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What changed in Binah Capital Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Binah Capital Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+111 added−88 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-16)

Top changes in Binah Capital Group, Inc.'s 2024 10-K

111 paragraphs added · 88 removed · 78 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWorld Equity Group, Inc. (“WEG”), incorporated in the State of Illinois, is registered as a broker-dealer and investment advisor with the SEC and is a member of FINRA and SIPC. WEG maintains offices in Schaumburg, Illinois and has branch offices throughout the United States of America.
Biggest changeDuring the year ended December 31, 2024, WFP began to operate under the dba Binah Financial Partners. World Equity Group, Inc. (“WEG”), incorporated in the State of Illinois, is registered as a broker-dealer and investment advisor with the SEC and is a member of FINRA and SIPC.
With a track record of building a platform capable of significant scale along with strategic initiatives to drive its growth via access to public capital, Binah’s features include: ● A national wealth management platform supporting more than 1,900 individuals working within the financial services industries ● Tech-enabled capabilities that allows for seamless integration and provides advisors with end-to-end services enhancing efficiency ● Open architecture that offers access to an array of solutions for advisors and their clients via expanded product offerings and shared services 1 Table of Contents ● A highly attractive financial model that is expected to experience organic growth, highly recurring revenues and expanding margins Each of our independent advisory and brokerage firms provides full support services to its financial advisors, including access to stock, bond, exchange-traded fund (“ ETF ”) and options execution; products such as insurance, mutual funds, alternative investments such as non-traded real estate investment trusts, unit trusts and fixed and variable annuities; and research, compliance, supervision, accounting and related services.
With a track record of building a platform capable of significant scale along with strategic initiatives to drive its growth via access to public capital, Binah’s features include: ● A national wealth management platform supporting more than 1,900 individuals working within the financial services industries ● Tech-enabled capabilities that allows for seamless integration and provides advisors with end-to-end services enhancing efficiency 1 Table of Contents ● Open architecture that offers access to an array of solutions for advisors and their clients via expanded product offerings and shared services ● A highly attractive financial model that is expected to experience organic growth, highly recurring revenues and expanding margins Each of our independent advisory and brokerage firms provides full support services to its financial advisors, including access to stock, bond, exchange-traded fund (“ ETF ”) and options execution; products such as insurance, mutual funds, alternative investments such as non-traded real estate investment trusts, unit trusts and fixed and variable annuities; and research, compliance, supervision, accounting and related services.
Independent Business Model: the Cabot Lodge Entities and the World Equity Group Cabot Lodge Securities LLC (“ CLS ”) maintains offices in New York, New York with branch offices throughout the United States of America, more than 100 registered advisors. and includes the following entities (the “ Cabot Entities ”): ● CLS, a Delaware limited liability company, is a broker-dealer registered with the SEC and is a member of FINRA and SIPC. ● CL Wealth Management LLC (“ CLWM ”), a Virginia limited liability company in the, is an investment advisory firm, registered with the SEC and provides advisory services to clients. ● Wentworth Financial Partners LLC (“ WFP ”) (f/k/a CL General Agency), a Delaware limited liability company, is an insurance entity providing financial services to clients.
Independent Business Model: the Cabot Lodge Entities and the World Equity Group Cabot Lodge Securities LLC (“ CLS ”) maintains offices in New York, New York with branch offices throughout the United States of America, more than 100 registered advisors. and includes the following entities (the “ Cabot Entities ”): ● CLS, a Delaware limited liability company, is a broker-dealer registered with the SEC and is a member of FINRA and SIPC. ● CL Wealth Management LLC (“ CLWM ”), a Virginia limited liability company, is an investment advisory firm, registered with the SEC and provides advisory services to clients. ● Wentworth Financial Partners LLC (“ WFP ”) (f/k/a CL General Agency), a Delaware limited liability company, is an insurance entity providing financial services to clients.
The independent broker-dealer is a commission based on a smaller percentage of a branch’s commission-based revenues from securities brokerage transactions conducted through our brokerage firms, and the fee-based revenue for asset management services provided by our corporate RIAs. 3 Table of Contents Competition The wealth management industry is highly competitive.
The independent broker-dealer is a commission based on a smaller percentage of a branch’s commission-based 3 Table of Contents revenues from securities brokerage transactions conducted through our brokerage firms, and the fee-based revenue for asset management services provided by our corporate RIAs. Competition The wealth management industry is highly competitive.
Our network enables highly qualified professionals to run their businesses efficiently and effectively through end-to-end resources and support, including: ● Clearing capabilities through major clearing and custodial firms ● Ability to maintain their identity and enhance their brand ● Flexibility to choose independent or corporate registered investment advisors ● Knowledge and services sharing across the community ● Seamless integration ● Enterprise relationships 4 Table of Contents Growth Strategy As advisors and assets under management continue to migrate from traditional wirehouse brokerage and commission-based platforms to hybrid and independent models, we believe we are well-positioned to expand our existing network and to grow through acquisitions.
Our network enables highly qualified professionals to run their businesses efficiently and effectively through end-to-end resources and support, including: ● Clearing capabilities through major clearing and custodial firms ● Ability to maintain their identity and enhance their brand ● Flexibility to choose independent or corporate registered investment advisors ● Knowledge and services sharing across the community ● Seamless integration 4 Table of Contents ● Enterprise relationships Growth Strategy As advisors and assets under management continue to migrate from traditional wirehouse brokerage and commission-based platforms to hybrid and independent models, we believe we are well-positioned to expand our existing network and to grow through acquisitions.
Corporate Structure Founded in March 2016 as a limited liability company under the Delaware Limited Liability Company Act, Wentworth, through four wholly-owned registered broker dealer subsidiaries and their affiliated entities, provides investment management services to clients via three advisor business models: Hybrid Business Model: The Purshe Kaplan Sterling Entities PKS Holdings, LLC (“ PKSH ”) is headquartered in Albany, New York with branch offices throughout the United States of America, more than 1700 registered individuals working within the financial services industries, and includes the following entities (the “ PKSH Entities ”): ● Purshe Kaplan Sterling Investments, Inc.
Corporate Structure Founded in March 2016 as a limited liability company under the Delaware Limited Liability Company Act, BMS, through four wholly-owned registered broker dealer subsidiaries and their affiliated entities, provides investment management services to clients via three advisor business models: Hybrid Business Model: The Purshe Kaplan Sterling Entities PKS Holdings, LLC (“ PKSH ”) is headquartered in Albany, New York with branch offices throughout the United States of America, more than 1700 registered individuals working within the financial services industries, and includes the following entities (the “ PKSH Entities ”): ● Purshe Kaplan Sterling Investments, Inc.
ITEM 1. BUSINESS The Company Binah Capital Group, Inc. is a Delaware corporation with its corporate headquarters located at 80 State Street, Albany, NY 12207, telephone number (212) 404-7002, Internet website address www.wentworthms.com. Our Internet website and content contained therein or connected thereto are not intended to incorporate into this Annual Report.
