# ROBOTTI SECURITIES, LLC X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: ROBOTTI SECURITIES, LLC - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0000714223-22-000003 - CIK: 714223 - File #: 8-28886 - Type: Broker-dealer - Material weakness: No - Auditor: Citrin Cooperman - Auditor location: White Plains, NY - Contact: Erwin Mevorah - Phone: 6464426726 - Website: robotti.com - Signed by: Robert E. Robotti (President) Original filing: https://www.sec.gov/Archives/edgar/data/714223/000071422322000003/2021SECFiling022822SCFONLY.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) {1}------------------------------------------------ {2}------------------------------------------------ | Robert E. Robotti | | swear (or affirm) that, to the best of my knowledge and belief, the | |------------------------|--------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------| | | tinancial report pertaining to the firm of Robotti Securities, LLC | as of | | 12/31 | | , 2021 | | | | 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. | | | | | SUSAN KAPLAN
NOTARY PUBLIC-STATE OF NEW YORK
No. 01KA6052215 | Signature | | | Qualified in Rockland County | 144 00 | - - - - - - - - - - - - - - - - - - - - - - - - - - - {3}------------------------------------------------ **ROBOTTI SECURITIES, LLC (A Limited Liability Company) FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION CONFIDENTIAL PURSUANT TO RULE 17a-5(e) (3) YEAR ENDED DECEMBER 31, 2021** ![](_page_3_Picture_1.jpeg) {4}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) FOR THE YEAR ENDED DECEMBER 31, 2021** ## **TABLE OF CONTENTS** | REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | Page
1-
2 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------| | FINANCIAL STATEMENTS | | | Statement of financial condition | 3 | | Statement of operations and changes in member's equity | 4 | | Statement of cash flows | 5 | | Notes to
financial statements | 6
-
17 | | SUPPLEMENTAL
INFORMATION | | | Computation of net capital under Rule 15c3-1 of the Securities and
Exchange Commission | 18 | | Computation for determination of the reserve requirements and
information relating to possession or control requirements
under Rule
15c3-3 of the Securities and Exchange Commission | 19 | | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 20 | | Exemption Report
Pursuant to Securities and Exchange Commission Rule
17a-5(d)(4) | 21 | ![](_page_4_Picture_3.jpeg) {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member Robotti Securities, LLC ## **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Robotti Securities, LLC as of December 31, 2021, and the related statements of operations and changes in member'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 Robotti Securities, LLC as of December 31, 2021, and the results of its operations and its cash flows for the year 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 Robotti Securities, LLC's management. Our responsibility is to express an opinion on Robotti Securities, LLC's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Robotti Securities, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ![](_page_5_Picture_10.jpeg) {6}------------------------------------------------ ![](_page_6_Picture_0.jpeg) ## **Auditor's Report on Supplemental Information** The supplemental information contained in the Computation of net capital under Rule 15c3-1 of the Securities and Exchange Commission ("Schedule I") and Computation for the determination of the reserve requirements and information relating to possession or control requirements under Rule 15c3-3 of the Securities and Exchange Commission ("Schedule II") has been subjected to audit procedures performed in conjunction with the audit of Robotti Securities, LLC's financial statements. The supplemental information is the responsibility of Robotti Securities, LLC's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a–5. In our opinion, the supplemental information contained in Schedules I and II is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Robotti Securities, LLC's auditor since 2007. White Plains, New York February 25, 2022 ![](_page_6_Picture_5.jpeg) {7}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021** ## **ASSETS** | Cash and cash equivalents | \$ | 2,803,889 | |--------------------------------------------------------------------|----|-----------| | Commissions receivable | | 19,026 | | Placement fee receivable | | 12,087 | | Securities owned, at fair value | | 431,118 | | Prepaid expenses and other assets | | 37,883 | | Deposit held at clearing broker | | 100,000 | | Furniture and equipment, less accumulated depreciation of \$57,804 | | 11,259 | | | | | | TOTAL ASSETS | \$ | 3,415,262 | | | | | | LIABILITIES AND MEMBER'S EQUITY | | | | Liabilities: | | | | Due to clearing broker | \$ | 2,180,889 | | Accrued compensation
costs | | 241,124 | | Accounts payable,
accrued expenses, and other liabilities | | 122,692 | | Due to Parent and other related parties | | 50,820 | | | | | | Total liabilities | | 2,595,525 | | Commitments and contingencies (Notes 3, 4, 5,
6
and
7) | | | | Member's equity | | 819,737 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$ | 3,415,262 | See accompanying notes to financial statements. ![](_page_7_Picture_4.jpeg) {8}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) STATEMENT OF OPERATIONS AND CHANGES IN MEMBER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2021** | Revenues: | | | |-------------------------------------------------------------------------|----|--------------| | Commissions | | \$ 1,007,136 | | Research and sales services
-
affiliate | | 193,858 | | Trading and investment gain, net | | 138,834 | | Placement fees
-
affiliate | | 54,965 | | Other revenues | | 193,306 | | | | | | Total revenues | | 1,588,099 | | Expenses: | | | | Non-commission compensation costs, including benefits and payroll taxes | | 955,748 | | Commissions
and fees | | 349,711 | | Clearance and execution | | 229,042 | | Occupancy | | 196,994 | | Professional
fees | | 117,908 | | Quotation and exchange | | 88,429 | | Regulatory and related costs | | 44,438 | | Telecommunications | | 16,803 | | Depreciation | | 6,059 | | Office and other operating expenses | | 72,573 | | Total expenses | | 2,077,705 | | Loss before income tax benefit | | (489,606) | | Income tax benefit | | 4,212 | | Net loss | | (485,394) | | Member's equity –
beginning | | 730,131 | | Contributions from Parent | | 575,000 | | MEMBER'S EQUITY –
ENDING | \$ | 819,737 | See accompanying notes to financial statements. ![](_page_8_Picture_3.jpeg) {9}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2021** | Cash flows from operating activities: | | |---------------------------------------------------------------------------------------|-----------------| | Net loss | \$
(485,394) | | Adjustments to reconcile net loss
to net cash provided by
operating activities: | | | Depreciation | 6,059 | | Changes in assets and liabilities: | | | Commissions receivable | (8,397) | | Placement fee receivable | (12,087) | | Securities owned, at fair value | (128,023) | | Prepaid expenses and other assets | 6,717 | | Due to clearing broker | 2,180,889 | | Accrued compensation costs | 139,150 | | Accounts payable, accrued expenses, and other liabilities | 43,442 | | Due to Parent and other related parties | (63,795) | | | | | Net cash provided by
