# INTESA SANPAOLO IMI SECURITIES CORP. X-17A-5 (2021-02-26) — Broker-dealer annual report - Company: INTESA SANPAOLO IMI SECURITIES CORP. - Form: X-17A-5 - Filed: 2021-02-26 - Period: 2020-12-31 - Accession: 0000810882-21-000003 - CIK: 810882 - File #: 8-37444 - Material weakness: No - Auditor: crowe llp - Auditor location: new york, NY - Contact: vincent di bella - Phone: 9174203311 - Signed by: Vincent Di Bella (chief financial officer) Original filing: https://www.sec.gov/Archives/edgar/data/810882/000081088221000003/2020publicreportb.pdf --- {0}------------------------------------------------ # Intesa Sanpaolo IMI Securities Corp. Statement of Financial Condition December 31, 2020 Filed as PUBLIC information pursuant to Rule 17a-5(d) under the Securities Exchange Act of 1934 {1}------------------------------------------------ UNITED STATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: October 31,2023 Estimated average burden hours per response ...... 12.00 SEC FILE NUMBER 8-37444 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the | | | Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | | |--------------------------------------------------------------------------------------------|-------------------------------------------------------|-----------------------------------------------------------|--------------------------------|--| | REPORT FOR THE PERIOD BEGINNING 01/01/2020 | | AND ENDING 12/31/2020 | | | | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME oF BROKER-DEALER: lntesa Sanpaolo IMI Securities Corp. | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | 1 William Street 9th Floor | | | | | | | (No. and Street) | | | | | New York | New York | 10004 | | | | (City) | (State) | (Zip Code) | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Vincent DiBella | 212-326-1 11 8 | | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
Crowe LLP | (Name - if individual, state last,firsl, middle name) | | | | | 485 Lexington Ave | New York | New York | 10017 | | | (Address) | (City) | (State) | (Zip Code) | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2)* > Potential persons who are to respond to the collection of information contained In this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1410 (11-05) {2}------------------------------------------------ ### OATH OR AFFIRMATION | 1, Vincent DiBella | | , swear (or affirm) that, to the best of | |------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | lntesa Sanpaolo Securities Corp. | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
, as | | of December 31 | 2020 | are true and correct. I further swear (or affirm) that | | | classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | Marina Belclc
Notary Public, State of NewYmk
RBgistration 1101 BE6043024
Qualified In Na ;sau County
My Commission [llpiros June 5, 20~o? | Signature
Chief Financial Officer | | '
Notary Public | | Title | | 0 (a) Facing Page.
0 (b) Statement of Financial Condition.
E1
§ (g) Computation ofNet Capital.
consolidation.
0 (I) An Oath or Affirmation. | This report** contains (check all applicable boxes):
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition.
(e) Statement of Cha,nges in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
D (f) Statement of Cha,nges in Liabilities Subordinated to Claims of Creditors.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | 0 (c) Statement oflncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement
0 (j) A Res:onciliation, including appropriate explanation of the Computation ofNet Capital Under Rule 15c3-1 and the
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | 0 (m) A copy of the SIPC Supplemental Report.
