# OSCAR GRUSS & SON INCORPORATED X-17A-5 (2021-03-30) — Broker-dealer annual report
- Company: OSCAR GRUSS & SON INCORPORATED
- Form: X-17A-5
- Filed: 2021-03-30
- Period: 2020-12-31
- Accession: 0000225412-21-000001
- CIK: 225412
- File #: 8-22371
- Material weakness: No
- Auditor: Mazars USA LLP
- Auditor location: Woodbury, NY
- Contact: Danielle Landau
- Phone: 212-419-4005
- Website: mazars.us
- Signed by: Danielle Landau (Chief Financial Officer)
Original filing: https://www.sec.gov/Archives/edgar/data/225412/000022541221000001/2020OGacctrptfinrpt.pdf
---
{0}------------------------------------------------
**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549**
0MB APPROVAL 0MB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response ...... 12.00
## **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill**
| SEC FILE NUMBER |
|-----------------|
| B-22371 |
**FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the**
**Securities Exchange Act of 1934 and Rule 17a-5 Thereunder**
| REPORT FOR THE PERIOD BEGINNING | __
____
1_/1_/_2_0 | _
AND ENDING. | __
12_/_3_1_/2_0 | ____
_ |
|--------------------------------------------------------------------------------------------|--------------------------------------------------------|------------------|---------------------|--------------------------------|
| | MM/DD/YY | | MM/DD/YY | |
| | A. REGISTRANT IDENTIFICATION | | | |
| NAME oF BROKER-DEALER: Oscar Gruss & Son Incorporated | | | | OFFICIAL USE ONLY |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | FIRM I.D. NO. |
| 10 East 53rd Street, 17th Floor | | | | |
| | (No. and Street) | | | |
| New York | New York | | 10022 | |
| (City) | (State) | | (Zip Code) | |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Danielle Landau | | | (212) 419-4005 | |
| | | | | (Area Code - Telephone Number) |
| | B. ACCOUNT ANT IDENTIFICATION | | | |
| | | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
Mazars USA LLP | | | | |
| | (Name - if individual, slate last, first, middle name) | | | |
| 60 Crossways Park Drive West, Suite 301 | Woodbury | | New York | 11797 |
| (Address) | (City) | (State) | | (Zip Code) |
| CHECK ONE: | | | | |
| ✓ I
certified Public Accountant | | | | |
| a
Public Accountant | | | | |
| Accountant not resident in United States or any of its possessions. | | | | |
| | | | | |
| | FOR OFFICIAL USE ONLY | | | |
| | | | | |
| | | | | |
*\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2)*
> **Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number.**
SEC 1410 (11-05)
{1}------------------------------------------------
#### **OATH OR AFFIRMATION**
| I, Danielle Landau | , swear (or affirm) that, to the best of | | | | |
|---------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
---------------------------------------------
Oscar Gruss & Son Incorporated | | | | |
| of December 31 | , as
are 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: | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | 1):o,i°d!J,.L | | | | |
| | Signature | | | | |
| | | | | | |
| | qn~~
Chief Financial Officer | | | | |
| | Title | | | | |
| | MARDl'lTA cnm.L0
Commissioner of Deeds | | | | |
| | CityofNew Yorlr.:-No. 5-1341
Notary Public | | | | |
| | Qualified in Richmond~ | | | | |
| 0 (a) Facing Page. | This report** contains (check all applicable boxes):
Commission Bxpires i oj i { a D 'J. I | | | | |
| | 0 (b) Statement of Financial Condition. | | | | |
| | O (c) Statement oflncome (Loss) or, ifthere is other comprehensive income in the period(s) presented, a Statement | | | | |
| | of Comprehensive Income (as defined in §210.1-02 of Regulation S-X). | | | | |
| | | | | | |
| § (d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | | |
| | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | | |
| | § (g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | | |
| | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | | | |
| | D U) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule l 5c3-l and the | | | | |
| | putation for Determination of the Reserve Requirements Under Exhibit A of Rule l 5c3-3. | | | | |
| 0 (k) | A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | | |
| | consolidation.