ITEM 1. BUSINESS The Company Binah Capital Group, Inc. is a Delaware corporation with its corporate headquarters located at 80 State Street, Albany, NY 12207, telephone number (212) 404-7002, Internet website address www.binahcap.com. Our Internet website and content contained therein or connected thereto are not intended to incorporate into this Annual Report.
Copies of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 may also be obtained by stockholders without charge upon written request to: Binah Capital Group Inc., 80 State Street, Albany, NY 12207, ATTN: Investor Relations. 6 Table of Contents
Copies of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 may also be obtained by stockholders without charge upon written request to: Binah Capital Group Inc., 80 State Street, Albany, NY 12207, ATTN: Investor Relations. 6 Table of Contents
Pipeline Acquisitions We continue to scale as firms consolidate into the Wentworth network and we add advisors via lift-out pipeline acquisitions. We leverage management’s existing relationships and experience to continue to identify and integrate partner and promote the Wentworth brand to the market. Regulatory Environment Most of the organizations and professionals in our network are subject to extensive regulation.
Pipeline Acquisitions We continue to scale as firms consolidate into the BMS network and we add advisors via lift-out pipeline acquisitions. We leverage management’s existing relationships and experience to continue to identify and integrate partner and promote the BMS brand to the market. Regulatory Environment Most of the organizations and professionals in our network are subject to extensive regulation.
Pursuant to the W2 Business Model, the independent broker-dealer joins one of our established branch offices and Wentworth is responsible for the payment of substantially all of the expenses associated with the operation of the branch office (including rent, utilities, furniture, equipment, quotation systems, employee wages and benefits and general office supplies).
Pursuant to the W2 Business Model, the independent broker-dealer joins one of our established branch offices and BMS is responsible for the payment of substantially all of the expenses associated with the operation of the branch office (including rent, utilities, furniture, equipment, quotation systems, employee wages and benefits and general office supplies).
The independent financial advisor generally establishes his or her own office and is solely responsible for the payment of all expenses associated with the operation of the branch office (including rent, utilities, furniture, equipment, quotation systems, employee wages and benefits and general office supplies).
The independent financial advisor generally establishes his or her own office 2 Table of Contents and is solely responsible for the payment of all expenses associated with the operation of the branch office (including rent, utilities, furniture, equipment, quotation systems, employee wages and benefits and general office supplies).
The unauthorized access, use, theft or destruction of client or employee personal, financial or other data could expose us to potential financial penalties and legal liability. 5 Table of Contents Human Capital As of December 31, 2023, the Company’s workforce was comprised of approximately 130 employees and substantially all employees are salaried.
The unauthorized access, use, theft or destruction of client or employee personal, financial or other data could expose us to potential financial penalties and legal liability. 5 Table of Contents Human Capital As of December 31, 2024, the Company’s workforce was comprised of approximately 150 employees and substantially all employees are salaried.
A significant percentage of a branch’s commission-based revenues from securities brokerage transactions conducted through our brokerage firms accrue to the 2 Table of Contents independent financial advisor.
A significant percentage of a branch’s commission-based revenues from securities brokerage transactions conducted through our brokerage firms accrue to the independent financial advisor.
(“ PKSF ”), incorporated in the State of New York, is an insurance entity providing financial services to clients. ● Representatives Indemnity Company, Inc. (“ Repco ”), incorporated in the British Virgin Islands, holds a general business insurance license for the purpose of providing professional liability insurance coverage for affiliated Wentworth entities.
(“ Repco ”), incorporated in the British Virgin Islands, holds a general business insurance license for the purpose of providing professional liability insurance coverage for affiliated BMS entities.
Added
During the year ended December 31, 2024, KWAC’s name was changed to Binah Capital Corp. (“Binah”) and Wentworth began to operate under a dba Binah Management Services (“BMS”). The names Binah and BMS will be used throughout.
Added
(“ PKSF ”), incorporated in the State of New York, is an insurance entity providing financial services to clients. During the year ended December 31, 2024, PKSF began to operate under the dba Binah Capital Insurance. ● Representatives Indemnity Company, Inc.
Added
WEG maintains offices in Schaumburg, Illinois and has branch offices throughout the United States of America.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or common stock, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise of a Company public warrant.
Biggest changeAlthough our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or common stock, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise of the Company’s warrants.
We have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant; provided that the last reported sale price of our common stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant; provided that the last reported sale price of our common stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
If we fail to meet or exceed such expectations, the market price of Company common stock could fall substantially, and we could face costly lawsuits, including securities class action suits. Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes- Oxley Act could have a material adverse effect on our business and stock price.
If we fail to meet or exceed such expectations, the market price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits. Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes- Oxley Act could have a material adverse effect on our business and stock price.
The decrease in revenue that could result from such an event could have a material adverse effect on our results of operations. Maintaining and enhancing our Wentworth brand and reputation is critical to our growth, and if we are unable to maintain and enhance our brand, our business, results of operations and financial condition could be adversely affected.
The decrease in revenue that could result from such an event could have a material adverse effect on our results of operations. Maintaining and enhancing our brand and reputation is critical to our growth, and if we are unable to maintain and enhance our brand, our business, results of operations and financial condition could be adversely affected.
Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefore at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could lose confidence in our reported financial information. Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make the Company common stock less attractive to investors.
Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed and investors could lose confidence in our reported financial information. Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make the Company’s common stock less attractive to investors.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(b) Holders As of April 1, 2024, there were 29 shareholders of record of our common stock and 11 holders of record of our warrants to purchase our common stock.
Biggest change(b) Holders As of March 28, 2025, there were 29 shareholders of record of our common stock and 11 holders of record of our warrants to purchase our common stock.
(f) Recent Sales of Unregistered Securities; The information required has been previously disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2024. (g) Use of Proceeds from Registered Offerings None. ITEM 6. [RESERVED]
(f) Recent Sales of Unregistered Securities; The information required has been previously disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2024. (g) Use of Proceeds from Registered Offerings None. ITEM 6. [RESERVED]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. [RESERVED] 23 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 34 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS 35
Biggest changeITEM 6. [RESERVED] 23 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 37 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS 38

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following presents an analysis of our results of operations for the years ended December 31, 2023 and 2022 ( in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ 2023 ​ 2022 ​ % Change Revenues: ​ Revenue from Contracts with Customers: ​ ​ ​ Commissions 138,191 149,297 (7.4) % Advisory Fees 21,668 23,107 (6.2) % Total Revenue from Contracts with Customers 159,859 172,404 ​ Interest and other income 8,096 6,446 (25.6) % Total revenues 167,955 178,850 (6.1) % ​ ​ 26 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ Expenses: 2023 2022 ​ Commissions and fees ​ ​ 136,169 ​ 145,651 ​ (6.5) % Employee compensation and benefits ​ ​ 13,385 ​ 14,227 ​ (5.9) % Rent and occupancy ​ ​ 1,189 ​ 950 ​ 25.2 % Professional fees ​ ​ 4,709 ​ 6,077 ​ (22.5) % Technology fees ​ ​ 2,457 ​ 1,892 ​ 29.9 % Interest ​ ​ 5,119 ​ 3,318 ​ 54.3 % Depreciation and amortization ​ ​ 1,216 ​ 1,523 ​ (20.1) % Other ​ ​ 3,225 ​ 3,721 ​ (13.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total expenses ​ ​ 167,469 ​ 177,359 ​ (5.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes ​ ​ 486 ​ 1,491 ​ (66.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Benefit) Provision for income taxes ​ ​ (85) ​ 580 ​ (15.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 571 ​ $ 911 ​ (99.4) % ​ Revenues Wentworth’s primary source of revenue is from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors.
