# DARWOOD ASSOCIATES INCORPORATED X-17A-5 (2021-04-07) — Broker-dealer annual report - Company: DARWOOD ASSOCIATES INCORPORATED - Form: X-17A-5 - Filed: 2021-04-07 - Period: 2020-12-31 - Accession: 0000026952-21-000002 - CIK: 26952 - File #: 8-16560 - Material weakness: No - Auditor: RW Group LLC. - Auditor location: Kennet Square, PA - Contact: Gerard Rendinaro - Phone: 908-413-0274 - Signed by: Gerard Rendinaro (Secretary) Original filing: https://www.sec.gov/Archives/edgar/data/26952/000002695221000002/fixed_1.pdf --- {0}------------------------------------------------ UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C, 20549 # **ANNUAL AUDITED REPORT FORM X·17A•5 PART Ill** 0MB APPROVAL 0MB Number: 3235-0123 Expires: October 31, 2023 **Estimated average burden** hoursoerresoonsa ...... 12.00 # SEC FILE NUMBER **B-16560** **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 BEGJNNJNG | __
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12_/_3_1_/2_0 | |---------------------------------------------------------------------------------------------|--------------------------------------------------------|------------|---------------------------------| | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME oF BROKER-DEALER: Darwood Associates Incorporated | | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | 284 US Highway 206 | | | | | | (No. and Street) | | | | Hillsborough | New Jersey | | 08844 | | (City) | (Stale) | | (Zip Codo) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Gerard Rendlnaro | | | 903 874-3600 | | | | | (Area Code - Telephone Number) | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report• | | | | | RWGroup | | | | | | (Name,. (/ Individual, 4/ate last, first, middle name) | | | | 400 Old Forge lane, Suite 401 | Kenneth Square | PA | 19348 | | (Address) | (City) | (State) | (Zip Code) | | CHECK ONE: | | | | | I
I certified Public Accountant | | | | | Public Accountant | | | | | B
Accountant not resident in_United States or any of its possessions. | | | | | | FOR OPFICIAL USE ONLY | | | | | | | | | | | | | | | | | | *\*Claims for exemption.from the requirement that the annual report he covered by the opinion of an Independent publtc accountant must be supported by a statement of/acts and circumstances relied on as the basis/or the exemption. See Section 240. /7a-5(e)(2)* > **Potenllal person\$ who are to reapond to the coJlectlon of Information contained In lhisformare nol required to respond unless the form di splays• currently valid 0MB control number.** SEC 1410 (11-05) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Gerard Rendlnaro | | , swear (or affirm) that, to the best of | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|---------------------------------------------------------------------------------------------------------------------------------| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
Daiwood Associates Incorporated | | , as | | of December 31 | 20 20 | ere true and correct. I further swear (or affirm) that | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | classified solely as that of a customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | Vice President | | | | Title | | | | ANDREA D. CRESTI | | | | NOTARY PUBLIC | | This report•• contains (check all applicable boxes): | | STATE OF NEW JERSEY | | 0 (a) Facing Page. | | MY COMMISSION EXPIRES
JAN. 29, 2026 | | [ZJ (b) Statement of Financial Condition.
