# HERBERT J. SIMS & CO, INC. X-17A-5 (2025-03-14) — Broker-dealer annual report - Company: HERBERT J. SIMS & CO, INC. - Form: X-17A-5 - Filed: 2025-03-14 - Period: 2024-12-31 - Accession: 0000090608-25-000007 - CIK: 90608 - File #: 8-03315 - Type: Broker-dealer - Material weakness: No - Auditor: APRIO, LLP - Auditor location: New York, NY - Contact: Jeffrey Collacuro - Phone: 2034189019 - Signed by: Jason Diamond (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/90608/000009060825000007/audit2024short3.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response : 12 **ANNUAL REPORTS FORM X-17A-S PART** Ill SEC FILE NUMBER 8-03315 **FACING PAGE** **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** | FI
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ee | | CFR 240.17a-S(e)(l)(ii), if applicable. **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 0MB control number.** {1}------------------------------------------------ # **OATH OR AFFIRMATION** I, JASON DIAMOND , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of HERBERT J. SIMS & co., INC. as of **12/31** 2~ is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. # **This filing\*\* contains (check all applicable boxes):** - (a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - D (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 (d) Statement of cash flows. - D (e} Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - D (g) Notes to consolidated financial statements. - D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-l, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - D (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-l, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - (q) Oath or affirmation in accordance with 17 CFR 240.17a-S, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - 0 (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (t) Independent public accountant's report based on an examination of the statement of financial condition . - (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - 0 (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - D (z) Other:-------------------------------------- - \*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e}{3} or 17 CFR 240.18a-7(d}(2), as applicable. AGING PRINCIPAL CATHERINE A VANCHO NOTARY PUBLIC State of Connecticut **My** Commission Expires 02/29/2028 {2}------------------------------------------------ CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 Filed in accordance with Rule 17a-5(e ) (3) under the Securities Exchange Act of 1934 and CFTC Regulation 1 .l0(g) as a PUBLIC document. {3}------------------------------------------------ HERBERT J. SIMS & CO ., INC . AND SUBSIDIARIES DECEMBER 31, 2024 # TABLE OF CONTENTS | C
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15 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Herbert J. Sims & Co., Inc. and Subsidiaries # **Opinion on the Financial Statement** We have audited the accompanying statement of consolidated financial condition of Herbert J. Sims & Co., Inc. and Subsidiaries, the "Company", as of December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statement"). In our opinion, the consolidated financial statement presents fairly, in all material respects, the consolidated financial position of Herbert J. Sims & Co. , Inc. and Subsidiaries as of December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. # **Basis for Opinion** This consolidated financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with 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 consolidated financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statement, 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 consolidated 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 consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Very truly yours, Apria, LLP We have served as Herbert J. Sims & Co., Inc. and Subsidiaries's auditor since 2014. New York, New York March 13, 2025 {5}------------------------------------------------ # HERBERT J . SIMS & CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 | C
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6 | | | | ### STOCKHOLDERS' EQUITY Class A Common stock , \$.001 par value; authorized 15,000 shares, issued 3,750 Class B Common stock, \$.001 par value; 5,000 auhtorized shares and issued 1,250 shares Additional paid in capital Retained earnings TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES AND STOCKHOLDERS ' EQUITY \$ 1 1 348,502 5 , 624 ,439 \$ 5,972,943 \$24,819,168 See accompanying notes to consolidated Statement of Financial Condition {6}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 ### 1. ORGANIZAT I ON AND NATURE OF BUSINESS Herbert J. Sims & Co ., Inc. ( " HJS") is a Delaware Corporation re - incorporated on November 15 , 2012 . Previously , it was incorporated under the laws of the State of New York . Herbert J . Sims & Co ., Inc . and its "Company " ) are principally engaged investment advisory , retail brokerage services are provided to institutions, wholly owned subsidiaries (collectively, the in investment banking, financial advisory , and other related financial services . These businesses and indi victuals . HJS is a broker- dealer registered with the Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). The Company is registered as an introducing broker wi th the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) . Herbert J . Sims Capital Management Inc. (HJSCM) is a wholly owned subsidiary of HJS and is an SEC Registered Investment Advisor. Through HJSCM the broker dealer, HJS offers wealth management solutions to its c lients for a fee based on assets under management . In November 2024, the Company ' s Board of Directors adopted a resolution to amend the HJS certificate of incorporation to increase the number of authorized shares of the corporation to 25 , 000 shares and create three new classes of common stock, Class A Common Stock, Class B Common Stock and Class C Common Stock, each with par value \$0.00 1 per share. Additionally , the Board of Directors approved the redesignation of the corporation's common stock as Class A Common Stock and effect a forward stock split by subdividing and converting each such issued and outstanding Class A Common Stock into shares of Class A Common Stock (the Stock Split) such that following the Stock Split, 3,750 shares of Class A Common Stock are issued and outstanding . Additionally, the corporation cancelled the Treasury Stock held and returned those shares of common stock to the status of authorized but unissued common stock . In November 2024 , the Company sold twenty- five percent (25%) of its equity interest to certain of its executives as Investors. The Investors purchased 1, 250 shares of Class B Common Stock, par value \$0 . 