# BROWN ASSOCIATES, INC. X-17A-5 (2021-09-29) — Broker-dealer annual report - Company: BROWN ASSOCIATES, INC. - Form: X-17A-5 - Filed: 2021-09-29 - Period: 2021-07-31 - Accession: 0000014651-21-000001 - CIK: 14651 - File #: 8-15665 - Material weakness: No - Auditor: Rodefer Moss & Co., PLLC - Auditor location: Knoxville, TN - Contact: Huxley Brown - Phone: 4232673776 - Signed by: Huxley Brown (President) Original filing: https://www.sec.gov/Archives/edgar/data/14651/000001465121000001/brownannualaudit1.pdf --- {0}------------------------------------------------ UNITED ST A TES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549 # ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill | Expires: | October 31, 2023 | |----------|-----------------------------| | | Estimated average burden | | | hours per response
12.00 | | | | OMB APPROVAL OMB Number: 3235-0123 | SEC FILE NUMBER | | |-----------------|--| | 8-15665 | | FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-S Thereunder | | REPORT FOR THE PERIOD BEGINNING
08/01/2020
MM/DDNY | | AND ENDING 07/31/2021
MM/DDNY | | |-------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|---------------|----------------------------------|--| | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM I.D. NO. | | | | 819 Broad Street | | | | | | | (No. and Street) | | | | | Chattanooga | TN | 37402 | | | | (City) | (State) | | (Zip Code) | | | Hxl
Brwn | | | (Arca Code -Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report= | | | | | Rodefer Moss & Co., PLLC | (Name - if individual. stale last, first, middle name) | | | | | 608 Mabry Hood Road | Knoxville | TN | 37932 | | | (Address) | (City) | (State) | (Zip Code) | | | [R]certified Public Accountant
DPublic Accountant | DAccountant not resident in United States or any of its possessions. | | | | | | FOR OFFICIAL USE ONLY | | | | | CHECK ONE: | | | | | *must he supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240. J 7a-5(e)(2)* Potentlal persons who are to respond to the collectlon of information contained in this form are not required to respond unless the form dlsplays a currently valid OMB control number. SEC 1410 (11·05) {1}------------------------------------------------ ### OATH OR AFFIRMATION | | , ,,
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31 | are true and correct. I further swear (or affirm) that
20 | | classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | | | | | | | | ;, '!!,,qj | o, '• | | "" c;,: ,
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.Su�,�"""''""' | | | | | | | s s;-.�r .s. | | This report u contains (check all applicable boxes): | | | [ii (a) Facing Page. | | | IK] (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. | | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | (0
� | Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | (g) Computation ofNet Capital. | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | (i)
� | Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | IBJ (j) | A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule I 5c3- I and the | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | O (k) A Reconciliation between the audited and unaudited 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. I 7a-5(e)(3). | | | | | | | | | | | | | | | | {2}------------------------------------------------ ### FINANCIAL STATEMENTS AND SUPPLEMENT ARY INFORMATION JULY 3 1 , 2021 {3}------------------------------------------------ ### INDEX TO REPORT ### JULY 31, 2021 | | PAGE | |-------------------------------------------------------------------------------------------------|------| | REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM | | | STATEMENT OF FINANCIAL CONDITION | 2 | | STATEMENT OF INCOME | 3 | | STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | 4 | | STATEMENT OF CASH FLOWS | 5 | | NOTES TO FINANCIAL STATEMENTS | 6-11 | | SUPPLEMENTARY INFORMATION | | | SCHEDULE- 1 COMPUTATION OF NET CAPITAL UNDER RULE 15c3-I
SECURITIES AND EXCHANGE COMIMISSION | 12 | | REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM | 13 | | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM ON APPL YING AGREED-UPON PROCEDURES | 14 | {4}------------------------------------------------ p: 865 583 00'1! f: 865.583 0560 *w.* rodefcrmoss com fi08 1'.labry Hood Road ![](_page_4_Picture_2.