# GORDON, HASKETT CAPITAL CORPORATION X-17A-5 (2024-06-25) — Broker-dealer annual report - Company: GORDON, HASKETT CAPITAL CORPORATION - Form: X-17A-5 - Filed: 2024-06-25 - Period: 2024-03-31 - Accession: 0000766634-24-000001 - CIK: 766634 - File #: 8-33944 - Type: Broker-dealer - Material weakness: No - Auditor: Sanville & Company LLC - Auditor location: Huntingdon Valley, PA - Contact: Brendan Lane - Phone: 2128836896 - Signed by: Michael E. Haskett (Chairman) Original filing: https://www.sec.gov/Archives/edgar/data/766634/000076663424000001/gordonhaskettcc24_sf-audit.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: Expires: Estimated average burden hours per response: # ANNUAL REPORTS FORM X-17A-5 PART III SEC FILE NUMBER | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | FACING PAGE | | | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|--|-----------------|------------| | | | | | | | FILING FOR THE PERIOD BEGINNING _____________________ AND ENDING ______________________ | MM/DD/YY | | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF FIRM: _______________________________________________________________________ | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
Broker-dealer
Security-based swap dealer
Major security-based swap participant
Check here if respondent is also an OTC derivatives dealer | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | _____________________________________________________________________________________ | | | | | | | (No. and Street) | | | | | _____________________________________________________________________________________ | | | | | | (City) | (State) | | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | _____________________________________________________________________________________ | | | | | | (Name) | (Area Code – Telephone Number) | | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | _____________________________________________________________________________________ | (Name – if individual, state last, first, and middle name) | | | | | _____________________________________________________________________________________ | | | | | | (Address) | (City) | | (State) | (Zip Code) | | | | | | | | _____________________________________________________________________________________
(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 be covered by the 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. {1}------------------------------------------------ | Michael E. Haskett | swear (or affirm) that, to the best of my knowledge and belief, the | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------| | financial report pertaining to the firm of Gordon, Haskett Capital Corporation | as of | | 3/31 | 2 024 | | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | ![](_page_1_Figure_2.jpeg) | gnature: | | |----------|--| | tle: | | | Chairman | | - - - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Those Charged With Governance of Gordon, Haskett Capital Corporation #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Gordon, Haskett Capital Corporation (the "Company") as of March 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement 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. This is our initial year as the Company's auditor. Huntingdon Valley, Pennsylvania June 12, 2024 {3}------------------------------------------------ # GORDON, HASKETT CAPITAL CORPORATION STATEMENT OF FINANCIAL CONDITION MARCH 31, 2024 (FILED PURSUANT TO RULE 17a-5(e)(3) UNDER THE SECURITIES EXCHANGE ACT OF 1934) AS A PUBLIC DOCUMENT {4}------------------------------------------------ #### GORDON, HASKETT CAPITAL CORPORATION TABLE OF CONTENTS MARCH 31, 2024 | | Page | |---------------------------------------------------------|-------| | Report of Independent Registered Public Accounting Firm | 1 | | Financial Statement | | | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3 - 8 | {5}------------------------------------------------ #### GORDON, HASKETT CAPITAL CORPORATION STATEMENT OF FINANCIAL CONDITION MARCH 31, 2024 #### ASSETS | Cash and cash equivalents
Clearing deposit
Commissions receivable
Furtniature and equipment (net of accumulated depreciation of \$253,681) | \$
221,271
1,156,956
91,181
__________- | |-----------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------| | Total assets | \$ 1,469,408 | #### LIABILITIES AND STOCKHOLDERS' EQUITY | Liabilities | | |---------------------------------------------------------------------------------------------|-------------------------------| | Accounts payable and accrued expenses | 40,000
\$ | | Due to related parties | 138,505 | | Total liabilities | 178,505 | | Subordinated borrowings | 1,000,000 | | Stockholders' equity
Common stock, par value \$.01 per share
Authorized: 1,000 shares | | | Issued and outstanding: 96 shares
Additional paid-in capital
Accumulated deficit | 1
6,543,050