001 per share. The shares are full y vested and the method f o r determining compensation cost was the per share book value of the Company. In the event of a f orfeiture all shares shall be returned to the company. {7}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 ### 2. SIGNIFICANT ACCOUNTING POLICIES # a . Principles of Consolidation The consolidated financial statement includes the accounts of HJS and its wholly owned subsidiaries: > Sims Mortgage Funding , Inc . ( "SMF") HJS Advisors , Inc. Herbert J . Sims Capital Management Inc. All intercompany balances and transactions have been eliminated in consolidation. b. Use of Estimates The Company ' s consolidated financial statements is prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of a financial statement requires management to make assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statement. Actual results could differ from those estimates . ### c. Cash and Cash Equivalents Cash represents cash deposits held at financial institutions . The Company maintains deposits in financial institutions that consistently exceed the Federal Deposit Insurance Corporation ("FDIC") limit of \$250,000. Cash equivalents are defined as unrestricted short-term investments with original maturities within three months of the date of purchase and money market i nvestments. #### d . Investments Securities The Company classifies its investments in government bonds as held-to-maturi ty since the Company has the positive intent and ability to hold the bonds to maturity. Therefore, the bonds are recorded at amortized cost . Subsequent to initial measurement, held- to-maturity investments are measured at amortized cost using the effective interest method less impairment, wi th revenue recognized on an effective yield basis. {8}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2024 # 2. SIGNIFICANT ACCOUNTING POLICIES (cont'd) # e. Furniture, Equipment & Leasehold Improvements Furniture, equipment & leasehold improvements are stated at cost . The Company provides for depreciation of assets using the straight-line method for financial reporting purposes. Furniture and equipment are depreciated over 3 to 7 years. Leasehold improvements are amortized over the lesser of the economic useful life of the improvement or over the term of the lease, which range from 1 to 6 years in length . # £.Employees Loans and Advances The Company has extended credit to certain employees upon commencement of employment with the Company or upon achieving certain performance milestones. The credit is in the form of notes signed by the individuals. The outstanding balance of the notes is \$1,825,877 at December 31 , 2024 . The terms of the loans average five years and are amortized on a monthly basis over their term and are charged a market rate of i nterest . An employee loan is placed on nonaccrual status when, based on current information, it is no longer probable that the scheduled payments of principal and interest would be collected when due according to the contractual terms of the underlying l oan agreement. The Company records the estimate of expected credit l osses as an allowance for credit losses on the consolidated statement of financial condition that adjusts the asset's amortized cost basis. ## g . Securities Owned and Securities Sold Transactions Purchases and sales of securities are reported on a settlement date basis. The cost of securities sold is based on the specific identification method. Interest is recorded on accrual basis . Proprietary securities transactions are recorded on a settlement date basis which i s generally two business days after trade date. The recording of securities transactions on a trade date basis was considered, and the difference was deemed immaterial. In the normal course of business, the Company purchases and sells securities as both principal and agent. Securities are recorded at fair value i n accordance with Financial Accounting Standards Board ("FASB" ) ASC 820 , Fair Value Measurements. h . Income Taxes The Company files its federal and most state and local income tax returns as part of a consolidated group . The Company calculates federal, state and l ocal income taxes as if the Company filed on a separate return basis, and the amount of tax or benefit ca lculated is either remitted to or received from the parent . {9}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 ## 2. SIGNIFICANT ACCOUNT ING POLICIES (cont 'd) h. Income Taxes ( cont'd) Deferred income taxes are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized . # i. Subsequent Events The Company has evaluated subsequent events through March 13 , 2025, the date the financial statements are available to be issued . ### j . Leases The Company recognizes and measures its leases in accordance with FASB ASU No. 2016-02, Leases (ASC Topic 842) . The Company is a lessee in various non-cancellable operating lease for office space and office equipment . The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of each lease. The lease liability is initially and subsequently recognized based on the present value of the contract's future lease payments. Variable payments are included in the future lease payments when those payments depend on an index or a rate. The discount rate is the implicit rate, if it is readily determinable , or the Company's incremental borrowing rate. The implicit rate of the Company ' s leases is not readily determinable and accordingl y, the Company uses its incremental borrowing rate, based on information available at each lease commencement date. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a consolidated basis to borrow an amount equal to the lease payments under similar terms in a s i milar economic environment. The ROU asset is subsequently measured throughout the lease term at the amounts of the remeasured lease liability (i.e. present value of the remaining lease payments), plus unamortized initial direct costs plus (minus) any prepaid (accrued) lease payments, less the amortized balance of lease incentives received, and any impairment recognized. {10}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2024 # 2. SIGNIFICANT ACCOUNTING POLICIES (cont ' d) ### k . Current Expected Credit Losses (CECL) The Company accounts for estimated credit losses on financial assets measured at an amortized cost basis and certain off-balance sheet credit exposures in accordance with FASB ASC 326 - 20 , Financial Instruments - Credit Losses. FASB ASC 326- 20 requires the Company to estimate expected credit losses over the life of its financial assets and certain off- balance sheet exposures as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts . The Company records the estimate of expected credit losses as an allowance for credit losses. For financial assets measured at an amortized cost basis the allowance for credi t losses is reported as a va l ua tion account on the consolidated statement of financial condition that adjusts the asset's amortized cost basis. # 1 . Valuation of Servicing Fee Residual Asset SMF recognizes and measures its servicing fee residual in accordance with FASB ASU No . 2009- 16, Transfers and Servicing (ASC Topic 860) . SMF is originator and underwriter of loans for healthcare and housing projects . SMF enters into agreements with the Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA), whereby HUD or FHA issue to SMF their firm mortgage insurance commitment (the "FHA Commitment") to provide mortgage insurance for a mortgage loan (the "Insured Loan") originated by SMF. SMF wi ll enter i n to an assignment contract with a financial ins ti tut ion ( the "Mortgagee") to assign the FHA Commitment to Mortgagee. The Mortgagee wi ll provide funding and originate the loan. The Mortgagee will then securitize and sell the Insured Loan as part of a mortgage-backed security or participation certificates (the "GNMA Security" ) and retain servicing rights f or the loans included in the GNMA Security, for which the Mortgagee receives a servicing fee . The servicing fee residual assets are classified as available-for-sale investments and represent the right to receive a portion of mortgage servicing cash f l ows in excess of amounts paid for the underlying mortgage l oans to be serviced. As owners of servicing fee residual assets, SMF is not required to be a licensed servicer or to assume any servicing duties, advance obligations or liabilities associated wit h the loan pool underlying the mortgage servicing rights ("MSR"). ### 3. ADVISORY FEES RECEIVABLE HJS Advisors, Inc. acts as the bondholder representative for loans issued by HJ Sims Investments LLC, ("HJSI" ) , an affiliated entity owned by two executives o f the Company . As o f December 31 , 2024 , \$810,835 o f net receivables are due to contracts with customers and are included in advisory fees receivable on the consolidated statement of financial condition . As of January 1, 2024 , net advisory fees receivable was \$619,209. {11}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2024 # 3. ADVISORY FEES RECEIVABLE (cont'd) The Company monitors and analyzes the financial condition of bond issuers and bondholders, the value of the underlying assets securing the loans, and the issuers' ability to pay , in determining whether an allowance for any amounts deemed uncollectible is required. From time to time , as needed, the Company works with issuers to execute full or partial recapitalization programs . In 2023 , the Company entered into an irrevocable sale arrangement with HJSI. Under the arrangement, the Company sold to HJSI certain net advisory fees receivables at 100 % of their value. At the time of sale, the net receivables reflected an allowance for credit losses due from customers that are under financial distress. As of January 1 , 2024 the receivable amount due from HJSI was \$611,240 and as of December 31 , 2024 \$1 60 , 573 remained unpaid and is included in other assets in the consolidat ed statement of financial condition. ### 4. SECURITIES OWNED AND SOLD Securities owned and sold at December 31 , 2024 consist of fixed income securities at fair value as follows: | | S