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM o the Shareholders of Brown Associates, Inc. #### O inion on the Financial Statements We have audited the accompanying statement of financial condition of Brown Associates, Inc. (the "Company") (a Tennessee Corporation) as of July 31, 2021, the related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes and Schedule-I Computation of Net Capital Under Rule 15c3-1 Securities and Exchange Commission (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles gener�lly accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements 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 the 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 perfonn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included perfonning procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and perfonning procedures tbat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overal(pre8entation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. #### Alditor's Report on Supplemental Information 1e Supplementary Information on page 12 has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental infonnation is the responsibility of the cbmpany's management. Our audit procedures included determining whether the supplemental infonnation rebonciles 10 the financial statements or tbe underlying accounting and other records. as applicable, and performing piocedures to rest the completeness and accuracy of the information �resented in the supplemental infonnation. In robing our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240. I 7a-5. In our opinion, the sJpplementary infonnation is fairly stated, in all material respects, in �lation to the financial statements as a whole. I Q� � 'I\_ e, ,'i...LC.. e have served as Brown Associates, lnc.'s auditor since 2014. oxville, Tennessee S ptember29, 2021 {5}------------------------------------------------ ### STATEMENT OF FINANCIAL CONDITION #### JULY 31, 2021 | ASSETS | | | |----------------------------------------------------------|----|---------| | SSE TS | | | | Cash and cash equivalents | | 564,191 | | Deposits with clearing organizations - restricted | | 10,000 | | Receivable from clearing organizations | | 16,137 | | Securities owned: | | | | Marketable: at market value | | 212,227 | | Office equipment and leasehold improvements, | | | | less accumulated depreciation of\$58,473 | | 1,370 | | Prepaid state taxes | | 9,274 | | Other prepaid expenses | | 6,931 | | Total assets | \$ | 820,130 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | LIABILITIES | | | | Accounts payable and accrued expenses | \$ | 13,736 | | Accrued federal taxes | | 14,400 | | Paycheck Protection Program - note payable | | 65 760 | | Total liabilities | | 93,896 | | STOCKHOLDERS' EQUITY | | | | Common stock, no par value, \$2 stated value, authorized | | | | 1,000 shares, issued 500 shares | | 1,000 | | Retained earnings | | 725,234 | | | | 726,234 | | Total stockholders' equity | | | The accompanying notes arc an imcgral part of these financial statements. {6}------------------------------------------------ ### STATEMENT OF INCOME ### YEAR ENDED JULY 31, 2021 | VENUES | | |----------------------------------------|-----------------| | Revenue from contracts with customers: | | | I Brokerage commissions | \$
I.152,491 | | ther revenue: | | | Government grant revenue | 65,760 | | Other revenue | 2,920 | | Total revenue, net | 1,221,171 | | EXPENSES | | | bfficer salaries | 610,864 | | �mployee compensation and benefits | 295,580 | | �egulatory fees and expenses | 13,792 | | eccupancy | 21,741 | | Other | 81,073 | | Total expenses | 1,023,050 | | !Nf COME BEFORE INCOME TAXES | 198,121 | | ncome tax expense | 38,277 | | TINCOME | 159,844
\$ | | | | The accompanying notes are an integral part ofthese financial statements. {7}------------------------------------------------ ### STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY #### YEAR ENDED JULY 31, 2021 | | Common
Stock | Retained
Earnings | Total
Stockholders'
Equity | |---------------------------|-----------------|----------------------|----------------------------------| | Balance at August I, 2020 | \$
l,000 | \$
865,390 | \$
866,390 | | Dividends | | (300,000) | (300,000) | | Net income | | 159,844 | 159,844 | | alance at July 31, 2021 | \$
l,000 | \$
725,234 | \$
726,234 | The accompanying notes are an integral part of the financial statements. 4 {8}------------------------------------------------ # STATEMENT OF CASH FLOWS # YEAR ENDED JULY 31, 2021 | C�SH FLOW FROM OPERA TING ACTIVITIES
et mcome | \$
159,844 | |----------------------------------------------------------------------------------------------------|---------------| | on cash income/expenses included in net income: | | | Depreciation | 260 | | Deferred income tax expense | 3,577 | | Forgiveness of first Paycheck Protection Program note payable | (65,760) | | Increase) decrease in operating assets: | | | Receivables from clearing organizations | (393) | | Prepaid state taxes | 4,186 | | Prepaid federal taxes | 48,880 | | Other prepaid expenses | (3,215) | | Increase in operating liabilities: | | | Accounts payable and accrued expenses | 3,341 | | Accrued federal taxes | 14,400 | | Net cash from operating activities | 165,120 | | c | | | SH FLOW FROM INVESTING ACTIVITIES
