorporated by reference in, this report are listed in the accompanying
Exhibit Index.
(b) Reports on Form 8-K
None.
-18-
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
SIEBERT FINANCIAL CORP.
Report of Independent Auditors F-1
Consolidated Statements of Financial Condition at December 31, 1999 and 1998 F-2
Consolidated Statements of Income for each of the years in the
three-year period ended December 31, 1999 F-3
Consolidated Statements of Changes in Stockholders' Equity for each
of the years in the three-year period ended December 31, 1999 F-4
Consolidated Statements of Cash Flows for each of the
years in the three-year period ended December 31, 1999 F-5
Notes to Consolidated Financial Statements F-6
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Siebert Financial Corp.
New York, New York
We have audited the accompanying consolidated statements of financial condition
of Siebert Financial Corp. and its wholly owned subsidiary as of December 31,
1999 and December 31, 1998, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Siebert Financial
Corp. and its wholly owned subsidiary as of December 31, 1999 and December 31,
1998, and the consolidated results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1999 in conformity
with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
February 14, 2000
F-1
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Financial Condition
December 31,
------------
1999 1998
---- ----
ASSETS
Cash and cash equivalents $ 22,882,000 $ 6,735,000
Cash equivalents - restricted 1,300,000 1,300,000
Receivable from clearing broker 2,358,000 2,700,000
Securities owned, at market value 2,653,000 5,381,000
Secured demand notes receivable from stockholder 2,000,000
Furniture, equipment and leasehold improvements, net 729,000 675,000
Investment in and advances to affiliate 1,097,000 1,572,000
Deferred financing costs 270,000
Prepaid expenses and other assets 1,286,000 861,000
----------------- -----------------
$ 32,305,000 $ 21,494,000
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Securities sold, not yet purchased, at market value $ 50,000 $ 567,000
Accounts payable and accrued liabilities 2,801,000 3,627,000
----------------- -----------------
2,851,000 4,194,000
----------------- -----------------
Commitments and contingent liabilities
Subordinated borrowings payable to stockholder 3,000,000
-----------------
Stockholders' equity:
Common stock, $.01 par value; 49,000,000 shares authorized,
22,889,687 shares
outstanding at December 31,1999
and 21,604,960 at December 31, 1998 228,000 215,000
Additional paid-in capital 17,582,000 6,714,000
Retained earnings 11,644,000 7,371,000
----------------- -----------------
29,454,000 14,300,000
$ 32,305,000 $ 21,494,000
================= =================
See notes to consolidated financial statements.
F-2
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Income
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
Revenues:
Commissions and fees $ 32,452,000 $ 24,059,000 $ 24,236,000
Investment banking 1,332,000 3,296,000 4,488,000
Trading profits 1,037,000 1,286,000 1,795,000
Income from equity investee 100,000 1,180,000 -
Interest and dividends 1,197,000 670,000 747,000
----------------- ----------------- -----------------
36,118,000 30,491,000 31,266,000
----------------- ----------------- -----------------
Expenses:
Employee compensation and benefits 11,183,000 10,925,000 11,181,000
Clearing fees, including floor brokerage 5,942,000 4,053,000 6,436,000
Advertising and promotion 3,386,000 1,998,000 2,941,000
Communications 2,470,000 1,805,000 1,644,000
Occupancy 553,000 665,000 714,000
Interest 155,000 327,000 418,000
Other general and administrative 4,492,000 3,262,000 3,257,000
----------------- ----------------- -----------------
28,181,000 23,035,000 26,591,000
----------------- ----------------- -----------------
Income before provision for income taxes 7,937,000 7,456,000 4,675,000
Provision for income taxes - current 3,334,000 3,143,000 2,057,000
----------------- ----------------- -----------------
Net income $ 4,603,000 $ 4,313,000 $ 2,618,000
================= ================= =================
Net income per share of common stock - basic $.20 $.20 $.12
Net income per share of common stock - diluted $.20 $.19 $.12
Weighted average shares outstanding - basic 22,725,452 21,598,406 21,549,484
Weighted average shares outstanding - diluted 23,238,100 22,241,860 21,549,484
See notes to consolidated financial statements.