**For conditions of confidential treatment of certain portions of this filing, see section 2 40.17 a-5 (e)(3). | 0 (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholder of Intesa Sanpaolo IMI Securities Corp. New York, New York ### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Intesa Sanpaolo IMI Securities Corp. (the "Company") as of December 31, 2020, 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, 2020, in conformity with accounting principles generally accepted in the United States of America. ### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on 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 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 of the financial statement provides a reasonable basis for our opinion. Crowe II P We have served as Intesa Sanpaolo IMI Securities Corp.'s auditor since 2018. New York, New York February 26, 2021 {4}------------------------------------------------ Intesa Sanpaolo IMI Securities Corp. Statement of Financial Condition December 31, 2020 # ASSETS | Cash | ಿ | 422,768 | |-----------------------------------------------------------------------------------------|---|----------------| | Cash Segregated Under Federal and Other Regulations | | 2,000,000 | | Financial Instruments Owned, at fair value | | 110,362,363 | | Receivables From Brokers, Dealers and Clearing Organizations | | 7,831,585 | | Receivable From Affiliates | | 25,782,702 | | Receivable From Affiliated Customer | | 183,978 | | Receivable From Non-Affiliated Customers | | 11,708,895 | | ROU Operating Lease Asset | | 1,493,369 | | Fixed Assets, at cost (net of accumulated depreciation and amortization of \$1,504,202) | | 331,876 | | Deferred Taxes | | 410,512 | | Taxes Receivable | | 894,290 | | Other Assets | | 1,365,408 | | Total assets | ಳ | 162,787,746 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | | Liabilities: | | | | Payables to Brokers, Dealers and Clearing Organizations | | 992,460 | | Payables to Affiliated Customer | | 10,585,412 | | Interest and Dividends Payable | | 194,423 | | Operating Lease Liability | | 1,493,369 | | Accounts Payable and Accrued Expenses | | 2,884,342 | | Total liabilities | | 16,150,006 | | Leases (Note 8) | | | | Stockholder's Equity: | | | | Common stock (66,500 shares authorized; 44,500 shares issued and | | | | outstanding, no par value) | | 44,500,000 | | Additional paid-in capital | | 102,000,000 | | Retained Earnings | | 137,740 | | Total stockholder's equity | | 146,637,740 | | Total liabilities and stockholder's equity | | \$ 162,787,746 | | See Notes to Statement of Financial Condition | | | {5}------------------------------------------------ #### Note 1. Description of Organization Intesa Sanpaolo IMI Securities Corp. (the "Company"), formerly known as Banca IMI Securities Corp., changed its name on July 20, 2020. This is the result of the merger of Banca IMI S.p.A. into its parent company, Intesa Sanpaolo S.p.A. (the "Group") The Company is registered as a broker dealer in securities under the Securities Exchange Act of 1934. The Company is regulated by the Securities and Exchange Commission (the "SEC"), and the Financial Industry Regulatory Authority, Inc. (FINRA"). The Company is a member of the New York Stock Exchange (the "NYSE") and other regional exchanges. The Company is also registered as an international dealer with the Ontario Securities Commission (the "OSC"). The Company is a wholly owned subsidiary of IMI Capital Markets USA Corporation (IMI U.S.), which is wholly owned by IMI Investments S.A., a wholly owned subsidiary of the "Group". As part of the Group's investment banking business, the Company serves as an agent of the Group in effecting equity and fixed income products on behalf of the group. Conversely the Company acts as agent for U.S. institutional investors, effecting trades in European equity securities. The Company also provides chaperoning services on behalf of the group for related US underwriting transactions. Such activities are settled by the Company through domestic and foreign clearing organizations as well as foreign affiliates with the underlying transactions conducted only on either a delivery versus payment or receipt versus payment basis. #### Significant Accounting Policies Note 2. Basis of Presentation: The financial statements include the accounts of Intesa Sanpaolo IMI Securities Corp., and are presented in accordance with accounting principles generally accepted in the United States of America. Use of Estimates: The preparation of the 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 the disclosure of contingent assets and