Biggest changeResults of Operations The following presents an analysis of our results of operations for the years ended December 31, 2024 and 2023 ( in thousands ): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ 2024 2023 % Change Revenues: ​ ​ ​ Revenue from Contracts with Customers: ​ ​ ​ ​ ​ Commissions ​ $ 139,452 ​ $ 138,191 0.9 % Advisory Fees ​ 24,939 ​ 21,668 15.1 % Total Revenue from Contracts with Customers ​ 164,391 ​ 159,859 ​ ​ Interest and other income ​ 4,512 ​ 8,096 (44.3) % Total revenues ​ 168,903 ​ 167,955 0.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ Expenses: 2024 2023 ​ Commissions and fees ​ ​ 136,932 ​ 136,169 ​ 0.6 % Employee compensation and benefits ​ ​ 15,544 ​ 13,385 ​ 16.1 % Rent and occupancy ​ ​ 1,150 ​ 1,189 ​ (3.3) % Professional fees ​ ​ 6,971 ​ 4,709 ​ 48.0 % Technology fees ​ ​ 1.292 ​ 2,457 ​ (47.4) % Interest ​ ​ 4,026 ​ 5,119 ​ (21.4) % Depreciation and amortization ​ ​ 1,019 ​ 1,216 ​ (16.2) % Other ​ ​ 5,116 ​ 3,225 ​ 58.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total expenses ​ ​ 172,050 ​ 167,469 ​ 2.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss) income before provision for income taxes ​ ​ (3,147) ​ 486 ​ (747.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (benefit) for income taxes ​ ​ 1,415 ​ (85) ​ (2,085.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income ​ $ (4,562) ​ $ 571 ​ (946.8) % ​ 27 Table of Contents Revenues The Company’s primary source of revenue is from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors.
Further, the calculation of these non-GAAP financial measures may differ from the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies. Gross profit is defined as total revenue less commissions paid to financial advisors and registered representatives and other fees that generate the revenue.
Further, the calculation of these non-GAAP financial measures may differ from the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies. Gross Profit Gross profit is defined as total revenue less commissions paid to financial advisors and registered representatives and other fees that generate the revenue.
We consider our gross profit amounts to be non-GAAP financial measures that may not be comparable to those of others in our industry. We believe that gross profit amounts can provide investors with useful insight into our core operating performance before other costs that are general and administrative in nature.
We consider our gross profit amounts to be non-GAAP financial measures that may not be comparable to those of others in our industry. We believe that gross profit amounts can provide investors with useful insight into our core operating performance before other costs that are general and administrative in nature.
Management believes that the non-GAAP financial measures of Gross Profit and EBITDA provide investors and analysts useful insight into our financial position and operating performance. Any non-GAAP measure provided should be viewed in addition to, and not as an alternative to, the most directly comparable measure determined in accordance with U.S. GAAP.
Management believes that the non-GAAP financial measures of Gross Profit, EBITDA and Adjusted EBITDA provide investors and analysts useful insight into our financial position and operating performance. Any non-GAAP measure provided should be viewed in addition to, and not as an alternative to, the most directly comparable measure determined in accordance with U.S. GAAP.
The estimated fair values of the reporting units are derived based on valuation techniques we believe market participants would use for each of the reporting units. We performed our goodwill impairment test as of and for the years ended December 31, 2023, and 2022.
The estimated fair values of the reporting units are derived based on valuation techniques we believe market participants would use for each of the reporting units. We performed our goodwill impairment test as of and for the years ended December 31, 2024, and 2023.
In addition to discounted cash flows, we consider other information, such as public market comparable and multiples of recent mergers and acquisitions of similar businesses. Although we believe the 33 Table of Contents assumptions, judgments, and estimates we have made in the past have been reasonable and appropriate, different assumptions, judgments, and estimates could materially affect our reported financial results.
In addition to discounted cash flows, we consider other information, such as public market comparable and multiples of recent mergers and acquisitions of similar businesses. Although we believe the assumptions, judgments, and estimates we have made in the past have been reasonable and appropriate, different assumptions, judgments, and estimates could materially affect our reported financial results.
The decrease in our effective tax rate was related to the change in deferred adjustments. 30 Table of Contents Liquidity and capital resources We have established liquidity policies intended to support the execution of strategic initiatives, while meeting regulatory capital requirements and maintaining ongoing and sufficient liquidity.
The change in our effective tax rate was related to the change in deferred adjustments. 31 Table of Contents Liquidity and capital resources We have established liquidity policies intended to support the execution of strategic initiatives, while meeting regulatory capital requirements and maintaining ongoing and sufficient liquidity.
Operating Expenses Commissions and Fees Commissions and fees primarily consist of commissions paid to the financial advisors, technology costs associated with the platform for which the financial advisors operate their business, insurance costs and regulatory costs.
Commissions and Fees Commissions and fees primarily consist of commissions paid to the financial advisors, technology costs associated with the platform for which the financial advisors operate their business, insurance costs and regulatory costs.
Please also refer to the section under heading “Special Note Regarding Forward-Looking Statements.” The information for the years ended December 31, 2023 and 2022 are derived from Wentworth Management Services LLC’s audited consolidated financial statements and the notes thereto included elsewhere in this report. 23 Table of Contents Any reference to Binah Capital Group, Inc. refers to Binah Capital Group, Inc. and our consolidated subsidiaries on a forward-looking basis or as the context requires, to the historical results of Wentworth Management Services LLC.
Please also refer to the section under heading “Special Note Regarding Forward-Looking Statements.” The information for the years ended December 31, 2024 and 2023 are derived from the Company’s audited consolidated financial statements and the notes thereto included elsewhere in this report. 23 Table of Contents Any reference to Binah Capital Group, Inc. refers to Binah Capital Group, Inc. and our consolidated subsidiaries on a forward-looking basis or as the context requires, to the historical results of BMS Management Services LLC.
Recently Issued Accounting Pronouncements Refer to Note 3 - Summary of Significant Accounting Policies, within the notes to the consolidated financial statements for a discussion of recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to us.
Recently Issued Accounting Pronouncements Refer to Note 3 - Summary of Significant Accounting Policies, within the notes to the consolidated financial statements for a discussion of recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to us. 36 Table of Contents
Any reference to “Wentworth Management Services LLC” refers to the entities comprising the Binah Capital Group, Inc. business prior to the consummation of the Business Combination.