F-3
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Changes In Stockholders' Equity
Common Stock
------------
Number Additional
of $.01 Par Paid-in Retained
Shares Value Capital Earnings Total
------ ----- ------- -------- -----
Balance - January 1, 1997 21,543,588 $ 215,000 $ 6,614,000 $ 617,000 $ 7,446,000
Net income - - - 2,618,000 2,618,000
Issuance of shares in connection with
offering, net of expenses 6,852 - (29,000) - (29,000)
Dividend on common stock ($.02 per
share) - - - (18,000) (18,000)
------------- ----------- --------------- -------------- --------------
Balance - December 31, 1997 21,550,440 215,000 6,585,000 3,217,000 10,017,000
Net income - - - 4,313,000 4,313,000
Issuance of shares in connection with
Restricted Stock Award Plan, net of
7,200 shares forfeited 38,000 - - - -
Non-cash compensation in connection
with Restricted Stock Award Plan - - 91,000 - 91,000
Issuance of shares in connection with
exercise of employee stock options 16,520 - 38,000 - 38,000
Dividends on common stock ($.12 per
share) - - - (159,000) (159,000)
------------- ----------- --------------- -------------- --------------
Balance - December 31, 1998 21,604,960 215,000 6,714,000 7,371,000 14,300,000
Net income 4,603,000 4,603,000
Issuance of shares in connection with
rights offering, net of expenses 961,087 10,000 6,919,000 6,929,000
Issuance of shares in connection
with Restricted Stock Award Plan,
net of 850 shares forfeited 3,400 - - - -
Non-cash compensation in connection
with Restricted Stock Award Plan 50,000 50,000
Issuance of shares in connection with
exercise of employee stock options 320,240 3,000 744,000 - 747,000
Tax benefit arising from exercise of
employer stock options 3,155,000 3,155,000
Dividends on common stock ($.12 per
share) - - - (330,000) (330,000)
------------- ----------- --------------- -------------- --------------
Balance - December 31, 1999 22,889,687 $ 228,000 $ 17,582,000 $ 11,644,000 $ 29,454,000
============= =========== =============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-4
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Net income $ 4,603,000 $ 4,313,000 $ 2,618,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 382,000 184,000 164,000
Income from equity investee (100,000) (1,180,000)
Non-cash compensation 50,000 91,000
Tax benefit of employee stock options 3,155,000
Changes in operating assets and liabilities:
Net decrease in securities owned, at market value 2,728,000 1,526,000 3,210,000
Net change in receivable from clearing broker 342,000 (457,000) (976,000)
Increase in prepaid expenses and other assets (182,000) (491,000) (181,000)
Net increase (decrease) in securities sold, not yet
purchased, at market value (517,000) (1,471,000) 590,000
Increase (decrease) in accounts payable and accrued
liabilities (747,000) 93,000 (16,000)
Net change in advances to equity investee (514,000)
---------------
Net cash provided by operating activities 9,200,000 2,608,000 5,409,000
--------------- ------------- -------------
Cash flows from investing activities:
Investment in cash equivalents-restricted (1,300,000)
Purchase of furniture, equipment and leasehold improvements (318,000) (358,000) (205,000)
Investment in/distributions from affiliate 998,000 (392,000)
Loans to affiliate (4,000,000)
Repayment of loans - affiliate 4,000,000
--------------- -------------
Net cash provided by (used in) investing activities 680,000 (358,000) (1,897,000)
--------------- ------------- -------------
Cash flows from financing activities:
Issuance of shares, net of expenses 6,929,000 (29,000)
Proceeds from exercise of options 747,000 38,000
Dividend on common stock (409,000) (80,000) (18,000)
Repayment of subordinated loan - stockholder (1,000,000)
---------------
Net cash provided by (used in) financing activities 6,267,000 (42,000) (47,000)
--------------- ------------- -------------
Net increase in cash and cash equivalents 16,147,000 2,208,000 3,465,000
Cash and cash equivalents - beginning of year 6,735,000 4,527,000 1,062,000
--------------- ------------- -------------
Cash and cash equivalents - end of year $ 22,882,000 $ 6,735,000 $ 4,527,000
=============== ============= =============
Supplemental cash flow disclosures:
Cash paid for:
Interest $ 155,000 $ 382,000 $ 405,000
Income taxes $ 566,000 $ 3,522,000 $ 1,796,000
Noncash investing and financing activities:
Dividends declared $ 79,000
Tax benefit of employee stock options $ 3,155,000
Return of secured demand note receivable and concellation of
subordinated notes payable $ 2,000,000
See notes to consolidated financial statements.
