# CLINGER & CO., INC. X-17A-5 (2019-09-04) — Broker-dealer annual report
- Company: CLINGER & CO., INC.
- Form: X-17A-5
- Filed: 2019-09-04
- Period: 2018-12-31
- Accession: 0000021031-19-000001
- CIK: 21031
- File #: 8-12823
- Material weakness: No
- Auditor: Jennifer Wray, CPA
- Auditor location: Sugar Land, TX
- Contact: Kristy Johnson
- Phone: 281-367-0380
- Signed by: Norman Clinger (Principal)
Original filing: https://www.sec.gov/Archives/edgar/data/21031/000002103119000001/clinger1.pdf
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
| | UNIS APPROVAL |
|--------------------------|---------------------------|
| OMB Number: | 3235-0123 |
| Expires: | August 31, 2020 |
| Estimated average burden | |
| | hours per response 12.00 |
SEC FILE NUMBER
8-12823
# ANNUAL AUDITED REPORT FORM X-17A-5 PART III
## FACING PAGE
Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder
| REPORT FOR THE PERIOD BEGINNING 01/01/2018
MM/DD/YY | AND ENDING 12/31/2018 | | |
|-----------------------------------------------------------------------------------------------------------------------------------|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
| | | MM/DD/YY | |
| A. REGISTRANT IDENTIFICATION | | | |
| NAME OF BROKER-DEALER: Clinger & Co., Inc
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
6505 Clawson St | | OFFICIAL USE ONLY | |
| | | FIRM I.D. NO. | |
| (No. and Street) | | | |
| TX | | | |
| (State) | | | |
| | | | |
| | | (Area Code - Telephone Number) | |
| | | | |
| | | | |
| Sugar Land | TX | 77498 | |
| (City) | (State) | (Zip Code) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | FOR OFFICIAL USE ONLY | 77055
(Zip Code)
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)
Accountant not resident in United States or any of its possessions. | |
"Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant 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)
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## OATH OR AFFIRMATION
| L. Norman Clinger | more are swear (or affirm) that, to the best of |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
Clinger & Co., Inc | , as |
| of December 31 | 20 18 are true and correct. I further swear (or affirm) that |
| neither the company nor any partner, principal officer or director has any proprietary interest in any account
classified solely as that of a customer, except as follows: | |
| | |
| SHERELLY G POSANA | Signature |
| Notary Public, State of Texas | Principal |
| Comm. Expires 12-24-2022
Notary ID 12847007
Notary Public | Title |
| | |
| This report ** contains (check all applicable boxes): | |
| (a) Facing Page.
7 (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.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(g) Computation of Net 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. | (i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the |
| Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | |
| consolidation.
(I) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of
(n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous andit. |
| ** For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). | |
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## CLINGER & CO., INC.
Financial Statements Supplemental Schedules Required by the Securities and Exchange Commission
Including Independent Auditor's
For the Year-Ended December 31, 2018
,
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# Contents
| Independent Auditors Report | |
|--------------------------------------------------------|--|
| Financial Statements | |
| Statement of Financial Condition | |
| Statement of Operations and Other Comprehensive Income | |
| Statement of Cash Flows | |
| Statement of Changes in Stockholder's Equity | |
| Notes to Financial Statements | |
|-------------------------------------------------------------------------------|--|
| Supplementary Schedules Pursuant to SEA Rule 17a-5 | |
| Computation of Net Capital | |
| Exemption Report Pursuant to SEA Rule 17a-5(d)(1)(0)(2)(2) | |
| Auditors Review of Exemption Report Pursuant to SEA Rule 17a-5(d)(1)(i)(B)(2) | |
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# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the members of Clinger & Co., Inc
## **Opinion on the Financial Statements**
We have audited the accompanying statement of financial condition of Clinger & Co., Inc as of December 31, 2018, the related statements of income, changes in shareholder's equity, and cash flows for the 2018 then ended, and the related notes and schedules. In our opinion, the financial statements present fairly, in all material respects, the financial position of Clinger & Co., Inc as of December 31, 2018 and the results of its operations and its cash flows for the 2018 then ended in conformity with accounting principles generally accepted in the United States of America.
## **Basis for Opinion**
These financial statements are the responsibility of Clinger & Co., Inc's management. Our responsibility is to express an opinion on Clinger & Co., Inc'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 Clinger & Co., Inc 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 perform 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 performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that 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 overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
## **Auditor's Report on Supplemental Information**
The supplementary information contained in Schedules I on the pages 12 has been subjected to audit procedures performed in conjunction with the audit of Clinger & Co., Inc's financial statements. The supplemental information is the responsibility of Clinger & Co., Inc's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming 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. §240.17a-5. In our opinion, the Supplementary schedule is fairly stated, in all material respects, in relation to the financial statements as a whole.