Any reference to “BMS Management Services LLC” refers to the entities comprising the Binah Capital Group, Inc. business prior to the consummation of the Business Combination.
Management exercises judgment in determining whether the Company is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenue on a net basis). For additional information see Note 4 in the consolidated financial statements as of and for the years ended December 31, 2023 and 2022.
Management exercises judgment in determining whether the Company is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenue on a net basis). For additional information see Note 5 in the consolidated financial statements as of and for the years ended December 31, 2024 and 2023.
EBITDA is not a measure of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP.
EBITDA and Adjusted EBITDA are not a measure of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP.
Asset Trends Total advisory and brokerage assets served were $23.9 billion at December 31, 2023, compared to $22.2 billion at December 31, 2022. Total net new assets were $(3.6) billion for the year ended December 31, 2023, compared to $1.6 billion for the same period in 2022.
Asset Trends Total advisory and brokerage assets served were $27.1 billion at December 31, 2024, compared to $23.9 billion at December 31, 2023. Total net new assets were $(2.1) billion for the year ended December 31, 2024, compared to $(3.6) billion for the same period in 2023.
Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. During the fourth quarter of 2023, Fed policymakers maintained the target range for the federal funds rate to 5.25% to 5.50%.
Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. During the fourth quarter of 2024, Fed policymakers maintained the target range for the federal funds rate at 4.25% to 4.50%.
The following tables summarizes the brokerage assets for the years ended December 31, 2023 and 2022 (in billions): ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2023 2022 Brokerage Assets 21.8 20.1 ​ Included in the brokerage assets above are trail-eligible assets as follows: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2023 2022 Trail-Eligible Assets 14.8 13.9 ​ The following table summarizes activity impacting brokerage assets for the years ended: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2023 2022 Balance – Beginning of period 20.1 23.1 Net new brokerage assets (1) (3.1) 1.5 Market impact (2) 4.8 (4.5) Balance – End of period 21.8 20.1 (1) Net new brokerage assets consist of total client deposits less client withdrawals from brokerage accounts, plus dividends, plus interest.
The following tables summarizes the brokerage assets for the years ended December 31, 2024 and 2023 (in billions): ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2024 2023 Brokerage Assets 24.5 21.8 ​ Included in the brokerage assets above are trail-eligible assets as follows: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2024 2023 Trail-Eligible Assets 17.9 15.6 ​ The following table summarizes activity impacting brokerage assets for the years ended: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2024 2023 Balance – Beginning of period 21.8 20.1 Net new brokerage assets (1) (2.1) (3.1) Market impact (2) 4.8 4.8 Balance – End of period 24.5 21.8 (1) Net new brokerage assets consist of total client deposits less client withdrawals from brokerage accounts, plus dividends, plus interest.
Accordingly, total commission revenue is reported on a gross basis. See Note 4 — Revenues From Contracts with Customers within the notes to the audited 27 Table of Contents consolidated financial statements for the years ended December 31, 2023, and 2022 for further details regarding our commission revenue by product category.
Accordingly, total commission revenue is reported on a gross basis. See Note 5 — Revenues From Contracts with Customers within the notes to the audited consolidated financial statements for the years ended December 31, 2024, and 2023 for further details regarding our commission revenue by product category.
Other expense Other expense includes insurance, travel-related expenses, office expenses, marketing and other miscellaneous expenses. Provision for Income Taxes Our effective income tax rate was (17.49)% and 11.35% for the years ended December 31, 2023 and 2022, respectively.
Other expense Other expense includes insurance, travel-related expenses, office expenses, marketing and other miscellaneous expenses. Provision for Income Taxes Our effective income tax rate was (45.09)% and (17.49)% for the years ended December 31, 2024 and 2023, respectively.
According to the most recent estimate from the U.S. Bureau of Economic Analysis, the U.S. economy grew 2.5% in 2023, and at an annualized pace of 3.3% in the fourth quarter of 2023 after growing at an annualized pace of 4.9% in the third quarter of 2023.
According to the most recent estimate from the U.S. Bureau of Economic Analysis, the U.S. economy grew 2.8% in 2024, and at an annualized pace of 2.3% in the fourth quarter of 2024 after growing at an annualized pace of 2.8% in the third quarter of 2024.
As a result of the 2023 and 2022 annual impairment tests, the fair value of the reporting units was 257% and 266% greater than its carrying value, respectively.
As a result of the 2024 and 2023 annual impairment tests, the fair value of the reporting units was approximately 270% and 257% greater than its carrying value, respectively.
Below is a reconciliation of net income to EBITDA for the periods presented (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the Years Ended December 31, EBITDA Reconciliation 2023 2022 Net income ​ $ 0.6 ​ $ 0.9 Interest expense ​ 5.1 ​ 3.3 (Benefit) Provision for income taxes ​ (0.1) ​ 0.6 Depreciation and amortization ​ 1.2 ​ 1.5 EBITDA ​ $ 6.8 ​ $ 6.3 ​ Economic Overview and Impact of Financial Market Events Our business is directly and indirectly sensitive to several macroeconomic factors and the state of the United States financial markets.
Below is a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the periods presented (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, EBITDA Reconciliation 2024 2023 Net (loss) income ​ $ (4.6) ​ $ 0.6 Interest expense ​ 4.0 ​ 5.1 (Benefit) Provision for income taxes ​ 1.4 ​ (0.1) Depreciation and amortization ​ 1.0 ​ 1.2 EBITDA ​ $ 1.9 ​ $ 6.8 Business combination and re-financing costs ​ ​ 4.4 ​ ​ 1.6 Adjusted EBITDA (2) ​ $ 6.3 ​ $ 8.4 ​ 26 Table of Contents Economic Overview and Impact of Financial Market Events Our business is directly and indirectly sensitive to several macroeconomic factors and the state of the United States financial markets.
Technology fees Technology fees primarily represent infrastructure costs that support the Company’s technology and communications costs. Technology fees increased by $0.6 million for the year ended December 31, 2023 as compared to 2022. Interest expense Interest expense primarily includes interest associated with the Company’s credit facility and other debt obligations.
Technology fees Technology fees primarily represent infrastructure costs that support the Company’s technology and communications costs. Technology fees decreased by $1.2 million for the year ended December 31, 2024 as compared to 2023. Interest expense Interest expense primarily includes interest associated with the Company’s credit facility and other debt obligations.
Although inflation, rising interest rates and volatile global markets were all headwinds the U.S. economy added roughly 494,000 jobs in the fourth quarter of 2023, while the unemployment rate averaged 3.7% in the fourth quarter of 2023, up slightly from the average in the prior quarter.
Although inflation, interest rates and volatile global markets were all headwinds the U.S. economy added roughly 500,000 jobs in the fourth quarter of 2024, while the unemployment rate averaged 4.2% in the fourth quarter of 2024, up slightly from the average in the prior quarter.
If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the two-step impairment test is not required. However, if we conclude otherwise, we are then required to perform the first step of the two-step impairment test.
