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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K
                      Annual Report Pursuant to Section 13
                 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 1996       Commission file number 0-5703



                             SIEBERT FINANCIAL CORP.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

                    New York                                  1-1796714
          ------------------------------                ---------------------
         (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                 Identification Number)

         885 Third Avenue, Suite 1720
         New York, New York                                   10022
         ----------------------------------------            --------
         (Address of  principal executive office)           (Zip Code)

Registrant's telephone number, including area code: (212) 644-2400

Securities registered pursuant to Section 12(b) of the Act: None

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock,  par
value $.01 per share

     Indicate by check mark  whether the  Registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  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 pursuant to Item
405 of Regulation S-K 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 ]

     As of March 24, 1997,  the aggregate  market value of the voting stock held
by non-affiliates  of the Registrant was  approximately  $1,227,000 based on the
bid price of the Common Stock on the Nasdaq SmallCap Market on that date.

     As of  March  24,  1997,  there  were  5,237,610  shares  of  Common  Stock
outstanding,  including  5,105,000  shares  held by  Muriel F.  Siebert,  Chair,
President and a Director of the Registrant.

                      Documents incorporated by reference:

     Siebert  Financial  Corp.'s  definitive  proxy statement to be filed by the
Registrant  pursuant to Regulation 14A is  incorporated  by reference into items
10, 11, 12 and 13 of Part III of this Form 10-K by reference.



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<PAGE>

PART I

Item 1. BUSINESS

General

     Siebert Financial Corp. (the "Company") is a holding company which 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  President  and  owns  97.5%  of the
outstanding Common Stock of the Company.

     The Company is the  successor by merger to J.  Michaels,  Inc.  ("JMI"),  a
company incorporated on April 9, 1934 in the State of New York which had been in
the retail furniture  business for more than 100 years.  Because of a decline in
the  strength of JMI's core retail  furniture  business in  Brooklyn,  New York,
management  of JMI  concluded  that the return on JMI's assets  generated by its
business was  insufficient and decided that it would be in the best interests of
its  shareholders  to sell JMI's assets and  distribute  the net proceeds  after
payment of all  liabilities to the  shareholders  of JMI. On April 24, 1996, JMI
and Muriel Siebert Capital Markets Group, Inc., a Delaware  corporation owned by
Ms. Siebert ("MSCMG"),  entered into a plan and agreement of merger (the "Merger
Agreement")  providing for the merger (the "Merger") of MSCMG with and into JMI,
on  the  terms  and  conditions  contained  in the  Merger  Agreement,  and,  in
connection therewith, after a distribution concurrently with the consummation of
the Merger,  to transfer all of JMI's  remaining  assets to a liquidating  trust
pursuant  to the Merger  Agreement  and to sell such assets and  distribute  the
proceeds  thereof to the  shareholders  of JMI.  The Merger was  consummated  on
November 8, 1996. Shortly thereafter,  the first liquidating  dividend of $11.50
per share was paid to  shareholders  of JMI. An  additional  $2.50 per share was
paid in February  1997 and  additional  amounts are  expected in the future to a
total  distribution of approximately  $18.00 per share. The Company will have no
continuing involvement with the liquidation of the remaining assets of JMI.

     Following the merger, the Company's fiscal year was changed to December 31.

     Siebert  was  incorporated  on June 13, 1969 under the laws of the State of
Delaware. The principal executive offices of the Company and Siebert are located
at 885 Third Avenue, 17th Floor, New York, New York 10022.

Business Overview

     Siebert provides discount  brokerage  services and related services to more
than  80,000  investor  accounts.  Siebert's  focus  in its  discount  brokerage
business  is to serve  retail  clients  who  seek a wide  selection  of  quality
investment  services at commissions that are  substantially  lower than those of
full-commission  firms and competitive  with the leading  national  discounters.
Through its Capital  Markets  division,  Siebert  offers  institutional  clients
equity  execution  services  on an agency  basis and  equity,  fixed  income and
municipal underwriting and  investment  banking  services.  Siebert is a


                                      -2-


<PAGE>

participant in the secondary markets for Municipal and U.S. Treasury securities.
The Capital  Markets  division  trades  listed closed end bond funds and certain
other  securities  for its own  account.  The  proprietary  trading  business is
strictly  segregated  from that of the  agency  business  executed  on behalf of
institutional clients.

     The firm is unique  among  discount  brokerage  firms in that  through  its
Capital Markets  division it offers a wide array of underwriting  and investment
banking  services  including  acting as sole manager,  co-manager  and otherwise
participating  in the management  underwriting  teams of, or acting as financial
advisors  for,  municipal,  corporate  debt and  equity,  government  agency and
mortgage/asset backed securities issues.

     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 area in the country through its Siebert Brandford Shank Division.

The Retail Discount Brokerage Business

     Discount  Brokerage and Related Services.  The Commission  eliminated fixed
commission  rates on securities  transactions  on May 1, 1975, a date that would
later come to be known as "May Day",  spawning the discount brokerage  industry;
that very day,  on the  opening  bell,  Siebert  executed  its first  discounted
commission  trade.  The firm has been a member of The New York  Stock  Exchange,
Inc. (the "NYSE") longer than any other discount broker.

     Siebert  provides  discount  brokerage  and  related  services to more than
80,000 investor accounts.  Siebert's focus in its discount brokerage business is
to serve retail clients who seek a wide selection of quality investment services
at commissions that are substantially lower than those of full-commission  firms
and competitive with the national discounters.

     Siebert clears securities  transactions on a fully-disclosed  basis through
National  Financial  Services  Corp.  ("NFSC"),  a wholly  owned  subsidiary  of
Fidelity  Investments,  as its clearing agent for all  transactions.  NFSC, with
over  $4  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 quick and easy access to account information.
The firm  provides its  customers  with  information  via  toll-free 800 service
direct to its  representatives  between  7:30 a.m. and 7:30 p.m.  Eastern  Time.
Through its MarketPhone  Voice Response  service and its Siebert OnLine software
introduced,  in the  first  quarter  of 1996,  24 hour  access is  available  to
customers.  Siebert's exclusive PerformanceFax P&L analysis service,  introduced
in the second  quarter of 1996,  provides by  facsimile  profit and loss account
information  before the market opens each morning.  In January,  1997 SiebertNet
was introduced  providing  customers with the ability to place orders,  get real
time quotes and news and other services directly over the Internet.


                                      -3-
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     Independent  Retail  Execution  Services.  Siebert  is  independent  of the
Over-the- Counter ("OTC") and "Third" market makers and consequently offers what
is believed to be the best possible trade executions for customers. Siebert does
not make markets in securities,  nor does it position  against  customer orders.
Most of the  firm's  listed  orders  are  routed  to the  primary  exchange  for
execution.  This allows the customer the opportunity for price  improvement when
trading directly on the NYSE. Through a service called NYSE Prime*,  Siebert 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 unaffiliated Nasdaq
market  makers with no single  market maker  executing  all trades.  This allows
Siebert to fill its  customer  orders by choosing the market maker it deems best
in each  particular  stock  quickly and  efficiently  in all market  conditions.
Additionally,   the  firm  offers  customers   execution  services  through  the
SelectNet*  and Instinet*  systems.  These systems are not generally  offered by
other discounters. Siebert believes that its OTC executions afford its customers
the best possible opportunity for consistent price improvement. Siebert does not
execute OTC trades through affiliated market makers.

     Siebert  executes  trades of fixed  income  securities  through its Capital
Markets division.  Representatives  of Siebert's Capital Markets division 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  ("UITs") or  Certificates  of Deposit  ("CDs").  See  "Business--Capital
Markets Division."

     Retail  Customer  Service.   Siebert  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.  The customer
service  department  is  located  in its  home  office  in New  York  City.  The
department is staffed and  supervised by securities  professionals  qualified to
address all of the clients' needs. Each representative is equipped with powerful
workstations  running  multiple  software  programs   simultaneously  for  quick
response to customer  inquiries.  The  workstations  display  real-time  quotes,
market information, up-to-date equity and margin balances, positions and account
history.

     Products  and  Services.  Siebert  offers  retail  customers  a variety  of
products and services  designed to assist them with their  investment  needs and
allow  them the  convenience  of  maintaining  a single  brokerage  account  for
simplicity and security.  The firm backs up its order  execution  service with a
no-hassle service  guarantee that states,  "If you are dissatisfied with a trade
for any reason, that trade is commission free."


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*NYSE Prime is a service mark of the New York Stock Exchange, Inc.; SelectNet is
a trademark of Nasdaq; Instinet is a trademark of Reuters.

                                      -4-


<PAGE>

     Siebert's  products  and  services  include  the Siebert  Asset  Management
account  featuring no- fee, no minimum check  writing;  a dividend  reinvestment
program that allows for the automatic  reinvestment of cash dividends as well as
capital  gains  distribution;  retirement  accounts that are free of fees if the
account maintains assets of at least $10,000; $100 million in account protection
per account  consisting  of $500,000 in standard  insurance and $99.5 million in
additional protection,  at no charge; free safekeeping services; and the Siebert
Syndicate Hotline,  Siebert's  exclusive  municipal bond syndicate  notification
program.