Jennifer Wray CPA PLLC
We have served as Clinger & Co., Inc's auditor since 2019. Sugar Land, Texas Sept 3th, 2019
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# Clinger & INC. Statement of Financial Condition 3,2019
| ASSETS | | | |
|--------|--|--|--|
| | | | |
| Current Assets | |
|---------------------------------|--------------|
| Checking/Savings | |
| Cash and Cash Equivalents | \$
6,244 |
| Tota! Checking/Savings | 6,244 |
| Accounts Receivable | |
| Accounts Receivable | 6,832 |
| Tota! Accounts Receivable | 6,832 |
| Other Current Assets | |
| Firm Investment - Gold | 26,907 |
| Total Other Current Assets | 26,907 |
| Total Current Assets | 39,984 |
| TOTAL ASSETS | \$
39,984 |
| UAB!UT!ES & EQUITY | |
| Liab!!ities | |
| Current liabilities | |
| Accounts Payable | |
| Accounts Payable | 7,935 |
| Tota! Accounts Payable | 7,935 |
| Other Current liabilities | |
| Payroll liabilities | 125 |
| Tota! Other Current Liabilities | 125 |
| Total Current liabilities | \$
8,060 |
| Total liabilities | 8,060 |
| Equity | |
| Common Stock | moo |
| Paid-in-Capita! | 31:!93 |
| Retained Earnings | (15,428) |
| Unrealized Gainl(Loss} cm Gold | 15,159 |
| Tota! Equity | 3'1,924 |
| TOTAL UAB!liTIES & EQUITY | \$
39,984 |
The accompanying notes am an integral part of these financial statements.
4
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# Clinger & Co., INC. Statement of Operations January through December 2018
| | Jan - Dec 18 |
|--------------------------------|--------------|
| Ordinary Income/Expense | |
| Income | |
| 120-1 Foos | 41.687 |
| Commission Income | 4,915 |
| OCI - Unrealized Gain/(Loss) | -510 |
| Total Income | 46.092 |
| Expense | |
| Automobile Expense | 33 |
| Bank Service Charges | 614 |
| Business Licenses and Permits | 23 |
| Insurance Expense | 15,142 |
| Miscellaneous | 5,910 |
| Office Expense | 10,546 |
| Office Supplies | 2.081 |
| Professional Fees | 3,030 |
| Regulatory | 4,163 |
| Telephone and Internet Expense | 3,353 |
| Utilities | 613 |
| Total Expense | 45,509 |
| Net Ordinary Income | 583 |
| Net Income | 583 |
The accompanying notes are an integral part of these financial statements.
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# Clinger & INC. Statement of Cash Flows through December 2018
| | Jan• Dec 18 |
|-------------------------------------------|----------------|
| OPERATING ACTIVmES | |
| Net Income | \$
583.47 |
| Adjustments to reconcile Net income | |
| to net cash provided by operations: | |
| Accounts Receivable | -3.54 |
| Accounts Receivable: Dreyfus | -4,52 |
| Accounts Receivable:First Eagle | -1 ,610. 77 |
| Accounts Rece!vable:Fran!din Templeton | -642.69 |
| Accounts Receivable:lnvescc | -176.50 |
| Accounts Receivable:Jchn Hancock | -5.76 |
| Accounts Receivab!e:MFS | -1,288.61 |
| Accounts Receivable:Oppenheimer | -86.19 |
| Accounts Receivable:PIMCO | ·2,863.06 |
| Accounts Receivable:Van Eck | A4.29 |
| Accounts Reccivable:Wel!s Farge | -106.48 |
| Firm Investment. Gold | 510.30 |
| Accounts Payable | 7,934.89 |
| Net cash provided by Operating Activities | 2,196.25 |
| FINANCING ACTIVITIES | |
| Paid-in-Capital | 2,277.00 |
| Retained Earnings | -21-468.40 |
| Unrea!!zed Ga!n/{Loss} on Gold | 15,159.10 |
| Net cash provided by Financing Activities | -4,032.30 |
| Net cash Increase for period | -1,836 05 |
| Cash at beginning of period | 8,080.00 |
| Cash at end of period | 6,243.95
\$ |
| Supplemental Cash Flew information | |
The accompanying notes are an integral part of these financial statements.
