# CETERA INVESTMENT SERVICES LLC X-17A-5 (2025-02-27) — Broker-dealer annual report - Company: CETERA INVESTMENT SERVICES LLC - Form: X-17A-5 - Filed: 2025-02-27 - Period: 2024-12-31 - Accession: 0000745401-25-000005 - CIK: 745401 - File #: 8-31826 - Type: Broker-dealer - Material weakness: No - Auditor: Deloitte & Touche LLP - Auditor location: Los Angeles, CA - Contact: Rodney Dowell - Phone: Vice President and P - Email: rodney.dowell@cetera.com - Website: cetera.com - Signed by: Rodney Dowell (Vice President and Principal Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/745401/000074540125000005/cispub.pdf --- {0}------------------------------------------------ #### CETERA INVESTMENT SERVICES LLC (SEC I.D. No. 8-31826) #### STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024 AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Filed pursuant to Rule 17a-5(d) under the Securities Exchange Act of 1934 as a Public Document. {1}------------------------------------------------ Public #### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response: 12 ### ANNUAL REPORTS FORM X-17A-5 PART III sec file number 8-31826 FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 AND ENDING\_12/31/2024 filing for the period beginning 01/01/2024 MM/DD/YY MM/DD/YY A. REGISTRANT IDENTIFICATION ## NAME OF FIRM: Cetera Investment Services LLC TYPE OF REGISTRANT (check all applicable boxes): Broker-dealer □ Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | 400 First St. S. Suite 300 | | | | |----------------------------------------------------------------------------------------------------|------------------------------------------------------------|-----------------|-------------------------------------------| | | (No. and Street) | | | | St. Cloud | MN | | 56302 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Rodney Dowell | (310) 341-1853 | | rodney.dowell@cetera.com | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Deloitte & Touche LLP | | | | | | (Name - if individual, state last, first, and middle name) | | | | 555 W. 5th Street, Floor 27 Los Angeles | | CA | 90013 | | (Address) | (City) | (State) | (Zip Code) | | October 20, 2003 | | 34 | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable | | | FOR OFFICIAL USE ONLY | | | \* Claims for exemption from the requirement that the annual reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. {2}------------------------------------------------ #### OATH OR AFFIRMATION | Rodney Dowell | , swear (or affirm) that, to the best of my knowledge and belief, the | |-------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------| | financial report pertaining to the firm of Cetera Investment Services LLC (the "Company") | as of | | December 31 | 2 024 is true and correct. I further swear (or affirm) that neither the company nor any | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. Title: Principal Financial Officer | OFFICIAL STAMP | |-----------------------------------------| | ROBIN C KNOLL | | NOTARY PUBLIC - OREGON | | COMMISSION NO. 1021633 | | MY COMMISSION EXPIRES FEBRUARY 13, 2026 | | | Signature: Notary Public #### This filing \*\* contains (check all applicable boxes): - (a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - [c] Statement of income (loss) or, if there is other comprehensive in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X). - [d) Statement of cash flows. - [ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - [f] Statement of changes in liabilities subordinated to claims of creditors. - [g) Notes to consolidated financial statements. - [ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - [i] Computation of tangible net worth under 17 CFR 240.18a-2. - [] Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - [ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - [1) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - [ (m) Information relating to possession or control reguirements for customers under 17 CFR 240.15c3-3. - [] (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - [] (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - [ {p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - [r] Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - @ (t) Independent public accountant's report based on an examination of the statement of financial condition. - [] (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - [ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [w] Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [ [x] Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.17-12, as applicable. - [ (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - [ (z) Other: - \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17o-5(e)(3) or 17 CFR 240.180-7(d)(2), as applicable. {3}------------------------------------------------ # Deloitte. Deloitte & Touche LLP 555 W. 5th Street. Suite 2700 Los Angeles, CA 90013-1010 USA Tel: +1 213 688 0800 Fax: +1 213-688 0100 www.deloitte.com #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Member of Cetera Investment Services LLC #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Cetera Investment Services LLC (the "Company") as of December 31, 2024, 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 the Company as of December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and 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 of the financial statement provides a reasonable basis for our opinion. Delintle = Touche LLP February 27, 2025 We have served as the Company's auditor since 2016. {4}------------------------------------------------ #### CETERA INVESTMENT SERVICES LLC #### STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024 | ASSETS | | | |------------------------------------------------------------------------|------|-------------| | Cash and cash equivalents | ಲ್ಲಿ | 102,024,026 | | Cash segregated under federal regulations | | 102,066,042 | | Receivable from clearing organizations, brokers and dealers | | 12,238,111 | | Receivable from customers | | 23,076,535 | | Commissions receivable | | 18,303,465 | | Other receivables | | 11,058,656 | | Deferred charges | | 38,318,936 | | Intangible assets, net of accumulated amortization of \$5,635,903 | | 14,858,290 | | Investments in fractional shares held by customers | | 7,339,405 | | Property and equipment, net of accumulated depreciation of \$4,947,934 | | 5,818,925 | | Other assets, net of allowance of \$41,322 | | 13,139,573 | | Total assets | 6 | 348,241,964 | | | | | | | | | | LIABILITIES AND MEMBER'S EQUITY | | | | LIABILITIES | | | | Payables to clearing organizations, brokers and dealers | ಲ್ಲಿ | 7,974,116 | | Payables to customers | | 117,139,664 | | Commissions payable | | 37,747,579 | | Related party payables | | 594,670 | | Accrued compensation | | 5,590,455 | | Accrued expenses and accounts payable | | 6,100,370 | | Deferred revenue | | 726,792 | | Repurchase obligation for investments held by customers | | 7,339,405 | | Other liabilities | | 26,736,822 | | Total liabilities | | 209,949,873 | #### COMMITMENTS AND CONTINGENCIES (Note 10) | MEMBER'S EQUITY | 138,292,091 | |---------------------------------------|-------------| | Total liabilities and member's equity | 348,241,964 | The accompanying notes are an integral part of this Statement of Financial Condition. {5}------------------------------------------------ #### CETERA INVESTMENT SERVICES LLC #### NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024 #### NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE COMPANY Cetera Investment Services LLC (the "Company") is a broker-dealer registered under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company provides brokerage and insurance services to individuals nationally through financial institutions and independent advisors. A majority of the financial advisors affiliated with the Company hold both securities and advisory licenses and provide investment advisory services through Cetera Investment Advisors LLC ("CIA"), an affliated registered investment advisor ("RIA"). As a result, all advisory business generated by the Company's advisors is recorded at CIA. The Company is a wholly owned subsidiary of Cetera Financial Group, Inc. ("Cetera Financial") which is a wholly owned subsidiary of Cetera Financial Holdings, Inc. ("Cetera Holdings is a wholly owned subsidiary of Aretec Group, Inc. ("Aretec"). Aretec is a direct wholly owned subsidiary of GC Two Intermediate Holdings, Inc. which is a wholly owned subsidiary of GC Two Holdings, Inc. ("GC Two"). GC Two is a wholly owned subsidiary of GC Three Holdings, LLC ("GC Three"). #### NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Basis of Presentation The Statement of Financial Condition was prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). #### Use of Estimates The preparation of the Statement of Financial Condition in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Statement of Financial Condition. Accordingly, actual results could differ from those estimates, and these differences could be material. #### Cash and Cash Equivalents Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and that are so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. #### Cash Segregated Under Federal Requlations The Company segregates cash pursuant to the requirements of Securities and Exchange Commission ("SEC") Rule 15c3-3 for the exclusive benefit of customers. #### Receivable from and Payable to Customers Receivable from and payable to customers include amounts related to cash and margin transactions. Customer cash receivables and payables arise from timing differences in the receipt and disbursement of customer funds. In margin accounts, the Company extends credit to its customers to finance their purchases {6}------------------------------------------------ of securities. Securities owned by customers are held as collateral for margin receivables. Such collateral is not reflected in the Statement of Financial