     Electronic Services. Siebert provides customers with electronic delivery of
services  through a variety of means,  as  discussed  below.  Siebert  believes,
however,  that the electronic  delivery services,  while cost efficient,  do not
offer a customer the ultimate in flexibility.  Siebert believes a combination of
electronic  services and  personalized  telephonic  service  maintains  customer
loyalty and best  serves the needs of most  customers.  To that end,  all of the
services of the firm are supported by trained licensed securities professionals.

     Siebert  OnLine - the firm's  popular PC software,  introduced in the first
quarter of 1996,  runs on Windows 3.1* and  Windows95*  through a secure private
connection.  It features  easy  installation  and intuitive  operations  but its
design  lends  itself to the active  trader as well.  With the click of a mouse,
investors can check their account status,  get real-time quotes and place orders
to trade securities 24 hours a day.

     Siebert  MarketPhone(R)  - allows  customers to trade at their  convenience
through  touch-tone  phones and to check  balances  and  executions  and receive
real-time quotes,  free. The service also permits  automatic  transfer to a live
broker or the use of the fax-on-demand feature to select an investment report to
be delivered to a fax machine within 90 seconds  through the firm's  Research by
Fax(R) service.

     PerformanceFax - introduced in the second quarter of 1996, allows customers
to receive a comprehensive  profit and loss analysis of their  portfolios  faxed
each morning  before the market  opens.  Alternatively,  the customer can select
from weekly and monthly schedules for receipt of PerformanceFax reports.

     SiebertNet - Internet  access with features  including the  efficiency  and
manageability of placing stock orders, obtaining real time quotes,  confirmation
of pending  and  executed  orders,  access to late  breaking  news and  valuable
financial reports, as well as current account information including balances and
positions.

     Siebert  FundExchange(R) - The FundExchange(R) Mutual Fund service provides
customers  with access to  approximately  4,500 mutual  funds,  including  1,000
no-load funds, about 340 of which have no-transaction fees.

     Siebert is  currently  developing  and will offer  during the next year new
products and services including the following:

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* Windows 3.1 and Windows95 are trademarks of the Microsoft Corporation.

                                      -5-


<PAGE>

     On-line  statement   imaging  system  -  Electronic   imaging  of  customer
     statements   will  be   displayed   directly   on  the  screen  of  Siebert
     representatives for fast accurate reconciliation of customer accounts.

     PerformanceFax   enhancements  -  New  reports  will  become  available  to
     customers.

     No annual fee VISA(R)* credit card - Will allow customers to make purchases
     with a Siebert VISA credit card.

     Enhanced MarketPhone(R) telephone brokerage service - Features will include
     quotes on mutual  funds and  Canadian  securities;  the ability to purchase
     mutual funds; a new upgraded menu system; and additional access ports.

     Siebert Fax on Demand  service -  Customers  will be able to call toll free
     from any touch tone  telephone  and select from a list of reports that will
     be faxed 24 hours a day.

     Newsand  trade  execution  alert service via PC, beeper and fax - Customers
     will be able to keep  abreast  of the market  whether at home or  traveling
     using the firm's alert service.

     VIP Premiere  Statement - The  statements  will offer a more  sophisticated
     view of the brokerage account information including a new account valuation
     section,  an asset allocation pie chart, a new improved  activity  section,
     and a more detailed income summary section.

     A Charitable  Common Fund account that will allow  customers to  contribute
     appreciated  securities  and  designate  the  beneficiaries  of income  and
     principal without incurring capital gains taxes on the appreciation.

     Retail New Accounts.  Siebert maintains a separate New Accounts  department
to  familiarize  each customer with  Siebert's  array of services,  policies and
procedures.  The department  assists in the development of new business received
through  the firm's  print and  broadcast  advertising  as well as its  referral
programs.  Additionally,  requests to upgrade services such as option and margin
approval are handled by this department.

     The Retail New  Accounts  department  assesses  the  credit  worthiness  of
customers  and  monitors  control  procedures  for  each  new  customer.   These
procedures  include the use of a  combination  of  nationally  recognized  fraud
prevention  services and internal controls  developed and maintained by Siebert.
Management feels that these procedures minimize Siebert's exposure to customers'
fraudulent activities.

     The New  Accounts  department  staff  also  assist  customers  in  document
management and compliance with regulatory requirements.

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         *VISA is a registered trademark of VISA International.

                                      -6-

<PAGE>

     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 NFSC, the firm's clearing agent, which also serves
as trustee for such accounts.  IRA, SEPP IRA and KEOGH accounts can be invested,
and 401(k) plans will in the near future be able to be invested, in a wide array
of  mutual  funds,   stocks,   bonds  and  other  investments  all  through  one
consolidated  account.  Cash  balances in these  accounts are swept daily to the
money  market  fund  chosen by the  customer.  Retirement  accounts in excess of
$10,000 in assets are free of maintenance fees.  Retirement  accounts also enjoy
free  dividend  reinvestment  in more  than  6,000  publicly  traded  securities
allowing  customers to  automatically  reinvest cash dividends and capital gains
distributions for additional shares of the same security.

     Customer  Financing.  Customers'  securities  transactions  are effected on
either a cash or margin  basis.  Generally,  a customer  buying  securities in a
cash-only  brokerage account is required to make payment by the settlement date,
currently  three  business  days  after  the  trade is  executed.  However,  for
purchases of certain types of securities,  such as options, a customer must have
a cash or a money  market fund balance in his or her account  sufficient  to pay
for the trade prior to its  execution.  When selling  securities,  a customer is
required to deliver the securities,  and is entitled to receive the proceeds, on
the  settlement  date.  In an account  authorized  for margin  trading,  Siebert
arranges  for the  clearing  agent to lend its  customer a portion of the market
value of  certain  securities  up to the limit  imposed by the  Federal  Reserve
Board,  which for most  equity  securities  is  initially  50%.  Such  loans are
collateralized  by the  securities  in the  customer's  account.  Short sales of
securities  represent  sales of borrowed  securities and create an obligation to
purchase the securities at a later date.  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 customer's  failure to meet his or her  obligations and in the event
of adverse changes in the market value of the securities positions in his or her
account.  Both  Siebert and its clearing  agent  reserve the right to set margin
requirements higher than those established by the Federal Reserve Board.

     Pursuant to its clearing  agreement,  Siebert  participates in its clearing
agent's  income  from  financing  Siebert  customers'  transactions.   See  also
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

     Offices.  During the fourth quarter of 1996, Siebert opened retail discount
brokerage  offices in  Morristown,  New Jersey and Palm Beach and Surfside  (Bal
Harbour),  Florida and entered  into an  agreement to relocate its office in Los
Angeles to Beverly Hills.

     Siebert currently  maintains seven retail discount brokerage  offices.  See
"Item  2  Properties."   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.

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     The New York office  remains open Monday  through  Friday from 7:30 a.m. to
7:30 p.m.,  Eastern Time, daily, while branch offices remain open from 9 a.m. to
5 p.m., Eastern Time, daily to service customers in person and by telephone.

     During the second  quarter of 1996,  the firm reached an agreement with its
clearing firm whereby the clearing firm would  guarantee the  availability of up
to 14 trading positions and related telephone and computer equipment for the use
of  Siebert   personnel  in  the  event  Siebert's  main  trading  facility  was
unavailable  for any  reason.  Furthermore,  the 14 trading  positions  would be
supported  by the  clearing  agent's  internal  licensed  representatives  until
Siebert's  representatives  arrived.  The  clearing  firm has  failed to provide
evidence  that they will be able to meet their  commitments  and the  Company is
taking steps to provide alternate arrangements as soon as practical.

     Information  Systems.  Siebert's operations rely heavily on its information
processing  and  communications  systems.  Siebert's  system  for  processing  a
securities transaction is automated.  Registered  representatives  equipped with
online  computer  terminals  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 in New York.  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  Siebert's  information  processing  or  communication  systems for a
significant  period of time could limit its ability to process its 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  maintenance  of
facilities for backup and communications located in facilities provided by NFSC,
its clearing agent, at the World Financial Center.

Capital Markets Division

     In 1991,  Siebert  formalized its commitment to its institutional  customer
base by creating the Siebert  Capital  Markets  division (the  "Capital  Markets
Division").  This group has served as a co-  manager,  selling  group  member or
underwriter  on a  full  spectrum  of new  issue  offerings  by  municipalities,
corporations and federal agencies. The Division has been involved in issues from
New York to  California.  In addition,  the  Division's  distribution  system is
extensive.  The firm has an  active  retail  account  base in  excess  of 80,000
accounts,  and an  institutional  account base which numbers  approximately  600
accounts.


                                      -8-

<PAGE>


     The Company  believes  that it is the  largest  WBE in the capital  markets
business in the country  through  Siebert and the largest MWBE in the tax exempt
underwriting area in the country through its Siebert Brandford Shank Division.

     The two  principal  areas of the Capital  Market  Division  are  Investment
Banking and Institutional Equity Execution Services.

     Investment Banking. Siebert offers investment banking services to corporate
and municipal clients through its Capital Markets Division which participates in
public offerings of equity and debt securities with institutional and individual
investors.

     Siebert has  participated as an underwriter for taxable and tax-exempt debt
raising capital for many types of issuers  including states,  counties,  cities,
transportation  authorities,   sewer  and  water  authorities  and  housing  and
education agencies. Since it began underwriting in 1989, the firm has co-managed
over $61.6  billion in municipal  debt.  Investment  Banking  revenues  from the
underwriting of taxable and tax-exempt debt and fees from financial  advisor and
remarketing  activities are set forth in the table "Selected  Financial Data" in
Part II - Item 6.