F-5
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Organization and basis of presentation:
Siebert Financial Corp. ("Financial"), through its wholly owned subsidiary,
Muriel Siebert & Co., Inc. ("Siebert"), engages in the business of
providing discount brokerage services for customers, investment banking
services for institutional clients and trading securities for its own
account. All significant intercompany accounts have been eliminated.
Financial and Siebert collectively are referred to herein as the "Company".
The municipal bond investment banking business was conducted by the Siebert
Brandford Shank division until July 1, 1998. Since that date it is being
conducted by Siebert Brandford Shank & Co., LLC ("SBS"), an investee, which
is accounted for by the equity method of accounting (see Note B).
On May 28, 1999, the Company consummated a merger with Andrew Peck
Associates, Inc. ("Peck"). Under the terms of the agreement, Peck was
merged with and into Siebert and the separate existence of Peck ceased. All
of the common stock of Peck outstanding was converted into 600,000 shares
of the Company's common stock. The merger is accounted for as a pooling of
interests. Accordingly, the Company's financial statements have been
restated to include the results of Peck for all periods presented.
The following information presents certain income statement data of the
separate companies for the periods preceding the merger:
January 1, 1999
Through
May 28, 1999
(unaudited) 1998 1997
----------- ---- ----
Revenues:
Company $ 12,929,000 $25,661,000 $25,868,000
Peck 2,504,000 4,830,010 5,398,000
------------ ----------- -----------
$ 15,433,000 $30,491,000 $31,266,000
============ =========== ===========
Net income:
Company $ 2,023,000 $4,313,000 $2,618,000
Peck 0 0 0
----------- ---------- ----------
$ 2,023,000 $4,313,000 $2,618,000
=========== ========== ==========
There were no transactions between the Company and Peck prior to the
merger.
[2] Security transactions:
Security transactions, commissions, revenues and expenses are recorded on a
trade date basis.
Siebert clears all its security transactions through an unaffiliated
clearing firm on a fully disclosed basis. Accordingly, Siebert does not
hold funds or securities for or owe funds or securities to its customers.
Those functions are performed by the clearing firm which is highly
capitalized.
F-6
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[3] Income taxes:
The Company accounts for income taxes utilizing the asset and liability
approach requiring the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between
the basis of assets and liabilities for financial reporting purposes and
tax purposes. Financial files a consolidated federal income tax return
which includes Siebert.
[4] Furniture, equipment and leasehold improvements:
Property and equipment is stated at cost and depreciation is calculated
using the straight-line method over the lives of the assets, generally five
years. Leasehold improvements are amortized over the period of the lease.
[5] Cash equivalents:
For purposes of reporting cash flows, cash equivalents include money market
funds.
[6] Advertising costs:
Advertising costs are charged to expense as incurred.
[7] Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
[8] Earnings per share:
Earnings per basic share are calculated by dividing net income by the
weighted average outstanding shares during the period. Earnings per diluted
share are calculated by dividing net income by the basic shares and all
dilutive securities, which consist of options. The treasury stock method is
used to reflect the dilutive effect of outstanding options, which, for 1999
and 1998 amounted to 512,648 and 643,454 additional shares respectively
added to the basic weighted average outstanding shares of 22,725,452 in
1999 and 21,598,406 in 1998. There were no dilutive securities in 1997.
[9] Investment banking:
Investment banking revenues include gains and fees, net of syndicate
expenses, arising from underwriting syndicates in which the Company
participates. Investment banking management fees are recorded on the
offering date, sales concessions on the settlement date and underwriting
fees at the time the underwriting is completed and the income is reasonably
determinable.