Condition. #### Commissions Receivable and Payable Commissions receivable includes commissions from brokerage, mutual fund, and direct private placement transactions, traded but not yet receivable also includes mutual fund and annuity trailers. Commissions payable related to these transactions are recorded based on estimated payout ratios for each product as commission revenue is accrued. #### Other Receivables Other receivables primarily consist of accrued customer account fees, accrued receivables related to cash sweep programs, and accrued reimbursements and allowances from product sponsors. #### Deferred Charges The Company identifies all significant costs to obtain or fulfill a contract with a financial institution investment program and advisor. These costs include transition and growth allowances and advisor recruiting costs. Transition and growth allowances are provided to the Company's investment programs and are used for costs associated with the program's conversion, growth, and training. Transition and growth allowances are recognized as assets and amortized over the related contractual agreement (typically 5-7 years). Advisor recruiting costs are recognized as assets and amortized on a straight-line basis over the estimated 20-year useful life of an advisor relationship. The unamortized balance of these assets is presented as Deferred charges in the Company's Statement of Financial Condition. As of December 31, 2024, the Company had unamortized deferred charges of \$38,318,936. As of December 31, 2024, the weighted average remaining useful life was 6.0 years. #### Intangible Assets Intangible assets that are deemed to have definite lives are amortized over their useful lives, generally from 4 - 20 years. See Note 6 - "Intangible Assets", for additional information. Definite-lived intangible assets subject to amortization are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the estimated fair value of the asset or asset group. There was no impairment of definite-lived intangible assets recognized during the year ended December 31, 2024. #### Investments in Fractional Shares Held by Customers The Company offers a Dividend Reinvest Program ("DRIP") that allows investors to reinvest cash dividends into additional shares of the underlying stock which may result in fractional shares transferred to client accounts. Fractional shares held by customers do not meet the criteria for derecognition under ASC 860, "Transfers and Servicing", and as such are accounted for as a secured borrowing (repurchase obligation) with the underlying financial assets pledged as collateral. These financial assets are presented as investments in fractional shares held by customers with a corresponding repurchase obligation for investments held by customers on the Statement of Financial Condition. The Company elected fair value option ("FVO") to measure the repurchase obligation. The fair value of these investments is determined by quoted prices in active markets and are classified as Level 1 within the fair value hierarchy. {7}------------------------------------------------ #### Securities Owned and Securities Sold, Not Yet Purchased Securities owned, and securities sold, not yet purchased are recorded on a trade date basis. Securities owned, and securities sold not yet purchased at fair value. As of December 31, 2024, securities owned of \$195,753 are included in Other assets and an immaterial amount of securities sold, not yet purchased are included in Other liabilities in the Statement of Financial Condition. See Note 3 - "Fair Value Measurements" for more information. #### Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Office furniture and equipment, and internally developed and purchased software are depreciated using the straight-line method over their estimated useful lives ranging from 3 to 10 years. Leasehold improvements are amortized over the lesser of their useful lives or the term of the lease. #### Other Assets Other assets include an alternative investment in a privately held equity investment of \$4,158,340, which is measured using net asset value. Other assets also include prepaid expenses and deposits with brokers and clearing organizations as well as immaterial balance of advisor advances, net of allowance for bad debt. The Company estimates expected credit losses for advisor advances based on evaluation of several factors related to credit risk, including financial advisors' affiliation status and advance purpose. Additionally, we consider overall macro-economic factors that may impact estimated expected credit losses. The methodologies and assumptions used in estimating credit losses are regularly evaluated to determine if our estimates are appropriate with adjustments made on a quarterly basis. #### Other Liabilities Other liabilities include financial institution investment program transition and growth reserves of \$25,395,736. As part of these programs, the Company will provide an allowance to the