liabilities at the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Securities Transactions: Customer securities transactions are recorded on the settlement date, which is generally three business days after the trade date. Receivables from and payables to customers include amounts related to securities transactions. The value of securities owned by customers collateralizing their balances due to the Company is not reflected in the accompanying statement of financial condition. Cash and Cash Equivalents: The Company considers all highly liquid investments, with original maturities of three months or less at the date of acquisition that are not held for sale in the ordinary course of business, to be cash equivalents. Cash Segregated Under Federal and Other Regulations: The Company segregates cash in a special reserve bank account for the exclusive benefit of customers under Rule 15c3-3 of the Securities Exchange Act of 1934. {6}------------------------------------------------ # Note 2. Significant Accounting Policies (continued) Financial Instruments Owned: Proprietary securities transactions and the related revenues and expenses are recorded on a trade-date basis. Financial instruments owned are stated at fair value with related changes in unrealized appreciation reflected in principal transactions revenues. Fair value is generally based on published market prices or other relevant factors including dealer price quotations. Fixed Assets: Furniture, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Straight-line depreciation of furniture and equipment is determined using estimated useful lives of three years. Leasehold improvements are amortized over the lesser of the economic useful life of the improvement or the lease. Management reviews furniture, equipment and leasehold improvements whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Fair Value of Financial Instruments: Substantially all of the Company's assets and liabilities are carried at fair value or contracted amounts that approximate fair value. Assets that are recorded at contracted amounts approximating fair value consist largely of short-term secured receivables, including customer receivables and certain other receivables. Similarly, the Company's short-term liabilities, such as customer and noncustomer payables and certain other payables, are recorded at contracted amounts approximating fair value. These instruments generally have variable interest rates and/or short-term maturities, in many cases overnight and, accordingly, their fair values are not materially affected by changes in interest rates. Income Taxes: The Company is included in the consolidated federal, state and local income tax returns of IMI U.S. Income taxes have been determined on a separate company basis. Financial Accounting Standards Board (the "FASB") ASC 740, Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more likely than not" of being sustained "when challenged" or "when examined" by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense and liability in the current year. The Company did not have any unrecognized tax benefits as of December 31, 2020, and do not expect any in the next twelve months. Income taxes are provided under the provisions of ASC 740, which requires the Company to use the asset and liability method. This method requires that deferred taxes be adjusted to reflect the tax rates at which future taxable amounts will be settled or realized. The effects of tax rate changes on future deferred tax liabilities and deferred tax assets, as well as other changes in income tax laws, are recognized in net earnings in the period such changes are enacted. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. ### New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The main objective of this new standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial assets and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 applies to all entities and is effective for fiscal years beginning after December 15, 2019 for "public entities," including non-public registered broker-dealers, with early adoption permitted. {7}------------------------------------------------ # **1RWH6LJQLILFDQW\$FFRXQWLQJ3ROLFLHVFRQWLQXHG** 2Q-DQXDU\WKH&RPSDQ\DGRSWHG\$68)LQDQFLDO,QVWUXPHQWV± &UHGLW/RVVHV7RSLF 0HDVXUHPHQWRI&UHGLW/RVVHVRQ)LQDQFLDO,QVWUXPHQWVDVDPHQGHGZKLFKUHSODFHVWKHLQFXUUHG ORVVPHWKRGRORJ\ZLWKDQH[SHFWHGORVVPHWKRGRORJ\WKDWLVUHIHUUHGWRDVWKHFXUUHQWH[SHFWHGFUHGLW ORVV&(&/ PHWKRGRORJ\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH&RPSDQ\DFFRXQWVIRUHVWLPDWHGFUHGLWORVVHVRQILQDQFLDODVVHWVPHDVXUHGDWDQDPRUWL]HGFRVW