operating activities | 1,678,561 | | | | | Cash used in
investing activities: | | | Purchase
of fixed assets | (2,548) | | Cash provided by financing activities: | | | Contributions from Parent | 575,000 | | | | | Net increase
in cash and cash equivalents | 2,251,013 | | | | | Cash and cash equivalents and restricted cash -
beginning | 652,876 | | | | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH –
ENDING | \$
2,903,889 | | | | | | | | Cash and cash equivalent and restricted cash consist of the following: | | | Cash
and cash equivalents | \$
2,803,889 | | Deposit held at clearing broker | 100,000 | | Total cash and cash equivalents and restricted cash | \$
2,903,889 | See accompanying notes to financial statements. ![](_page_9_Picture_3.jpeg) {10}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### Organization Robotti Securities, LLC (the "Company") is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company was formed on July 1, 2003, as a single-member limited liability company under the laws of the state of New York. The Company's sole member is Robotti & Company, Incorporated (the "Parent"). As a limited liability company, the member is not responsible for the debts of the Company unless they are specifically guaranteed. The Company provides brokerage services to both institutional and individual investors. The Company is engaged in a single line of business as a securities broker-dealer, which comprises several classes of services, including principal and agency transactions as well as securities research. #### 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 affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ## Securities Transactions Principal transactions are recorded on a trade-date basis. In addition, any corresponding receivables and payables for trades that have not settled, if any, are recorded in the statement of financial condition as a net receivable or payable. Marketable securities are stated at fair value. ### Revenue Recognition The Company recognized revenue in accordance with Financial Accounting Standards Board ("FASB") Topic 606, *Revenue from Contracts with Customers*. This 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 or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligation in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance, and (e) recognize revenue when (or as) the entity satisfies a performance ![](_page_10_Picture_12.jpeg) {11}------------------------------------------------ ### N**OTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### Revenue Recognition (Continued) 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. 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; and whether constraints on variable consideration should be applied due to uncertain future events. The Company earns commission revenue by acting primarily as an agent on behalf of customers. The Company's performance obligations in such situations consist of trade execution and clearing services and are satisfied on the date (the "Trade Date") the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer. Commissions are paid to the Company on the date the trade actually settles, generally two days after the Trade Date. Accordingly, commission revenues and a corresponding receivable are recorded on the Trade Date. Under commission sharing programs, the Company is a recipient of payments from institutional clients whereby a portion of the commissions otherwise paid by such clients to other executing brokers are allocated to the Company. The Company generally recognizes such amounts in the period in which it receives notification of such discretionary allocation by the institutional client and is included in Other revenues on the statement of operations and changes in member's equity. The Company earns revenues from various related parties, as further discussed in Note 3 to the financial statements. ## Concentration of Credit Risk The Company maintains cash accounts at one commercial bank in amounts that at times may exceed the federal insurance limit. In addition, the Company maintains its securities and a portion of its cash at its clearing broker. These assets maintained at the clearing broker are subject to the credit risk of the clearing broker. {12}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** ## Furniture and Equipment Furniture and equipment are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which are generally five years. ## Income Taxes The Parent is a corporation with S corporation status and the Company is a single-member limited liability company that is treated, to the extent permitted by law, as a disregarded entity for federal and state income tax purposes. Accordingly, the Company does not generally record a provision for federal and state income taxes. The city of New York ("NYC") does not recognize S corporation status and the Company's results are included in the Parent's NYC tax return. Accordingly, the Company will recognize its share of the NYC tax expense incurred by the Parent. To the extent that the Company is confident of the ultimate realization of any NYC net operating loss ("NOL") available to the Parent, it will record its pro-rata share of any such NOL. In addition, the state of California imposes a tax on limited liability companies which is computed on a standalone basis and is included in the Company's statement of operations and changes in member's equity. ## Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents consist primarily of cash on deposit at the Company's bank as well as cash and money market funds held in the Company's accounts at its clearing broker. The Company classifies its deposit that is held at its clearing broker as restricted cash on the statement of cash flows. ## Major Customers During 2021, three of the Company's customers each accounted for more than 10% of the Company's commission revenue. In aggregate, these customers accounted for approximately 59% of total commission revenue. Each of these entities is related to the Company by common ownership, management, or employment. ## Uncertain Tax Positions The Company recognizes and measures its unrecognized tax benefits in accordance with FASB Accounting Standards Codification ("ASC") 740, *Income Taxes*. Under that guidance, the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. ![](_page_12_Picture_12.jpeg) {13}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### Fair Value Measurements The Company follows the guidance in FASB ASC 820, *Fair Value Measurement*. Using that guidance, fair value is 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. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income, or cost approach, as specified by FASB ASC 820, are used to measure fair value. Using the provisions within FASB ASC 820, the Company has characterized its investments in securities, based on the order of liquidity of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest order of liquidity to quoted prices in active markets for identical assets or liabilities [Level 1] and the lowest order of liquidity to unobservable inputs [Level 3]. If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the investment. The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2 inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and, inputs that are derived principally from or corroborated by observable market data by correlation or other means. If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. ![](_page_13_Picture_9.jpeg) {14}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** ### Credit Losses on Financial Instruments The credit loss methodology, Current Expected Credit Losses ("CECL"), as provided for in Accounting Standards Update No. 2016-13, *Financial Instruments – Credit Losses* (Topic 326), requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime "expected credit loss" measurement objective for the recognition of credit losses for loans, cash and cash equivalents, held-to-maturity securities and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. For financial assets measured at cost (e.g., cash and cash equivalents, commission receivables, and due from other broker), the Company has concluded that there are de minimis expected credit losses based on the nature and contractual life or expected life of the financial assets and immaterial historic and expected losses. ## Subsequent Events The Company has evaluated subsequent events occurring through February 25, 2022, the date on which these financial statements were issued. In January 2022, the Company received \$100,000, as a capital contribution from Parent. ## **NOTE 2. FURNITURE AND EQUIPMENT** Furniture and equipment at December 31, 2021, consisted of the following: | Furniture and equipment | \$ 69,063 | |--------------------------------|--------------| | Less: accumulated depreciation | (57,804) | | Furniture and equipment, net | \$
11,259 | Depreciation expense for the year ended December 31, 2021, amounted to \$6,059. ## **NOTE 3. RELATED-PARTY TRANSACTIONS** ## Insurance Services Certain insurance brokerage services are provided by an entity that is owned by a family member of an officer of the Company. This officer is also the indirect majority member of the Company. During the year ended December 31, 2021, the Company incurred approximately \$11,000 of expenses related to insurance premiums due to non-affiliated third-party insurance companies for services brokered by this related party. ![](_page_14_Picture_14.jpeg) {15}------------------------------------------------ ## **NOTE 3. RELATED-PARTY TRANSACTIONS (CONTINUED)** #### Commission Income For the year ended December 31, 2021, the Company earned commission income totaling approximately \$680,000 from several entities related to the Company by common ownership, management, or employment. Such revenue amounted to approximately 68% of total commission income earned by the Company in 2021. In addition to the aforementioned commission income, the Company is the introducing broker-dealer for a pooled investment vehicle (the "Fund") affiliated with the Company. The securities owned by the Fund are primarily held at the Company's clearing broker. The Fund's trading activity is executed primarily in foreign markets and the Company assists the Fund in ensuring that all security transactions held at the clearing broker clear are properly posted in the Fund's account. The Company will usually utilize a local market broker ("Local Broker") to execute the Fund's security transactions in foreign markets and passes on to the Fund, without mark-up, direct costs received from the clearing broker for such services. In most instances, the Local Broker will charge a commission on trades executed for the Fund, without any further markup by the Company. On occasion, with regard to certain Fund trades (the "Trades"), the Company will charge the Fund a commission in excess of the amount charged by the Local Broker or will execute a trade for the Fund in the United States. In 2021, the Company earned less than \$100 in commissions for Trades executed and the Company remitted, commissions, if any, due to the Local Brokers. #### Advances Advances to or from Robotti & Company Advisors, LLC ("Advisors"), an affiliated company, or the Parent are non-interest bearing and have no specified repayment dates. Advances can be in the form of actual cash advances between these entities or the payment of expenses by one entity on behalf of the other. #### Expense Sharing Arrangements Pursuant to a cost sharing agreement (the "Agreement") between the Parent, the Company and Advisors, the Parent acts as the common paymaster for certain compensation and overhead costs incurred on behalf of the Company, the Parent, Advisors, and certain other affiliates of the Parent (the Parent, Advisors, and other affiliates are collectively referred to as the "Affiliates"). In addition, pursuant to the Agreement, the Company acts as the common paymaster for certain non-compensation related expenses incurred by itself and the Affiliates. Included in the aforementioned costs are amounts paid by the Company and the Parent for direct costs as well as costs that are subject to an allocation (the "Allocated Costs") between the Company and the Affiliates. Allocated Costs generally consist of salaries and related benefits paid for shared ![](_page_15_Picture_8.jpeg) {16}------------------------------------------------ ## **NOTE 3. RELATED-PARTY TRANSACTIONS (CONTINUED)** #### Expense Sharing Arrangements (Continued) personnel, as well as certain other overhead costs. The Agreement provides that allocations of shared employee compensation costs between the Company and the Affiliates are based on the estimated amount of time spent by employees on behalf of the Company and the Affiliates. In addition, the Agreement provides that the allocation of other overhead costs be based primarily on the estimated usage of such services by the Company and the Affiliates. Total Allocated Costs charged to the Company by the Parent in 2021, and included in the accompanying statement of operations and changes in member's equity, amounted to approximately \$757,000. Total Allocated Costs charged by the Company to the Affiliates in 2021 amounted to approximately \$58,000 and have been recorded as a reduction of the expenses that they relate to. ## Securities Owned Included in "Securities owned, at fair value" in the accompanying statement of financial condition is approximately \$2,400 of securities of a company in which an officer of the Company serves as a director. ### Research Services - Affiliate The Agreement provides that specified compensation costs ("Advisor Compensation Costs") of certain employees who provide research and sales services that benefit Advisors are charged to the Company. Pursuant to the Agreement and in consideration of the Company paying the Advisor Compensation Costs, Advisors has agreed to pay the Company a 25% markup on such costs. In 2021, such revenue to the Company amounted to approximately \$194,000. ## Execution Services for Wrap Fee Accounts Certain customers ("Wrap Customers") of Advisors have entered into wrap fee arrangements with Advisors. In such arrangements, customers are charged by Advisors a single asset-based fee ("Wrap Fee") for both advisory and trade execution services. While Advisors provides the advisory services for these accounts, the Company provides the trade execution services. In consideration of the services provided by the Company to Wrap Customers, Advisors and the Company have agreed