financial institution to support conversion, growth, and training. Transition and growth reserves are initially recorded as liabilities and subsequently adjusted based on the amount of eligible costs reimbursed to the financial institution. The corresponding asset is recorded in Deferred charges in the Statement of Financial Condition. #### Deferred Revenue The Company records deferred revenue when cash payments are received or due in advance of its performance obligation, including amounts which are refundable. #### Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities (PBEs). This ASU is effective for the Company for annual periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its financial statement, however, it does not expect this update to have an impact on its financial condition as the standard is disclosure-related only. #### Recently Adopted Accounting Pronouncements In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment {8}------------------------------------------------ performance. This ASU also requires that an entity with a single reportable segment, such as the Company, provide all of the disclosures required as part of the updates and all existing disclosures required by Topic 280. This update is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted this ASU on January 1, 2024, and the adoption did not have any impact on its financial condition as the standard was disclosure-related only. #### NOTE 3 - FAIR VALUE MEASUREMENTS The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. U.S. GAAP defines three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 - Unobservable inputs that reflect the entity's own assumptions about the data inputs that market participants would use in the pricing of the asset or liability and are consequently not based on market activity. The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is the most significant to the fair value measurement in its entirety. A review of the fair value hierarchy classification is conducted on an annual basis. Changes in the type of inputs used in determining fair value may result in a reclassification for certain assets. The Company assumes all transfers occur at the beginning of the reporting period in which they occur. For the year ended December 31, 2024, there were no transfers between Levels 1, 2, and 3. The Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis by product category as of December 31, 2024 is as follows: {9}------------------------------------------------ | | Level 1 | Level 2 | Level 3 | Total | |-----------------------------------------------------------------------|------------------|--------------|---------|-----------------| | Assets: | | | | | | | | | | | | Cash equivalents - money market funds | ಳಿ
86,319,225 | ക | ക | \$ 86,319,225 | | Investments in fractional shares held by
customers | 7,339,405 | | | 7,339,405 | | Securities owned - recorded in Other
assets: | | | | | | Equity securities | 92 | 189,525 | | 189,617 | | Municipal bonds | 6,136 | | | 6,136 | | Total securities owned | 6,228 | 189,525 | | 195,753 | | | | | | | | Total | 93,664,858 | ಿ
189,525 | ക | 93,854,383
ನ | | | | | | | | | Level 1 | Level 2 | Level 3 | Total | | Liabilities: | | | | | | Repurchase obligation for investments
held by customers | ಿ
7,339,405 | ക്ക | ക | 7,339,405
ಕೆ | | Securities sold, not yet purchased-
recorded in Other liabilities: | | | | | | Equity securities | 89 | | | 89 | | Total securities sold, not yet
purchased | 89 | | | 89 | Cash equivalents include money market mutual fund instruments, which are short term in nature with readily determinable values derived from active markets. Publicly traded equity securities with sufficient trading volume are fair valued by management using quoted prices in active markets. Accordingly, these securities are classified within Level 1. Municipal bonds and convertible preferred equities included in equity securities are fair valued by management using third-party pricing services and are classified as Level 2. #### Fair Value of Financial Instruments not Measured at Fair Value The fair value of cash and cash equivalents and cash segregated under federal and other regulations was estimated to approximate the carrying value and are classified as Level 1 of the fair value hierarchy. The fair value of receivable from and payables to clearing organizations, brokers and dealers, receivable from and payables to customers, commissions receivable and payable, related party payables, other receivables, deferred charges, accrued compensation, accrued expenses and accounts payable, and deferred revenue were estimated to approximate the carrying value and are classified as Level 2 of the fair value hierarchy due to their short-term nature. #### NOTE 4 - RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS Receivable from and payable to brokers, dealers and clearing organizations result from the Company's processing of customer transactions and consisted of the following as of December 31, 2024: {10}------------------------------------------------ | Receivables: | | |----------------------------|-----------------| | Omnibus account receivable | \$ 11,601,513 | | Fails to deliver | 636.598 | | Total | 12,238,111 | | Payables: | | | Clearing organization | ea