EDVLVDQGFHUWDLQRIIEDODQFHVKHHWFUHGLWH[SRVXUHVLQDFFRUGDQFHZLWK)\$6%\$6&)LQDQFLDO ,QVWUXPHQWV± &UHGLW/RVVHV)\$6%\$6&UHTXLUHVWKH&RPSDQ\WRHVWLPDWHH[SHFWHGFUHGLWORVVHV RYHUWKHOLIHRILWVILQDQFLDODVVHWVDQGFHUWDLQRIIEDODQFHVKHHWH[SRVXUHVDVRIWKHUHSRUWLQJGDWHEDVHG RQUHOHYDQWLQIRUPDWLRQDERXWSDVWHYHQWVFXUUHQWFRQGLWLRQVDQGUHDVRQDEOHDQGVXSSRUWDEOHIRUHFDVWV 5HFHLYDEOHVIURPDQG SD\DEOHVWREURNHUGHDOHUVDQG&OHDULQJ2UJDQL]DWLRQV 7KH&RPSDQ\¶V UHFHLYDEOHVIURPEURNHUGHDOHUVDQGFOHDULQJRUJDQL]DWLRQVLQFOXGHDPRXQWVUHFHLYDEOHIURPVHWWOHG WUDGHVDFFUXHGLQWHUHVWUHFHLYDEOHVDQGFDVKGHSRVLWV3D\DEOHVWREURNHUGHDOHUVSULPDULO\FRQVLVWRI VHFXULWLHVIDLOHGWRUHFHLYH\$SRUWLRQRIWKH&RPSDQ\¶VWUDGHVDQGFRQWUDFWVDUHFOHDUHGWKURXJKD FOHDULQJRUJDQL]DWLRQDQGVHWWOHGGDLO\EHWZHHQWKHFOHDULQJRUJDQL]DWLRQDQGWKH&RPSDQ\%HFDXVHRI WKLVGDLO\VHWWOHPHQWWKHDPRXQWRIXQVHWWOHGFUHGLWH[SRVXUHVLVOLPLWHGWRWKHDPRXQWRZHGWKH &RPSDQ\IRUDYHU\VKRUWSHULRGRIWLPH 5HFHLYDEOHV IURP \$IILOLDWHV \$IILOLDWHG &XVWRPHUV DQG 1RQ\$IILOLDWHG &XVWRPHUV 7KH &RPSDQ\¶V UHFHLYDEOHVIURP DIILOLDWHV SULPDULO\ FRQVLVW RI FRPPLVVLRQVDQGIHHVHDUQHGIURP UHYHQXHWUDQVDFWLRQV 7KH &RPSDQ\¶V UHFHLYDEOHVIURP DIILOLDWHG FXVWRPHUV DQG QRQDIILOLDWHG FXVWRPHUV SULPDULO\ FRQVLVWV RI 593'93IDLOV 6XEVWDQWLDOO\DOORIWKHVH UHFHLYDEOHV DUHDFFRXQWHGIRUDW DPRUWL]HG FRVWQHW RIHVWLPDWHG XQFROOHFWLEOH DPRXQWVZKLFKJHQHUDOO\DSSUR[LPDWHVIDLUYDOXH7KH&RPSDQ\HVWLPDWHVDQDOORZDQFHIRUFUHGLWORVVHV RQ UHFHLYDEOHV E\ FRQVLGHULQJ FUHGLW TXDOLW\ LQGLFDWRUV RI DIILOLDWHV DQG FXVWRPHUV DQG HYDOXDWLQJ FROOHFWDELOLW\ RI UHFHLYDEOHV EDODQFHV &XUUHQWO\ WKH &RPSDQ\ GRHV QRW KDYH DQ DOORZDQFH IRU FUHGLW ORVVHVRQLWVUHFHLYDEOHV 7KH&RPSDQ\KDVDVVHVVHGWKHLPSDFWWKHXSGDWHKDVRQLWVILQDQFLDO VWDWHPHQWVDQGKDVGHWHUPLQHG WKHXSGDWHWRKDYHQRPDWHULDOLPSDFWRQWKH&RPSDQ\¶VDFFRXQWLQJIRUHVWLPDWHGFUHGLWORVVHV # **1RWH )DLU9DOXH0HDVXUHPHQW** 7KH&RPSDQ\KDVDGRSWHGWKH)\$6%\$FFRXQWLQJ6WDQGDUGV&RGLILFDWLRQ ³\$6&´ 7RSLF*Fair Value Measurements and Disclosures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{8}------------------------------------------------ ### Note 3. Fair Value Measurement (continued) - Level 1: Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Company has the ability to access at the measurement date. - Level 2: Quoted prices which are not active, or inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability. - Level 3: Prices, inputs or exotic modeling techniques that are both significant to the fair value measurement and unobservable (supported by little or no market activity). A description of the valuation techniques applied to the Company's major categories of financial instruments owned, measured at fair value are as follows - U.S. Government securities - U.S. Government securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, vields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. U.S. Government securities are categorized in level 1 or level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities. Money market fund - Money market funds consists of money market mutual funds. Cash deposits are made by the Company to the fund which invests at least 99.5% of its total assets in cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities, and repurchase agreements secured by such obligations or cash. The money market fund is classified as Level 1 assets in the fair value hierarchy. The fund seeks to preserve the value of \$1 per share. The Company has not experienced any losses in such account. As required by ASC 820, investments are classified within the lovel of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement. The table that follows sets forth information about the fair value hierarchy at which the Company's investments were measured at December 31, 2020. | | | Level 1 | Level 2 | Level 3 | | l otal | |----------------------------------|---|-------------|---------|---------|----|----------------| | | | | | | | | | Investments in Securities: | | | | | | | | U.S. Treasury Securities \$ | | 82,562,363 | | | ಕೆ | 82,562,363 | | Money Market Fund | S | 27,800,000 | | | ಕಾ | 27,800,000 | | | | 110,362,363 | | | | \$ 110,362,363 | The Company assesses the levels of the investments at each measurement day, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between levels during the year ended December 31, 2020. At December 31, 2020, there were no financial instruments owned that were pledged to counterparties. {9}------------------------------------------------ #### Note 4. Common Stock The authorized common stock of the Company is comprised of 66,500 shares, of which 44,500 are issued and outstanding at December 31, 2020. All of the Company's stock is owned by IMI U.S. The common stock has no par or stated value and is carried at its original issue price of \$1,000 per share. Additional paid-in capital represents capital contributions made by IMI U.S. to the Company subsequent to the original stock issuance. #### Related Parties Note 5. The Company has extensive transactions with affiliates of the Group. These activities include executing and clearing securities transactions and providing operational support for foreign affiliates in their securities dealings in the United States. Summarized below are the Company's affiliate balances as of December 31, 2020: ### Assets: | Receivables from brokers, dealers and
clearing organizations
