# WORLD CAPITAL BROKERAGE, INC. X-17A-5 (2023-08-28) — Broker-dealer annual report - Company: WORLD CAPITAL BROKERAGE, INC. - Form: X-17A-5 - Filed: 2023-08-28 - Period: 2023-05-31 - Accession: 0000005139-23-000001 - CIK: 5139 - File #: 8-06805 - Type: Broker-dealer - Material weakness: No - Auditor: Sanville & Company - Auditor location: Dallas, TX - Contact: Timothy E Taggart - Phone: 3036260631 - Signed by: Timothy E Taggart (President) Original filing: https://www.sec.gov/Archives/edgar/data/5139/000000513923000001/8-6805_X-17A-5_2023_Pub.pdf --- {0}------------------------------------------------ UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 # ANNUAL AUDITED REPORT FORM X-17A-5 PART III OMB APPROVAL OMB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response .. . . . . . 12.00 # SEC FILE NUMBER 8-6805 FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the + - £ 1024 -- J D -- 1 D -- 1 TL - | report for the period beginning 06/01/2022 | AND ENDING 05/31/2023 | | |---------------------------------------------------------------------|-------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | MM/DD/YY | | MM/DD/YY | | | | | | | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM I.D. NO. | | | | | | (No. and Street) | | | | Co | | 80203 | | (State) | | (Zip Code) | | | | | | | | (Area Code - Telephone Number) | | | | | | | | | | | | | | | TX | 75201 | | (City ) | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | 325 N. St. Paul Street, Suite 3100 Dallas | A. REGISTRANT IDENTIFICATION
NAME OF BROKER-DEALER: World Capital Brokerage, Inc.
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
(Name - if individual, state last, first, middle name) | nent that the annual re must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2) > Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1410 (11-05) {1}------------------------------------------------ #### OATH OR AFFIRMATION | Timothy E. Taggart | swear (or affirm) that, swear (or affirm) that, to the best of | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------| | World Capital Brokerage, Inc. | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
as | | of May 31 | 20 23 are true and correct. I further swear (or affirm) that | | classified solely as that of a customer, except as follows: | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | | | | PATRICIA A BLUM
NOTARY PUBLIC
STATE OF COLORADO
NOTARY ID 20024036975
MY COMMISSION EXPIRES NOVEMBER 14, 2026 | Signature
President | | | Title | | Notary Public | | | This report ** contains (check all applicable boxes):
(a) Facing Page.
(b) Statement of Financial Condition. | (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(g) Computation of Net Capital. | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | - (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. - (i) Information Relating to the Possession or Control Requirements Under Rule 15e3-3. - (i) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. - | (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of consolidation. - (I) An Oath or Affirmation. - (m) A copy of the SIPC Supplemental Report. - (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). {2}------------------------------------------------ **(SEC I.D. No. 8-6805)** **Statement of Financial Condition as of May 31, 2023** **Filed in accordance with Rule 17a-5(e)(3) as a PUBLIC DOCUMENT.** {3}------------------------------------------------ Sanville & Company CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERIC AN INSTITUTE OF CERTIFIED PUBLIC ACCOUNT ANTS PENNSYLVANIA INSTITUTE OF CERT FED PUBLIC ACCOLINT ANTS 1514 OLD YORK RO AD ABINGTON, PA 19001 (215)884-8460 · (215)884-8686 FAX 325 NORTH SAINT PAUL ST. SUITE 3100 DALLAS, TX75201 (214)738-1998 100 WALL STREET 8th FLOOR NEW YORK, NY 10005 (212)709-9512 #### Report of Independent Registered Public Accounting Firm To the Stockholder of World Capital Brokerage, Inc. #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of World Capital Brokerage, Inc. (the Company) as of May 31, 2023, and the related notes (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of May 31, 2023, in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those insks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. This is the initial year we have served as the Company's auditor. Dallas. Texas August 28, 2023 {4}------------------------------------------------ # **STATEMENT OF FINANCIAL CONDITION MAY 31, 2023** # ASSETS | Cash and cash equivalents
Investment securities, at market value (note 2)
Deposits with clearing organizations