IZI ( 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 !Sc3-3. | | | | | | D U) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule I Sc3-J and the | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | | consolidation. | | D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | ✓ (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}------------------------------------------------ ## DARWOOD ASSOCIATES INC. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION PURSUANT TO 17a-5(d) OF THE SECURITIES AND EXCHANGE COMMISSION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2020 {3}------------------------------------------------ ## **DARWOOD ASSOCIATES INC. CONTENTS** | | Report oflndependent Registered Public Accounting Firm 1 | | |--|-----------------------------------------------------------|--| |--|-----------------------------------------------------------|--| ### **Financial Statements:** | Statement of Financial Condition 2 | | |-------------------------------------------------|--| | Statement of Income 3 | | | Statement of Changes in Stockholder's Equity 4 | | | Statement of Cash Flows 5 | | | Notes to Financial Statements 6-9 | | ### **Supplementary Schedule:** | Computation of Net Capital, Aggregate Indebtedness, and
Schedule I -
Basic Net Capital Requirement Pursuant to Rule 15c3-l of the | | |-----------------------------------------------------------------------------------------------------------------------------------------|--| | Securities and Exchange Commission I 0 | | | Supplementary Reports: | | | Exemption Report Pursuant to Rule 15c3-3 of the Securities and Exchange Commission 11 | | | Review Report oflndependent Registered Public Accounting Firm 12 | | | | Supplemental SIPC Report 13-14 | | |--|---------------------------------|--| |--|---------------------------------|--| {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Shareholders of Darwood Associates, Inc #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Darwood Associates, Inc, as of December 31, 2020, and the related statements of income, changes in stockholder's equity, and cash flows for the year ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Darwood Associates, Inc as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020 in accordance with accounting principles generally accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of Darwood Associates, Inc's management. Our responsibility is to express an opinion on Darwood Associates, 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 Darwood Associates, 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. #### **Supplemental Information** The computation of net capital, aggregate indebtedness and basic net capital requirement pursuant to rule 15c3~1 has been subjected to audit procedures pertormed in conjunction with the audit of Darwood Associates, Inc's financial statements. The supplemental information is the responsibility of Darwood Associates, 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 computation of net capital and aggregate indebtedness under rule 15c3-1 is fairly stated, in all material respects, in relation to the financial statements as a whole. We ha\/e served as Darwood Associates, Inc's auditor since 2018. Kennett Square, Pennsylvania March 31, 2021 {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ### **INDEPENDENT ACCOUNTANT'S AGREED-UPON PROCEDURES REPORT ON SCHEDULE OF ASSESSMENT AND PAYMENTS (FORM SIPC-7)** Board of Directors of Darwood Associates, Inc In accordance with Rule 17a-S(e)(4) under the Securities Exchange Act of 1934 and with the SIPC Series 600 rules, we have performed the procedures enumerated below, which were agreed to by Darwood Associates, Inc and the Securities Investor Protection Corporation (SIPC) with respect to the accompanying General Assessment Reconciliation (Form SIPC-7) of Darwood Associates, Inc for the year ended December 31, 2020, solely to assist you and the SIPC in evaluating Darwood Associates, Inc's compliance with the applicable instructions of the General Assessment Reconciliation [Form SIPC-7). Darwood Associates, Inc's management is responsible for Darwood Associates, Inc's compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation 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 are as follows: - 1) Compared the listed assessment payments in Form 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 Ill for the year ended December 31, 2020, with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2020, noting no differences; - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting 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, the objective of which would be the expression of an opinion on compliance with the applicable instructions of the Form SIPC-7. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters 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 specified parties listed above and is not intended to be and should not be used by anyone other than these specified parties. *wgo'~* Kennett Square, PA March 31, 2021 {6}------------------------------------------------ ### **STATEMENT OF FINANCIAL CONDITION** ### **DECEMBER 31, 2020** #### **ASSETS** | Cash | \$
31,335 | | |---------------------------------------|---------------|--------| | Commission receivable | | 16,499 | | Marketable securities (at fair value) | | 79,644 | | Clearing deposit | | 35,000 | | Security deposits and other assets | | 4,495 | | Right to use assets | | 35,840 | | Total assets | \$
