# LAMON & STERN, INC. X-17A-5 (2021-09-29) — Broker-dealer annual report - Company: LAMON & STERN, INC. - Form: X-17A-5 - Filed: 2021-09-29 - Period: 2021-06-30 - Accession: 0000711241-21-000007 - CIK: 711241 - File #: 8-28694 - Material weakness: No - Auditor: RUBIO CPA, PC - Auditor location: ATLANTA, GA - Contact: Chip Allen - Phone: 7316683825 - Signed by: HOLLIS M LAMON (PRESIDENT) Original filing: https://www.sec.gov/Archives/edgar/data/711241/000071124121000007/edgarupload21.pdf --- {0}------------------------------------------------ RUBIO CPA, PC CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder of Lamon & Stern, Inc. #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Lamon & Stern, Inc. (the "Company") as of June 30. 2021, the related statements of operations, changes in stockholder's equity, and cash flows for the year then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and the results of its operations and its cash flows for then ended in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audt. We are a public accounting fi'm 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 regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement to the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. #### Supplemental Information The information contained in Schedules I, Il and III has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the Company's management. Our audit procedures included determining whether the information in Schedules to the financial statements or the underlying and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the accompanying schedules. In forming our opinion on the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented {1}------------------------------------------------ in conformity with 17 C.F.R. §240.17a-5. In our opinion, the aforementioned supplemental infonnation is fairly stated, n all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2013. September 28, 2021 Atlanta, Georgia Rubio CPA, PC {2}------------------------------------------------ # Lamon & Stern, Inc. Statement of Financial Condition June 30, 2021 #### Assets | Cash
Accounts receivable
Prepaid Expenses
Furniture, equipment and leasehold improvements
net of accumulated depreciation of \$42, 109
State Income Tax Receivable
Deposit with clearing broker-dealer | S | 247,552
147,983
482
005
1,302
25,000 | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|-----------------------------------------------------| | Total assets | S | 423,224 | | Liabilities and stockholder's equity | | | | Liabilities | | | | Accrued commissions | | 13,007 | | Accrued compensation | | 4,500 | | Income taxes payable | | 9,771 | | Accounts payable and accrued expenses | | 26,929 | | Total liabilities | | 54,207 | | Stockholder's equity | | | | Common stock, \$1 par value, 100,000 shares authorized, | | | | 500 shares issued and outstanding | | 500 | | Additional paid-in capital | | 6,149 | | Retained earnings | | 362,368 | | Total stockholder's equity | | 369,017 | | Total liabilities and stockholder's equity | S | 423,224 | {3}------------------------------------------------ # Lamon & Stern, Inc. Statement of Operations June 30, 2021 | Revenues | | | |-----------------------------------------|---|-----------| | Fees for account supervision | S | 1,296,548 | | Commissions | | 34,756 | | Interest | | 779 | | PPP loan forgiveness | | 65,600 | | Total revenues | | 1,397,683 | | Expenses | | | | Commissions, compensation and benefits | | 1,072,552 | | Occupancy and equipment | | 27,856 | | Clearing fees | | 6,913 | | Technology and communications | | 14,451 | | Other expenses | | 181,450 | | Total expenses | | 1,303,222 | | Net income from operations before taxes | | 94,461 | | Income tax expense | | 9,771 | | Net income | S | 84,690 | {4}------------------------------------------------ # Lamon & Stern, Inc. Statement of Cash Flows June 30, 2021 | Cash flows from operating activities | | | |-----------------------------------------------------------------------|---|----------| | Net income | S | 84,690 | | Items which do not impact cash | | | | Depreciation | | 219 | | PPP loan forgiveness | | (65,600) | | Adjustments to reconcile net income to net cash provided by operating | | | | activities: | | | | Change in: | | | | Accounts receivable | | (26,773) | | State income tax receivable | | (1,302) | | Accounts payable and accrned expenses | | 14,866 | | Accrued commissions | | (11,779) | | Accrued compensation | | 4,500 | | Income taxes payable | | 6,032 | | Net cash provided by operating activities | S | 4,853 | | Cash flows from financing activities | | | | Dividends | | (30,000) | | Net cash used by financing activities | | (30,000) | | Net decrease in cash | | (25,147) | | Cash, beginning of year | | 272,699 | | Cash, end of year | S | 247,552 | | | | | | SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | | Cash Paid During the Year for Interest | S | 405 | | Cash Paid During the Year for Income Taxes | S | 5,429 | {5}------------------------------------------------ # Lamon & Stern, Inc. Statement of Changes in Stockholder's Equity June 30, 2021 | | Common
Stock | | Paid-In
Capital | | Retained
Earnings | | Total | | |------------------------|-----------------|-----|--------------------|-------|----------------------|----------|-------|----------| | Balance, June 30, 2020 | S | 500 | es | 6,149 | es | 307,678 | ಕೆ | 314,327 | | Net income | | | | | | 84,690 | S | 84,690 | | Dividends | | | | | | (30,000) | | (30,000) | | Balance, June 30, 2021 | A | 500 | es | 6,149 | ಳ | 362,368 | ಕ | 369,017 | {6}------------------------------------------------ # I.General The Company is incorporated under the laws of the State of Georgia. It operates as a broker of securities and is a member of FINRA (Financial Industry Regulatory Authority). The Company clears all transactions with and for customers on a fully disclosed basis with a national clearing broker/dealer and promptly transmits all customer funds and securities to the clearing broker/dealer and, as such, is exempt from the computation of reserve requirements pursuant to Rule 15c3-3 and infommtion relating to the possession or control requirements under Rule 15c3-3. ## 2.Summary of Significant Accounting Policies ## Use of Estimates in Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ f'om those estimates. #### Cash Cash represents withdrawable deposits in banks located in Georgia. From time to time, balances may exceed FDIC insured limits. ## Deposits with Clearing Agent Deposits are held by a clearing agent as a condition of the Company's Fully Disclosed Clearing Agreement. ## Furniture, Equipment and Leasehold Improvements Furniture, equipment, and leasehold improvements are carried at cost. Furniture and equipment are depreciated over five to seven years using straight-line and accelerated methods. Depreciation expense for the year ended June 30, 2021 amounted to \$219. ## Accounts Receivable Accounts receivable are non-interest bearing uncollateralized obligations receivable in accordance with the terms agreed upon with each client. The Company regularly reviews its accounts receivable for any uncollectible amounts. The review for uncollectible amounts is based on an analysis of the Company's collection experience, customer credit worthiness, and cmTent economic trends. Based on management's review of accounts receivable, no allowance for credit losses is considered necessary. {7}------------------------------------------------ ## 2.Summary of Significant Accounting Policies (Continued) #### Accounts Receivable (Continued) In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost. The model replaces the probable, incurred loss model for those assets and broadens the info1111ation an entity must consider in developing its expected credit loss estimate for assets measured at amortized costs. The Company adopted ASU No. 2016-13 on July 1, 2020 using the modified retrospective approach with no material impact to its financial position, results of operations or cash flows. #### Revenue From Contracts with Customers Revenue f om contracts with customers includes commission income and fees from asset management services. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement 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 under the contract; 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. 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 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 of the securities have been transferred to/from the customer. The Company provides investment advisory services on a daily basis. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company. Fee arrangements are based on a percentage applied to the customer's assets under management. Fees are received periodically and are recognized as revenue in the period in which performance obligations are satisfied. {8}------------------------------------------------ ## 2.Summary of Significant Accounting Policies (Continued) #### Income Taxes Income taxes are recognized during the year in which transactions enter into the determination of financial statement income, with deferred taxes being provided for net operating loss carry forwards and temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. Management of the Company considers the likelihood of changes by taxing authorities in its filed income tax returns and discloses potential sigmificant changes that management believes are more likely than not to occur upon examination by tax authorities. Management has not identified any uncertain tax positions in filed income tax requre recognition or disclosure in the accompanying financial statements. The Company's income tax returns for the past three years are subject to examination by tax authorities, and may change upon examination. #### Subsequent Events Management evaluates events occmTing subsequent to the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through the date the financial statements were issued. ## 3.Net Capital Requirement The Company is subject to the Securities and Exchange Commission's Net Capital Rule (rule 15c3-I), which requires that the ratio of aggregate indebtedness to net capital (as these terms are defined in the Rule) shall not exceed fifteen to one. Net capital ratio fluctuate on a daily basis. As of June 30, 2021, the ratio of aggregate indebtedness to net capital was 23 to I and net capital was \$231,352, which exceeded the minimum net capital requirements by \$181,352. ## 4.Employee Benefits The Company has established the Lamon & Stern, Inc. 401 (k) Profit Sharing Plan (the Plan) under Section 401(k) of the Internal Revenue Code. The Plan is a defined contribution savings plan covering substantially all employees of the Company. The Company may, at its discretion, make employer contributions. Discretionary employer contributions to the Plan were approximately \$61,592 for the year ended June 30, 2021. {9}------------------------------------------------ ## 5.Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of tax currently payable or refundable plus effects of deferred tax assets and liabilities represent the future tax return consequences of those differences that will be either deductible or taxable when the assets and liabilities are recovered or settled. Deferred income tax effects for the year ended June 30, 2021 were insignificant. Income tax expense in the Statement of Operations differs from the amount expected, based on statutory income tax rates, due to the exclusion of PPP loan forgiveness revenue of \$65,600 from taxable income as well as certain non-deductible expenses. The state income tax receivable of \$1,302 at June 30, 2021 exists from a duplicate payment of prior year state income taxes in the current year that is to be refunded. #### 6.Commitments and Contingencies The Company leases office premises under a month to month agreement. Rent expense for the year ended June 30, 2021 was approximately \$23,000. The Company has elected, for all underlying classes of assets, to not recognize ROU assets and lease liabilities for short term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease costs associated with short term leases on a straight-line basis over the lease term. The Company is subject to litigation in the normal course of business. The Company has no litigation in progress at June 30, 2021. ## 7.Concentrations During the year ended June 30, 2021, the Company had one customer that accounted for approximately 22% of total revenues and approximately 78% of accounts receivable at June 30, 2021 were due from two customers. ## 8.PPP Loan In May 2020, the Company received a loan of \$65,600 pursuant to its application under the Small Business