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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Form 10-K

(Mark One)

x  ANNUAL REPORT
UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2005

o  TRANSITION
REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to __________

Commission file number 0-5703

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Siebert
Financial Corp.
(Exact name of
registrant as specified in its charter)

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|                                         |  |                      
|---------------------------------------- |  | ---------------------
|New York                                 |  | 11-1796714           
|(State
  or other jurisdiction of        |  | (I.R.S.
  Employer   
|incorporation
  or organization)         |  | Identification
  No.)
|                                         |  |                      
|885 Third Avenue, New York, New York     |  | 10022                
|(Address of principal executive offices) |  | (Zip Code)           

(212) 644-2400
Registrants telephone number

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Securities registered under Section 12(b) of the Exchange Act:

|                      |  |                                            
|--------------------- |  | -------------------------------------------
|Title
  of each class |  | Name
  of each exchange on which registered
|NONE                  |  | NONE                                       

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, PAR VALUE $.01 PER SHARE(Title of class)

Indicate
by checkmark if the registrant is a well know seasoned issuer, as defined in
Rule 405 of the Securities Act.YES o   NO x

Indicate
by checkmark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.YES o   NO x

Indicate
by checkmark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES x   NO o

Indicate
by checkmark 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 Indicate
by checkmark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. (See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act). Large
accelerated filer o Accelerated filer o Non-accelerated filer x

Indicate
by checkmark whether the registrant is a shell company (as defined in Rule
12b-2). YES o   NO x

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The
number of shares of the Registrants outstanding Common Stock, as of March 16,
2006, was 22,125,254 shares. The aggregate market value of the Common Stock
held by non-affiliates of the registrant (based upon the last sale price of the
Common Stock reported on the Nasdaq Stock Market as of the last business day of
the registrants most recently completed second fiscal quarter (June 30, 2005),
was $7,287,677.

Documents Incorporated by Reference: Proxy
Statement to be filed pursuant to Regulation 14A of the Exchange Act on or
before May 1, 2006, incorporated by reference into Part III.

Special Note Regarding Forward-Looking Statements

Statements
in this Annual Report on Form 10-K, as well as oral statements that may be made
by the Company or by officers, directors or employees of the Company acting on
the Companys behalf, that are not statements of historical or current fact
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward looking statements
involve risks and uncertainties and known and unknown factors that could cause
the actual results of the Company to be materially different from historical
results or from any future expressed or implied by such forward looking
statements, including without limitation: changes in general economic and
market conditions; changes and prospects for changes in interest rates;
fluctuations in volume and prices of securities; demand for brokerage and
investment banking services; competition within and without the discount
brokerage business, including the offer of broader services; competition from
electronic discount brokerage firms offering greater discounts on commissions
than the Company; the prevalence of a flat fee environment; decline in
participation in equity or municipal finance underwritings; limited trading
opportunities; the method of placing trades by the Companys customers;
computer and telephone system failures; the level of spending by the Company on
advertising and promotion; trading errors and the possibility of losses from
customer non-payment of amounts due; other increases in expenses and changes in
net capital or other regulatory requirements.

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PART I

Item 1. BUSINESS

General

Siebert
Financial Corp. (the Company) is a holding company that conducts its retail
discount brokerage and investment banking business through its wholly-owned
subsidiary, Muriel Siebert & Co., Inc., a Delaware corporation (Siebert).
Muriel Siebert, the first woman member of the New York Stock Exchange, is the
Chairwoman and President and owns approximately 90% of the outstanding common
stock, par value $.01 per share (the Common Stock) of the Company.

The
Companys principal offices are located at 885 Third Avenue, New York, New York
10022, and its phone number is (212) 644-2400. The Companys Internet address
is www.siebertnet.com. The Companys SEC filings are available through its
website, where you are able to obtain copies of the Companys public filings
free of charge. The Companys Common Stock trades on the Nasdaq National Market
under the symbol SIEB.

Business Overview

Sieberts
principal activity is providing Internet and traditional discount brokerage and
related services to retail investors and, through its wholly owned subsidiary,
Siebert Womans Financial Network, Inc (WFN), engages in providing products,
services and information all uniquely devoted to womans financial needs.
Through its Capital Markets division, Siebert also offers institutional clients
equity execution services on an agency basis, as well as equity and fixed income
underwriting and investment banking services. The Company believes that it is
the largest Woman-Owned Business Enterprise (WBE) in the capital markets
business in the country. In addition, Siebert, Brandford, Shank & Co., LLC
(SBS), a company in which Siebert holds a 49% ownership interest, is the
largest Minority and Womens Business Enterprise (MWBE) in the tax-exempt
underwriting business in the country.

The Retail Division

Discount Brokerage and Related Services.
Siebert became a discount broker on May 1, 1975, a date that would later come
to be known as May Day. Siebert believes that it has been in business and a
member of The New York Stock Exchange, Inc. (the NYSE) longer than any other
discount broker. In 1998, Siebert began to offer its customers access to their
accounts through SiebertNet, its Internet website. Sieberts focus in its
discount brokerage business is to serve retail clients seeking a wide selection
of quality investment services, including trading through a broker on the
telephone, through a wireless device or via the Internet, at commissions that
are substantially lower than those of full-commission firms and competitive
with the national discount brokerage firms. Siebert clears its securities
transactions on a fully disclosed basis through National Financial Services
Corp. (NFS), a wholly owned subsidiary of Fidelity Investments.

Siebert
serves investors who make their own investment decisions. Siebert seeks to
assist its customers in their investment decisions by offering a number of
value added services, including easy access to account information. Sieberts
representatives are available to assist customers with information via
toll-free 800 service Monday through Friday between 7:30 a.m. and 7:30 p.m.
Eastern Time. Through its SiebertNet, Mobile Broker, inter-active voice
recognition and Siebert MarketPhone services, 24-hour access is available to
customers.

Independent Retail Execution Services.
Siebert offers what it believes to be the best possible trade executions for
customers. Siebert does not make markets in securities, nor does it take
positions against customer orders.

Sieberts
listed orders are routed in a manner intended to afford its customers the
opportunity for price improvement on all orders. Through a service called NYSE
Prime, Siebert also has the ability to document to customers all price
improvements received on orders executed on the NYSE when orders are filled at
better than the National Best Bid/Offer.

Sieberts
over the counter orders are executed through a network of Nasdaq market makers
with no single market maker executing all trades. The firm also offers
customers execution services through Nasdaqs SelectNet and Reuters Instinet
systems for an additional fee. These systems give customers access to all
Electronic Communication Networks listed on SelectNet and to Instinet before
and after regular market hours. Siebert believes that its over-the counter
executions afford its customers the best possible opportunity for consistent
price improvement.

Customers
may also indicate online interest in buying or selling fixed income securities,
including municipal bonds, corporate bonds, mortgage-backed securities,
Government Sponsored Enterprises, Unit Investment Trusts or Certificates of
Deposit. These transactions are serviced by registered representatives.

Retail
Customer Service. Siebert believes that superior customer service enhances its
ability to compete with larger discount brokerage firms and therefore provides
retail customers, at no additional charge, with personal service via toll-free
access to dedicated customer support personnel for all of its products and
services. Customer service personnel are located in each of Sieberts branch offices.
Siebert presently has retail offices in New York, New York, Jersey City, New
Jersey, Boca Raton, Surfside, Palm Beach and Naples, Florida and Beverly Hills,
California. Siebert uses a proprietary Customer Relationship Management System
that enables representatives, no matter where located, to view a customers
service requests and the response thereto. Eventually, it is intended that

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this
system will also allow customers to enter their requests directly into the
system and track the response. Sieberts telephone system permits the automatic
routing of calls to the next available agent having the appropriate skill set.

Retirement Accounts. Siebert offers
customers a variety of self-directed retirement accounts for which it acts as
agent on all transactions. Custodial services are provided through an affiliate
of NFS, the firms clearing agent, which also serves as trustee for such
accounts. Each IRA, SEP IRA, ROTH IRA, 401(k) and KEOGH account can be invested
in mutual funds, stocks, bonds and other investments in a consolidated account.

Customer Financing. Customers margin
accounts are carried through Sieberts clearing agent, lends customers a
portion of the market value of certain securities held in the customers
account. Margin loans are collateralized by these securities. Customers also
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 customers to engage in margin, short sale or any
transaction, Siebert assumes the risk of its customers failure to meet their
obligations in the event of adverse changes in the market value of the
securities positions. Both Siebert and its clearing agents reserve the right to
set margin requirements higher than those established by the Federal Reserve
Board.

Siebert
has established policies with respect to maximum purchase commitments for new
customers or customers with inadequate collateral to support a requested
purchase. Managers have some flexibility in the allowance of certain
transactions. When transactions occur outside normal guidelines, accounts are
monitored closely until their payment obligation is completed; if the customer
does not meet the commitment, steps are taken to close out the position and
minimize any loss. Siebert has not had significant credit losses in the last
five years.

Information and Communications Systems.
Sieberts operations rely heavily on information processing and communications
systems which are provided by Sieberts clearing agent. The system for
processing securities transactions is highly automated. Registered
representatives utilize personal computer workstations to access customer
account information, obtain securities prices and related information and enter
and confirm orders through dedicated lines to Sieberts clearing agents.

Siebert
maintains a computer network to support its customer service messaging systems,
as well as other applications such as record keeping and direct customer access
to marketing information. Through its clearing agents, Sieberts computers are
linked to the major registered United States securities exchanges, the National
Securities Clearing Corporation and The Depository Trust Company. Failure of
Sieberts redundant private lines local area networks or communication systems
for a significant period of time could limit the ability to process a large
volume of transactions accurately and rapidly. This could result in Siebert being
unable to satisfy its obligations to customers and other securities firms, and
in such an event could result in regulatory violations. External events, such
as an earthquake or massive power failure, loss of redundant external
information feeds, such as security price information, as well as massive
internal malfunctions, could render part or all of such systems inoperative.

To
enhance the reliability of its systems and backup data, Siebert maintains
redundancies, backup plans and recovery functions including backup trading
facilities.

Sieberts
communications systems include a voice system that allows calls to be answered
by the next available agent having the appropriate skill set for the incoming
call. Data is delivered to branches over a multipoint Virtual Private Network
system. Call center software provides statistical reports, such as time on
hold, duration of calls and the number of calls handled by each agent. The
vendor of the communications system monitors these systems on a twenty-four
hour a day, seven day a week basis and can make software repairs remotely.

Current Developments

Siebert
filed a lawsuit against Intuit Inc. (Intuit) in New York State Supreme Court
on September 17, 2003 seeking not less than $11.1 million in compensatory
damages and $33.3 million in punitive damages for claims relating to the Joint
Brokerage Service (the JBS) conducted during the years ended December 31,
2003 and 2002 under the Strategic Alliance Agreement between Siebert and Intuit.
The Court denied Intuits motion to dismiss Sieberts causes of action for
breach of fiduciary duty, breach of contractual obligations to pay shared
expenses, promissory estoppel, and breach of the implied covenant of good faith
and fair dealing. The Court granted Intuits motion to dismiss Sieberts causes
of action for breach of the express covenant of good faith and fair dealing,
misrepresentation and/or fraud, and its request for punitive damages. Intuit
has counterclaimed against Siebert, seeking not less than $6.6 million. Siebert
and Intuit have appealed from certain portions of the Courts decision and
Siebert has also moved for reargument of that decision regarding punitive
damages. In November 2005, Intuits counsel was disqualified by the Court from
representing Intuit in this action. Any further activity in the action is
stayed pending Intuits appeal from the Order of disqualification, which appeal
is expected to be heard by the Appellate Court in April 2006.

Siebert
terminated the fully disclosed clearing agreement (the Clearing Agreement)
with Pershing LLC (formerly the Pershing division of Donaldson, Lufkin &
Jenrette Securities Corporation) (Pershing) in 2003. Based on consultation
with counsel, Siebert believes that the $1,500,000 that it advanced to Pershing
in January 2003 should have been returned and that Pershing may be liable for
damages. Pershing has expressed its belief that it is entitled to retain the
advance and receive a minimum of $3 million for its unreimbursed costs, a
termination fee of $500,000 and $5 million for lost revenues. Siebert believes
the Pershing claims are without merit and that the ultimate result of this
matter will not have a material adverse effect on result of operations or
financial position. Siebert in 2004 decided not to commence proceedings against
Pershing and charged off the $1,500,000 advance to Pershing.

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Siebert and Pershing in 2005 entered into a Limited Release Agreement
under which Siebert received a release from the $3 million disputed claims for
unreimbursed fees and costs, and Pershing was released from any liability to
Siebert based upon the disputed fees and costs, and Siebert paid a
consideration to Pershing that had been previously accrued by Siebert.

The
Company entered into an Operating Agreement, effective as of April 19, 2005
(the Operating Agreement), with Suzanne Shank and Napolean Brandford III, the
two individual principals of SBS ( the Principals) of SBS Financial Products
Company LLC, a Delaware limited liability company (SBSFPC). Pursuant to the
terms of the Operating Agreement, the Company and each of the Principals made
an initial capital contribution of $400,000 in exchange for a 33.33% initial
interest in SBSFPC. SBSFPC engages in derivatives transactions related to the
municipal underwriting business. The Operating Agreement provides that profit
and loss will be shared 66.66% by the Principals and 33.33% by the Company.

On
May 15, 2000, the board of directors of the Company authorized the repurchase
of up to 1,000,000 shares of the Companys common stock. Shares will be
purchased from time to time, in the discretion of the Company, in the open
market and in private transactions. Through December 31, 2005, 916,434 shares
have been purchased at an average price of $4.51 per share. The Company intends
to continue acquiring shares pursuant to its stock repurchase program based
upon the price of the stock and in accordance with applicable rules and
regulations.

The Capital Markets Division

In
1991, Siebert created its Capital Markets Group (SCM) division, which serves
as a co-manager, underwriting syndicate member, or selling group member on a
wide spectrum of securities offerings for corporations and Federal agencies.

Principal
activities of the Capital Markets Division are investment banking and
institutional equity execution services. In June 2004, Siebert expanded its SCM
and New York Stock Exchange (NYSE) Floor Operations. SCM provides
high-quality brokerage service to both institutional investors and issuers of
equity and fixed-income securities.

During
1996, Siebert formed the Siebert, Brandford, Shank division of the investment
banking group to enhance the activities of Sieberts tax exempt underwriting.
The operations of the Siebert, Brandford, Shank division were moved on July 1,
1998, to a newly formed entity, SBS. Two individuals, Mr. Napoleon Brandford
and Ms. Suzanne F. Shank, own 51% of the equity and are entitled to 51% of the
net profits of SBS and Siebert is entitled to the balance. Through its
investment in SBS, Siebert has become a more significant factor in the tax
exempt underwriting area, and expects to enhance its government and
institutional relationships, as well as the breadth of products that can be
made available to retail clients. During 2005, SBS served as the lead manager
of over $2 billion of negotiated municipal new issues and served as a
co-manager in over $54 billion of negotiated municipal new issues.

Since
its inception, the Siebert, Brandford, Shank division and its successor SBS
have co-managed offerings of approximately $371 billion and lead managed
offerings of approximately $14 billion. Clients include the States of
California, Texas, Washington, Ohio and Michigan and the Cities of Chicago,
Detroit, Los Angeles, Houston, Dallas, Denver and St. Louis.

SBS
operates out of offices in San Francisco, New York, Seattle, Houston, Chicago,
Detroit, Los Angeles, Washington, DC, San Antonio, Anchorage, Miami and Dallas.

Certain
risks are involved in the underwriting of securities. Underwriting syndicates
agree to purchase securities at a discount from the initial public offering
price. An underwriter is exposed to losses on the securities that it has committed
to purchase if the securities must be sold below the cost to the syndicate. In
the last several years, investment banking firms have increasingly underwritten
corporate and municipal offerings with fewer syndicate participants or, in some
cases, without an underwriting syndicate. In these cases, the underwriter
assumes a larger part or all of the risk of an underwriting transaction. Under
Federal securities laws, other laws and court decisions, an underwriter is
exposed to substantial potential liability for material misstatements or
omissions of fact in the prospectus used to describe the securities being
offered.

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 number of the firms new accounts are developed
directly from referrals by satisfied customers.

Competition

Siebert encounters significant competition
from full-commission, online and discount brokerage firms, as well as from
financial institutions, mutual fund sponsors and other organizations, many of
which are significantly larger and better capitalized than Siebert. The reduced
volume of trading starting in early 2001 is leading to consolidation in the
industry in both the online and traditional brokerage business. Siebert
believes that additional competitors such as banks, insurance companies,
providers of online financial and information services and others will continue
to be attracted to the online brokerage industry as they expand their product
lines. Many of these competitors are larger, more diversified, have greater
capital resources, and offer a wider range of services and financial products
than Siebert. Some such firms are offering their services over the Internet and
have devoted more resources to and have more elaborate websites than Siebert.
Siebert competes with a wide variety of vendors of financial services for

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the
same customers. Siebert believes that its main competitive advantages are high
quality customer service, responsiveness, cost and products offered, the
breadth of product line and excellent executions.

Regulation

The
securities industry in the United States is subject to extensive regulation
under both Federal and state laws. The Securities and Exchange Commission
(SEC) is the Federal agency charged with administration of the Federal
securities laws. Siebert is registered as a broker-dealer with the SEC, and is
a member of the New York Stock Exchange (NYSE) and the National Association
of Securities Dealers (NASD). Much of the regulation of broker-dealers has
been delegated to self-regulatory organizations, principally the NASD and
national securities exchanges such as the NYSE, which is Sieberts primary
regulator with respect to financial and operational compliance. These
self-regulatory organizations adopt rules (subject to approval by the SEC)
governing the industry and conduct periodic examinations of broker-dealers.
Securities firms are also subject to regulation by state securities authorities
in the states in which they do business. Siebert is registered as a broker-dealer
in 50 states, the District of Columbia and Puerto Rico.

The
principal purpose of regulation and discipline of broker-dealers is the
protection of customers and the securities markets, rather than protection of
creditors and stockholders of broker-dealers. The regulations to which
broker-dealers are subject cover all aspects of the securities business,
including training of personnel, sales methods, trading practices among
broker-dealers, uses and safekeeping of customers funds and securities,
capital structure of securities firms, record keeping, fee arrangements,
disclosure to clients, and the conduct of directors, officers and employees.
Additional legislation, changes in rules promulgated by the SEC and by
self-regulatory organizations or changes in the interpretation or enforcement
of existing laws and rules may directly affect the method of operation and
profitability of broker-dealers and investment advisers. The SEC,
self-regulatory organizations and state securities authorities may conduct
administrative proceedings which can result in censure, fine, cease and desist
orders or suspension or expulsion of a broker-dealer or an investment adviser,
its officers or its employees.