202,813 | | #### **LIABILITIES AND STOCKHOLDER'S EQUITY** | Liabilities: | | |------------------------------------------------------------------------------|---------------| | Accounts payable and accrued expenses | \$
28,516 | | AI leases payable | \$
1,376 | | Non Al leases payable | 35,839 | | Loans payable | 58,960 | | Deferred taxes | 15,051 | | Total liabilities | 139,742 | | Stockholder's Equity: | | | Common stock, no par value, 50,000 shares authorized, issued and outstanding | 50,000 | | Retained earnings | 13,071 | | Total stockholder's equity | 63,071 | | Total liabilities and stockholder's equity | \$
202,813 | The accompanying notes are an integral part of these financial statements. {7}------------------------------------------------ ### **STATEMENT OF INCOME** | Revenues: | | |---------------------------------------------------------------------------|----------------| | Commissions | \$
541,073 | | Investment income | 1,196 | | | 542,269 | | Expenses: | | | Salaries and related expenses | 280,577 | | Professional fees and commissions | 75,476 | | Occupancy | 32,630 | | Regulatory fees and expenses | 6,809 | | Travel | 10,052 | | Insurance | 27,274 | | Meals and entertainment | 23,804 | | Other expenses | 112,957 | | | 569,579 | | Income from operations before other income and provision for income taxes | (27,310) | | Other income -
unrealized gain on marketable securities | 15,384 | | Income before provision for income taxes | (11,926) | | Provision for income tax expense | 1,173 | | Provision for deferred income tax expense | 17 | | Net income | \$
(13,116) | ### **FOR THE YEAR ENDED DECEMBER 31, 2020** The accompanying notes are an integral part of these financial statements . {8}------------------------------------------------ #### **STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY** #### **FOR THE YEAR ENDED DECEMBER 31, 2020** | | Common
Stock | Retained
Earnings | Total | |--------------------------------------------------------|-----------------|----------------------|--------------| | Balance at December 31, 2019 as
previously reported | \$
50,000 | \$
26,187 | \$
76,187 | | Net income | | (13,l 16) | (13,116) | | Balance at December 31, 2020 | \$
50,000 | \$
13,071 | \$
63,071 | The accompanying notes are an integral part of these financial statements. {9}------------------------------------------------ #### **STATEMENT OF CASH FLOWS** #### **FOR THE YEAR ENDED DECEMBER 31, 2020** | Cash flows from operating activities: | | |---------------------------------------------------------------------|----------| | Net income
\$ | (13,116) | | Adjustments to reconcile net income to | | | net cash provided by operating activities: | | | Unrealized gain on marketable securities | (15,384) | | Changes in operating assets and liabilities: | | | Increase in commission receivables | 3,668 | | Increase in security deposits, other assets and right to use assets | 27,123 | | Decrease in accounts payable and accrued expenses | (8,704) | | Decrease in deferred tax liability | 17 | | Increase lease payable | (27,946) | | Total adjustments | (21,226) | | Net cash provided by operating activities | (34,342) | | Net cash provided by financing activities | | | Payrolll Protection Program proceeds | 58,960 | | Net increase in cash | 24,618 | | Cash at beginning of the year | 41,717 | | Cash at end of the year
\$ | 66,335 | | Supplemental Disclosure of Cash Flow Information | | | Cash paid during the year for: | | | Interest paid | | | Income taxes paid | 1173 | The accompanying notes are an integral part of these financial statements. {10}------------------------------------------------ ## **DARWOOD ASSOCIATES INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** # **1. ORGANIZATION AND NATURE OF BUSINESS** Darwood Associates Inc. ("the Company") is registered as a broker and dealer in securities pursuant to Section 15 (b) of the Securities and Exchange Act of 1934. The Company was incorporated on April 1, 1971 in the State of New York. The Company is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corp ("SIPC"). ## Recent Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02 which supersedes ASC 840, *Accounting for Leases.* The new guidance requires the recognition of lease assets and lease liabilities for operating leases with lease terms of more than twelve months. Presentation of leases within the statement of operations and statement of cash flows will be generally consistent with current lease accounting guidance. The amended ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We adopted the amended ASU in the first quarter of fiscal year 2019. The accounting changes had a material effect on our financial statements and a minor impact on Net Capital. # **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** # Basis of Presentation The accompanying financial statements have been prepared in conformity with U.S generally accepted accounting principles ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission (the "Commission"). It is management's opinion, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. ## Use of 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 expenses during the reporting period. Actual results could differ from those estimates ### Commission Receivable Commission receivable are stated at the amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Management has determined that no allowance for doubtful accounts at December 31, 2020 are required. ## Accounting