that Advisors would allocate a portion of the Wrap Fee to the Company using an agreed-upon percentage that will be re-evaluated each year based on applicable costs and trade volume. Total Wrap Fees allocated to the Company in 2021 amounted to approximately \$25,000 and are included in "Commissions" in the accompanying statement of operations and changes in member's equity. ![](_page_16_Picture_11.jpeg) {17}------------------------------------------------ ## **Note 3. RELATED-PARTY TRANSACTIONS (CONTINUED)** #### Placement Services The Company has entered into placement agent agreements (each a "Placement Agreement") with the general partner or the managing member, as the case may be, and the investment adviser (together, the "Managers"), of certain pooled investment vehicles affiliated with the Company, to act as placement agent for interests in such vehicles. In one Placement Agreement, as compensation for these services, the managing member has agreed to pay the Company a placement fee of 35% percentage of management fee and incentive allocations earned by the Managers relating to interests in the vehicle placed by the Company. In 2021, such revenue to the Company amounted to approximately \$33,000. In the remaining Placement Agreements, each Manager has agreed to pay a placement fee to the Company equaling the compensation due to the Company's employees for providing such services, plus a markup ranging from 5% to 25%. The amount due employees is based on a percentage of management fee and incentive allocations earned by the Managers relating to interests in the vehicles placed by the Company. In 2021, such revenue related to these Placement Agreements amounted to approximately \$22,000. ### **NOTE 4. CONTINGENCIES** In the normal course of business, the Company may be a party to various litigation and regulatory matters. At December 31, 2021, management believes that the aggregate liability or benefit which may result from these proceedings will not be material to the Company's financial position or operating results. ## COVID-19 Pandemic The effects of the outbreak of COVID-19 have impacted and continue to impact the global economy and global financial markets. The impact could affect the Company's business and results of operations. There were no disruptions to business during 2021 or anticipated disruptions in the future to the operations of the business as result of the pandemic. The Company is continually monitoring the circumstances surrounding COVID-19, as well as the economic and market conditions to determine any future potential effects on operations. {18}------------------------------------------------ #### **NOTE 5. NET CAPITAL REQUIREMENTS** The Company is subject to the SEC's Uniform Net Capital Rule ("SEC Rule 15c3-1"), which requires the maintenance of minimum net capital and that the ratio of aggregate Indebtednessto net capital, both as defined, not exceed 15 to 1. Net capital and aggregate indebtedness change from day to day. At December 31, 2021, the Company had net capital of \$499,369, which exceeded the Company's minimum net capital requirement of approximately \$173,000. The Company's percentage of aggregate indebtedness to net capital was 519.76% as of December 31, 2021. In 2021, the Company received capital contributions from the Parent amounting to \$575,000. The Parent has stated its intent to provide capital, if needed, to support regulatory net capital requirements and operations through February 28, 2023. #### **NOTE 6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET CREDIT RISK** As a securities broker-dealer, the Company is engaged in buying and selling securities for a diverse group of institutional and individual investors. The Company's transactions are collateralized and are executed with and on behalf of banks, brokers and dealers, and other financial institutions. The Company introduces these transactions for clearance to its clearing broker on a fully disclosed basis. The Company's exposure to credit risk associated with non-performance of customers in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets, which may impair both the customers' ability to satisfy their obligations to the Company and the Company's ability to liquidate the collateral at an amount equal to the original contracted amount. The agreement between the Company and its clearing broker provides that the Company is obligated to assume any exposure related to nonperformance by its customers. The Company seeks to control the aforementioned risks by working with the clearing broker to require customers to maintain margin collateral in compliance with various regulatory requirements and the clearing broker's internal guidelines. The Company monitors its customer activity by reviewing information it receives from its clearing broker and by requiring customers to deposit additional collateral or reduce positions when necessary. From time to time, the Company will hold positions of securities sold but not yet purchased ("short positions"). The value of short positions are collateralized by marketable securities and cash held by the clearing broker. When entering into such transactions, the Company will be obligated to purchase the securities at a future date and will incur a loss if the market value of the security subsequently increases prior to the Company closing its position. At December 31, 2021, the Company did not hold any short positions. ![](_page_18_Picture_6.jpeg) {19}------------------------------------------------ ## **NOTE 7. EMPLOYEE BENEFIT PLAN** The Parent adopted a 401(k) plan (the "401(k)") that will cover employees of the Company. The 401(k) permits an employer discretionary match to the plan based on either employee earnings or employee contributions to the plan. The Parent will allocate to the Company its share of the employer matching contribution, if any. In 2021, the Company incurred approximately \$11,000 for its share of an employer match. There was no funding of an employer match with regard to 2021, as of December 31, 2021. #### **NOTE 8. FAIR VALUE MEASUREMENTS & STRATEGIC ADVISORY AGREEMENT** Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The valuation techniques are as follows: - (a) Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; - (b) Cost approach. Amount that would be required to replace the service capacity of an asset (replacement cost); and - (c) Income approach. Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models). ![](_page_19_Picture_8.jpeg) {20}------------------------------------------------ ## **NOTE 8. FAIR VALUE MEASUREMENTS (CONTINUED)** The following table presents the Company's fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2021: | | Level 1 | Level 2 | Level 3 | Total | Valuation
Technique | |-----------------------------------------|------------|----------|-----------|------------|------------------------| | Assets: | | | | | | | Money market funds: | | | | | | | Held at clearing broker | \$ 35,444 | \$
- | \$