On
March 4, 2005, Siebert consented without admitting or denying guilt to a
$45,000 fine and censure by the NYSE due to findings of books-and-records,
financial, operational and supervisory deficiencies. This action was based on
technical record keeping and administrative deficiencies and there were no
complaints from and no losses to any Siebert customers. As the NYSE expressly
noted, Siebert had no prior disciplinary history in its 37 years in business.

As
a registered broker-dealer and NASD member organization, Siebert is required by
Federal law to belong to the Securities Investor Protection Corporation
(SIPC) which provides, in the event of the liquidation of a broker-dealer,
protection for securities held in customer accounts held by the firm of up to
$500,000 per customer, subject to a limitation of $100,000 on claims for cash
balances. The SIPC is funded through assessments on registered broker-dealers.
In addition, Siebert, through its clearing agent, has purchased from private
insurers additional account protection in the event of liquidation up to the
net asset value, as defined, of each account. Stocks, bonds, mutual funds and
money market funds are included at net asset value for purposes of SIPC
protection and the additional protection. Neither SIPC protection nor the
additional protection insures against fluctuations in the market value of
securities.

Siebert
is also authorized by the Municipal Securities Rulemaking Board to effect
transactions in municipal securities on behalf of its customers and has
obtained certain additional registrations with the SEC and state regulatory
agencies necessary to permit it to engage in certain other activities
incidental to its brokerage business.

Margin
lending arranged by Siebert is subject to the margin rules of the Board of
Governors of the Federal Reserve System and the NYSE. Under such rules,
broker-dealers are limited in the amount they may lend in connection with
certain purchases and short sales of securities and are also required to impose
certain maintenance requirements on the amount of securities and cash held in
margin accounts. In addition, those rules and rules of the Chicago Board
Options Exchange govern the amount of margin customers must provide and
maintain in writing uncovered options.

Net Capital Requirements

As
a registered broker-dealer, Siebert is subject to the SECs Uniform Net Capital
Rule (Rule 15c3-1) (the Net Capital Rule), which has also been adopted by the
NYSE. Siebert is a member firm of the NYSE and the NASD. The Net Capital Rule specifies
minimum net capital requirements for all registered broker-dealers and is
designed to measure financial integrity and liquidity. Failure to maintain the
required regulatory net capital may subject a firm to suspension or expulsion
by the NYSE and the NASD, certain punitive actions by the SEC and other
regulatory bodies and, ultimately, may require a firms liquidation.

Regulatory
net capital is defined as net worth (assets minus liabilities), plus qualifying
subordinated borrowings, less certain deductions that result from excluding
assets that are not readily convertible into cash and from conservatively
valuing certain other assets. These deductions include charges that discount
the value of security positions held by Siebert to reflect the possibility of
adverse changes in market value prior to disposition.

The
Net Capital Rule requires notice of equity capital withdrawals to be provided
to the SEC prior to and subsequent to withdrawals exceeding certain sizes. The
Net Capital Rule also allows the SEC, under limited circumstances, to restrict
a broker-

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dealer
from withdrawing equity capital for up to 20 business days. The Net Capital
Rule of the NYSE also provides that equity capital may not be drawn or cash
dividends paid if resulting net capital would be less than 5 percent of
aggregate debits.

Under
applicable regulations, Siebert is required to maintain regulatory net capital
of at least $250,000. At December 31, 2005 and 2004, Siebert had net capital of
$25.6 million and $16.9 million, respectively. Siebert claims exemption from
the reserve requirement under Section 15c3-3(k)(2)(ii).

Employees

As
of March 16, 2006, the Company had approximately 93 employees, six of whom were
corporate officers. None of the employees is represented by a union, and the
Company believes that relations with its employees are good.

Item 1A. RISK
  FACTORS

Securities market
volatility and other securities industry risk could adversely affect our
business

Our
principal business activities include discount retail broker-dealer
operations, as well as investment banking, institutional sales and other related
business lines.  Like other businesses
operating in the securities industry, our business is directly affected by
volatile trading markets, fluctuations in the volume of market activity,
economic and political conditions, upward and downward trends in business and
finance at large, legislation and regulation affecting the national and
international business and financial communities, currency values, inflation,
market conditions, the availability and cost of short-term or long-term funding
and capital, the credit capacity or perceived credit worthiness of the
securities industry in the marketplace and the level and volatility of interest
rates.  We also face risks relating to
trading losses, losses resulting from the ownership or underwriting of securities,
counterparty failure to meet commitments, customer fraud, employee fraud,
issuer fraud, errors and misconduct, failures in connection with the processing
of securities transactions and litigation.
The varied risks associated with our business and the securities
industry in general could adversely affect our commission and other
revenues.  A reduction in our revenues
or a loss resulting from our underwriting or ownership of securities or sales
or trading of securities could have a material adverse effect on our business,
results of operations and financial condition.
In addition, as a result of these risks, our revenues and operating
results may be subject to significant fluctuations from quarter to quarter and
from year to year.

Lower price levels in
the securities markets may reduce our profitability adversely affecting the
price of our common stock.

Lower
price levels of securities may result in (i) reduced volumes of securities,
options and futures transactions, with a consequent reduction in our commission
revenues, and (ii) losses from declines in the market value of securities we
held in investment and underwriting positions.  In periods of low volume, our levels of
profitability are further adversely affected because certain of our expenses
remain relatively fixed.  Sudden sharp
declines in market values of securities and the failure of issuers and
counterparties to perform their obligations can result in illiquid markets
which, in turn, may result in our having difficulty selling securities.  Such negative market conditions, if
prolonged, may also lower our revenues from investment banking and other
activities.  A reduction in our revenues
from investment banking or other activities could have a material adverse
affect on our business, results of operations and financial condition.

There is intense
competition in the discount brokerage industry.

Siebert
encounters significant competition from full-commission, online and other
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.
Siebert equity investee, SBS, a municipal
bond underwriter, also encounters significant competition from firms engaged in
the municipal finance business. The

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general
financial success of the securities industry over the past several years and
the price wars encountered and lower commission rates in the discount brokerage
business in general have strengthened our existing competitors.  Siebert believes that such changes in the
industry will continue to strengthen existing competitors and 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 may not be able to compete effectively with current or
future competitors.

During
2005, competition continued to intensify both among all classes of brokerage
firms and within the discount brokerage business as well as from consolidation
in the discount brokerage industry.  Some
competitors in the discount brokerage business offer services which we do not,
including financial advice and investment management.  In the last two years, some competitors have continued to offer
lower flat rate execution fees that are difficult for any conventional discount
firm to meet.  Industry-wide changes in
trading practices are expected to cause continuing pressure on fees earned by
discount brokers for the sale of order flow.
Many of the flat fee brokers impose charges for services such as
mailing, transfers and handling exchanges which Siebert does not and also
direct their execution to captive market makers.  Continued or increased competition from ultra low cost, flat fee
brokers and broader service offerings from other discount brokers could limit
our growth or lead to a decline in Sieberts customer base which would
adversely affect our business, results of operations and financial condition.

We are subject to
extensive government regulation.

Our
business is subject to extensive regulation in the United States, at both the
Federal and state level.  We are also
subject to regulation by selfregulatory organizations and other regulatory
bodies in the Untied States, such as the SEC, the NYSE, the NASD and the
Municipal Securities Rulemaking Board (the MSRB).  We are registered as a broker-dealer in 50 states, the District
of Columbia and Puerto Rico.  The
regulations to which we are subject as a broker-dealer cover all aspects of the
securities business including: training of personnel, sales methods, trading
practices, uses and safe keeping of customers funds and securities, capital
structure, record keeping, fee arrangements, disclosure and the conduct of
directors, officers and employees.
Failure to comply with any of these laws, rules or regulations, which
may be subject to the uncertainties of interpretation, could result in civil
penalties, fines, suspension or expulsion and have a material adverse effect on
our business, results of operations and financial condition.

Siebert,
as a registered broker-dealer and NASD member organization, 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 in the event of liquidation up to the
net asset value, as defined, of each account. Stocks, bonds, mutual funds and
money market funds are included at net asset value for

---



purposes of SIPC protection
and the additional protection. Neither SIPC protection nor the additional
protection insures against fluctuations in the market value of securities.

Siebert
is also authorized by the MSRB to effect transactions in municipal securities
on behalf of its customers and has obtained certain additional registrations
with the SEC and state regulatory agencies necessary to permit it to engage in
certain other activities incidental to its brokerage business.

Margin
lending arranged by Siebert is subject to the margin rules of the Board of
Governors of the Federal Reserve System and the NYSE. Under such rules,
broker-dealers are limited in the amount they may lend in connection with
certain purchases and short sales of securities and are also required to impose
certain maintenance requirements on the amount of securities and cash held in
margin accounts. In addition, those rules and rules of the Chicago Board
Options Exchange govern the amount of margin customers must provide and
maintain in writing uncovered options.

The
laws, rules and regulations, as well as governmental policies and accounting
principles, governing our business and the financial services and banking
industries generally have changed significantly over recent years and are
expected to continue to do so.  We
cannot predict which changes in laws, rules, regulations, governmental policies
or accounting principles will be adopted.
Any changes in the laws, rules, regulations, governmental policies or
accounting principles relating to our business could materially and adversely
affect our business, results of operations and financial condition.

We are subject to
net capital requirements.

The
SEC, the NYSE and various other securities and commodities exchanges and other
regulatory bodies in the United States have rules with respect to net capital
requirements which affect us.  These
rules have the effect of requiring that at least a substantial portion of a
broker-dealers assets be kept in cash of highly liquid investments.  Our compliance with the net capital
requirements could limit operations that require intensive use of capital, such
as underwriting or trading activities.
These rules could also restrict our ability to withdraw our capital,
even in circumstances where we have more than the minimum amount of required
capital, which, in turn, could limit our ability to implement growth
strategies.  In addition, a change in
such rules, or the imposition of new rules, affecting the scope, coverage,
calculation or amount to such net capital requirements, or a significant
operating loss or any unusually large charge against net capital, could have
similar adverse effects.

Our customers may
fail to pay us.

A principal
credit risk to which we are exposed on a regular basis is that our
customers may fail to pay for their purchases or fail to maintain the minimum
required collateral for amounts borrowed against securities positions
maintained by them.  We have established
policies with respect to maximum purchase commitments for new customers or
customers with inadequate collateral to support a requested purchase.  However, our managers have some flexibility
in the allowance of certain transactions.
When transactions occur outside normal guidelines, these accounts are
monitored until their payment obligation is completed. If the

---



customer does
not meet the commitment, we take steps to close out the position in an attempt
to minimize losses.

We
have personnel specifically responsible for monitoring all customer positions
for the maintenance of required collateral.
These personnel also monitor accounts that may be concentrated in
one or more securities whereby a significant decline in the value of a
particular security could reduce the value of the accounts collateral below
the accounts loan obligation. While we have not had significant credit losses
in the last five years, we cannot assure you that the policies and procedures
we have established will be adequate to prevent a significant credit loss.

We face risks
relating to our investment banking activities.

Certain
risks are involved in the underwriting of securities. Investment banking underwriting syndicates
agree to purchase securities at a discount from the 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 increasingly have underwritten
corporate and municipal offerings with fewer syndicate participants or, in some
cases, without an underwriting syndicate.
In these cases, the underwriter assumes a larger part or all of the risk
of an underwriting transaction.

Under
Federal securities laws, other laws and court decisions, an underwriter is
exposed to substantial potential liability for material misstatements or
omissions of fact in the prospectus used to describe the securities being
offered.  While municipal securities are
exempt from the registration requirements of the Securities Act, underwriters
of municipal securities are exposed to substantial potential liability for
material misstatements or omissions of fact in the offering  documents prepared for these offerings.

An increase in
volume on our systems or other events could cause them to malfunction.

We
presently receive and process up to 65% of our trade orders
electronically.  This method of trading
is heavily dependent on the integrity of the electronic systems supporting
it.  While we have never experienced a
significant failure of our trading systems, heavy stress placed

---



on our systems
during peak trading times could cause our systems to operate at unacceptably
low speeds or fail altogether. Any significant degradation or failure of our
systems or the systems of third parties involved in the trading  process (e.g., online and Internet  service
providers, record keeping and data processing functions performed by
third parties, and third party software), even for a short time, could cause
customers to suffer delays in trading.
These delays could cause substantial losses for customers and could
subject us to claims from these customers for losses.  We cannot assure you that our network structure will operate
appropriately in the event of a subsystem, component or software failure.  In
addition,  we cannot  assure you that we will be able to prevent
an  extended  systems  failure  in
the  event   of
a  power or telecommunications  failure, an earthquake, terrorist attack, fire or any act of God. Any systems failure
that causes interruptions in our operations could have a material adverse
effect on our business, financial condition and operating results.

We rely on
information processing and communications systems to process and record our
transactions.

Our
operations rely heavily on information processing and communications
systems.  Our system for processing
securities transactions is highly 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 our customer service delivery systems, as well as other applications
such as clearing functions, account administration, record keeping and direct
customer access to investment information, we maintain a computer network in
New York City.  Through our clearing
agent, our computers are also linked to the major registered U.S. securities
exchanges,   the National Securities
Clearing Corporation and the Depository Trust Company. Failure of the
information processing or communications systems for a significant period of
time could limit our ability to process a large volume of transactions
accurately and rapidly.  This could
cause us to be unable to satisfy our obligations to customers and other
securities firms, and could result in regulatory violations.  External events, such as an earthquake,
terrorist attack 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
these systems inoperative.

We may not be able
to keep up pace with continuing changes in technology.

Our
market is characterized by rapidly changing technology.  To be successful, we must adapt to this
rapidly changing environment by continually improving the performance, features
and reliability of our services.  We
could incur substantial costs if we need to modify our services or
infrastructure or adapt our technology to respond to these changes.  A delay or failure to address technological
advances and developments or an increase in costs resulting from these changes
could have a material and adverse effect on our business, financial condition
and results of operations.

We depend on our
ability to attract and retain key personnel.

---



Our
continued success is principally dependent on our founder, Muriel F. Siebert,
Chairwoman, Chief Executive Officer and President and our senior
management.  In addition, the continued
success of the SBS may be dependent on the
services of Napoleon Brandford III and Suzanne Shank. The loss of the services
of any of these individuals could significantly harm our business, financial
condition and operating results.

Our principal
shareholder may control many key decisions.

Ms.
Muriel Siebert currently owns approximately 90% of our outstanding common
stock.  Ms. Siebert will have the power
to elect the entire Board of Directors and, except as otherwise provided by
law or our Certificate of Incorporation or by-laws, to approve any action
requiring shareholder approval without a shareholders meeting.

There may be no
public market for our common stock.

Only
approximately 2,200,000 shares, or approximately 10% of our shares outstanding,
are currently held by the public.
Although our common stock is traded in The Nasdaq National Market, their
can be no assurance that an active public market will continue.

Item 1B. UNRESOLVED
  STAFF COMMENTS

Not applicable.

Item 2. PROPERTIES

Siebert
currently maintains seven retail discount brokerage offices. 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 on the
Internet or by telephone and mail.

Siebert
operates its business out of the following seven leased offices:

|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|------------------------------------ |  | ------------------------------------------ | ----- | ---------------------------------- |  | --------------------- |  |  | -------------------- | 
|Location                             |  | Approximate
  Office Area in
  Square Feet |       | Expiration Date of
  Current Lease |  | Renewal
  Terms       | 
|                                     |  |                                            |       |                                    |  |                       | 
|                                    
|Corporate Headquarters,
  Retail and |  |                                            |       |                                    |  |                       |  |  |                      | 
|Investment Banking Office            |  |                                            |       |                                    |  |                       |  |  |                      | 
|885 Third Ave.                       |  |                                            |       |                                    |  |                       |  |  |                      | 
|New York, NY 10022                   |  |                                            | 7,828 |                                    |  | 12/31/06              |  |  | None                 | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|Retail Offices                       |  |                                            |       |                                    |  |                       |  |  |                      | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|9693 Wilshire Boulevard              |  |                                            |       |                                    |  |                       |  |  |                      | 
|Beverly Hills, CA 90212              |  |                                            | 1,000 |                                    |  | 12/31/06              |  |  | 1
  year option      | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|4400 North Federal Highway           |  |                                            |       |                                    |  |                       |  |  |                      | 
|Boca Raton, FL 33431                 |  |                                            | 2,438 |                                    |  | 5/31/09               |  |  | None                 | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|111 Pavonia Avenue(1)                |  |                                            |       |                                    |  |                       |  |  | 5
  year option on a | 
|Jersey City, NJ 07310                |  |                                            | 7,768 |                                    |  | 6/30/07
  and 6/30/09 |  |  | portion
  of space   | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|400 Fifth Avenue  South             |  |                                            |       |                                    |  |                       |  |  |                      | 
|Naples, FL 33940                     |  |                                            | 1,008 |                                    |  | 4/30/06               |  |  | None                 | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|240A South County Road               |  |                                            |       |                                    |  |                       |  |  |                      | 
|Palm Beach, FL 33480                 |  |                                            | 770   |                                    |  | 12/31/06              |  |  | None                 | 
|                                     |  |                                            |       |                                    |  |                       |  |  |                      | 
|9569 Harding Avenue                  |  |                                            |       |                                    |  |                       |  |  |                      | 
|Surfside, FL
  33154                 |  |                                            | 1,150 |                                    |  | 4/30/07               |  |  | None                 | 

|    |                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------
|(1) | Certain of the Companys
  administrative and back office functions are performed at this location.

The
Company believes that its properties are in good condition and are suitable for
the Companys operations.

Item 3. LEGAL
  PROCEEDINGS

See
Part I-Item 1 Business-Current Developments and Part I-Item 7 Managements
Discussion and Analysis of Financial Condition and Results of Operations with
respect to the Companys lawsuit against Intuit Inc. which was filed in New
York State Supreme Court, County of New York on September 17, 2003 alleging
among other things, Intuits breach of contractual obligations, breach of
fiduciary duties and misrepresentation and/or fraud, all relating to the Joint
Brokerage services conducted under the Strategic Alliance Agreement between
Siebert and Intuit.

In
addition, the Company is involved in various routine lawsuits of a nature
deemed by the Company 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 the financial position or results of operations.

-5-

---



|        |                                                
|------- | -----------------------------------------------
|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No
matter was submitted to a vote of shareholders during the fourth quarter of the
fiscal year ended December 31, 2005.

PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
  AND ISSUER PURCHASES OF EQUITY SECURITIES

The
Companys common stock trades on the Nasdaq Stock Market under the symbol
SIEB. The high and low sales prices of the Companys common stock reported by
Nasdaq during the following calendar quarters were:

|                                   |  |      |      |     |   |      | 
|---------------------------------- |  | ---- | ---- | --- | - | ---- | 
|                                   |  | High |      | Low |  
|                                   |  |      |      |     |  
|First
  Quarter - 2004             |  | $    | 4.69 |     | $ | 3.41 | 
|                                  
|Second
  Quarter - 2004            |  | $    | 5.32 |     | $ | 3.64 | 
|                                  
|Third
  Quarter - 2004             |  | $    | 4.35 |     | $ | 2.74 | 
|                                  
|Fourth
  Quarter - 2004            |  | $    | 4.20 |     | $ | 2.94 | 
|                                  
|First
  Quarter - 2005             |  | $    | 3.95 |     | $ | 2.96 | 
|                                  
|Second
  Quarter - 2005            |  | $    | 4.50 |     | $ | 2.55 | 
|                                  
|Third
  Quarter - 2005             |  | $    | 3.85 |     | $ | 2.80 | 
|                                  
|Fourth
  Quarter - 2005            |  | $    | 3.05 |     | $ | 2.34 | 
|                                  
|January 1,
  2006 - March 16, 2006 |  | $    | 2.72 |     | $ | 2.39 | 

On
March 16, 2006, the closing price of the Companys common stock on the Nasdaq
Stock Market was $2.63 per share. There were 155 holders of record of the
Companys common stock and more than 2,000 beneficial owners of common stock on
March 6, 2006.

Dividend Policy

The
Company paid no cash dividends to its shareholders in 2005, 2004 and 2003. Ms.
Siebert, the majority shareholder of the Company, has waived her right to
receive the dividends declared by the Company to date although she intends to
participate in dividends declared in the future. The Board of Directors of the
Company periodically considers whether to declare dividends. 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.

Issuer Purchase Of Equity Securities

The
following table sets forth information regarding the Companys purchase of its
common stock on a monthly basis during the fourth quarter of 2005:

|                |  |                                                     |       |                               |  |                                                                                |   |                                                                        |  |  |  |         |  |  |  |        |  | 
|--------------- |  | --------------------------------------------------- | ----- | ----------------------------- |  | ------------------------------------------------------------------------------ | - | ---------------------------------------------------------------------- |  |  |  | ------- |  |  |  | ------ |  | 
|Period          |  | Total
  Number
  Of Shares
  PurchasedDuring Period |       | Average
  PricePaid Per Share |  | Total
  Number of
  Shares Purchased as
  Part of Publicly
  AnnouncedPlans(1) |   | Maximum
  Number of Shares
  That May Yet Be
  Purchased UnderThe Plan | 
|                |  |                                                     |       |                               |  |                                                                                |   |                                                                        | 
|October 2005    |  |                                                     |      |                               |  |                                                                                |   |                                                                       |  |  |  | 911,567 |  |  |  | 88,433 |  | 
|November
  2005 |  |                                                     | 1,500 |                               |  |                                                                                | $ | 2.69                                                                   |  |  |  | 913,067 |  |  |  | 86,933 |  | 
|December
  2005 |  |                                                     | 3,367 |                               |  |                                                                                | $ | 2.79                                                                   |  |  |  | 916,434 |  |  |  | 83,566 |  | 
|                |  |                                                     |       |                               |  |                                                                                |   |                                                                        |  |  |  |         |  |  |  |        |  | 
|Total           |  |                                                     | 4,867 |                               |  |                                                                                | $ | 2.76                                                                   |  |  |  | 916,434 |  |  |  | 83,566 |  | 

-6-

---





---

(1) On May 15,
2000, the Board of Directors of the Company authorized a buy back of up to one
million shares of the Companys common stock. Under this program, shares are
purchased from time to time, at the Companys discretion, in the open market
and in private transactions.

Equity Compensation Plan Information

The following
table sets forth information as of December 31, 2005 with respect to our equity
compensation plans.

|                                                                |  |                                                                                                |  |                                                                                |  |                                                                                                                                             |      |  |  |           |  | 
|--------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  |  | --------- |  | 
|Plan Category                                                   |  | Number of Securities to be
  issued upon exercise of
  outstanding options,warrants and rights |  | Weighted-average
  exercise price of
  outstanding options,warrants and rights |  | Number of Securities
  remaining available for
  issuance under equity
  compensation plans
  (excluding securitiesreflected in column (a)) |     
|                                                                |  |                                                                                                |  |                                                                                |  |                                                                                                                                             |     
|                                                                |  | (a)                                                                                            |  | (b)                                                                            |  | (c)                                                                                                                                         |     
|Equity compensation plans approved by
  security holders(1)     |  | 1,767,610                                                                                      |  |                                                                                |  | $                                                                                                                                           | 4.16 |  |  | 2,025,915 |  | 
|                                                                |  |                                                                                                |  |                                                                                |  |                                                                                                                                             |      |  |  |           |  | 
|Equity compensation plans not approved by
  security holders(2) |  | 41,400                                                                                         |  |                                                                                |  |                                                                                                                                             |     |  |  | 18,600    |  | 
|                                                                |  |                                                                                                |  |                                                                                |  |                                                                                                                                             |      |  |  |           |  | 
|Total                                                           |  | 1,809,010                                                                                      |  |                                                                                |  | $                                                                                                                                           | 4.16 |  |  | 2,044,515 |  | 

|    |                                                             
|--- | ------------------------------------------------------------
|   
|   
|(1) | Represents
  the Companys 1997 Stock Option Plan.          
|    |                                                             
|(2) | Represents
  the Companys 1998 Restricted Stock Award Plan.

Material Terms of the 1998 Restricted Stock
Award Plan

The
Companys 1998 Restricted Stock Award Plan provides for awards to key employees
of not more than an aggregate of 60,000 shares of our common stock, subject to
adjustments for stock splits, stock dividends and other changes in our
capitalization, to be issued either immediately after the award or at a future
date. As of December 31, 2005, 41,400 shares of the Companys common stock
under the Restricted Stock Award Plan had been awarded and were outstanding. As
provided in the plan and subject to restrictions, shares awarded may not be
disposed of by the recipients for a period of one year from the date of the
award. Cash dividends on shares awarded are held by us for the benefit of the
recipients, subject to the same restrictions as the award. These dividends,
without interest, are paid to the recipients upon lapse of the restrictions.

|                                               |                        
|---------------------------------------------- | -----------------------
|Item 6.                                        | SELECTED FINANCIAL DATA
|(In
thousands except share and per share data)

The Following Selected Financial Information
Should Be Read In Conjunction With The Companys Consolidated Financial
Statements And The Related Notes Thereto.

|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|------------------------------------------------------ |  | ---- | ---------- | ---- | - | ---------- |  | ---- | ---------- | ---- | - | ---------- | - | - | ---------- | 
|                                                       |  | 2005 |            | 2004 |   | 2003       |  | 2002 |            | 2001 |  
|                                                       |  |      |            |      |   |            |  |      |            |      |  
|Income statement data:                                 |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|Total Revenues                                         |  | $    | 31,172     |      | $ | 28,104     |  | $    | 24,696     |      | $ | 24,104     |   | $ | 32,020     | 
|Net income (loss)                                      |  | $    | 1,863      |      | $ | 533        |  | $    | 123        |      | $ | (1,633     | ) | $ | 2,488      | 
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|Net income (loss) per share of common stock            |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|Basic                                                  |  | $    | 0.08       |      | $ | 0.02       |  | $    | 0.01       |      | $ | (0.07      | ) | $ | 0.11       | 
|Diluted                                                |  | $    | 0.08       |      | $ | 0.02       |  | $    | 0.01       |      | $ | (0.07      | ) | $ | 0.11       | 
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|Weighted average shares outstanding (basic)            |  |      | 22,093,369 |      |   | 22,113,228 |  |      | 22,305,369 |      |   | 22,403,990 |   |   | 22,438,719 | 
|Weighted average shares outstanding
  (diluted)        |  |      | 22,127,940 |      |   | 22,276,562 |  |      | 22,453,538 |      |   | 22,403,990 |   |   | 22,698,934 | 
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|Statement of financial condition data (at
  year-end): |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |   |   |            | 
|Total assets                                           |  | $    | 43,027     |      | $ | 41,560     |  | $    | 40,026     |      | $ | 40,451     |   | $ | 42,129     | 
|Total liabilities excluding subordinated
  borrowings  |  | $    | 5,975      |      | $ | 6,460      |  | $    | 4,891      |      | $ | 4,784      |   | $ | 4,829      | 
|Stockholders equity                                   |  | $    | 37,052     |      | $ | 35,100     |  | $    | 35,135     |      | $ | 35,667     |   | $ | 37,300     | 

-7-

---



|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS

This
discussion should be read in conjunction with the Companys audited
Consolidated Financial Statements and the Notes thereto contained elsewhere in
this Annual Report.

The
overall market conditions were weaker in 2005 due to rising interest rates,
higher oil prices and nearly six weeks of hurricanes in the southeast all of
which have created a lack of investor interest in investing in stocks.
Consequently, customer trading activity was flat for the Company.

Competition
continued to intensify among all types of brokerage firms, including
established discount brokers and new firms entering the on-line brokerage
business. Electronic trading continues to account for an increasing amount of
trading activity, with some firms charging very low trading execution fees that
are difficult for any conventional discount firm to meet. Some of these
brokers, however, impose asset based charges for services such as mailing,
transfers and handling exchanges which the Company does not currently impose,
and also direct their orders to market makers where they have a financial
interest. Continued competition could limit the Companys growth or even lead
to a decline in the Companys customer base, which would adversely affect its
results of operations. Industry-wide changes in trading practices, such as the
New York Stock Exchanges Hybrid Market proposal and the increasing use of
Electronic Communications Networks, are expected to put continuing pressure on
commissions/fees earned by brokers while increasing volatility.

The
Company entered into an Operating Agreement, effective as of April 19, 2005
(the Operating Agreement), with Suzanne Shank and Napolean Brandford III, the
two individual principals of SBS ( the Principals) of SBS Financial Products
Company LLC, a Delaware limited liability company (SBSFPC). Pursuant to the
terms of the Operating Agreement, the Company and each of the Principals made
an initial capital contribution of $400,000 in exchange for a 33.33% initial
interest in SBSFPC. SBSFPC engages in derivatives transactions related to the
municipal underwriting business. The Operating Agreement provides that profit
and loss will be shared 66.66% by the Principals and 33.33% by the Company.

On
May 15, 2000, the Board of Directors of the Company authorized a buy back of up
to one million shares of the Companys common stock. Under this program, shares
are purchased from time to time, at the Companys discretion, in the open
market and in private transactions. Through March 14, 2006, 916,434 shares have
been purchased at an average price of $4.51 per share.

The
Company, like other securities firms, is directly affected by general economic
and market conditions including fluctuations in volume and prices of
securities, changes and the prospect of changes in interest rates, and demand
for brokerage and investment banking services, all of which can affect the
Companys profitability. In addition, in periods of reduced financial market
activity, profitability is likely to be adversely affected because certain expenses
remain relatively fixed, including salaries and related costs, portions of
communications costs and occupancy expenses. Accordingly, earnings for any
period should not be considered representative of earnings to be expected for
any other period.

Siebert filed a lawsuit against Intuit Inc. (Intuit) in New York State
Supreme Court on September 17, 2003 seeking not less than $11.1 million in
compensatory damages and $33.3 million in punitive damages for claims relating
to the Joint Brokerage Service (the JBS) conducted during the years ended
December 31, 2003 and 2002 under the Strategic Alliance Agreement between
Siebert and Intuit. The Court denied Intuits motion to dismiss Sieberts
causes of action for breach of fiduciary duty, breach of contractual
obligations to pay shared expenses, promissory estoppel, and breach of the
implied covenant of good faith and fair dealing. The Court granted Intuits
motion to dismiss Sieberts causes of action for breach of the express covenant
of good faith and fair dealing, misrepresentation and/or fraud, and its request
for punitive damages. Intuit has counterclaimed against Siebert, seeking not
less than $6.6 million. Siebert and Intuit have appealed from certain portions
of the Courts decision and Siebert has also moved for reargument of that
decision regarding punitive damages. In November 2005, Intuits counsel was
disqualified by the Court from representing Intuit in this action. Any further
activity in the action is stayed pending Intuits appeal from the Order of
disqualification, which appeal is expected to be heard by the Appellate Court
in April 2006.

Critical Accounting Policies

The
Company generally follows accounting policies standard in the brokerage
industry and believes that its policies appropriately reflect its financial
position and results of operations. Management has identified the use of
estimates as its critical policy. The estimates relate primarily to revenue
and expense items in the normal course of business as to which the Company
receives no confirmations, invoices, or other documentation, at the time the
books are closed for a period. The Company uses its best

-8-

---



judgment,
based on its knowledge of revenue transactions and expenses incurred, to
estimate the amount of such revenue and expenses. The Company is not aware of
any material differences between the estimates used in closing its books for
the last five years and the actual amounts of revenue and expenses incurred
when the Company subsequently receives the actual confirmations, invoices or
other documentation. Estimates are also used in determining the useful lives of
intangibles assets, and the fair market value of intangible assets. Management
believes that its estimates are reasonable.

Results of Operations

Year Ended December
31, 2005 Compared To Year Ended December 31, 2004

Revenues.
Total revenues for 2005 were $31.2 million, an increase of $3.1 million, or
10.9%, from 2004. Commission and fee income increased $1.5 million, or 6.2%,
from the prior year to $25.3 million due to an increase in commissions
generated by the commission recapture, institutional direct access and
institutional trading operations as well as retail customer accounts purchased
from Wall Street Discount, Inc. in the second quarter 2004 offset by a decrease
in retail customer commissions. The decrease in retail customer commissions is
due a decrease in the average commission charged per trade in 2005 from the
previous year. The commission recapture, institutional direct access and
institutional trading operations began in the third quarter 2004.

Investment
banking revenues increased $1 million, or 74.0%, from the prior year to $2.4
million in 2005 due to the Company participating in more new issues as a result
of the Capital Markets team that joined the Company in the third quarter of
2004.

Income
from the Companys investment in Siebert, Brandford, Shank & Co., LLC
(SBS), an entity in which the Company holds a 49% equity interest, for 2005
and 2004 was $1.7 million. SBS serves as an underwriter for municipal bond
offerings. Income from the Companys equity investment in SBS Financial Products
Company, LLC, an entity in which the Company holds a 33.33% equity interest
(SBSFPC) for 2005 was $194,000. SBSFPC operations began in the second quarter
of 2005.

Trading
profits decreased $59,000, or 7.8%, from the prior year to $702,000 primarily
due to decreased trading in municipal, government and corporate bonds within
the Companys riskless trading group.

Income
from interest and dividends increased $508,000, or 108.1%, from the prior year
to $978,000 primarily due to higher interest rates and higher cash balances.

Expenses.
Total expenses for 2005 were $28.0 million, an increase of $838,000, or 3.1%,
from the prior year.

Employee
compensation and benefit costs increased $289,000, or 2.6%, from the prior year
to $11.4 million primarily due to the hiring of the Companys General Counsel,
the expansion of the Companys Capital Markets Group and the New York Stock
Exchange Floor Operation, settlement of employee related matters and health and
other employee benefits offset commissions based on production, headcount in
customer service and new accounts departments and termination of an executive
officer.

Clearing
and floor brokerage fees increased $1.1 million, or 24.8%, from the prior year
to $5.3 million primarily due to increased volume of trade executions and a one
time commission rebate of $800,000 from the Companys clearing firm in the
first and second quarter of 2004.

Professional fees increased $2.2 million, or 100.3% from the prior year to $4.3
million primarily due to an increase in legal fees relating to litigation with Intuit and
employee matters and consulting fees relating to the Company entering into the commission recapture business in the third quarter of 2004, the
acquisition of the customer accounts of Wall Street Discount Corp., and Sarbanes-Oxley.

Advertising
and promotion expense decreased $231,000, or 20.9%, from the prior year to
$876,000 primarily due to managements decision to spend less for advertising
and promotion.

Communications
expense decreased $603,000, or 25.9%, from the prior year to $1.7 million from
actively pursuing alternative vendors and utilizing new technologies.

Occupancy
costs decreased $14,000, or 1.3%, from the prior year to $1.1 million
principally due to the combining of the Companys Boca Raton office with Your
Discount Broker, Inc.s Boca Raton office in the second quarter of 2004.

Other
general and administrative expenses decreased $282,000, or 7.9%, from the
prior year to $3.3 million primarily due to a decrease in depreciation and amortization expenses, printing and postage costs offset by
an increase in placement and registration fees.

Taxes.
The provision for income taxes increased by $900,000, or 200.0% from the prior
year to $1.4 million due to an increase in net income before tax to $3.2
million in 2005 from $983,000 in 2004.

Year Ended December
31, 2004 Compared To Year Ended December 31, 2003

Revenues.
Total revenues for 2004 were $28.1 million, an increase of $3.4 million, or
13.8%, from 2003. Commission and fee income increased $3.3 million, or 16.3%,
from the prior year to $23.8 million due to increased trading volume and higher
margin debit balances maintained by the Companys retail customer base in 2004.

Investment
banking revenues increased $277,000, or 25.5%, from the prior year to $1.4 million
in 2004 due to an increase in activity in the new issue market and the addition
of new capital markets personnel.

-9-

---



Income
from the Companys investment in Siebert, Brandford, Shank & Co., LLC
(SBS) for 2004 was $1.7 million compared to income of $1.9 million for the
prior year. This decrease in profits was due in part to the decreased number of
municipal bond offerings managed or co-managed by SBS.

Trading
profits decreased $43,000, or 5.4%, from the prior year to $761,000 primarily
due to decreased trading in municipal, government and corporate bonds within
the Companys riskless trading group.

Income
from interest and dividends increased $20,000, or 4.4%, from the prior year to
$470,000 primarily due to interest earned on a $25 million subordinated loan
obtained from the Companys clearing firm that was required by an issuer to
participate in its initial public offering, and higher interest rates offset by
the maturing of municipal bonds that provided higher yields.

Expenses. Total
expenses for 2004 were $27.1 million, an increase of $2.6 million, or 10.7%,
from the prior year.

Employee
compensation and benefit costs increased $2.4 million, or 27.7%, from the prior
year to $11.1 million primarily due to the hiring of the Companys General
Counsel, the expansion of the Companys Capital Markets Group and the New York
Stock Exchange Floor Operation and increase in bonus accruals.

Clearing
and floor brokerage fees decreased $29,000, or 0.07%, from the prior year to
$4.24 million primarily due to a one time commission rebate of $ 800,000 from
the Companys clearing firm offset by the increased volume of trade executions.

