Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



"Management's Discussion and Analysis of Financial Condition and Results of Operations" is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including fair value of financial instruments. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.



All amounts in this disclosure are in thousands (except share, unit, per share, and per unit data) except where otherwise noted.



Overview



We are a financial services company specializing in an expanding range of capital markets and asset management services. We are organized into three business segments: Capital Markets, Asset Management, and Principal Investing.



	•	Capital Markets: Our Capital Markets business segment consists primarily of sales, trading, underwriting, gestation repo financing, new issue placements in corporate and securitized products, and advisory services. Our sales and trading group provides trade execution to corporate investors, institutional investors, mortgage originators, and other smaller broker-dealers. We specialize in a variety of products, including but not limited to: corporate bonds and loans, SPAC equity, preferred equity, asset backed securities ("ABS"), mortgage backed securities ("MBS"), residential mortgage backed securities ("RMBS"), collateralized bond obligations ("CBOs"), collateralized mortgage obligations ("CMOs"), municipal securities, to-be-announced securities ("TBAs") and other forward agency MBS contracts, Small Business Administration ("SBA") loans, U.S. government bonds, U.S. government agency securities, brokered deposits and certificates of deposit ("CDs") for small banks, and hybrid capital of financial institutions including whole loans and other structured financial instruments. We operate our capital markets activities primarily through our subsidiaries: Cohen Securities in the United States and CCFESA in Europe. CCM, our boutique investment bank, is a division of Cohen Securities. Our Capital Markets business segment also includes unrealized and realized gains and losses on its other investments, at fair value and other investments sold, not yet purchased, at fair value that were acquired as part of our CCM business.
	•	Asset Management: Our Asset Management business segment manages assets within investment funds, managed accounts, joint ventures, and collateralized debt obligations ("CDOs") (collectively referred to as "Investment Vehicles"). Our Asset Management business segment includes our fee-based asset management operations, which include ongoing base and incentive management fees.
	•	Principal Investing: Our Principal Investing business segment is comprised of investments that we have made for the purpose of earning an investment return rather than investments made to support our trading and other Capital Markets business segment activities. These investments are included in other investments, at fair value; other investments sold, not yet purchased; and investments in equity method affiliates in our consolidated balance sheets.



We generate our revenue by business segment primarily through the following activities.

	•	Investment banking and new issue revenue comprised of (a) origination fees for newly created financial instruments originated by us, (b) revenue from advisory services, (c) underwriting, (d) new issue revenue associated with arranging and placing the issuance of newly created financial instruments, and (e) any investment returns on financial instruments that we have acquired or received as consideration for services provided by CCM.
	•	Trading activities of the Company, which include execution and brokerage services, riskless trading activities as well as gains and losses (unrealized and realized) and income and expense earned on securities and derivatives classified as investments-trading; and
	•	Revenue earned on the Company's gestation repo financing program.

•

Asset management fees for our on-going asset management services provided to certain Investment Vehicles, which may include fees both senior and subordinate to the securities in the Investment Vehicle, and incentive management fees earned based on the performance of the various Investment Vehicles.

	•	Gains and losses (unrealized and realized) and income and expense earned on securities classified as other investments, at fair value and other investments, sold not yet purchased, which were not acquired as part of the CCM business; and
	•	Income and loss earned on equity method investments.





Business Environment

Our business in general and our Capital Markets business segment in particular do not produce predictable earnings. Our results can vary dramatically from year-to-year and quarter-to-quarter. Our business is materially affected by economic conditions in the financial markets, political conditions, broad trends in business and finance, the housing and mortgage markets, changes in volume and price levels of securities transactions, and changes in interest rates, including overnight funding rates, all of which can affect our profitability and are unpredictable and beyond our control. These factors may affect the financial decisions made by investors and companies, including their level of participation in the financial markets and their willingness to participate in corporate transactions. Severe market fluctuations or weak economic conditions could reduce our trading volume and revenues, negatively affect our ability to generate investment banking and new issue revenue, and adversely affect our profitability.

As a general rule, our trading business benefits from increased market volatility. Increased volatility usually results in increased activity from our clients and counterparties. However, periods of extreme volatility may at times result in clients reducing their trading volumes, which would negatively impact our results. Also, periods of extreme volatility may result in large fluctuations in securities valuations and we may incur losses on our holdings. Also, our mortgage group's business benefits when mortgage volumes increase, and may suffer when mortgage volumes decrease. Among other things, mortgage volumes are significantly impacted by changes in interest rates. In addition, as a smaller firm, we are exposed to intense competition. Although we provide financing to our customers, larger firms have a much greater capability to provide their clients with financing, giving them a competitive advantage. We are much more reliant upon our employees' relationships, networks, and abilities to identify and capitalize on market opportunities. Therefore, our business may be significantly impacted by the addition or loss of key personnel.

We try to address these challenges by (i) focusing our business on clients and asset classes that are underserved by the large firms, (ii) continuing to monitor our fixed costs to enhance operating leverage and limit our losses during periods of low volumes, and (iii) attempting to hire and retain entrepreneurial and effective traders, investment bankers, and salespeople. Our business environment is rapidly changing. New risks and uncertainties emerge continuously and it is not possible for us to predict all the risks we will face. New risks and uncertainties may negatively impact our operating performance.

A portion of our revenue is generated from net trading activity. We engage in proprietary trading for our own account, provide securities financing for our customers, and execute "riskless" trades with a customer order in hand resulting in limited market risk to us. The inventory of securities held for our own account, as well as held to facilitate customer trades, and our market making activities are sensitive to market movements.

A portion of our revenue is generated from investment banking and new issue engagements. The fees charged and volume of these engagements are sensitive to the overall business environment. We provide origination services in Europe through our subsidiary CCFESA, and investment banking and new issue services in the U.S. through our subsidiary Cohen Securities. A division of Cohen Securities, CCM is our full-service boutique investment bank providing capital markets and SPAC advisory services to corporations, financial sponsors, investors, and institutions. In some cases, CCM will receive financial instruments in lieu of cash for its investment banking and new issue engagements. In these cases, we record revenue equal to the fair value of the instruments received. Subsequent to receipt, the instruments are carried at fair value as a component of other investments, at fair value in our consolidated balance sheets. Any change in the fair value of these instruments subsequent to recording the investment banking and new issue revenue will be recorded as an adjustment to investment banking and new issue revenue in our consolidated statement of operations. Currently, our primary source of investment banking and new issue revenue is from investment banking and advisory services through CCM, as well as originating assets for our U.S. and European insurance asset management business including our U.S. Insurance JV and for our CREO JV.

A portion of our revenue is generated from management fees. Our ability to charge management fees and the amount of those fees is dependent upon the underlying investment performance and stability of the Investment Vehicles. If these types of investments do not provide attractive returns to investors, the demand for such instruments will likely fall, thereby reducing our opportunity to earn new management fees or maintain existing management fees.

A portion of our revenues is generated from our principal investing activities. Therefore, our revenues are impacted by the overall market supply and demand of these investments as well as the individual performance of each investment. Our principal investments are included within other investments, at fair value; other investments sold, not yet purchased; and investments in equity method affiliates in our consolidated balance sheets. More recently, a significant component of our principal investment revenue has come from SPAC related equity investments, primarily in entities that have been the result of sponsored SPAC business combinations or related party sponsored SPAC business combinations. Access to these investments is reliant on a robust SPAC market. Performance of the resulting principal investments can be materially impacted by overall performance of the equity markets. See note 8 to our consolidated financial statements included in this Annual Report on Form 10-K.

The SPAC Market

In 2018, we began sponsoring a series of SPACs. In addition, we invest in other SPACs at various stages of their business life cycle. Beginning in 2019, these SPAC activities have become a significant portion of our Principal Investing business segment. In August 2018, we invested in and became the general partner of a newly formed investment fund (the "SPAC Fund"), which was created for the purpose of investing in the equity interests of SPACs and SPAC sponsor entities including SPACs sponsored by us, our affiliates, and third parties. Effective April 1, 2023, all of the investors in the SPAC Fund, other than the general partner of the SPAC Fund ("Vellar GP"), redeemed all of their interests in the SPAC Fund. In 2025, we sold our remaining interest in Vellar GP.

As a complement to the SPAC Fund, we established and became manager of two newly formed umbrella limited liability companies (the "SPAC Series Funds") that issued a separate series of interest for each investment portfolio, which typically consisted of investments in the sponsor entities of individual SPACs. We are not issuing any new SPAC Series Funds, and this business is winding down. Generally, when a SPAC acquires or merges with a privately held target company, the target company winds up owning a majority of the resulting outstanding equity of the SPAC so the transaction is accounted for as a reverse merger. Private companies utilize reverse mergers with SPACs as a method of going public as an alternative to a traditional IPO. All of our business activity related to SPACs is highly sensitive to the volume of activity in the SPAC market. Volumes could be negatively impacted if target companies no longer see SPACs as an attractive alternative thereby reducing the number of suitable potential business combination targets. Also, investor demand for SPACs would be negatively impacted if the stock of SPACs that successfully complete a business combination underperform the market. If volumes of SPAC activity decline, our results of operations will likely be significantly negatively impacted.

We are exposed to public equity prices of SPACs and post-business combination SPACs through our other investments, at fair value, investments in equity method affiliates, and other investments sold, not yet purchased. As a result, we recorded significant principal transaction losses and equity method losses in certain SPAC related investments. Continued declines in the equity prices of these companies will result in further losses for us.

Margin Pressures in Fixed Income Brokerage Business

Performance in the financial services industry in which we operate is highly correlated to the overall strength of the economy and financial market activity. Overall market conditions are a product of many factors beyond our control and can be unpredictable. These factors may affect the financial decisions made by investors, including their level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors including the volatility of the equity and fixed income markets, the level and shape of the various yield curves, and the volume and value of trading in securities.

Margins and volumes in certain products and markets within the fixed income brokerage business continue to decrease materially as competition has increased and general market activity has declined. Further, we continue to expect that competition will increase over time, resulting in continued margin pressure. 

Our response to this margin compression has included: (i) building a diversified trading platform, (ii) acquiring or building out new product lines and expanding existing product lines, (iii) building a hedging execution and funding operation to service mortgage originators, (iv) building out CCM, and (v) monitoring our fixed costs. Our cost management initiatives are ongoing. However, there can be no certainty that these efforts will be sufficient. If insufficient, we will likely see a decline in profitability.

U.S. Housing Market

The mortgage group primarily earns revenue by providing hedging execution, securities financing, and trade execution services to mortgage originators and other investors in mortgage-backed securities. Therefore, this group's revenue is highly dependent on the volume of mortgage originations in the U.S. Origination activity is highly sensitive to interest rates, the U.S. job market, housing starts, sale activity of existing housing stock, as well as the general health of the U.S. economy. In addition, any new regulation that impacts U.S. government agency mortgage-backed security issuance activity, residential mortgage underwriting standards, or otherwise impacts mortgage originators will impact our business. We have no control over these external factors and there is no effective way for us to hedge against these risks. Our mortgage group's volumes and profitability will be highly impacted by these external factors.

Recent Events and Transactions

Columbus Circle SPAC

On May 19, 2025, Columbus Circle Capital Corp I (the "Columbus Circle SPAC"), a blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses (each a "Business Combination"), completed the sale of 25,000,000 units (the "Units") in its initial public offering (the "IPO"), which included 3,000,000 units issued pursuant to the underwriters' partial exercise of their over-allotment option.

On June 23, 2025, the Columbus Circle SPAC entered into a definitive business combination agreement with ProCap BTC, LLC, a Delaware limited liability company ("ProCap BTC"), ProCap Financial, Inc., a Delaware corporation ("ProCap Financial"), Crius SPAC Merger Sub, Inc., a Delaware corporation ("SPAC Merger Sub"), Crius Merger Sub, LLC, a Delaware limited liability company ("Company Merger Sub"), and Inflection Points Inc., d/b/a Professional Capital Management, a Delaware corporation (the "Business Combination Agreement"). Pursuant to the transactions contemplated by the Business Combination Agreement (the "Business Combination"), the Columbus Circle SPAC and ProCap BTC would merge into SPAC Merger Sub and Company Merger Sub, respectively, and become wholly-owned subsidiaries of ProCap Financial, and ProCap Financial would become a publicly traded company. Proceeds from the Business Combination, if any, after satisfaction of redemption payments to the Columbus Circle SPAC's public shareholders and transaction expenses, were expected to be used by ProCap Financial to purchase bitcoin, in connection with ProCap Financial's business plans and strategies.

On December 5, 2025, the transactions contemplated by the Business Combination were consummated (the "Closing"). Upon the Closing, Columbus Circle SPAC and ProCap BTC merged into SPAC Merger Sub and Company Merger Sub, respectively, and became wholly-owned subsidiaries of ProCap Financial. ProCap Financial became the go-forward company following the Closing. ProCap Financials' common stock and warrants commenced trading on the Nasdaq Global Market on December 8, 2025 under the symbols "BRR" and "BRRWW," respectively.

From May 19, 2025 until December 5, 2025, we consolidated the sponsor of the Columbus Circle SPAC, which treated its investment in the Columbus Circle SPAC under the equity method of accounting. The sponsor distributed all of its assets and ceased operations in December 2025. The following table shows the impact that the consolidation of the Columbus Circle SPAC sponsor had on our statement of operations during 2025.

		2025
Revenues
Principal transactions and other income		$	32,240
Total revenue			32,240
Operating expenses
Compensation and benefits			15,671
Total operating expenses			15,671
Operating income / (loss)			16,569
Non-operating income / (expense)
Income / (loss) from equity method affiliates			(2,675	)
Income / (loss) before income taxes			13,894
Income tax expense / (benefit)			-
Net income / (loss)			13,894
Less: Net income (loss) attributable to the non-convertible non-controlling interest			5,854
Enterprise net income (loss)			8,040
Less: Net income (loss) attributable to the convertible non-controlling interest			-
Net income / (loss) attributable to Cohen & Company Inc.		$	8,040

The compensation incurred above represented share-based compensation recognized upon completion of the Business Combination. See note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for the discussion of our accounting policy related to equity compensation for SPACs we sponsor.

