Binah Capital Group Inc

Previous wording

Results for the period ended March 31, 2024 included a net loss of approximately $1.6 million and total revenue of approximately $41.0, which compares to net income and total revenue of $1.1 million and approximately $43.0 million, respectively, for the period ended March 31, 2023.

Current wording

Results for the three and six-month period ended June 30, 2024 included a net loss of approximately $(0.7) million and $(2.3) million and total revenue of approximately $40.6 million and $82.1 million, respectively, which compares to net income and total revenue of $0.1 million and $1.2 million and approximately $40.4 million and $83.8 million, respectively, for the three and six month period ended June 30, 2023.

Previous wording

Total advisory and brokerage assets served were $24.9 billion at March 31, 2024, compared to $22.8 at March 31, 2023. Total net new assets were $(1.5) billion for the period ended March 31, 2024, compared to $(1.1) billion for the same period in 2023.

Current wording

Total advisory and brokerage assets served were $25.1 billion at June 30, 2024, compared to $23.1 billion at June 30, 2023. Total net new assets were $(0.8) billion and $(2.2) billion for the three and six-month period ended June 30, 2024, compared to $(1.0) billion and $(2.1) billion for the same period in 2023.

Previous wording

Net new advisory assets were $(0.1) billion for the period ended March 31, 2024, compared to $(0.1) billion in 2023. Advisory assets were $2.2 billion at March 31, 2024, which is consistent with the $2.2 billion at March 31, 2023.

Current wording

Net new advisory assets were $0.0 billion and $(0.1) billion for the three and six-month period ended June 30, 2024, compared to $(0.3) billion and $(0.4) billion for the same period in 2023. Advisory assets were $2.3 billion at June 30, 2024, which is approximately a 13% increase from the $2.0 billion at June 30, 2023.

Previous wording

Net new brokerage assets were $(1.4) billion for the period ended March 31, 2024, compared to $(1.0) in 2023. Brokerage assets were $22.7 billion at March 31, 2024, up 10% from $20.6 billion at March 31, 2023.

Current wording

Net new brokerage assets were $(0.8) billion and $(2.1) billion for the three and six-month period ended June 30, 2024, compared to $(0.7) billion and $(1.7) billion for the same period in 2023. Brokerage assets were $22.8 billion at June 30, 2024, up approximately 8% from $21.1 billion at June 30, 2023.

Previous wording

Gross profit, a non-GAAP financial measure, was $7.8 million for the period ended March 31, 2024, a decrease of 6% from $8.3 million for the period ended March 31, 2023. See the*”Key Performance Metrics and Non-GAAP Financial Measures”* section for additional information on gross profit.

Current wording

Gross profit, a non-GAAP financial measure, was $7.3 million and $15.1 million for the three and six-month period ended June 30, 2024, a decrease of 3% from $7.5 million for the three months ended June 30, 2023 and a decrease of 5% from $15.8 million for the six months ended June 30, 2023. See the*“Key Performance Metrics and Non-GAAP Financial Measures”* section for additional information on gross profit.

Previous wording

According to the most recent estimate from the U.S. Bureau of Economic Analysis, the U.S. economy grew at an annualized pace of 1.6% in the first quarter of 2024, after growing at an annualized pace of 3.4% in the fourth quarter of last year. Although inflation, rising interest rates and volatile global markets were all headwinds the U.S. economy added roughly 829,000 jobs in the first quarter of 2024, while the unemployment rate averaged 3.8% in the first quarter of 2024, up slightly from the average in the prior quarter.

Current wording

According to the most recent estimate from the U.S. Bureau of Economic Analysis, the U.S. economy grew at an annualized pace of 2.8% in the second quarter of 2024, after growing at an annualized pace of 1.6% in the first quarter of this year. Although inflation, rising interest rates and volatile global markets were all headwinds the U.S. economy added roughly 503,000 jobs in the second quarter of 2024, while the unemployment rate averaged 4.0% in the second quarter of 2024, up slightly from the average in the prior quarter.