Professional fees increased $619,000,
or 40.6% from the prior year to $2.1 million primarily due to the increase in consulting fees relating to the
Company entering into the commission recapture business in the third quarter of 2004 and the acquisition
of the customer accounts of Wall Street Discount Corp.

Advertising
and promotion expense decreased $251,000, or 18.5%, from the prior year to $1.1
million primarily due to managements decision to spend less for advertising
and promotion.

Communications
expense decreased $507,000, or 17.9%, from the prior year to $2.3 million
primarily due to managements effort to control and maintain these costs.

Occupancy
costs decreased $56,000, or 5.0%, from the prior year to $1.1 million
principally due to the combining of the Companys Boca Raton office with Your
Discount Broker, Inc.s Boca Raton office into a larger branch.

Other
general and administrative expenses decreased $1.1 million or 23.6%, from the prior
year to $3.6 million primarily due to the elimination of product development
costs relating to the JBS and the decrease in depreciation and amortization.

Taxes.
The provision for income taxes increased by $380,000, or 542.9% from the prior
year to $450,000 due to an increase in net income before tax to $983,000 in
2004 from $193,000 in 2003.

Liquidity and
Capital Resources

The
Companys assets are highly liquid, consisting generally of cash, money market
funds and securities freely saleable in the open market. The Companys total
assets at December 31, 2005 were $43 million, of which, $33.4 million, or 78%,
were regarded by the Company as highly liquid.

Siebert
is subject to the net capital requirements of the SEC, the NYSE and other
regulatory authorities. At December 31, 2005, Sieberts regulatory net capital
was $25.6 million, $25.3 million in excess of its minimum capital requirement
of $250,000. Siebert
terminated the fully disclosed clearing agreement (the Clearing Agreement)
with Pershing LLC (formerly the Pershing division of Donaldson, Lufkin &
Jenrette Securities Corporation) (Pershing) in 2003. Based on consultation
with counsel, Siebert believes that the $1,500,000 that it advanced to Pershing
in January 2003 should have been returned and that Pershing may be liable for
damages. Pershing has expressed its belief that it is entitled to retain the
advance and receive a minimum of $3 million for its unreimbursed costs, a termination
fee of $500,000 and $5 million for lost revenues. Siebert believes the Pershing
claims are without merit and that the ultimate result of this matter will not
have a material adverse effect on result of operations or financial position.
Siebert in 2004 decided not to commence proceedings against Pershing and
charged off the $1,500,000 advance to Pershing. Siebert and Pershing in 2005
entered into a Limited Release Agreement under which Siebert received a release
from the $3 million disputed claims for unreimbursed fees and costs, and
Pershing was released from any liability to Siebert based upon the disputed
fees and costs, and Siebert paid a consideration to Pershing that had been
previously accrued by Siebert.

In
August 2004, Siebert participated as an underwriter in the Google, Inc. initial
public offering. To participate as an underwriter, the lead Investment Banks
(the Banks) requested that each underwriter provide the Banks with a $25
million Letter of Credit on behalf of each underwriter in favor of the Banks.
To obtain the Letter of Credit, Siebert entered into a Temporary Subordinated
Loan Agreement with NFS. On August 6, 2004, Siebert obtained a Letter of Credit
for $25 million and terminated the Letter of Credit and paid the Temporary
Subordinated Loan Agreement with NFS on September 15, 2004.

The
Company also intends to acquire additional shares of its common stock pursuant
to its share buy back program.

Siebert
has entered into a Secured Demand Note Collateral Agreement with SBS under
which it is obligated to loan to SBS up to $1.2 million pursuant to a secured
promissory note on a subordinated basis. Amounts obligated to be loaned by
Siebert under the facility are reflected on the Companys balance sheet as
cash equivalents - restricted. SBS pays Siebert interest on this amount at
the

-10-

---



rate of 8% per
annum. The facility expires on August 31, 2007, at which time SBS is obligated
to repay to Siebert any amounts borrowed by SBS thereunder.

Below
is a table that presents the Companys obligations and commitments at December
31, 2005:

|                            |  |                         |           |        |           |           |  |           |         |            |   |         |           |  |   |   |  |  | 
|--------------------------- |  | ----------------------- | --------- | ------ | --------- | --------- |  | --------- | ------- | ---------- | - | ------- | --------- |  | - | - |  |  | 
|                            |  | Payment
  Due By Period |           |       
|                            |  |                         |           |        |           |           |  |           |         |            |   |         |           |  |   |   | 
|                            |  |                         |           |        | Less Than |           |  |           |         |            |   |         | More Than |  |  
|Contractual Obligations     |  | Total                   |           | 1 Year |           | 1-3 Years |  | 3-5 Years |         | Five Years |   |        
|Operating lease obligations |  | $                       | 1,963,000 |        | $         | 965,000   |  | $         | 813,000 |            | $ | 185,000 |           |  | $ | 0 |  |  | 

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial Instruments Held For Trading
Purposes:

Through
Siebert, the Company maintains inventories in exchange-listed and Nasdaq equity
securities and municipal securities on both a long and short basis. The fair
value of all long and short positions held by Siebert at December 31, 2005 was
zero. The Company does not engage in derivative transactions, has no interest
in any special purpose entity and has no liabilities, contingent or otherwise,
for the debt of another entity, except for Sieberts obligation under its
Secured Demand Note Collateral Agreement of $1.2 million executed in favor of
SBS. SBS pays Siebert interest on this amount at the rate of 8% per annum.
Siebert earned interest of $96,000 from SBS in each of the years that Sieberts
commitment has been outstanding.

Financial Instruments Held For Purposes Other
Than Trading:

Working
capital is generally temporarily invested in dollar denominated money market
funds and commercial paper. These investments are not subject
to material changes in value due to interest rate movements.

In
the normal course of its 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
Companys financial statements. Retail customer transactions are cleared
through clearing brokers on a fully disclosed basis. If customers do not
fulfill their contractual obligations, the clearing broker may charge Siebert
for any loss incurred in connection with the purchase or sale of securities at
prevailing market prices to satisfy the 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 if customers and other counterparties are unable to
fulfill their contractual obligations.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See
financial statements and supplementary data required pursuant to this item
beginning on page F-1 of this Report on Form 10-K.

|        |                                                                                     
|------- | ------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

The
Company carried out an evaluation, under the supervision and with the
participation of management, including the Companys President and Chief
Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures as of the end of the period
covered by this report pursuant to Rule 13a-15 of Securities Exchange of 1934,
as amended. Based on that evaluation, the Companys management, including the
President and Chief Financial Officer, concluded that the Companys disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company that is required to be included in the
Companys periodic filings with the Securities and Exchange Commission.

There
were no changes in the Companys internal controls over financial reporting
that occurred during the Companys most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect the
Companys internal controls over financial reporting.

Item 9B. OTHER INFORMATION

None

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
  REGISTRANT

| |     |                              
| | --- | -----------------------------
| | (a) | Identification
  of Directors

This
information is incorporated by reference from the Companys definitive proxy
statement to be filed by the Company pursuant to Regulation 14A on or prior to
May 1, 2006.

-11-

---



| |     |                                       
| | --- | --------------------------------------
| | (b) | Identification
  of Executive Officers

| |                        |     |                                    |  |  |  | 
| | ---------------------- | --- | ---------------------------------- |  |  |  | 
| | Name                   | Age | Position                          
| |                        |     |                                    |  |  |  | 
| |                        |     |                                    |  |  |  | 
| |                        |     |                                   
| | Muriel F.
  Siebert    | 73  | Chairwoman
  and President        
| |                        |     |                                   
| | Ameen Esmail           | 47  | Executive Vice
  President and    
| |                        |     | Director of
  Business Development
| |                        |     |                                   
| | Joseph M.
  Ramos, Jr. | 47  | Executive
  Vice President and    
| |                        |     | Chief
  Financial Officer         
| |                        |     |                                   
| | Jeanne
  Rosendale     | 41  | Executive
  Vice President and    
| |                        |     | General
  Counsel                 
| |                        |     |                                   
| | Daniel Iesu            | 46  | Secretary                         

Certain
information regarding each executive officers business experience is set forth
below.

Muriel
F. Sieberthas been Chairwoman, President and a
director of Siebert since 1967 and the Company since November 8, 1996. Ms.
Siebert became the first woman member of the New York Stock Exchange on
December 28, 1967 and served as the first woman Superintendent of Banks of the
State of New York from 1977 to 1982. She is director of the New York State
Business Council and the Boy Scouts of Greater New York. She is the founder and
past president of the Womans Forum, a former member of the State of New
York Commission on Judicial Nomination and is on the executive committee of the
Economic Club of New York.

Ameen
Esmailhas been Executive Vice President and Director
of Business Development since July 3, 2003. From 1984 to 1996, Mr. Esmail
served as an Executive Vice President of Siebert. From 1996 to 2003, Mr. Esmail
worked as an independent consultant servicing the financial securities
industry. Mr. Esmail earned a MBA from New York Universitys Sterns Graduate
School of Business in 2000.

Joseph
M. Ramos, Jr.
has been Executive Vice President, Chief Financial Officer and Assistant
Secretary of Siebert since February 10, 2003. From May 1999 to February 2002,
Mr. Ramos served as Chief Financial Officer of A.B. Watley Group, Inc. From
November 1996 to May 1999, Mr. Ramos served as Chief Financial Officer of Nikko
Securities International, Inc. From September 1987 to March 1996, Mr. Ramos
worked at Cantor Fitzgerald and held various accounting and management
positions, the last as Chief Financial Officer of their registered
broker-dealer based in Los Angeles. From October 1982 to September 1987, Mr.
Ramos was an audit manager for Deloitte & Touche LLP, a public accounting
firm. Mr. Ramos is a Certified Public Accountant licensed in the State of New
York.

Jeanne
M. Rosendalehas been Executive Vice President,
General Counsel of Siebert since May 3, 2004. From February 2003 to April 2004,
Ms. Rosendale served as Global Director Compliance for Knight Equity Markets.
From 2001 through the end of 2002, Ms. Rosendale served as Managing Director,
General Counsel and Chief Compliance Officer for TD Securities (USA) Inc. Ms. Rosendales
background likewise includes senior level legal positions with Citigroup and
the law firm Weil Gotshal & Manges, LLP. Ms. Rosendale received both her
B.A. and J.D., with honors, from Fordham University. She is active in various
industry groups such as the SIA, the Bond Market Association, the LSTA and
ISDA.

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

|                                                                                                                                                                                    |     |                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ---------------------------------------------------
|                                                                                                                                                                                    | (c) | Compliance
  with Section 16(a) of the Exchange Act
|                                                                                                                                                                                    |     |                                                    
|This
  information is incorporated by reference from the Companys definitive proxy
  statement to be filed by the Company pursuant to Regulation 14A on or prior
  to May 1, 2006.
|                                                                                                                                                                                    |     |                                                    
|                                                                                                                                                                                    | (d) | Code of
  Ethics                                   

The
Company has adopted a financial code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer
and all other employees of the Company performing similar functions. This
financial code of ethics is posted on our website. The Internet address for the
Companys website is http://www.siebertnet.com. The Company intends to satisfy
the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment
to, or waiver from, a provision of this code of ethics by either filing a Form
8-K or posting such information on our website, at the address and location
specified above, within four business days following the date of such amendment
or waiver.

Item 11. EXECUTIVE COMPENSATION

The
information required by this item is incorporated by reference from the
Companys definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to May 1, 2006.

-12-

---



|         |                                                                                                 
|-------- | ------------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
  OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The
information required by this item is incorporated by reference from the
Companys definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to May 1, 2006.

|         |                                                 
|-------- | ------------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONS

The
information required by this item is incorporated by reference from the
Companys definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to May 1, 2006.

|         |                                       
|-------- | --------------------------------------
|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES

The
information required in this item is incorporated by reference from the
Companys definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to May 1, 2006.

PART IV

|         |                                           
|-------- | ------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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

|                                                                                                                                 |       |                                                            
|-------------------------------------------------------------------------------------------------------------------------------- | ----- | -----------------------------------------------------------
|                                                                                                                                 | (a)   | The following
  documents are filed as part of this report:
|                                                                                                                                 |       |                                                            
|                                                                                                                                 | 1.    | Financial
  Statements                                     
|                                                                                                                                 |       |                                                            
|The
  consolidated Financial statements for the year ended December 31, 2005
  commence on page F-1 of this report on Form 10-K.
|                                                                                                                                 |       |                                                            
|                                                                                                                                 | 2.    | Financial
  Statement Schedules                            
|                                                                                                                                 |       |                                                            
|                                                                                                                                 | None. |                                                            
|                                                                                                                                 |       |                                                            
|                                                                                                                                 | 3.    | Exhibits                                                   

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

-13-

---



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                      |     
|------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                      | Page
|                                                                                                                                      |     
|SIEBERT FINANCIAL CORP.                                                                                                               |     
|                                                                                                                                      |     
|Report of Independent
Registered Public
  Accounting Firm                                                                             | F-1 
|                                                                                                                                      |     
|Consolidated Statements of
Financial
  Condition at December 31, 2005 and 2004                                                        | F-2 
|                                                                                                                                      |     
|Consolidated Statements of
Income for each
  of the years in the three-year period ended December 31, 2005                            | F-3 
|                                                                                                                                      |     
|Consolidated Statements of
Changes in
  Stockholders Equity for each of the years in the three-year period ended
  December 31, 2005 | F-4 
|                                                                                                                                      |     
|Consolidated Statements of
Cash Flows for
  each of the years in the three-year period ended December 31, 2005                        | F-5 
|                                                                                                                                      |     
|Notes to Consolidated
Financial Statements                                                                                            | F-6 
|                                                                                                                                      |     
|SIEBERT, BRANDFORD,
  SHANK & CO., LLC                                                                                                |     
|                                                                                                                                      |     
|Report of Registered Public Accounting Firm                                                                                           | F-16
|                                                                                                                                      |     
|Statements of Financial
Condition at
  December 31, 2005 and 2004                                                                     | F-17
|                                                                                                                                      |     
|Statements of Operations for
each of the
  years in the three-year period ended December 31, 2005                                     | F-18
|                                                                                                                                      |     
|Statements of Changes in
Members Capital
  for each of the years in the three-year period ended December 31, 2005                    | F-19
|                                                                                                                                      |     
|Statements of Cash Flows for
each of the
  years in the three-year period ended December 31, 2005                                     | F-20
|                                                                                                                                      |     
|Notes to Financial
Statements                                                                                                         | F-21

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

Board of
Directors and Stockholders 
Siebert Financial Corp.

We have
audited the accompanying consolidated statements of financial condition of
Siebert Financial Corp. and subsidiaries (the Company) as of
December 31, 2005 and 2004, and the related consolidated statements of
income, changes in stockholders equity and cash flows for each of the years in
the three-year period ended December 31, 2005. 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 the standards of the Public Company Accounting
Oversight Board (United States). 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 subsidiaries as of December 31, 2005 and 2004, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2005 in conformity with
U.S. generally accepted accounting principles.

Eisner LLP

New York, New
York
March 20, 2006

---



SIEBERT FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION

|                                                                                                          |  |                |            |      |   |            |  
|--------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | ---- | - | ---------- | -
|                                                                                                          |  | December
  31, |           
|                                                                                                          |  |                |           
|                                                                                                          |  | 2005           |            | 2004 |  
|                                                                                                          |  |                |            |      |  
|ASSETS                                                                                                    |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|Cash and cash equivalents                                                                                 |  | $              | 30,980,000 |      | $ | 28,748,000 |  
|Cash equivalents - restricted                                                                             |  |                | 1,300,000  |      |   | 1,300,000  |  
|Receivable from clearing broker                                                                           |  |                | 2,404,000  |      |   | 2,371,000  |  
|Furniture, equipment and leasehold
  improvements, net                                                    |  |                | 828,000    |      |   | 1,305,000  |  
|Investments in and advances to
affiliates                                                                 |  |                | 4,428,000  |      |   | 3,779,000  |  
|Prepaid expenses and other assets                                                                         |  |                | 992,000    |      |   | 1,539,000  |  
|Intangibles, net                                                                                          |  |                | 1,494,000  |      |   | 2,017,000  |  
|Deferred taxes                                                                                            |  |                | 601,000    |      |   | 501,000    |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  | $              | 43,027,000 |      | $ | 41,560,000 |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                      |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|Liabilities:                                                                                              |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|Accounts payable and accrued liabilities                                                                  |  | $              | 5,975,000  |      | $ | 6,460,000  |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|Commitments and contingent liabilities                                                                    |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|Stockholders equity:                                                                                     |  |                |            |      |   |            |  
|Common stock, $.01 par value; 49,000,000
  shares authorized, 23,039,402 shares                           |  |                |            |      |   |            |  
|issued and 22,122,968 shares outstanding at
  December 31, 2005 and 22,983,917 shares                     |  |                |            |      |   |            |  
|issued and 22,082,301 shares outstanding at
  December 31, 2004                                           |  |                | 230,000    |      |   | 229,000    |  
|Additional paid-in capital                                                                                |  |                | 18,063,000 |      |   | 17,931,000 |  
|Retained earnings                                                                                         |  |                | 22,896,000 |      |   | 21,033,000 |  
|Less: 916,434 and
  901,616 shares of treasury stock at cost at December 31, 2005, and 2004, respectively |  |                | (4,137,000 | )    |   | (4,093,000 | )
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  |                | 37,052,000 |      |   | 35,100,000 |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  |                |            |      |   |            |  
|                                                                                                          |  | $              | 43,027,000 |      | $ | 41,560,000 |  
|                                                                                                          |  |                |            |      |   |            |  

See notes to consolidated financial statements.