(I) An Oath or Affirmation. | | | | |
| | (m) A copy of the SIPC Supplemental Report. | | | | |
| | (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | |
| | | | | | |
\*\* *For conditions of confidential treatment of certain portions of this filing, see section 240. I 7a-5(e)(3).*
{2}------------------------------------------------
# **Oscar Gruss & Son Incorporated**
(A Wholly Owned Subsidiary of Makor Partners Limited)
Statement of Financial Condition
As of December 31, 2020
{3}------------------------------------------------
## **Oscar Gruss & Son Incorporated**
(A Wholly Owned Subsidiary of Makar Partners Limited)
## **CONTENTS**
| Report of Independent Registered Public Accounting Firm | 1 - 2 |
|---------------------------------------------------------|-------|
| Financial Statements | |
| Statement of Financial Condition | 3 |
| Notes to Financial Statement | 4 |
{4}------------------------------------------------
Mazars USA LLP 60 Crossways Park Drive West Suite 301 Woodbu ry, New York 11797
Tel: 516.488.1200 www.mazars.us
## **Report of Independent Registered Public Accounting Firm**
**To the Directors and Stockholder of Oscar Gruss & Son Incorporated**
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Oscar Gruss & Son Incorporated, (the "Company"), as of December 31, 2020, and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of the Company, as of December 31 , 2020, 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 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 that 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.
We have served as the Company's auditor since 2020.
Woodbury, NY March 26, 2021
{5}------------------------------------------------
#### **Oscar Gruss & Son Incorporated**
(A Wholly Owned Subsidiary of Mak.or Partners Limited)
#### **Statement of Financial Condition December 31, 2020**
#### **ASSETS**
| \$
Cash and cash equivalents
Due from clearing broker, including clearing deposit of \$1,964,004
Commission receivable from other broker-dealers and customers, including an
allowance for commission receivable of \$20,582
Property and equipment, net
Right of use asset
Restricted cash
Due from affiliates
Income taxes receivable
Deferred tax assets
Other assets
Total assets
LIABILITIES AND STOCKHOLDER'S EQUITY | 5,122,633
2,881,626
2,014,965
215,413
3,453,080
596,569
904,881
132,039
150,792
321 ,165
)
\$15,793,163 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Liabilities: | |
| \$
Accrued compensation payable | 4,241,819 |
| Accounts payable and accrued expenses | 877,025 |
| Loan payable | 888,465 |
| Due to affiliates | 140,630 |
| Lease liabilities | 3,600,543 |
| Subordinated borrowings | 3,000,000 |
| Total liabilities | 12,748,482 |
| | |
| Stockholder's Equity: | |
| Common stock -
no par value; authorized 20,000 shares, issued | |
| and outstanding 16,536 shares | 433,931 |
| Additional paid in capital | 3,094,980 |
| Accumulated deficit | (484,230) |
| Total stockholder's equity | 3,044,681 |
| Total liabilities and stockholder's equity | \$15,793,163 |
| See Notes to Financial Statement. | |
{6}------------------------------------------------
#### **Notes to Financial Statement**
#### **Note 1. Operations and Principal Business Activity**
Organization: Oscar Gruss & Son Incorporated (the "Company") is wholly owned by Makar Partners Limited (the "Parent"), and is registered with the Securities and Exchange Commission (the "SEC") as an introducing broker-dealer and is a member of various exchanges and associations, including the Financial Industry Regulatory Authority, Inc. ("FINRA"), National Futures Association ("NFA"), and the Securities Investor Protection Corporation ("SIPC"). The Company's transactions are executed with, and on behalf of, institutional investors, including other brokers and dealers, commercial banks, insurance companies, pension plans and other financial institutions.
Operations: As an introducing broker-dealer, the Company provides services for the purchases and sales of securities. Most transactions are cleared on a fully disclosed basis through an independent broker-dealer. The Company pays this broker-dealer various charges and fees for clearing services provided. All customer-related balances are carried on the books of the clearing broker. The Company carries no customer accounts and does not hold funds or securities for, or owe money or securities to, customers. In the event a customer is unable to fulfill its contractual obligation to the clearing broker, the Company may be exposed to off-balance-sheet risk (refer to Note 3). The Company is engaged in a line of business as a securities broker-dealer in riskless principal transactions.
The Company generates commission revenue through option executions. Similar to equities, the Company provides services for the purchases and sales of derivatives securities. These transactions are directed to the customers' prime broker for clearing services. The Company charges a commission for each of these executions. These customers are invoiced monthly.
Additional income is earned from the Company's research. This line of income is for research services and access to the Company's research database. Customers are invoiced on a monthly or quarterly basis.
The Company operates with a commission sharing agreement with one of its affiliates. This commission sharing agreement is for several securities products such as equities, derivatives, fixed income and foreign exchange currency. The Company invoices the affiliate monthly for this commission sharing per the agreement.
The Company operates under the provisions of Paragraph (k)(2)(ii) of Rule 15c-3-3 of the Securities Exchange Act of 1934, and is claiming an exemption from this rule.