As of December 31, 2025, we held 2,151,666 shares of BRR that were allocated to us by the sponsor of the Columbus Circle SPAC, which were carried at a value of $7,595 included as a component of other investments, at fair value in our consolidated balance sheet. The BRR shares are subject to certain transfer restrictions, which restrictions will lapse and the BRR shares will no longer be subject to these transfer restrictions upon the earliest to occur of the following: (i) the second anniversary of the Closing, (ii) if the closing price of ProCap Financials' common stock equals or exceeds $10.21 per share (subject to customary adjustments) for any 20 trading days within any consecutive 30-trading day period, and (iii) if the dollar volume-weighted average price for Bitcoin (BTC) during any one hundred twenty (120)-hour period equals or exceeds $140 during any five-day period. Any further change in value of these shares until final liquidation will be recorded as principal transactions gain or loss in our consolidated statement of operations. The Company recorded a loss of ($452) on the shares of BRR from the date the Sponsor distributed the shares through December 31, 2025.

In addition, we served as underwriter and advisor to the Columbus Circle SPAC. See note 31 to our consolidated financial statements included in this Annual Report on Form 10-K. As partial consideration for these services, we received 392,000 shares of BRR and 196,000 warrants. The shares and warrants are carried at a value of $1,521 and included as a component of other investments, at fair value in our consolidated balance sheet.

Sale of Management Contracts

On March 13, 2025, we entered into a Master Transaction Agreement (the "MTA") with an affiliate of Hildene Capital Management, LLC ("Hildene"), an SEC-registered investment adviser based in Stamford, Connecticut. Hildene has been investing in CDOs backed by trust preferred securities ("TruPS") since the 2007-08 financial crisis and has extensive experience with monitoring banks and insurance companies. Pursuant to the MTA, the Company agreed to sell, assign, transfer, and convey to Hildene all of its rights and obligations in and under the Collateral Management Agreements and Collateral Administration Agreements (each a "CDO Agreement" and together, the "CDO Agreements") for (i) Alesco Preferred Funding III, Ltd., (ii) Alesco Preferred Funding IV, Ltd., (iii) Alesco Preferred Funding V, Ltd., (iv) Alesco Preferred Funding VI, Ltd., and (v) Alesco Preferred Funding VIII, Ltd. (each an "Issuer," and, collectively, the "Issuers") and all books and records with respect to each Issuer (collectively with the CDO Agreements, the "Assigned Assets"). The MTA contemplated multiple closings following the date of the MTA (each an "MTA Closing"), with each MTA Closing to occur following the satisfaction of the conditions to MTA Closing for the assignment of each CDO Agreement pursuant to the MTA. The most significant condition outside of the Company's and Hildene's control was consent of the preferred security holders of each CDO. During the year ended December 31, 2025, we received all required consents with respect to the MTA Closing, and all of the MTA Closings were consummated. No further MTA Closings will occur. We recorded a gain of $2,734, which represented the sale price of $3,500 less offsets of $766, which represented management fees received by us subsequent to March 1, 2025.

Vellar Opportunities GP, LLC

On February 25, 2025, the Operating LLC entered into (i) a Limited Liability Company Interest Purchase Agreement (the "Vellar Purchase Agreement") with Jason Capone and Solomon Cohen, who is the son of our executive chairman, Daniel G. Cohen, and (ii) a Transition Services Agreement (the "Vellar Transition Services Agreement" and, together with the Vellar Purchase Agreement, the "Vellar Agreements") with Vellar Opportunities GP LLC, a Delaware limited liability company ("Vellar GP"). Prior to entering into the Vellar Agreements, the Operating LLC was the managing member and owner of 33.4% of Vellar GP.

Pursuant to the Vellar Purchase Agreement, the Operating LLC sold all of its 33.4% interest in Vellar GP to each of Solomon Cohen and Jason Capone for an aggregate of $10. As of February 25, 2025 and as a result of the consummation of the transactions contemplated by the Vellar Purchase Agreement, we no longer had any investment in Vellar GP. Pursuant to the Vellar Purchase Agreement, the Operating LLC resigned as the managing member of Vellar GP, effective February 25, 2025. In the first quarter of 2025, we recorded a loss on sale of $836, which is included as component of principal transactions and other income in the Company's consolidated statement of operations.

Consolidated Results of Operations



The following section provides a comparative discussion of our consolidated results of operations for the specified periods. The period-to-period comparisons of financial results are not necessarily indicative of future results.



Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024



The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2025 and 2024.

COHEN & COMPANY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands)

		Year Ended December 31,								Favorable / (Unfavorable)
		2025				2024				$ Change				% Change
Revenues
Investment banking and new issue		$	187,608			$	40,778			$	146,830				360	%
Net trading			47,347				36,409				10,938				30	%
Asset management			8,817				9,009				(192	)			(2	)%
Principal transactions and other income			31,792				(6,598	)			38,390				582	%
Total revenues			275,564				79,598				195,966				246	%
Operating expenses
Compensation and benefits			177,518				56,388				(121,130	)			(215	)%
Business development, occupancy, equipment			7,897				6,617				(1,280	)			(19	)%
Subscriptions, clearing, and execution			15,927				9,639				(6,288	)			(65	)%
Professional fee and other operating			14,091				14,421				330				2	%
Depreciation and amortization			724				556				(168	)			(30	)%
Total operating expenses			216,157				87,621				(128,536	)			(147	)%
Operating income / (loss)			59,407				(8,023	)			67,430				840	%
Non-operating income / (expense)
Interest expense, net			(5,876	)			(5,821	)			(55	)			(1	)%
Gain on sale of management contracts			2,734				-				2,734				NM
Income / (loss) from equity method affiliates			(16,763	)			21,704				(38,467	)			(177	)%
Income / (loss) before income taxes			39,502				7,860				31,642				403	%
Income tax expense / (benefit)			(632	)			(329	)			303				92	%
Net income / (loss)			40,134				8,189				31,945				390	%
Less: Net income (loss) attributable to the non-convertible non-controlling interest			(1,913	)			8,675				10,588				122	%
Enterprise net income (loss)			42,047				(486	)			42,533				8752	%
Less: Net income (loss) attributable to the convertible non-controlling interest			27,616				(357	)			(27,973	)			(7836	)%
Net income / (loss) attributable to Cohen & Company Inc.		$	14,431			$	(129	)		$	14,560				11287	%



Revenues



Revenues increased by $195,966, or 246%, to $275,564 for the year ended December 31, 2025, as compared to $79,598 for the year ended December 31, 2024. As discussed in more detail below, the change was comprised of (i) an increase of $146,830 in investment banking and new issue revenue; (ii) an increase of $10,938 in net trading revenue; (iii) a decrease of $192 in asset management revenue; and (iv) an increase of $38,390 in principal transactions and other income.



Investment Banking and New Issue



Investment banking and new issue revenue increased by $146,830, or 360%, to $187,608 for the year ended December 31, 2025, as compared to $40,778 for the year ended December 31, 2024.

		Year Ended December 31, 2025
		Cash				Non-Cash				Total
CCM - Underwriting		$	46,995			$	14,633			$	61,628
CCM - Advisory and other new issue			90,258				217,765				308,023
Other - Origination			3,916				-				3,916
Total		$	141,169			$	232,398			$	373,567
Gains / (losses) on CCM financial instruments received as non-cash consideration											(185,959	)
Investment banking and new issue										$	187,608
		Year Ended December 31, 2024
		Cash				Non-Cash				Net
CCM - Underwriting		$	4,733			$	1,423			$	6,156
CCM - Advisory and other new issue			32,495				22,915				55,410
Other - Origination			1,856				-				1,856
Total		$	39,084			$	24,338			$	63,422
Gains / (losses) on CCM financial instruments received as non-cash consideration											(22,644	)
Investment banking and new issue										$	40,778
		Change
		Cash				Non-Cash				Total
CCM - Underwriting		$	42,262			$	13,210			$	55,472
CCM - Advisory and other new issue			57,763				194,850				252,613
Other - Origination			2,060				-				2,060
Total		$	102,085			$	208,060			$	310,145
Gains / (losses) on CCM financial instruments received as non-cash consideration											(163,315	)
Investment banking and new issue										$	146,830

During the year ended December 31, 2025, we began classifying principal transactions income/loss related to CCM activities from principal transaction to investment banking and new issue. Specifically, $22,644 and $4,312 of revenue previously reported on the consolidated statement of operations in principal transaction revenue has been reclassified as investment banking and new issue revenue for the periods ending December 31, 2024, and 2023, respectively. These reclassifications had no effect on previously reported net income.

Our revenue earned from investment banking and new issue has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements remains consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition.  In addition, we often incur certain costs related to investment banking and new issue engagements. For underwritings, any costs incurred are included as a component of subscriptions, clearing, and execution. For advisory and other new issue some expenses may be recorded in professional fees and other. Finally, the change in value of our financial instruments received as consideration will also impact revenue recognized and can be volatile. All investment banking and new issue revenue is included in our Capital Markets segment. See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

CCM is our full-service boutique investment bank providing capital markets and SPAC advisory services to corporations, financial sponsors, investors, and institutions. In addition, we generate investment banking and new issue revenue by originating new assets for the U.S. Insurance JV, CREO JV, and our PriDe Funds in Europe.

In some cases, CCM will receive financial instruments in lieu of cash for its investment banking and new issue engagements. In these cases, we record revenue equal to the fair value of the instruments received. Subsequent to receipt, the instruments are carried at fair value as a component of other investments, at fair value in our consolidated balance sheets. Any change in the fair value of these instruments subsequent to recording the investment banking and new issue revenue will be recorded as an adjustment to investment banking and new issue revenue in our consolidated statement of operations. Further, the financial instruments we receive in these cases are often (i) common stock investments that are restricted for resale for some period of time, (ii) convertible or non-convertible notes receivable that are not publicly traded, (iii) equity investments in special purpose entities that are not publicly traded, or (iv) unrestricted common stock investments in public companies with low trading volumes. As a result, it may take us a significant period of time to liquidate these financial instruments.

Net Trading



Net trading revenue increased by $10,938, or 30%, to $47,347 for the year ended December 31, 2025, as compared to $36,409 for the year ended December 31, 2024. The following table shows the detail by trading group.



NET TRADING

(Dollars in Thousands)

		Year Ended December 31,
		2025				2024				Change
Mortgage		$	4,322			$	5,207			$	(885	)
Gestation repo			19,213				15,152				4,061
High yield corporate			2,177				3,318				(1,141	)
Agencies			3,318				2,519				799
MBS			760				15				745
SPAC equity			4,351				-				4,351
CMOs			2,659				1,426				1,233
SBAs			2,401				(45	)			2,446
Structured notes			3,709				2,617				1,092
Other			4,437				6,200				(1,763	)
Total		$	47,347			$	36,409			$	10,938



Our net trading revenue includes unrealized gains on our trading investments, as of the applicable measurement date, which may never be realized due to changes in market or other conditions not in our control. This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to the volatility and uncertainty in the capital markets generally, the net trading revenue recognized during the year may not be indicative of future results. Furthermore, from time to time, some of the assets included in the investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 9 and 10 to our consolidated financial statements included in this Annual Report on Form 10-K. The fair value estimates made by us may not be indicative of the final sale price at which these assets may be sold. We consider our gestation repo business to be subject to significant concentration risk. See note 11 to our consolidated financial statements included in this Annual Report on Form 10-K. All net trading revenue is included in our Capital Markets segment. See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

Asset Management



Assets Under Management 

Our AUM equals the sum of the NAV or gross assets of the Investment Vehicles we manage based on whichever measurement serves as the basis for the calculation of our management fees. Our calculation of AUM may differ from the calculations used by other asset managers and, as a result, this measure may not be comparable to similar measures presented by other asset managers. This definition of AUM is not necessarily identical to the definitions of AUM that may be used in our management agreements.





ASSETS UNDER MANAGEMENT

(Dollars in Thousands)

		As of December 31,
		2025				2024				2023
Pride, managed accounts, and other		$	994,170			$	1,359,310			$	900,263
US Insurance JV			144,127				154,001				165,969
CREO JV			192,941				263,308				296,246
Company-sponsored CDOs			101,480				965,887				995,191
Assets under management (1)		$	1,432,718			$	2,742,506			$	2,357,669



(1)

The accounts we manage may employ leverage. In some cases, our fees are based on gross assets and in other cases on net assets. Finally, in the case of the SPAC Series Funds, there are no management fees earned. AUM included herein is calculated using either gross or net assets of each managed account or CDO based on whichever serves as the basis for our management fees. In the case where no management fees are earned, the net assets are included.

Asset management fees decreased by $192, or 2%, to $8,817 for the year ended December 31, 2025, as compared to $9,009 for the year ended December 31, 2024. The decrease is primarily due to the sale of our legacy Alesco CDO agreements, which closed during 2025. During the twelve months ended December 2025 and 2024, we earned a total of $737 and $1,313 in revenue from these contracts, respectively. This was partially offset by an increase in revenue generated by the Pride Funds due to higher AUM and deferred performance fees related to the PriDe Funds. All asset management revenue is included in our asset management segment. See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

Principal Transactions and Other Income

Principal transactions and other income increased by $38,390 to $31,792 for the year ended December 31, 2025, as compared to ($6,598) for the year ended December 31, 2024.