F-7
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[10] Cash equivalents - restricted:
Cash equivalents - restricted represents cash invested in a money market
account which is pledged as collateral for a secured demand note in the
amount of $1,200,000 executed in favor of SBS.
[11] Accounting for stock options:
The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25 ("APB Opinion 25"), "Accounting for Stock
Issued to Employees" using intrinsic values with appropriate disclosures in
conformity with the fair values based method of Statement of Financial
Accounting Standards No. 123 (See Note G).
NOTE B - INVESTMENT IN AFFILIATE
In March 1997, Siebert and two individuals (the "Principals") formed SBS to
succeed to the tax-exempt underwriting business of the Siebert Brandford Shank
division of Siebert when regulatory requirements permitted. The agreements with
the Principals provide that profits will be shared 51% to the Principals and 49%
to Siebert. Losses incurred in the amount of approximately $631,000 through June
30, 1998 were recouped by Siebert prior to any profit allocation to the
Principals. Siebert invested $392,000 as its share of the members' capital of
SBS. Through June 30, 1998, Siebert operated the division's business in
accordance with the terms of the agreements with the Principals. Effective July
1, 1998, SBS met the regulatory requirements and commenced operations.
In 1998, the Company loaned an aggregate of $4,000,000 to SBS, which was
subsequently repaid, pursuant to Temporary Subordination Agreements.
In 1999, Muriel F. Siebert, the Chairwoman of the Company, pledged shares of the
Company's common stock to collateralize SBS's obligation under a $5,000,000
Revolving Subordinated Loan Agreement.
Summarized financial data of SBS as of December 31, 1999 and 1998 and for the
year ended December 31, 1999 and the period July 1, 1998 (commencement of
operations) through December 31, 1998 is as follows:
1999 1998
---- ----
Total assets $ 10,519,000 $ 6,234,000
Total liabilities including subordinated
liabilities of $6,200,000 and $1,200,000 9,143,000 3,685,000
Total members' capital 1,376,000 2,549,000
Total revenues 6,535,000 4,817,000
Net income 204,000 1,750,000
During 1999 and 1998, Siebert charged SBS $265,000 and $150,000 respectively,
for rent and general and administrative services, which Siebert believes
approximates the cost of furnishing such services.
F-8
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE C - SUBORDINATED BORROWINGS AND SECURED DEMAND NOTE RECEIVABLE
The subordinated borrowings, which the Company settled in September 1999, were
payable to the principal stockholder and consisted of the following at December
31, 1998:
Secured demand note collateral agreement, 4%, due
December 31, 2000 $ 2,000,000
Subordinated note, 8%, due January 31, 2000 500,000
Subordinated note, 8%, due October 31, 2000 500,000
---------------
$ 3,000,000
===============
In 1999, Siebert returned $2,000,000 of secured demand notes receivable and
$1,000,000 in cash in exchange for the cancellation of $3,000,000 of
subordinated notes payable.
The subordinated borrowings were available in computing net capital under the
Securities and Exchange Commission's (the "SEC") Uniform Net Capital Rule.
Interest paid on subordinated borrowings was approximately $120,000 in 1999 and
approximately $160,000 in each of the years ended December 31, 1998 and 1997.
NOTE D - FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
Furniture, equipment and leasehold improvements consist of the following:
December 31,
1999 1998
---- ----
Equipment $ 1,077,000 $ 907,000
Leasehold improvements 137,000 132,000
Furniture and fixtures 97,000 84,000
------------ -----------
1,311,000 1,123,000
Less accumulated depreciation and amortization 582,000 448,000
------------ -----------
$ 729,000 $ 675,000
============ ===========
Depreciation and amortization expense for the years ended December 31, 1999,
1998 and 1997 amounted to $264,000, $184,000 and $164,000, respectively.