- | \$ 35,444 | (a) | | Held at bank | 1,301 | - | - | 1,301 | (a) | | Total money market funds | 36,745 | - | - | 36,745 | | | Equity securities owned, at fair value: | | | | | | | Consumer discretionary | - | 9,900 | 142,150 | 152,050 | (a) | | Energy | 85,156 | - | - | 85,156 | (a) | | Health care | - | 54 | - | 54 | (a) | | Industrials | - | 148 | - | 148 | (a) (c) | | Materials | 108,563 | - | - | 108,563 | (a) | | Real estate | - | - | 199 | 199 | (a) | | Transportation & shipping | 84,948 | - | - | 84,948 | (a) | | Total equity securities owned, at | | | | | | | fair value | 278,667 | _ 10,102 | 142,349 | 431,118 | | | Total money market funds and | | | | | | | securities owned | \$ 315,412 | \$10,102 | \$142,349 | \$ 467,863 | | Money market funds, as well as long equity securities included in Level 1, are valued at quoted market prices. Equity securities that have limited market activity are grouped in Level 2 and are valued at the quoted market prices. The Company holds shares in a non-public consumer discretionary company (the "Portfolio Company"). Utilizing market comparable companies, the Company's shares of the Portfolio Company are valued at approximately \$142,000 at December 31, 2021, and are included in Level 3 assets in the table above. In 2021, pursuant to an agreement (the "Consulting Agreement") with the Portfolio Company, the Company has been employed as its financial and strategic advisor and received a non-refundable engagement fee (the ![](_page_20_Picture_6.jpeg) {21}------------------------------------------------ ## **NOTE 8. FAIR VALUE MEASUREMENTS (CONTINUED)** "Engagement Fee") of \$10,000. This amount is included in "Accounts payable, accrued expenses and other liabilities" on the statement of financial condition at December 31, 2021. As provided for in the Consulting Agreement, should a transaction to acquire this entity, or substantially all of its assets occur, the Company will receive a transaction fee based on the consideration received by the Portfolio Company and the Engagement Fee will be credited against such amount. ![](_page_21_Picture_3.jpeg) {22}------------------------------------------------ **SUPPLEMENTAL INFORMATION** ![](_page_22_Picture_1.jpeg) {23}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION DECEMBER 31, 2021** ## **NET CAPITAL** | Capital: | | |----------------------------------------------------------------------------------|-------------| | Member's equity | \$819,737 | | Non-allowable assets: | | | Security
not
readily marketable | 229,723 | | Prepaid expenses and other assets | 45,096 | | Furniture and equipment, net | 11,259 | | Total non-allowable assets | 286,078 | | Net capital before haircuts on securities positions | 533,659 | | Haircuts on securities positions | 34,290 | | NET CAPITAL | 499,369 | | Minimum net capital | 173,035 | | Excess net capital | \$326,334 | | Net capital less the greater of 10% of aggregate indebtedness or 120% of the | | | statutory minimum net capital required | \$239,817 | | MINIMUM NET CAPITAL REQUIREMENT | | | Total aggregate indebtedness ("AI")
from statement of financial condition | \$2,595,525 | | One-fifteenth of AI | \$173,035 | | Statutory minimum net capital required | \$100,000 | | Minimum net capital, the greater of one-fifteenth of AI or the statutory minimum | \$173,035 | | Percentage of AI
to net capital | 519.76% | No material differences existed between the above computation of net capital and the Company's computation included in its unaudited December 31, 2021, FOCUS report. See report of independent registered public accounting firm. ![](_page_23_Picture_5.jpeg) {24}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) COMPUTATION FOR DETERMINATION OF THE RESERVE REQUIREMENTS AND INFORMATION RELATING TO POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION DECEMBER 31, 2021** The Company operates under the exemptive provisions of paragraph (k)(2)(ii) of SEC Rule 15c3-3. The Company is subject to the exemptive provisions of paragraph (k)(2)(ii) of SEC Rule 15c3-3 and did not maintain possession or control of any customer funds or securities at December 31, 2021. See report of independent registered public accounting firm. ![](_page_24_Picture_4.jpeg) {25}------------------------------------------------ ![](_page_25_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member Robotti Securities, LLC We have reviewed management's statements, included in the accompanying Exemption Report pursuant to Securities and Exchange Commission Rule 17a-5(d)(4), in which (1) Robotti Securities, LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Robotti Securities, LLC claimed an exemption from 17 C.F.R. §240.15c3-3: (k)(2)(ii) (the "exemption provisions") and (2) Robotti Securities, LLC stated that Robotti Securities, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. Robotti Securities, LLC is also filing this Exemption Report because Robotti Securities, LLC's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 are limited to providing research. In addition, Robotti Securities, LLC did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; did not carry accounts of or for customers; and did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. Robotti Securities, LLC's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Robotti Securities, LLC's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934 and Robotti Securities, LLC's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, and related SEC Staff Frequently Asked Questions. White Plains, New York February 25, 2022 ![](_page_25_Picture_12.jpeg) {26}------------------------------------------------ ![](_page_26_Picture_0.jpeg) Robotti Securities, LLC 60 East 42nd Street, Suite 3100 New York, NY 10165-0057 **www.robotti.com** # **Robotti Securities, LLC Exemption Report** Robotti Securities, LLC (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d) (1) and (4). To the best of its knowledge and belief, the Company states the following: - (1) The Company claimed an exemption from 17 C.F.R. §240.15c3-3 under the following provisions of 17 C.F.R. § 240.15c3-3 (k)(2)(ii); and - (2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3(k) throughout the calendar year ending December 31, 2021 without exception. - (3) The Company is also filing this Exemption Report because the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 are limited to (1) Providing Research, and the Company (1) did not directly or indirectly receive, hold or otherwise owe funds or securities for or to customers, (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. # Robotti Securities, LLC I, Robert Robotti, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. By: Signature: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Name: Robert Robotti Title: Chief Executive Officer February 8, 2022 ![](_page_26_Picture_14.jpeg) {27}------------------------------------------------ **ROBOTTI SECURITIES, LLC (A Limited Liability Company) STATEMENT OF FINANCIAL CONDITION YEAR ENDED DECEMBER 31, 2021** {28}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) FOR THE YEAR ENDED DECEMBER 31, 2021** #### **TABLE OF CONTENTS** | | Page | |------------------------------------------------------------|--------------| | REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 | | FINANCIAL STATEMENT | | | Statement of financial condition | 2 | | Notes to
financial statement | 3
-