PRINCIPAL TRANSACTIONS & OTHER INCOME

(Dollars in Thousands)

		Year Ended December 31,
		2025				2024				Change
Interests in public companies:
ProCap Financial, Inc. (NASDAQ:BRR)		$	31,788			$	-			$	31,788
Brand Engagement Network, Inc. (NASDAQ: BNAI)			(144	)			(773	)			629
Critical Metals Corp. (NASDAQ: CRML)			(1,843	)			(1,392	)			(451	)
Fold Holdings, Inc. (NASDAQ: FLD)			(678	)			-				(678	)
Marblegate Capital Corporation (OTC:MGTE)			874				-
Holdco Nuvo Group D.G Ltd. (OTC: NUVOQ)			-				(2,198	)			2,198
Syntec Optics Holdings, Inc. (NASDAQ: OPTX)			1				(863	)			864
Payoneer Global Inc. (NASDAQ: PAYO)			(1,297	)			1,406				(2,703	)
Rezolve AI PLC (NASDAQ: RZLV)			271				(1,386	)			1,657
Tevogen Bio Holdings Inc. (NASDAQ: TVGN)			-				(401	)			401
Zoomcar Holdings, Inc. (OTC: ZCAR)			-				(7,097	)			7,097
CREO JV			(342	)			617				(959	)
U.S. Insurance JV			237				(17	)			254
SFAs			1,404				1,476				(72	)
Other			73				388				(315	)
Total principal transactions			30,344				(10,240	)			40,584
IIFC revenue share			1,867				2,557				(690	)
Vellar GP			(836	)			-
All other income			417				1,085				(668	)
Other income			1,448				3,642				(2,194	)
Total principal transactions and other income		$	31,792			$	(6,598	)		$	38,390



Interests in Public Companies

These investments represent our direct and indirect investments in certain public companies. These investments may be in the form of unrestricted common stock, restricted common stock, equity derivatives, convertible notes and non-convertible notes receivable, as well as equity interest in SPVs that have investments in these public companies. The name and stock symbol of each public company in which we have a direct or indirect investment is listed in the table above. The amounts shown represent the change in the fair value of our investment during each time period noted in the table.

Other Principal Investments

The CREO JV invests in primarily multi-family commercial real estate mortgage-backed loans. We carry our investment in the CREO JV at its reported NAV.

The U.S. Insurance JV invests in insurance company debt. We carry our investment in the U.S. Insurance JV at its reported NAV.

We have also engaged in several transactions known as "share forward arrangements" ("SFAs").. In a typical SFA transaction, we acquire an interest in a publicly traded company and enter into an offsetting derivative with the same company. Both the interest in the public company and the offsetting derivative are carried at fair value. The amount shown in the table above represents the net change in fair value recorded during the periods presented. The interests we hold in SFA Counterparties are included as a component of other investments, at fair value. The derivatives are included as a component of other investments sold, not yet purchased, at fair value. See note 8 to our consolidated financial statements included in this Annual Report on Form 10-K for more information regarding our SFAs.

Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.

Other Income

Other income is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items. The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC. The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments. To date, we have earned $10,042. Other income is recorded in all three of our segments. See note 29 to our consolidated financial statements included in our Annual Report on Form 10-K.

Operating Expenses



Operating expenses increased by $128,536, or 147%, to $216,157 for the year ended December 31, 2025, as compared to $87,621 for the year ended December 31, 2024. As discussed in more detail below, the change was comprised of (i) an increase of $121,130 in compensation and benefits; (ii) an increase of $1,280 in business development, occupancy, and equipment; (iii) an increase of $6,288 in subscriptions, clearing, and execution; (iv) a decrease of $330 in professional fee and other operating; and (v) an increase of $168 in depreciation and amortization.

Compensation and Benefits



Compensation and benefits increased by $121,130, or 215%, to $177,518 for the year ended December 31, 2025, as compared to $56,388 for the year ended December 31, 2024.

COMPENSATION AND BENEFITS

(Dollars in Thousands)

		Year Ended December 31,
		2025				2024				Change
Cash compensation and benefits		$	157,305			$	51,720			$	105,585
Equity-based compensation - Columbus Circle SPAC			15,671				-				15,671
Equity-based compensation - Cohen & Company			4,542				4,668				(126	)
Total		$	177,518			$	56,388			$	121,130



Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits. Cash compensation and benefits increased by $105,585 to $157,305 for the year ended December 31, 2025, as compared to $51,720 for the year ended December 31, 2024. Our headcount increased to 126 as of December 31, 2025 from 113 as of December 31, 2024. Cash compensation increased primarily due to an increase in incentive compensation related to the increase in investment banking and new issue revenue, as well as the year over year overall improvement in operating performance.



Included in the 2025 equity-based compensation was $15,761 recognized at the completion of the business combination between ProCap Financial and Columbus Circle SPAC representing founder shares in Columbus Circle SPAC allocable to our employees. This was a one-time expense, and we should incur no further expense related to equity instruments of the Columbus Circle SPAC. The compensation incurred above represented share-based compensation recognized upon completion of the business combination. See note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for the discussion of our accounting policy related to equity compensation for SPACs we sponsor. Equity-based compensation related to Cohen & Company shares was relatively unchanged.

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment increased by $1,280, or 19%, to $7,897 for the year ended December 31, 2025, as compared to $6,617 for the year ended December 31, 2024. This increase was comprised of an increase in business development of $1,271 and an increase in other occupancy of $9. Increased business development expenditures were related to our increased investment banking and new issue activities.



Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution increased by $6,288, or 65%, to $15,927 for the year ended December 31, 2025, as compared to $9,639 for the year ended December 31, 2024. The increase was comprised of an increase in subscriptions and dues of $669 and an increase in clearing and execution of $5,619. The increase in clearing and execution was mainly due to the increase in costs incurred on the higher volume on investment banking and new issue engagements including firm underwritings.



Professional Fee and Other Operating Expenses

Professional fee and other operating expenses decreased by $330, or 2%, to $14,091 for the year ended December 31, 2025, as compared to $14,421 for the year ended December 31, 2024. The decrease was the result of a decrease in other operating expense of $806, partially offset by an increase in professional fees of $476.

Depreciation and Amortization

Depreciation and amortization increased by $168, or 30%, to $724 for the year ended December 31, 2025, as compared to $556 for the year ended December 31, 2024.

Non-Operating Income and Expense

Interest Expense, net



Interest expense, net increased by $55 to $5,876 for the year ended December 31, 2025, as compared to $5,821 for the year ended December 31, 2024.







INTEREST EXPENSE

(Dollars in Thousands)

		Year Ended December 31,
		2025				2024				Change
Junior subordinated notes		$	4,748			$	4,695			$	53
2020/2024 Notes			1,002				740				262
Byline Credit Facility			126				76				50
Redeemable Financial Instrument - JKD Capital Partners I LTD			-				310				(310	)
		$	5,876			$	5,821			$	55

See notes 19 and 20 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding our redeemable financial instruments and debt.

Income / (Loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates decreased by $38,467 to ($16,763) for the year ended December 31, 2025, as compared to $21,704 for the year ended December 31, 2024. See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.

		Year Ended December 31,
		2025				2024				Change
Dutch Real Estate Entities		$	634			$	(759	)		$	1,393
Columbus Circle SPAC			(3,467	)			-				(3,467	)
SPAC Sponsor Entities			(13,930	)			22,463				(36,393	)
		$	(16,763	)		$	21,704			$	(38,467	)

SPAC sponsor entities includes both indirect and direct investments in SPAC sponsor entities. Several of these SPAC sponsor entities are invested in SPACs that have completed their business combinations. Those SPAC sponsor entities hold restricted and unrestricted equity interests in the public post-merger entities. We account for our investments in SPAC sponsor entities under the equity method of accounting. If the SPAC sponsor entity distributes SPAC shares to us, we account for those SPAC shares as a component of other investments, at fair value. The following table shows the equity method income or loss included in other SPAC sponsor entities above broken out by the ultimate public company investee. For several of the investments described below, we also had an investment in the same company accounted for at fair value as a component of other investments, at fair value during the periods presented. See discussion of principal transactions above.

		Year Ended December 31,
		2025				2024				Change
African Agriculture Holdings Inc. (OTC: AAGR)		$	-			$	(2,362	)		$	2,362
Brand Engagement Network, Inc. (NASDAQ: BNAI)			-				2,059				(2,059	)
Critical Metals Corp. (NASDAQ: CRML)			(367	)			4,785				(5,152	)
Next.e.GO N.V. (OTC: EGOXF)			-				(279	)			279
Fold Holdings, Inc. (NASDAQ: FLD)			1,409				(128	)			1,537
Murano Global Investments Plc (NASDAQ: MRNO)			(14,980	)			15,914				(30,894	)
Holdco Nuvo Group D.G Ltd. (OTC: NUVOQ)			-				2,198				(2,198	)
Rezolve AI PLC (NASDAQ: RZLV)			(109	)			3,468				(3,577	)
Tevogen Bio Holdings, Inc. (NASDAQ: TVGN)			-				786				(786	)
Zoomcar Holdings, Inc. (OTC: ZCAR)			(138	)			(2,516	)			2,378
Other			255				(1,462	)			1,717
		$	(13,930	)		$	22,463			$	(36,393	)

See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.

Income Tax Expense / (Benefit)

Income tax expense / (benefit) was ($632) for the year ended December 31, 2025, as compared to ($329) for the year ended December 31, 2024.

		For the Year Ended December 31,
		2025				2024				Change
Current income tax expense / (benefit)
Federal income tax expense / (benefit)		$	-			$	-			$	-
Foreign income tax expense / (benefit)			369				118				(251	)
State and local income tax expense / (benefit)			868				230				(638	)
			1,237				348				(889	)
Deferred income tax expense / (benefit)
Federal income tax expense / (benefit)			(3,228	)			(1	)			3,227
Foreign income tax expense / (benefit)			-				-				-
State and local income tax expense / (benefit)			1,359				(676	)			(2,035	)
			(1,869	)			(677	)			1,192
		$	(632	)		$	(329	)		$	303



We have significant carryforward tax assets. As of December 31, 2025, the Company had a federal net operating loss ("NOL") of approximately $72,735, which will be available to offset future taxable income, subject to limitations described below. If not used, this NOL will begin to expire in 2028. The Company also had net capital losses ("NCLs") in excess of capital gains of $59,382 as of December 31, 2025, which can be carried forward to offset future capital gains. If not used, this carryforward will begin to expire in 2026. ASC 740 requires that we record a valuation allowance against these assets so that the net asset recognized is, in management's judgment, more likely than not to be realized.

Each reporting period, management determines the expected amount of taxable income it will generate in each jurisdiction where the Company has NOLs. Management then schedules this income against each carryforward asset and determines what portion of the asset it believes is more likely than not to be realized. This determination is subjective and subject to many assumptions and factors including profitability of our business in the future, the timing of that future income as compared to carryforward asset expiration, the character of future income (ordinary or capital), and the jurisdiction in which the income will be generated. To the extent management's determination changes, an adjustment will be made to the valuation allowance resulting in deferred tax expense or benefit. In 2025, we recorded a reduction in the valuation allowance we had applied against our NOL assets because of our improved operating performance and future prospects. This resulted in a deferred tax benefit being recorded in 2025. Due to the magnitude of the Company's carryforward assets as well as the volatility of the Company's operating results, significant adjustments to the valuation allowance are likely going forward. These future adjustments may likewise result in material amounts of deferred tax benefit or expense going forward.

Net Income/ (Loss) Attributable to the Non-Convertible Non-Controlling Interest

Net income / (loss) attributable to the non-convertible non-controlling interest for the years ended December 31, 2025 and 2024 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us for the relevant periods. These interests are not convertible into Common Stock.

		Year Ended December 31,
		2025				2024				Change
Vellar GP		$	864			$	634			$	230
Columbus Circle SPAC			5,853				-				5,853
Other SPAC related			(8,630	)			8,041				(16,671	)
		$	(1,913	)		$	8,675			$	(10,588	)

Net Income / (Loss) Attributable to the Convertible Non-Controlling Interest



Net income / (loss) attributable to the convertible non-controlling interest for the years ended December 31, 2025 and 2024 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.

SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST

For the Year Ended December 31, 2025

		Wholly Owned Subsidiaries				Other Consolidated Subsidiaries				Total Operating LLC Consolidated				Cohen & Company Inc.				Consolidated
Net income / (loss) before tax		$	40,150			$	(648	)		$	39,502			$	-			$	39,502
Income tax expense / (benefit)			2,197				-				2,197				(2,829	)			(632	)
Net income / (loss) after tax			37,953				(648	)			37,305				2,829				40,134
Other consolidated subsidiary non-controlling interest							(1,913	)			(1,913	)
Net income / (loss) attributable to the Operating LLC			37,953				1,265				39,218
Average effective Operating LLC non-controlling interest % (1)											70.42	%
Operating LLC non-controlling interest										$	27,616
Summary
Other consolidated subsidiary non-controlling interest										$	(1,913	)
Operating LLC non-controlling interest											27,616
										$	25,703





SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST

For the Year Ended December 31, 2024

		Wholly Owned Subsidiaries				Other Consolidated Subsidiaries				Total Operating LLC Consolidated				Cohen & Company Inc.				Consolidated
Net income / (loss) before tax		$	(5,805	)		$	13,665			$	7,860			$	-			$	7,860
Income tax expense / (benefit)			(316	)							(316	)			(13	)			(329	)
Net income / (loss) after tax			(5,489	)			13,665				8,176				13				8,189
Other consolidated subsidiary non-controlling interest							8,675				8,675
Net income / (loss) attributable to the Operating LLC			(5,489	)			4,990				(499	)
Average effective Operating LLC non-controlling interest % (1)											71.54	%
Operating LLC non-controlling interest										$	(357	)
Summary
Other consolidated subsidiary non-controlling interest										$	8,675
Operating LLC non-controlling interest											(357	)
										$	8,318

(1)

Non-controlling interest is recorded on a quarterly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.



Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023



The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2024 and 2023.