The requirements of Paragraph (k)(2)(ii) provide that the Company clear all transactions on behalf of customers on a fully disclosed basis with a clearing broker-dealer and promptly transmit all customer funds and securities to the clearing broker-dealer. The clearing broker-dealer carries all of the accounts of the customers and maintains and
{7}------------------------------------------------
### **Notes to Financial Statement**
#### **Note 1. Operations and Principal Business Activity (continued)**
preserves all related books and records as are customarily kept by a clearing brokerdealer.
Branch Offices: The Company currently has four branch office locations. The main office of supervisory jurisdiction is located in New York. This branch operates as the hub with all lines of business operations generating out of this location as well as serving as the main supervisory office for all branches.
The Company has a branch office in Ramat Gan, Israel. This branch operates as the introducing broker-dealer for transactions and customers located primarily in Israel. The Company has a branch office in Dallas, Texas. This branch functions exclusively as a research facility with no transactions being generated. In December 2018, the Company opened up a branch office in London, United Kingdom. This branch office generates revenue in foreign currency transactions ("FX transactions").
#### **Note 2. Summary of Significant Accounting Policies**
Basis of Presentation: The Company follows accounting principles generally accepted in the United States of America ("U.S. GAAP"), as established by the Financial Accounting Standards Board (the "FASB"), to ensure consistent reporting of financial condition, results of operations and cash flows.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Property and Equipment: Property and equipment is recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the economic useful life of the improvement or the term of the lease.
Cash and Cash Equivalents: The Company maintains cash in accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant financial risk. At December 31, 2020, the amount in excess of federally insured limits was approximately \$5,660,000. The Company's cash equivalents are highly liquid investments with an original maturity of three months or less as of acquisition.
Revenue and Expense Recognition: The Company complies with ASC 606, "Revenue from Contracts with Customers" which provides guidance on the recognition of revenue from customers.
{8}------------------------------------------------
#### **Notes to Financial Statement**
#### **Note 2. Summary of Significant Accounting Policies (continued)**
The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). 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.
Equity and credit research fees are paid to the Company for providing equity and credit research. Revenue is recognized once an arrangement exists and access to research has been provided, which is the point in time when the Company believes that the performance obligation is satisfied. The Company had research income receivable of approximately \$100,000 at December 31, 2020, which is included in other assets on the accompanying statement of financial condition.
Foreign Currency: Gains or losses resulting from foreign currency transactions are included in commission revenue in the statement of operations. Commission revenue and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions.
Income Taxes: The Company's provision for income taxes is based on all items included in income as reported for financial statement purposes. In accordance with U.S. GAAP, uncertain tax positions should be recognized, measured, disclosed and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are sustainable when potentially challenged by the applicable tax authority. Tax positions deemed potentially unsustainable would be recorded as a tax expense and liability in the current year. For the year ended December 31, 2020, management has determined that there are no uncertain tax positions.
Deferred Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in deferred tax assets and liabilities. Valuation allowances are established, if necessary, to reduce the deferred tax assets to their estimated net realizable value.
{9}------------------------------------------------
#### **Notes to Financial Statement**
#### **Note 2. Summary of Significant Accounting Policies (continued)**
Fair Value of Financial Instruments: At December 31, 2020, the carrying value of the Company's financial instruments, such as cash and cash equivalents, due from clearing broker, commission receivable from other broker-dealers and customers, accounts payable, accrued expenses and loan payable approximate their fair values due to the nature of their short term maturities.
#### Recently Issued Accounting Pronouncements:
In August 2014, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, (Topic 326): Measurement of Credit Losses on Financial Instruments which updated the accounting standards related to account for credit losses on certain types of financial instruments, including loans and debt securities. For short-term account receivables, the new guidance requires a current expected credit loss (CECL) approach to determine the allowance for credit losses. CECL requires loss estimates for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. The update requires an entity to estimate the credit losses expected over the life of the asset. The estimate of the expected credit losses and subsequent changes in the estimate is reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The guidance is effective for the Company on January 1, 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company adopted the provisions of this guidance on January 1, 2020 and the adoption has no impact on its financial statements.
Leases: Effective January 1, 2019, the Company adopted ASC Topic 842, Leases ("ASC 842"). The new guidance increases transparency by requiring the recognition of right to use assets and lease liabilities on the statement of financial condition. The recognition of these lease assets and lease liabilities represents a change from previous U.S. GAAP requirement, which did not require lease assets and lease liabilities to be recognized for most operating leases.
The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lease, have not significantly changed from previous U.S. GAAP requirements.