12 | {29}------------------------------------------------ ![](_page_29_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member Robotti Securities, LLC ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Robotti Securities, LLC as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of Robotti Securities, LLC as of December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. ### **Basis for Opinion** This financial statement is the responsibility of Robotti Securities, LLC's management. Our responsibility is to express an opinion on Robotti Securities, LLC'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 Robotti Securities, LLC 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 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 Robotti Securities, LLC's auditor since 2007. White Plains, New York February 25, 2022 {30}------------------------------------------------ # **ROBOTTI SECURITIES, LLC (A Limited Liability Company) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021** ## **ASSETS** | Cash and cash equivalents | \$
2,803,889 | |--------------------------------------------------------------------|-----------------| | Commissions receivable | 19,026 | | Placement fee receivable | 12,087 | | Securities owned, at fair value | 431,118 | | Prepaid expenses and other assets | 37,883 | | Deposit held at clearing broker | 100,000 | | Furniture and equipment, less accumulated depreciation of \$57,804 | 11,259 | | TOTAL ASSETS | \$
3,415,262 | | | | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities: | | | Due to clearing broker | \$
2,180,889 | | Accrued compensation costs | 241,124 | | Accounts payable,
accrued expenses, and other liabilities | 122,692 | | Due to Parent and other related parties | 50,820 | | Total liabilities | 2,595,525 | | Commitments and contingencies (Notes 3, 4, 5,
6
and
7) | | | Member's equity | 819,737 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$
3,415,262 | See accompanying notes to financial statement. {31}------------------------------------------------ #### **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### Organization Robotti Securities, LLC (the "Company") is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company was formed on July 1, 2003, as a single-member limited liability company under the laws of the state of New York. The Company's sole member is Robotti & Company, Incorporated (the "Parent"). As a limited liability company, the member is not responsible for the debts of the Company unless they are specifically guaranteed. The Company provides brokerage services to both institutional and individual investors. The Company is engaged in a single line of business as a securities broker-dealer, which comprises several classes of services, including principal and agency transactions as well as securities research. ### Use of Estimates The preparation of the statement of financial condition in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") 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 statement. Actual results could differ from those estimates. #### Securities Transactions Principal transactions are recorded on a trade-date basis. In addition, any corresponding receivables and payables for trades that have not settled, if any, are recorded in the statement of financial condition as a net receivable or payable. Marketable securities are stated at fair value. ### Revenue Recognition The Company recognized revenue in accordance with Financial Accounting Standards Board ("FASB") Topic 606, *Revenue from Contracts with Customers*. This 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 or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligation in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance, and (e) recognize revenue when (or as) the entity satisfies a performance {32}------------------------------------------------ ## N**OTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** ## Revenue Recognition (Continued) 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. 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; and whether constraints on variable consideration should be applied due to uncertain future events. The Company earns commission revenue by acting primarily as an agent on behalf of customers. The Company's performance obligations in such situations consist of trade execution and clearing services and are satisfied on the date (the "Trade Date") the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer. Commissions are paid to the Company on the date the trade actually settles, generally two days after the Trade Date. Accordingly, commission revenues and a corresponding receivable are recorded on the Trade Date. Under commission sharing programs, the Company is a recipient of payments from institutional clients whereby a portion of the commissions otherwise paid by such clients to other executing brokers are allocated to the Company. The Company generally recognizes such amounts in the period in which it receives notification of such discretionary allocation by the institutional client. The Company earns revenues from various related parties, as further discussed in Note 3 to the financial statement. #### Concentration of Credit Risk The Company maintains cash accounts at one commercial bank in amounts that at times may exceed the federal insurance limit. In addition, the Company maintains its securities and a portion of its cash at its clearing broker. These assets maintained at the clearing broker are subject to the credit risk of the clearing broker. #### Furniture and Equipment Furniture and equipment are stated at cost. {33}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### Income Taxes The Parent is a corporation with S corporation status and the Company is a single-member limited liability company that is treated, to the extent permitted by law, as a disregarded entity for federal and state income tax purposes. Accordingly, the Company does not generally record a provision for federal and state income taxes. The city of New York ("NYC") does not recognize S corporation status and the Company's results are included in the Parent's NYC tax return. Accordingly, the Company will recognize its share of the NYC tax expense incurred by the Parent. To the extent that the Company is confident of the ultimate realization of any NYC net operating loss ("NOL") available to the Parent, it will record its pro-rata share of any such NOL. In addition, the state of California imposes a tax on limited liability companies which is computed on a standalone basis. ## Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents consist primarily of cash on deposit at the Company's bank as well as cash and money market funds held in the Company's accounts at its clearing broker. The Company classifies its deposit that is held at its clearing broker as restricted cash. ## Major Customers During 2021, three of the Company's customers each accounted for more than 10% of the Company's commission revenue. In aggregate, these customers accounted for approximately 59% of total commission revenue. Each of these entities is related to the Company by common ownership, management, or employment. ## Uncertain Tax Positions The Company recognizes and measures its unrecognized tax benefits in accordance with FASB Accounting Standards Codification ("ASC") 740, *Income Taxes*. Under that guidance, the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. ## Fair Value Measurements The Company follows the guidance in FASB ASC 820, *Fair Value Measurement*. Using that