     In October 1996,  Siebert  formed the Siebert  Brandford  Shank Division of
Siebert to add to the former  activities  of Siebert's  tax exempt  underwriting
department the activities of 26 municipal  investment banking  professionals who
were previously employed by the 13th largest tax exempt underwriting firm in the
country.  As soon  as all  licenses  and  consents  are  obtained,  the  Siebert
Brandford Shank Division will be separately  incorporated and Napoleon Brandford
and  Suzanne F. Shank will own 51% of the equity and be  entitled  to 51% of the
net profits or bear 51% of any net losses after  Siebert's  recovery of start-up
expenses  while  Siebert  will have the  balance.  The group is expected to make
Siebert a more significant  factor in the tax exempt  underwriting area. This 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, the new Division has opened offices in San Francisco,  Seattle and Houston
and is paying rent on an interim basis while  negotiating  to open or assume the
leases for additional offices in Dallas, Chicago,  Detroit and Los Angeles. The
additional overhead and costs incurred in the openings will adversely impact net
income until  additional  revenues are produced in amounts  sufficient to absorb
such  overhead  and  costs.  There  can be no  assurance  as to when and if such
revenues  will be  produced.  As a startup  Division,  the unit has not yet been
profitable.

     To date,  however,  the  Division  has been  awarded  roles as  Co-Managing
Underwriter  of offerings  approximating  $3.5 billion and as a Senior  Managing
Underwriter  of offerings  of  approximately  $500  million  expected to come to
market between April 1 and December 31, 1997. Awarded clients include the States
of California,  Texas and Washington and the Cities of Chicago,  Detroit and St.
Louis.

     Siebert has participated as an underwriter in several of the largest common
stock offerings that have come to market,  including Conrail,  Allstate,  PacTel
Corporation,  Estee  Lauder  and  Lucent  Technologies.  To  date,  the firm has
participated  as an underwriter in over 105 offerings  including  corporate debt
issuance totaling over $3.6 billion.

                                      -9-


<PAGE>

     The  principal  sources of  revenue of the  Capital  Markets  Division  are
underwriting  profits and  management  fees derived from  underwriting.  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 such 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,
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.

     Institutional Equity Execution Services.  The firm emphasizes  personalized
service,  professional  order handling and client  satisfaction to approximately
400 institutional  accounts. It utilizes up to 15 independent floor brokers that
use an extensive network linked via direct "ring down" circuits.  Each broker is
strategically  located  on a major  exchange,  which  allows  Siebert to execute
orders in all market environments.  Utilizing its clearing arrangement,  Siebert
has  the  ability  to  provide  foreign   execution  and  clearing  services  to
institutional  customers.  Although the firm from time to time positions stocks,
options or futures,  it does not execute  customer orders against such positions
because Siebert believes its client's interest in a transaction should always be
placed above any other interest.  The firm's  institutional client list includes
some of the largest  pension  funds,  investment  managers  and banks across the
country.  The firm trades an average of 668,000  shares daily for  institutional
investors and for its own account.

     Institutional  Basket  Trading  Technology.  The Capital  Markets  Division
completed in the second  quarter of 1996 the design and  commenced  operation of
the exclusive Siebert Real-Time List Execution System ("SRLX"). SRLX is designed
exclusively  for  institutional  customers who employ the use of basket  trading
strategies in their portfolio management.

     SRLX enables the Capital Markets Division to simultaneously manage an array
of baskets for multiple clients while providing real-time analysis.  SRLX can be
integrated  into an existing local area network.  It is built with the latest 32
bit technology to take advantage of today's Pentium-based PC's running Microsoft
Windows95* or Windows NT*. Data integrity is assured  through a private  digital
T1 line with built-in network redundancy.


--------
* Pentium is a  trademark  of the Intel  Corporation;  Microsoft  Windows95  and
WindowsNT are a trademarks of the Microsoft Corporation.

                                      -10-


<PAGE>


     SRLX is built for  institutional  customers  with features  designed to add
significant value to their trading capabilities.  SRLX features include: Written
almost  entirely in VB native code by in-house staff for  reliability and speed;
sophisticated  graphical interface allowing  exceptional control and monitoring;
real-time  order entry,  reporting and messaging from the  inter-market  trading
network;  real-time  basket  analysis  including  average pricing and liquidity;
multiple  basket  management  from  a  single  window;  account  allocation  and
end-of-day report uploading;  customized client reports; active intervention for
large blocks or inactive stocks; and built-in  automatic  fail-safe and recovery
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.

     The Capital Markets Division  maintains a practice of announcing in advance
that it will contribute a portion of the net commission revenues it derives from
sales  of  negotiated  new  issue  equity,  municipal  and  government  bonds to
charitable   organizations.   Once  the  Siebert  Brandford  Shank  division  is
profitable,  the  division  will likely  follow a similar  practice.  Siebert is
certified as a WBE with numerous states,  agencies and  authorities.  Siebert is
the only "WBE" which offers both retail and institutional  product  distribution
capabilities.   It  is  also  the  largest  "WBE"  with   significant   minority
participation.  Although  it has been a member  of the New York  Stock  Exchange
since 1967, new business  opportunities  have become  available to it based upon
its status as a "WBE." See "Business - Regulation."

     Many of the firm's  competitors expend substantial funds in advertising and
direct  solicitation  of prospects and customers to increase  their share of the
market.

Competition

     Siebert  encounters   significant   competition  from  full-commission  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. 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. Siebert
competes  with a wide  variety  of vendors of  financial  services  for the same
customers.  Siebert believes that the main competitive advantages are quality of
execution and service,  responsiveness,  price of services and products offered,
and the breadth of product line.

     Among Siebert's principal retail competitors are Charles Schwab,  Quick and
Reilly,  Fidelity  Investments,  Waterhouse  Securities,  Jack  White & Co.  and
Kennedy Cabot. Siebert charges commissions lower than some other discount

                                      -11-

<PAGE>

brokers including Charles Schwab,  Quick & Reilly and Fidelity  Investments.  In
investment banking,  Siebert's  principal  competitors for business include both
national and regional firms, some of whom have resources  substantially  greater
than Siebert's.

Regulation

     The  securities  industry  in the United  States is  subject  to  extensive
regulation  under both  Federal  and state laws.  The  Securities  and  Exchange
Commission (the "Commission") is the Federal agency charged with  administration
of the Federal  securities laws.  Siebert is registered as a broker-dealer  with
the  Commission,  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 the 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 Commission) 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 48 states, the District of
Columbia and Puerto Rico.

     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   Commission   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  Commission,
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 employees. Neither the Company nor Siebert has been the subject
of 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.  SIPC is funded  through  assessments  on  registered
broker-dealers.  In addition, Siebert, through its clearing agent, has purchased
from private insurers  additional  account protection of up to $99.5 million per
customer,  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 (i.e.,  protected securities may either be replaced or converted into
an equivalent market value as of the date a SIPC trustee is appointed).  Neither
SIPC  protection nor the additional  protection  applies to  fluctuations in the
market value of securities.

                                      -12-

<PAGE>

     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  Commission  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.

     In  the  recent  election,  voters  in the  State  of  California  approved
Proposition 209, a proposed  statewide  constitutional  amendment by initiative,
and the  Governor  issued  an  executive  order  requiring  state  officials  to
immediately   implement  the  initiative.   Proposition  209  bans  preferential
treatment for women and minorities in state  programs.  Under  Proposition  209,
state  agencies  have been ordered to end all quotas or set asides.  A number of
lawsuits were filed challenging the  constitutionality  of the proposition under
the  Fourteenth  Amendment  and the equal  protection  clause and a court in San
Francisco  has  issued  an  injunction   blocking  the   implementation  of  the
proposition. The Court of Appeals for the Ninth Circuit is currently considering
the appeal of the injunction blocking  Proposition 209's  implementation.  It is
unclear at this point whether the  proposition  will be  implemented or what the
impact of the  proposition  will be on the new business  opportunities  that may
have become available to Siebert in California based upon its status as a "WBE."
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 MBEs.

See "Business-Advertising, Marketing and Promotion."

Net Capital Requirements; Net Capital

     As a  registered  broker-dealer,  Siebert  is subject  to the  Uniform  Net
Capital  Rule (Rule  15c3-1)  promulgated  by the  Commission  (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 net capital may subject a firm to suspension or
expulsion by the NYSE and the NASD,  certain  punitive actions by the Commission
and other regulatory bodies and, ultimately, may require a firm's liquidation.

     "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
(haircuts)  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 Commission prior to and subsequent to withdrawals  exceeding

                                      -13-

<PAGE>

certain   sizes.   Such  rule   prohibits   withdrawals   that  would  reduce  a
broker-dealer's  net  capital  to an  amount  less  than  25% of its  deductions
required by the Net Capital Rule as to its security  positions.  The Net Capital
Rule also allows the  Commission,  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  Regulation  240.15c3-1(a)(1)(ii)
promulgated  by the  Commission.  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, 1996 and 1995,  Siebert had net capital of
$7.8 million and $4.6 million,  respectively,  and net capital  requirements  of
$250,000  under  Regulation  240.15c3-1(a)(1)(ii).  Siebert  is not  subject  to
Commission 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
Commission Rule 17a-11 requirement.