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6 | Muni cipal bonds consist primarily of revenue bonds issued by state and l ocal governmental authorities related to continuing care retirement communities and health care facilities. ### 5. FAIR VALUE OF FINANCIAL INSTRUMENTS FASB ASC 820 , Fair Value Measurements, defines fair value , establishes a framework for measuring fair value and expands disclosure about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value . Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair values of its financial instruments and assets and liabilities recognized at fair value in the financial statements on a recurring basis in accordance with ASC 820 . {12}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 # 5. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont'd) The Company ' s financial instruments are carried at fair value or amounts that approximate fair value. To differentiate between the approach to fair value measurements , ASC 820 uses a fair value hierarchy and describes three levels used to classify fair value measurements . Level 1 measurements are quoted prices (unadjusted) in acti ve markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis . Level 2 measurements are observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active ; or other inputs that are observable or can be corroborated by observable market data , such as matrix pricing of fixed income securi ties . Level 3 measurements are based on unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any , market activity for the asset or liability at the measurement date . Therefore, unobservable inputs reflect the Company 's own assumptions about that market participants would use in pricing the asset or l iability assumptions about risk) . the inputs (including The fo l lowing valuation factors are considered for the financial assets and liabili ties of the Company : Cash equivalents consist of investments in money market funds. Such instruments are classifi ed within l evel 1 of the fair value hierarchy. Fixed rate municipal bonds may be priced using matrix pricing models . The Company relies on outside pricing services to determine the fair value of the f ixed rate municipal obli gati ons . Fi xed rate municipal bonds are c l assifi ed within Level 2 of the fair value hierarchy because the y are traded in an over the counter market (OTC) or Leve l 3 based on other specifi c factor s , such the borrower's credit strength and operating environment, in the case of project revenue bonds . Fixed rate corporate bonds may be priced usi ng matrix pricing models . The Company relies on outside prici ng ser vices to determine the fair value of t he fixed rate corporate obligations. Fixed Corporate bonds are classified as Level 2 in the fair value hierarchy. Corporate bonds issued as private placements valued using unobservable inputs, such as discount rates, long- term revenue growth rates, operati ng margi ns , cap rates and other assumptions about the securities are classifi ed as Level 3 in the fair value hierarchy. {13}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 # 5. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont'd) The following table presents the Company ' s fair va lue hierarchy for those assets and liabilities at fair value basis as at December 31 , 2024. | | L
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, | | | ### 7. DUE FROM CLEARING AGENT The Company c l ears **all** its financial transactions with customers through a c l earing agent on a fully disclosed basis as an introducing broker. Under its fully disclosed clearing agreement , the Company has agreed to maintain a " Deposit Account" that shall, at all times, contain cash and/or securities with a minimum market value of \$250,000 . The Company has various accounts at the clearing broker for margining of securities held in the Company's trading inventory. The clearing broker has the right to net (offset) the balances in these firm accounts which results in a net receivable from the clearing broker or a net liability to the clearing broker . The liability is collateralized by the securities held by the clearing broker. {14}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2024 ### 8. SECURED DEMAND NOTE & SUBORDINATED BORROWINGS The subordinated borrowings at December 31 , 2024 , a l l of which are from the Company ' s principal officer, are as follows : | S
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97 | These agreements have been approved by FINRA and contain automatic renewal provisions . The subordinated borrowings are available for use in computing net capital under the SEC ' s uniform net capital rul e . To the extent that such borrowings are required for HJS ' s continued net capi tal compliance , they may not be repaid. In August 2024 , the company entered into a new secured demand note wi th its principal officer in the amount of \$1 , 000 , 000 with a maturity date of August 16 , 2025 . Cash and securities i n the amount of approximately \$2 , 858 , 660 have been secured as collateral with the clearing agent as required by the secured demand note agreements. ### 9 . INCOME TAXES On December 2017 , the TCJA was signed into law, which enacted various changes to the U.S. corporate tax l aw . Some of the most significant provisi ons impacti ng corporations include a reduced corporate i ncome tax rate from 35% to 21% effective in 2018 , a one time "deemed repatriation" tax on earnings in non- U.S . jurisdictions, limitation on deductibility of interest , the transition of U. S . international taxation from a worldwide t ax system to a territorial tax system and other provisions . U. S. GAAP accounting f or income taxes requires compani es to record the impacts of any tax law change on the Company ' s deferred income taxes in the quarter that the tax law change is enacted. {15}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 9. INCOME TAXES (cont'd) The components of the deferred tax assets and liabilities at December 31 , 2024, consist of the following: Deferred tax assets: | | T