F-2

---



CONSOLIDATED
STATEMENTS OF INCOME

|                                                 |  |      |                         |      |   |            |  |   |            | 
|------------------------------------------------ |  | ---- | ----------------------- | ---- | - | ---------- |  | - | ---------- | 
|                                                 |  |      | Year Ended December 31, |     
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                 |  | 2005 |                         | 2004 |   | 2003       | 
|                                                 |  |      |                         |      |   |            | 
|Revenue:                                         |  |      |                         |      |   |            |  |   |            | 
|Commissions and fees                             |  | $    | 25,271,000              |      | $ | 23,798,000 |  | $ | 20,456,000 | 
|Investment banking                               |  |      | 2,372,000               |      |   | 1,363,000  |  |   | 1,086,000  | 
|Trading profits                                  |  |      | 702,000                 |      |   | 761,000    |  |   | 804,000    | 
|Income from equity investees                     |  |      | 1,849,000               |      |   | 1,712,000  |  |   | 1,900,000  | 
|Interest and dividends                           |  |      | 978,000                 |      |   | 470,000    |  |   | 450,000    | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                
|                                                 |  |      | 31,172,000              |      |   | 28,104,000 |  |   | 24,696,000 | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                
|Expenses:                                        |  |      |                         |      |   |            |  |   |            | 
|Employee compensation and benefits               |  |      | 11,427,000              |      |   | 11,138,000 |  |   | 8,722,000  | 
|Clearing fees, including floor brokerage         |  |      | 5,295,000               |      |   | 4,242,000  |  |   | 4,271,000  | 
|Professional fees                                |  |      | 4,296,000               |      |   | 2,144,000  |  |   | 1,525,000  | 
|Advertising and promotion                        |  |      | 876,000                 |      |   | 1,107,000  |  |   | 1,358,000  | 
|Communications                                   |  |      | 1,728,000               |      |   | 2,331,000  |  |   | 2,838,000  | 
|Occupancy                                        |  |      | 1,053,000               |      |   | 1,067,000  |  |   | 1,123,000  | 
|Interest                                         |  |      | 2,000                   |      |   | 28,000     |  |   | 1,000      | 
|Write off of advance to clearing broker          |  |      |                         |      |   | 1,500,000  |  |   |            | 
|Other general and administrative                 |  |      | 3,282,000               |      |   | 3,564,000  |  |   | 4,665,000  | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                
|                                                 |  |      | 27,959,000              |      |   | 27,121,000 |  |   | 24,503,000 | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                
|Income
  before provision for income taxes       |  |      | 3,213,000               |      |   | 983,000    |  |   | 193,000    | 
|Provision
  for income taxes                     |  |      | 1,350,000               |      |   | 450,000    |  |   | 70,000     | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                
|Net income                                       |  | $    | 1,863,000               |      | $ | 533,000    |  | $ | 123,000    | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|                                                
|Net income
  per share of common stock - basic   |  | $    | 0.08                    |      | $ | 0.02       |  | $ | 0.01       | 
|Net income
  per share of common stock - diluted |  | $    | 0.08                    |      | $ | 0.02       |  | $ | 0.01       | 
|                                                 |  |      |                         |      |   |            |  |   |            | 
|Weighted
  average shares outstanding - basic    |  |      | 22,093,369              |      |   | 22,113,228 |  |   | 22,305,369 | 
|Weighted
  average shares outstanding - diluted  |  |      | 22,127,940              |      |   | 22,276,562 |  |   | 22,453,538 | 

See notes to consolidated financial
statements.

F-3

---



CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|-------------------------------------------------------------------------- |  | ----------------- | ---------- | -------------- | - | ---------------------------- |  | ---------------- | ---------- | ----------------- | - | ---------- |  | ----- | ------- |  | - | ---------- | - | - | ---------- | -
|                                                                           |  | Common Stock      |            | Treasury Stock |  
|                                                                           |  |                   |            |                |  
|                                                                           |  | Number
  OfShares |            | $.01 ParValue  |   | Additional
  Paid -InCapital |  | RetainedEarnings |            | Number
  OfShares |   | Amount     |  | Total |        
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |        
|                                                                          
|Balance - January 1, 2003                                                  |  |                   | 22,968,167 |                | $ | 229,000                      |  | $                | 17,880,000 |                   | $ | 20,377,000 |  |       | 572,400 |  | $ | (2,819,000 | ) | $ | 35,667,000 |  
|Net income                                                                 |  |                   |            |                |   |                              |  |                  |            |                   |   | 123,000    |  |       |         |  |   |            |   |   | 123,000    |  
|Treasury
  share purchases                                                 |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       | 189,503 |  |   | (706,000   | ) |   | (706,000   | )
|Issuance of
  shares in connection with exercise of employee stock options |  |                   | 15,750     |                |   |                              |  |                  | 36,000     |                   |   |            |  |       |         |  |   |            |   |   | 36,000     |  
|Tax benefit
  arising from exercise of employees stock options             |  |                   |            |                |   |                              |  |                  | 15,000     |                   |   |            |  |       |         |  |   |            |   |   | 15,000     |  
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|Balance - December 31, 2003                                                |  |                   | 22,983,917 |                |   | 229,000                      |  |                  | 17,931,000 |                   |   | 20,500,000 |  |       | 761,903 |  |   | (3,525,000 | ) |   | 35,135,000 |  
|Net income                                                                 |  |                   |            |                |   |                              |  |                  |            |                   |   | 533,000    |  |       |         |  |   |            |   |   | 533,000    |  
|Treasury
  share purchases                                                 |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       | 139,713 |  |   | (568,000   | ) |   | (568,000   | )
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|Balance - December 31, 2004                                                |  |                   | 22,983,917 |                |   | 229,000                      |  |                  | 17,931,000 |                   |   | 21,033,000 |  |       | 901,616 |  |   | (4,093,000 | ) |   | 35,100,000 |  
|Net income                                                                 |  |                   |            |                |   |                              |  |                  |            |                   |   | 1,863,000  |  |       |         |  |   |            |   |   | 1,863,000  |  
|Treasury
  share purchases                                                 |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       | 14,818  |  |   | (44,000    | ) |   | (44,000    | )
|Issuance of
  shares in connection with exercise of employee stock options |  |                   | 55,485     |                |   | 1,000                        |  |                  | 132,000    |                   |   |            |  |       |         |  |   |            |   |   | 133,000    |  
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  
|Balance - December 31, 2005                                                |  |                   | 23,039,402 |                | $ | 230,000                      |  | $                | 18,063,000 |                   | $ | 22,896,000 |  |       | 916,434 |  | $ | (4,137,000 | ) | $ | 37,052,000 |  
|                                                                           |  |                   |            |                |   |                              |  |                  |            |                   |   |            |  |       |         |  |   |            |   |   |            |  

See notes to consolidated financial statements.

F-4

---





CONSOLIDATED
STATEMENTS OF CASH FLOWS

|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|----------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                    |  | Year Ended December 31, |           
|                                                                                    |  |                         |           
|                                                                                    |  | 2005                    |            | 2004 |   | 2003       |  
|                                                                                    |  |                         |            |      |   |            |  
|Cash Flows From Operating Activities:                                               |  |                         |            |      |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net income                                                                          |  | $                       | 1,863,000  |      | $ | 533,000    |   | $ | 123,000    |  
|Adjustments to reconcile net income to net
  cash provided by operating activities: |  |                         |            |      |   |            |   |   |            |  
|Depreciation and amortization                                                       |  |                         | 1,128,000  |      |   | 1,464,000  |   |   | 1,778,000  |  
|Income from equity investees                                                        |  |                         | (1,849,000 | )    |   | (1,712,000 | ) |   | (1,900,000 | )
|Distribution from equity investees                                                  |  |                         | 1,573,000  |      |   | 1,231,000  |   |   | 1,443,000  |  
|Tax benefit of exercised employee stock
  options                                   |  |                         |            |      |   |            |   |   | 15,000     |  
|Deferred taxes                                                                      |  |                         | (100,000   | )    |   | 52,000     |   |   | 26,000     |  
|Write-off of advance to clearing broker                                             |  |                         |            |      |   | 1,500,000  |   |   |            |  
|Changes in:                                                                         |  |                         |            |      |   |            |   |   |            |  
|Securities owned, at market value                                                   |  |                         |            |      |   | 1,226,000  |   |   | 3,999,000  |  
|Receivable from clearing broker                                                     |  |                         | (33,000    | )    |   | (884,000   | ) |   | (387,000   | )
|Prepaid expenses and other assets                                                   |  |                         | 547,000    |      |   | 268,000    |   |   | 9,000      |  
|Securities sold, not yet purchased, at
  market value                               |  |                         |            |      |   | (6,000     | ) |   | 6,000      |  
|Accounts payable and accrued liabilities                                            |  |                         | (485,000   | )    |   | 1,575,000  |   |   | 368,000    |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash provided by operating
activities                                           |  |                         | 2,644,000  |      |   | 5,247,000  |   |   | 5,480,000  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash Flows From Investing Activities:                                               |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Purchase of intangibles                                                             |  |                         |            |      |   | (400,000   | ) |   | (1,150,000 | )
|Return of deposit on equipment                                                      |  |                         |            |      |   |            |   |   | 241,000    |  
|Advance to clearing broker                                                          |  |                         |            |      |   |            |   |   | (1,500,000 | )
|Purchase of furniture, equipment and
  leasehold improvements                       |  |                         | (128,000   | )    |   | (177,000   | ) |   | (160,000   | )
|Investment in and advances made
  to equity investees                               |  |                         | (373,000   | )    |   | (86,000    | ) |   | (7,000     | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash used in investing
  activities                                             |  |                         | (501,000   | )    |   | (663,000   | ) |   | (310,000   | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash Flows From Financing Activities:                                               |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Purchase of treasury shares                                                         |  |                         | (44,000    | )    |   | (568,000   | ) |   | (706,000   | )
|Proceeds from exercise of options                                                   |  |                         | 133,000    |      |   |            |   |   | 36,000     |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash provided by (used in) financing
  activities                               |  |                         | 89,000     |      |   | (568,000   | ) |   | (670,000   | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net increase in cash and cash equivalents                                           |  |                         | 2,232,000  |      |   | 4,016,000  |   |   | 2,234,000  |  
|Cash and cash equivalents - beginning of
  year                                     |  |                         | 28,748,000 |      |   | 24,732,000 |   |   | 22,498,000 |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash and cash equivalents - end of year                                             |  | $                       | 30,980,000 |      | $ | 28,748,000 |   | $ | 24,732,000 |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Supplemental Cash Flow Disclosures:                                                 |  |                         |            |      |   |            |   |   |            |  
|Cash paid for:                                                                      |  |                         |            |      |   |            |   |   |            |  
|Interest                                                                            |  | $                       | 1,000      |      | $ | 28,000     |   | $ | 1,000      |  
|Income taxes                                                                        |  | $                       | 812,000    |      | $ | 741,000    |   | $ | 61,000     |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Noncash Investing And Financing Activities:                                         |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Tax benefit of employee stock options                                               |  |                         |            |      |   |            |   |   | 15,000     |  

See notes to consolidated financial
statements.

F-5

---



SIEBERT FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT
 ACCOUNTING POLICIES

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] | Business:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Siebert
  Financial Corp. (Financial), through its wholly owned subsidiary, Muriel
  Siebert & Co., Inc. (Siebert), engages in the business of providing
  discount brokerage services for customers, investment banking services for
  institutional clients and trading securities for its own account, and, through
  its wholly owned subsidiary, Siebert Womens Financial Network, Inc. (WFN),
  engages in providing products, services and information all uniquely devoted
  to womens financial needs. All significant intercompany accounts and
  transactions have been eliminated. Financial, Siebert and WFN collectively
  are referred to herein as the Company.                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The
  municipal bond investment banking business is being conducted by Siebert
  Brandford Shank & Co., LLC (SBS), an investee, which is accounted for
  by the equity method of accounting (see Note C). The equity method provides
  that Siebert record its share of SBSs earnings or losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[2] | Securities Transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Securities transactions
  trading profit, commission revenues and related clearing expenses are recorded on a trade date
  basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Siebert
  clear all its security transactions through two unaffiliated clearing firms
  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 firms, which are highly capitalized. Marketable
  securities are valued at market value. Interest is recorded on an accrual basis.
Dividends are recorded on the ex-dividend date.                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[3] | Income Taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company
  accounts for income taxes utilizing the asset and liability approach
  requiring the recognition of deferred tax assets and liabilities for the
  expected future tax consequences of temporary differences between the basis
  of assets and liabilities for financial reporting purposes and tax purposes.
  Financial files a consolidated federal income tax return, which includes Siebert
  and WFN.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[4] | Furniture, Equipment and Leasehold Improvements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Property and
  equipment is stated at cost less accumulated depreciation. Depreciation is calculated using the
  straight-line method over the estimated useful lives of the assets, generally five years.
  Leasehold improvements are amortized over the shorter of the estimated useful
  life or period of the lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[5] | Cash Equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Cash equivalents consist of highly liquid investments purchase with original maturity of three months or less including of money market funds
 and commercial paper.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[6] | Advertising Costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Advertising
  costs are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[7] | Use Of Estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to
  make estimates and assumptions that affect the reported amounts of assets and
  liabilities and disclosure of contingent assets and liabilities at the date
  of the financial statements and the reported amounts of revenues and expenses
  during the reporting period. Actual results could differ from those
  estimates.                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[8] | Earnings Per Share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Basic
  earnings per share is calculated by dividing net income by the weighted
  average outstanding shares during the period. Diluted earnings per share is
  calculated by dividing net income by the number of shares outstanding under
  the basic calculation and adding all dilutive securities, which consist of
  options. The treasury stock method is used to reflect the dilutive effect of
  outstanding options, which, for 2005, 2004 and 2003 amounted to 34,571, 163,334
  and 148,169 additional shares, respectively, added to the basic weighted
  average outstanding shares of 22,093,369, 22,113,228 and 22,305,369 in 2005,
  2004 and 2003, respectively. Potentially dilutive securities consisting of
  outstanding options at December 31, 2005, 2004 and 2003 amounted to
  1,767,610, 1,888,350 and 1,802,930, respectively.

F-6

---



NOTE A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[9]  | Investment Banking:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Investment
  banking revenue includes gains and fees, net of syndicate expenses, arising
  from underwriting syndicates in which the Company participates. Investment
  banking management fees are recorded on the offering date, sales concessions
  on the settlement date and underwriting fees at the time the underwriting is
  completed and the income is reasonably determinable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|[10] | Cash Equivalents - Restricted:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Cash
  equivalents - restricted represents $1,300,000 of cash invested in a money
  market account which Siebert is obligated to lend to SBS on a subordinated
  basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Any
  outstanding amounts loaned bear interest at 8% per annum and are
  repayable on August 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|[11] | Stock-Based Compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Statement of
  Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
  Compensation (SFAS 123) as amended by SFAS No. 148, (Accounting for
  Stock-Based Compensation  Transition and Disclosure an amendment to SFAS
  123), allows the fair value of stock-based compensation to be included in
  expense over the period earned; alternatively, if the fair value of
  stock-based compensation awards are not included in expense, SFAS 123
  requires disclosure of net income (loss), on a pro forma basis, as if expense
  treatment had been applied. As permitted by SFAS 123, the Company continues
  to account for such compensation under Accounting Principles Board Opinion
  No. 25 (APB 25), Accounting for Stock Issued to Employees, and related
  interpretations, pursuant to which no compensation cost was recognized in
  connection with the issuance of stock options, as all options granted under
  the 1997 Stock Option Plan had an exercise price equal to or greater than the
  fair value of the underlying common stock on the date of grant. Had the
  Company elected to recognize compensation expense for the stock option plan,
  consistent with the method prescribed by SFAS 123, the Companys net income
  and income per share for the years ended December 31, 2005, 2004 and 2003
  would have decreased to the pro forma amounts as follows:

|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|--------------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | ---- | - | -------- | - | - | -------- | - | 
|                                                                                                    |  | Year Ended December 31, |           |     
|                                                                                                    |  |                         |           |     
|                                                                                                    |  | 2005                    |           | 2004 |   | 2003     |   |  
|                                                                                                    |  |                         |           |      |   |          |   |  
|Net income, as reported                                                                             |  | $                       | 1,863,000 |      | $ | 533,000  |   | $ | 123,000  |   | 
|Stock-based employee compensation
  determined under the fair value based method, net of tax effect |  |                         | (424,000  | )    |   | (332,000 | ) |   | (759,000 | ) | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|Pro forma net income (loss)                                                                         |  | $                       | 1,439,000 |      | $ | 201,000  |   | $ | (636,000 | ) | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|Net income (loss) per share - basic:                                                                |  |                         |           |      |   |          |   |   |          |   | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|As reported                                                                                         |  | $                       | .08       |      | $ | .02      |   | $ | .01      |   | 
|Pro forma                                                                                           |  | $                       | .07       |      | $ | .01      |   | $ | (.03     | ) | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|Net income (loss) per share - diluted:                                                              |  |                         |           |      |   |          |   |   |          |   | 
|                                                                                                    |  |                         |           |      |   |          |   |   |          |   | 
|As reported                                                                                         |  | $                       | .08       |      | $ | .02      |   | $ | .01      |   | 
|Pro forma                                                                                           |  | $                       | .07       |      | $ | .01      |   | $ | (.03     | ) | 

The weighted
  average fair value of stock options is estimated at
  the grant date using the Black-Scholes option pricing model
  with the following weighted average assumptions:

|                                    |  |   |       |   |   |       |   |   |       |   | 
|----------------------------------- |  | - | ----- | - | - | ----- | - | - | ----- | - | 
|                                    |  |   | 2005  |   |   | 2004  |   |   | 2003  |   | 
|                                    |  |   |       |   |   |       |   |   |       |   | 
|Risk free
  interest rate           |  |   | 4.30  | % |   | 3.71  | % |   | 4.00  | % | 
|Expected
  life of options in years |  |   | 5.00  |   |   | 7.78  |   |   | 10.00 |   | 
|Expected dividend
  yield           |  |   | 0.00  | % |   | 0.00  | % |   | 0.00  | % | 
|Expected
  volatility               |  |   | 53.00 | % |   | 52.00 | % |   | 72.00 | % | 
|                                    |  |   |       |   |   |       |   |   |       |   | 
|Weighted
  average fair value       |  | $ | 1.42  |   | $ | 3.01  |   | $ | 3.09  |   | 

F-7

---



NOTE A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[12] | Intangibles:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Purchased
  intangibles are principally being amortized using the straight-line method
  over an estimated useful lives of three to five years (see Note E).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|[13] | Valuation Of Long-Lived Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | The Company
  evaluates the recoverability of its long-lived assets and requires the
  recognition of impairment of long-lived assets in the event the net book
  value of these assets exceeds the estimated future undiscounted cash flows
  attributable to these assets. The Company assesses potential impairment to
  its long-lived assets when there is evidence that events or changes in
  circumstances have made recovery of the assets carrying value unlikely.
  Should impairment exist, the impairment loss would be measured based on the
  excess of the carrying value of the assets over the assets fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|[14] | New Accounting Standards:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement No. 123R. Share-Based Payment (SFAS 123R), which requires
companies to measure and recognize compensation
expense for all stock-based payments to employees, including grants of employee
stock options, to be recognized in the income statement based on their
fair value. Pro forma disclosure is no longer
an alternative. That cost will be recognized as compensation expense over the
service period, which would normally be the vesting period. SFAS 123R
will be effective for the Company beginning January 1, 2006. As permitted under
SFAS No. 123 the Company currently accounts for share-based payments to
employees using the APB Opinion No. 25 intrinsic value method. Accordingly, the
adoption of SFAS No. 123Rs fair value method could have a significant impact
on the Companys results of operations, although it will have no impact on the
Companys overall financial position. The impact of adoption of SFAS No. 123R
cannot be predicted at this time, because it will depend on levels of
share-based payments in the future.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | In December
  2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets, an
  amendment of APB No. 29, Accounting for Nonmonetary Transactions (FAS 153).
  FAS 153 amends APB No. 29 to eliminate the exception for nonmonetary
  exchanges of similar productive assets and replaces it with a general
  exception for exchanges of nonmonetary assets that do not have commercial
  substance. A nonmonetary exchange has commercial substance if the future cash
  flows of the entity are expected to change significantly as a result of the
  exchange. We have adopted FAS 153 for nonmonetary exchanges beginning after
  June 15, 2005. FAS No. 153 did not have an impact on our
  results of operations or financial position.                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB
Statement No. 3. This Statement establishes, unless impracticable, retrospective application as the required method for reporting a
change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle.
The provisions of this Statement are effective for accounting changes and corrections of errors made in fiscal years beginning after
December 15, 2005. Early
adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this Statement
is issued. The Company does not believe that the adoption of this Statement in 2006 will have a material impact on the Companys
financial position or results of operation.                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|[15] | Reclassification
   Certain previous years adjustments have been reclassified to conform with
  current year presentations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

NOTEB - INTUITLAWSUIT

Siebert filed
a lawsuit against Intuit Inc. (Intuit) in New York State Supreme Court on
September 17, 2003 seeking not less than $11.1 million in compensatory damages
and $33.3 million in punitive damages for claims relating to the Joint
Brokerage Service (the JBS) conducted during the years ended December 31,
2003 and 2002 under the Strategic Alliance Agreement between Siebert and
Intuit. The Court denied Intuits motion to dismiss Sieberts causes of action
for breach of fiduciary duty, breach of contractual obligations to pay shared
expenses, promissory estoppel, and breach of the implied covenant of good faith
and fair dealing. The Court granted Intuits motion to dismiss Sieberts causes
of action for breach of the express covenant of good faith and fair dealing,
misrepresentation and/or fraud, and its request for punitive damages. Intuit
has counterclaimed against Siebert, seeking not less than $6.6 million. Siebert
and Intuit have appealed from certain portions of the Courts decision and
Siebert has also moved for reargument of that decision regarding punitive
damages. In November 2005, Intuits counsel was disqualified by the Court from
representing Intuit in this action. Any further activity in the action is
stayed pending Intuits appeal from the Order of disqualification, which appeal
is expected to be heard by the Appellate Court in April 2006. The outcome of the litigation
cannot now be predicted.