If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater 35 Table of Contents than its carrying amount, then performing the two-step impairment test is not required.
The following tables summarizes the advisory assets for the years ended December 31, 2023 and 2022 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Advisory Assets 2,087 2,129 ​ The following table summarizes activity impacting advisory assets for the years ended: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2023 2022 Balance – Beginning of period 2,129 2,518 Net new advisory assets (1) (531) 98 Market impact (2) 489 (487) Balance – End of period 2,087 2,129 (1) Net new advisory assets consist of total client deposits less client withdrawals from custodial accounts, plus dividends, plus interest, minus advisory fees.
The following tables summarizes the advisory assets for the years ended December 31, 2024 and 2023 (in billions): ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 Advisory Assets 2.6 2.1 ​ 29 Table of Contents The following table summarizes activity impacting advisory assets for the years ended: ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2024 2023 Balance – Beginning of period 2.1 2.1 Net new advisory assets (1) (0.0) (0.6) Market impact (2) 0.5 0.6 Balance – End of period 2.6 2.1 (1) Net new advisory assets consist of total client deposits less client withdrawals from custodial accounts, plus dividends, plus interest, minus advisory fees.
The production levels begin at gross revenue of $15,000 up to $4,000,000 and up, and the payout rate starts at 50% and increases to a top payout rate of 94% for annual production of $4,000,000 and up. 29 Table of Contents The following table sets forth our payout rate, which is a statistical or operating measure and monitored to review that such costs of revenue remain consistent on a period over period basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ 2023 2022 Change Payout range 77.96 % 75.48 % 2.49 % ​ For the year ended December 31, 2023, the payout rate increased as compared to 2022 as a result of the addition of a team of financial advisors whose payout percentages range from 90-94%.
The production levels begin at gross revenue of $15,000 up to $4,000,000 and up, and the payout rate starts at 50% and increases to a top payout rate of 94% for annual production of $4,000,000 and up. 30 Table of Contents The following table sets forth our payout rate, which is a statistical or operating measure and monitored to review that such costs of revenue remain consistent on a period over period basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ 2024 2023 Change Payout range 75.44 % 77.96 % (2.52) % ​ For the year ended December 31, 2024, the payout rate decreased as compared to 2023 as a result of the reduction in non-recurring commission products that carried a payout at 90%.
Our key operating, business and financial metrics are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the Years Ended December 31, Operating Metric (dollars in billions) 2023 2022 Advisory and Brokerage Assets ​ ​ ​ Brokerage assets ​ $ 21.8 ​ $ 20.1 Advisory assets ​ 2.1 ​ 2.1 Total Advisory and Brokerage Assets ​ $ 23.9 ​ $ 22.2 ​ ​ ​ ​ ​ ​ ​ Net New Assets ​ ​ Net new brokerage assets ​ $ (3.1) ​ $ 1.5 Net new advisory assets ​ (0.5) ​ 0.1 Total Net New Assets ​ $ (3.6) ​ $ 1.6 ​ ​ ​ ​ ​ ​ ​ Financial Metrics (dollars in millions) ​ ​ Total revenue ​ $ 168.0 ​ $ 178.8 Net income ​ $ 0.6 ​ $ 0.9 Non-GAAP Financial Metrics (dollars in millions) ​ ​ Gross Profit (1) ​ $ 31.8 ​ $ 33.2 EBITDA (2) ​ $ 6.8 ​ $ 6.3 (1) Gross profit is a non-GAAP financial measure defined as total revenue less commissions paid to financial advisors and registered representatives and other fees that generate the revenue.
A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP financial measures appears below in the footnotes to the table of our key operating, business and financial metrics. ​ 25 Table of Contents Our key operating, business and financial metrics are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the Years Ended December 31, Operating Metric (dollars in billions) 2024 2023 Advisory and Brokerage Assets ​ ​ ​ Brokerage assets ​ $ 24.5 ​ $ 21.8 Advisory assets ​ 2.5 ​ 2.1 Total Advisory and Brokerage Assets ​ $ 27.0 ​ $ 23.9 ​ ​ ​ ​ ​ ​ ​ Net New Assets ​ ​ ​ ​ Net new brokerage assets ​ $ (2.1) ​ $ (3.1) Net new advisory assets ​ 0.0 ​ (0.5) Total Net New Assets ​ $ (2.1) ​ $ (3.6) ​ ​ ​ ​ ​ ​ ​ Financial Metrics (dollars in millions) ​ ​ ​ ​ Total revenue ​ $ 169.0 ​ $ 168.0 Net (loss) income ​ $ (4.6) ​ $ 0.6 Non-GAAP Financial Metrics (dollars in millions) ​ ​ ​ ​ Gross Profit (1) ​ $ 32.0 ​ $ 31.8 EBITDA (2) ​ $ 1.9 ​ $ 6.8 Adjusted EBITDA (2) ​ $ 6.3 ​ $ 8.4 (1) Gross profit is a non-GAAP financial measure defined as total revenue less commissions paid to financial advisors and registered representatives and other fees that generate the revenue.
The decrease in the trailing based revenues is primarily due to volatility driven declines in trail eligible assets. Commission revenue is generated from brokerage assets.
The increase in the trailing based revenues is primarily due to volatility driven increases in trail eligible assets. 28 Table of Contents Commission revenue is generated from brokerage assets.
Trailing based revenue decreased by approximately $3.1 million of 3% for the year ended December 31, 2023 as compared to 2022. The decrease in sales based revenue for the year ended December 31, 2023 as compared to 2022 is attributable to a decrease in the generation of transactional based products.
Trailing based revenue increased by approximately $16.2 million or 19.0% for the year ended December 31, 2024 as compared to 2023. The decrease in sales based revenue for the year ended December 31, 2024 as compared to 2023 is attributable to a decrease in the generation of transactional based products.
Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired.
However, if we conclude otherwise, we are then required to perform the first step of the two-step impairment test. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired.
The advisory fees generated from the Company’s corporate advisory platform are based on a percentage of the market value of the eligible assets in the clients’ advisory accounts. 28 Table of Contents Advisory fees decreased by approximately 2% for the year ended December 31, 2023 as compared to December 31, 2022, due to a net outflow of advisory assets.
The advisory fees generated from the Company’s corporate advisory platform are based on a percentage of the market value of the eligible assets in the clients’ advisory accounts. Advisory fees increased by approximately 15% for the year ended December 31, 2024 as compared to December 31, 2023, due to the positive impact from the financial markets.
(2) Represents the obligations under the amounts due to certain sellers of the PKSH entities. The amount includes accrued interest as of December 31, 2023 and the notes matured in May 2023. (3) Represents future minimum lease payments as of December 31, 2023, under non-cancelable office leases. (4) Represents amounts due to WMS members which are payable on demand.
(2) Represents the obligations under the amounts due to certain sellers of the PKSH entities. The amount includes accrued interest as of December 31, 2024 and the notes mature in March 2027. (3) Represents future minimum lease payments as of December 31, 2024, under non-cancelable office leases.