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9 | |---------|------------------------------|---------|-----------------------------------------|--------------------------------| | | | | | | Net deferred tax assets Loan servicing asset Audit periods remain open for examination until the applicable statute of limitations has expired. The statute of limitations for the tax years is generally three years. \$ (453 , 4 1 4) The authoritative guidance for uncertainty of income taxes, as amended , requires the Company to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority , including the resolution of any related appeals or litigation processes, based on the technical merits of the position . The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely or being realized upon ultimate settl ement, which could result in the Company recording a tax liability . The Company reviews and evaluates tax positions in its major jurisdictions and determines whether there are uncertain tax positions that require financial statement recognition. The Company has determined that the guidance for uncertainty in income taxes had no impact on its consolidated financial statement at December 31, 2024. {16}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2024 ### 10. 401K EMPLOYEE SAVINGS AND RETIREMENT PLANS As of January 1, 1995, the Company adopted a 40l(k) Profit Sharing Employee Sa v ings and Retirement Plan covering all eligible US based employees, as defined . As of January 1 , 2015, the Company adopted a 40l(k) Profit Sharing Employee Savings and Retirement Plan covering all eligible Puerto Rico based employees , as defined. As of October 30, 2024 , the plan was terminated and all plan assets were distributed to participants . Under both plans, employee made, subject to defined discretionary and are based contributions of up to limitations. Employer on participants' annual 100 % of paid compensation may be contributions to the plans are compensation. ### 11 . RELATED PARTY TRANSACTIONS The Company acts as placement agent , advisor or manager for a separate limited liability company owned by two executives of the Company . #### 12. INDEMNIFICATIONS In the normal course of its business, the Company i ndemnifies and guarantees bond issuance trustees and other counterparties, against specified potential losses in connection wi th providing services to the Company . The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be esti mated . However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the consolidated f inancial statement for these indemnificati ons . ### 13. LEASES The Company has obligations as a lessee for office spaces and office equipment with initial non-cancellable terms in excess of one year . The Company classifi ed such leases as operating leases. Some of the leases contain renewa l options for a period of one year or more. Because the Company is not reasonably certain to exercise the renewal options, the optional periods are not included in determining each lease term and associated payments under the renewal options are excluded from these payments . The Company ' s operati ng leases do not include terminat i on options for either party to the l eases or r estrictive financial or other covenants . Payments due under the lease contracts include fixed payments plus material variable payments . The Company ' s office space leases require it to make variable payments for the Company's proportionate share of each building ' s property taxes, insurance and common area maintenance. These variable lease payments are included in the lease payments used to determine lease liability. {17}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 ### 13 . LEASES (cont'd) The Company has non-cancellable operating leases for office space in Connecticut, Florida, New Jersey , Minnesota , Maryland , North Carolina, and Texas under agreements extending through May 2029 . Pursuant to ASC 842 , the present value of the future minimum lease payments is recorded as a right to use ROU asset and related lease liability . The components of the leases are as follows: | L
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2 | {18}------------------------------------------------ ### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2024 ### 14. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK At December 31 , 2024 cash on deposit in high quality financial institutions exceeded FDIC limits by approximately \$576 , 778 . The Company has not experi enced any losses in such accounts. The Company clears its securities transactions through major financial services firms . These activities may expose the Company to off- balance sheet risk in the event that the institution is unable to fulfill its obligation and the Company has to purchase or sell the securities at a loss . The Company is exposed to market and interest rate risks as a result of its fixed income trading activities . It is reasonably possible that changes in the values of securities owned could occur in the near term and that such changes could affect the amounts reported on the consolidated statement of financial condition . Interest rate hikes by the Federal Reserve have caused existing bonds to trade lower as newly issued bonds offer higher coupon rates, adding risk to the fixed income market. The Company is also exposed to credit risk when a counterparty or issuer does not meet its financial obligations to the Company . The Company monitors and acti vely manages this risk and does not anti cipate any losses with respect to such activities . # 15 . LI TIGATION The Company is, from time to time, a party to legal proceedings arisi ng in the normal course of its business . Management believes that none of t he l egal proceedings cur rently outstanding wi l l have a mate r ial adverse effect on the Company ' s business, financial condition or result s of operations . ### 16 . MI NIMUM NET CAPITAL REQUIREMENTS HJS is regi stered as a broker- dealer and introduci ng broker with the SEC and CFTC . HJS is subject to Rule 15c3- l of the Securities Exchange Act of 1 934 which requires t he maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. HJS is also subject to the net capital requirement of CFTC Regulation 1. 17 and requirements of the NFA . Net capital and the related net capital ratio may fluctuate on a daily basis . At December 31 , 2024 , HJS's net capi tal and aggregate indebtedness ("AI " ), as defined, were \$7 , 404,600 and \$7 , 429 , 169 respectively . The aggregate i ndebtedness to net capital ratio was 1 to 1 . Excess net capital was \$6 , 909 , 322 . Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.