F-8

---



NOTE C - INVESTMENT IN AFFILIATES

Investment in and
advances to, equity in income, of and
distributions received from affiliates as of and for the year
ended December 31, 2005 consisting of the following:

|                               |  |     |           |        |   |         |  |   |           | 
|------------------------------ |  | --- | --------- | ------ | - | ------- |  | - | --------- | 
|                               |  | SBS |           | SBSFPC |   | TOTAL   | 
|                               |  |     |           |        |   |         |  |   |           | 
|                               |  |     |           |        |   |         |  |   |           | 
|Investment
  and advances      |  | $   | 3,840,000 |        | $ | 588,000 |  | $ | 4,428,000 | 
|                               |  |     |           |        |   |         |  |   |           | 
|Income from equity
  investees |  | $   | 1,656,000 |        | $ | 193,000 |  | $ | 1,849,000 | 
|                               |  |     |           |        |   |         |  |   |           | 
|Distributions                  |  | $   | 1,567,000 |        | $ | 6,000   |  | $ | 1,573,000 | 
|                               |  |     |           |        |   |         |  |   |           | 

Accounts related to affiliates
included in the accompanying financial statements for 2004 and 2003 are
attributable solely to SBS.

In March 1997,
Siebert and two individuals (the Principals) formed SBS to succeed to the
tax-exempt underwriting business of the Siebert Brandford Shank division of
Siebert. The agreements with the Principals provide that profits will be shared
51% to the Principals and 49% to Siebert. Siebert invested $392,000 as its
share of the members capital of SBS. SBS commenced operations on July 1, 1998.

Summarized
financial data of SBS is as follows:

|                                                                                              |  |   |            |  |   |            |  |   |            |  | 
|--------------------------------------------------------------------------------------------- |  | - | ---------- |  | - | ---------- |  | - | ---------- |  | 
|                                                                                              |  |   | 2005       |  |   | 2004       |  |   | 2003       |  | 
|                                                                                              |  |   |            |  |   |            |  |  
|                                                                                             
|Total assets including secured demand note of 1,200,000
in each year due from Siebert         |  | $ | 14,166,000 |  | $ | 12,326,000 |  | $ |            |  | 
|Total liabilities including subordinated
  liabilities $1,200,000 in each year due to Siebert |  |   | 6,547,000  |  |   | 4,882,000  |  |   |            |  | 
|Total members capital                                                                        |  |   | 7,619,000  |  |   | 7,444,000  |  |   | 6,463,000  |  | 
|Total revenue                                                                                 |  |   | 21,086,000 |  |   | 17,222,000 |  |   | 14,628,000 |  | 
|Net income                                                                                    |  |   | 3,377,000  |  |   | 3,494,000  |  |   | 3,878,000  |  | 
|Regulatory minimum net capital requirement                                                    |  |   | 356,000    |  |   | 245,000    |  |   |            |  | 

The amounts
above are unconsolidated and recorded on a gross basis. During each of 2005,
2004 and 2003 Siebert charged SBS $240,000 for rent and general and
administrative services, which Siebert believes approximates the cost of
furnishing such services. In addition, during each of the years 2005, 2004 and 2003, Siebert earned interest income of $96,000, $110,000
and $120,000 from SBS in connection with Sieberts obligation to make subordinate note for up
to $1,200,000 and Siebert paid SBS interest earned on the restricted cash equivalents of $52,000, $22,000 and $18,000. (See Note J)

Sieberts
share of undistributed earnings from SBS amounts to $3,341,000 and $3,256,000
at December 31, 2005 and 2004, respectively. Such amounts may not be
immediately available for distribution to Siebert for various reasons including
the amount of SBSs available cash, the provisions of the agreement between
Siebert and the Principals and SBSs continued compliance with its regulatory
net capital requirements.

Financial
entered into an Operating Agreement, effective as of April 19, 2005 (the
Operating Agreement), with the two individual principals of SBS (the
Principals) for the formation of SBS Financial Products Company, LLC, a
Delaware limited liability company (SBSFPC). Pursuant to the terms of the
Operating Agreement, Financial and each of the Principals made an initial
capital contribution of $400,000 in exchange for a 33.33% initial interest in
SBSFPC. SBSFPC engages in derivatives transactions related to the municipal
underwriting business. The Operating Agreement provides that profit will be
shared 66.66% by the Principals and 33.33% by Financial.

Summarized
financial data of SBSFPC as of and for the period ended December 31,
2005 is set forth below. Sieberts share of undistributed earnings of SBSFPC amounts to $187,000
on December 31, 2005.

|                         |  |   |           | 
|------------------------ |  | - | --------- | 
|                         |  |   | 2005      | 
|                         |  |   |          
|                        
|Total assets             |  | $ | 4,870,000 | 
|Total
  liabilities      |  |   | 3,107,000 | 
|Total
  members capital |  |   | 1,763,000 | 
|Total revenues           |  |   | 1,185,000 | 
|Net income               |  |   | 582,000   | 

NOTE D - FURNITURE, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS, NET

Furniture,
equipment and leasehold improvements consist of the following:

|                                                 |  |                |            |   |   |            |   | 
|------------------------------------------------ |  | -------------- | ---------- | - | - | ---------- | - | 
|                                                 |  | December
  31, |            |  
|                                                 |  |                |            |  
|                                                 |  |                | 2005       |   |   | 2004       |   | 
|                                                 |  |                |            |   |   |           
|                                                
|Equipment                                        |  | $              | 2,251,000  |   | $ | 3,071,000  |   | 
|Leasehold
  improvements                         |  |                | 207,000    |   |   | 533,000    |   | 
|Furniture
  and fixtures                         |  |                | 21,000     |   |   | 150,000    |   | 
|                                                 |  |                |            |   |   |            |   | 
|                                                
|                                                 |  |                | 2,479,000  |   |   | 3,754,000  |   | 
|Less
  accumulated depreciation and amortization |  |                | (1,651,000 | ) |   | (2,449,000 | ) | 
|                                                 |  |                |            |   |   |            |   | 
|                                                
|                                                 |  | $              | 828,000    |   | $ | 1,305,000  |   | 
|                                                 |  |                |            |   |   |            |   | 

F-9

---



Depreciation
and amortization expense for the years ended December 31, 2005, 2004 and 2003
amounted to $605,000, $741,000 and $672,000, respectively.

NOTE E - INTANGIBLE ASSETS, NET

In several
transactions during September and October of 2000, WFN acquired the stock of
WFN Womens Financial Network, Inc. (WFNI) and HerDollar.com, Inc.,
respectively, companies in the development stage which had yet to commence principal
operations, had no significant revenue and had assets consisting principally of
websites, content and domain names, for aggregate consideration of $2,310,000
including costs. The transactions have been accounted for as purchases of
assets consisting of domain name, website and content, and a non-compete
agreement (the Acquired Intangible Assets). Related deferred tax assets
attributable to net operating loss carryforwards of the acquired companies and
deferred tax liabilities attributable to the excess of the statement bases of
the acquired assets over their tax bases have been reflected in the
accompanying consolidated financial statements as an adjustment to the carrying
amount of such intangibles (see Note F).

F-10

---



NOTE E - INTANGIBLE ASSETS, NET (CONTINUED)

Intangible
assets consist of the following:

|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|----------------------------------- |  | ------------------------- | --------- | -------------------------- | - | ------------------------- |  | -------------------------- | --------- |  | - | --------- | 
|                                    |  | December
  31, 2005       |           | December
  31, 2004        |  
|                                    |  |                           |           |                            |  
|                                    |  | Gross
  Carrying
  Amount |           | Accumulated
  Amortization |   | Gross
  Carrying
  Amount |  | Amortization
  Accumulated |          
|                                    |  |                           |           |                            |   |                           |  |                            |          
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Amortizable
  assets:               |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Website,
  content and non-compete  |  | $                         | 2,350,000 |                            | $ | 2,350,000                 |  | $                          | 2,350,000 |  | $ | 2,350,000 | 
|Retail
  brokerage accounts         |  |                           | 2,588,000 |                            |   | 1,844,000                 |  |                            | 2,588,000 |  |   | 1,321,000 | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|                                    |  | $                         | 4,938,000 |                            | $ | 4,194,000                 |  | $                          | 4,938,000 |  | $ | 3,671,000 | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Unamortized
  intangible assets:    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Domain
  name/intellectual property |  | $                         | 750,000   |                            |   |                           |  | $                          | 750,000   |  |   |           | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Amortization
  expense              |  |                           |           |                            | $ | 523,000                   |  |                            |           |  | $ | 723,000   | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 

Estimated
amortization expense is as follows:

| |                              |  |  |   |         | 
| | ---------------------------- |  |  | - | ------- | 
| | Year
  Ending
  December 31, |  |  |   |         | 
| |                              |  |  |   |         | 
| | 2006                         |  |  | $ | 312,000 | 
| | 2007                         |  |  |   | 312,000 | 
| | 2008                         |  |  |   | 92,000  | 
| | 2009                         |  |  |   | 28,000  | 
| |                              |  |  |   |         | 
| |                              |  |  |   |         | 
| |                              |  |  | $ | 744,000 | 
| |                              |  |  |   |         | 

NOTE F - INCOME TAXES

Income tax
provision consists of the following:

|                                           |  |                           |           |      |   |         |  |   |         |  
|------------------------------------------ |  | ------------------------- | --------- | ---- | - | ------- |  | - | ------- | -
|                                           |  | Year Ended
  December 31, |          
|                                           |  |                           |          
|                                           |  | 2005                      |           | 2004 |   | 2003    | 
|                                           |  |                           |           |      |   |         | 
|                                           |  |                           |           |      |   |         |  |   |         |  
|Federal
  income tax provision (benefit):  |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|Current                                    |  | $                         | 1,080,000 |      | $ | 253,000 |  | $ |         |  
|Deferred                                   |  |                           | (81,000   | )    |   | 42,000  |  |   | (33,000 | )
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           | 999,000   |      |   | 295,000 |  |   | (33,000 | )
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|State and
  local tax provision (benefit): |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|Current                                    |  |                           | 370,000   |      |   | 145,000 |  |   | 44,000  |  
|Deferred                                   |  |                           | (19,000   | )    |   | 10,000  |  |   | 59,000  |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           | 351,000   |      |   | 155,000 |  |   | 103,000 |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|Total tax
  provision (benefit):           |  |                           |           |      |   |         |  |   |         |  
|Current                                    |  |                           | 1,450,000 |      |   | 398,000 |  |   | 44,000  |  
|Deferred                                   |  |                           | (100,000  | )    |   | 52,000  |  |   | 26,000  |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  |                           |           |      |   |         |  |   |         |  
|                                           |  | $                         | 1,350,000 |      | $ | 450,000 |  | $ | 70,000  |  
|                                           |  |                           |           |      |   |         |  |   |         |  

F-11

---



NOTE F - INCOME TAXES (CONTINUED)

A
reconciliation between the income tax provision and income taxes
computed by applying the statutory Federal income tax rate to income (loss)
before taxes is as follows:

|                                                              |  |                         |           |      |   |         |  |   |         |  
|------------------------------------------------------------- |  | ----------------------- | --------- | ---- | - | ------- |  | - | ------- | -
|                                                              |  | Year Ended December 31, |          
|                                                              |  |                         |          
|                                                              |  | 2005                    |           | 2004 |   | 2003    | 
|                                                              |  |                         |           |      |   |         | 
|                                                              |  |                         |           |      |   |         |  |   |         |  
|Expected
  income tax provision at statutory Federal tax rate |  | $                       | 1,092,000 |      | $ | 335,000 |  | $ | 66,000  |  
|State and
  local taxes, net of Federal tax benefit           |  |                         | 258,000   |      |   | 79,000  |  |   | 15,000  |  
|Other *                                                       |  |                         |           |      |   | 36,000  |  |   | (11,000 | )
|                                                              |  |                         |           |      |   |         |  |   |         |  
|                                                              |  |                         |           |      |   |         |  |   |         |  
|Income tax
  expense                                          |  | $                       | 1,350,000 |      | $ | 450,000 |  | $ | 70,000  |  
|                                                              |  |                         |           |      |   |         |  |   |         |  

* State tax adjustment

Deferred
income taxes reflect the impact of temporary differences between the amounts of
assets and liabilities for financial reporting purposes and their tax basis
of such amounts. The principal items giving rise to deferred tax assets
(liabilities) are as follows:

|                                                  |  |                |          |      |   |          |  
|------------------------------------------------- |  | -------------- | -------- | ---- | - | -------- | -
|                                                  |  | December
  31, |         
|                                                  |  |                |         
|                                                  |  | 2005           |          | 2004 |  
|                                                  |  |                |          |      |  
|                                                  |  |                |          |      |   |          |  
|Net
  operating losses                            |  | $              | 402,000  |      | $ | 479,000  |  
|Acquired
  Intangible assets                      |  |                | (315,000 | )    |   | (315,000 | )
|Furniture,
  equipment and leasehold improvements |  |                | (84,000  | )    |   | (164,000 | )
|Unrealized gain - SBSFP                           |  |                | (40,000  | )    |   |          |  
|Retail
  brokerage accounts                       |  |                | 638,000  |      |   | 501,000  |  
|                                                  |  |                |          |      |   |          |  
|                                                  |  |                |          |      |   |          |  
|                                                  |  | $              | 601,000  |      | $ | 501,000  |  
|                                                  |  |                |          |      |   |          |  

Management
believes that it is more likely than not that the deferred tax asset will be
realized, and therefore no valuation allowance has been provided.

Net operating
loss carryforwards of $958,000, are attributable to WFN, expire through 2020. Utilization of such net operating loss carryforwards
is subject to annual limitations under Section 382 of the
Internal Revenue Code.

In 2003, the Company
reduced current taxes payable by $15,000 resulting from the deductibility of
the difference between the exercise price of nonqualifying stock options
granted by the Company and the market value of the stock on the dates of
exercise. The tax benefit was recorded as a credit to paid-in capital.

NOTE G - STOCKHOLDERS EQUITY

Siebert is
subject to the SECs Uniform Net Capital Rule (Rule 15c3-1), which requires the
maintenance of minimum net capital. Siebert has elected to use the alternative
method, permitted by the rule, which requires that Siebert maintain minimum net
capital, as defined, equal to the greater of $250,000 or 2 percent of aggregate
debit balances arising from customer transactions, as defined. (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% of aggregate debits.) At December 31, 2005 and 2004, Siebert had net capital
of approximately $25,590,000 and $16,846,000, respectively, as compared with
net capital requirements of $250,000. Siebert claims exemption from the reserve
requirement under Section 15c3-3(k)(2)(ii).

The 1998
Restricted Stock Award Plan (the Award Plan), provides for awards of not more
than 60,000 shares of the Companys common stock, subject to adjustments for
stock splits, stock dividends and other changes in the Companys
capitalization, to key employees, to be issued either immediately after the
award or at a future date. As provided in the Award Plan and subject to
restrictions, shares awarded may not be disposed of by the recipients for a
period of one year from the date of the award. Cash dividends on shares awarded
are held by the Company for the benefit of the recipients and are paid upon
lapse of the restrictions. No awards were granted 2005, 2004 and 2003. As of December 31, 2005, 18,600 common shares are available for future
awards under the award plan.

On May 15,
2000, the Board of Directors of the Company authorized a buy back of up to one
million shares of common stock. Shares will be purchased from time to time in
the open market and in private transactions. Through December 31, 2005, 916,434
shares were purchased at an average price of $4.51.

F-12

---



NOTE H - OPTIONS

The Companys
1997 Stock Option Plan, as amended, (the Plan) authorizes the grant of
options to purchase up to an aggregate of 4,200,000 shares, subject to
adjustment in certain circumstances. Both non-qualified options and options
intended to qualify as Incentive Stock Options under Section 422 of the
Internal Revenue Code, as amended, may be granted under the Plan. A Stock
Option Committee of the Board of Directors administers the Plan. The committee
has the authority to determine when options are granted, the term during which
an option may be exercised (provided no option has a term exceeding 10 years),
the exercise price and the exercise period. The exercise price shall generally
be not less than the fair market value on the date of grant. No option may be
granted under the Plan after December 2007. Generally, employee options vest
20% per year for five years and expire ten years from the date of grant.