COHEN & COMPANY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands)

		Year Ended December 31,								Favorable / (Unfavorable)
		2024				2023				$ Change				% Change
Revenues
Investment banking and new issue		$	40,778			$	23,952			$	16,826				70	%
Net trading			36,409				30,926				5,483				18	%
Asset management			9,009				7,337				1,672				23	%
Principal transactions and other income			(6,598	)			20,766				(27,364	)			(132	)%
Total revenues			79,598				82,981				(3,383	)			(4	)%
Operating expenses
Compensation and benefits			56,388				52,092				(4,296	)			(8	)%
Business development, occupancy, equipment			6,617				5,204				(1,413	)			(27	)%
Subscriptions, clearing, and execution			9,639				8,965				(674	)			(8	)%
Professional fee and other operating			14,421				9,296				(5,125	)			(55	)%
Depreciation and amortization			556				563				7				1	%
Total operating expenses			87,621				76,120				(11,501	)			(15	)%
Operating income / (loss)			(8,023	)			6,861				(14,884	)			(217	)%
Non-operating income / (expense)
Interest expense, net			(5,821	)			(6,526	)			705				11	%
Income / (loss) from equity method affiliates			21,704				15,609				6,095				39	%
Income / (loss) before income taxes			7,860				15,944				(8,084	)			(51	)%
Income tax expense / (benefit)			(329	)			5,545				5,874				106	%
Net income / (loss)			8,189				10,399				(2,210	)			(21	)%
Less: Net income (loss) attributable to the non-convertible non-controlling interest			8,675				19,590				10,915				56	%
Enterprise net income (loss)			(486	)			(9,191	)			8,705				95	%
Less: Net income (loss) attributable to the convertible non-controlling interest			(357	)			(4,078	)			(3,721	)			(91	)%
Net income / (loss) attributable to Cohen & Company Inc.		$	(129	)		$	(5,113	)		$	4,984				97	%



Revenues



Revenues decreased by $3,383, or 4%, to $79,598 for the year ended December 31, 2024, as compared to $82,981 for the year ended December 31, 2023. As discussed in more detail below, the change was comprised of (i) an increase of $16,826 in investment banking and new issue revenue; (ii) an increase of $5,483 in net trading revenue; (iii) an increase of $1,672 in asset management revenue; and (iv) a decrease of $27,364 in principal transactions and other income.



Investment Banking and New Issue



Investment banking and new issue revenue increased by $16,826, or 70%, to $40,778 for the year ended December 31, 2024, as compared to $23,952 for the year ended December 31, 2023.

		Year Ended December 31, 2024
		Cash				Non-Cash				Total
CCM - Underwriting		$	4,733			$	1,423			$	6,156
CCM - Advisory and other new issue			32,495				22,915				55,410
Other - Origination			1,856				-				1,856
Total		$	39,084			$	24,338			$	63,422
Gains / (losses) on CCM financial instruments received as non-cash consideration											(22,644	)
Investment banking and new issue										$	40,778
		Year Ended December 31, 2023
		Cash				Non-Cash				Net
CCM - Underwriting		$	-			$	-			$	-
CCM - Advisory and other new issue			7,925				18,248				26,173
Other - Origination			2,091				-				2,091
Total		$	10,016			$	18,248			$	28,264
Gains / (losses) on CCM financial instruments received as non-cash consideration											(4,312	)
Investment banking and new issue										$	23,952
		Change
		Cash				Non-Cash				Total
CCM - Underwriting		$	4,733			$	1,423			$	6,156
CCM - Advisory and other new issue			24,570				4,667				29,237
Other - Origination			(235	)			-				(235	)
Total		$	29,068			$	6,090			$	35,158
Gains / (losses) on CCM financial instruments received as non-cash consideration											(18,332	)
Investment banking and new issue										$	16,826

During the year ended December 31, 2025, we began classifying principal transactions income/loss related to CCM activities from principal transaction to investment banking and new issue. Specifically, $22.644 and $4,312 of revenue previously reported on the consolidated statement of operations in principal transaction revenue has been reclassified as investment banking and new issue revenue for the periods ending December 31, 2024, and 2023, respectively. These reclassifications had no effect on previously reported net income.

Our revenue earned from investment banking and new issue has been, and we expect will continue to be, volatile. We earn revenue from a limited number of engagements. Therefore, a small change in the number of engagements can result in large fluctuations in the revenue recognized. Further, even if the number of engagements remains consistent, the average revenue per engagement can fluctuate considerably. Finally, our revenue is generally earned when an underlying transaction closes (rather than on a monthly or quarterly basis). Therefore, the timing of underlying transactions increases the volatility of our revenue recognition. In addition, we often incur certain costs related to new issue engagements. For underwritings, any costs incurred are included as a component of subscriptions, clearing and execution. For advisory and other new issue some expenses may be recorded in professional fees and other. Finally, the change in value of our financial instruments received as consideration will also impact revenue recognized and can be volatile. All investment banking and new issue revenue is included in our Capital Markets segment. See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

CCM is our full-service boutique investment bank providing capital markets and SPAC advisory services to corporations, financial sponsors, investors, and institutions. In addition, we generate investment banking and new issue revenue by originating new assets for the U.S. Insurance JV, CREO JV, and our PriDe Funds in Europe.

In some cases, CCM will receive financial instruments in lieu of cash for its investment banking and new issue engagements. In these cases, we record revenue equal to the fair value of the instruments received. Subsequent to receipt, the instruments are carried at fair value as a component of other investments, at fair value in our consolidated balance sheets. Any subsequent change in the fair value of these instruments will be recorded as an adjustment to our investment banking and new issue revenue in our consolidated statement of operations. Further, the financial instruments we receive in these cases are often (i) common stock investments that are restricted for resale for some period of time, (ii) convertible or non-convertible notes receivable that are not publicly traded, (iii) equity investments in special purpose entities that are not publicly traded, or (iv) unrestricted common stock investments in public companies with low trading volumes. As a result, it may take us a significant period of time to liquidate these financial instruments. 

Net Trading



Net trading revenue increased by $5,483, or 18%, to $36,409 for the year ended December 31, 2024, as compared to $30,926 for the year ended December 31, 2023. The following table shows the detail by trading group.





NET TRADING

(Dollars in Thousands)

		For the Year Ended December 31,
		2024				2023				Change
Mortgage		$	5,207			$	(1,276	)		$	6,483
Gestation repo			15,152				16,068				(916	)
High yield corporate			3,318				4,768				(1,450	)
Agencies			2,519				1,146				1,373
MBS			15				-				15
CMOs			1,426				-				1,426
SBAs			(45	)			-				(45	)
Structured notes			2,617				-				2,617
Other			6,200				10,220				(4,020	)
Total		$	36,409			$	30,926			$	5,483



Our net trading revenue includes unrealized gains on our trading investments, as of the applicable measurement date, which may never be realized due to changes in market or other conditions not in our control. This may adversely affect the ultimate value realized from these investments. In addition, our net trading revenue also includes realized gains on certain proprietary trading positions. Our ability to derive trading gains from such trading positions is subject to overall market conditions. Due to the volatility and uncertainty in the capital markets generally, the net trading revenue recognized during the year may not be indicative of future results. Furthermore, from time to time, some of the assets included in the investments-trading line of our consolidated balance sheets represent level 3 valuations within the FASB valuation hierarchy. Level 3 assets are carried at fair value based on estimates derived using internal valuation models and other estimates. See notes 9 and 10 to our consolidated financial statements included in this Annual Report on Form 10-K. The fair value estimates made by us may not be indicative of the final sale price at which these assets may be sold. We consider our gestation repo business to be subject to significant concentration risk. See note 11 to our consolidated financial statements included in this Annual Report on Form 10-K. All net trading revenue is included in our Capital Markets segment. See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.



Asset Management

Asset management fees increased by $1,672, or 23%, to $9,009 for the year ended December 31, 2024, as compared to $7,337 for the year ended December 31, 2023. The increase is primarily due to the recognition in 2024 of deferred performance fees related to certain PriDe Funds and the portfolio servicing fee on the notional amount of loans owned by the CREO JV. All asset management revenue is included in our asset management segment. See note 29 to our consolidated financial statements included in this Annual Report on Form 10-K.

Principal Transactions and Other Income



Principal transactions and other income decreased by $27,364 to ($6,598) for the year ended December 31, 2024, as compared to $20,766 for the year ended December 31, 2023.





PRINCIPAL TRANSACTIONS & OTHER INCOME

(Dollars in Thousands)

		For the Year Ended December 31,
		2024				2023				Change
Interests in public companies:
Brand Engagement Network, Inc. (NASDAQ: BNAI)		$	(773	)		$	-			$	(773	)
Critical Metals Corp. (NASDAQ: CRML)			(1,392	)			-				(1,392	)
Heliogen, Inc. (OTC: HLGN)			-				(324	)			324
Holdco Nuvo Group D.G Ltd. (OTC: NUVOQ)			(2,198	)			-				(2,198	)
Syntec Optics Holdings, Inc. (NASDAQ: OPTX)			(863	)			(1,141	)			278
Payoneer Global Inc. (NASDAQ: PAYO)			1,406				(95	)			1,501
Rezolve AI PLC (NASDAQ: RZLV)			(1,386	)			-				(1,386	)
Tevogen Bio Holdings Inc. (NASDAQ: TVGN)			(401	)			-				(401	)
Zoomcar Holdings, Inc. (OTC: ZCAR)			(7,097	)			(6	)			(7,091	)
CREO JV			617				901				(284	)
Stoa USA Inc. / FlipOS			-				(6,847	)			6,847
U.S. Insurance JV			(17	)			463				(480	)
SFAs			1,476				25,395				(23,919	)
Bridge Loan			-				1,050				(1,050	)
Other			388				(135	)			523
Total principal transactions			(10,240	)			19,261				(29,501	)
IIFC revenue share			2,557				1,105				1,452
All other income / (loss)			1,085				400				685
Other income			3,642				1,505				2,137
Total principal transactions and other income		$	(6,598	)		$	20,766			$	(27,364	)

Interests in Public Companies

These investments represent our direct and indirect investments in certain public companies. These investments may be in the form of unrestricted common stock, restricted common stock, equity derivatives, convertible notes, non-convertible notes, fair value receivables, as well as equity interest in SPVs that have investments in these public companies. The name and stock symbol of each public company in which we have a direct or indirect investment is listed in the table above. The amounts shown represent the change in the fair value of our investment in each time period noted in the table.

Other Principal Investments

The CREO JV invests in primarily multi-family commercial real estate mortgage-backed loans. We carry our investment in the CREO JV at its reported NAV.

The U.S. Insurance JV invests in insurance company debt. We carry our investment in the U.S. Insurance JV at its reported NAV.

Stoa USA Inc. / FlipOS was a private company in which we owned common equity. During 2023, Stoa USA Inc. / FlipOS announced it had ceased operations. We wrote off our investment in 2023. We have no remaining investment in Stoa USA Inc. / FlipOS.

We have engaged in several SFA transactions. In a typical SFA transaction, we acquire an interest in a publicly traded company and enter into an offsetting derivative with the same company. Both the interest in the public company and the offsetting derivative are carried at fair value. The amount shown in the table above represents the net change in fair value recorded during the periods presented. The interests we hold in SFA Counterparties are included as a component of other investments, at fair value. The derivatives are included as a component of other investments sold, not yet purchased, at fair value. See note 8 to our consolidated financial statements included in this Annual Report on Form 10-K for more information regarding our SFAs.

The bridge loan exit fee was earned on a bridge loan made to an early stage growth company.

Other principal investments consist of realized and unrealized gains and losses from other investments reported at fair value.

Other Income

Other income is comprised of an ongoing revenue share arrangement as well as other miscellaneous operating income items. The revenue share arrangement noted in the table above entitles us to a percentage of revenue earned by IIFC. The IIFC revenue share arrangement expires at the earlier of (i) the dissolution of IIFC or (ii) when we have earned a cumulative $20,000 in revenue share payments. As of December 31, 2024, we had earned $8,175. See note 29 to our consolidated financial statements included in our Annual Report on Form 10-K.



Operating Expenses



Operating expenses increased by $11,501, or 15%, to $87,621 for the year ended December 31, 2024, as compared to $76,120 for the year ended December 31, 2023. As discussed in more detail below, the change was comprised of (i) an increase of $4,296 in compensation and benefits; (ii) an increase of $1,413 in business development, occupancy, and equipment; (iii) an increase of $674 in subscriptions, clearing, and execution; (iv) an increase of $5,125 in professional fee and other operating; and (v) a decrease of $7 in depreciation and amortization.



Compensation and Benefits



Compensation and benefits increased by $4,296, or 8%, to $56,388 for the year ended December 31, 2024, as compared to $52,092 for the year ended December 31, 2023.



COMPENSATION AND BENEFITS

(Dollars in Thousands)

		Year Ended December 31,
		2024				2023				Change
Cash compensation and benefits		$	51,720			$	47,701			$	4,019
Equity-based compensation			4,668				4,391				277
Total		$	56,388			$	52,092			$	4,296

Cash compensation and benefits in the table above is primarily comprised of salary, incentive compensation, severance, employer portion of payroll taxes, and benefits. Cash compensation and benefits increased by $4,019 to $51,720 for the year ended December 31, 2024, as compared to $47,701 for the year ended December 31, 2023. Our headcount decreased to 113 as of December 31, 2024 from 118 as of December 31, 2023. Cash compensation increased primarily due to an increase in incentive compensation related to the increase in investment banking and new issue revenue and income from equity method affiliates, as well as the year over year overall improvement in operating performance.

Equity-based compensation increased due to a higher number of restricted shares granted in 2024 as compared to 2023.

Business Development, Occupancy, and Equipment

Business development, occupancy, and equipment increased by $1,413, or 27%, to $6,617 for the year ended December 31, 2024, as compared to $5,204 for the year ended December 31, 2023. This increase was comprised of an increase in business development of $867 and an increase in other occupancy of $546.



Subscriptions, Clearing, and Execution

Subscriptions, clearing, and execution increased by $674, or 8%, to $9,639 for the year ended December 31, 2024, as compared to $8,965 for the year ended December 31, 2023. The increase was comprised of an increase in subscriptions and dues of $660 and an increase in clearing and execution of $14.



