# GUZMAN & COMPANY X-17A-5 (2021-03-30) — Broker-dealer annual report

- Company: GUZMAN & COMPANY
- Form: X-17A-5
- Filed: 2021-03-30
- Period: 2020-12-31
- Accession: 0000822756-21-000002
- CIK: 822756
- File #: 8-38646
- Material weakness: No
- Auditor: BDO USA LLP
- Auditor location: MIAMI, FL
- Contact: Alexis G. Miller
- Phone: 305-374-3600
- Signed by: Alexis G. Miller (CFO)

Original filing: https://www.sec.gov/Archives/edgar/data/822756/000082275621000002/Public.pdf

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**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** 

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# **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill**

| SEC FILE NUMBER |  |
|-----------------|--|
|                 |  |
| 8-38646         |  |

**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                                                             | Q1 /Q1/202Q                                                                                  | AND ENDING         | 12/31/2020                                      |  |  |
|---------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|--------------------|-------------------------------------------------|--|--|
|                                                                                             | MM/DDNY                                                                                      |                    | MMIDDNY                                         |  |  |
|                                                                                             | A. REGISTRANT IDENTIFICATION                                                                 |                    |                                                 |  |  |
| NAME OF BROKER-DEALER: Guzman & Company                                                     |                                                                                              | OFFICIAL USE ONLY  |                                                 |  |  |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)                           |                                                                                              | FIRM 1.0. NO.      |                                                 |  |  |
| 101 Aragon Avenue                                                                           |                                                                                              |                    |                                                 |  |  |
|                                                                                             | (No. and Street)                                                                             |                    |                                                 |  |  |
| Coral Gables                                                                                | Florida                                                                                      |                    | 33134                                           |  |  |
| (City)                                                                                      | (State)                                                                                      |                    | (Zip Code)                                      |  |  |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT<br>Alexis G. Miller |                                                                                              |                    | (305) 374 3600<br>(Area Code -Telephone Number) |  |  |
|                                                                                             | B. ACCOUNTANT IDENTIFICATION                                                                 |                    |                                                 |  |  |
| INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report*<br>BOO USA, LLP   | (Name - if individual, state last, first, middle name)                                       |                    |                                                 |  |  |
|                                                                                             |                                                                                              |                    |                                                 |  |  |
| 1450 Brickell Av. 18th Floor<br>(Address)                                                   | Miami<br>(City)                                                                              | Florida<br>(State) | 33131<br>(Zip Code)                             |  |  |
| a<br>CHECK ONE:<br>I ✓I certified Public Accountant<br>Public Accountant                    | Accountant not resident in United States or any of its possessions.<br>FOR OFFICIAL USE ONLY |                    |                                                 |  |  |
|                                                                                             |                                                                                              |                    |                                                 |  |  |

*\*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 e,xemption. 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 OMBcontrol number.**

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# **OATH OR AFFIRMATION**

**I, \_A\_l\_ex:\_i\_s\_G\_.\_M\_il\_le \_r \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ , swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of ------------------------------------------ Guzman & Company -, as** 

**of December 31 are true and correct.- I further swear ( or affirm) that neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account classified solely as that of a customer, except as follows:** 