Commissions receivable (note 5)
Accounts receivables – affiliate (note 3)
Notes receivable – affiliate (note 3)
Other assets | \$
53,950)
2,291,910)
25,000)
90,071)
93,664)
60,509)
109,760) | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------| | Total assets | \$
2,724,864) | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | Liabilities:
Accounts payable
Accounts payable affiliate (note 3)
Accounts payable affiliate – Payroll (note 3)
Clearance Account
Commissions payable
Secured Notes payable
Income Tax payable
Deferred Tax Liability | 119,961)
3,725)
9,143)
224)
86,594)
643,887)
4,793)
313,288) | | Total liabilities | 1,181,615) | | Stockholder's equity:
Common stock, \$1 par value; 50,000 shares authorized;
24,500 shares issued and outstanding
Retained earnings
Total stockholder's equity | 24,500)
1,518,749)
1,543,249) | | Total liabilities and stockholder's equity | \$
2,724,864) | {5}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS MAY 31, 2023** #### **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### **BASIS OF FINANCIAL STATEMENT PRESENTATION** **The accompanying financial statements include the accounts of World Capital Brokerage, Inc. (the Company), a wholly owned subsidiary of AGF Holdings, Inc. (the Parent). The Company is a Colorado corporation and a registered broker-dealer with the Securities and Exchange Commission (SEC). The primary functions of the Company are to underwrite the shares of American Growth Fund, Inc. (the Fund), a diversified open-end investment company, and to function as a broker-dealer of securities. Significant accounting policies followed by the Company are:** #### **INVESTMENT SECURITIES** **Security transactions and related revenue and expense are recorded on a trade date basis. In accordance with financial reporting requirements for broker/dealers, the Company**'**s investment securities are recorded at market value based upon quotes from brokers. Changes in unrealized appreciation or depreciation are included in revenue. Realized gains and losses are computed using the specific identification method.** #### **COMMISSIONS** **Commissions and related clearing expenses are recorded on a trade-date basis as securities transactions occur.** #### **INCOME TAXES** **The Company and the Parent account for income taxes using the asset and liability method of accounting for income taxes. The Company files consolidated federal and state income tax returns with the Parent. An informal tax sharing agreement currently exists between the Company and the Parent. Under such agreement the tax expense or benefit recorded by the Company, including the tax effects of related assets and liabilities of affiliates, is computed as if the Company filed separate stand-alone tax returns. Such amounts are limited to tax expense or benefit recorded on a consolidated basis for the Parent. The Company's method of accounting for income taxes conforms to** *"Accounting For Income Taxes"***. This method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities.** **The Company evaluates tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Management of the Company has reviewed the tax positions for the open tax years ending May 31, 2020 through May 31, 2023 and has determined that there are no significant uncertain tax positions that would require recognition in the financial statements.** #### **CONCENTRATION OF CREDIT RISK** **From time to time the Company had cash balances on deposits with banks in excess of the federally insured limits. The Company believes its risk of loss is limited due to the high credit quality of such bank.** #### **STATEMENT OF CASH FLOWS** **For purposes of the statement of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.** #### **USE OF ESTIMATES** **The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.** {6}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS, continued MAY 31, 2023** # **ADOPTION OF ASU 2016-02 LEASES (TOPIC 842)** **The company has adopted the ASU 2016-02 Leases (Topic 842). The company has elected to apply the short-term lease exception for our financial statements as we have a month-to-month lease. For Further details see Note 3.** ## **2. INVESTMENT SECURITIES** **On May 31, 2023, the Company's investment securities had an aggregate cost basis of \$1,065,733 and a market value of \$2,291,910 resulting in an unrealized gain of \$1,226,177.** **The Company follows a fair value hierarchy that distinguishes market data obtained from independent sources (observable inputs) and the Company's own market assumptions (unobservable inputs). These inputs are used in determining the value of the Company's investments and are summarized in the following fair value hierarchy.