Professional Fee and Other Operating Expenses



Professional fee and other operating expenses increased by $5,125, or 55%, to $14,421 for the year ended December 31, 2024, as compared to $9,296 for the year ended December 31, 2023. The increase was comprised of an increase in professional fees of $1,913 and an increase in other operating expenses of $3,212. A large portion of the increase in other operating expense was the result of bad debt expense of $2,556 recorded during 2024 related to CCM accounts receivable.

Depreciation and Amortization



Depreciation and amortization decreased by $7, or 1%, to $556 for the year ended December 31, 2024, as compared to $563 for the year ended December 31, 2023.

Non-Operating Income and Expense

Interest Expense, net



Interest expense, net decreased by $705, or 11%, to $5,821 for the year ended December 31, 2024, as compared to $6,526 for the year ended December 31, 2023.





INTEREST EXPENSE

(Dollars in Thousands)

		For the Year Ended December 31,
		2024				2023				Change
Junior subordinated notes		$	4,695			$	5,247			$	(552	)
2020/2024 Notes			740				450				290
Byline Bank			76				338				(262	)
Redeemable Financial Instrument - JKD Capital Partners I LTD			310				491				(181	)
		$	5,821			$	6,526			$	(705	)



See notes 19 and 20 to our consolidated financial statements included in this Annual Report on Form 10-K.

Income / (Loss) from Equity Method Affiliates

Income / (loss) from equity method affiliates increased by $6,095 to $21,704 for the year ended December 31, 2024, as compared to $15,609 for the year ended December 31, 2023. See note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.

		Year Ended December 31,
		2024				2023				Change
Dutch Real Estate Entities		$	(759	)		$	334			$	(1,093	)
SPAC Sponsor Entities			22,463				15,275				7,188
		$	21,704			$	15,609			$	6,095

SPAC sponsor entities includes both indirect and direct investments in SPAC sponsor entities. Several of these SPAC sponsor entities are invested in SPACs that have completed their business combinations. Those SPAC sponsor entities hold restricted and unrestricted equity interests in the public post-merger entities. We account for our investments in SPAC sponsor entities under the equity method of accounting. If the SPAC sponsor entity distributes SPAC shares to us, we account for those SPAC shares as a component of other investments, at fair value. The following table shows the equity method income or loss included in SPAC sponsor entities above broken out by the ultimate public company investee. For several of the investments described below, we also had an investment in the same company accounted for at fair value as a component of other investments, at fair value during the periods presented. See discussion of principal transactions above.

		Year Ended December 31,
		2024				2023				Change
African Agriculture Holdings Inc. (OTC: AAGR)		$	(2,362	)		$	2,358			$	(4,720	)
Brand Engagement Network, Inc. (NASDAQ: BNAI)			2,059				(2	)			2,061
Critical Metals Corp. (NASDAQ: CRML)			4,785				(72	)			4,857
Next.e.GO N.V. (OTC: EGOXF)			(279	)			212				(491	)
Fold Holdings, Inc. (NASDAQ: FLD)			(128	)			-				(128	)
Murano Global Investments Plc (NASDAQ: MRNO)			15,914				(11	)			15,925
Holdco Nuvo Group D.G Ltd. (OTC: NUVOQ)			2,198				(8	)			2,206
Rezolve AI PLC (NASDAQ: RZLV)			3,468				(83	)			3,551
Syntec Optics Holdings, Inc. (NASDAQ: OPTX)			-				4,304				(4,304	)
Tevogen Bio Holdings Inc. (NASDAQ: TVGN)			786				(3	)			789
Zoomcar Holdings, Inc. (OTC: ZCAR)			(2,516	)			10,013				(12,529	)
Other			(1,462	)			(1,433	)			(29	)
		$	22,463			$	15,275			$	7,188

See note 12 to our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-K.

Income Tax Expense / (Benefit)

The income tax expense / (benefit) was ($329) for the year ended December 31, 2024, as compared to $5,545 for the year ended December 31, 2023. See note 23 to our consolidated financial statements included in our Annual Report on Form 10-K.

		For the Year Ended December 31,
		2024				2023				Change
Current income tax expense / (benefit)
Federal income tax expense / (benefit)		$	-			$	-			$	-
Foreign income tax expense / (benefit)			118				120				2
State and local income tax expense / (benefit)			230				71				(159	)
			348				191				(157	)
Deferred income tax expense / (benefit)
Federal income tax expense / (benefit)			(1	)			3,205				3,206
Foreign income tax expense / (benefit)			-				-				-
State and local income tax expense / (benefit)			(676	)			2,149				2,825
			(677	)			5,354				6,031
		$	(329	)		$	5,545			$	5,874

Each reporting period, management determines the expected amount of taxable income it will generate in each jurisdiction where the Company has NOLs. Management then schedules this income against each carryforward tax asset and determines what portion of the asset it believes is more likely than not to be realized. This determination is subjective and subject to many assumptions and factors including: profitability of our business in the future, the timing of that future income as compared to carryforward asset expiration, the character of future income (ordinary or capital), and the jurisdiction in which the income will be generated. To the extent management's determination changes, an adjustment will be made to the valuation allowance resulting in deferred tax expense or benefit. We recorded deferred tax expense in 2024 because expectations of future income decreased and the Company increased the valuation allowance it had applied against carryforward tax assets. Due to the magnitude of the Company's carryforward tax assets as well as the volatility of the Company's operating results, significant adjustments to the valuation allowance are likely going forward. These future adjustments may likewise result in material amounts of deferred tax benefit or expense going forward.



Net Income / (Loss) Attributable to the Non-Convertible Non-Controlling Interest

Net income / (loss) attributable to the non-convertible non-controlling interest for the years ended December 31, 2024 and 2023 was comprised of the non-controlling interest related to member interests in consolidated subsidiaries of the Operating LLC other than interests held by us for the relevant periods. These interests are not convertible into Common Stock.

		Year Ended December 31,
		2024				2023				Change
Vellar GP		$	634			$	14,755			$	(14,121	)
Other SPAC related			8,041				4,835				3,206
		$	8,675			$	19,590			$	(10,915	)

Prior to March 31, 2023, the Vellar GP was the general partner of the SPAC Fund but did not consolidate it. Effective April 1, 2023, the Vellar GP began consolidating the SPAC Fund. The Vellar GP primarily invested in share forward arrangements. On February 25, 2025, the Operating LLC sold its 33.4% interest in the Vellar GP pursuant to the Vellar Purchase Agreement and no longer consolidates Vellar GP. See notes 4, 10, and 21 to our consolidated financials included in this Annual Report on Form 10-K. Other SPAC related is mainly comprised of an entity that we consolidated but do not wholly own that invests in other SPAC sponsor entities.

Net Income / (Loss) Attributable to the Convertible Non-Controlling Interest

Net income / (loss) attributable to the convertible non-controlling interest for the years ended December 31, 2024 and 2023 was comprised of the non-controlling interest related to member interests in the Operating LLC other than interests held by us for the relevant periods.





SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST

For the Year Ended December 31, 2024

		Wholly Owned Subsidiaries				Other Consolidated Subsidiaries				Total Operating LLC Consolidated				Cohen & Company Inc.				Consolidated
Net income / (loss) before tax		$	(5,805	)		$	13,665			$	7,860							$	7,860
Income tax expense / (benefit)			(316	)							(316	)			(13	)			(329	)
Net income / (loss) after tax			(5,489	)			13,665				8,176				13				8,189
Other consolidated subsidiary non-controlling interest							8,675				8,675
Net income / (loss) attributable to the Operating LLC			(5,489	)			4,990				(499	)
Average effective Operating LLC non-controlling interest % (1)											71.54	%
Operating LLC non-controlling interest										$	(357	)
Summary
Other consolidated subsidiary non-controlling interest										$	8,675
Operating LLC non-controlling interest											(357	)
										$	8,318





SUMMARY CALCULATION OF CONVERTIBLE NON-CONTROLLING INTEREST

For the Year Ended December 31, 2023

		Wholly Owned Subsidiaries				Other Consolidated Subsidiaries				Total Operating LLC Consolidated				Cohen & Company Inc.				Consolidated
Net income / (loss) before tax		$	(23,091	)		$	39,035			$	15,944			$	-			$	15,944
Income tax expense / (benefit)			1,972				-				1,972				3,573				5,545
Net income / (loss) after tax			(25,063	)			39,035				13,972				(3,573	)			10,399
Other consolidated subsidiary non-controlling interest			-				19,590				19,590
Net income / (loss) attributable to the Operating LLC			(25,063	)			19,445				(5,618	)
Average effective Operating LLC non-controlling interest % (1)											72.59	%
Operating LLC non-controlling interest										$	(4,078	)
												)
Summary
Other consolidated subsidiary non-controlling interest										$	19,590
Operating LLC non-controlling interest											(4,078	)
										$	15,512



(1)

Non-controlling interest is recorded on a quarterly basis. Because earnings are recognized unevenly throughout the year and the non-controlling interest percentage may change during the period, the average effective non-controlling interest percentage may not equal the percentage at the end of any period or the simple average of the beginning and ending percentages.



Liquidity and Capital Resources



Liquidity is a measurement of our ability to meet potential cash requirements including ongoing commitments to repay debt borrowings, make interest payments on outstanding borrowings, fund investments, and support other general business purposes. In addition, our U.S. and European broker-dealer subsidiaries are subject to certain regulatory requirements to maintain minimum levels of net capital. Historically, our primary sources of funds have been our operating activities and general corporate borrowings. In addition, our trading operations have generally been financed by use of collateralized securities financing arrangements as well as margin loans.

Certain subsidiaries of the Operating LLC have restrictions on the withdrawal of capital and otherwise in making distributions and loans. Cohen Securities is subject to net capital restrictions imposed by the SEC and FINRA that require certain minimum levels of net capital to remain in this subsidiary. In addition, these restrictions could potentially impose notice requirements or limit our ability to withdraw capital above the required minimum amounts (excess capital) whether through a distribution or a loan. CCFESA is subject to the regulations of the ACPR, which imposes minimum capital requirements. See note 25 to our consolidated financial statements included in this Annual Report on Form 10-K.

Dividends and Distributions

During the third quarter of 2010, our board of directors initiated a dividend of $0.50 per quarter, which was paid regularly through December 31, 2011. Beginning in 2012, our board of directors declared a dividend of $0.20 per quarter, which was paid regularly through the first quarter of 2019.

On July 29, 2021, our board of directors reinstated our quarterly dividend declaring a cash dividend of $0.25 per share. We have paid a cash dividend of $0.25 regularly since then. In addition to our routine quarterly distribution, on March 8, 2022 and December 22, 2025, our board of directors declared special dividends of $0.75 per share and $2.00 per share, respectively. On March 6, 2026, the board of directors declared a quarterly dividend of $0.25 per share and a special dividend of $0.70 per share both payable on April 3, 2026, to stockholders of record as of March 20, 2026. Any future determination to declare and pay dividends will be made at the discretion of our board of directors, after taking into account a variety of factors, including business, financial, and regulatory considerations as well as any limitations under Maryland law or imposed by any agreements governing our indebtedness.

Repurchases of Common Stock

The Company did not repurchase any shares of Common Stock in 2023, 2024, or 2025.

Issuances of Common Stock

On October 5, 2023, we entered into an equity distribution agreement (the "2023 Equity Agreement") relating to the ATM Program, pursuant to which we are permitted to sell an aggregate of up to $4,712 in Shares, which represented one-third of the value of the Common Stock held by non-affiliates. As of December 31, 2025, 13,500 shares had been sold under the 2023 Equity Agreement for total proceeds of $154.

See note 33 to our consolidated financial statements included in this Annual Report on Form 10-K for discussion of new equity distribution agreement entered into in 2026.

During the years ended December 31, 2025, 2024, and 2023, we had the following significant financing transactions. This excludes non-cash transactions. See notes 20 and 21 in our consolidated financial statements included in this Annual Report on Form 10-K.

During 2025:
	o	We repaid the 2024 Note in the amount of $2,573.
	o	We paid dividends of $2,131 and distributions to the convertible non-controlling interest of $13,000
	o	We received investments of $2,669 from the non-convertible non controlling interest
During 2024:
	o	We repaid our redeemable financial instrument in the amount of $2,573. The remainder was converted to the 2024 Note.
	o	We paid dividends of $1,873 and distributions to the convertible non-controlling interest of $4,819
	o	We paid distributions of $6,758 to the non-convertible non-controlling interest.
During 2023:
	o	We drew and repaid $15,000 on a revolving line of credit.
	o	We paid dividends of $1,750 and distributions to the convertible non-controlling interest of $4,344.
	o	We paid distributions of $10,041 to the non-convertible non-controlling interest.



Cash Flows



We have seven primary uses for capital:

(1)	To fund the operations of our Capital Markets business segment. Our Capital Markets business segment utilizes capital (i) to fund securities inventory to facilitate client trading activities; (ii) for risk trading for our own account; (iii) to fund our collateralized securities lending activities; (iv) for temporary capital needs associated with underwriting activities; and (v) to fund business expansion into existing or new product lines including additional capital dedicated to our mortgage group as well as our gestation repo business.
(2)	To fund the expansion of our Asset Management business segment. We generally grow our AUM by sponsoring new Investment Vehicles. The creation of a new Investment Vehicle often requires us to invest a certain amount of our own capital to attract outside capital to manage. Also, the new Investment Vehicles often require warehouse and other third-party financing to fund the acquisition of investments. Finally, we generally will hire employees to manage new Investment Vehicles and will operate at a loss for a startup period.
(3)	To fund investments and operating losses. We make principal investments (including sponsor and other investments in SPACs) to generate returns. We may need to raise additional debt or equity financing in order to ensure we have the capital necessary to take advantage of attractive investment opportunities.
(4)	To fund mergers or acquisitions. We may opportunistically use capital to acquire other asset managers, individual asset management contracts, or financial services firms. To the extent our liquidity sources are insufficient to fund our future merger or acquisition activities, we may need to raise additional funding through an equity or debt offering. No assurances can be given that additional financing will be available in the future, or that, if available, such financing will be on favorable terms.
(5)	To fund potential dividends and distributions. We sometimes pay dividends and distributions.
(6)	To fund potential repurchases of Common Stock. We have opportunistically repurchased Common Stock in private transactions. See note 21 to our consolidated financial statements included in this Annual Report on Form 10-K.
(7)	To pay off debt as it matures. We have indebtedness that must be repaid as it matures. See note 20 to our consolidated financial statements included in this Annual Report on Form 10-K.