Receivable from affiliates
Receivable from affiliated customer
ROU Operating Lease Asset | 445.090
25,782,702
183.978
1,432,888 | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------| | Total assets | \$ 27,844,658 | | Liabilities:
Payable to affiliated Customer
Operating Lease Liability | 10,585,412
1,432,888 | | Total liabilities | \$ 12,018,300 | The Company has a \$200 million uncommitted unsecured line of credit for short term borrowings with a maturity of up to 1 year. The Company has another 20 million euro line of credit from the Group to cover delivery risk related to securities transactions. These lines of credit are used to finance activities involving settlement of securities transactions. These lines of credit are payable on demand and bear interest at rates that vary and are determined at the time of the borrowing. The Company did not have any outstanding borrowings under the lines of credit at December 31, 2020. {10}------------------------------------------------ #### Note 6. Concentrations of Credit Risk The Company's clearance activities for customers and noncustomers, including affiliates (collectively, "customers"), involve the execution, settlement and financing of customers' securities transactions. Customers' securities activities are transacted on a delivery versus payment or receipt versus payment basis. These transactions may expose the Company to loss in the event that customers are unable to fulfill their contractual obligations. In the event customers fail to satisfy their obligations, the Company may be required to purchase or sell securities at prevailing market prices in order to fulfill the customers' obligations. The Company maintains its cash in financial institutions which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not subject to any significant credit risk on its cash. #### Note 7. Fixed Assets A summary of fixed assets for the year ended December 31, 2020 is as follows: | Equipment | ക | 912,047 | |------------------------------------------------|------|-------------| | Leasehold improvements | | 562.243 | | Furniture and fixtures | | 361,788 | | | | | | | | 1,836,078 | | Less accumulated depreciation and amortization | | (1,504,202) | | | | | | Fixed assets, net | ಲ್ಲಿ | 331,876 | #### Note 8. Leases ### Lessee Arrangements The Company enters into leases in the normal course of business primarily for office space, real estate and equipment. The Company's leases have remaining terms ranging from 3 to 4 years. The Company's leases do not include residual value guarantees or covenants. Leases are classified as operating leases at the lease commencement date. Lease expense is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. {11}------------------------------------------------ # Intesa Sanpaolo IMI Securities Corp. Notes to Statement of Financial Condition #### Note 8. Leases (continued) The Company uses an incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company's incremental borrowing rate is based on the prime rate, adjusted for the lease term and other factors. The Company's rate used was 5% for all current leases. The Company's weighted average life of its leases is approximately 2.5 years. There are no provisions for extensions. The Company has obligations under noncancelable operating leases for space with various expiration dates. The Company leases its office space from an affiliate under a sublease agreement. The terms of the Company's principal office space sublease at the 1 William Street, New York City location provide for certain escalation clauses relating to taxes and operating expense payments. The future aggregate minimum lease commitment for space is listed below: | Year ending December 31, | | | |-----------------------------------|------|--------------| | 2021 | ಕ್ಕಾ | 632,995 | | 2022 | | 608,245 | | 2023 | | 405,497 | | 2024 | | | | 2025 | | | | Thereafter | | | | Total undiscounted lease payments | ക | 1,646,737 | | Less: inputed interest | | (153,368 | | Net lease liabilities | | \$ 1,493,369 | | | | | Annual commitments under other leases aggregate \$19,402 in 2022, and \$539 in 2023. #### Indemnifications Note 9. In the normal course of business, the Company is subject to various claims, litigation, regulatory and arbitration matters. Because these claims and matters are at different stages, management is unable to predict their outcomes. The Company also enters into contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that has not yet occurred. The Company expects the risk of loss to be remote. #### Note 10. Net Capital Requirements The Company is subject to the SECs Uniform Net Capital Rule (Rule 15c3-1). The Company computes its net capital requirements under the alternative method provided for in Rule 15c3-1, which requires the Company to maintain net capital equal to the greater of \$1,000,000 or 2% of aggregate debit items arising from customer transactions, as defined. Advances to affiliates, repayment of subordinated borrowings, dividend payments and other equity withdrawals are subject to certain notification and other provisions of the SEC Uniform Net Capital Rule or other regulatory bodies. {12}------------------------------------------------ # Note 8. Net Capital Requirements (continued) At December 31, 2020, the Company had net capital of \$116,348,544, which was \$115,348,544 in excess of the required net capital of \$1,000,000. The Company had a Net Capital to Aggregate Debit Items Percentage of 987.42% Under the clearing arrangement with a clearing broker, the Company is required to maintain certain minimum levels of net capital and to comply with other financial ratio requirements. At December 31, 2020, the Company was in compliance with all such requirements. #### Note 11. Employee Benefits All employees of the Company are eligible to contribute to a 401(k) plan upon hire date. The Company will make a 100% matching contribution on the first 5% of base compensation deposited by the employee as an elective contribution. Amounts deferred over 5% are not matched by the Company. Vesting in Company contributions occurs over a five-year period. The Company has a profit-sharing plan for all employees who have been employed with the Company as of each fiscal year-end. The board of directors of the Company sets the profit-sharing percentage for the plan annually. All contributions vest over a four-year period commencing with the second year of employment with the Company. The expense relating to the profit-sharing plan is recognized each year as the plan is funded by the Company. #### Note 12. Income Taxes The Company is included in the consolidated federal income tax return filed by IMI U.S. Federal income taxes are calculated as if the Company filed a separate federal income tax return. The Company is included in a combined state income tax return with IMI U.S. If included in a combined return, state and local taxes are calculated as if the Company filed a separate state income tax return. Items that result in a net deferred tax asset at December 31, 2020 were as follows: | Credits | | | |------------------------|-----|----------| | Accrued Expenses | ക്ക | 455,823 | | Fixed Assets | | (45,311) | | Net deferred tax asset | မှာ | 410,512 | | | | | | | | | | | | | At December 31, 2020, the Company had federal and state income tax returns for the 2015, 2016, 2017, 2018 and 2019 tax years open and subject to examination. {13}------------------------------------------------ # Note 13. Risks and Uncertainties Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect the amounts reported in the statement of financial condition. The risk of loss on unsettled transactions relates to customers' and other counterparties' inability to fuffill their contracted obligations. A novel strain of coronavirus surfaced in Wuhan China in December 2019 and has spread around the world with resulting business and social disruption. The virus was declared a public Health Emergency of International Concern by the World Health Organization on January 30, 2020 and on March 11, 2020 was declared a pandemic. The operations and business results of the Company could be materially adversely affected. Significant estimates may be materially adversely impacted by local, state and national restrictions and events designed to contain the coronavirus. The magnitude of the impact is likely dependent on the length and severity of the disruption. As of this statement of financial condition, the Company's operating results were not materially adversely affected. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.