** **Level 1 – quoted prices in active markets for identical securities,** **Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc), and** **Level 3 – significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments).** **The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.** **The following is a summary of the inputs used, as of May 31, 2023, in valuing the Company's assets carried at fair value:** | Equity | Level 1 | Level 2 | Level 3 | Total | |-------------------------------|--------------|---------|---------|--------------| | Entertainment | \$ 803,075 | \$ 0 | \$ 0 | \$ 803,075 | | Hospitals and Care Facilities | 307,196 | 0 | 0 | 307,196 | | Medical Services Plans | 261,975 | 0 | 0 | 261,975 | | Apparel Manufacturing | 205,301 | 0 | 0 | 205,301 | | Insurance - Life | 158,768 | 0 | 0 | 158,768 | | Specialty Chemicals | 109,334 | 0 | 0 | 109,334 | | Travel & Tourism | 109,309 | 0 | 0 | 109,309 | | Recreational Vehicles & Boats | 107,965 | 0 | 0 | 107,965 | | Aerospace & Defense | 100,220 | 0 | 0 | 100,220 | | Mutual Funds | 69,279 | 0 | 0 | 69,279 | | Containers & Packaging | 59,488 | 0 | 0 | 59,488 | | Total Equity | \$ 2,291,910 | \$ 0 | \$ 0 | \$ 2,291,910 | **The Company recognizes transfers between levels of the last day of each fiscal reporting period.** {7}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS, continued MAY 31, 2023** ## **3. TRANSACTIONS WITH RELATED PARTIES** **The Company, the Parent, Investment Research Corporation (IRC), the investment advisor for the Fund, American Growth Financial Services (FS), AGF Property Management Company (AVP), and Fidelity Leasing (FL) are controlled by the same individual. Certain officers and directors of the Company are also officers and directors of the Fund, IRC, FS, AVP, and FL. As principal underwriter for the Fund, the Company received gross underwriting commissions and distribution fees of \$7,336 for the twelve months ended May 31, 2023. The Company received \$0 from IRC for distribution services.** **The Company shares office space and certain employees with the Fund and IRC. The Company was charged \$44,035, by an affiliated company, which holds a month to month lease for the rental of office space. Costs related thereto and certain other costs are allocated among the affiliates on a basis determined by management.** **During fiscal 2023, the company received \$0 from related parties for property management services provided. The Company has a receivable due from related parties of \$1,000 from the parent company, \$92,664 from affiliated companies. The Company has a notes receivable due from related parties of \$60,509 from IRC. The Company has a payable due to related parties of \$3,725 to FL and \$9,143 for payroll expenses.** #### **4. MINIMUM NET CAPITAL** **Pursuant to Rule 15c3-1 of the Securities Exchange Act of 1934, the Company, as a registered securities broker/dealer, is required to maintain a minimum net capital of the greater of \$250,000 or 6 2/3% of "aggregate indebtedness," as defined in such rule. On May 31, 2023, the Company had net capital of \$794,220 which was \$544,220 in excess of its required net capital of \$250,000. The Company's ratio of aggregate indebtedness to net capital at May 31, 2023 was 1.093 to 1.** #### **5. COMMISSIONS RECEIVABLE** **Commissions paid to broker/dealers through deferred sales charges, for the sale of Fund shares, are recorded as commissions receivable. The Company receives from the Fund a monthly distribution fee based on the Fund**'**s daily net assets. Commissions receivable are recovered through the receipt of the distribution fee and redemption charges, if any, related to Fund shares subject to contingent deferred sales charges.** ### **6. INCOME TAXES** **The provision for income taxes consists of the following:** | Current Expense | | | | |------------------|-----------|-----------|--| | Federal | \$ | -) | | | State | | -) | | | | | -) | | | | | | | | Deferred Expense | | | | | Federal | (128,082) | | | | State | | (27,751) | | | Total | \$ | (155,833) | | **The deferred tax liability results from unrealized appreciation of investments.** #### **7. SUBSEQUENT EVENTS** **The Company has evaluated events and transactions that occurred between June 1, 2023 and August 28, 2023, which is the date the financial statements were available to be issued, for possible disclosure and recognition in the financial statements.** Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.