Proceeds from the sale of investments | 300,000 | | Reinvested dividends and interest | (201) | | Net cash from investing activities | 299,799 | | | | | SH FLOW FROM FINANCING ACTIVITIES
Proceeds from second Paycheck Protection Program note payable | 65,760 | | Dividends paid | (300,000) | | Net cash from financing activities | (234,240) | | T CHANGE IN CASH | 230,679 | | Cash and cash equivalents - beginning of year | 333,512 | | Cash and cash equivalents - end of year | \$
564,191 | The accompanying notes are an integral part ofthese financial statements. *5* {9}------------------------------------------------ # NOTES TO FINANCIAL STATEMENTS ## JULY 31, 2021 ### N TE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Nature of Business ' I, 'I I " I I i I ,, !' Brown Associates, Inc. (the "Company") is a Tennessee corporation formed in I 969. The Company is a non-carrying broker dealer that provides general investment and management advisory services relating to investment venture capital and pension and profit sharing plans as well as investment banking services. Additionally, the Company sells and distributes various investments such as securities, mutual funds, and insurance contracts. The Company does not ordinarily provide credit to its customers. Fees and commissions are normally received from the entities offering the various investments. ### Basis of Accounting The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. #### Marketable Securities The Company carries investments in marketable securities at fair value in accordance with Financial Accounting Standards Board (FASS) Accounting Standards Codification (ASC) Topic 820, *Fair Value Measurement.* Unrealized gains and losses resulting from changes in the market value are charged or credited to operations in the current period. #### Depreciation and Amortization Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the depreciable assets. Estimated useful lives are as follows: | Asset | Life | |------------------------|-----------| | Office equipment | 5-7 years | | Leasehold improvements | 15 years | #### Concentration of Risk The Company maintains cash on deposit with federally insured banks. At times, the balances in these accounts may be in excess of federally insured limits. Cash equivalents include investments which are not insured by the Federal Deposit Insurance Corporation (FDIC), but may be insured by the Securities Investor Protection Corporation (SIPC). At times, these investments may be in excess ofSIPC limits. (Continued) {10}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS # JULY 31, 2021 ### , TE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ### Income Taxes ' !1 I I > Income tax expense includes federal and state taxes currently payable and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. These differences result from differences in depreciation methods and the tax benefits attributed to net operating loss carryforwards. #### Uncertain tax positions The Company recognizes and measures its unrecognized tax benefits in accordance with F ASB ASC 740, *Income Taxes.* Under that guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available, or when an event occurs that requires a change. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations by tax authorities for tax years before 2018. The Company has concluded that there are no significant uncertain tax positions requiring recognition or disclosure, and there are no material amounts of unrecognized tax benefits. ### Revenue recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 *-Revenue Recognition from Contracts with Customers (Topic 606).* The update modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other guidance. The update eliminates all transaction and industry specific accounting principles and replaces them with a unified, five step approach that includes: (l) identifying the contract(s) with the customer; (2) identifying the performance obligation(s) in the contract(s); (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract(s); and (5) recognizing revenue as the performance obligation(s) are satisfied. Brokerage commissions - The Company earns commissions primarily from brokering commercial real estate investments, discount stock brokerage services, and life insurance sales. Funding for the commercial real estate investments are held by an escrow agent until finalization of the funding. Upon finalization the commission is paid and recognized as revenue. The Company records commissions from life insurance companies as income when received. The Company earns commissions from trading securities on behalf of its customers through a brokerage clearing firm. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchase is identified, the principal is agreed upon, and the risk and rewards of ownership have been transferred to the customer. (Continued) {11}------------------------------------------------ # NOTES TO FINANCIAL STATEMENTS # JULY 31, 2021 # TE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) #### Uses of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ### Cash **and** Cash Equivalents For the purpose of the statement of cash flows the Company considers all highly liquid investments with original maturities ofless than ninety days to be cash equivalents. # Advertising Costs Advertising costs are expensed as incurred. There was no advertising expense for the year ended July 3 I, 2021. # TE 2 - FAIR VALUE MEASUREMENT FASS ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB ASC Topic 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company had the ability to access. - Level 2 inputs are inputs (other than quoted prices included within level I) that are observable for the asset or liability, either directly or indirectly. - Level 3 inputs are unobservable inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs should be developed based on the best information available in the circumstances and may include the Company's own data.) \$212,227 in money markets were valued using Level I inputs. There were no securities valued using level 2 or 3 input valuations. {12}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS ### JULY 31, 2021 ### , TE 3 - OFFICE EQUIPMENT AND LEASEHOLD IMPROVEMENTS Major classes of equipment and leasehold improvements and accumulated depreciation are as follows: | Office equipment | 54,217
\$ | |-------------------------------|--------------| | Leasehold improvements | 5 626 | | | 59,843 | | Less accumulated depreciation | (58,473) | | Total | \$
l,31ll | Depreciation expense was \$260 for the year ended July 31, 2021. ### TE 4 - PAYCHECK PROTECTION PROGRAM NOTE PAYABLE The Company received a second draw of\$65,760 Payroll Protection Program (PPP) loan in April 2021, from the U.S. Small Business Administration (SBA). Under the terms of the PPP program, the loan may be forgiven if the funds are spent in accordance with the program. lfthe funds or a portion of the funds are not spent in accordance with the program, the unforgiven portion is payable in monthly principal and interest installments bearing interest at I%. The note matures *5* years from the date of the note. ### , TE 5 - GOVERNMENT GRANT REVENUE On March 31, 2021, the Company received notification from the SBA that the entire amount of the first PPP loan of\$65,760 was forgiven. Therefore, these funds are included in the statement of income as governmental grant revenue totaling \$65,760 for the year ended July 31, 2021. ### TE 6 - INCOME TAXES Provisions for income taxes is comprised of the following elements: | Current tax expense: | | |----------------------------|--------------| | Federal | 24,400
\$ | | State | 10 300 | | | 34 700 | | Deferred tax expense | | | Federal | 3,388 | | State | 189 | | | 3 577 | | Provision for income taxes | 38,277
\$ | Deferred tax assets and liabilities are estimated using a 21 % federal rate and a 6.5% state rate. As of July 31, 2021, there was no deferred tax asset (liability). {13}------------------------------------------------ # NOTES TO FINANCIAL STATEMENTS ### JULY 31, 2021 ### , TE 7-RELATED PARTY TRANSACTIONS The Company leases its building on a month-to-month basis from Ed Brown Family L.P. Certain members of the Brown Family are stockholders of Brown Associates, Inc. Rental expense for the year totaled \$12,000. Garth and Brown Investment Management, LLC is owned by a stockholder of Brown Associates, Inc. Garth and Brown reimburses Brown Associates, Inc. on an as needed basis for expenses paid on their behalf. For the year ending July 31, 2021, reimbursed expenses were \$2,416. ## , TE 8 - NET CAPITAL REQUIREMENTS The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-l), which requires the maintenance of minimum net capital and requires that *the* ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to I (and the "applicable" exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed IO to I). At July 31, 2021, the Company had net capital ofS703,356, which was \$653,356 in excess of its minimum dollar net capital requirement