F-9
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE E - INCOME TAXES
Income tax expense consists of the following:
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
Federal income tax $ 2,388,000 $ 2,233,000 $ 1,360,000
State and local income tax 946,000 910,000 697,000
-------------- -------------- --------------
Income tax expense $ 3,334,000 $ 3,143,000 $ 2,057,000
============== ============== ==============
A reconciliation between the income tax expense and income taxes computed by
applying the statutory Federal income tax rate to income before taxes is as
follows:
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
Expected income tax provision at statutory Federal
tax rate $ 2,699,000 $ 2,535,000 $ 1,590,000
State and local taxes, net of Federal tax effect 635,000 718,000 467,000
Effect of refund of prior years' local taxes, net of
Federal and state tax effect (110,000) -
---------------- ---------------- ----------------
Income tax expense $ 3,334,000 $ 3,143,000 $ 2,057,000
================ ================ ================
There are no significant temporary differences which give rise to deferred tax
assets or liabilities at December 31, 1999 and 1998.
In 1999, the Company reduced current taxes payable by $3,155,000 resulting from
the deductibility of the difference between the exercise price of nonqualifying
stock options granted by the Company and the market value of the stock on the
dates of exercise. The tax benefit was recorded as a credit to paid-in capital.
NOTE F - STOCKHOLDERS' EQUITY
Siebert is subject to the SEC's Uniform Net Capital Rule (Rule 15c3-1), which
requires the maintenance of minimum net capital. Siebert has elected to use the
alternative method, permitted by the rule, which requires that Siebert maintain
minimum net capital, as defined, equal to the greater of $250,000 or 2 percent
of aggregate debit balances arising from customer transactions, as defined. At
December 31, 1999 and 1998, Siebert had net capital of approximately $15,475,000
and $11,124,000, respectively, as compared with net capital requirements of
$250,000. Siebert claims exemption from the reserve requirement under Section
15c3-3(k)(2)(ii).
In an offering completed on March 21, 1997, the Company offered to its
shareholders with "odd lots" the opportunity to "round up" their shares to the
next nearest 100 shares. 6,852 shares were issued with proceeds to the Company
of approximately $16,000. Costs related to the offering approximated $45,000.
The principal shareholder waived her right to receive her portion of dividends
declared in 1997, 1998 and 1999.
F-10
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE F - STOCKHOLDERS' EQUITY (CONTINUED)
On April 7, 1998 the Company split its stock 4 for 1. All share and per share
data contained herein have been retroactively adjusted to reflect this stock
split.
On January 15, 1999, the Company completed a rights offering in which
shareholders received one right to purchase one share of the Company's common
stock at $7.50 for each share that they owned; approximately 961,000 rights were
exercised raising approximately $6,900,000 after the payment of offering
expenses of approximately $270,000.
The 1998 Restricted Stock Award Plan (the "Award Plan"), provides for awards of
not more than 60,000 shares of the Company's common stock, subject to
adjustments for stock splits, stock dividends and other changes in the Company's
capitalization, to key employees, to be issued either immediately after the
award or at a future date. As provided in the Award Plan and subject to
restrictions, shares awarded may not be disposed of by the recipients for a
period of one year from the date of the award. Cash dividends on shares awarded
are held by the Company for the benefit of the recipients and are paid upon
lapse of the restrictions.
During 1998 and 1999, respectively, the Company awarded employees 38,000 and
3,400 shares under the Award Plan, net of forfeiture of 7,200 and 850 shares.
The shares, which vest one year from the dates of grant, were valued at market
value on the dates of grant and are being charged to expense over the vesting
periods. The Company recorded non-cash compensation charges of $91,000 and
$50,000 in 1998 and 1999, respectively, relating to the shares awarded under the
Award Plan.
NOTE G - OPTIONS
In 1997, the shareholders of the Company approved the 1997 Stock Option Plan
(the "Plan"). The Plan authorizes the grant of options to purchase up to an
aggregate of 2,100,000 shares, subject to adjustment in certain circumstances.
Both non-qualified options and options intended to qualify as "Incentive Stock
Options" under Section 422 of the Internal Revenue Code, as amended, may be
granted under the Plan. A Stock Option Committee of the Board of Directors
administers the Plan. The committee has the authority to determine when options
are granted, the term during which an option may be exercised (provided no
option has a term exceeding 10 years), the exercise price and the exercise
period. The exercise price shall generally be not less than the fair market
value on the date of grant. No option may be granted under the Plan after
December 2007.