Employees

     As of March 18,  1997,  Siebert had 121 full time  employees,  four of whom
were corporate  officers.  None of the employees are represented by a union, and
Siebert believes that its relations with its employees are good.

Item 2. Properties

     Siebert operates its business out of the following nine offices:

<TABLE>
<CAPTION>

                                               Approximate          Expiration
                                             Office Area in          Date of
                                                Square               Current                  Renewal
          Location                               Feet                Lease                    Terms
          --------                               ----                -----                    -----

<C>                                            <C>                  <C>                   <C>
885 Third Ave.                                 7,828 SF             7/15/97                5 year option
Suite 1720
New York, NY  10022

2020 Avenue of the Stars                         846 SF               N/A                 Month-to-month
Concourse Level
Suite C216
Los Angeles, CA  90067

220 Sansome Street                             3,250 SF             2/28/00                    None
15th Floor
San Francisco, CA  94104
(Investment Banking only)


                                      -14-

<PAGE>
                                               Approximate          Expiration
                                             Office Area in          Date of
                                                Square               Current                  Renewal
          Location                               Feet                Lease                    Terms
          --------                               ----                -----                    -----

4400 North Federal Highway                     1,038 SF             2/28/02                    None
Suite 106D
Boca Raton, FL  33431

400 Fifth Avenue South                         1,008 SF             4/22/99                    None
Suite 100
Naples, FL  33940

230-238 Royal Palm Way                           629 SF            10/31/97                1 year option
Suite 408-410
Palm Beach, FL  33480

9569 Harding Avenue                            1,150 SF             9/30/98                    None
Surfside, FL  33154


66 South Street                                1,341 SF             8/31/06                    None
Morristown, NJ  07960


2 Union Square                                   325 SF             4/30/97                 2 one year
601 Union Street                                                                              options
Seattle, WA  98101
(Investment Banking only)

601 Jefferson                                    220 SF               Month                     None
Suite 320                                                               to
Houston, TX 77002                                                     month
(Investment Banking only)
</TABLE>

     In addition to  occupying a portion of  Siebert's  existing  offices in New
York,  the new Siebert,  Brandford,  Shank  Division  has opened  offices in San
Francisco,  Seattle and  Houston  and is paying  rent on an interim  basis while
negotiating  to open or assume  the  leases  for  additional  offices in Dallas,
Chicago, Detroit and Los Angeles.

     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 lawsuits of a nature which is deemed
customary  and  incidental to its business.  In the opinion of  management,  the
ultimate  disposition of such actions will not have a material adverse effect on
its financial position or results of operations.

                                      -15-


<PAGE>


Item 4. Submission of Matters to a Vote of Security Holders

     Not applicable.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

     The Common Stock commenced  trading in the Nasdaq SmallCap Market under the
symbol "SIEB" on November 12, 1996.  The high and low sales prices of the Common
Stock reported by the Nasdaq SmallCap Market during the following periods were:

                                                       High             Low

November 12, 1996 to December 31, 1996........      $ 12.00           $ 9.00

January 1, 1997 to March 24, 1997.............      $ 12.375          $ 9.25

     The closing bid price on March 24, 1997 in the Nasdaq  SmallCap  Market was
$9.25 per share.

     As of March 24,  1997,  there were  approximately  530 holders of record of
Common Stock.

Limited Offering 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,  once  extended,  expired  March 21,
1997. 1,713 shares were issued pursuant to the offer.

Dividend Policy

     Subject to  statutory  and  regulatory  constraints,  prevailing  financial
conditions and future earnings, the Company may pay cash dividends on its Common
Stock but has not done so to date. 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.

     If the Company determines to pay a dividend,  Ms. Siebert,  as the majority
shareholder  of the  Company,  may from time to time waive her rights to receive
cash dividends to be declared by the Company.

                                      -16-

<PAGE>


Item 6. Selected Financial Data

     The selected consolidated financial data set forth below for the five years
ended  December 31, 1996 has been derived from the Company's  audited  financial
statements.  Such  information  should  be  read  in  conjunction  with,  and is
qualified  in its  entirety  by,  the  financial  statements  and notes  thereto
appearing  elsewhere in this report.

<TABLE>
<CAPTION>

                                                                            Year Ended December 31,
                                                          -------------------------------------------------------------
                                                        1996            1995           1994           1993           1992
                                                        ----            ----           ----           ----           ----
<S>                                                 <C>              <C>           <C>             <C>            <C>
Income statement data:
  Revenues:
  Commissions ...................................   $ 20,105,127    $ 15,645,334   $ 12,128,797   $ 14,349,051   $  9,874,853
  Trading profits ...............................        868,823       2,608,078      3,215,288      3,133,722      1,378,293
  Interest  and  dividends ......................        656,434       1,389,612        462,618        261,198        234,770
  Investment banking ............................      2,532,795       1,396,967      1,536,030      2,462,309      2,435,734
                                                    ------------    ------------   ------------   ------------   ------------

    Total revenues ..............................     24,163,179      21,039,991     17,342,733     20,206,280     13,923,650
                                                    ------------    ------------   ------------   ------------   ------------
  Expenses:
  Salaries, commissions  and employee ...........      9,753,847       8,586,116      6,132,899      8,999,567      4,844,544
    benefits (1) ................................
  Clearing  fees,  including  floor
    brokerage ...................................      4,585,398       4,249,050      3,967,558      4,473,740      3,017,085
  Advertising and  promotion ....................      3,265,692       2,485,426      2,299,030      2,171,858      1,838,707
  Communications ................................      1,359,325       1,119,189      1,001,957        896,986        590,034
  Interest ......................................        290,465         568,326        602,759        323,876        290,185
  Rent and occupancy ............................        403,534         326,089        323,123        323,235        200,976
  Other general and  administrative .............      2,339,483       2,461,122      2,458,237      1,932,143       1,930,23
                                                    ------------    ------------   ------------   ------------   ------------
    Total expenses ..............................     21,997,744      19,795,318     16,785,563     19,121,405     12,711,769
                                                    ------------    ------------   ------------   ------------   ------------

Income before provision for taxes ...............      2,165,435
Provision for  income  taxes -  current .........        201,000
                                                    ------------
Net income -- historical ........................      1,964,435       1,244,673        557,170      1,084,875      1,211,881
Pro forma provision for income taxes (2) ........        752,000         548,000        245,000        477,000        533,000
                                                    ------------    ------------   ------------   ------------   ------------
PRO  FORMA  NET  INCOME .........................      1,212,435    $    696,673   $    312,170   $    607,875   $    678,881
                                                                    ============   ============   ============   ============
Supplementary pro forma adjustment:
  Effect of officer's salary  reduction
     as though 1997 salary had been in effect          2,975,000
  Related income taxes ..........................     (1,309,000)
                                                    ------------
Supplementary pro forma net income ..............   $  2,878,435
                                                    ============
Per share of common stock:
PRO  FORMA  NET INCOME ..........................   $        .23    $        .13   $        .06   $        .12   $        .13
                                                    ============    ============   ============   ============   ============
Supplementary pro forma net income ..............   $        .55
                                                    ============
Weighted average common shares deemed outstanding      5,235,897       5,235,897      5,235,897      5,235,897      5,235,897
Balance Sheet data (at period-end):

   Total assets .................................   $ 14,372,708    $ 16,291,195   $  9,372,230   $ 12,161,104   $  4,784,663
   Total liabilities excluding subordinated debt       4,271,143       9,154,065      3,479,773      6,825,817      1,530,795
   Subordinated debt to majority shareholder ....      3,000,000       2,000,000      2,000,000      2,000,000      1,000,000
   Stockholder's equity .........................      7,101,565       5,137,130      3,892,457      3,335,287      2,253,868

</TABLE>

------------

(1)  Salaries,   commissions   and  employee   benefits   includes   $2,975,000,
     $2,975,000,  $1,215,000, $3,958,000 and $1,450,000 for 1996 through 1992 of
     S Corporation  compensation of Muriel Siebert in excess of the amounts that
     would have been paid had her new base salary  arrangement  of $150,000 been
     in effect.

(2)  The pro forma  provision  for income  taxes  represents  income taxes which
     would have been provided had Siebert operated as a C Corporation.


                                      -17-

<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Business Environment

     Market  conditions  during 1996 reflected a  continuation  of the 1995 bull
market characterized by record volume and record high market levels. Declines in
market  volumes or increases in interest rates could limit  Siebert's  growth or
even lead to a decline in Siebert's  customer base which would adversely  affect
its results of operations.

     Also during 1996,  competition  has  continued to intensify  both among all
classes of brokerage firms and within the discount brokerage business as well as
from new firms not  previously  in the  discount  business  announcing  plans to
become significantly  involved.  Other firms,  traditionally  discount execution
firms  primarily,  have announced  their intention to broaden their offerings to
include advice and investment  management.  Since 1994,  some firms have offered
low flat rate  execution fees that are difficult for any  conventional  discount
firm to meet. Many of the flat fee brokers, however, impose charges for services
such as mailing,  transfers and handling  reorganizations which Siebert does not
and  also  direct  their  execution  to  affiliated  market  makers.   Increased
competition,  broader  service  offerings  or  the  prevalence  of  a  flat  fee
environment  could  also  limit  Siebert's  growth or even lead to a decline  in
Siebert's customer base which would adversely affect its results of operations.