If we are unable to raise sufficient capital on economically favorable terms, we may need to reduce the amount of capital invested for the uses described above, which may adversely impact earnings and our ability to pay dividends.



As of December 31, 2025 and December 31, 2024, we maintained cash and cash equivalents of $19,590 and $10,650, respectively. We generated cash from or used cash for the activities described below.



SUMMARY CASH FLOW INFORMATION

(Dollars in Thousands)

		Year Ended December 31,
		2025				2024				2023
Cash flow from operating activities		$	27,350			$	9,475			$	(39,660	)
Cash flow from investing activities			26,208				16,506				38,123
Cash flow from financing activities			(17,301	)			(16,717	)			(17,105	)
Effect of exchange rate on cash			915				(324	)			191
Net cash flow			37,172				8,940				(18,451	)
Cash and cash equivalents, beginning			19,590				10,650				29,101
Cash and cash equivalents, ending		$	56,762			$	19,590			$	10,650



See the statements of cash flows in our consolidated financial statements. We believe our available cash and cash equivalents, as well as our investment in our trading portfolio and related borrowing capacity, will provide sufficient liquidity to meet the cash needs of our ongoing operations in the near term.



2025 Cash Flows



As of December 31, 2025, our cash and cash equivalents were $56,762, representing an increase of $37,172 from December 31, 2024. The increase was attributable to cash flow from operating activities of $27,350, cash provided by investing activities of $26,208, cash used in financing activities of $17,301, and the increase in cash resulting from a change in exchange rates of $915.



The cash provided from operating activities of $27,350 was comprised of (a) net cash inflow of $71,816 related to working capital fluctuations; (b) net cash outflow of $45,098 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, securities sold under agreement to repurchase, receivables under resale agreements, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, not yet purchased; and (c) net cash outflow from other earnings items of $632 (which represents net income or loss adjusted for the following non-cash operating items: deferred taxes, other income / (expense), non-cash advisory revenue, realized and unrealized gains and losses on other investments, at fair value, other investments sold, not yet purchased, income / (loss) from equity method affiliates, equity-based compensation, depreciation, and amortization).



The cash provided from investing activities of $26,208 was comprised of (a) $55,218 in proceeds from sales of other investments, at fair value; (b) $316 in proceeds from sales from other investments sold, not yet purchased; and (c) $1,587 in distributions received from equity method affiliates; partially offset by (d) $26,551 of purchases of other investments, at fair value; (e) $2,675 used to invest in equity method affiliates; (f) $433 as a result of the disposal of Vellar GP; and (g) $1,254 of purchases of furniture, equipment, and leasehold improvements.



The cash used in financing activities of $17,301 was comprised of (a) $2,573 used to repay debt; (b) $343 used to net settle equity awards; (c) $2,131 paid in dividends on Common Stock; (d) $13,000 paid in distributions to the convertible non-controlling interest; (e) $954 of redemptions of convertible non-controlling interest; and (f) $969 paid in distributions to the non-convertible non-controlling interest; partially offset by (g) $2,669 in proceeds from investments in non-convertible non-controlling interest.



2024 Cash Flows

As of December 31, 2024, our cash and cash equivalents were $19,590, representing an increase of $8,940 from December 31, 2023. The increase was attributable to cash flow from operating activities of $9,475, cash provided by investing activities of $16,506, cash used in financing activities of $16,717, and the decrease in cash resulting from a change in exchange rates of $324.

The cash provided from operating activities of $9,475 was comprised of (a) net cash inflow of $1,527 related to working capital fluctuations; (b) net cash inflow of $8,310 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, securities sold under agreement to repurchase, receivables under resale agreements, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, not yet purchased; and (c) net cash outflow from other earnings items of $362 (which represents net income or loss adjusted for the following non-cash operating items: deferred taxes, other income / (expense), non-cash advisory revenue, realized and unrealized gains and losses on other investments, at fair value, other investments sold, not yet purchased, income / (loss) from equity method affiliates, equity-based compensation, depreciation, and amortization).

The cash provided from investing activities of $16,506 was comprised of (a) $78,834 in proceeds from sales of other investments, at fair value; (b) $214 in proceeds from sales from other investments sold, not yet purchased; and (c) $1,026 in distributions received from equity method affiliates; partially offset by (d) $60,675 of purchases of other investments, at fair value; (e) $1,408 of purchases of other investments sold, not yet purchased; (f) $236 used to invest in equity method affiliates, and (g) $1,249 of purchases of furniture, equipment, and leasehold improvements.

The cash used in financing activities of $16,717 was comprised of (a) $2,573 used to repay our redeemable financial instrument; (b) $189 used to net settle equity awards; (c) $1,873 paid in dividends on Common Stock; (d) $4,819 paid in distributions to the convertible non-controlling interest; (e) $659 of redemptions of convertible non-controlling interest; and (f) $6,758 paid in distributions to the non-convertible non-controlling interest; partially offset by (g) $154 in proceeds from the issuance of Common Stock.

2023 Cash Flows

As of December 31, 2023, our cash and cash equivalents were $10,650, representing a decrease of $18,451 from December 31, 2022. The decrease was attributable to cash used in operating activities of $39,660, cash provided by investing activities of $38,123, cash used in financing activities of $17,105, and the increase in cash resulting from a change in exchange rates of $191.

The cash used in operating activities of $39,660 was comprised of (a) net cash outflow of $77,599 related to working capital fluctuations; (b) net cash inflow of $65,282 from trading activities comprised of our investments-trading, trading securities sold, not yet purchased, securities sold under agreement to repurchase, receivables under resale agreements, and receivables and payables from brokers, dealers, and clearing agencies, as well as the changes in unrealized gains and losses on the investments-trading and trading securities sold, not yet purchased; and (c) net cash outflow from other earnings items of $27,343 (which represents net income or loss adjusted for the following non-cash operating items: deferred taxes, other income / (expense), non-cash advisory revenue, realized and unrealized gains and losses on other investments, at fair value, other investments sold, not yet purchased, income / (loss) from equity method affiliates, equity-based compensation, depreciation, and amortization).

The cash provided from investing activities of $38,123 was comprised of (a) $75,906 in proceeds from sales of other investments, at fair value; (b) $53,928 in proceeds from sales of other investments sold, not yet purchased, at fair value; and (c) $2,091 in proceeds from distributions from equity method affiliates; partially offset by (d) $86,021 in cash used to purchase other investments, at fair value; (e) $5,512 in cash used to purchase other investments sold, not yet purchased, at fair value; (f) $1,896 in cash used to invest in equity method affiliates; and (g) $373 in purchases of furniture, equipment, and leasehold improvements.

The cash used in financing activities of $17,105 was comprised of (a) $15,000 of cash used to repay debt; (b) $175 of cash used to settle equity awards; (c) $1,750 of cash used to pay dividends on Common Stock; (d) $4,344 in cash used for distributions to the convertible non-controlling interest; (e) $10,041 in cash used for distributions to the non-convertible non-controlling interests; partially offset by (f) $15,000 in proceeds from the issuance of debt; (g) $39 in cash proceeds from investments in the non-convertible non-controlling interests; and (h) $834 of cash used for the redemption of convertible non-controlling interest units.



Regulatory Capital Requirements



We have two subsidiaries that are licensed securities dealers: Cohen Securities in the U.S. and CCFESA in France. As a U.S. broker-dealer, Cohen Securities is subject to the Uniform Net Capital Rule in Rule 15c3-1 under the Exchange Act. CCFESA is subject to the regulations of the ACPR. The amount of net assets that these subsidiaries may distribute is subject to restrictions under these applicable net capital rules. These subsidiaries have historically operated in excess of minimum net capital requirements. Our minimum capital requirements at December 31, 2025 were as follows.



MINIMUM NET CAPITAL REQUIREMENTS

(Dollars in Thousands)

		As of December 31, 2025
U.S.		$	250
France			714
Total		$	964

We operate with more than the minimum regulatory capital requirement in our licensed broker-dealers. As of December 31, 2025, total net capital, or the equivalent as defined by the relevant statutory regulations, in our licensed broker-dealers was $79,119. See note 25 to our consolidated financial statements included in this Annual Report on Form 10-K. In addition, our licensed broker-dealers are generally subject to capital withdrawal notification requirements and restrictions.

Restrictions of Distributions of Capital from Cohen Securities

As of December 31, 2025, our total equity on a consolidated basis was $106,281. However, the total equity of Cohen Securities was $104,415. Therefore, only $1,866 of equity existed outside of Cohen Securities. During certain periods of time, we have generated losses or negative cash flow outside of Cohen Securities. We are dependent on taking distributions of income (and potentially returns of capital) from Cohen Securities to satisfy the cash needs outside of Cohen Securities, such as to cover losses incurred outside of Cohen Securities, to satisfy other obligations that come due outside of Cohen Securities, and to make investments outside of Cohen Securities. However, we are subject to significant limitations on our ability to make distributions from Cohen Securities such as the limitations imposed by FINRA under rule 15c3-1 (described immediately above) and limitations under our line of credit with Byline Bank (see note 20 to our consolidated financial statements included in this Annual Report on Form 10-K). Furthermore, counterparties to Cohen Securities have their own internal counterparty credit requirements. The specific requirements are not generally shared with us. However, if we take too much in capital distributions from Cohen Securities (beyond its net income), we may not be able to trade with certain counterparties, which may cause Cohen Securities' operations to deteriorate.



Securities Financing



We maintain repurchase agreements with various third-party financial institutions. There is no maximum limit as to the amount of securities that may be transferred pursuant to these agreements, and transactions are approved on a case-by-case basis. The repurchase agreements do not include substantive provisions other than those covenants and other customary provisions contained in standard master repurchase agreements. The repurchase agreements generally require us to transfer additional securities to the counterparty in the event the value of the securities then held by the counterparty in the margin account falls below specified levels and contain events of default were we to breach our obligations under the agreement. We receive margin calls from our repurchase agreement counterparties from time to time in the ordinary course of business. To date, we have maintained sufficient liquidity to meet margin calls, and we have never been unable to satisfy a margin call, however, no assurance can be given that we will be able to satisfy requests from our counterparties to post additional collateral in the future. See note 11 to our consolidated financial statements included in this Annual Report on Form 10-K.



If there were an event of default under a repurchase agreement, the counterparty would have the option to terminate all repurchase transactions existing with us and make any amount due from us to the counterparty payable immediately. Repurchase obligations are full recourse obligations to us. If we were to default under a repurchase obligation, the counterparty would have recourse to our other assets if the collateral was not sufficient to satisfy our obligations in full. Most of our repurchase agreements are entered into as part of our gestation repo business.



Our clearing brokers provide securities financing arrangements including margin arrangements and securities borrowing and lending arrangements. These arrangements generally require us to transfer additional securities or cash to the clearing broker in the event the value of the securities then held by the clearing broker in the margin account falls below specified levels and contain events of default were we to breach our obligations under such agreements.



An event of default under the clearing agreement would give the counterparty the option to terminate the clearing arrangement. Any amounts owed to the clearing broker would be immediately due and payable. These obligations are recourse to us. Furthermore, a termination of any of our clearing arrangements would result in a significant disruption to our business and would have a significant negative impact on our dealings and relationship with our customers.



The following table presents our period end balance, average monthly balance, and maximum balance at any month end for receivables under resale agreements and securities sold under agreements to repurchase.

		2025				2024
Receivables under resale agreements
Period end		$	357,408			$	668,259
Monthly average		$	619,894			$	566,987
Maximum month end		$	811,908			$	743,654
Securities sold under agreements to repurchase
Period end		$	400,391			$	695,966
Monthly average		$	652,260			$	570,715
Maximum month end		$	840,249			$	742,120



Fluctuations in the balance of our repurchase agreements from period-to-period and intra-period are dependent on business activity in those periods. The fluctuations in the balances of our receivables under resale agreements over the periods presented were impacted by our clients' desires to execute collateralized financing arrangements through the repurchase market or other financing products.

Average balances and period end balances will fluctuate based on market and liquidity conditions and we consider such intra-period fluctuations as typical for the repurchase market. Month-end balances may be higher or lower than average period balances.



Debt Financing



The following table summarizes our long-term indebtedness and other financing outstanding. See note 20 to our consolidated financial statements in our Annual Report on Form 10-K for more information.

DETAIL OF DEBT

(Dollars in Thousands)

Description		December 31, 2025				December 31, 2024			Interest Rate Terms		Interest (2)			Maturity
Non-convertible debt:
12.00% senior note (the "2024 Note")		$	2,573			$	5,146		Fixed			12.00	%	August 2026
12.00% senior note (the "2020 Note")			4,500				4,500		Fixed			12.00	%	January 2026
Junior subordinated notes (1):
Alesco Capital Trust I			28,125				28,125		Variable			8.10	%	July 2037
Sunset Financial Statutory Trust I			20,000				20,000		Variable			8.10	%	March 2035
Less unamortized discount			(22,303	)			(22,867	)
			25,822				25,258
Byline Credit Facility			-				-		Variable			N/A		June 2026
Total		$	32,895			$	34,904

	(1)	The junior subordinated notes represent debt the Company owes to the two trusts noted above. The total par amount owed by the Company to the trusts is $49,614. However, the Company owns the common stock of the trusts in a total par amount of $1,489. The Company pays interest (and at maturity, principal) to the trusts on the entire $49,614 junior subordinated notes outstanding. However, the Company receives back from the trusts the pro rata share of interest and principal on the common stock held by the Company. These trusts are variable interest entities ("VIEs") and the Company does not consolidate them even though the Company holds the common stock. The Company carries the common stock on its balance sheet at a value of $0. The junior subordinated notes are recorded at a discount to par. When factoring in the discount, the yield to maturity of the junior subordinated notes as of December 31, 2025 on a combined basis was 19.07% assuming the variable rate in effect on the last day of the reporting period remains in effect until maturity.
	(2)	Represents the interest rate in effect as of the last day of the reporting period.

