# CAPITAL INSTITUTIONAL SERVICES, INC. X-17A-5 (2024-02-28) — Broker-dealer annual report - Company: CAPITAL INSTITUTIONAL SERVICES, INC. - Form: X-17A-5 - Filed: 2024-02-28 - Period: 2023-12-31 - Accession: 0000215360-24-000002 - CIK: 215360 - File #: 8-22273 - Type: Broker-dealer - Material weakness: No - Auditor: Moss Adams, LLP - Auditor location: Dallas, TX - Contact: Benin Huseinbegovic - Phone: 2149223240 - Signed by: Ann Sebert (CEO & President) Original filing: https://www.sec.gov/Archives/edgar/data/215360/000021536024000002/CAPISPublicDocument2023.pdf --- {0}------------------------------------------------ #### **CAPITAL INSTITUTIONAL SERVICES, INC.** STATEMENT OF FINANCIAL CONDITION FOR THE YEAR ENDED DECEMBER 31, 2023 {1}------------------------------------------------ # **CAPITAL INSTITUTIONAL SERVICES, INC.** # Table of Contents | | Page | |---------------------------------------------------------|--------| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 | | STATEMENT OF FINANCIAL CONDITION | 2 | | NOTES TO FINANCIAL STATEMENTS | 3 - 11 | {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) # **Report of Independent Registered Public Accounting Firm** To the Shareholders and the Board of Directors of Capital Institutional Services, Inc. #### *Opinion on the Financial Statement* We have audited the accompanying statement of financial condition of Capital Institutional Services, Inc. (the Company) as of December 31, 2023, that is filed pursuant to Rule 17a-5 under the Securities Exchange Act of 1934, and the related notes (the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. #### *Basis for Opinion* This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with 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 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 financial statement, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. Dallas, Texas February 26, 2024 We have served as the Company's auditor since 2016. {3}------------------------------------------------ ### CAPITAL INSTITUTIONAL SERVICES, INC. Statement of Financial Condition December 31, 2023 ### ASSETS | Assets
Cash
Restricted cash
Investments, at fair value
Receivables from brokers and dealers
Deferred research costs, net
Furniture and equipment, net
Right of use assets | \$
389,985
1,093,221
28,204,024
970,373
1,193,565
1,047,715
1,406,059 | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------| | Prepaid and other assets
Goodwill | 1,489,896
674,761 | | Total Assets | \$
36,469,599 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | Liabilities | | | Accounts payable and accrued liabilities
Accrued commissions and bonuses
Accrued research services
Accrued state income taxes
Lease liability | \$
3,581,280
1,102,055
14,816,578
34,915
1,406,059 | | Total Liabilities | 20,940,887 | | Commitments and contingencies-Note 8 | | | Shareholders' Equity
Voting common stock, \$0.01 par value,
1,000,000 shares authorized, 20,842 shares
issued and 17,144 outstanding | 208 | | Non-voting common stock, \$0.01 par value,
9,000,000 shares authorized, 187,578 | | | shares issued and 164,800 outstanding
Additional paid-in capital
Notes Receivable – Stockholders
Treasury Stock
Retained earnings
Total Shareholders' Equity | 1,876
27,355
(254,167)
(1,513,465)
17,266,905
15,528,712 | | Total Liabilities and Shareholders' Equity | \$
36,469,599 | The accompanying notes are an integral part of these financial statements. {4}------------------------------------------------ ### **Note 1 - Nature of Operations and Summary of Significant Accounting Policies** Capital Institutional Services, Inc. (the "Company") is a securities broker-dealer and is a member firm of the New York Stock Exchange and other principal exchanges. The Company executes debt, equity, futures, options and currency transactions for domestic and international investment advisors, money managers and plan sponsors (the "Money Managers"). The Company transacts business out of its offices in Dallas, Texas. #### Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities, disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results may differ from these estimates. ### Research Credit The Company conducts a portion of its business within the safe harbor of Section 28(e) of the Securities Exchange Act of 1934, as amended. In that regard, the Company executes brokerage transactions for the Money Managers at a negotiated commission rate. As an incentive to use the Company's facilities for the execution of such brokerage transactions, the Company has developed a system to provide thirdparty research services to Money Managers based upon the frequency of use of its facilities. Money Managers are permitted to allocate a portion of their gross commissions to pay for research products and other qualifying services provided by third parties. The amount of third-party research services that the Company will furnish to the Money Managers is based on the amount of commissions that the Company has allocated to the separate performance obligation related to third-party research services. The Company allocates the transaction price to the performance obligations identified on a relative standalone selling price basis. Such amounts are measured by the Company in terms of a Research