On October 1, 2020, the Company entered into a new lease. In applying ASC 842, the Company made an accounting policy election not to recognize the right of use assets and lease liabilities relating to short-term leases. Implementation of ASC 842 included an analysis of contracts, including real estate leases and service contracts to identify embedded leases, to determine the initial recognition of the right to use assets and lease liabilities, which required subjective assessment over the determination of the associated discount rates to apply in determining the lease liabilities.
{10}------------------------------------------------
## **Notes to Financial Statement**
### **Note 2. Summary of Significant Accounting Policies (continued)**
The new lease falling under ASC 842 resulted in the recording of operating lease right of use assets and operating lease liabilities of approximately \$3,563,000 at October 1, 2020. The Company determines if an arrangement is or contains a lease at inception. The Company's operating lease arrangement are comprised of real estate and facility leases. Right of use assets represent the Company's right to use the underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate and the implicit rate is not readily determinable, the Company estimates its incremental borrowing rate based on the information available at the measurement date in determining the present value of the lease payments. The present value of the lease payments was determined using a 4.25% incremental borrowing rate. Right of use assets also exclude lease incentives.
#### **Note 3. Due From Clearing Brokers**
The clearing and depository operations for the Company's security transactions are provided by brokers pursuant to clearance agreements. At December 31, 2020, the receivables from the clearing broker represent a cash deposit of \$1,964,004 maintained at the clearing broker and commissions receivable earned of approximately \$917,000 as an introducing broker for the transactions of its customers.
The Company has agreed to indemnify its clearing broker for losses that the clearing broker may sustain from the customer accounts introduced by the Company. As of December 31, 2020, no material amounts were owed to the clearing broker by these customers in connection with normal margin, cash and delivery against payment transactions. In the normal course of business, introduced customers maintain debit balances with the clearing broker. At December 31, 2020, these balances were fully collateralized by securities owned by the customers.
#### **Note 4. Property and Equipment**
| Property and equipment, at cost, consists of the following: | | |
|-------------------------------------------------------------|-------------|--------------|
| Computers and equipment | \$ | 316,279 |
| Furniture and fixtures | | 21,934 |
| Leasehold improvements | | 31,880 |
| | | 370,093 |
| Less accumulated depreciation and amortization | ------- | 154,680
~ |
| | | |
| Property and equipment, net | \$ | 215,413 |
| | ~~--------- | |
{11}------------------------------------------------
#### **Notes to Financial Statements**
#### **Note 5. Loan Payable**
On April 30, 2020, the Company obtained a loan of \$888,465 from JP Morgan Chase Bank under the Paycheck Protection Program (the "PPP") created by the Coronavirus Aid, Relief and Economic Security Act ("CARES") Act. Borrowers under the PPP may apply to have their loans forgiven if they use the proceeds of the loan to fund payroll, rent, and utilities costs incurred or paid during the covered period following the date the loan was funded. To the extent any portion of the loan is not forgiven, that portion must be repaid over a 5-year term commencing on the date the loan was funded, and the borrower must pay interest an annual rate of 1.0%. The Company believes it has met all of the requirements for forgiveness and expects that most or all of the loan will be forgiven.
The loan was recorded at full value on April 30, 2020 when the proceeds were received, and no reduction in the liability will be recorded until the Company receives a forgiveness decision from JP Morgan Chase Bank.
#### **Note 6. Liabilities Subordinated to Claims of General Creditors**
Liabilities subordinated to the claims of general creditors have been approved by FINRA for inclusion in computing the Company's net capital pursuant to the SEC Uniform Net Capital Rule. The \$3,000,000 10% subordinated loan matures on December 31, 2022.
Subordinated debt can be withdrawn by the lender at the stated maturity date or can be accelerated upon six months' notice. Any subordinated debt can be repaid only if, after giving effect to such repayment, the Company meets the SEC's capital regulations governing withdrawal of subordinated debt.
#### **Note 7. Net Capital Requirements**
As a registered broker-dealer, the Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule 15c3-1 .
The Company has elected to compute its net capital under the alternative method. This rule requires the Company to maintain minimum net capital, as defined, equal to the greater of \$250,000, or an amount based on the number of and price of underlying securities in which it makes a market.
Net capital changes from day to day. At December 31, 2020, the Company had net capital of \$3,198,558, which was \$2,948,558 in excess of the minimum net capital requirement of **\$250,000.**
The Company is also subject to the Commodity Futures Trading Commission ("CFTC") minimum financial requirements, which require that the Company maintain net capital, as defined, equal to the greater of its requirements under Regulation 1.17 under the Commodity Exchange Act or Rule 15c3-1. At December 31, 2020, the Company's net capital for purposes of reporting to the CFTC is the same as described in the preceding paragraph.