Off-Balance Sheet Arrangements



Other than as described in note 10 (derivative financial instruments) and note 18 (variable interest entities) to our consolidated financial statements included in this Annual Report on Form 10-K, there were no material off balance sheet arrangements as of December 31, 2025.



Contractual Obligations



The table below summarizes our significant contractual obligations as of December 31, 2025 and the future periods in which such obligations are expected to be settled in cash. Our junior subordinated notes are assumed to be repaid on their respective maturity dates. Excluded from the table are obligations that are short-term in nature, including trading liabilities and repurchase agreements. In addition, amortization of discount on debt is excluded.



CONTRACTUAL OBLIGATIONS

December 31, 2025

(Dollars in Thousands)



		Payment Due by Period
		Total				Less than 1 Year				1 - 3 Years				3 - 5 Years				More than 5 Years
Operating lease arrangements		$	21,637			$	2,800			$	5,704			$	4,617			$	8,516
Maturity of 2024 Notes (1)			2,573				2,573				-				-				-
Interest on 2024 Notes (1)			283				283				-				-				-
Maturity of 2020 Notes (1)			4,500				4,500				-				-				-
Interest on 2020 Notes (1)			182				182				-				-				-
Maturities on junior subordinated notes			48,125				-				-				-				48,125
Interest on junior subordinated notes (1)			41,748				3,898				7,795				7,795				22,260
Other Operating Obligations (2)			2,545				1,680				863				2				-
		$	121,593			$	15,916			$	14,362			$	12,414			$	78,901

	(1)	The interest on the junior subordinated notes related to Alesco Capital Trust I is variable. The interest rate of 8.10% (based on a 90-day SOFR rate in effect as of December 31, 2025 plus 4.00%) was used to compute the contractual interest payment in each period noted. The interest on the junior subordinated notes related to Sunset Financial Statutory Trust I is variable. The interest rate of 8.10% (based on a 90-day SOFR rate in effect as of December 31, 2025 plus 4.15%) was used to compute the contractual interest payment in each period noted.
	(2)	Represents material operating contracts for various services.



We believe that we will be able to continue to fund our current operations and meet our contractual obligations through a combination of existing cash resources and other sources of credit. Due to the uncertainties that exist in the economy, we cannot be certain that we will be able to replace existing financing or find sources of additional financing in the future.



Critical Accounting Policies and Estimates



Our accounting policies are essential to understanding and interpreting the financial results in our consolidated financial statements. Our industry is subject to a number of highly complex accounting rules and requirements, many of which place heavy burdens on management to make judgments relating to our business. We encourage readers of this Form 10-K to read all of our critical accounting policies, which are included in note 3 to our consolidated financial statements included herein for a full understanding of these issues and how the financial statements are impacted by these judgments. Certain of these policies are considered to be particularly important to the presentation of our financial results because they require us to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.



We consider the accounting policies discussed below to be the policies that are the most impactful to our financial statements and also subject to significant management judgment.

Valuation of Financial Instruments



How fair value determinations impact our financial statements



All of the securities we own that are classified as investments-trading, securities sold, not yet purchased, other investments, at fair value, or other investments sold, not yet purchased are recorded at fair value with changes in fair value (both unrealized and realized) recorded in earnings.



Unrealized and realized gains and losses on securities classified as investments-trading and securities sold, not yet purchased in the consolidated balance sheets are recorded as a component of net trading revenue in the consolidated statements of operations. Unrealized and realized gains and losses on securities classified as other investments, at fair value, and other investments sold, not yet purchased in the consolidated balance sheets are either recorded as an adjustment to investment banking and new issue revenue or recorded as a component of principal transactions and other income in the consolidated statements of operations.



How we determine fair value for securities



We account for our investment securities at fair value under various accounting literature, including Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 320, Investments - Debt and Equity Securities ("ASC 320"), pertaining to investments in debt and equity securities and the fair value option of financial instruments in ASC 825, Financial Instruments ("ASC 825"). We also account for certain assets at fair value under applicable industry guidance such as: (a) FASB ASC 946, Financial Services-Investment Companies ("ASC 946") and (b) FASB ASC 940-320, Proprietary Trading Securities ("ASC 940-320").



The determination of fair value is based on quoted market prices of an active exchange, independent broker market quotations, market price quotations from third-party pricing services, or, when independent broker quotations or market price quotations from third-party pricing services are unavailable, valuation models prepared by management. These models include estimates and the valuations derived from them could differ materially from amounts realizable in an open market exchange.



We adopted the fair value measurement provisions in ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), applicable to financial assets and financial liabilities effective January 1, 2008. ASC 820 defines fair value as the price that would be received to sell the asset or paid to transfer the liability between market participants at the measurement date ("exit price"). An exit price valuation will include margins for risk even if they are not observable. In accordance with ASC 820, we categorize our financial instruments, based on the priority of the inputs to the valuation technique, into a three-level valuation hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the hierarchy under ASC 820 are described below.



Level 1	Financial assets and liabilities with values that are based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2	Financial assets and liabilities with values that are based on one or more of the following: (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in non-active markets; (c) pricing models with inputs that are derived, other than quoted prices, and are observable for substantially the full term of the asset or liability; or (d) pricing models with inputs that are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level 3	Financial assets and liabilities with values that are based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability.



In certain cases, the inputs used to measure fair value may fall into different levels of the valuation hierarchy. In such cases, the level of the valuation hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.



Financial instruments carried at contract amounts with short-term maturities (one year or less) are repriced frequently or bear market interest rates. Accordingly, those contracts are carried at amounts approximating fair value. Financial instruments carried at contract amounts on our consolidated balance sheets include receivables from and payables to brokers, securities purchased under agreements to resell ("reverse repurchase agreements" or "receivables under resale agreements"), and sales of securities under agreements to repurchase ("repurchase agreements").



How we determine fair value for investments in investment funds and similar vehicles



A portion of our other investments, at fair value represents investments in investment funds and other non-publicly traded entities that have the attributes of investment companies as described in ASC 946-15-2. We estimate the fair value of these entities using the reported net asset value per share as of the reporting date in accordance with the "practical expedient" provisions related to investments in certain entities that calculated net asset value per share (or its equivalent) included in ASC 820.



Derivative Financial Instruments



We do not utilize hedge accounting for our derivatives. Accordingly, all derivatives are carried at fair value with unrealized and realized gains recognized in earnings.



If the derivative is expected to be managed by employees of our Capital Markets business segment or is a hedge for an investment classified as investments-trading, the derivative will be carried as a component of investments-trading if it is an asset or securities sold, not yet purchased if it is a liability. If the derivative is a hedge for an investment carried as a component of other investments, at fair value, the derivative will be recorded in other investments, at fair value if it is an asset or other investments sold, not yet purchased if it is a liability.



We may, from time to time, enter into derivatives as investments or to manage our risk exposures arising from (i) fluctuations in foreign currency rates with respect to our investments in foreign currency denominated investments; (ii) our investments in interest sensitive investments; (iii) our investments in various equity instruments; and (iv) our facilitation of mortgage-backed trading. Derivatives entered into by us, from time to time, may include (i) foreign currency forward contracts; (ii) purchase and sale agreements of TBAs and other forward agency MBS contracts; (iii) other extended settlement trades; (iv) equity options such as calls and puts; and (v) SFAs.



In addition to the derivatives noted above, we may from time to time enter into other securities or loan trades that do not settle within the normal securities settlement period. In those cases, the purchase or sale of the security or loan is not recorded until the settlement date. However, from the trade date until the settlement date, our interest in the security is accounted for as a derivative as either a forward purchase commitment or a forward sale commitment.



Derivatives involve varying degrees of off-balance sheet risk, whereby changes in the level or volatility of interest rates or market values of the underlying financial instruments may result in changes in the value of a particular financial instrument in excess of its carrying amount. Depending on our investment strategy, realized and unrealized gains and losses are recognized in principal transactions and other income or in net trading in our consolidated statements of operations on a trade date basis.



Accounting for Income Taxes



We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.



We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such a determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.



Our policy is to record penalties and interest as a component of provision for income taxes in our consolidated statements of operations.

Our voting-controlled subsidiary, the Operating LLC, is treated as a pass-through entity for U.S. federal income tax purposes and in most of the states in which we do business. The Operating LLC is subject to entity level taxes in certain state and foreign jurisdictions. However, as a result of the AFN Merger, we acquired significant deferred tax assets and liabilities and now have significant tax attributes. Effective as of January 1, 2010, we began to be treated as a C corporation for U.S. federal and state income tax purposes.



As shown in note 23 to the consolidated financial statements contained herein, we currently have significant recognized as well as unrecognized deferred tax assets. Deferred tax assets should only be recognized to the extent that we determine we can benefit in the future from the asset. Generally, this determination is based on our estimates of our ability to generate future taxable income. This determination is complex and subject to judgment. The determination is ongoing and subject to change. If we were to change this determination in the future, a significant deferred tax benefit or deferred tax expense would be recognized as a component of earnings.



Revenue Recognition

Investment banking and new issue



Investment banking and new issue revenue comprised of (a) origination fees for newly created financial instruments originated by us, (b) revenue from advisory services, (c) underwriting, (d) new issue revenue associated with arranging and placing the issuance of newly created financial instruments, and (e) any investment returns on financial instruments that we have acquired or received as consideration for services provided by CCM. These revenues are recognized when we satisfy our performance obligations by providing the related services and when collectability is reasonably assured. Underwriting revenue arises from securities offerings in which we act s as an underwriter. Underwriting expenses include legal fees, selling concessions, and clearing and settlement charges incurred in connection with the underwriting activities and are recorded as a component of subscriptions, clearing and execution in the consolidated statement of operations. Underwriting revenue and expenses are recorded on a gross basis.



Net trading



Net trading includes: (i) all gains, losses, interest income, dividend income, and interest expense from securities classified as investments-trading and trading securities sold, not yet purchased; (ii) interest income and expense from collateralized securities transactions; and (iii) commissions and riskless trading profits. Net trading is reduced by margin interest, which is recorded on an accrual basis. We refer to investments included as a component of investments - trading and trading securities sold, not yet purchased as trading assets.



Riskless trades are transacted through our proprietary account with a customer order in hand, resulting in little or no market risk to us. Transactions that settle in the regular way are recognized on a trade date basis. Extended settlement transactions are recognized on a settlement date basis (although in cases of extended settlement trades, the unsettled trade is accounted for as a derivative between trade and settlement date). See notes 3 and 10 to our consolidated financial statements included in this Annual Report on Form 10-K. The investments classified as trading are carried at fair value. The determination of fair value is based on quoted market prices of an active exchange, independent broker market quotations, market price quotations from third-party pricing services or, when independent broker quotations or market price quotations from third-party pricing services are unavailable, valuation models prepared by our management. The models include estimates, and the valuations derived from them could differ materially from amounts realizable in an open market exchange. See note 9 to our consolidated financial statements included in this Annual Report on Form 10-K.



Asset management



Asset management revenue consists of management fees earned from Investment Vehicles. In the case of CDOs, the fees earned by us generally consist of senior, subordinated, and incentive fees.



The senior asset management fee is generally senior to all the securities in the CDO capital structure and is recognized on a monthly basis as services are performed. The senior asset management fee is generally paid on a quarterly basis.



The subordinated asset management fee is an additional payment for the same services but has a lower priority in the CDO cash flows. If the CDO experiences a certain level of asset defaults and deferrals, these fees may not be paid. There is no recovery by the CDO of previously paid subordinated asset management fees. It is our policy to recognize these fees on a monthly basis as services are performed. The subordinated asset management fee is generally paid on a quarterly basis. However, if we determine that the subordinated asset management fee will not be paid (which generally occurs on the quarterly payment date), we will stop recognizing additional subordinated asset management fees on that particular CDO and will reverse any subordinated asset management fees that are accrued and unpaid. We will begin accruing the subordinated asset management fee again if payment resumes and, in management's estimate, continued payment is reasonably assured. If payment were to resume but we were unsure of continued payment, we would recognize the subordinated asset management fee as payments were received and would not accrue such fees on a monthly basis.



The incentive management fee is an additional payment, made typically after five to seven years of the life of a CDO, which is based on the clearance of an accumulated cash return on investment ("Hurdle Return") received by the most junior CDO securities holders. It is an incentive for us to perform in our role as asset manager by minimizing defaults and maximizing recoveries. The incentive management fee is not ultimately determined or payable until the achievement of the Hurdle Return by the most junior CDO securities holders. We recognize incentive fee revenue when it is probable and there is not a significant chance of reversal in the future.



In the case of Investment Vehicles other than CDOs, generally we earn a base fee and, in some cases, an incentive fee. Base fees will generally be recognized monthly as services are performed and will be paid monthly or quarterly. The contractual terms of each arrangement will determine our revenue recognition policy for incentive fees in each case. However, in all cases, we recognize the incentive fees when they are probable and there is not a significant chance of reversal in the future.



Principal transactions and other income



Principal transactions include all gains, losses, and income (interest and dividend) from financial instruments classified as other investments, at fair value and other investments sold, not yet purchased in the consolidated balance sheets other than those received as compensation for investment banking and new issue revenue engagements.