guidance, fair value is 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 {34}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### Fair Value Measurements (Continued) date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income, or cost approach, as specified by FASB ASC 820, are used to measure fair value. Using the provisions within FASB ASC 820, the Company has characterized its investments in securities, based on the order of liquidity of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest order of liquidity to quoted prices in active markets for identical assets or liabilities [Level 1] and the lowest order of liquidity to unobservable inputs [Level 3]. If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the investment. The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2 inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and, inputs that are derived principally from or corroborated by observable market data by correlation or other means. If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. #### Credit Losses on Financial Instruments The credit loss methodology, Current Expected Credit Losses ("CECL"), as provided for in Accounting Standards Update No. 2016-13, *Financial Instruments – Credit Losses* (Topic 326), requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime "expected credit loss" measurement objective for the recognition of credit losses for loans, cash and cash equivalents, held-to-maturity securities and other receivables at the time the financial {35}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### Credit Losses on Financial Instruments (Continued) asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. For financial assets measured at cost (e.g., cash and cash equivalents, commission receivables, and due from other broker), the Company has concluded that there are de minimis expected credit losses based on the nature and contractual life or expected life of the financial assets and immaterial historic and expected losses. #### Subsequent Events The Company has evaluated subsequent events occurring through February 25, 2022, the date on which this financial statement was issued. In January 2022, the Company received \$100,000, as a capital contribution from Parent. #### **NOTE 2. FURNITURE AND EQUIPMENT** Furniture and equipment at December 31, 2021, consisted of the following: | Furniture and equipment | \$ 69,063 | |--------------------------------|--------------| | Less: accumulated depreciation | (57,804) | | Furniture and equipment, net | \$
11,259 | #### **NOTE 3. RELATED-PARTY TRANSACTIONS** ## Expense Sharing Arrangements Pursuant to a cost sharing agreement (the "Agreement") between the Parent, the Company and Advisors, the Parent acts as the common paymaster for certain compensation and overhead costs incurred on behalf of the Company, the Parent, Advisors, and certain other affiliates of the Parent (the Parent, Advisors, and other affiliates are collectively referred to as the "Affiliates"). In addition, pursuant to the Agreement, the Company acts as the common paymaster for certain non-compensation related expenses incurred by itself and the Affiliates. Included in the aforementioned costs are amounts paid by the Company and the Parent for direct costs as well as costs that are subject to an allocation (the "Allocated Costs") between the Company and the Affiliates. Allocated Costs generally consist of salaries and related benefits paid for shared personnel, as well as certain other overhead costs. The Agreement provides that allocations of shared employee compensation costs between the Company and the Affiliates are based on the estimated amount of time spent by employees on behalf of {36}------------------------------------------------ ## **NOTE 3. RELATED-PARTY TRANSACTIONS (CONTINUED)** #### Expense Sharing Arrangements (Continued) the Company and the Affiliates. In addition, the Agreement provides that the allocation of other overhead costs be based primarily on the estimated usage of such services by the Company and the Affiliates. ## Securities Owned Included in "Securities owned, at fair value" in the accompanying statement of financial condition is approximately \$2,400 of securities of a company in which an officer of the Company serves as a director. #### Placement Services The Company has entered into placement agent agreements (each a "Placement Agreement") with the general partner or the managing member, as the case may be, and the investment adviser (together, the "Managers"), of certain pooled investment vehicles affiliated with the Company, to act as placement agent for interests in such vehicles. In one Placement Agreement, as compensation for these services, the managing member has agreed to pay the Company a placement fee of 35% percentage of management fee and incentive allocations earned by the Managers relating to interests in the vehicle placed by the Company. In the remaining Placement Agreements, each Manager has agreed to pay a placement fee to the Company equaling the compensation due to the Company's employees for providing such services, plus a markup ranging from 5% to 25%. The amount due employees is based on a percentage of management fee and incentive allocations earned by the Managers relating to interests in the vehicles placed by the Company. #### **NOTE 4. CONTINGENCIES** In the normal course of business, the Company may be a party to various litigation and regulatory matters. At December 31, 2021, management believes that the aggregate liability or benefit which may result from these proceedings will not be material to the Company's financial position or operating results. #### COVID-19 Pandemic The effects of the outbreak of COVID-19 have impacted and continue to impact the global economy and global financial markets. The impact could affect the Company's business and results of operations. There were no disruptions to business during 2021 or anticipated disruptions in the future to the operations of the business as result of the pandemic. The Company is continually monitoring the circumstances surrounding COVID- {37}------------------------------------------------ ## **NOTE 4. CONTINGENCIES (CONTINUED)** #### COVID-19 Pandemic (Continued) 19, as well as the economic and market conditions to determine any future potential effects on operations. #### **NOTE 5. NET CAPITAL REQUIREMENTS** The Company is subject to the SEC's Uniform Net Capital Rule ("SEC Rule 15c3-1"), which requires the maintenance of minimum net capital and that the ratio of aggregate Indebtednessto net capital, both as defined, not exceed 15 to 1. Net capital and aggregate indebtedness change from day to day. At December 31, 2021, the Company had net capital of \$499,369, which exceeded the Company's minimum net capital requirement of approximately \$173,000. The Company's percentage of aggregate indebtedness to net capital was 519.76% as of December 31, 2021. In 2021, the Company received capital contributions from the Parent amounting to \$575,000. The Parent has stated its intent to provide capital, if needed, to support regulatory net capital requirements and operations through February 28, 2023. ## **NOTE 6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET CREDIT RISK** As a securities broker-dealer, the Company is engaged in buying