Executive Summary Financial Highlights Results for the year ended December 31, 2023 included net income of approximately $571,000 and total revenue of approximately $168.0 million, which compares to net income and total revenue of $910,331 and approximately $178.0 million, respectively, for the year ended December 31, 2022.
Executive Summary Financial Highlights Results for the year ended December 31, 2024 included a net loss of approximately $4.6 million and total revenue of approximately $168.9 million, which compares to net income and total revenue of $0.5 million and approximately $168.0 million, respectively, for the year ended December 31, 2023.
Interest expense increased by $1.8 million for the year ended December 31, 2023 as compared to 2022 resulting from an increase in the interest rate of the credit facility. Depreciation and amortization Depreciation and amortization relates to the use of property, equipment and leasehold improvements. Amortization also includes the amortization related to certain intangible assets.
Interest expense decreased by $1.1 million for the year ended December 31, 2024 as compared to 2023 resulting from the repayments and restructuring of the related party debt obligations of BMS. Depreciation and amortization Depreciation and amortization relates to the use of property, equipment and leasehold improvements. Amortization also includes the amortization related to certain intangible assets.
Cash Flows The following table sets forth a summary of cash flows for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2023 2022 Net cash provided by operating activities $ 2,553 $ 5,362 Net cash used in investing activities ​ ​ (80) ​ ​ (327) Net cash used in financial activities ​ ​ (2,701) ​ ​ (4,510) Net change in cash flows ​ $ (228) ​ $ 526 ​ Cash Flows from Operating Activities .
Cash Flows The following table sets forth a summary of cash flows for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 Net cash (used in) provided by operating activities $ (617) $ 2,553 Net cash used in investing activities ​ ​ (85) ​ ​ (80) Net cash provided by (used in) financing activities ​ ​ 1,567 ​ ​ (2,701) Net change in cash flows ​ $ 865 ​ $ (228) 34 Table of Contents Cash Flows from Operating Activities.
Net new advisory assets were $(531) million for the year ended December 31, 2023, compared to $98 million in 2022. Advisory assets were $2.1 billion at December 31, 2023, which is consistent from the $2.1 billion at December 31, 2022. Net new brokerage assets were $(3.1) billion for the year ended December 31, 2023, compared to $1.5 billion in 2022.
Net new advisory assets were $0.0 million for the year ended December 31, 2024, compared to $(0.5) million in 2023. Advisory assets were $2.5 billion at December 31, 2024, which is an increase of approximately 21% from the $2.1 billion at December 31, 2023.
The Company presents EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations. EBITDA is not a measure of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP.
EBITDA and Adjusted EBITDA are not a measure of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP.
Parent Company Liquidity Wentworth Management Services LLC (the “Parent”), the direct holding company of our operating subsidiaries, considers its primary sources of liquidity to be dividends and management fees from our operating subsidiaries.
Parent Company Liquidity Binah Capital Group, Inc., through its indirectly wholly owned subsidiary BMS, is the direct holding company of our operating subsidiaries, considers its primary sources of liquidity to be dividends and management fees from our operating subsidiaries.
The conditions related to this contingency were met on November 30, 2018, and thus the notes have been issued to the sellers. These subordinated promissory notes had a maturity date of May 30, 2023, and accrued interest at a rate of 10% annually. The interest on these notes has continued to accrue until such time as these notes are paid.
These notes had a maturity date of May 17, 2023 and accrued interest at a rate of 10% annually. The interest on these notes continued to accrue until such time as these notes were paid or restructured.
The following table sets forth the components of our commission revenue for years December 31, 2023 and 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ ​ ​ ​ 2022 ​ 2022 ​ $ Change ​ % Change Sales-based $ 74,525 $ 83,988 (9,463) (11.3) % Trailing ​ 85,334 ​ 88,416 (3,082) (3.5) % Total commission revenue ​ $ 159,859 ​ $ 172,404 (12,545) (7.3) % ​ Sales based revenue decreased by approximately $9.5 million or 11% year ended December 31, 2023 as compared to 2022.
The following table sets forth the components of our commission revenue for years December 31, 2024 and 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ $ Change ​ % Change Sales-based $ 62,827 $ 74,525 (11,698) (15.7) % Trailing ​ 101,564 ​ 85,334 16,230 19.0 % Total commission revenue ​ $ 164,391 ​ $ 159,859 4,532 2.8 % ​ Sales based revenue decreased by approximately $11.7 million or 15.7% for the year ended December 31, 2024 as compared to 2023.
EBITDA is a non-GAAP financial measure defined as net income plus interest expense, provision for income taxes, and depreciation and amortization. The Company presents EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations.
The Company presents EBITDA and Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations.
Net provided by operating activities was $2.5 million for the year ended December 31, 2023 compared to $5.3 million for the year ended December 31 2022, representing a decrease of $2.8 million or 52%. The decrease was primarily attributable to the the decrease in commissions receivable offset by decreases in commissions payable. Cash Flows from Investing Activities .
Net cash used in operating activities was $0.6 million for the year ended December 31, 2024 compared to net cash provided by $2.6 million for the year ended December 31 2023, representing a decrease of approximately $3.2 million or 124%.
Net cash used in financing activities was $2.7 million for the year ended December 31, 2023 compared to cash used in financing activities of $4.5 million for the year ended December 31, 2022. The decrease is primarily related to the decrease in the distribution of capital during the year ended December 31, 2023.
Net cash provided by financing activities was approximately $1.6 million for the year ended December 31, 2024 compared to cash used in financing activities of $2.7 million for the year ended December 31, 2023.
Below is a calculation of gross profit for the periods presented (in millions): ​ 25 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ As of and for the Years Ended December 31, Gross Profit 2023 2022 Total revenue ​ $ 168.0 ​ $ 178.8 Commission and fees ​ 136.2 ​ 145.7 Gross Profit ​ $ 31.8 ​ $ 33.2 (2) EBITDA is a non-GAAP financial measure defined as net income plus interest expense, provision for income taxes, and depreciation and amortization.
Below is a calculation of gross profit for the periods presented (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, Gross Profit 2024 2023 Total revenue ​ $ 169.0 ​ $ 168.0 Commission and fees ​ 137.0 ​ 136.2 Gross Profit ​ $ 32.0 ​ $ 31.8 (2) EBITDA and Adjusted EBITDA are non-GAAP financial measures.
Sources of Liquidity As of December 31, 2023, we had $20.82 million outstanding under our Senior Credit Facility with Oak Street Funding, LLC, net of debt issuance costs.
Sources of Liquidity As of December 31, 2024, we had $19.6 million outstanding under our Credit Agreement with Byline Bank, net of unamortized debt issuance costs.
Rent and occupancy Rent and occupancy increased by $0.2 million for the year ended December 31, 2023 compared to 2022 relating to a new lease agreement entered into by World Equity Group, Inc. Professional fees Professional fees includes costs incurred related to legal and accounting services.