The investments classified as other investments, at fair value and other investments sold, not yet purchased are carried at fair value. The determination of fair value is based on quoted market prices of an active exchange, independent broker market quotations, market price quotations or models from third-party pricing services, or, when independent broker quotations or market price quotations or models from third-party pricing services are unavailable, valuation models prepared by management. These models include estimates, and the valuations derived from them could differ materially from amounts realizable in an open market exchange. Dividend income is recognized on the ex-dividend date.



Other income / (loss) includes foreign currency gains and losses, interest earned on cash and cash equivalents, interest earned and losses incurred on notes receivable, and other miscellaneous income including revenue from revenue sharing arrangements.



Variable Interest Entities



FASB ASC 810, Consolidation ("ASC 810") contains the guidance surrounding the definition of VIEs, the definition of variable interests, and the consolidation rules surrounding VIEs. In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. As a general matter, a reporting entity must consolidate a VIE when it is deemed to be the primary beneficiary. The primary beneficiary is the entity that has both (a) the power to direct the matters that most significantly impact the VIE's financial performance and (b) a significant variable interest in the VIE.



We can potentially become involved with a VIE in three main ways:



Our Investment Portfolio



For each investment made within the investment portfolio, we assess whether the investee is a VIE and if we are the primary beneficiary. If we determine the entity is a VIE and we are the primary beneficiary, we will consolidate it.



Our Asset Management Activities



For each investment management contract we enter into, we will assess whether the entity being managed is a VIE and if we are the primary beneficiary. If we determine the entity is a VIE and we are the primary beneficiary, we will consolidate it.



Our Trading Portfolio



From time to time, we may have an interest in a VIE through the investments we make as part of our trading activities. Because of the high volume of trading activity in which we engage, we do not perform a formal assessment of each individual investment within our trading portfolio to determine if the investee is a VIE and if we are the primary beneficiary. Even if we were to obtain a variable interest in a VIE through our trading portfolio, we would not be deemed to be the primary beneficiary for two main reasons: (a) we do not usually obtain the power to direct activities that most significantly impact any investee's financial performance and (b) a scope exception exists within the consolidation guidance for cases where the reporting entity is a broker-dealer and any control (either as the primary beneficiary of a VIE or through a controlling interest in a voting interest entity) was deemed to be temporary. In the unlikely case that we obtained the power to direct activities and obtained a significant variable interest in an investee in our trading portfolio that was a VIE, any such control would be deemed to be temporary due to the rapid turnover within the trading portfolio.

Stock Compensation

We account for stock compensation according to FASB ASC 718, Stock Compensation ("ASC 718"). In the periods presented herein, we had three different types of grants that fall under ASC 718.

First, we sometimes grant restricted common stock in Cohen & Company Inc. to employees and directors. These grants vest over a period of time and only have service based vesting criteria. In these cases, we determine the fair value of the grants by taking the closing stock price of Cohen & Company Inc. on the day prior to the grant date and multiplying it by the number of restricted shares granted. We recognize the expense over the service period on a straight-line basis. We assume no forfeitures up front and record forfeitures as they occur by reducing expense. The recipient is entitled to dividends that are declared and paid during the vesting period but they are paid only if (and to the extent) the restricted share grant ultimately vests.

Second, we sometimes grant operating units of the Operating LLC to employees. These grants also vest over a period of time and only have service based vesting criteria. Because there is a fixed exchange ratio between units of the Operating LLC and shares of Cohen & Company Inc., the fair value of the grant is calculated by taking the closing stock price of Cohen & Company Inc. on the day prior to the grant date, adjusting for the exchange ratio, and then multiplying by the number of units of the Operating LLC granted. We recognize the expense over the service period on a straight-line basis. We assume no forfeitures up front and record forfeitures as they occur by reducing expense. The recipient is entitled to distributions that are declared and paid during the vesting period but they are paid only if (and to the extent) the unit grant ultimately vests.

Third, employees sometimes invest in the membership interests of consolidated SPAC sponsor entities (Insurance SPAC Sponsor Entities, Insurance SPAC II Sponsor Entities, Insurance SPAC III Sponsor Entities, and Columbus Circle SPAC Sponsor Entities). Because these entities are consolidated and the employees are investing in the consolidated company's non-controlling interest, these equity interests fall under ASC 718. Generally, the employee invests a de minimis amount and receives an allocation of the founder shares held by the sponsor entity. The investment does not have any explicit vesting criteria associated with it. Generally, the employee's investment will be worthless if the SPAC is liquidated and it will become worth something if the SPAC completes its business combination. Therefore, we treat these grants as having a performance condition (i.e. the completion of the SPAC business combination). Further, at the time of the investments, we treat this performance condition as being non-probable. The effect of this is that we record no expense related to these investments until (and only if) the business combination is completed. Upon completion of the business combination, we record compensation expense in an amount equal to the fair value of the grant. The fair value of the grant is equal to the public trading price of the SPAC on the date of the grant adjusted for certain sale restrictions imposed on the shares the employee receives (generally, they are restricted for sale for some time period and subject to certain hurdle prices before they become freely tradeable). We use a Monte Carlo simulation model to determine the appropriate discount to place on shares that are subject to hurdle prices. The compensation amount is recorded with an offsetting credit to non-controlling interest. From that point forward, the shares received by the employee are treated as part of the non-controlling interest and allocated income, expense, gains, and losses accordingly until the applicable sponsor entity is liquidated or otherwise de-consolidated.

Investments in Special Purpose Acquisition Companies ("SPACs") Sponsor Entities

We invest in the sponsor entities of SPACs. The sponsor entities are limited liability companies (each an "LLC") that pool their members' interests and invest in the private placement and founder shares (together, sponsor shares) of a SPAC. The SPAC will also raise funds in a public offering and seek to complete a business combination within an agreed upon time frame. The SPAC will use the proceeds raised from the sponsor shares to pay transaction and operating expenses during the period it is seeking a business combination. The proceeds of the public offering are placed in an interest bearing trust and can only be used to complete the business combination and pay taxes on the interest earned. Generally, the public investors must approve any business combination prior to its effectiveness. If a business combination is not completed within the agreed upon time frame, the SPAC will liquidate and return the public investors' investment to them. If there are funds remaining after liquidation, the sponsor entities may receive some portion of their investment back, but it is likely they will suffer a total loss of their investment. If the business combination is completed, the sponsor entities' private placement in the SPAC will entitle them to a combination of unrestricted common, restricted common, and (in some cases) warrants of the post-business combination SPAC (which is a publicly traded company). The following summarizes our accounting policies related to our investments in these entities:

•	The sponsor entities are LLCs that give all important decision making rights to their respective managing member. Furthermore, the other members of the LLC cannot replace the managing member. Accordingly, we concluded that the sponsor entities are VIEs and the managing member has the power to direct its most important economic activities. In all cases where we are the managing member of a sponsor entity, we also have had a significant economic interest in such sponsor entity and therefore consolidate such sponsor entity.
•	In all cases where we consolidated a sponsor entity, we determined that the sponsor entity's private placement investment in the SPAC that it sponsors should be treated as an equity method investment during the SPAC's pre-business combination period. Furthermore, due to the difficulty of determining the fair value of such an investment in the SPAC's pre-business combination period, we have chosen to not elect the fair value option.
•	If a SPAC completes its business combination, the sponsor entity's investment in the SPAC will be converted to a combination of unrestricted and restricted shares in the post-business combination SPAC. At this point (assuming we consolidate the sponsor entity), we will account for the shares received at fair value. We will reclassify any remaining equity method investment balance to other investments, at fair value and record principal transactions income for the difference. We will record non-controlling interest expense for the SPAC shares that are distributable to the non-controlling interest holders of the sponsor entity. The fair value of the unrestricted shares received is equal to the public trading price of the SPAC on the date of the business combination. The fair value of the restricted shares received is adjusted downwards from the public trading price for certain sale restrictions imposed (generally, they are restricted for sale for some time period and subject to certain hurdle prices before they become freely tradeable). We use a Monte Carlo simulation model to determine the appropriate discount to place on shares that are subject to hurdle prices. In the case of a SPAC business combination where we consolidate the sponsor entity, generally there is also an equity-based compensation entry to be recorded at the date of the business combination. See the equity-based compensation section above. We will continue to mark the sponsor entity's investment in the SPAC to market and record principal transactions income or loss and offsetting non-controlling interest income or expense until the sponsor entity itself distributes all of the SPAC shares it owns to its members and liquidates. At that point, we will hold the SPAC shares directly (rather than through a consolidated subsidiary) and will record principal transaction income and loss until the SPAC shares themselves are liquidated.
•	We also invest in sponsor entities that we do not consolidate because we are not the managing member of such sponsor entity or otherwise do not have the power to direct the sponsor entity's most important activities. In these cases, we treat our investment in the sponsor entity as an equity method investment. Furthermore, due to the difficulty of determining the fair value of such an investment in the applicable SPAC's pre-business combination period, we have chosen to not elect the fair value option.
•	If a SPAC completes a business combination and we have an equity method investment in the associated sponsor entity, the sponsor entity will record income equal to the difference between the fair value of the restricted and unrestricted shares it will receive and the carrying value of its equity method investment in the SPAC. We will recognize our share of this gain as income from equity method affiliates. The sponsor entity will continue to mark its investment in the SPAC to market after the business combination and we will recognize our share of the change in fair value as income or loss from equity method affiliates. Once the sponsor entity distributes our allocable share of the SPAC shares it owns, we will reclassify our investment from investment in equity method affiliate to other investments, at fair value as we will then hold the SPAC shares directly (rather than through an equity method investee). We will then record principal transactions income and loss until the SPAC shares themselves are liquidated.
•	If a SPAC liquidates and we have an investment in it (either directly in the case of consolidated sponsor entities or indirectly in the case of equity method sponsor entities), we will write-off our remaining equity method balance and record a loss on the equity method investment. In the case of consolidated sponsor entities, we will also record an offsetting entry to non-controlling interest.



Share Forward Arrangements

We have also engaged in several transactions known as "share forward arrangements" ("SFAs"). In a typical SFA transaction, we acquire an interest in a publicly traded company (referred to as the "SFA Counterparty") through open market purchases, direct acquisitions from the SFA Counterparty, or a combination thereof. These interests can take the form of unrestricted common shares, restricted common shares, equity derivatives, or fair value receivables. Upon acquiring these interests, we enter into an SFA derivative arrangement with the SFA Counterparty. In cases where we acquire our interests in the SFA Counterparty through open market purchases, the SFA generally requires an up-front payment to us from the SFA Counterparty. The amount of this up-front payment equals the cost we paid for our interests in the SFA Counterparty, less a shortfall amount in certain cases. To fund the shortfall portion of the initial investment, we will utilize available cash on hand or available financing. The SFA stipulates that we must make a payment to the SFA Counterparty on a certain maturity date. Depending on the terms of the SFA, this payment may be made in cash, by returning the interests we acquire in the SFA Counterparty, or through a combination of both. In some cases, the SFA requires the payment to be made exclusively in cash. Importantly, the SFA does not obligate us to hold the interests which we acquired in the SFA Counterparty. Following the execution of the SFA, we are free to sell the interests we acquired in the SFA Counterparty (assuming the interests themselves are not restricted from transfer). Additionally, SFAs generally include a feature whereby if we hold the interests we acquired in the SFA Counterparty until maturity or another agreed-upon date, we become eligible to receive an additional payment from the SFA Counterparty, either in cash or in additional interests in the SFA Counterparty. Such a payment is known as the "Maturity Consideration." Furthermore, SFAs usually include a provision allowing us to terminate the SFA, either in whole or in part, before its maturity by making an agreed-upon payment based on an amount defined in the SFA (the "Reset Price"). The Reset Price may either remain fixed throughout the term of the SFA, or fluctuate based on certain calculations within the SFA. SFAs also impose various obligations on the SFA Counterparty, which may include registering a predetermined number of the interests in the SFA Counterparty (subject to the SFA) with the SEC, maintaining the listing of the SFA Counterparty securities on a national exchange, and/or that the closing price of the SFA Counterparty's shares on the public exchange does not fall below a predetermined price for a specific period of time. If any of these SFA Counterparty obligations are breached or not satisfied, we may have the right to terminate the SFA and accelerate the payment of the Maturity Consideration upon termination. The SFAs provide the right of set off in the case of Maturity Consideration, thereby allowing us to keep the interests we hold in the SFA Counterparty and offset the Maturity Consideration we are owed following termination of the applicable SFA.

We account for SFA transactions as follows:

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The interests in public companies that we own are carried at fair value. Refer to note 9 for further details on determining the fair value of unrestricted common shares, restricted common shares, equity derivatives, or fair value receivables.

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The derivative obligation arising from the SFA is also carried at fair value. Fair value represents the amount we would need to pay to settle the SFA obligation at any reporting period date. If the SFA provides us with multiple methods of settling the obligation, we will choose the most advantageous one to value the derivative obligation. In performing this calculation, only settlement methods contractually available to us at the reporting date will be considered (i.e., ones available at some future date will not be considered). For instance, if we may terminate the SFA early by either returning common shares or making a cash payment based on the Reset Price, the liability will be valued at the lower of: (i) the fair value of the common shares and (ii) the cash amount based on the Reset Price.

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We do not recognize any Maturity Consideration as revenue until it is earned under the contract, either by meeting the hold period requirement or due to a breach of obligation by the SFA Counterparty that enables us to terminate the SFA early.

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In cases where we earn Maturity Consideration and the amount we are owed exceeds the fair value of the interest we own that is available to offset, we will consider the probability of payment of the remaining Maturity Consideration based on the credit quality of the SFA Counterparty and general market conditions. If we determine that the collection of the remaining Maturity Consideration owed is not probable, we will not record the unpaid portion.



Recent Accounting Pronouncements



The following is a list of recent accounting pronouncements that, we believe, will have a continuing impact on our financial statements going forward. For a more complete list of recent pronouncements, see note 3 to our consolidated financial statements included in this Annual Report on Form 10-K.