In March 1997, the Company granted to non-employee directors options to purchase
120,000 shares of the Company's common stock at an exercise price of $2.313 per
share. The options expire five years from the date of grant.
In May 1997, pursuant to the Plan, the Company granted options to certain of its
employees to purchase 799,000 shares of its common stock at an exercise price of
$2.313 per share. In November 1997, pursuant to the Plan, the Company granted
options to an employee to purchase 40,000 shares of the Company's common stock
at an exercise price of $2.219 per share. In February 1998 and November 1998,
the Company granted options to purchase 76,000 and 10,000 shares, respectively,
of the Company's common stock at exercise prices of $2.688 and $6.625 per share,
respectively. During 1999, the Company granted 34,500 options to employees to
purchase the Company's common stock at exercise prices ranging from $17.81 to
$32.50. All employee options vest 20% per year for five years and expire ten
years from the date of grant.
F-11
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE G - OPTIONS (CONTINUED)
A summary of the Company's stock option transactions for the three years ended
December 31, 1999 is presented below:
1999 1998 1997
---- ---- ----
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
Outstanding - beginning of year 870,800 $ 2.39 925,200 $2.31
Granted 34,500 $27.33 86,000 $3.15 959,000 $2.31
Forfeited (63,360) $ 2.31 (123,880) $2.31 (33,800) $2.31
Exercised (320,240) $ 2.31 (16,520) $2.31
----------- ----------- -----------
Outstanding - end of year 521,700 $ 4.15 870,800 $2.39 925,200 $2.31
=========== =========== ===========
Exercisable at end of year 53,840 $ 2.69 254,560 $2.31 120,000 $2.31
===========
Weighted average fair value
of options granted $12.13 $1.44 $1.18
The following table summarizes information related to options outstanding at
December 31, 1999:
Options Outstanding Options Exercisable
------------------- -------------------
Weighted Weighted
Range Weighted Average Average Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Life Price Exercisable Price
------ ----------- ---------------- ----- ----------- -----
$ 2.31 409,200 7.42 Years $ 2.31
$ 2.69 68,000 8.08 Years $ 2.69 53,840 $2.69
$ 6.63 10,000 8.83 Years $ 6.63 - -
$17.81 9,500 9.25 Years $17.81 - -
$24.75 5,000 9.25 Years $24.75 - -
$32.50 20,000 9.33 Years $32.50 - -
------------ -----------
$2.31 - $32.50 521,700 7.66 Years $ 4.15 53,840 $2.69
============ ===========
The fair value of stock options is estimated at the grant date using the
Black-Scholes option pricing model with the following weighted average
assumptions.
1999 1998 1997
---- ---- ----
Risk free interest rate 5.11% 5.55% 6.40%
Expected life of options in years 3 10 9.37
Expected dividend yield .47% 2% 0%
Expected volatility 62% 40% 25%
F-12
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE G - OPTIONS (CONTINUED)
The Company applies APB Opinion 25 and related Interpretations in accounting for
its options. Accordingly, no compensation cost has been recognized for its stock
option grants. The pro forma effect of applying SFAS No. 123 on net income for
the years ended December 31, 1999, 1998 and 1997 is not necessarily
representative of the effects on reported net income for future years due to,
among other things, (1) the vesting period of stock options and (2) the fair
value of additional stock options in future years. Had compensation costs for
the Company's stock option grants been determined based on the fair value at the
grant dates for awards, the Company's net income and earnings per share would
have reduced to the pro forma amounts indicated below.
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
Net Income As reported $4,603,000 $4,313,000 $2,618,000
Pro forma $4,334,000 $4,098,000 $2,397,000
Net Income Per Share - Basic As reported $.20 $.20 $.12
Pro forma $.19 $.19 $.11
Net Income Per Share -Diluted As reported $.20 $.19 $.12
Pro forma $.19 $.18 $.11
At December 31, 1999, 1,782,000 shares of the Company's common stock have been
reserved for future issuance under the Plan, the Award Plan and for options
granted to directors.