A summary of
the Companys stock option transaction for the three years ended December 31,
2004 is presented below:

|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|------------------------------------------------ |  | ------ | --------- | ------------------------------------- | - | ------ |  | ------------------------------------- | --------- | ------ | - | ------------------------------------- |  |  | --------- | - | - | ----- | 
|                                                 |  | 2005   |           | 2004                                  |   | 2003   | 
|                                                 |  |        |           |                                       |   |        | 
|                                                 |  | Shares |           | Weighted
  Average
  Exercise
  Price |   | Shares |  | Weighted
  Average
  Exercise
  Price |           | Shares |   | Weighted
  Average
  Exercise
  Price | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       | 
|                                                
|Outstanding
  - beginning of the year            |  |        | 1,888,350 |                                       | $ | 4.11   |  |                                       | 1,802,930 |        | $ | 4.08                                  |  |  | 1,855,260 |   | $ | 4.39  | 
|Granted                                          |  |        | 200,000   |                                       | $ | 2.81   |  |                                       | 90,000    |        | $ | 4.60                                  |  |  | 50,000    |   | $ | 3.87  | 
|Forfeited                                        |  |        | (265,255  | )                                     | $ | 3.13   |  |                                       | (4,580    | )      | $ | 3.85                                  |  |  | (86,580   | ) | $ | 11.02 | 
|Exercised                                        |  |        | (55,485   | )                                     | $ | 0.00   |  |                                       | 0         |        | $ | 0.00                                  |  |  | (15,750   | ) | $ | 2.31  | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|Outstanding
  - end of year                      |  |        | 1,767,610 |                                       | $ | 4.16   |  |                                       | 1,888,350 |        | $ | 4.11                                  |  |  | 1,802,930 |   | $ | 4.08  | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|Exercisable
  at end of year                     |  |        | 1,613,410 |                                       | $ | 4.14   |  |                                       | 1,556,950 |        | $ | 4.06                                  |  |  | 1,407,230 |   | $ | 3.98  | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|                                                 |  |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |       | 
|Weighted average fair value of options
  granted |  |        |           |                                       | $ | 1.42   |  |                                       |           |        | $ | 3.01                                  |  |  |           |   | $ | 3.09  | 

The following
table summarizes information related to options outstanding at December 31,
2005:

|                          |  |  |                      |           |                                                   |            |                                       |   |                      |  |                                       |  |   |      
|------------------------- |  |  | -------------------- | --------- | ------------------------------------------------- | ---------- | ------------------------------------- | - | -------------------- |  | ------------------------------------- |  | - | -----
|                          |  |  | Options Outstanding  |           | Options Exercisable                               |           
|                          |  |  |                      |           |                                                   |           
|Range
  Exercise
  Prices |  |  | Number
  Outstanding |           | Weighted
  Average
  Remaining
  Contractual Life |            | Weighted
  Average
  Exercise
  Price |   | Number
  Exercisable |  | Weighted
  Average
  Exercise
  Price | 
|                          |  |  |                      |           |                                                   |            |                                       |   |                      |  |                                       | 
|                          |  |  |                      |           |                                                   |            |                                       |   |                      |  |                                       |  |   |      
|$0.00- 2.31               |  |  |                      | 15,000    |                                                   | 6.8 Years  |                                       | $ | 2.12                 |  | 9,000                                 |  | $ | 2.12 
|$2.32- 2.69               |  |  |                      | 134,610   |                                                   | 1.4 Years  |                                       | $ | 2.33                 |  | 134,610                               |  | $ | 2.33 
|$2.69- 2.81               |  |  |                      | 280,500   |                                                   | 5.5 Years  |                                       | $ | 2.78                 |  | 248,300                               |  | $ | 2.79 
|$2.81- 5.33               |  |  |                      | 1,330,000 |                                                   | 5.5 Years  |                                       | $ | 4.58                 |  | 1,214,000                             |  | $ | 4.54 
|$5.34-32.50               |  |  |                      | 7,500     |                                                   | 3.9 Years  |                                       | $ | 17.81                |  | 7,500                                 |  | $ | 17.81
|                          |  |  |                      |           |                                                   |            |                                       |   |                      |  |                                       |  |   |      
|                          |  |  |                      |           |                                                   |            |                                       |   |                      |  |                                       |  |   |      
|$0.00-32.50               |  |  |                      | 1,767,610 |                                                   | 5.15 Years |                                       | $ | 4.16                 |  | 1,613,410                             |  | $ | 4.14 
|                          |  |  |                      |           |                                                   |            |                                       |   |                      |  |                                       |  |   |      

At December
31, 2005, approximately 2,025,915 shares of the Companys common stock have
been reserved for future issuance under the Plan, the Award Plan and for
options granted to directors.

NOTE I - FINANCIAL INSTRUMENTS WITH
OFF-BALANCE SHEET RISK AND CONCENTRATIONS
OF CREDIT RISK

In the normal
course of business, Siebert enters into transactions in various financial
instruments with off-balance sheet risk. This risk includes both market and
credit risk, which may be in excess of the amounts recognized in the statement
of financial condition.

Retail
customer transactions are cleared through clearing brokers on a fully disclosed
basis. In the event that customers are unable to fulfill their contractual
obligations, the clearing broker may charge Siebert for any loss incurred in
connection with the purchase or sale of securities at prevailing market prices
to satisfy customers obligations. Securities transactions entered into as of December 31, 2005
settled with no adverse effect on Sieberts financial condition. Siebert regularly monitors the activity in
its customer accounts for compliance with its margin requirements.

F-13

---



NOTE J - COMMITMENTS AND CONTINGENT
LIABILITIES

Siebert
terminated the fully disclosed clearing agreement (the Clearing Agreement)
with Pershing LLC (formerly the Pershing division of Donaldson, Lufkin &
Jenrette Securities Corporation) (Pershing) in 2003. Based on consultation
with counsel, Siebert believes that the $1,500,000 that it advanced to Pershing
in January 2003 should have been returned and that Pershing may be liable for
damages. Pershing has expressed its belief that it is entitled to retain the
advance and receive a minimum of $3 million for its unreimbursed costs, a
termination fee of $500,000 and $5 million for lost revenues. Siebert believes
the Pershing claims are without merit and that the ultimate result of this
matter will not have a material adverse effect on result of operations or
financial position. Siebert in 2004 decided not to commence proceedings against
Pershing and charged off the $1,500,000 advance to Pershing. Siebert and
Pershing in 2005 entered into a Limited Release Agreement under which Siebert
received a release from the $3 million disputed claims for unreimbursed fees
and costs, and Pershing was released from any liability to Siebert based upon
the disputed fees and costs, and Siebert paid a consideration to Pershing that
had been previously accrued by Siebert. The outcome of this matter cannot now be predicted.

In August
2004, Siebert participated as an underwriter in the Google, Inc. initial public
offering. To participate as an underwriter, the lead Investment Banks (the
Banks) requested that each underwriter provide the Banks with a $25 million
Letter of Credit on behalf of Siebert in favor of the Banks. To obtain the
Letter of Credit, Siebert entered into a Temporary Subordinated Loan Agreement
with National Financial Services Corp (NFS). On August 6, 2004, Siebert
entered into a Letter of Credit for $25 million and terminated the Letter of
Credit and paid the temporary subordinated loan agreement with NFS on September
15, 2004.

The Company
rents discount retail brokerage and other office space under long-term operating leases expiring in various periods
through 2009. These leases call for base rent plus escalations for taxes and
operating expenses.

Future minimum
base rental payments under these operating leases are as follows:

|               |  |  |        |           | 
|-------------- |  |  | ------ | --------- | 
|Year
  Ending  |  |  |        |           | 
|December
  31, |  |  | Amount |          
|               |  |  |        |          
|              
|2006           |  |  |        | 965,000   | 
|2007           |  |  |        | 424,000   | 
|2008           |  |  |        | 389,000   | 
|2009           |  |  |        | 185,000   | 
|               |  |  |        |           | 
|               |  |  |        |           | 
|               |  |  | $      | 1,963,000 | 
|               |  |  |        |           | 

Rent expense,
including escalations for operating costs, amounted to approximately $985,000,
$984,000 and $1,041,000 for the years ended December 31, 2005, 2004 and 2003,
respectively. Rent is being charged to expense over the entire lease term on a
straight-line basis.

In addition to
the Pershing matter, Siebert is party to certain claims, suits and complaints
arising in the ordinary course of business. In the opinion of management, all
such claims, suits and complaints are without merit, or involve amounts which
would not have a significant effect on the financial position or results of
operations of the Company. The Company believes that adequate provisions have
been made for such matters.

Siebert
sponsors a defined contribution retirement plan under Section 401(k) of the
Internal Revenue Code that covers substantially all employees. Participant
contributions to the plan are voluntary and are subject to certain limitations.
Siebert may also make discretionary contributions to the plan. No contributions
were made by Siebert in 2005, 2004 and 2003.

Siebert is
party to a Secured Demand Note Collateral Agreement with SBS which obligates
Siebert to lend SBS, on a subordinated basis, up to $1,200,000. Amounts that
Siebert is obligated to lend under this arrangement are reported as cash
equivalents - restricted, currently in the amount of $1,300,000. As of December 31, 2005, no amount had been loaned to SBS.

NOTE K  FAIR VALUE OF
FINANCIAL INSTRUMENTS

The carrying
amounts reflected in the consolidated statements of financial condition for
cash, cash equivalents, receivable from broker, accounts payable and accrued
liabilities approximate fair value due to the short term maturities of those
instruments. Securities owned and securities sold, not yet purchased are
carried at market value, in accordance with industry practice for broker-dealers
in securities.

F-14

---



NOTEL 
VALUATIONANDQUALIFYINGACCOUNTS

The following
is a summary of accumulated depreciation and accumulated amortization
for the years ended December 31:

|                             |  |                                    |           |                                    |  |            |  |                              |           |     |  |           | 
|---------------------------- |  | ---------------------------------- | --------- | ---------------------------------- |  | ---------- |  | ---------------------------- | --------- | --- |  | --------- | 
|Description                  |  | Balance at
  beginning
  of period |           | Charged
  to cost
  and
  expenses |  | Deductions |  | Balance at
  end of
  period |          
|                             |  |                                    |           |                                    |  |            |  |                              |          
|                            
|Accumulated
  depreciation:  |  |                                    |           |                                    |  |            |  |                              |           |     |  |           | 
|Year ended December 31, 2003 |  |                                    | 1,584,000 |                                    |  | 672,000    |  |                              | 214,000   | (a) |  | 2,042,000 | 
|Year ended December 31, 2004 |  |                                    | 2,042,000 |                                    |  | 741,000    |  |                              | 334,000   | (a) |  | 2,449,000 | 
|Year ended December 31, 2005 |  |                                    | 2,449,000 |                                    |  | 605,000    |  |                              | 1,403,000 | (a) |  | 1,651,000 | 
|                             |  |                                    |           |                                    |  |            |  |                              |           |     |  |           | 
|Accumulated
  amortization:  |  |                                    |           |                                    |  |            |  |                              |           |     |  |           | 
|Year ended December 31, 2003 |  |                                    | 1,842,000 |                                    |  | 1,106,000  |  |                              |          |     |  | 2,948,000 | 
|Year ended December 31, 2004 |  |                                    | 2,948,000 |                                    |  | 723,000    |  |                              |          |     |  | 3,671,000 | 
|Year ended December 31, 2005 |  |                                    | 3,671,000 |                                    |  | 523,000    |  |                              |          |     |  | 4,194,000 | 

(a) Write off
accumulated depreciation related to fixed asset dispositions.

NOTE M - SUMMARIZED QUARTERLY FINANCIAL DATA
(UNAUDITED)

|                           |  |              |           |               |   |              |  |               |           |              |   |               |  |              |           |               |   |           |  |   |           |  |   |           |  
|-------------------------- |  | ------------ | --------- | ------------- | - | ------------ |  | ------------- | --------- | ------------ | - | ------------- |  | ------------ | --------- | ------------- | - | --------- |  | - | --------- |  | - | --------- | -
|                           |  | 2005         |           | 2004          |  
|                           |  |              |           |               |  
|                           |  | FirstQuarter |           | SecondQuarter |   | ThirdQuarter |  | FourthQuarter |           | FirstQuarter |   | SecondQuarter |  | ThirdQuarter |           | FourthQuarter |  
|                           |  |              |           |               |   |              |  |               |           |              |   |               |  |              |           |               |  
|Revenue                    |  | $            | 7,226,000 |               | $ | 7,996,000    |  | $             | 8,102,000 |              | $ | 7,848,000     |  | $            | 7,031,000 |               | $ | 6,151,000 |  | $ | 7,167,000 |  | $ | 7,755,000 |  
|Net income (loss)          |  | $            | 181,000   |               | $ | 594,000      |  | $             | 542,000   |              | $ | 546,000       |  | $            | 415,000   |               | $ | 230,000   |  | $ | 422,000   |  | $ | (534,000  | )
|Earnings (loss) per share: |  |              |           |               |   |              |  |               |           |              |   |               |  |              |           |               |   |           |  |   |           |  |   |           |  
|Basic                      |  | $            | 0.01      |               | $ | 0.03         |  | $             | 0.02      |              | $ | 0.02          |  | $            | 0.02      |               | $ | 0.01      |  | $ | 0.02      |  | $ | (0.03     | )
|Diluted                    |  | $            | 0.01      |               | $ | 0.03         |  | $             | 0.02      |              | $ | 0.02          |  | $            | 0.02      |               | $ | 0.01      |  | $ | 0.02      |  | $ | (0.03     | )

F-15

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

Board of
Managers 
Siebert, Brandford, Shank & Co., L.L.C.
New York, New York

We have audited the accompanying statements of
financial condition of Siebert, Brandford, Shank & Co., L.L.C. as of
December 31, 2005 and 2004, and the related statements of operations, changes
in members capital, and cash flows for each of the years in the three-year
period ended December 31, 2005. 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 the
standards of the Public Company Accounting Oversight Board (United States).
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 financial position of
Siebert, Brandford, Shank & Co., L.L.C. as of December 31, 2005 and 2004,
and the results of its operations and its cash flows for each of the years in
the three-year period ended December 31, 2005 in conformity with U.S. generally
accepted accounting principles.

Eisner LLP

New York, New York
February 8, 2006

F-16

---



SIEBERT,
BRANDFORD, SHANK & CO., L.L.C.

STATEMENTS OF
FINANCIAL CONDITION

Statements of
Financial Condition

|                                                          |  |              |            |      |   |            | 
|--------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ---------- | 
|                                                          |  | December 31, |           
|                                                          |  |              |           
|                                                          |  | 2005         |            | 2004 |  
|                                                          |  |              |            |      |  
|                                                          |  |              |            |      |   |            | 
|ASSETS                                                    |  |              |            |      |   |            | 
|Cash and cash equivalents                                 |  | $            | 10,512,082 |      | $ | 9,053,050  | 
|Securities owned, at market
  value                       |  |              | 580,145    |      |   | 10,011     | 
|Accounts receivable                                       |  |              | 1,020,294  |      |   | 1,507,986  | 
|Receivable from broker                                    |  |              | 168,047    |      |   | 7,478      | 
|Receivable from affiliate                                 |  |              | 21,997     |      |   |            | 
|Secured demand note                                       |  |              | 1,200,000  |      |   | 1,200,000  | 
|Furniture and equipment and
  leasehold improvements, net |  |              | 248,595    |      |   | 203,698    | 
|Other assets                                              |  |              | 414,736    |      |   | 343,435    | 
|                                                          |  |              |            |      |   |            | 
|                                                         
|                                                          |  | $            | 14,165,896 |      | $ | 12,325,658 | 
|                                                          |  |              |            |      |   |            | 
|                                                          |  |              |            |      |   |            | 
|Commitments and Contingency                               |  |              |            |      |   |            | 
|                                                          |  |              |            |      |   |            | 
|LIABILITIES AND MEMBERS CAPITAL                          |  |              |            |      |   |            | 
|Liabilities:                                              |  |              |            |      |   |            | 
|Payable to member                                         |  | $            | 101,902    |      | $ | 125,888    | 
|Accounts payable and accrued
  expenses                   |  |              | 5,245,204  |      |   | 3,555,380  | 
|                                                          |  |              |            |      |   |            | 
|                                                         
|                                                          |  |              | 5,347,106  |      |   | 3,681,268  | 
|                                                         
|Subordinated debt                                         |  |              | 1,200,000  |      |   | 1,200,000  | 
|                                                         
|Members capital                                          |  |              | 7,618,790  |      |   | 7,444,390  | 
|                                                          |  |              |            |      |   |            | 
|                                                         
|                                                          |  | $            | 14,165,896 |      | $ | 12,325,658 | 
|                                                          |  |              |            |      |   |            | 

See Notes to Financial Statements

F-17

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

Statements of
Operations

|                                     |  |                         |            |      |   |            |  |   |            | 
|------------------------------------ |  | ----------------------- | ---------- | ---- | - | ---------- |  | - | ---------- | 
|                                     |  | Year Ended December 31, |           
|                                     |  |                         |           
|                                     |  | 2005                    |            | 2004 |   | 2003       | 
|                                     |  |                         |            |      |   |            | 
|                                     |  |                         |            |      |   |            |  |   |            | 
|Revenues:                            |  |                         |            |      |   |            |  |   |            | 
|Investment banking                   |  | $                       | 18,085,786 |      | $ | 15,779,505 |  | $ | 14,254,693 | 
|Trading profits                      |  |                         | 2,597,064  |      |   | 1,358,959  |  |   | 312,657    | 
|Interest and other                   |  |                         | 403,260    |      |   | 83,870     |  |   | 60,793     | 
|                                     |  |                         |            |      |   |            |  |   |            | 
|                                    
|                                     |  |                         | 21,086,110 |      |   | 17,222,334 |  |   | 14,628,143 | 
|                                     |  |                         |            |      |   |            |  |   |            | 
|                                    
|Expenses:                            |  |                         |            |      |   |            |  |   |            | 
|Employee compensation and
  benefits |  |                         | 12,890,686 |      |   | 9,963,888  |  |   | 7,452,723  | 
|Clearing fees                        |  |                         | 370,003    |      |   | 122,448    |  |   | 31,847     | 
|Communications                       |  |                         | 539,191    |      |   | 356,939    |  |   | 243,327    | 
|Occupancy                            |  |                         | 640,666    |      |   | 477,668    |  |   | 504,524    | 
|Professional fees                    |  |                         | 633,137    |      |   | 744,635    |  |   | 641,219    | 
|Interest                             |  |                         | 96,000     |      |   | 110,000    |  |   | 120,000    | 
|General and administrative           |  |                         | 2,539,257  |      |   | 1,952,983  |  |   | 1,756,607  | 
|                                     |  |                         |            |      |   |            |  |   |            | 
|                                    
|                                     |  |                         | 17,708,940 |      |   | 13,728,561 |  |   | 10,750,247 | 
|                                     |  |                         |            |      |   |            |  |   |            | 
|                                    
|Net income                           |  | $                       | 3,377,170  |      | $ | 3,493,773  |  | $ | 3,877,896  | 
|                                     |  |                         |            |      |   |            |  |   |            | 