Rent and occupancy Rent and occupancy remained relative consistent for the year ended December 31, 2024 compared to 2023, decreasing by 3.3% or $0.04 million. Professional fees Professional fees includes costs incurred related to legal and accounting services.
Net cash used in investing activities was $0.08 million for the year ended December 31, 2023 compared to $0.33 million for the year ended December 31, 2022. The decrease was primarily related to the decrease in the purchases of property and equipment. Cash Flows from Financing Activities .
The decrease was primarily attributable to the decrease in net income offset by increases in accounts payable, accrued expenses and commissions payable. Cash Flows from Investing Activities. Net cash used in investing activities was $0.09 million for the year ended December 31, 2024 consistent with the $0.08 million for the year ended December 31, 2023. Cash Flows from Financing Activities.
Brokerage assets were $21.8 billion at December 31, 2023, up 8% from $20.1 billion at December 31, 2022. Gross Profit Trend Gross profit, a non-GAAP financial measure, was $31.8 million for the year ended December 31, 2023, a decrease of 4% from $33.2 million for the year ended December 31, 2022.
Gross Profit Trend Gross profit, a non-GAAP financial measure, was $32.0 million for the year ended December 31, 2024, an increase of 0.6% from $31.8 million for the year ended December 31, 2023.
Employee compensation and benefits Employee compensation and benefits includes salaries, wages, benefits and related taxes for our employees. Employee compensation and benefits for the year ended December 31, 2023 decreased by $0.8 million which is directly related to the decrease in headcount of approximately 6%.
Employee compensation and benefits Employee compensation and benefits includes salaries, wages, benefits and related taxes for our employees. Employee compensation and benefits for the year ended December 31, 2024 increased by $2.2 million which is directly related to the additional personnel costs attributed to the Company now operating as a public company.
The growth in interest and other income for the year ended December 31, 2023, compared to 2022 is primarily related to an increase in interest rates and an increase in marketing revenue from alternative investments, and an increase in sponsorship revenue.
The decrease in interest and other income for the year ended December 31, 2024, compared to 2023 is primarily related to certain non-recurring income items earned during 2023.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and other commitments as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by period ​ Total ​ Less than 1 Year ​ 1 - 3 Years ​ 3 - 5 Years ​ More than 5 Years Contractual obligations ​ (in thousands) Long-term debt obligations (1) $ 21,467 ​ $ 2,418 $ 9,071 $ 9,815 $ 163 Interest payments ​ 7,156 1,901 ​ 4,112 ​ 1,142 ​ ​ 3 Promissory notes – affiliates (2) ​ 12,177 12,177 ​ — ​ — ​ ​ — Due to member (4) ​ 5,169 5,169 ​ ​ ​ ​ ​ Operating lease obligations (3) ​ 4,501 535 ​ 1,662 ​ 1,764 ​ ​ 540 ​ $ 45,304 $ 17,032 $ 14,845 $ 12,721 $ 706 32 Table of Contents (1) Represents principal obligations related to the Oak Street credit facility that was entered into during the years ended December 31, 2020 and 2021.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and other commitments as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by period ​ Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Contractual obligations ​ (in thousands) Long-term debt obligations (1) $ 20,300 ​ $ 2,030 $ 8,120 $ 10,150 $ — Promissory notes – affiliates (2) ​ 5,442 129 ​ 5,313 ​ — ​ ​ — Operating lease obligations (3) ​ 4,405 777 ​ 2,228 ​ 1,400 ​ ​ — ​ $ 30,147 $ 2,936 $ 15,661 $ 11,550 $ — (1) Represents principal obligations related to the Byline Credit Agreement that was entered into during the years ended December 31, 2024.
The interest on these notes has continued to accrue until such time as these notes are paid. 31 Table of Contents Contingent consideration subordinated promissory notes Additionally, in connection with the acquisition of the PKSH Entities, the Company agreed to pay contingent consideration in the amount of $5.0 million to certain sellers.
Also, in connection with the acquisition of the PKSH Entities, BMS agreed to pay contingent consideration in the amount of $5.0 million to certain sellers. The conditions related to this contingency were met on November 30, 2018, and thus the notes had been issued to the sellers.
These notes had a maturity date of May 17, 2023 and accrued interest at a rate of 10% annually.
These subordinated promissory notes had a maturity date of May 30, 2023, and accrued interest at a rate of 10% annually. The interest on these notes continued to accrue until such time as these notes were paid or restructured. In connection with the closing of the Business Combination, the Company paid approximately $3.5 million on these notes.
Removed
A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP financial measures appears below in the footnotes to the table of our key operating, business and financial metrics.
Added
Net new brokerage assets were $(2.1) billion for the year ended December 31, 2024, compared to $(3.1) billion in 2023. Brokerage assets were $24.5 billion at December 31, 2024, an increase of approximately 12% from $21.8 billion at December 31, 2023.
Removed
Professional fees for the year ended December 31, 2023 as compared to 2022 decreased by $1.4 million, respectively, which is related to decrease in tax and audit costs related to the preparation and audit of the financial statements required to be included in the initial proxy and registration statements filed with the SEC.
Added
EBITDA and Adjusted EBITDA EBITDA is a non-GAAP financial measure defined as net income plus interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA, a non-GAAP measure, plus business combination and re-financing costs.
Removed
The associated debt facilities are as follows: Oak Street Funding, LLC On April 2, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with Oak Street Funding LLC (“Oak Street”) in the amount of $25 million.
Added
EBITDA is defined as net income plus interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus non-recurring costs related to our business combination as well as re-financing the senior credit facility costs.
Removed
This note payable bears interest at the prime rate (“Prime”) (8.50% as of December 31, 2023) plus 2.25% and has a 10-year term and a 3-month interest only repayment provision. As of December 31, 2023 and 2022, the outstanding balance of the Oak Street note, net of unamortized debt issuance costs was $17.6 million and $19.5 million, respectively.
Added
The Company presents EBITDA and Adjusted EBITDA because management believes that it can be a useful financial metric in understanding the Company’s earnings from operations.
Removed
On April 25, 2021, the Company entered into an additional promissory note with Oak Street in the amount of $4.1 million related to the acquisition of WEG (“WEG Note”). This note payable bears interest at Prime plus 2.25% and has a 10-year term.
Added
Professional fees for the year ended December 31, 2024 as compared to 2023 increased by $2.3 million which is directly related to transaction costs associated with the Business Combination, the re-financing of the senior credit facility and specific costs related to the Company now operating as a public company.
Removed
As of December 31, 2023 and 2022, the outstanding balance of this note, net of unamortized debt issuance costs was $3.2 million and $3.4 million, respectively. Under the Oak Street notes, the Company is subject to certain covenants as defined in the agreements.