of \$50,000. The Company's net capital ratio was 13.35 to 1. ## TE 9 - RJSK AND UNCERTAINTIES During the year 2020, local, U.S., and world governments have encouraged self-isolation to curtail the spread of the global pandemic, coronavirus disease (COVID-19), by mandating temporary work stoppage in many sectors and imposing limitations on travel and size and duration of group meetings. Many industries are experiencing disruption to business operations and the impact ofreduced consumer spending. There is unprecedented uncertainty surrounding the duration of the pandemic, its potential economic ramifications, and any government actions to mitigate them. If the pandemic continues, it may have an adverse effect on the Company's future operations, financial position, and liquidity. On March 27, 2020 President Trump signed into law the "Coronavirus Aid, Relief, and Economic Security ("CARES") Act." The CARES Act among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, and increased limitations on qualified charitable contributions. The Company is currently evaluating how these provisions for the CARES Act will impact its financial condition, results of operations, and cash flows. ### TE 10 - NEW ACCOUNTING PRONOUNCEMENTS The F ASB issued Accounting Standards Update (ASU) 2016-02, *Leases* (Topic 842), in February 2016. ASU 2016-02 requires the recognition by lessees of assets and liabilities that arise from all lease transactions, except for leases with a lease term of 12 months or less. The lessee accounting model under ASU 2016-02 retains two types of leases: finance leases, which are to be accounted for in substantially the same manner as the existing accounting for capital leases, and operating leases, which are to be accounted for (both in the statement of operations and the statement of cash flows) in a manner consistent with existing accounting for operating leases. ASU 2016-02 also requires expanded qualitative and quantitative disclosures regarding the amount, timing, and uncenainty of cash flows arising from leases. ASU 2016-02 applies to the Company's financial statements for the year ending July 31, 2023, with earlier implementation permitted. The Company's management has not determined the impact on its financial statements as a result of implementing ASU 2016-02. {14}------------------------------------------------ NOTES TO FINANCIAL STATEMENTS #### JULY 31, 2021 #### I OTE 11 - SUBSEQUENT EVENTS Management has evaluated events and transactions subsequent to the balance sheet date through the date of the auditor's report (the date the financial statements were available to be issued) for potential recognition or disclosure in the financial statements. Management has not identified any items requiring recognition or disclosure. {15}------------------------------------------------ # SUPPLEMENT ARY INFORMATION {16}------------------------------------------------ # SCHEDULE - I COMPUTATION OF NET CAPITAL UNDER RULE l 5c3-l SECURITIES AND EXCHANGE COMMISSION AS OF JULY 31, 2021 # (See Report of Independent Registered Public Accounting Firm) #### Net Capital: | stckholders' equity allowable for net capital
Add: Other (deductions) or allowable credits: | \$
726,234 | |------------------------------------------------------------------------------------------------|---------------| | Total capital allowable | 726.234 | | Deductions and/or charges:
Nonallowable assets: | | | Furniture, equipment, and leasehold improvements, net | 1,370 | | Prepaid state taxes | 9,274 | | Other assets | 6,931 | | | 17,575 | | Net capital before haircuts on securities positions | 708,659 | | Haircuts on securities | | | Trading and investment securities: | | | Other securities | 4,245 | | Other- Money Market Fund | 1.058 | | | 5,303 | | NET CAPITAL | \$
703.356 | | AGGREGATE INDEBTEDNESS | \$
93,896 | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENT | | | Minimum net capital | \$
6,260 | | Minimum dollar net capital requirement | \$
50,000 | | Excess net capital | \$
653,356 | | Excess net capital at l ,000 percent | 643,356