basis The Company uses the accrual basis of accounting for financial statement and income tax reporting. Accordingly revenues are recognized when services are rendered and expenses realized when the obligation is incurred. {11}------------------------------------------------ ## **DARWOOD ASSOCIATES INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** ## **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** ## Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are carried at cost, which approximates market value. ## Fair Values of Financial Instruments Financial Accounting Standards Board Accounting Standards Codification ("ASC") 825, "Financial Instruments," requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company's financial instruments: The carrying amount of cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses and accounts payable to related parties, approximate fair value because of the short maturity of those instruments. ## Marketable Securities Marketable securities are carried at fair market value, with umealized gains and losses reported in net earnings. Realized gains or losses are computed based on specific identification of the securities sold and are charged or credited to current earnings. Purchases and sales of marketable securities and the related commission revenue and expense are recorded on a trade date basis which is generally two business days before settlement. Marketable securities are classified as a Level I investment. ASC 820 Fair Value Hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, Level I, Level 2 and Level 3. - Level I inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company has 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 are unobservable inputs should be developed based on the best information available in the circumstances and may include the Company's own data). ### Income Taxes The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based upon the differences between financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred taxes also are recognized for operating losses that are available to offset future taxable income. Pursuant to accounting guidance concerning provision for uncertain income tax provisions contained in Accounting Standards Codification ("ASC") 740-10, there are no uncertain income tax positions. The federal and state income tax returns of the Company are subject to examination by the **IRS** and state taxing authorities, generally for three . years after they were filed. The expense (benefit) for income taxes consist of: Current: | Federal | (137)
\$ | |-------------------|-------------| | State | \$ 1,310 | | Total tax expense | 1,173
\$ | {12}------------------------------------------------ | Deferred and other: | \$ | 17 | |---------------------|---------|----| | Total tax expense | \$1,190 | | ## Revenue Recognition The Company's revenues are from commissions and fees earned from their brokering services and are recognized on settlement date. Any other revenues are de minimis and recognized when received. The Company has adopted ASC 606 and has applied the 5 Step Model to Revenue Recognition as follows: - 1. Contracts: - Accounts held at RBC- the RBC Customer Agreement and agreed upon commission schedule. - 2. Performance Obligation in the Contracts: - Trades- Execution of Trade and subsequent settlement. - Fees Earned- The passing of a prescribed period of time. - 3. Transaction Price: - Trades- Agreed upon commission schedule. - Fees Earned- As prescribed in contract. - 4. Allocation of the Transaction Price between Performance Obligations in the Contract: - The price is allocated ratably based on the stand alone performance price of each performance obligation. - 5. Recognition of Revenue when Performance Obligation is Satisfied: - See the paragraph above. # Concentrations of Credit Risk The Company places its cash with a high credit quality financial institution. The Company's account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to \$250,000. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. # **3. NET CAPITAL** The Company is a registered broker-dealer and is subject to the SEC's Uniform Net Capital Rule 15c3-l. This requires that the Company maintain minimum net capital of \$5,000 and requires that the ratio of aggregate indebtedness to net capital, both as defined, not exceed 8 to I, in the first year of membership, and 15 to I thereafter. The rule also provides that equity capital may not be withdrawn, cash dividends paid or the Company's operations expanded, if the resulting net capital ratio would exceed 10 to 1. As of December 31, 2020, the Company had net capital of \$44,638 which exceeded required net capital by \$39,638 and aggregate indebtedness of\$49,236. The Company's aggregate indebtedness to net capital ratio was **1.10** to I as of December 31, 2020. {13}------------------------------------------------ # **4. CLEARING DEPOSIT** As of December 31 2020, the Company has a \$35,000 deposit with RBC Capital Markets pursuant to the Fully Disclosed Clearing Agreement. ## **5. OPERATING LEASE** The Company leases its facilities in New Jersey under lease agreements expiring July 31, 2022. In addition, the Company leases space in New York, under lease agreements expiring September I, 2021. The Company paid \$30,900.88 in office rent (including area maintenance costs) for 2020. Future minimum lease payments are as follows: | December 31, 2021 | \$27,755.21 | |-------------------|-------------| | December 