Added
The associated debt facilities are as follows: Byline Bank On December 23, 2024 (the “ Credit Agreement Closing Date ”), BMS, entered into a Credit Agreement (the “ Credit Agreement ”) with Byline Bank, as lender (the “ Lender ”), pursuant to which the Lender agreed, at the BMS’s request, to (i) make to BMS a term loan in the original principal amount of $20.3 million (the “ Term Loan ”), which was funded on the Credit Agreement Closing Date; (ii) make to BMS, from time to time, certain non-revolving loans (the “ Non-Revolving Loans ”) in an aggregate principal amount of up to $1.0 million (the “ Non-Revolving Loan Commitment ”), to be funded through, but excluding, the Maturity Date (as defined below); and (iii) issue to BMS, from time to time, letters of credit (the “ Letters of Credit ” and together with the Term Loan and Non-Revolving Loans, the “ Loans ”) until the earliest to occur of (a) the one year from the Credit Agreement Closing Date and (b) the date on which the Non-Revolving Loans are fully drawn.
Removed
As of December 31, 2022 and March 31, 2023, the Company did not meet a certain debt service coverage ratio and subsequently obtained a waiver from Oak Street for such covenant violations. For the period from April 1, 2023 to December 31, 2023, the Company was in compliance with all financial related covenants.
Added
As of December 31, 2024, the outstanding balance on the Term Loan was $19.6 million, net of debt issuance costs. Under the terms of the Credit Agreement, to the extent that the Company requests a Letter of Credit, the Non-Revolving Loan Commitment shall be permanently reduced in an amount equal to the amount of such Letter of Credit.
Removed
The minimum calendar year payments and maturities of the Oak Street notes as of December 31, 2023 were as follows (in thousands): ​ ​ ​ ​ ​ 2024 $ 2,418 2025 ​ 2,702 2026 ​ 3,012 2027 ​ 3,357 2028 ​ 3,739 Thereafter ​ 6,239 Total ​ $ 21,467 ​ Other promissory notes On November 30, 2017, WMS issued subordinated promissory notes in the aggregate principal amount of approximately $3.6 million to certain sellers in connection with the acquisition of the PKSH Entities.
Added
The Non-Revolving Loans may not be requested by the Company and may only be advanced in connection with a repayment of a Letter of Credit (“ LC Payment ”). As of December 31, 2024 there are no amount outstanding under the Non-Revolving Loan or Letters of Credit.
Removed
As of December 31, 2023 and 2022, the amount of principal and accrued interest related to these promissory notes were approximately $12.2 million and $11.6 million, respectively. Related interest expense was approximately $0.9 million for each of the years ended December 31, 2023 and 2022.
Added
The Loans (both principal and any remaining unpaid interest) made by the Lender to BMS are scheduled to mature and become immediately due and payable in full on December 23, 2029 (“Maturity Date”).
Removed
Other commitments Other commitments include amounts due to members of Wentworth related to promissory notes entered into between certain members and Wentworth to provide for working capital. The outstanding balance of these promissory notes as of December 31, 2023, and December 31, 2022 are $5.2 million and $4.7 million, respectively.
Added
The obligations under the Credit Agreement shall bear interest (i) as to the Term Loan, a per annum variable interest rate equal to the Applicable Margin (as defined in the Credit Agreement) plus the greater of (x) the Term Secured Overnight Financing Rate (“SOFR”) (as defined in the Credit Agreement) and (y) one percent (1.00%) (the “ Term Loan Interest Rate ”); (ii) as to the Non-Revolving Loans or any reimbursement obligations relating to a Letter of Credit, at an interest rate equal to SOFR plus four percent (4.00%) per annum; and (iii) if any other obligations is created under the Loan Documents (as defined in the Credit Agreement), at the Term Loan Interest Rate.
Added
As of December 31, 2024, the effective interest rate was 8.3%. The Term Loan must be used by BMS to refinance Existing Credit Facilities (as defined in the Credit Agreement) and the Non-Revolving Loans must be used solely to reimburse the Lender with respect to any Letters of Credit issued to BMS.
Added
The Term Loan refinanced and retired the previous Oak Street Funding Facility. The Credit Agreement also includes customary covenants for a transaction of this type, including covenants limiting the indebtedness that can be incurred by BMS and restricting BMS’s ability to make certain loans and investments.
Added
Additionally, BMS is subject to financial covenants whereby BMS and its subsidiaries on a consolidated basis may not have, as of the last day of each fiscal quarter, commencing with fiscal quarter ending on March 31, 2025, (1) a fixed charge coverage ratio as of the last day of the fiscal quarter for the twelve (12) month period then ended of not less than 1.20 to 1.00; (ii) a senior net leverage ratio as of the last day of such Fiscal Quarter for the twelve (12) month period then ended, of (A) for the fiscal quarter ended March 31, 2025 and each fiscal quarter through 32 Table of Contents and including September 30, 2025, not more than 3.00 to 1.00; and (B) for the fiscal quarter ended December 31, 2025 and each fiscal quarter ending thereafter, not more than 2.75 to 1.00; or (iii) an annualized revenue received from custodians of at least $18.0 million.
Added
Also, in accordance with the Credit Agreement, BMS has deposited $1.0 million into an A/P Reserve Account and is classified as restricted cash.
Added
The minimum calendar year payments and maturities of the Byline Term Loan as of December 31, 2024 were as follows ( in thousands ) : ​ ​ ​ ​ 2025 $ 2,030 2026 ​ ​ 2,030 2027 ​ ​ 3,045 2028 ​ ​ 3,045 2029 ​ ​ 10,150 Total $ 20,300 ​ Series A Redeemable Convertible Preferred Stock On March 15, 2024 (the “Funding Date”) in connection with the consummation of the Business Combination, Holdings and BMS entered into a Subscription Agreement with an investor for the purchase of 1,500,000 shares of Holdings’ Series A Redeemable Convertible Preferred Stock (the “ Holdings Series A Stock ”) in a private placement at $9.60 per share, for an aggregate purchase price of $14.4 million (the “ Series A PIPE ”).
Added
The Holdings Series A Stock may be converted into shares of Holdings Common Stock after the second anniversary of the closing of the Series A PIPE, which such conversion shall initially be 1.5 shares of Holdings Common Stock for each share of Series A Convertible Preferred Stock, subject to certain adjustments provided in the Certificate of Designations.
Added
Additionally, the Holdings Series A Stock carries a cumulative dividend at a rate of nine percent (9%) per annum, payable and compounded quarterly on the last day of each quarter.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed4 unchanged
Biggest changeAs of December 31, 2023, $20.8 million (net of debt issuance costs) of our outstanding debt was subject to floating interest rate risk.
Biggest changeAs of December 31, 2024, $20.3 million of our outstanding debt was subject to floating interest rate risk.
The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its counterparties and, based upon factors surrounding the credit risk of its counterparties, establishes an allowance for uncollectible accounts and, consequently, believes that its receivables credit risk exposure beyond such allowances is limited. ​ 34 Table of Contents
The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its counterparties and, based upon factors surrounding the credit risk of its counterparties, establishes an allowance for uncollectible accounts and, consequently, believes that its receivables credit risk exposure beyond such allowances is limited. ​ 37 Table of Contents

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