Credit. As the Company acts as an agent in these transactions, it records expenses on a net basis within commission revenue on the statement of income. It is understood by the Money Managers and the Company that Research Credit is not redeemable in cash and, when redeemed, may only be used to obtain third-party research services through the Company or another broker-dealer. Accordingly, management does not consider Research Credit to be a financial instrument. The accumulated Research Credit of Money Managers is reduced when the Company provides third-party research at the request of such Money Managers. The Company believes that the appropriate point in time to recognize commission revenue is when the Company executes a brokerage transaction, as there are no significant performance obligations to be satisfied subsequent to this point. Amounts relating to Money Managers with a positive Research Credit balance are reflected in the accompanying statement of financial condition as accrued research services. Such amounts represent the estimated third-party research services to be provided to Money Managers from whom the Company has earned commissions for execution of brokerage transactions. Amounts relating to Money Managers with a negative Research Credit balance are reflected in the accompanying statement of financial condition as deferred research costs. Such amounts represent the amount of research services paid on behalf of Money Managers for which future commissions are expected to be received. {5}------------------------------------------------ ### **Note 1 - Nature of Operations and Summary of Significant Accounting Policies,** continued #### Commission Rebate The Company provides a commission rebate program to plan sponsors whereby a portion of the commissions associated with trades executed on their behalf are rebated back to the plan. Plan sponsors may also make payments to vendors to offset certain plan expenses. ### Revenue Recognition The Company follows Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606). ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with the customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, and (d) allocate the transaction price to the performance obligation, in determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved, and (e) recognize revenue when (or as) the Company satisfies a performance obligation. Revenue in the scope of ASC 606 includes commissions, underwriting concessions, and correspondent clearing fees. The recognition and measurement of revenue is based on the assessment of individual agreements. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress towards completion of performance obligations; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events. #### Commissions The Company executes security transactions on behalf of the Customers with the majority of commissions from equity trading. Each time a Customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on a trade date basis (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the Money Manager), with settlement date generally the second business day following the trade date. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. #### Underwriting Concessions Underwriting concessions represent concessions from managing underwriters on syndicates generated by Customers doing business with the Company. Underwriting concessions are recognized on the trade date (the date on which the Company purchases the securities from the issuer) with the settlement date generally the second business day following the trade date. The Company believes that the trade date is the appropriate point in time to recognize revenue for {6}------------------------------------------------ ### **Note 1 - Nature of Operations and Summary of Significant Accounting Policies,** continued securities underwriting transactions as there are no significant performance obligations to be satisfied subsequent to this date and the issuer obtains the control and benefit of the capital markets offering at that point. #### Correspondent Clearing Fees Correspondent clearing fees represent income received for providing institutional quality execution and clearing services to fully disclosed correspondent broker/dealers. Correspondent fees are recognized on trade date basis with settlement date generally the second business day following the trade date. The Company believes that is the appropriate point in time to recognize correspondent clearing fees as there are no significant performance obligations to be satisfied subsequent to this point. The economic conditions which affect the firm's operations are related to overall trends in the economy and can be significantly influenced by changes in overall market conditions. #### Financial Instruments The carrying amount of cash and short-term investments approximates fair value due to the short maturity of those instruments. Investments are carried at fair value which is estimated based on quoted market prices for those or similar instruments (see Note 3). Proprietary securities transactions in regular-way trades are recorded on the trade date, as if they had settled. Investment income arising from all securities and commodities transactions entered into for the account and risk