Previous wording

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. During the first quarter of 2024, Fed policymakers maintained the target range for the federal funds rate to 5.25% to 5.50%. The equity markets rebounded resulting in the S&P 500 returning 10.6% during the first quarter of 2024.

Current wording

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. During the second quarter of 2024, Fed policymakers maintained the target range for the federal funds rate from 5.25% to 5.50%. The equity markets rebounded resulting in the S&P 500 returning 4.3% during the second quarter of 2024.

Previous wording

The following presents an analysis of our results of operations for the period ended March 31, 2024 and 2023 (in thousands):

Current wording

The following presents an analysis of our results of operations for the three and six-month periods ended June 30, 2024 and 2023 (in thousands):

Previous wording

The Company is principal for the commission revenue, as it is responsible for the execution of the clients’ purchases and sales and maintains relationships with the product sponsors. Advisors assist the Company in performing it obligations. Accordingly, total commission revenue is reported on a gross basis. See Note 4 — Revenues From Contracts with Customers within the notes to the condensed consolidated financial statements for the period ended March 31, 2024, and 2023 for further details regarding our commission revenue by product category.

Current wording

The Company is principal for the commission revenue, as it is responsible for the execution of the clients’ purchases and sales and maintains relationships with the product sponsors. Advisors assist the Company in performing it obligations. Accordingly, total commission revenue is reported on a gross basis. See Note 4 - Revenues From Contracts with Customers within the notes to the condensed consolidated financial statements for the three and six-month periods ended June 30, 2024, and 2023 for further details regarding our commission revenue by product category.

Previous wording

The following table sets forth the components of our commission revenue for the period ended March 31, 2024 and 2023 (in thousands):

Current wording

The following tables sets forth the components of our commission revenue for the three and six-month periods ended June 30, 2024 and 2023 (in thousands):

Previous wording

Sales-based revenue increased by approximately $0.5 million or 3% for the period ended March 31, 2024 as compared to 2023. Trailing based revenue decreased by approximately $1.4 million or 7% for the period ended March 31, 2024 as compared to 2023. The increase in sales-based revenue for the period ended March 31, 2024 as compared to 2023 is attributable to an increase in the generation of transactional based products. The decrease in the trailing based revenues is primarily due to the net outflows of brokerage assets.

Current wording

Sales-based revenue decreased by approximately $6.2 million and $5.6 million or 28% and 15% for the three and six-month period ended June 30, 2024, respectively, as compared to 2023. Trailing based revenue increased by approximately $6.4 million and $5.0 million or 57% and 16% for the three and six-month periods ended June 30, 2024, respectively, as compared to 2023. The decrease in sales-based revenue for the three and six-month periods ended June 30, 2024 as compared to 2023 is attributable to a decrease in the generation of transactional based products. The increase in the trailing based revenues is primarily due to the net increase in trailing based assets and increase in the market performance Commission revenue is generated from brokerage assets. The following tables summarize the brokerage assets for the three and six-month periods ended June 30, 2024 and 2023 (in billions):

Previous wording

Advisory fees increased by approximately 3% for the period ended March 31, 2024 as compared to March 31, 2023, due to positive returns in the market offset by outflows of advisory assets.

Current wording

Advisory fees increased by approximately 20.2% and 10.3% for the three and six-month periods ended June 30, 2024, respectively, as compared to the same periods in June 30, 2023, due to positive returns in the market offset by outflows of advisory assets.

Previous wording

The following tables summarizes the advisory assets for the periods ended March 31, 2024 and 2023 (in billions):

Current wording

The following tables summarizes the advisory assets for the three and six-month periods ended June 30, 2024 and 2023 (in billions):

Previous wording

For the period ended March 31, 2024, the payout rate decreased as compared to 2023 as a result of in the prior year there was a non-recurring commissionable product that carried a payout at 90%.