and selling securities for a diverse group of institutional and individual investors. The Company's transactions are collateralized and are executed with and on behalf of banks, brokers and dealers, and other financial institutions. The Company introduces these transactions for clearance to its clearing broker on a fully disclosed basis. The Company's exposure to credit risk associated with non-performance of customers in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets, which may impair both the customers' ability to satisfy their obligations to the Company and the Company's ability to liquidate the collateral at an amount equal to the original contracted amount. The agreement between the Company and its clearing broker provides that the Company is obligated to assume any exposure related to nonperformance by its customers. The Company seeks to control the aforementioned risks by working with the clearing broker to require customers to maintain margin collateral in compliance with various regulatory requirements and the clearing broker's internal guidelines. The Company monitors its customer activity by reviewing information it receives from its clearing broker and by requiring customers to deposit additional collateral or reduce positions when necessary. From time to time, the Company will hold positions of securities sold but not yet purchased ("short positions"). The value of short positions are collateralized by marketable securities and cash held by the clearing broker. When entering into such transactions, the Company will be obligated to purchase the {38}------------------------------------------------ ## **NOTE 6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET CREDIT RISK (CONTINUED)** securities at a future date and will incur a loss if the market value of the security subsequently increases prior to the Company closing its position. At December 31, 2021, the Company did not hold any short positions. #### **NOTE 7. EMPLOYEE BENEFIT PLAN** The Parent adopted a 401(k) plan (the "401(k)") that will cover employees of the Company. The 401(k) permits an employer discretionary match to the plan based on either employee earnings or employee contributions to the plan. The Parent will allocate to the Company its share of the employer matching contribution, if any. #### **NOTE 8. FAIR VALUE MEASUREMENTS & STRATEGIC ADVISORY AGREEMENT** Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The valuation techniques are as follows: - (a) Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; - (b) Cost approach. Amount that would be required to replace the service capacity of an asset (replacement cost); and - (c) Income approach. Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models). {39}------------------------------------------------ ## **NOTE 8. FAIR VALUE MEASUREMENTS (CONTINUED)** The following table presents the Company's fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2021: | | Level 1 | Level 2 | Level 3 | Total | Valuation
Technique | |-----------------------------------------|------------|----------|-----------|------------|------------------------| | Assets: | | | | | | | Money market funds: | | | | | | | Held at clearing broker | \$ 35,444 | \$
- | \$
- | \$ 35,444 | (a) | | Held at bank | 1,301 | - | - | 1,301 | (a) | | Total money market funds | 36,745 | - | - | 36,745 | | | Equity securities owned, at fair value: | | | | | | | Consumer discretionary | - | 9,900 | 142,150 | 152,050 | (a) | | Energy | 85,156 | - | - | 85,156 | (a) | | Health care | - | 54 | - | 54 | (a) | | Industrials | - | 148 | - | 148 | (a) (c) | | Materials | 108,563 | - | - | 108,563 | (a) | | Real estate | - | - | 199 | 199 | (a) | | Transportation & shipping | 84,948 | - | - | 84,948 | (a) | | Total equity securities owned, at | | | | | | | fair value | 278,667 | _ 10,102 | 142,349 | 431,118 | | | Total money market funds and | | | | | | | securities owned | \$ 315,412 | \$10,102 | \$142,349 | \$ 467,863 | | Money market funds, as well as long equity securities included in Level 1, are valued at quoted market prices. Equity securities that have limited market activity are grouped in Level 2 and are valued at the quoted market prices. The Company holds shares in a non-public consumer discretionary company (the "Portfolio Company"). Utilizing market comparable companies, the Company's shares of the Portfolio Company are valued at approximately \$142,000 at December 31, 2021, and are included in Level 3 assets in the table above. In 2021, pursuant to an agreement (the "Consulting Agreement") with the Portfolio Company, the Company has been employed as its financial and strategic advisor and received a non-refundable engagement fee (the {40}------------------------------------------------ ## **NOTE 8. FAIR VALUE MEASUREMENTS (CONTINUED)** "Engagement Fee") of \$10,000. This amount is included in "Accounts payable, accrued expenses and other liabilities" on the statement of financial condition at December 31, 2021. As provided for in the Consulting Agreement, should a transaction to acquire this entity, or substantially all of its assets occur, the Company will receive a transaction fee based on the consideration received by the Portfolio Company and the Engagement Fee will be credited against such amount. {41}------------------------------------------------ ![](_page_41_Picture_0.jpeg) # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPLYING AGREED-UPON PROCEDURES** To the Member Robotti Securities, LLC We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation ("SIPC") Series 600 Rules, which are enumerated below on the accompanying General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2021. Management of Robotti Securities, LLC (the "Company") is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2021. Additionally, SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and the associated findings are as follows: - 1. Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2. Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2021, with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2021, noting no differences; - 3. Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; {42}------------------------------------------------ ![](_page_42_Picture_0.jpeg) - 4. Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5. Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences. We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to, and did not conduct an examination or a review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Company and SIPC and is not intended to be, and should not be, used by anyone other than these specified parties. White Plains, New York February 25, 2022 {43}------------------------------------------------ # **Robotti Securities, LLC (A Limited Liability Company) SCHEDULE OF SECURITIES INVESTOR PROTECTION CORPORATION ASSESSMENT AND PAYMENTS (FORM SIPC-7) FOR THE YEAR ENDED DECEMBER 31, 2021** | SIPC-7 –
general assessment | \$ 2,042 | |---------------------------------|----------| | Less amounts paid:
July 2021 | 970 | | Amount due with Form SIPC-7 | \$ 1,072 | SIPC Collection Agent: Securities Investor Protection Corporation See independent accountant's agreed-upon procedures report on schedule of assessment and payments (Form SIPC-7). Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.