NOTE H - CLEARING AGREEMENT
In 1998, Siebert signed a new agreement with its clearing broker which provides,
among other things, for reduced ticket charges and execution fees. The agreement
provided for retroactive effect at the new rates and resulted in a refund of
$1,000,000 in 1998.
NOTE I - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
CREDIT RISK
In the normal course of business, Siebert enters into transactions in various
financial instruments with off-balance sheet risk. This risk includes both
market and credit risk, which may be in excess of the amounts recognized in the
statement of financial condition.
Retail customer transactions are cleared through clearing brokers on a fully
disclosed basis. In the event that customers are unable to fulfill their
contractual obligations, the clearing broker may charge Siebert for any loss
incurred in connection with the purchase or sale of securities at prevailing
market prices to satisfy customers' obligations. Siebert regularly monitors the
activity in its customer accounts for compliance with its margin requirements.
Siebert is exposed to the risk of loss on unsettled customer transactions in the
event customers and other counterparties are unable to fulfill contractual
obligations. Securities transactions entered into as of December 31, 1999
settled with no adverse effect on Siebert's financial condition.
F-13
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE J - COMMITMENTS AND CONTINGENT LIABILITIES
The Company rents office space under long-term operating leases expiring in
various periods through 2004. These leases call for base rent plus escalations
for taxes and operating expenses.
Future minimum base rental payments under these operating leases are as follows:
Year Ending
December 31, Amount
------------ ------
2000 $ 594,000
2001 549,000
2002 535,000
2003 325,000
2004 194,000
-------------
$ 2,197,000
Rent expense, including escalations for operating costs, amounted to
approximately $376,000, $591,000 and $488,000 for the years ended December 31,
1999, 1998 and 1997, respectively. Rent is being charged to expense over the
entire lease term on a straight-line basis.
Siebert is party to certain claims, suits and complaints arising in the ordinary
course of business. In the opinion of management, all such claims, suits and
complaints are without merit, or involve amounts which would not have a
significant effect on the financial position of the Company.
Siebert sponsors a defined contribution retirement plan under Section 401(k) of
the Internal Revenue Code that covers substantially all employees. Participant
contributions to the plan are voluntary and are subject to certain limitations.
Siebert may also make discretionary contributions to the plan. No contributions
were made by Siebert in 1999, 1998 and 1997.
Siebert executed a demand note payable in favor of SBS in the amount of
$1,200,000 collaterized by approximately $1,300,000 of cash equivalents which
are reported as "cash equivalents - restricted". This obligation is not included
in the Company's statement of financial condition because it has not been drawn
down by SBS.
NOTE K - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reflected in the consolidated statements of financial
condition for cash, cash equivalents, receivable from broker, secured demand
notes receivable, accounts payable and accrued liabilities and subordinated
borrowings approximate fair value due to the short term maturities of those
instruments. Securities owned and securities sold, not yet purchased are carried
at market value, in accordance with industry practice for broker-dealers in
securities.
F-14
SIEBERT FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE L - SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
1999 1998
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Revenues $8,550,000 $9,255,000 $7,783,000 $10,530,000 $7,726,000 $7,957,000 $6,834,000 $7,974,000
Net income $1,031,000 $1,369,000 $ 643,000 $ 1,560,000 805,000 $1,364,000 $1,075,000 $1,069,000
Earnings per share:
Basic $.05 $0.06 $0.03 $0.07 $.04 $0.06 $0.05 $0.05
Diluted $.04 $0.06 $0.03 $0.07 $.04 $0.06 $0.05 $0.05
F-15
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SIEBERT FINANCIAL CORP.