31, 2022 | \$12,250.00 | ### **6. MARKETABLE SECURITIES** The Company purchased 300 warrants divided into four tranches to purchase shares of common stock of The NASDAQ Stock Market, Inc. The first two tranches expired worthless. The Company exercised the warrant for the third tranche and paid \$4,500 for 300 shares of restricted stock in 2005. In 2006, the Company exercised the warrant for the fourth tranche and paid \$4,800 for 300 shares of restricted stock. As of December 31, 2020 all restrictions on the marketability of the stock were lifted. Accordingly, the Company now carries the security as an allowable asset for net capital purposes at market value. As of December 31, 2020, the Company has \$79,644 in marketable securities. The following table presents the Company's fair value hierarchy for this asset as of December 31, 2019: | | Level I | Level 2 | Level 3 | Total | |-----------------------|----------|---------|---------|----------| | Marketable Securities | \$79,644 | | | \$79,644 | ### **7. PAYROLL PROTECTION PROGRAM (PPP)** On April 71 h, 2020 Darwood entered into an agreement with JP Morgan Chase and received a Payroll Protection Program (PPP) Loan in the amount of \$58,960. The Loan carries interest of .98% and payable in 2 years from the date of issuance. The Company anticipates filing for "Forgiveness" on this loan in calendar year 2021. {14}------------------------------------------------ On April 71 \ 2020 Darwood entered into an agreement with JP Morgan.Chase and received a Payroll Protection Program (PPP) Loan in the amount of \$58,960. The Loan carries interest of .98% and payable in 2 years from the date of issuance. The Company anticipates filing for "Forgiveness" on this loan in calendar year 2021. ### **8. SUBSQUENT EVENTS** The Company evaluated events occurring between the end of its fiscal year, December 31, 2020, and March 31, 2021, when the financial statements were issued. There were no transactions or events that required disclosure as subsequent events. 9 {15}------------------------------------------------ #### **SCHEDULE I** #### **DARWOOD ASSOCIATES INC.** ### **COMPUTATION OF NET CAPITAL, AGGREGATE INDEBTEDNESS, AND BASIC NET CAPITAL REQUIREMENT PURSUANT TO RULE 15c3-I OF THE SECURITIES AND EXCHANGE COMMISSION** | DECEMBER 31, 2020 | | |------------------------------------------------------------------------------------------------|--------------| | Aggregate Indebtedness | | | Accounts payable and accrued expenses | \$
49,236 | | Total Aggregate indebtness | \$
49,236 | | | | | Total stockholder's equity | \$
63,071 | | Adjustments to Net Capital | | | Haircuts and undue concentrations
(13,938)
Security deposits and other assets
(4,495) | | | Total Adjustments to Net Capital | (18,433) | | Net Capital, as defined | \$
44 638 | | Computation of Basic Net Capital Requirement | | | (a) Minimum net capital required (6 2/3 % of total aggregate indebtness) | 3,282 | | (b) Minimum net capital required of broker dealer | \$
5 000 | | Net Capital Requirement (Greater of(a) or (b)) | \$
5 000 | | Net Capital In Excess of Requirement | \$
39,638 | | Net Capital less greater of 10% of A.I. or | \$
38,638 | | 120% of Net Capital Requirement | | | Ratio Of Aggregate Indebtedness To Net Capital | 1.10% | | Reconciliation with the Company's computation of net capital: | | | Net capital as reported in the Company's Part IIA (unaudited) | | | Focus Report | \$
44,638 | | Net audit adjustments | | | Increase in non-allowable and haircuts
Net capital per above | \$
44,638 | | | | There are no material differences between the computation of net capital presented above and the computation of net capital in the Company's unaudited Form X-l 7A-5, Part IIA filing as of December 31, 2020. {16}------------------------------------------------ ## **EXEMPTION REPORT PURSUANT TO RULE ISC3-3 OF THE SECURITIES AND EXCHANGE COMMISSION** ### **DECEMBER 31, 2020** Darwood Associates Inc. operates pursuant to paragraph (k)(2)(ii) of SEC Rule l 5c3-3 under which the Company claims an exemption from SEC Rule 15c3-3. The Company is exempt from the reserve requirements of Rule 15c3-3 as its transactions are limited, such that it does not handle customer funds or securities. Accordingly, the computation for determination of reserve requirements pursuant to Rule l 5c3-3 and information relating to the possession or control requirement pursuant to Rule 15c3-3 are not applicable. The Company has met the identified exemption provisions throughout the year ended December 31, 2020 without exception. Signature: A *1* • Gerard Rendinaro, Vice President {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors of Darwood Associates, Inc We have reviewed management's statements, included in the accompanying Exemption Report Rule 17a-S(d)(4), in which (1) Darwood Associates, Inc identified the following provisions of 17 C.F.R. §15c3-3(k) under which Darwood Associates, Inc claimed an exemption from 17 C.F.R. §240.15c3-3: (2)(ii) (the "exemption provisions") and (2) Darwood Associates, Inc stated that Darwood Associates, Inc met the identified exemption provisions throughout the most recent fiscal year without exception. Darwood Associates, 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 Darwood Associates, 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)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. Kennett Square, Pennsylvania March 31, 2021 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.