See Notes to Financial Statements

F-18

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

STATEMENTS OF CHANGES IN MEMBERS CAPITAL

|                              |  |   |            |  
|----------------------------- |  | - | ---------- | -
|Balance - January 1, 2003     |  | $ | 5,540,573  |  
|Distributions to member       |  |   | (2,955,633 | )
|Net income                    |  |   | 3,877,896  |  
|                              |  |   |            |  
|                             
|Balance -
  December 31, 2003 |  |   | 6,462,836  |  
|Distributions to member       |  |   | (2,512,219 | )
|Net income                    |  |   | 3,493,773  |  
|                              |  |   |            |  
|                             
|Balance - December 31, 2004   |  |   | 7,444,390  |  
|Distributions to members      |  |   | (3,202,770 | )
|Net income                    |  |   | 3,377,170  |  
|                              |  |   |            |  
|                              |  |   |            |  
|Balance - December 31, 2005   |  | $ | 7,618,790  |  
|                              |  |   |            |  

See Notes to Financial Statements

F-19

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

STATEMENTS OF CASH FLOWS

|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|----------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                    |  | Year Ended December 31, |           
|                                                                                    |  |                         |           
|                                                                                    |  | 2005                    |            | 2004 |   | 2003       |  
|                                                                                    |  |                         |            |      |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash flows
  from operating activities:                                             |  |                         |            |      |   |            |   |   |            |  
|Net income                                                                          |  | $                       | 3,377,170  |      | $ | 3,493,773  |   | $ | 3,877,896  |  
|Adjustments to reconcile net
  income to net cash provided by operating activities: |  |                         |            |      |   |            |   |   |            |  
|Depreciation and amortization                                                       |  |                         | 68,824     |      |   | 46,498     |   |   | 52,078     |  
|Changes in:                                                                         |  |                         |            |      |   |            |   |   |            |  
|Securities owned, at market
  value                                                 |  |                         | (570,134   | )    |   | 5,276      |   |   | 763,589    |  
|Accounts receivable                                                                 |  |                         | 487,692    |      |   | (1,119,783 | ) |   | 155,832    |  
|Receivable from broker-dealers                                                      |  |                         | (160,569   | )    |   | (434       | ) |   | (7,044     | )
|Other assets                                                                        |  |                         | (71,301    | )    |   | (67,708    | ) |   | (119,577   | )
|Receivable to/payable from
  member                                                 |  |                         | (23,986    | )    |   | 86,152     |   |   | 6,764      |  
|Accounts payable and accrued
  expenses                                             |  |                         | 1,689,825  |      |   | 1,085,165  |   |   | 545,470    |  
|Payable to broker-dealer                                                            |  |                         |            |      |   |            |   |   | (246,044   | )
|Payable to Affiliate                                                                |  |                         | (21,997    | )    |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash provided by operating activities                                           |  |                         | 4,775,524  |      |   | 3,528,939  |   |   | 5,028,964  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                   
|Cash flows
  from investing activities:                                             |  |                         |            |      |   |            |   |   |            |  
|Purchase of property and
  equipment                                                |  |                         | (113,722   | )    |   | (121,346   | ) |   | (89,349    | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash flows
  from financing activities:                                             |  |                         |            |      |   |            |   |   |            |  
|Distributions to members                                                            |  |                         | (3,202,770 | )    |   | (2,512,219 | ) |   | (2,955,633 | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net increase
  in cash and cash equivalents                                         |  |                         | 1,459,032  |      |   | 895,374    |   |   | 1,983,982  |  
|Cash and cash equivalents -
  beginning of year                                     |  |                         | 9,053,050  |      |   | 8,157,676  |   |   | 6,173,694  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash and cash
  equivalents - end of year                                           |  | $                       | 10,512,082 |      | $ | 9,053,050  |   | $ | 8,157,676  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Supplemental
  disclosures of cash flow information:                                |  |                         |            |      |   |            |   |   |            |  
|Taxes paid                                                                          |  | $                       | 120,000    |      | $ | 120,000    |   | $ | 117,000    |  
|Interest paid                                                                       |  | $                       | 96,000     |      | $ | 110,000    |   | $ | 120,000    |  

See Notes to Financial Statements

F-20

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 2005

NOTE A - ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] | Organization and Basis Of Presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Siebert,
  Brandford, Shank & Co., L.L.C. (SBS or the Company) was formed on
  March 10, 1997 to engage in the business of tax-exempt underwriting and
  related trading activities. The Company qualifies as a Minority and Womens
  Business Enterprise in certain states.                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company
  was formed to succeed the tax-exempt underwriting activities business of the
  Siebert, Brandford, Shank Division of Muriel Siebert & Co., Inc.
  (Siebert), and commenced operations on July 1, 1998. Two individuals (the
  Principals) and Siebert are the equity members of the Company. The business
  arrangement provides that profits will be shared 51% to the Principals and
  49% to Siebert.                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|[2] | Securities Transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Securities
  transactions, commissions, revenues and expenses are recorded on a trade date
  basis. Securities owned are valued at market value.                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Dividends
  are recorded on the ex-dividend date, and interest income is recognized on an
  accrual basis.                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|[3] | Investment Banking:                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Investment
  banking revenues include gains and fees, net of syndicate expenses, arising
  primarily from municipal bond offerings in which the Company acts as an
  underwriter or agent. Investment banking management fees are recorded on
  offering date, sales concessions on settlement date, and underwriting fees at
  the time the underwriting is completed and the income is reasonably
  determinable.                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|[4] | Furniture, Equipment And Leasehold Improvements, Net:                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Furniture
  and equipment is stated at cost and depreciation is calculated using the
  straight-line method over the lives of the assets, generally five years.
  Leasehold improvements are amortized over the period of the lease.                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|[5] | Cash Equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | For purposes
  of reporting cash flows, cash equivalents include money market funds.                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|[6] | Use Of Estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|[7] | Income Taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company
  is not subject to federal income taxes. Instead, the members are required to
  include in their income tax returns their respective share of the Companys
  income. The Company is subject to tax in certain state and local
  jurisdictions.                                                                                                                                                                                                                                   

NOTE B - SUBORDINATED
BORROWINGS AND SECURED DEMAND NOTE RECEIVABLE

The
subordinated debt at December 31, 2005 and 2004 consist of a Secured Demand
Note Collateral Agreement, as amended, payable to Siebert, in the amount of
$1,200,000, bearing interest at 8% and due August 31, 2007. Interest expense
paid to Siebert for each of 2005, 2004 and 2003 amounts to $96,000, $110,000
and $120,000, respectively.

The
subordinated borrowings are available in computing net capital under the
Securities and Exchange Commissions (the SEC) Uniform Net Capital Rule. To
the extent that such borrowing is required for the Companys continued
compliance with minimum net capital requirements, it may not be repaid.

The secured
demand note receivable of $1,200,000 is collateralized by cash equivalents of
Siebert of approximately $1,300,000 at December 31, 2005. Interest earned on
the collateral amounted to approximately $52,000, $22,000 and $18,000 in 2005,
2004 and 2003, respectively.

F-21

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2005

NOTE C - FURNITURE,
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Furniture,
equipment and leasehold improvements consist of the following:

|                                                 |  |      |          |      |   |          |  
|------------------------------------------------ |  | ---- | -------- | ---- | - | -------- | -
|                                                 |  | 2005 |          | 2004 |  
|                                                 |  |      |          |      |  
|                                                 |  |      |          |      |   |          |  
|Equipment                                        |  | $    | 435,068  |      | $ | 360,214  |  
|Furniture
  and fixtures                         |  |      | 149,468  |      |   | 110,600  |  
|                                                 |  |      |          |      |   |          |  
|                                                 |  |      |          |      |   |          |  
|                                                 |  |      | 584,536  |      |   | 470,814  |  
|Less
  accumulated depreciation and amortization |  |      | (335,941 | )    |   | (267,116 | )
|                                                 |  |      |          |      |   |          |  
|                                                 |  |      |          |      |   |          |  
|                                                 |  | $    | 248,595  |      | $ | 203,698  |  
|                                                 |  |      |          |      |   |          |  

NOTE D - NET CAPITAL

The Company is
subject to the SECs Uniform Net Capital Rule 15c3-1, which requires the
maintenance of minimum net capital and requires that the ratio of aggregate
indebtedness to net capital, both as defined, shall not exceed 15 to 1. At
December 31, 2005 and 2004, the Company had net capital of $7,841,000 and
$7,916,000, respectively, which was $7,485,000 and $7,671,000, respectively, in
excess of its required net capital, and its ratio of aggregate indebtedness to
net capital was .68 to 1 and .35 to 1, respectively. The Company claims
exemption from the reserve requirements under Section 15c-3-3(k)(2)(ii).

NOTE E - COMMITMENTS
AND CONTINGENCY

The Company
rents office space under long-term operating leases expiring through 2013.
These leases call for base rent plus escalations for taxes and operating
expenses. Future minimum base rent under these operating leases are as
follows:

|           |  |   |           |  | 
|---------- |  | - | --------- |  | 
|Year       |  |   | Amount    | 
|           |  |   |           | 
|           |  |   |           | 
|2006       |  | $ | 445,000   | 
|2007       |  |   | 407,000   | 
|2008       |  |   | 390,000   | 
|2009       |  |   | 363,000   | 
|2010       |  |   | 200,000   | 
|Thereafter |  |   | 429,000   | 
|           |  |   |           | 
|           |  |   |           | 
|           |  | $ | 2,234,000 | 
|           |  |   |           | 

Rent expense
including taxes and operating expenses for 2005, 2004 and 2003 amounted to
$640,666, $477,668 and $504,524, respectively.

NOTE F - OTHER

During each of
2005, 2004 and 2003, the Company was charged $240,000 by Siebert for rent and
general and administrative services.

F-22

---



SIGNATURES

In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                        |       |                        
|----------------------- | ----- | -----------------------
|SIEBERT FINANCIAL CORP.
|                        |       |                        
|                        | By:   | /s/ MURIEL
  F. SIEBERT
|                        |       |                        
|                        |       | Muriel F.
  Siebert    
|                        |       | Chair and
  President  
|                        |       |                        
|                        | Date: | March 31,
  2006       

In accordance
with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.

|                           |  |                                                                                                      |  |                 
|-------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ----------------
|Name                       |  | Title                                                                                                |  | Date            
|                           |  |                                                                                                      |  |                 
|/s/ Muriel
  F. Siebert    |  | Chair,
  President and Director
  (principal executive officer)                                      |  | March 31,
  2006
|                          
|Muriel F.
  Siebert       
|                           |  |                                                                                                      |  |                 
|/s/ Jeanne
  Rosendale     |  | Executive
  Vice President,
  and General Counsel                                                    |  | March 31,
  2006
|                          
|Jeanne
  Rosendale        
|                           |  |                                                                                                      |  |                 
|/s/ Joseph
  M. Ramos, Jr. |  | Chief
  Financial Officer
  and Assistant Secretary
  (principal financial and
  accounting officer) |  | March 31,
  2006
|                          
|Joseph M.
  Ramos, Jr.    
|                          
|                          
|                           |  |                                                                                                      |  |                 
|/s/ Patricia
  L. Francy   |  | Director                                                                                             |  | March 31,
  2006
|                           |  |                                                                                                      |  |                 
|Patricia L.
  Francy       |  |                                                                                                      |  |                 
|                           |  |                                                                                                      |  |                 
|/s/ Leonard
  M. Leiman    |  | Director                                                                                             |  | March 31,
  2006
|                           |  |                                                                                                      |  |                 
|Leonard M.
  Leiman        |  |                                                                                                      |  |                 
|                           |  |                                                                                                      |  |                 
|/s/ Jane H.
  Macon        |  | Director                                                                                             |  | March 31,
  2006
|                           |  |                                                                                                      |  |                 
|Jane H.
  Macon            |  |                                                                                                      |  |                 
|                           |  |                                                                                                      |  |                 
|/s/ Robert
  P. Mazzarella |  | Director                                                                                             |  | March 31,
  2006
|                           |  |                                                                                                      |  |                 
|Robert P.
  Mazzarella     |  |                                                                                                      |  |                 
|                           |  |                                                                                                      |  |                 
|/s/ Nancy S.
  Peterson    |  | Director                                                                                             |  | March 31,
  2006
|                           |  |                                                                                                      |  |                 
|Nancy S.
  Peterson        |  |                                                                                                      |  |                 

---



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) (incorporated by reference to Siebert Financial Corp.s Form 10-K
  for the fiscal year ended December 31, 1996)        
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 2.2   |                         |  | Amendment
  No. 1 to Merger Agreement, dated as of June 28, 1996 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                                                                                   
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 2.3   |                         |  | Amendment
  No. 2 to Merger Agreement, dated as of September 30, 1996 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                                                                              
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 2.4   |                         |  | Amendment
  No. 3 to Merger Agreement, dated as of November 7, 1996 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                                                                                
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 3.1   |                         |  | Certificate
  of Incorporation of Siebert Financial Corp., formerly known as J. Michaels,
  Inc. originally filed on April 9, 1934, as amended and restated to date
  (incorporated by reference to Siebert Financial Corp.s Form 10-K for the
  fiscal year ended December 31, 1997)                
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 3.2   |                         |  | By-laws of
  Siebert Financial Corp. (incorporated by reference to Siebert Financial
  Corp.s Registration Statement on Form S-1 (File No. 333-49843) filed with
  the Securities and Exchange Commission on April 10, 1998)                                                                         
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.1  |                         |  | Siebert
  Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference
  to Siebert Financial Corp.s Form 10-K for the fiscal year ended December 31,
  1997)                                                                                                                         
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.2  |                         |  | 10(a)
  Siebert Financial Corp. 1997 Stock Option Plan (incorporated by reference to
  Siebert Financial Corp.s Form 10-K for the fiscal year ended December 31,
  1996)                                                                                                                             
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.4  |                         |  | LLC
  Operating Agreement, among Siebert, Brandford, Shank & Co., LLC, Muriel
  Siebert & Co., Inc., Napoleon Brandford III and Suzanne F. Shank, dated
  as of March 10, 1997 (incorporated by reference to Siebert Financial Corp.s
  Form 10-K for the fiscal year ended December 31, 1996)       
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.5  |                         |  | Services
  Agreement, between Siebert, Brandford, Shank & Co., LLC and Muriel
  Siebert & Co., Inc., dated as of March 10, 1997 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                    
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.6  |                         |  | Siebert
  Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference
  to Siebert Financial Corp.s Form 10-K for the fiscal year ended December 31,
  1997)                                                                                                                         
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.7  |                         |  | Stock Option
  Agreement, dated March 11, 1997, between the Company and Patricia L. Francy
  (incorporated by reference to Siebert Financial Corp.s Registration
  Statement on Form S-8 (File No. 333-72939) filed with the Securities and
  Exchange Commission on February 25, 1999)              
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.8  |                         |  | Stock Option
  Agreement, dated March 11, 1997, between the Company and Jane H. Macon
  (incorporated by reference to Siebert Financial Corp.s Registration
  Statement on Form S-8 (File No. 333-72939) filed with the Securities and
  Exchange Commission on February 25, 1999)                   
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.9  |                         |  | Stock Option
  Agreement, dated March 11, 1997, between the Company and Monte E. Wetzler
  (incorporated by reference to Siebert Financial Corp.s Registration
  Statement on Form S-8 (File No. 333-72939) filed with the Securities and
  Exchange Commission on February 25, 1999)                
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.10 |                         |  | Employment
  Agreement, dated as of April 9, 1999, between the Company and Daniel Jacobson
  (incorporated by reference to Siebert Financial Corp.s Form 10-Q for the
  quarter ended September 30, 1999)                                                                                            
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.11 |                         |  | Strategic
  Alliance Agreement, dated as of April 29, 2002, by and between Intuit Inc,
  Muriel Siebert & Co., Inc. and Investment Solutions, Inc. (incorporated
  by reference to Siebert Financial Corp.s Form 10-Q for the quarter ended
  June 30, 2002.)                                        
|            |       |                         |  |                                                                                                                                                                                                                                                                                                       
|            | 10.12 |                         |  | Fully
  Disclosed Clearing Agreement, dated April 30, 2002, by and between the
  Pershing Division of Donaldson, Lufkin and Jenrette Securities Corporation
  and Muriel Siebert & Co., Inc. (incorporated by reference to Siebert
  Financial Corp.s Form 10-Q for the quarter ended June 30, 2002.)

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|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|----------- | ----- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description Of Document
|            |       |                        
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 10.13 |                         |  | Operating
  Agreement of SBS Financial Products Company, LLC, dated effective as of April
  19, 2005, by and among Siebert Financial Corp., Napoleon Brandford III and
  Suzanne Shank. (incorporated by reference to Siebert Financial Corp.s
  Current Report on Form 8-K filed with the Securities and Exchange Commission
  on May 17, 2005)
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 21    |                         |  | Subsidiaries
  of the registrant (incorporated by reference to Siebert Financial Corp.s
  Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                                                                                                                      
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 23    |                         |  | Consent of
  Independent Auditors                                                                                                                                                                                                                                                                                                                
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 31.1  |                         |  | Certification
  of Muriel F. Siebert pursuant to Securities Exchange Act Rules 13a-14 and
  15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                         
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 31.2  |                         |  | Certification
  of Joseph M. Ramos, Jr. pursuant to Securities Exchange Act Rules 13a-14 and
  15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley act of 2002.                                                                                                                                                                     
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 32.1  |                         |  | Certification
  of Muriel F. Siebert of Periodic Financial Report under Section 906 of the
  Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                          
|            |       |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|            | 32.2  |                         |  | Certification
  of Joseph M. Ramos, Jr. of Periodic Financial Report under Section 906 of the
  Sarbanes- Oxley Act of 2002                                                                                                                                                                                                                      

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