of the Company are recorded on a trade date basis. #### Furniture and Equipment Furniture and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. #### Shareholder Equity The Company has voting and non-voting classes of common stock. Both classes of common stock are treated equally with respect to the declaration and payment of dividends, the making of any distribution in connection with the dissolution and winding up of the Company, or in any merger or consolidation. Holders of voting common stock have voting rights at all meetings of shareholders, whereas holders of non-voting common stock have no voting rights. Treasury stock is shown at cost consists of 3,698 voting and 22,778 non-voting. #### Cash and Restricted Cash The Company defines cash and cash equivalents as highly liquid investments with original maturities of three months or less at the time of purchase, other than those held for sale in the ordinary course of business. Restricted Cash consist of customer funds that are subject to SEC rule 15c3-3. #### Receivable from broker-dealers The Company's receivable from broker-dealers and clearing organizations include amounts receivable from unsettled trades, including amounts related to futures and options on futures {7}------------------------------------------------ ### **Note 1 - Nature of Operations and Summary of Significant Accounting Policies,** continued contracts executed on behalf of customer, amount receivable for securities failed to deliver, accrued interest receivable and cash deposits. A portion of the Company's trades and contracts are cleared trough a clearing organization and settle daily between the clearing organization and Company. Because of this daily settlement, the amount of unsettled credit exposure is limited to the amount owed the Company for very short period of time. The Company continually reviews the credit of its counterparties. ### Contract Balances and Credit Losses The timing of the Company's revenue recognition may differ from the timing of payment by the Company's customers. The Company records a receivable when revenue is recognized prior to payment and has an unconditional right to payment, and a liability when the payment is received and the performance obligations are not yet satisfied. The Company did not have any receivables other than those included in receivables from broker-dealers, or deferred revenue as of December 31, 2022 and December 31, 2023. The Company accounts for credit losses in accordance with ASC Topic 326, Financial Instruments -- Credit Losses (ASC 326). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the guidance, the Company has the ability to determine there are no expected credit losses in certain circumstances. An allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including receivables recognized under ASC 606. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with other receivables is not significant until they are 90 days past due based on the contractual arrangement and expectation of collection in accordance with industry standards. The Company had no allowance for credit losses for trade receivables or financial assets at December 31, 2022, or December 31, 2023. #### Investments Investments at December 31, 2023 consist of money market funds, certificates of deposit, U.S. Treasury notes and mutual funds. Investments are recorded at fair value with realized and unrealized gains and losses included in investment income. Profit and loss arising from all securities transactions entered into for the account of the Company are recorded on settlement date basis. ### Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use ("ROU") assets, and lease liabilities in the Statement of Financial Condition. {8}------------------------------------------------ ### **Note 1 - Nature of Operations and Summary of Significant Accounting Policies,** continued ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. The non-lease components primarily relate to common area maintenance and other services which are charged to the Company based upon actual cost. The Company elected the practical expedient to combine its lease and nonlease components that meet the defined criteria and will account for the combined lease component under ASC 842 on a prospective basis. Such cost are generally accounted for within occupancy and equipment. For leases with a term of 12 months or less, the Company has made an accounting policy election by class or underlying asset not to recognize lease assets and lease liabilities. The Company elected this practical expedient and has not accounted for leases with lease term of 12 months or less. Lease payments for these leases incurred for the year ended December 31, 2023 is included on the Statement of Income with Occupancy and equipment. ### Goodwill Goodwill is tested for impairment at the enterprise level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying value. No instances of impairment were identified during the year ended December 31, 2023. #### Intangible Assets Intangible assets are subject to amortization and are amortized using the straight-line method over their estimated period of benefit. The Company evaluates the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. #### **Note 2 - Concentration Risk** At various times throughout 2023, the Company had cash balances in excess of federally insured limits of at least \$250,000 available to depositors under the FDIC's general deposit insurance rules. Deposit held in noninterest-bearing transaction accounts are aggregated with any interest-bearing accounts for the combined total coverage of at least \$250,000. {9}------------------------------------------------ ### **Note 3 - Fair Value** 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 market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability is exchanged in an orderly transaction; it is not a forced liquidation or distressed sale. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. This methodology prioritizes the inputs to valuation techniques by giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy are described below: - Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. - Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly. - Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy. Investments in money market funds and certificates of deposits are highly liquid instruments readily convertible to known amounts of cash with maturities of less than one year. Investments in U.S. Treasury Notes and Mutual Funds are traded on a national exchange and are stated at the last reported sales price on the day of valuation. The Company considers all such investments to be Level 1 investments. The following table summarizes the inputs used to value the Fund's assets and liabilities measured at fair value as of December 31, 2023. | Assets | Total | Level 1 | Level 2 | Level 3 | |-------------------------|------------------|------------------|---------|---------| | Investments | | | | | | Money Market Funds | \$
20,897,539 | \$
20,897,539 | \$
- | \$
- | | Certificates of Deposit | 4,623,080 | 4,623,080 | | | | U.S. Treasury Notes | 2,039,511 | 2,039,511 | | | | Mutual Funds | 643,894 | 643,894 | | | | Total Investments | \$
28,204,024 | \$
28,204,024 | \$
- | \$
- | At December 31, 2023, the Company did not hold any financial liabilities measured at fair value. {10}------------------------------------------------ ### **Note 4 - Furniture and Equipment** The following is a summary of furniture and equipment as of December 31, 2023: | | Estimated | | |------------------------------------------------|-------------|-----------------| | | Useful Life | | | Furniture, fixtures and leasehold improvements | 7 years | \$
566,456 | | Computer equipment | 5 years | 1,378,308 | | Computer software | 5 years | 563,361 | | | | 2,508,125 | | Less –
accumulated depreciation | | (1,460,411) | | Total | | \$
1,047,714 | ### **Note 5 - Customer Protection - Reserves and Custody Securities** The Company does not hold funds or securities for customers and, accordingly, is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to Paragraph (k)(2)(ii) of such rule. Rule 15c3-3 provides for the maintenance by broker dealers of basic reserves with respect to customers' cash and securities and enumerates standards relating to the physical possession of customer securities. Cash of \$1,093,221 has been segregated in a special bank account for the exclusive benefit of customers related to commission rebates under Rule 15c3-3 of the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(i) and is classified as restricted cash on the statement of financial condition. The Company carries no customer regulated commodities futures accounts; therefore, the computation of segregated funds pursuant to Section 4d(2) of the Commodity Exchange Act is not applicable. #### **Note 6 - Income Taxes** The Company has elected S corporation status under the Internal Revenue Code ("IRC") and is not subject to federal income taxes. Profits or losses of the Company are included in the federal income tax returns of its shareholders. The provisions for income tax and accrued income taxes payable included in the accompanying financial statements represent estimated state and local income taxes. The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. The Company applies FASB Accounting Standard Codification (ASC) 740-10 relating to accounting for uncertain tax positions. ASC 740-10 prescribes a recognition threshold and measurement process for accounting for uncertain tax positions and also provides guidance on various related matters such as derecognition interest, penalties and disclosures required. The Company does not have any uncertain tax positions. Generally, the Company is subject to examination by U.S. federal (or state and local) income tax authorities for the years ended December 31, 2020, 2021 and 2022. {11}------------------------------------------------ ### **Note 7 - Net Capital Requirements** The Company is subject to the Securities and Exchange Commissions' Uniform Net Capital Rule (Rule 15c3-1). The Company has elected to compute minimum net capital under the Alternative Net Capital method under Rule 15c3-1(a)(1)(ii), which requires maintenance of minimum net capital of the greater of 2% of aggregate debit items or \$250,000. At December 31, 2023, the Company had net capital as defined by Rule 15c3-1 of \$10,423,710 which was \$ 10,173,710 in excess of the required minimum net capital. Capital distributions to shareholders can be made under a capital distribution policy approved by the Company's Board of Directors. Periodic distributions approved by the Board of Directors are made to enable shareholders to pay federal income taxes on the Company's profits, among other purposes. #### **Note 8 - Leases** The Company leases office and equipment under operating leases with expiration dates through September, 2028. Certain leases provide for renewal options. Future maturities of lease liabilities at December 31, 2023 are as follows: | Year Ending | | |-----------------------|-----------------| | December 31 | Amount | | 2024 | 357,782 | | 2025 | 315,387 | | 2026 | 327,440 | | 2027 | 339,493 | | 2028 | 291,281 | | Lease Total | 1,631,383 | | Less imputed interest | (225,324) | | Total | \$