Current Developments

     For the year  ended  December  31,  1996,  commission  and fee  income  and
investment  banking revenues  continued to experience  strong and record growth.
Equity trading activities,  however,  continued to lag the growth in the balance
of the firm.

     During the fourth quarter of 1996, Siebert opened retail discount brokerage
offices in  Morristown,  New Jersey and Palm Beach and Surfside  (Bal  Harbour),
Florida and entered  into an  agreement to relocate its office in Los Angeles to
Beverly Hills.

     In October 1996,  Siebert  formed the Siebert  Brandford  Shank Division of
Siebert to add to the former  activities  of Siebert's  tax exempt  underwriting
department the activities of 26 municipal  investment banking  professionals who
were previously employed by the 13th largest tax exempt underwriting firm in the
country.  As soon  as all  licenses  and  consents  are  obtained,  the  Siebert
Brandford Shank Division will be separately  incorporated and Napoleon Brandford
and  Suzanne F. Shank will own 51% of the equity and be  entitled  to 51% of the
net profits while  Siebert will own and be entitled to the balance.  In addition
to  occupying  a  portion  of  Siebert's  existing  offices  in New York and Los
Angeles, the new Division has opened offices in San Francisco and Seattle and is
paying rent on an interim basis while  negotiating  to open or assume the leases
for additional offices in Houston, Dallas, Chicago and Detroit. The additional

                                      -18-

<PAGE>


overhead and costs  incurred in the openings  will  adversely  impact net income
until  additional  revenues  are produced in amounts  sufficient  to absorb such
overhead and costs.  There can be no  assurance as to when and if such  revenues
will be produced.  As a startup Division,  the unit has not yet been profitable.
To date, however, the Division has been awarded roles as Co-Managing Underwriter
of offerings  approximating $3.5 billion and as a Senior Managing Underwriter of
offerings of approximately $500 million expected to come to market between April
1 and December 31, 1997.

Results of Operations

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

     Total revenues for 1996 were $24.2 million,  an increase of $3.1 million or
15% over  1995.  Commission  and fee  income  and  investment  banking  revenues
increased and trading and interest and dividend revenues declined.

     Commission  and fee income  increased  $4.5 million or 29% to $20.1 million
due to the continued  bull market and  increased  spending for  advertising  and
promotion  to attract  additional  clients.  In  addition,  under a new clearing
agreement  which was  phased in  during  the  second  quarter  of 1995,  Siebert
received additional  commission income on client margin and free credit balances
and  investments  in certain  mutual and money  market  funds and the amounts of
related customer balances and investments increased substantially.

     Trading  profits  declined  $1.7  million  or  67%  to  $869,000  due  to a
continuing lack of liquidity and substantially  reduced volatility in markets in
which  the firm  trades,  thus  limiting  trading  and  arbitrage  opportunities
compared to the prior year.

     Interest  and  dividends  decreased  $733,000  or  53% to  $656,000  due to
decreases in long trading  positions and in trading  strategies  which generated
greater dividend income in 1995 over the corresponding period in 1996.

     Investment  banking  increased  $1.1  million or 81% to $2.5 million due to
increased  participation  in both equity and tax exempt  underwritings  over the
prior year period.  This resulted  from  providing  additional  resources to the
development of both types of business and, from October 1, 1996, the addition of
over 20 municipal investment banking professionals to form the Siebert Brandford
Shank Division engaged in tax exempt underwriting.

     Total costs and expenses for 1996 were $22.0  million,  an increase of $2.2
million or 11% over 1995.  All  categories of costs  increased  except  interest
expense and other general and administrative expenses.

     Compensation  and  benefit  costs  increased  $1.2  million  or 14% to $9.8
million due to  provisions  for bonus  payments  and to increases in staffing to
cover the trading and service needs of the retail commission  business,  and, in
fourth quarter,  the tax exempt  underwriting  business.  Management,  staff and

                                      -19-

<PAGE>


incentive bonuses increased $350,000 reflecting volume, improved performance and
firm profitability. The balance of the increase relates primarily to an increase
in average  head count of 73 for 1995 to 95 for 1996,  an increase  of 32%.  The
staff  increase  is  primarily  related  to the  increase  in retail  commission
business and, in the fourth  quarter,  the addition of the municipal  investment
banking professionals.

     Clearing and  brokerage  fees  increased  $336,000 or 7.9% to $4.6 million.
Such costs increased substantially less than commission volume due to the effect
of a new clearing cost structure that became  effective in the second quarter of
1995.

     Advertising and promotion expense increased $780,000 or 31% to $3.3 million
due to increased branch and service  promotion (for example,  the opening of the
Naples office in early 1996 and the Surfside and Palm Beach offices in late 1996
and the  introduction of new products ( such as "Siebert  OnLine") and increased
advertising  and  promotion  to  differentiate  Siebert  from other  firms in an
increasingly competitive environment.

     Communications  expense  increased  $240,000 or 22% to $1.4  million as the
client  base and  volume  increased  and more  services  were  offered  directly
on-line.

     Interest expense declined $278,000 or 49% to $291,000  primarily due to the
decreased use of equity trading  strategies that involve large short  positions.
Dividend  charges  against  short  positions  are  included  as part of interest
expense.

     Rent and occupancy costs increased  $77,000 or 24% to $403,000  principally
due to opening a new branch in Naples, Florida in December 1995, pre-opening and
rental  costs of three new retail  branches in late 1996,  and the new  location
costs for the Siebert Brandford Shank Division for the fourth quarter of 1996.

     Other general and administrative  expenses decreased $122,000 or 5% to $2.3
million due  principally  to reduced  legal and  consulting  fees in the current
year.  Included in general and  administrative  costs for 1996 are approximately
$210,000 in legal,  accounting  and printing  costs related to the JMI merger in
November, 1996.

     Siebert's  current  and pro forma  provision  for  income  taxes  increased
$405,000  or 74% to  $953,000  while  pro  forma  net  income  for 1996 was $1.2
million,  an  increase  of $516,000  or 74% over 1995,  both  proportional  to a
similar increase in pre-tax income.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

     Total  revenues for 1995 were $21.0  million an increase of $3.7 million or
21% over 1994.  Commission  and fee income and interest  and  dividend  revenues
increased and trading and investment banking revenues declined.

     Commission  and fee income  increased  $3.5 million or 29% to $15.6 million
due to the  continued  bull market and  increased  spending for  advertising  to
attract additional clients.


                                      -20-

<PAGE>

     Trading profits  declined  $607,000 or 19% to $2.6 million due to a lack of
liquidity and substantially  reduced volatility in the firm's markets during the
second half of the year thus  limiting the trading and  arbitrage  opportunities
present in the first half of the year and in the prior period.

     Interest and  dividends  increased  $927,000 or 200% to $1.4 million due to
increases in long trading  positions and in trading  strategies  which generated
greater dividend income.

     Investment  banking  decreased  $139,000  or 9.1% to  $1.4  million  due to
reduced  underwriting  volume  generally in  municipal  markets and a shift from
negotiated underwriting transactions to competitively bid transactions which are
relatively less profitable for participants.

     Total costs and expenses for 1995 were $19.8  million,  an increase of $3.0
million or 18% over 1994.  All  categories of costs  increased  except  interest
expense.

     Compensation  and  benefit  costs  increased  $2.5  million  or 40% to $8.6
million due to an increase in Subchapter-S  compensation to Ms. Siebert of $1.76
million, an increase in contractual incentive bonus compensation of $355,000 and
an increase in the bonus provision for other staff and executives of $365,000.

     Clearing and  brokerage  fees  increased  $282,000 or 7.1% to $4.2 million.
Such costs increased substantially less than commission volume due to the effect
of a new clearing cost structure that became  effective in the second quarter of
1995.

     Advertising  and  promotion  expense  increased  $186,000  or  8.1% to $2.5
million primarily in increased  advertising to differentiate  Siebert from other
firms in an increasingly competitive environment.

     Communications  expense  increased  $117,000 or 12% to $1.1  million due to
increased  market volume,  increased use of "800" number service  resulting from
national  television  advertising  and increased  use of Siebert's  market phone
service for orders as well as customer inquiries.  Also as a result of increased
volume, the cost of quote services increased $58,000 or 14%.

     Interest expense declined $34,000 or 5.7% to $568,000  primarily due to the
decreased use of equity trading  strategies that involve large short  positions.
Dividend  charges  against  short  positions  are  included  as part of interest
expense.

     Rent and occupancy  costs  increased  $3,000 or 0.9% to $326,000  primarily
from cost escalation provisions in existing leases.

                                      -21-


<PAGE>

     Siebert's pro forma provision for income taxes  increased  $303,000 or 124%
to  $548,000  and pro forma net income for 1995 was  $697,000,  an  increase  of
$385,000 or 123% over 1994, both  proportional to a similar  increase in pre-tax
income.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

     Total revenues for 1994 were $17.3  million,  a decrease of $2.9 million or
14%  compared to 1993.  Commissions  and fees and  investment  banking  revenues
declined. Trading and interest income increased, but to a much lesser extent.

     Commissions and fees were $12.1 million,  a decrease of $2.2 million or 16%
compared to 1993.  Principal  factors  were a general  decline in overall  stock
market volume and activity and increased  competition in the discount  brokerage
industry, particularly from a class of new flat fee discount brokers.