{12}------------------------------------------------
## **Notes to Financial Statement**
## **Note 8. Profit-Sharing Plan**
The Company maintains a profit-sharing plan (the "Plan") qualified under Section 401(k) of the Internal Revenue Code (the "Code") covering substantially all full-time, salaried employees. Covered employees are permitted, within limitations imposed by the Code, to make pretax and post-tax contributions to the Plan pursuant to salary reduction agreements. The Plan is noncontributory.
## **Note 9. Indemnifications and Uncertainties**
In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company expects the risk of future obligation under these indemnifications to be remote.
In early 2020, an outbreak of a novel strain of coronavirus (COVID-19) emerged globally resulting in an overall decline in economic activity. The ultimate impact of COVID-19 on the financial performance of the Company is not reasonably estimable at this time.
#### **Note 10. Income Tax Expense**
In 2020, the Company recorded net deferred tax assets related to the tax effect of the book to tax timing differences for depreciation, rent, compensation and New York State and New York City net operating loss carryforwards.
Deferred tax assets at December 31, 2020 are summarized as follow:
| State and city | 28,772 |
|--------------------------|---------------|
| Total deferred tax asset | \$
150,792 |
#### **Note 11. Related-Party Transactions**
The Company earned commission income from Makor Securities London Limited ("Makor"), an affiliate, relating to transactions with the affiliate. Additionally, the Company executes transactions for Makor per an agreement.
The Company has an agreement with Makor for FX consulting services. Makor collects the commissions on behalf of the Company from the FX clearing broker. The Company had a receivable due from the affiliate relating to these transactions of approximately \$79,000 at December 31, 2020.
{13}------------------------------------------------
## **Notes to Financial Statement**
## **Note 11. Related Party Transactions (continued)**
The Company paid expenses on behalf of Enigma Securities LLC ("Enigma"), an affiliate. As a result, the Company had a receivable due from the affiliate of approximately \$825,000 at December 31, 2020.
In October 2018, the Company entered into a new agreement with Makar OG Limited (the "Branch"), an affiliate, based on a commission allocation calculation of revenues and expenses generated by the Branch. At December 31, 2020, the Company had an amount due to the affiliate of approximately \$117,000, for the related transactions.
The Company utilizes the administrative services of Makor Capital Limited, ("Makor Capital"), an affiliate. These services include but are not limited to consulting for back office and administrative functions, access to the database portal, and data lines. Makor Capital invoices the Company for these services. At December 31, 2020, the Company had an amount due to the affiliate of approximately \$24,000, for the above related transactions.
In 2018, the Company contracted with a related party to develop a computer software database, and the maintenance of that software database.
The Company also engaged the consulting services of the affiliate for their expertise in alternative assets. \$142,500 payable to this affiliate is included in the accounts payable and accrued expenses on the accompanying statement of financial condition at December 31, 2020.
#### **Note 12. Leases**
The Company entered into an operating lease for its New York office facility which commenced on October 1, 2020 and expires October 31, 2027. The Company obtained a letter of credit from a bank of approximately \$317,000 for the rent security deposit. This letter of credit is guaranteed by the money market cash balances of the Company held with its bank and is reflected as restricted cash on the accompanying statement of financial condition.
At December 31, 2020, the Company also maintained approximately \$280,000 of restricted cash in connection with a letter of credit for a lease which was terminated in 2020. The restriction was released in January 2021.
A lease liability is included on the statement of financial condition for approximately \$3,600,000 and the corresponding right of use asset is approximately \$3,453,000, included on the statement of financial condition as well.
{14}------------------------------------------------
#### **Notes to Financial Statement**
### **Note 12. Leases (continued)**
The maturities of the outstanding lease liability at December 31, 2020, are as follows:
| Year ending December 31 : | |
|---------------------------|---------------|
| 2021 | 475,987
\$ |
| 2022 | 634,650 |
| 2023 | 634,650 |
| 2024 | 634,650 |
| 2025 | 634,650 |
| Thereafter | 1,163,525 |
| Discount to present value | (577,569) |
| | |
| Lease liability | \$ 3 600 543 |
As of December 31, 2020, the weighted average remaining lease term is 85 months and the weighted average discount rate is 4.25%.
### **Note 13. Subsequent Events**
On January 7, 2021, the Company made a capital distribution of \$500,000.
The financial statements were approved by management and available for issuance on March 26, 2021. Subsequent events have been evaluated through this date.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.