Current wording

For the three and six-month periods ended June 30, 2024, the payout rate decreased as compared to 2023 as a result of in the prior year there was a non-recurring commissionable product that carried a payout at approximately 90%.

Previous wording

Employee compensation and benefits for the period ended March 31, 2024 remained consistent as compared to March 31, 2023, decreasing slightly by 1.3%.

Current wording

Employee compensation and benefits for the three-month period ended June 30, 2024 as compared to June 30, 2023, increased by approximately 9%.

Previous wording

Professional fees includes costs incurred related to legal and accounting services. Professional fees for the period ended March 31, 2024 as compared to 2023 increased by $3.5 million, which is directly related to transaction costs associated with the Business Combination.

Current wording

Professional fees includes costs incurred related primarily to legal and accounting services. Professional fees for the three months ended June 30, 2024 decreased by $.4 million as compared to the 2023 resulting from a decrease in professional fees related to the Business Combination that occurred in March 2024. Professional fees for the six months ended June 30, 2024 increased by $3.2 million as compared to the 2023 which is directly related to transaction costs associated with the Business Combination.

Previous wording

Technology fees primarily represent infrastructure costs that support the Company’s technology and communications costs. Technology fees decreased by $0.18 million for the period ended March 31, 2024 as compared to 2023.

Current wording

Technology fees primarily represent infrastructure costs that support the Company’s technology and communications costs. Technology fees increase by $0.1 million for the three months ended June 30, 2024 as compared 2023 and decreased by $0.1 million for six months ended June 30, 2024, respectively, as compared to 2023.

Previous wording

Interest expense primarily includes interest associated with the Company’s credit facility and other debt obligations. Interest expense decreased by $0.11 million for the period ended March 31, 2024 as compared to 2023 resulting from the repayment and restructuring of the related party debt obligations of Wentworth.

Current wording

Interest expense primarily includes interest associated with the Company’s credit facility and other debt obligations. Interest expense decreased by $0.7 million and $0.8 million for the three and six-month periods ended June 30, 2024, respectively, as compared to 2023 resulting from the repayment and restructuring of the related party debt obligations of Wentworth.

Previous wording

Our effective income tax rate was (7.0)% and 21.0% for the periods ended March 31, 2024 and 2023, respectively. The decrease in our effective tax rate was related to the transaction expenses related to the Reverse Recapitalization.

Current wording

Our effective income tax rate was (29.0)% and (15.2)% for the three and six-month periods ended June 30, 2024, as compared to 187.8% and 44.2% for the same periods in 2023, respectively. The difference in our effective tax rate was related to the transaction expenses related to the Reverse Recapitalization.

Previous wording

As of March 31, 2024, we had $20.2 million outstanding under our Senior Credit Facility with Oak Street Funding, LLC, net of debt issuance costs. The associated debt facilities are as follows:

Current wording

As of June 30, 2024, we had $19.7 million outstanding under our Senior Credit Facility with Oak Street Funding, LLC, net of debt issuance costs. The associated debt facilities are as follows:

Previous wording

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. This note payable bears interest at the prime rate (“Prime”) (8.50% as of March 31, 2024) plus 2.25% and has a 10-year term and a 3-month interest only repayment provision. As of March 31, 2024 and December 31, 2023, the outstanding balance of the Oak Street note, net of unamortized debt issuance costs was $17.2 million and $17.6 million, respectively.

Current wording

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. This note payable bears interest at the prime rate (“Prime”) (8.50% as of June 30, 2024) plus 2.25% and has a 10-year term and a 3-month interest only repayment provision. As of June 30, 2024 and December 31, 2023, the outstanding balance of the Oak Street note, net of unamortized debt issuance costs was $16.7 million and $17.6 million, respectively.

Previous wording

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. As of March 31, 2024 and December 31, 2023, the outstanding balance of this note, net of unamortized debt issuance costs was $3.1 million and $3.2 million, respectively.