     Trading  profits  increased  $82,000  or 2.6% to  $3.2  million  due to the
continued  success of firm trading  strategies  suited to relatively  liquid and
volatile markets.

     Interest  and  dividends  increased  $201,000  or  77% to  $463,000  due to
increases in long trading  positions and in trading  strategies  which generated
greater dividend income in 1994 compared to 1993.

     Investment  banking decreased $926,000 or 38% to $1.5 million due primarily
to a reduction  of  approximately  $500,000 in taxable  fixed  income  syndicate
income which had been  significant in 1993.  This was due to market  conditions,
the termination of certain  Resolution Trust Company and FannieMae  underwriting
programs and the loss of a key  employee.  The municipal  bond area  principally
accounted  for the remaining  decline due to a softening in the  municipal  bond
market.

     Total costs and  expenses for 1994 were $16.8  million,  a decrease of $2.3
million or 12% compared to 1993.  Compensation  and benefits and clearing  costs
accounted principally for the decrease,  with some offsetting increases in other
categories.

     Compensation  and benefits  decreased  $2.9 million or 32% to $6.1 million.
Ms.  Siebert's  Subchapter-S  Corp.  compensation  declined $2.7 million in 1994
compared to 1993 and a reduction in staff and in the executive  bonus  provision
accounted for the balance, in each case due to reduced firm profitability.

     Clearing and brokerage fees  decreased  $506,000 or 11% to $4.0 million due
to a decrease in the retail commission business.  The decrease was less than the
percentage  decrease in commissions  because the 1994 mix of  commissions  had a
shift toward  listed  securities in 1994 which incur floor  brokerage  costs not
applicable to OTC trades.

     Advertising  and  promotion  expense  increased  $127,000  or  5.9% to $2.3
million. The increased expenditures represented a campaign to minimize the

                                      -22-

<PAGE>

effects of reduced  market volume by capturing  increased  market share.  Due to
reduced  municipal  market  activity,  contributions,  included  as  promotional
expense,  decreased approximately  $560,000.  Expenditures for other advertising
and promotional costs increased approximately $685,000 over the prior year.

     Communications expense increased $105,000 or 12% to $1.0 million.  Although
commission volume declined,  the firm's emphasis on customer service resulted in
more  service-oriented  representatives  providing  a wider  range of  services,
specifically including substantially more quote services.

     Interest expense  increased  $279,000 or 86% to $602,000 due to the trading
strategies  involving  large  short  positions  which  incur  dividend  charges.
Dividend  charges  against  short  positions  are  included  as part of interest
expense.

     Rent and occupancy costs remained the same at $323,000.

     Other general and administrative expenses increased $526,000 or 27% to $2.5
million,  principally  due to legal  defense fees and expenses  with two actions
involving former employees; both cases were settled.

     Siebert's pro forma provision for income taxes decreased $232,000 or 49% to
$245,000 and pro forma net income  decreased  $296,000 or 49% to $312,000,  both
proportional to a similar decrease in pre-tax income.

Liquidity and Capital Resources

     Siebert'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, 1996 were $14.4  million,  of which $2.0 million took the
form of a secured demand note.  $13.5 million or 94% of total assets were highly
liquid.

     Siebert is subject to the net capital  requirements of the Commission,  the
NYSE and other  regulatory  authorities.  At December  31, 1996,  Siebert's  net
capital  was $ 7.8  million,  $7.5  million  in  excess of its  minimum  capital
requirement of $250,000.

Risk Management

     The principal credit risk to which Siebert is exposed on a regular basis is
to  customers  who fail to pay for their  purchases  or who fail to maintain the
minimum required collateral for amounts borrowed against securities positions.

     Siebert  has  established   policies  with  respect  to  maximum   purchase
commitments for new customers or customers with inadequate collateral to support
a requested purchase.


                                      -23-
<PAGE>

Managers  have  some   flexibility  in  allowing  certain   transactions.   When
transactions  occur  outside  normal  guidelines,  such  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 purchase and minimize any
losses.

     Siebert  has a  risk  unit  specifically  responsible  for  monitoring  all
customer  positions for the  maintenance of required  collateral.  The unit also
monitors  accounts  that may be  concentrated  unduly in one or more  securities
whereby a significant decline in the value of a particular concentrated security
could reduce the value of the  account's  collateral  below the  account's  loan
obligation.

     Siebert has not had significant credit losses in the last five years.

Item 8. Financial Statements and Supplementary Data

     See index immediately following the signature page.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

     None.


                                      -24-

<PAGE>

Part III

Item 10. Directors and Executive Officers of the Company

     (a) Identification of Directors

     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.

     (B) Identification of Executive Officers

     The executive officers of the Company are:

Name                        Age              Position
----                        ---              --------

Muriel F. Siebert           64         Chair and President

Nicholas P. Dermigny        38         Executive Vice President and Chief
                                       Operating Officer

T. K. Flatley               56         Executive Vice President, Chief Financial
                                       and Administrative Officer and Assistant
                                       Secretary

Daniel Iesu                 37         Secretary and Controller


     Certain  information  furnished to the Company by each executive officer is
set forth below.

     Muriel F. Siebert has been Chair, President and a director of Siebert since
1967 and the Company since  November 8, 1996.  The first woman member of the New
York Stock Exchange on December 28, 1967,  Ms. Siebert served as  Superintendent
of Banks of the State of New York from 1977 to 1982.  She is a  director  of the
New York State Business  Council,  the National  Women's Business  Council,  the
International Women's Forum and the Boy Scouts of Greater New York.

     Nicholas P. Dermigny has been Executive Vice President and Chief  Operating
Officer  of  Siebert  since  joining  the  firm in 1989.  Prior to 1993,  he was
responsible for the retail discount division. Mr. Dermigny became an officer and
director of the Company on November 8, 1996.

     T. K. Flatley has been  Executive  Vice  President and Chief  Financial and
Administrative  Officer of Siebert  since  April 1996 and of the  Company  since
November  8, 1996.  He became  Assistant  Secretary  of the Company on March 11,
1997.  From May  1993  until  April  1996,  he was  engaged  independently  as a
consultant  in the  investment  banking and  brokerage  business  except for the
period from November 1993 to November 1994 when he was Chief Financial and

                                      -25-

<PAGE>

Administrative  Officer of Ryan,  Beck & Co.,  Inc., an  investment  banking and
brokerage  firm in New Jersey.  From 1990 until 1993, he was President and Chief
Executive Officer of Motivated Security Services, a security services firm based
in New Jersey. Mr. Flatley is a Certified Public Accountant.

     Daniel Iesu has been  Secretary  of Siebert  since  October 1996 and of the
Company since November 8, 1996. He has been Controller of Siebert since 1989.

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.

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.

Item 12. 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.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) The following documents are filed as part of this report.

         1. Financial Statements

                  The  financial  statements  filed as part of this  report  are
                  listed in the accompanying Index to Financial Statements.

         2. Financial Statement Schedules

                  Schedules are omitted  because they are not  applicable or the
                  required  information is shown in the financial  statements or
                  the notes thereto

         3. Exhibits

                  The exhibits  required by Item 601 of Regulations S-K filed as
                  part of, or  incorporated  by  reference  in,  this report are
                  listed in the accompanying Exhibit Index.

                                      -26-


<PAGE>

         (b) Reports on Form 8-K

                  Current  Report  on Form  8-K  filed  with the  Commission  on
                      November 15, 1996 reporting  pursuant to Item 5 the merger
                      with JMI.

                  Current  Report  on Form  8-K  filed  with the  Commission  on
                      November 21, 1996 reporting  pursuant to Item 1 the change
                      in  control  of the  Registrant  as a result of the merger
                      with JMI.

         (c) Exhibits required by Item 601 of Regulation S-K

                  See the accompanying Exhibit Index

         (d) Financial Statement Schedules

                  See (a) 2. above



                                      -27-
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       SIEBERT FINANCIAL CORP.


                                       By: /s/ Muriel F. Siebert
                                           -------------------------------------
                                               Muriel F. Siebert
                                               Chair and President
 March 27, 1997


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, 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           Chair, President and Director    March 27, 1997
------------------------------   (principal executive officer)
Muriel F. Siebert

 /s/ Nicholas P. Dermigny        Executive Vice President and     March 27, 1997
------------------------------   Chief Operating Officer and
Nicholas P. Dermigny             Director

 /s/ T. K. Flatley               Executive Vice President and     March 27, 1997
------------------------------   Chief Financial and
T. K. Flatley                    Administrative Officer
                                 (principal financial and
                                 accounting officer)

/s/ Patricia L. Francy           Director                         March 27, 1997
------------------------------
Patricia L. Francy

/s/ Jane H. Macon                Director                         March 27, 1997
------------------------------
Jane H. Macon

/s/ Monte E. Wetzler             Director                         March 27, 1997
------------------------------
Monte E. Wetzler

                                      -28-


<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

                                                                      Page
                                                                      ----

Siebert Financial Corp. and Subsidiary

    Report of Independent Auditors.....................................F-1

    Consolidated Balance Sheets at
       December 31, 1996 and 1995 .....................................F-2

    Consolidated Statements of Income for each of the
        years in the three-year period ended December 31, 1996.........F-3

    Consolidated Statements of Retained Earnings for each of the
       years in the three-year period ended December 31, 1996..........F-4

    Consolidated Statements of Cash Flows for each of the
        years in the three-year period ended December 31, 1996.........F-5

    Notes to Financial Statements......................................F-6




<PAGE>
                                                Richard A. Eisner & Company, LLP
--------------------------------------------------------------------------------
                                                     Accountants and Consultants

RAE




                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
Siebert Financial Corp.
New York, New York


         We have audited the accompanying consolidated balance sheets of Siebert
Financial  Corp.  and its wholly  owned  subsidiary  as of December 31, 1996 and
December 31, 1995, and the related consolidated statements of income, changes in
shareholders'  equity  and cash  flows for each of the  years in the  three-year
period  ended   December  31,  1996.   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, 1996 and
December 31, 1995, and the  consolidated  results of their  operations and their
cash flows for each of the years in the  three-year  period  ended  December 31,
1996, in conformity with generally accepted accounting principles.