Administration's Paycheck Protection Program established by the enabling legislation under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Upon application to the lender, it was determined that the company had met all requirements for loan forgiveness. The entire loan amount of \$65,600 was forgiven in the current year and is included in revenues as PPP loan forgiveness. {10}------------------------------------------------ # Lamon & Stern, Inc. Schedule I Computation of Net Capital Under Rule 15c3-1 of The Securities and Exchange Commission Act of 1934 as of June 30, 2021 | Net Capital: | | | |------------------------------------------------|--------------|---------| | Total stockholder's equity | S
369,017 | | | Less non-allowable assets: | | | | Prepaid expense | | (482) | | Property and equipment | | (902) | | State income tax receivable | | (1,302) | | Accounts receivable, net | (134,976) | | | | (137,665) | | | Net capital before haircuts | 231,352 | | | Less haircuts | | | | Net capital | 231,352 | | | Less required net capital | 50,000 | | | Excess net capital | 181,352 | | | Aggregate indebtedness | 54,207 | | | | 23 to 1.0 | | | Ratio of aggregate indebtedness to net capital | | | Reconciliation with Company's computation of net capital included in Part IIA of Form X-17A-5, as amended, as of June 30, 2021. There is no significant difference between net capital above and net capital as reported in Part II A of Fom1 X-17a-5, as amended, as of June 30, 2021. {11}------------------------------------------------ Lamon & Stern, Inc. #### Schedule II ## Computation For Determination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission As Of June 30, 2021 The Company is exempt f om the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraphs (k)(2)(i) and (k)(2)(ii) of the Rule. #### Schedule III ## Information Relating to the Possession of Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission As Of June 30, 2021 The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraphs (k)(2)(i) and (k)(2)(ii) of the Rule. {12}------------------------------------------------ ![](_page_12_Picture_0.jpeg) \*/7&45.&/5 "/% 'M/"/\$\*"- \$0/46-5"/5h4 8FTU1BDFT'FSSZ3E 4VJUF "UMBOUB (FPSHJB MM 'B9 # **>DKE Θ^dZE͕ /E͘Ζ^yDWd/KE ZWKZd** >ĂŵŽŶ Θ^ƚĞƌŶ͕ /ŶĐ͘ ;ƚŚĞ ΗŽŵƉĂŶLJΗͿŝƐ ĂƌĞŐŝƐƚĞƌĞĚ ďƌŽŬĞƌͲĚĞĂůĞƌƐƵďũĞĐƚƚŽ ZƵůĞ ϭϳĂͲϱ ƉƌŽŵƵůŐĂƚĞĚ ďLJƚŚĞ ^ĞĐƵƌŝƚŝĞƐĂŶĚ džĐŚĂŶŐĞ ŽŵŵŝƐƐŝŽŶ ;ϭϳ ͘&͘Z ϮϰϬ͘ϭϳĂͲϱ͕ ΗZĞƉŽƌƚƐƚŽ ďĞ ŵĂĚĞ ďLJ ĐĞƌƚĂŝŶ ďƌŽŬĞƌƐĂŶĚ ĚĞĂůĞƌƐΗͿ͘ dŚŝƐ džĞŵƉƚŝŽŶ ZĞƉŽƌƚǁĂƐ ƉƌĞƉĂƌĞĚ ĂƐ ƌĞƋƵŝƌĞĚ ďLJ ϭϳ ͘&͘ZϮϰϬ͘ϭϳĂͲ^;ĚͿ;ůͿĂŶĚ ;ϰͿ͘ dŽ ƚŚĞ ďĞƐƚŽĨŝƚƐ ŬŶŽǁůĞĚŐĞĂŶĚ ďĞůŝĞĨ͕ƚŚĞ ŽŵƉĂŶLJƐƚĂƚĞƐƚŚĞ ĨŽůůŽǁŝŶŐ͗ dŚĞ ŽŵƉĂŶLJĐůĂŝŵĞĚ ĂŶ ĞdžĞŵƉƚŝŽŶ ĨƌŽŵ ƚŚĞ ƉƌŽǀŝƐŝŽŶƐ ŽĨ ZƵůĞ ϭϱĐϯͲϯ ƵŶĚĞƌƚŚĞ^ĞĐƵƌŝƚŝĞƐ ĂŶĚ džĐŚĂŶŐĞĐƚ ŽĨ ϭϵϯϰ͕ ƉƵƌƐƵĂŶƚƚŽ ƉĂƌĂŐƌĂƉŚ ;ŬͿ;ϮͿ;ŝͿ ĂŶĚ ;ŝŝͿ ŽĨƚŚĞ ZƵůĞ͘ dŚĞ ŽŵƉĂŶLJŵĞƚ ƚŚĞ ŝĚĞŶƚŝĨŝĞĚ ĞdžĞŵƉƚŝŽŶ ƉƌŽǀŝƐŝŽŶƐ ƚŚƌŽƵŐŚŽƵƚƚŚĞ ŵŽƐƚ ƌĞĐĞŶƚĨŝƐĐĂů LJĞĂƌ ĞŶĚĞĚ :ƵŶĞ ϯϬ͕ ϮϬϮϭ ǁŝƚŚŽƵƚĞdžĐĞƉƚŝŽŶ͘ ,ŽůůŝƐ D͘ >ĂŵŽŶ͕ WƌĞƐŝĚĞŶƚ ƵŐƵƐƚϮϱ͕ϮϬϮϭ {13}------------------------------------------------ RUBIO CPA, PC CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder of Lamon & Stern, Inc. We have reviewed management's statements included in the accompanying Broker Dealers Annual Exemption Report n which (1) Lamon & Stern, Inc. identified the following provisions of 17 C.F.R. § 15c3-3(k) under which Lamon & Stern Inc. claimed an exemption from 17 C.F.R. § 240.15c3-3: (k)(2)(i) and (ii) (the · exemption provisions) · and (2) Lamon & Stern Inc. stated that Lamon & Stern Inc. met the identified exemption throughout the most recent fiscal year without exception. Lamon & Stern, Inc. s management is responsible for compliance with the exemption provisions and its tatements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and accordingly, included inquires and other requred procedures to obtain evidence about Lamon & Stern, Inc. 's compliance with he exemption provisions. A review s substantially less in scope than an examination, the objective of which is the expression of an opinion on management s statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraphs (k)(2)(i) and (ii), of Rule 15c3-3 under the Securities Exchange Act of 1934. September 28 2021 Atlanta GA CPA PC Rubio CPA PC Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.