\$ | | Percentage of aggregate indebtedness to net capital | 13.35% | | | | There is no material difference between the preceding computation and the Company's corresponding unaudited part II of form X-17A-5 as of July 31, 2021 {17}------------------------------------------------ #### BROWN ASSOCIATES, INC. July 31, 2021 #### SCHEDULE II he Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, ursuant to paragraph (k)(2)(ii) of the Rule and does not hold customers' monies or securities. #### SCHEDULE Ill #### INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER THE SECURITIES AND EXCHANGE COMMISSION RULE 1Sc3-3 he Company is exempt from the provisions of Rule 1Sc3-3 under the Securities Exchange Act of 1934, ursuant to paragraph (k)(2)(ii) of the Rule and does not hold customers' monies or securities. {18}------------------------------------------------ ### EXEMPTION REPORT Brown Associates, Inc. ("Company") is a registered broker-dealer subject to SEC Rule 17a-5 ("Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by Rule 17a-5(d)(l) and (4). To the best of its knowledge and belief, the Company states the following: hroughout the fiscal year ended July 31, 2021, the Company claimed an exemption to SEC Rule 1Sc3-3 pursuant to paragraph k{2)(ii) ("identified exemption provision"). he Company has met the identified exemption provision throughout the most recent fiscal year without exception. Hux�fif q,l.il - )1 Date President {19}------------------------------------------------ • Cerl1fied ubl,c Accountants oameas Adv,sors *p·* 865 583.0091 *r* ees.ssa.csee w: rodefermoss.com 60S Mabry Hooe.I Road Knoxville, TN 3i932 ![](_page_19_Picture_2.jpeg) ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders of Brown Associates, Inc. We have reviewed management's statements, included in the accompanying Financial and Operational Combined Uniform Single Report, Part IlA ("Focus Report"), in which (1) Brown Associates, Inc. (the "Company") identified the following provisions of 17 C.F.R. §15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. §240.15c3-3: (2)(ii) ("exemption provisions") and (2) the Company stated that the Company met the identified exemption provisions throughout the most recent fiscal year without exception. The Company's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and. accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. oxville, Tennessee September 29, 2021 Listening better, trying harder. caring more. **THAT'S RODEFER MOSS.** {20}------------------------------------------------ • Cernfred Jb,,c Acccuoteote • uslness Adv,sors p: 865.583.0091 *f* 865.583.0560 11,: rodcformoss.com 608 Mabry Hood Road ![](_page_20_Picture_2.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES Shareholders of Brown Associates, Inc. We have pcrfonncd the procedures included in Rule 17a-S(e)(4) under the Securities Exchange Act of 1934 and with the Securities Investor Protection Corporation ("SIPC") Series 600 Rules, which are enumerated below and were agreed to by Brown Associates, Inc. (the "Company") and the SIPC, solely to assist you and SIPC in evaluating the Company's compliance with the applicable instructions of the General Assessment Reconciliation ("Form SIPC-7'') for the year ended July 3 1, 2021. The Company's management is responsible for its Form SIPC- 7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with standards established by the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings arc as follows: - I) Compared the Ii seed assessment payments in Fonn SIPC- 7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amount reported on the Annual Audited Report Form X-17A-5 Part III for the year ended July 3 1, 2021 with the Total Revenue amount reported in Form SIPC-7 for the year ended July 3 1, 2021, noting no differences; - 3) Compared any adjustments reported in Form SIPC-7 with �porting schedules and working papers, noting no differences; *-,/J-·-* - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SJPC-7 and in the related schedules and working papers supporting the adjustments, nopng no differences; and - 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's compliance with the applicable instructions of the Form SIPC-7 for the year ended iuly 31, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other maners might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the Company's Shareholders and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. Knoxville, Tennessee September 29, 2021 L1sten1ng better. trying harder, caring more **THAT'S RODEFER MOSS.** {21}------------------------------------------------ | | SIPC-7 | | | Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001 | | SIPC-7 | |------------------|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | (36-REV 12/18) | | | General Assessment Reconciliation | | (36-REV 12/18) | | | | 1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for
purposes of the audit requirement of SEC Rule 17a·5: | For the fl seal year ended | 07 /31/2021
(Read caretulty the instructions in your Working Copy before comple!lng !his Fo1m)
TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS | | | | | L | IBROWN ASSOCIATES, INC.
819 BROAD STREET
CHATTANOOGA, TN 37402 | | | indicate on the form filed.
contact respecting this form.