Richard A. Eisner & Company, LLP

New York, New York
February 14, 1997

                                       F-1

<PAGE>
<TABLE>
<CAPTION>
                                       SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                                           CONSOLIDATED BALANCE SHEETS

                                                  A S S E T S
                                                  -----------
                                                                                    December 31,
                                                                         -----------------------------------
                                                                             1996                   1995
                                                                         -----------             -----------
<S>                                                                      <C>                     <C>
Cash and cash equivalents                                                $   231,029             $   164,071
Securities owned, at market value                                         10,116,248              13,746,931
Receivable from brokers and dealers                                        1,141,439
Secured demand note receivable from majority shareholder                   2,000,000               2,000,000
Property and equipment, net                                                  450,254                 238,864
Prepaid expenses and other assets                                            433,738                 141,329
                                                                         -----------             -----------

          T O T A L                                                      $14,372,708             $16,291,195
                                                                         ===========             ===========


                                      LIABILITIES AND SHAREHOLDERS' EQUITY
                                      ------------------------------------

Payable to brokers and dealers                                                                   $ 5,236,346
Accounts payable and accrued liabilities                                 $ 2,824,000               3,339,229
Securities sold, not yet purchased, at market value                        1,447,143                 578,490
                                                                         -----------             -----------

          T o t a l                                                        4,271,143               9,154,065
                                                                         -----------             -----------


Commitments and contingencies

Liabilities to majority shareholder
  subordinated to claims of general creditors                              3,000,000               2,000,000
                                                                         -----------             -----------
Shareholders' equity:
   Common stock, $.01 par value 49,000,000
     shares authorized, 5,235,897 shares
      outstanding at December 31, 1996,
      5,105,000shares outstanding
      at December 31, 1995                                                    52,359                  51,050
   Additional paid-in capital                                              6,771,049
   Retained earnings                                                         278,157               5,086,080
                                                                         -----------             -----------

          Total shareholders' equity                                       7,101,565               5,137,130
                                                                         -----------             -----------

         T O T A L                                                       $14,372,708             $16,291,195
                                                                         ===========             ===========






                         The accompanying notes to financial statements are an integral part hereof.

                                                           F-2
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                     SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                                      CONSOLIDATED STATEMENTS OF INCOME

                                                                        Year Ended December 31,
                                                           ---------------------------------------------
                                                                1996            1995            1994
                                                           ------------     ------------    ------------
<S>                                                        <C>              <C>              <C>
Revenues:
  Commissions                                              $ 20,105,127     $ 15,645,334    $ 12,128,797
  Trading profits                                               868,823        2,608,078       3,215,288
  Interest and dividends                                        656,434        1,389,612         462,618
  Investment banking                                          2,532,795        1,396,967       1,536,030
                                                           ------------     ------------    ------------

      Total revenues                                         24,163,179       21,039,991      17,342,733
                                                           ------------     ------------    ------------
Expenses:
  Salaries, commissions and employee benefits                 9,753,847        8,586,116       6,132,899
  Clearing fees, including floor brokerage                    4,585,398        4,249,050       3,967,558
  Advertising and promotion                                   3,265,692        2,485,426       2,299,030
  Communications                                              1,359,325        1,119,189       1,001,957
  Interest                                                      290,465          568,326         602,759
  Rent and occupancy                                            403,534          326,089         323,123
  Other general and administrative                            2,339,483        2,461,122       2,458,237
                                                           ------------     ------------    ------------

       Total expenses                                        21,997,744       19,795,318      16,785,563
                                                           ------------     ------------    ------------

Income before provision for taxes                             2,165,435

Provision for income taxes - current                            201,000
                                                           ------------

NET INCOME - HISTORICAL                                       1,964,435        1,244,673         557,170

Pro forma provision for income taxes                            752,000          548,000         245,000
                                                           ------------     ------------    ------------

PRO FORMA NET INCOME                                          1,212,435     $    696,673    $    312,170
                                                                            ============    ============

Supplementary pro forma adjustment:
  Effect of officer's salary reduction as though
    1997 salary had been in effect in 1996                    2,975,000
  Related income taxes                                       (1,309,000)
                                                           ------------

Supplementary pro forma net income                         $  2,878,435
                                                           ============

Per share of common stock:
  PRO FORMA NET INCOME                                     $        .23     $        .13    $        .06
                                                           ============     ============    ============

Supplementary pro forma net income                         $        .55
                                                           ============

Weighted average shares outstanding                           5,235,897        5,235,897       5,235,897




   The accompanying notes to financial statements are an integral part hereof

                                       F-3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                               SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                                     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY


                                                          Common Stock
                                                    -----------------------
                                                     Number                   Additional
                                                       of         $.01 Par     Paid-in        Retained
                                                     Shares        Value       Capital        Earnings       Total
                                                     ------        -----       -------        --------       -----

<S>                                                 <C>         <C>           <C>           <C>            <C>
Balance - January 1, 1994                           5,105,000   $    51,050   $  - 0 -      $ 3,284,237    $ 3,335,287

Net income                                                                                      557,170        557,170
                                                  -----------   -----------   --------      -----------    -----------

Balance - December 31, 1994                         5,105,000        51,050      - 0 -        3,841,407      3,892,457

Net income                                                                                    1,244,673      1,244,673
                                                 -----------    ------------  ---------     -----------    -----------

Balance - December 31, 1995                         5,105,000        51,050       - 0 -       5,086,080      5,137,130

Net income as S corporation January 1,
 1996 - November 8, 1996                                                                      1,686,278      1,686,278

Transfer upon change in tax status                                            6,772,358      (6,772,358)         - 0 -

Issuance of shares in connection
 with reorganization                                  130,897         1,309      (1,309)                         - 0 -

Net income as C corporation
 November 9, 1996 -
 December 31, 1996                                                                              278,157        278,157
                                                  -----------   -----------  ----------     -----------    -----------

BALANCE - DECEMBER 31, 1996                         5,235,897   $    52,359  $6,771,049     $   278,157    $ 7,101,565
                                                  ===========   ===========  ==========     ===========    ===========


                  The accompanying notes to financial statements are an integral part hereof.

                                                       F-4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                               SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                        Year Ended December 31,
                                                                              -----------------------------------------
                                                                                  1996           1995           1994
                                                                              -----------    -----------    -----------
<S>                                                                           <C>             <C>            <C>
Cash flows from operating activities:
  Net income                                                                  $ 1,964,435    $ 1,244,673    $   557,170
  Adjustments to reconcile net income to net cash
   (used in) provided by operating activities:
     Depreciation and amortization                                                108,460         67,360         55,668
     Changes in operating assets and liabilities:
      (Increase)decrease in prepaid expenses and other assets                    (292,409)        (2,097)       137,781
       Net decrease (increase) in securities owned, at market value             3,630,683     (8,006,577)       382,928
       Net change in receivable from/payable to brokers and dealers            (6,377,785)     8,151,165      2,309,964
      (Decrease) increase in accounts payable and accrued liabilities            (515,229)     1,432,940        (70,391)
       Net increase (decrease) in securities sold, not yet
        purchased, at market value                                                868,653       (994,994)    (3,275,653)
                                                                              -----------    -----------    -----------

          Net cash (used in) provided by operating activities                    (613,192)     1,892,470         97,467

Cash flows from investing activities:
  Purchase of property and equipment                                             (319,850)       (95,771)       (48,587)

Cash flows from financing activities:
  Subordinated loan borrowings from majority shareholder                        1,000,000                       225,000
  Repayment of subordinated loan to majority shareholder                                      (2,000,000)
                                                                              -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               66,958       (203,301)       273,880

Cash and cash equivalents - beginning of year                                     164,071        367,372         93,492
                                                                              -----------    -----------    -----------

CASH AND CASH EQUIVALENTS - END OF YEAR                                       $   231,029    $   164,071    $   367,372
                                                                              ===========    ===========    ===========


Supplemental disclosures of cash flow information:
  Cash paid during the year for:
     Interest                                                                 $   290,465    $   568,326    $   602,759
     Income and franchise taxes                                                   234,850        126,342         83,680

</TABLE>


Supplemental information on noncash financing activities:
     During 1995, the majority  shareholder  issued a secured demand note to the
     Company and the Company issued a subordinated note to the shareholder, both
     in the amount of $2,000,000.