By: /s/ Muriel F. Siebert
----------------------
Muriel F. Siebert
Chair and President
Date: March 28, 2000
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Name Title Date
---- ----- ----
/s/ Muriel F. Siebert
- ----------------------- March 28, 2000
Muriel F. Siebert Chair, President and Director
(principal executive officer)
/s/ Nicholas P. Dermigny
- ------------------------- March 28, 2000
Nicholas P. Dermigny Executive Vice President,
Chief Operating Officer and
Director
/s/ Mitchell M. Cohen March 28, 2000
- ------------------------
Mitchell M. Cohen Chief Financial Officer
and Assistant Secretary
(principal financial and
accounting officer)
/s/ Patricia L. Francy March 28, 2000
- ----------------------
Patricia L. Francy Director
/s/ Jane H. Macon March 28, 2000
- ----------------------
Jane H. Macon Director
/s/ Daniel Jacobson March 28, 2000
- ---------------------
Daniel Jacobson Director
SIEBERT FINANICIAL CORP. & SUBSIDIARY
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Plan and Agreement of Merger between J. Michaels, Inc. ("JMI") and
Muriel Siebert Capital Markets Group, Inc. ("MSCMG"), dated as of
April 24, 1996 ("Merger Agreement") (incorporated by reference to
Siebert Financial Corp.'s Form 10-K for the fiscal year ended December
31, 1996)
2.2 Amendment No. 1 to Merger Agreement, dated as of June 28, 1996
(incorporated by reference to Siebert Financial Corp.'s Form 10-K for
the fiscal year ended December 31, 1996)
2.3 Amendment No. 2 to Merger Agreement, dated as of September 30, 1996
(incorporated by reference to Siebert Financial Corp.'s Form 10-K for
the fiscal year ended December 31, 1996)
2.4 Amendment No. 3 to Merger Agreement, dated as of November 7, 1996
(incorporated by reference to Siebert Financial Corp.'s Form 10-K for
the fiscal year ended December 31, 1996)
3.1 Certificate of Incorporation of Siebert Financial Corp., formerly
known as J. Michaels, Inc. originally filed on April 9, 1934, as
amended and restated to date (incorporated by reference to Siebert
Financial Corp.'s Form 10-K for the fiscal year ended December 31,
1997)
3.2 By-laws of Siebert Financial Corp. (incorporated by reference to
Siebert Financial Corp.'s Registration Statement on Form S-1 (File No.
333-49843) filed with the Securities and Exchange Commission on April
10, 1998)
10.1 Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated
by reference to Siebert Financial Corp.'s Form 10-K for the fiscal
year ended December 31, 1997)
10.2 10(a) Siebert Financial Corp. 1997 Stock Option Plan (incorporated by
reference to Siebert Financial Corp.'s Form 10-K for the fiscal year
ended December 31, 1996)
10.4 LLC Operating Agreement, among Siebert, Brandford, Shank & Co., LLC,
Muriel Siebert & Co., Inc., Napoleon Brandford III and Suzanne F.
Shank, dated as of March 10, 1997 (incorporated by reference to
Siebert Financial Corp.'s Form 10-K for the fiscal year ended December
31, 1996)
10.5 Services Agreement, between Siebert, Brandford, Shank & Co., LLC and
Muriel Siebert & Co., Inc., dated as of March 10, 1997 (incorporated
by reference to Siebert Financial Corp.'s Form 10-K for the fiscal
year ended December 31, 1996)
10.6 Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated
by reference to Siebert Financial Corp.'s Form 10-K for the fiscal
year ended December 31, 1997)
10.7 Stock Option Agreement, dated March 11, 1997, between the Company and
Patricia L. Francy (incorporated by reference to Siebert Financial
Corp.'s Registration Statement on Form S-8 (File No. 333-72939) filed
with the Securities and Exchange Commission on February 25, 1999)
10.8 Stock Option Agreement, dated March 11, 1997, between the Company and
Jane H. Macon (incorporated by reference to Siebert Financial Corp.'s
Registration Statement on Form S-8 (File No. 333-72939) filed with the
Securities and Exchange Commission on February 25, 1999)
10.9 Stock Option Agreement, dated March 11, 1997, between the Company and
Monte E. Wetzler (incorporated by reference to Siebert Financial
Corp.'s Registration Statement on Form S-8 (File No. 333-72939) filed
with the Securities and Exchange Commission on February 25, 1999)
21 Subsidiaries of the registrant (incorporated by reference to Siebert
Financial Corp.'s Registration Statement on Form S-1 (File No.
333-49843) filed with the Securities and Exchange Commission on April
10, 1998)
23 Consent of Independent Auditors
27 Financial Data Schedule