1,406,059 | The weighted average remaining lease term is 3.72 years and the weighted average discount rates 5.17%. Certain operating leases provided for renewal options for periods from 1 to 7 years at their fair rental value at the time of renewal. In the normal course of business, operating leases are generally renewed or replaced by other leases. #### **Note 9 - Note Receivable from Stockholder** In August 2023, certain members of CAPIS's management team ("Borrowers") collectively purchased 2,404 shares of treasury stock for a total of \$199,564. The Borrowers paid for these shares using funds loaned to the Borrowers by CAPIS. The loans bear interest at 2% and are due on January 1, 2025. Per the terms of the loan agreements, all principal amounts and accrued interest of the loans will be forgiven by CAPIS if certain conditions of the loan agreement are met, including that the Borrower remain continuously employed by CAPIS until January 1, 2025. Borrowers who are terminated by CAPIS, or who terminate his/her employment, prior to January 1, 2025 period are required to repay the outstanding and unforgiven loan balances and any accrued but unforgiven interest. Repayment shall not be required where the Borrower was terminated by CAPIS without {12}------------------------------------------------ ### **Note 9 - Note Receivable from Stockholder**, continued "Cause", the Borrower terminates employment for "Good Reason" or his/her death or disability. CAPIS amortizes these forgivable loans ratably over three years based upon the forgiveness schedule in the loan agreement. #### **Note 10 - Employee Benefits** The Company adopted an employee savings plan (the "Plan") effective January 1, 1991, with employer participation in accordance with the provisions of Section 401(k) of the IRC. The vast majority of the Company's employees are eligible to become participants in the Plan after three months of service. The Plan allows participants to make pretax contributions up to 60% of their salary and commissions, not to exceed amounts allowable under the IRC, with the Company making discretionary matching contributions. All amounts contributed to the Plan are deposited in a trust fund which is administered by an independent financial institution. In 2004, the Company implemented a Deferred Compensation Plan (the "DCP") for eligible management employees to defer a portion of their compensation. The DCP is funded through employee contributions, employer contributions, and the Company's matching contributions up to a specific limit. Investments are made at the participants' discretion. All assets associated with the DCP are classified as investments with the related liability to deferred compensation. Employer contributions to the DCP and investment gains on assets in the DCP are included in compensation expense. At December 31, 2023, the Company had no obligation to provide other post-retirement benefits to current or former employees. #### **Note 11 - Off-Balance Sheet Risk** The Company clears all of its securities transactions through a clearing broker on a fully disclosed basis. Pursuant to the terms of the agreement between the Company and the clearing broker, the clearing broker has the right to charge the Company for losses that result from a counterparty's failure to fulfill its contractual obligations. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing broker, the Company believes there is no maximum amount assignable to this right. As of December 31, 2023, the Company has recorded no liabilities with regard to the right. In addition, the Company has the right to pursue collection or performance from the counterparties who do not perform under their contractual obligations. The Company monitors the credit standing of the clearing broker and all counterparties with which it conducts business. #### **Note 12 – Commitments and Contingencies** The Company may become involved in various legal matters and regulatory inquiries or examinations in the ordinary course of business. The Company is not aware of any material contingencies relating to such matters that would require accrual or disclosure in the financial statements or their notes as of December 31, 2023. The Company does not have any guarantees or other commitments as of December 31, 2023. #### N**ote 13- Subsequent Event** The Company has evaluated subsequent events through February 26, 2024, which is the date the financial statements were available to be issued. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.