Current wording

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. As of June 30, 2024 and December 31, 2023, the outstanding balance of this note, net of unamortized debt issuance costs was $3.0 million and $3.2 million, respectively.

Previous wording

As of December 31, 2023, the amount of principal and accrued interest related to these promissory notes was approximately $12.2 million. Related interest expense was approximately $0 million and $0.2 million for the periods ended March 31, 2024 and 2023, respectively.

Current wording

As of December 31, 2023, the amount of principal and accrued interest related to these promissory notes was approximately $12.2 million. Related interest expense was approximately $0 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

In connection with the closing of the Business Combination, the Company paid approximately $3.5 million on these notes. In addition to the paydown, the noteholders agreed to forgive the remaining accrued but unpaid interest of approximately $3.8 million and entered into new promissory notes in the principal amount of approximately $5.3 million in the aggregate. The terms of these new promissory notes provide for maturity on May 15, 2027 and carries an interest rate of Prime plus 1.00%, but no less than 7.50% per annum.

Current wording

In connection with the closing of the Business Combination, the Company paid approximately $3.5 million on these notes. In addition to the paydown, the noteholders agreed to forgive the remaining accrued but unpaid interest of approximately $3.8 million and entered into new promissory notes in the principal amount of approximately $5.3 million in the aggregate. The terms of these new promissory notes provide for maturity on May 15, 2027 and carries an interest rate of Prime plus 1.00%, but no less than 7.50% per annum. Related interest expense was approximately $0.1 and $0 for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

The following table sets forth a summary of cash flows for the period ended March 31, 2024 and 2023:

Current wording

The following table sets forth a summary of cash flows for the six month period ended June 30, 2024 and 2023:

Previous wording

Cash Flows from Operating Activities. Net cash used in operating activities was $3.1 million for the period ended March 31, 2024 compared to net cash provided by of $0.4 million for the period ended March 31 2023, representing a decrease of approximately $3.5 million or 921 %. The decrease was primarily attributable to the decrease in net income of approximately $1.0 million to a net loss of $1.5 million or a change of $2.5 million.

Current wording

Cash Flows from Operating Activities. Net cash used in operating activities was $2.1 million for the six-month period ended June 30, 2024, compared to net cash provided by of $0.2 million for the six-month period ended June 30 2023, representing a decrease of approximately $2.3 million. The decrease was primarily attributable to the decrease in net income of approximately $1.2 million to a net loss of $2.2 million or a change of $3.4 million.

Previous wording

Cash Flows from Investing Activities. Net cash used in investing activities was $0.01 million for the period ended March 31, 2024 compared to $0.09 million for the period ended March 31, 2023. The decrease was primarily related to the decrease in the purchases of property and equipment.

Current wording

Cash Flows from Investing Activities. Net cash used in investing activities was $0.0 million for the six-month period ended June 30, 2024, compared to $0.1 million for the six-month period ended June 30, 2023. The decrease was primarily related to the decrease in the purchases of property and equipment.

Previous wording

Cash Flows from Financing Activities. Net cash provided by financing activities was approximately $1.7 million for the period ended March 31, 2024 compared to cash used in financing activities of approximately $0.8 million for the period ended March 31, 2023. The change is primarily related to the proceeds received from the Redeemable Convertible Preferred Financing offset by the repayments of the Wentworth related party debt obligations.

Current wording

Cash Flows from Financing Activities. Net cash provided by financing activities was approximately $1.3 million for the six-month period ended June 30, 2024 compared to cash used in financing activities of approximately $1.3 million for the six-month period ended June 30, 2023. The change is primarily related to the proceeds received from the Redeemable Convertible Preferred Financing offset by the repayments of the Wentworth related party debt obligations.

Previous wording

Revenues from contracts with customers are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. 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 periods ended March 31, 2024 and 2023.

Current wording

Revenues from contracts with customers are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. 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 three and six-months periods ended June 30, 2024 and 2023.