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# Clinger & Co,, Statement of Changes Stockholder's Equity
As of and for the Year-Ended December 31, 2018
| | | | | | | | | | | Total | |
|----------------------------|-------------|-------------|---------|---------|------------|--------|----------|----------|--------------|----------|--|
| | CommonStock | | Paid-in | | Unrealized | | Retained | | Stokholder's | | |
| | Shares | Amount | | Capital | Gain | | | | | Equity | |
| Balance, December 31, 2017 | i,000 | 1,000 | \$ | 28,916 | \$ | | \$ | 5,457 | s | 35,373 | |
| Unrealized Gain | | | | | | | | | | | |
| Gold held for sale | | | | | | 15,i59 | | | | i 5,159 | |
| Prior Perrod AdJustment | | | | 2.277 | | | | (21,468) | | (19,191) | |
| Net Loss | | | | | | | | 583 | | 583 | |
| Balance, December 31, 2018 | | \$
i,000 | \$ | 31,193 | \$ | | | | \$ | 31,924 | |
The accompanying notes are an integral part of these financial statements.
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## & Co., Inc. Notes to Financial Statements As of and for the Year-Ended December 31, 2018
## NOTE A- SUMMARY OF ACCOUNTING POLICIES
Accounting principles followed by the Company and the methods of applying those principles which materially affect the determination of financial position, results of operation and cash flows are summarized below:
### Organization
Clinger & Co., Inc. (the "Company"), a Texas C Corporation, was formed in January 1966. It is a member of the Financial Industry Regulatory Authority (FINRA). As a limited broker-dealer, the Company operated under the exemptive provisions of the Securities and Exchange Commission's (SEC) Rule 15c3-3(k)(2}(i) which provides that it will not maintain any margin accounts, will promptly transmit all customer funds and deliver securities received and does not hold funds or securities for, or owe money or securities to customers. The Company's revenues are primarily from commissions earned from various mutual funds. The Company's accounts receivable are from brokers and dealers in securities. Consequently, the Company's ability to collect the amounts is affected by economic fluctuations in the securities industry.
## Description of Business
The Company, located in Houston, Texas, is a broker and dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of FINRA. Company operates under SEC Rule 15c3-3(k)(2)(i) (the Customer Protection Rule), which provides that a!I funds and securities belonging to the Company's customers are held in a "Special Account for the Exclusive Benefit of customers".
## Basis *of* Accounting
The financial statements of the Company been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, other liabilities.
#### Cash and Equivalents
The Company considers as cash all short-term investments with an original maturity of three months or less to be cash equivalents.
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The Corporation considers accounts receivable to be fully collectible; accordingly, no allowance for. doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made.
## Income *taxes*
The Company uses the liability method of accounting for income tax in conformity with accounting principles generally accepted in the United States of America (GAAP). Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. For December 31, 2018, the Company had a gain for tax purposes in the amount of \$1,098 and utilized a NOL resulting in \$0 federal tax liability. As of December 31, 2018, the Company had loss carry forward in the amount of \$8,056 for which a valuation allowance was recorded due to it is most likely the deferred tax asset will not be realized.
### Estimates
The preparation of financial statements in conformity 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 revenues and expense during the reporting period. Actual results could differ from those estimates.
## Fair Value of Financial Instruments
Financial instruments that are subject to fair value disclosure requirements are carried in the financial statements at amount that approximate fair value and include cash and cash equivalents. Fair values are based on quoted market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk.
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*Concentrations* The Company has revenue concentrations; the company specializes in
sales of securities.
## *Revenue Recognition*
#### Revenue Recognition
Commission Revenue are recorded by the company when the services are rendered on the trade date. Effective January 1st 2018, the Company adopted the requirements of Financial Accounting Standard Board's ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended. The Company completed its implementation analysis, reviewing current accounting policies and practices to identify potential differences that would from applying the requirements under new The Company had evaluated the potential impacts of the new revenue recognition standard on its flnancial statement and has not identified any material changes in the timing of revenue recognition. The adoption of the new guidance for revenue recognition did not result in any change to the financial statements for the year ended December 31st 2018.
#### NOTE B - FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants at the measurement date (Le., an exit price). The guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair va!ue hierarchy are described below:
Level 1 - Quoted, active market prices for identical assets or liabilities. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgagebacked securities, which are traded by dealers of brokers in active markets. Valuation is obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The Company did have not any Level 1 assets.
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Level 2 - Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted for identical or similar assets in inactive markets, and model derived valuations in which significant inputs are observable in active markets. The Company did have level 2 assets or liabilities.
Level 3 - Valuation techniques in which one or more significant inputs are observable in the marketable. The Company did not have any level 3 assets or liabilities.