_j HUXLEY BROWN | Note: If any of the information shown on the
mailing label requires correction, please e-mail
any corrections to form@sipc.org and so
Name and telephone number of person to | | 2. A. | | General Assessment {item 2e from page 2) | | | | 11,832 | | B. | 02/22/2021 | Less paymen1 made with SIPC-6 filed (exclude Interest) | | | | | | C. | | Date Paid
Less prior overpayment applied | | | | | | D. | | Assessment balance due or (overpayment) | | | | 913 | | E. | | Interest computed on late payment (see instruction E) for | | days at 20% per annum | 0 | | | F. | | Total assessment balance and interest due (or overpayment | | carried forward) | | | | H. | G. PAYMENT: | "'the box
�
Check mailed to P.O. Box�Funds Wired
Total {must be same as F above)
Overpayment carried forward
3. Subsidiaries {SJ and predecessors (P) included in this form (give name and 1934 Act registration number): | D
AC | .q
913
·----------- | | | | | | | | | | | | | and complete. | The SIPC member submitting this form and the
person by whom it ta executed represent thereby
that all information contained herein is true, correct | | BROWN ASSOCIATES, INC.
1 | • cl Corporation. P111ne1Jh1p or 01h1r organ,ullon) | | | Dated | | the�day ,,AUGUST | ,20� | HUXLEY BROWN, PRESIDENT | | | | | | This form and the assessment payment rs due 60 days after the end of the fiscal year. Retain the Working Copy of this form
for a period of not less than 6 years, the latest 2 years In an easily accessible place. | | | (11110) | | | ffi Dates:
3= | | Pos!marked
Received | Reviewed | | | | | �
>
� | Calculations---­ | | Documentation | _ | | Forward Copy ---- | | cc
a | u Exceplions: | | | | | | | | | cii Disposilion of exceptions: | | 1 | | | | | | | | | | | SECURITIES INVESTOR PROTECTION CORPORATION {22}------------------------------------------------ # DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT Amounts for the fiscal period | | beginning 08/01/2020
and ending 07/3JQ021 | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------| | Item No. | Eliminate cents | | 2a. Total revenue (FOCUS line 12/Part l!A Line 9, Code 4030) | 11,221,171 | | 2b. Additions:
(1) Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not included above. | 0 | | (2) Ne! loss from principal transactions in securities in trading accounts. | 0 | | (3) Net loss from principal transactions in commodities in trading accounts. | 0 | | (4) Interest and dividend expense deducted in determining item 2a. | 0 | | (5) Net loss from management of or parncipanon in the underwriting or distribution of securities. | 0 | | (6) Expenses other than edvenlstnq, printing, registration fees and legal fees deducted in determining net
protit tram management of or par1icipa1ion in underwriting or distribution ot securities. | 0 | | (7) Net loss from securities in investment accounts. | 0 | | Total additions | 0 | | 2c. Deductions: | | | (1) Revenues from the distribution of shares ol a registered open end inves1ment company or unit
investment trust, from the sale of variable annuities, from the business of insurance, horn investment
advisory services rendered to registered investment companies or insurance company separate
accounts, and from transactions in security futures products. | 0 | | {2) Revenues from commodity 1ransactions. | 0 | | {3) Commissions, 1!oor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | 0 | | {4) Reimbursements for postage in connection with proxy solicila1ion. | 0 | | {5) Ne1 gain from securities in investment accounts. | 0 | | (6) 100% ot commissions and markups earned from transactions in (i) certifica1es of deposit and
(ii) Treasury bills, bankers acceptances 01 commercial paper that ma1ure nine months or less
from issuance da1e. | 0 | | (7) Direct expenses o! printing advertising and legal fees incurred in connection with other revenue
rerateo to the securities business (revenue defined by Section 16(9)(L) ot the Ac!). | 0 | | (8) Other revenue not related either directly or indirectly to the securities business.
(See Instruction C): | | | (Deductions in excess of \$100,000 require documentation} | 0 | | (9) (i) Total interest and dividend expense (FOCUS line 22/PART IIA Line 13,
Code 4075 plus line 2b(4) above) but not in excess
O
of total interest and dividend income.
\$,c:._
_ | | | (ii) 40% of margin interest earned on customers securities
accounts (40% of FOCUS line 5, Code 3960). | | | Enter the greater or line (i) or (ii) | 0 | | Total deductions | 0 | | 2d. SIPC Net Operating Revenues | 11,221,171 | | 2e. General Assessment@ .0015 | 11,832 | | | (to page 1, line 2.A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.