(6,252,148) | | Total stockholders' equity | 290,903 | | Total liabilities and stockholders' equity | \$ 1,469,408 | See notes to financial statement. {6}------------------------------------------------ #### Note 1 - Nature of Business and Summary of Significant Accounting Policies #### Nature of Business Gordon, Haskett Capital Corporation (the "Company") is a Delaware corporation formed for the purpose of conducting business as a broker-dealer in securities. The Company is registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). The Company, like other securities industry entities, is affected by economic and political conditions. The Company operates under the exemptive provisions of Paragraph (k)(2)(ii) of Rule 15c3-3 of the Securities Exchange Act of 1934, and clears all transactions on behalf of customers on a fully- disclosed basis with a clearing broker-dealer. The clearing broker-dealer carries all of the accounts of the customers and maintains and preserves all related books and records as are customarily kept by a clearing broker-dealer. #### Basis of Presentation The accompanying financial statement of the Company has been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). #### Related Parties' Business Arrangements The Company has several agreements with certain affiliated related parties under common ownership with its shareholders. Related Parties' affiliation and main businesses arrangements follow (see Note 7): Gordon Haskett Research Advisors (GHRA), owned 56% by the same two shareholders of the Company, provides research services to institutional investors. GHRA agreed to pay the Company for providing various professional, legal and accounting, consulting, office management and administrative services. Indata Services Co., LLC (Indata), owned 100% by the same two shareholders of the Company, provides portfolio management services. Indata agreed to pay the Company for providing various professional legal and accounting, consulting, office management and administrative services. Michael E. Haskett (MEH), a 50% shareholder of the Company, provides consulting and management services to the Company. The Company agreed to pay for office space rental including utilities to 441 Lexington Avenue Co., owned 99% by the 50% shareholder of the Company. Gordon Property Group LLC, consisting of several separate operating real estate entities, ownership ranging from 97% to 100% by the 50% shareholder of the Company, agreed to pay the Company for providing various professional legal and accounting, consulting, office management and and administrative services. {7}------------------------------------------------ ### Note 1 - Nature of Business and Summary of Significant Accounting Policies (Continued) #### Use of Estimates The preparation of a financial statement in conformity with 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 and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ### Cash and Cash Equivalents Cash and cash equivalents include short-term money market funds and highly-liquid debt instruments purchased with an original maturity of three months or less when purchased. #### Credit Losses The Company complies with ASC Topic 326, Financial Instruments – Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset. Under the accounting update, the Company has the ability to determine that there are no expected credit losses in certain circumstances (e.g. based on the credit quality of the customer). The Company's commissions receivable are reported at their estimated net realizable value. Management determined that an allowance for doubtful accounts was not necessary as of March 31, 2024. #### Receivables and Deferred Revenue Commissions receivable of \$91,181 are included on the statement of financial condition at March 31, 2024. #### Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. "exit price") in an orderly transaction between market participants at the measurement date. The fair value methodology prioritizes techniques used to measure fair value into three broad levels: - Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. - Level 2 Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. - Level 3 Valuations are based on inputs that are unobservable and significant to overall fair value measurement. {8}------------------------------------------------ #### Note 1 - Nature of Business and Summary of Significant Accounting Policies (Continued) #### Income Taxes The Company has elected, by unanimous consent of its stockholders, to be taxed under the provisions of subchapter "S" of the Internal Revenue Code and reports its taxable income on a cash basis for each calendar year. Under those provisions, the Company does not provide for federal and state corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal and state income taxes on their respective shares of the Company's taxable income. However, the Company is subject to New York City corporate taxes because New York City does not recognize S corporation status. Deferred tax assets of approximately \$470,000 are fully offset by a contra valuation allowance in the same amount. The Company recognizes the tax benefits of uncertain tax positions only where the positions are "more likely than not" to be sustained assuming examination by tax authorities and determined to be attributed to the Company. The determination of attribution, if any, applies for each jurisdiction where the Company is subject to income taxes on the basis of tax laws and regulations of the jurisdiction. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability of the various jurisdictions may be materially different from management's estimate which is zero as of March 31, 2024. Management has analyzed the Company's tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded for related tax positions taken on returns filed for open years 2020-2022, or expected to be taken in year 2023 tax returns. The Company identifies its major tax jurisdictions as U.S. Federal, New York State and New York City where the Company operates. The Company is not aware of any tax positions for which is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of interest expenses. As of March 31, 2024, the Company has no accrued interest or penalties related to uncertain tax positions. ### Furniture and Equipment Furniture and equipment consists of computers, and furniture and fixtures which are recorded at cost and depreciated over their useful lives of five years. Maintenance and repairs are charged to operations. Major renewals and improvements are capitalized. #### Lease Accounting The Company adopted the lease accounting guidance in Accounting Standards Update No. 2016-2, Leases (Topic 842) ("ASC Topic 842"). The Company defines a short-term lease as a lease that, at the commencement date, has a lease term of 12 month or less and does not contain an option to purchase the underlying asset that the lease is reasonably certain to exercise. The Company's lease obligations are deemed to be short-term. {9}------------------------------------------------ ## Note 2 – Fair Value Measurements The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs and methodology used for valuing the following securities are not necessarily an indication of the risk associated with investing in those securities. The Company records money market funds at amortized cost which is represented by the net asset value and reflects its fair value at March 31, 2023. | Description | Level 2 | |--------------------|-----------------------------------------| | Money Market Funds | \$ 218,194 Reported as cash equivalents | At March 31, 2024 the carrying value of the Company's cash, due to related party, accounts payable and accrued expenses approximate their fair value due to their short term nature. #### Note 3 - Furniture and Equipment The components of furniture and equipment are as follows: | Office equipment
Furniture and fixtures | \$ 212,412
41,269
253,681 | |--------------------------------------------|---------------------------------| | Less: Accumulated depreciation | (253,681) | | | - 0 -
\$ | #### Note 4 - Subordinated Borrowings Subordinated Borrowings totaling \$1,000,000 at March 31, 2024 consist of two separate \$500,000 subordinated loan agreements (SLAs) payable to one of the its stockholders, bearing interest at 1% per annum with maturity dates of February 28, 2025 and December 1, 2024, respectively. Each SLA provides each year for an automatic additional year rollover from its maturity date. Both SLAs have been approved by FINRA as allowable in computing the Company's Net Capital Rule (SEC Rule 15c3-1. ## Note 5 - Net Capital Requirement The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At March 31, 2024, the Company had net capital of \$1,286,539 which exceeded the requirement of \$50,000 by \$1,236,539. The Company's net capital ratio was 0.14 to 1. {10}------------------------------------------------ ## Note 6 - Financial Instruments with Off-Balance-Sheet Credit Risk As a securities broker, the Company is engaged in buying and selling securities for a diverse group of institutional and individual investors. The Company 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 a clearing broker-dealer on a fully-disclosed basis. The Company's exposure to credit risk associated with nonperformance of customers in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair 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-dealer provides that the Company is obligated to assume any exposure related to such nonperformance by its customers. The Company seeks to control the aforementioned risks by requiring customers to maintain margin collateral in compliance with various regulatory requirements and the clearing broker-dealer's internal guidelines. The Company monitors its customer activity by reviewing information it receives from its clearing broker-dealer on a daily basis, and requiring customers to deposit additional collateral, or reduce positions, when necessary. In the normal course of business, the Company indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, against specific potential losses in connection with their acting as an agent of, or providing services to, the Company. The Company also indemnifies some clients against potential losses incurred in the event specific third-party service providers, including sub custodians and third-party brokers, improperly executed transactions. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications. #### Note 7 – Related Party Transactions The Company has entered into a Research Exchange Vendor Agreement with GHRA (the vendor) whereby the Vendor provided research services pursuant to Section 28 (e) of the Securities Exchange Act of 1934 (the soft dollar arrangements). Due to Related Parties totaling \$138,505 at March 31, 2024 consists of amounts payable to GHRA. The Company has entered into certain written expense sharing agreements (ESA) with certain affiliates under common ownership (see Note 1). The Company leases office space from a related entity that is wholly owned by a 50% stockholder of the Company, on a month-to-month basis. Due to the above related party transactions, the financial condition of the Company may differ from those that would have been achieved had the Company operated autonomously or as an entity independent of its affiliates. {11}------------------------------------------------ ## Note 8 – Employee Benefit Plans – 401(k) Plan The Company sponsors a non-contributory 401(k) Plan for its employees. This Plan provides for taxdeferred salary deductions for employees meeting certain minimum age and service requirements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.