The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as December 31, 2018
| | Level 1 | Level2 | Level3 | Total |
|------------|---------|----------|--------|----------|
| Assets | | | | |
| Gold | | \$26,907 | | \$26,907 |
| Securities | | | | |
| Total | | \$26,907 | | \$26,907 |
#### NOTE C - NET CAPiTAl REQUIREMENTS
This ru!e requires the maintenance of minimum net capita! and requires that the ratio of aggregate indebtedness to net capital, both as shall not exceed 1500% (15 to 1). Net capital and the related net capital ratio may fluctuate on a daily basis. At December 31, the Company had net of which was \$14,711 in excess of its required net capital of \$5,000. The Company's net capital ratio was 40.89%. The Company has elected to use the basic computation method, as is permitted by the rule, which requires that the Company maintain minimum Net Capital pursuant to a fixed dollar amount or 6-2/3% percent of total aggregate indebtedness, as , defined, whichever is greater, and does not, therefore, calculate its net capital requirement under the alternative reserve requirement method.
## NOTE D - OTHER COMMITMENTS AND CONTINGENCIES
Included in the Company's clearing agreement with its clearing broker-dealer is an indemnification clause. This clause relates to instances where the Company's customers fail to settle security transactions. In the event this occurs, the Company will indemnify the clearing broker-dealer to the extent of the net loss on the unsettled trade. At December 31, 2018, management of the Company had not been notified by the clearing broker-dealer nor were they otherwise aware of any potential losses to this indemnification.
#### NOTE E-SUBSEQUENTEVENTS
The Conipany has evaluated events subsequent to the balance sheet date for items requiring recordings or disclosure in the financial statements. The evaluation was performed through September 3, 2019,which is the date the financial statements were available to be issued. Based upon this review, the Company has determined that there were no events which took place that would have a material impact on its financial statements.
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## Clinger & Co., Inc. Supplementary Schedules Purs1.1ant to SEA Rule 17a-S Of the Securities and Exchange Act 1934 As of and for the Year-Ended December 31, 2018
#### Computation of Net Capital
| Stockholder's Equity | | | \$31,924 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|----------|--------------------------------|
| Non-Allowable Assets
Total Non-Allowable Assets | | | \$ 6,832 |
| Haircuts on Securities Positions
Securities Haircuts
Undue Concentration Charges
Total Haircuts on Securities Positions | \$ 5,381 | \$5,381 | |
| Net Allowable Capital | | | \$19,711 |
| Computation of Net Capital Requirement | | | |
| Minimum Net Capital Required as a Percentage of Aggregate Indebtedness
Minimum Dollar Net capital Requirement of Reporting Broker-Dealer
Net Capital Requirement
Excess Net Capital | | | \$
5,000
5,000
14,711 |
| Computation of Aggregate Indebtedness | | | |
| Total Aggregate Indebtedness
Percentage of Aggregate Indebtedness to Net Capital | | | \$ 8,060
40.89% |
| Computation of Reconciliation of Net Capital | | | |
| Net Capital Computed on FOCUS IIA as of December 31, 2018
Adjustments
Net Capital per Audit | | \$19,711 | \$19,711 |
There was no material difference between net capital computation shown here and the net capital computation shown on the Company's unaudited FOCUS X-17A-5 report dated December 31, 2018.
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**CLINGER** & **COMPANV, INC 6505 CLAWSON STREET HOUSTON, TEXAS n0SS-7103 PH: B32-577-7999 FAX: 713-686-7254**
Clinger & Co., Inc. 6505 Clawson \ Houston, TX 7\05S
September 3, 2019
Jennifer Wray crA PLLC 16418 Beewo d Gten Dr. Sugar Land, TX 77498
Re: Exemption ·eport Pursuant to SEA Rule 17a-5(d)(1)9i}(B}{2}
To the best knowledge and belief Clinger & Company, Inc.
- 1. claims **•~emption** 15c3-3{kl(2)(i)J from 15c.l-3;
- 2. Clinger~ Company, Inc. has met the identified exemption from January 1, 2018, through December 31, 2018, without exception, unless, if applicable, are stated in I number , below;
3. Clinger & Company, Inc. has had no exceptions to report this fiscal year.
Regards,
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# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Members of Clinger & Co., Inc
We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Clinger & Co., Inc identified the following provisions of 17 C.F.R. §15c3-3(k) under which Clinger & Co., Inc claimed an exemption from 17 C.F.R. §240.15c3-3(k)(2)(i) (exemption provisions) and (2) Clinger & Co., Inc stated that Clinger & Co., Inc met the identified exemption provisions from January 1st 2018 to December 31 st 2018 without exception. Clinger & Co., Inc'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 Clinger & Co., Inc'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)(i) of Rule 15c3-3 under the Securities Exchange Act of 1934.
Jennifer Wray CPA PLLC
Sugar Land, Texas. Sept 3th 2019
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.