4.186,260 | | Fails to receive | 3,787,856 | | Total | 7,974,116
ದ್ | #### NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2024: | 4.592.916 | |-------------| | 5,432,601 | | 741.342 | | 10.766.859 | | (4.947.934) | | 5,818,925 | | | #### NOTE 6 -INTANGIBLE ASSETS The following tables present the components of intangible assets with definite lives subject to amortization at December 31, 2024: | As of December 31, 2024 | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount | Weighted
Average
Remaining
Useful Life
(years) | |---------------------------------|-----------------------------|-----------------------------|---------------------------|------------------------------------------------------------| | Financial advisor relationships | \$ 20.494.193 | \$ (5,635,903) | \$ 14,858,290 | 14.5 | | Total | \$ 20,494,193 | \$ (5,635,903) | \$ 14,858,290 | | #### NOTE 7 - EMPLOYEE BENEFIT PLANS The employees of the Company are covered by a 401(k) defined contribution plan and a health and welfare plan that are administered by Cetera Financial. Subject to eligibility requirements, all employees are eligible to participate. The 401(k) plan features an employer-matching program. The health and welfare plan is a self-insured plan sponsored by Cetera Financial. Costs of the plans are allocated to the Company based on rates determined by Cetera Financial. The Company had no separate employee benefit plans in 2024 and relied on Cetera Financial to cover all eligible employees. All benefits that were paid by Cetera Financial were charged back to the Company for reimbursement. {11}------------------------------------------------ #### NOTE 8 - RELATED PARTY TRANSACTIONS Cetera Financial allocates a portion of its general administrative expenses to the Company based on factors including assets total revenues, under management, sales volume, number of personnel and producing advisors. In 2024, the Company allocated expenses to its related party, CIA, per an expense sharing agreement. Further, the Company provides clearing and other services to CIA in connection to its advisory accounts. The Company provides custodial services for certain customer retirement accounts of three affliated companies, Cetera Advisors LLC, Cetera Advisor Networks LLC and Cetera Financial Specialists LLC. Because these transactions and agreements are with affiliates, they might not have been the same as those recorded if the Company were not a wholly owned subsidiary of Cetera Financial and affiliated with the other entities. As of December 31, 2024, the Company had a \$585,493 outstanding pavable to Cetera Financial and \$9,177 of outstanding payables to other affiliates. Additionally, the Company had a \$324,755 outstanding receivable from CIA and \$90,861 of outstanding receivables from other affiliates, which are included in other assets as of December 31, 2024. Cetera Financial may fund note receivables as part of the recruitment effort to the Company's advisors. Those notes typically require the payback of principal and interest to Cetera Financial over periods of three to four years. The issuance of these notes by Cetera Financial is typically accompanied by the execution of a bonus agreement, between the financial advisor and the Company, providing for the payment based on the passage of time or attainment of certain production targets. Given the credit agreements Aretec has with its lenders, in the event of a default the Company's assets could be used to satisfy Aretec's obligations. #### NOTE 9 - OFF BALANCE SHEET RISK The Company is engaged in various principal and brokerage activities with counterparties primarily including broker-dealers, banks and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. In the event a customer fails to satisfy its cash or margin account obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices in order to fulfill the customer's obligations. The Company seeks to control the risk associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. The Company monitors required margin levels daily and pursuant to such guidelines, requires to deposit additional collateral or reduce positions, when necessary. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains its cash in bank deposit accounts, the balances of which, at times, may exceed federally insured limits. Exposure to credit risk is reduced by maintaining the Company's banking relationships with high credit quality financial institutions. The Company holds securities that can potentially subject the Company to market risk. The amount of potential gain or loss depends on the securities performance and overall market activity. The Company monitors its securities positions on a monthly basis to evaluate its positions and if applicable, may elect to sell all or a portion to limit the loss. {12}------------------------------------------------ #### NOTE 10 - COMMITMENTS AND CONTINGENCIES Service contracts - The Company has contracted for technology processing services. The following table shows the future annual minimum payments due: | | | Year Ended December 31, | | |------------|----|-------------------------|--| | 2025 | ಳು | 4,610,000 | | | 2026 | | 4.657.500 | | | 2027 | | 5,212,438 | | | 2028 | | 5,319,613 | | | 2029 | | 471.233 | | | Thereafter | | 1,229,220 | | | Total | ಕಾ | 21,500,004 | | Line of credit - The Company has a \$50,000,000 uncommitted collateralized line of credit with a nationally recognized financial institution. The line of credit does not have a stated expiration. There were no outstanding borrowings as of December 31, 2024. Legal and regulatory proceedings related to business operations - The Company is involved in legal proceedings from time to time arising out of business operations, including arbitrations and lawsuits involving private claimants, subpoenas, investigations and other actions by government authorities and selfregulatory organizations. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases in which claimants seek indeterminate damages, the Company cannot estimate what the possible loss or range of loss related to such matters will be. The Company recognizes a loss with regard to a legal proceeding when it believes it is probable a loss has occurred, and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company maintains insurance coverage, including general liability, directors and officers, errors and omissions, excess entity errors and omissions and fidelity bond insurance. The Company is a registered broker-dealer and, as such, is subject to the continual scrutiny of those who regulate its industry, including FINRA, SEC, and the various securities commissions of the states and iurisdictions in which it operates. As part of the requlatory process, the Company is subject to routine examinations, the purpose of which is to determine the Company's compliance with rules and regulations promulgated by the examining regulatory authority. It is not uncommon for the regulators to assert, upon completion of an examination, that the Company has violated certain of these rules and regulations. Where possible, the Company endeavors to correct such asserted violations. In certain circumstances, and depending on the nature and extent of the violations, the Company may be subject to disciplinary action, including fines. In August 2024, the Company and its affiliates settled with the SEC regarding self-reported possible violations of the recordkeeping requirements of the federal securities laws in connection with businessrelated off-channel communications. When there is indemnification or insurance, the Company may engage in defense or settlement and subsequently seek reimbursement for such matters. #### NOTE 11 - NET CAPITAL REQUIREMENTS The Company is subject to the SEC Uniform Net Capital Rule 15c3-1. The Company computes its net capital pursuant to the alternative method provided for in the Rule 15c3-1, which requires the maintenance of minimum net capital of the greater of \$250,000 or 2% of aggregate debit items. {13}------------------------------------------------ At December 31, 2024, the Company had net capital of \$50,932,864, which was \$50,477,732 in excess of required net capital of \$455,132. #### NOTE 12 - SEGMENT REPORTING The Company is engaged in a single line of business as a securities broker-dealer. Operating exclusively in the United States, the Company provides brokerage and insurance services through independent financial advisors. Operations constitute a single segment and therefore, a single reportable segment because the chief operating decision makers ("CODM") manage business activities using information of the Company as a whole. The CODM, listed below, use net income, including significant expenses such as commissions, to evaluate the business's performance, predominantly in the forecasting process, management of resources, and to make operational decisions to manage the Company. The Company does not have any customers that individually account for over 10% of revenues. Chief Executive Officer, Cetera Holdings Chief Executive Officer, Cetera Financial Group Chief Financial Officer, Cetera Financial Group The Company's financial statements contain all pertinent information, including assets, net income, and significant expenses, utilized by the CODM to manage the Company. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies. #### NOTE 13 - SUBSEQUENT EVENTS The Company has evaluated activity through the date the financial statement was issued and concluded that no subsequent events have occurred that would require recognition or disclosure in the financial statement. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.