     During 1994, a secured demand note  receivable  provided by Ms. Siebert was
     offset by subordinated liabilities.



   The accompanying notes to financial statements are an integral part hereof

                                       F-5

<PAGE>
                     SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                          NOTES TO 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 and
trading securities for its own account.

          In  accordance  with a Plan and  Agreement  of Merger  which closed on
November 8, 1996 (the  "Merger"),  J. Michaels,  Inc.  ("JMI") issued  5,105,000
shares (post one-for-seven  reverse split) to Muriel Siebert in exchange for all
the issued and outstanding shares of Muriel Siebert Capital Markets Group, Inc.,
("MSCMG"),  sole  shareholder  of  Siebert.  The  Agreement  provided  that  JMI
liquidate  all its  assets,  other than shares of Siebert,  and  distribute  the
proceeds  to the  pre-merger  stockholders  of JMI who, by virtue of the merger,
collectively  retained a 2 1/2% interest in the surviving company which has been
renamed  Siebert  Financial  Corp.  The  Merger  has  been  accounted  for  as a
reorganization  of Siebert whereby Financial issued 130,897 shares of its common
stock  to  the  pre-merger  stockholders  of  JMI.  Accordingly,  the  financial
statements have been prepared using the historical basis of Siebert's assets and
liabilities.

          The financial statements reflect the results of operations,  financial
condition  and  cash  flows  of  Siebert,  and,  from  the  date of the  Merger,
Financial. All significant intercompany accounts have been eliminated. Financial
and Siebert collectively are referred to herein as the "Company".

     (2) Security transactions:
     --------------------------

          Prior  to  1996,  security  transactions,  commissions,  revenues  and
expenses  were  recorded on a  settlement  date basis,  generally  the third day
following the transaction for securities and the next day for options.  Revenues
and  related  expenses  on a trade  date basis  were not  materially  different.
Effective  January 1, 1996,  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.

     (3) Income taxes:
     -----------------

          Effective  November 8, 1996 the Company's S corporation tax status was
terminated by virtue of the Merger. The historical  financial  statements do not
include a provision for income taxes for the period prior to the  termination of
the S election.  A pro forma provision for income taxes has been reflected which
represents  taxes which would have been provided had the Company operated as a C
corporation for the entire year.

          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.

     (4) Property and equipment:
     ---------------------------

          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.

                                       F-6

<PAGE>

                     SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS


(NOTE A) - Organization and Summary of Significant Accounting Policies:
          (continued)
--------------------------------------------------------------------------------

     (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) Reclassifications:
     ----------------------

          Certain  reclassifications  have  been  made  to  the  1994  financial
statements to conform to the 1995 and 1996 presentation.

     (9) Supplementary pro forma data:
     ---------------------------------

          Supplementary pro forma net income and supplementary pro forma earning
per share give effect to the  adjustment of Ms.  Siebert's  salary to the amount
set forth in her current salary arrangement and the related tax effect.

     (10) Pro forma and supplementary pro forma earnings per common share:
     ---------------------------------------------------------------------

          The Company calculated earnings per share for all periods on the basis
of 5,235,897 common shares deemed outstanding.



(NOTE B) - Liabilities to Majority Shareholder Subordinated to Claims of General
           Creditors and Secured Demand Note Receivable Due From Majority
           Shareholder:
--------------------------------------------------------------------------------

          The subordinated liabilities consist of the following:

                                                        December 31,
                                                  ----------------------------
                                                     1996             1995
                                                  ----------        ----------
Subordinated note, due December 31, 1998,
  interest payable at 4% per annum                $2,000,000        $2,000,000

Subordinated note, due January 31, 1999,
  interest payable at 8% per annum                   500,000

Subordinated note, due October 31, 1999,
  interest payable at 8% per annum                   500,000
                                                  ----------        -----------

     T o t a l                                   $3,000,000          $2,000,000
                                                 ==========          ==========


          The  long-term  borrowings  under  subordination  agreements  will  be
automatically  renewed  for a period of one year if notice of demand for payment
is not given thirteen months prior to maturity.

                                       F-7

<PAGE>
                     SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS


(NOTE B) - Liabilities to Majority Shareholder Subordinated to Claims of General
           Creditors and Secured Demand Note Receivable Due From Majority
           Shareholder:  (continued)
--------------------------------------------------------------------------------

          The subordinated  borrowings are covered by agreements approved by the
New York Stock  Exchange and are thus  available in computing  net capital under
the Securities and Exchange Commission's Uniform Net Capital Rule. To the extent
that such  borrowings  are  required for  Siebert's  continued  compliance  with
minimum net capital requirements, they may not be repaid.

          Interest paid on  subordinated  borrowings was $123,000,  $160,000 and
$160,000 for the years ended December 31, 1996, 1995 and 1994, respectively.

          The secured demand note receivable  from  shareholder of $2,000,000 at
December  31, 1996 and at  December  31, 1995 is  collateralized  by  marketable
securities with a market value of $2,363,000 and $2,394,000, respectively.


(NOTE C) - Property and Equipment - Net:
----------------------------------------

          Property and equipment consist of the following:

                                                   December 31,
                                          -------------------------------
                                             1996                 1995
                                          ---------            ----------

Leasehold improvements                    $  70,576            $   36,305
Furniture and fixtures                       61,539                38,612
Equipment                                   569,471               306,819
                                          ---------            ----------

                                            701,586               381,736
Less accumulated deprecia tion and
  amortization                             (251,332)             (142,872)
                                          ---------            ----------

         T o t a l                       $  450,254            $  238,864
                                         ==========            ==========

          Depreciation and amortization expense for the years ended December 31,
1996, 1995 and 1994 amounted to $108,460, $67,360 and $55,668, respectively.


(NOTE D) - Income Taxes:
------------------------

          The difference between the tax provisions (pro forma for periods prior
to November  8, 1996) and the amount  that would be  computed  by  applying  the
statutory  federal income tax rate to income before taxes is attributable to the
following:

                                                 Year Ended
                                                 December 31,
                                      -----------------------------------
                                        1996         1995          1994
                                      --------     --------      --------

Income tax provision at 34%           $736,000     $423,000      $189,000

State and local taxes,
  net of federal tax benefit           217,000      125,000        56,000
                                       -------      -------        ------

     T o t a l                        $953,000     $548,000      $245,000
                                      ========     ========      ========

          There are no  significant  temporary  differences  which  give rise to
deferred tax assets or liabilities at December 31, 1996.

                                       F-8

<PAGE>


                     SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS


(NOTE E) - Net Capital:
-----------------------

          Siebert is subject to the Securities and Exchange Commission'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. (The net capital rule of the New
York Stock  Exchange 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, 1996 and 1995,  Siebert had net capital of
$7,754,450  and   $4,606,280,   respectively,   as  compared  with  net  capital
requirements of $250,000.


(NOTE F) - 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  National  Financial
Services Corp.  ("NFSC") on a fully disclosed basis. In the event that customers
are unable to fulfill their contractual obligations, NFSC 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,  1996  settled  with no  adverse  effect  on  Siebert's  financial
condition.

          Siebert's  equity in accounts  held by NFSC,  consisting of securities
owned and securities sold, not yet purchased,  collateralize  the margin amounts
due to NFSC.


(NOTE G) - Commitments and Contingencies:
-----------------------------------------

          The Company  rents  office  space  under  long-term  operating  leases
expiring in various periods  through 2006.  These leases call for base rent plus
escalations for taxes and operating expenses.

          Future minimum rental  payments for base rent plus operating  expenses
under these operating leases are as follows:

                   Year Ending
                   December 31,                      Amount
                   ------------                      ------

                      1997                        $  435,000
                      1998                           235,000
                      1999                           127,000
                      2000                            66,000
                      2001                            57,000
                     Thereafter                      180,000
                                                  ----------

                                                  $1,100,000
                                                  ==========


         Rent expense,  including  escalations  for operating  costs amounted to
$360,000,  $289,000 and $309,000 for the years ended December 31, 1996, 1995 and
1994, respectively.  Payments are being charged to expense over the entire lease
term on a straight-line basis.

                                       F-9

<PAGE>
                     SIEBERT FINANCIAL CORP. AND SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS

(NOTE G) - Commitments and Contingencies:  (continued)
-----------------------------------------

          The Company 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.

          The  Company  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. The Company may also make discretionary contributions to
the plan. No contributions were made by the Company in 1996, 1995 and 1994.

                                      F-10



<PAGE>

                                 EXHIBIT INDEX

Exhibit No.             Description of Document
-----------             -----------------------

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")

2.2         Amendment No. 1 to Merger Agreement, dated as of June 28, 1996

2.3         Amendment No. 2 to Merger Agreement, dated as of September 30, 1996

2.4         Amendment No. 3 to Mergr Agreement, dated as of November 7, 1996

3.1         Certificate of Incorporation of Siebert Financial Corp., formerly
            known as J. Michaels, Inc., originally filed on April 9, 1934, as
            amended to date (previously filed)

3.2         By-laws of Siebert Financial Corp.

10.1        Siebert Financial Corp. 1997 Stock Option Plan

10.2        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

10.3        Services Agreement, between Siebert, Brandford, Shank & Co., LLC
            and Muriel Siebert & Co., Inc., dated as of March 10, 1997

21.1        Subsidiaries of the Registrant

27.1        Financial Data Schedule (EDGAR filing only)