| Chief Financial Officer                                                                                                                                                                                             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| '<br>MARIA 1UESA ANGEL<br>,,••�Wl··.<br>r1q_�1. �t;\ Notary Publlt • State of Florida<br>Commission# HH 078828<br>\,'\�.£,'fl<br>•·� o, �'fl My Comm. Expires Jan 11, 202S<br>Banded through llatlonal Notary Assn. |
| This report ** contains (check all applicable boxes):                                                                                                                                                               |
| 0 (a) Facing Page.                                                                                                                                                                                                  |
| @ (b) Statement of Financial Condition.<br>D (c) Statement oflncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement                                                       |
| of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).                                                                                                                                                |
| D ( d) Statement of Changes in Financial Condition.                                                                                                                                                                 |
| D (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.                                                                                                                       |
| §<br>D (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.                                                                                                                                 |
| (g) Computation of Net Capital.                                                                                                                                                                                     |
| (h) Computation for Determination of Reserve Requirements Pursuant to Rule l 5c3-3.                                                                                                                                 |
| (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.                                                                                                                               |
| D (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the                                                                                               |
| Computation for Dete1mination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.                                                                                                                           |
| D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of<br>§                                                                                          |
| consolidation.                                                                                                                                                                                                      |
| (I) An Oath or Affirmation.                                                                                                                                                                                         |
| (m) A copy of the SIPC Supplemental Report.                                                                                                                                                                         |
| (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit.                                                                                     |
| **For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).                                                                                                         |

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# STATEMENT OF FINANCIAL CONDITION

YEAR ENDED DECEMBER 31 , 2020

(CONFIDENTIAL PURSUANT TO RULE 17A-5(e)(3))

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### **CONTENTS:**

| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1   |
|---------------------------------------------------------|-----|
| FINANCIAL STATEMENTS:                                   |     |
| Statement of Financial Condition                        | 2   |
| Notes to Statement of Financial Condition               | 3-9 |

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![](_page_4_Picture_0.jpeg)

Fax: 305-373-0056 www. bdo. com

1 450 Bricl<ell Avenue, 1 8th Floor Miami , FL 33131

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholder Guzman & Company Miami, Florida

Opinion on Financial Statement

We have audited the accompanying statement of financial condition of Guzman & Company (the "Broker-Dealer") 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 Broker-Dealer at 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 Broker-Dealer's management. Our responsibi lity is to express an opinion on the Broker-Dealer's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to 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 provides a reasonable basis for our opinion.

We have served as the Broker-Dealer's auditor since 2021 .

*'.B.DD USA, LL P* 

March 29, 2021

BOO USA, LLP, a Delaware limited liability partoership, is tho U.S. member of BOO International limited, a UK company limited by guarantee, and fonns part of tho international BOO network of Independent member firms.

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### STATEMENT OF FI NANCIAL CONDITION DECEMBER 31 , 2020

| ASSETS                                                              |                    |
|---------------------------------------------------------------------|--------------------|
| Cash and cash equivalents                                           | \$<br>1 ,937,434   |
| Cash segregated un<br>der regulatory requirements (Note 4)          | 58,490             |
| Depos<br>its with clearin<br>g organizations                        | 500,000            |
| Rec<br>eivable from clearing organizations (Note 5)                 | 3,095,444          |
| Other receivables                                                   | 355,834            |
| Due from related pa<br>rties, net (Note 3)                          | 92<br>,409         |
| Secu<br>rities own<br>ed, at fai<br>r value (Note 6)                | 342,478            |
| P repaid ex<br>pens<br>es and depos<br>its                          | 74,732             |
| Fu<br>rniture, equipment and leasehold improvements, net (Note 1 0) | 1 6,938            |
| Right of use asset -<br>Operating, net (Note 11)                    | 60,400             |
| Right of use ass<br>ets -<br>Finance, net (Note 11)                 | 66,045             |
| TOTAL ASSETS                                                        | \$<br>6,600,204    |
| LIAB<br>ILITIES AND STOCKHOLDE<br>R'S EQUITY                        |                    |
| Securities sold, not yet purchased, at fair value (Note 6)          | \$<br>25<br>1 ,729 |
| Accounts payable and ac<br>c<br>rued expenses                       | 1 ,291<br>,741     |
| Payroll Protec<br>tion Program loan                                 | 527,300            |
| Lease obligati<br>on -<br>Operating (Note 11)                       | 61<br>,264         |
| Lease obligation<br>s -<br>Finance (Note 11)                        | 67,652             |
|                                                                     | 2,1<br>99,686      |
| SU<br>BORDINATE<br>D BORROWINGS (NOTE 9)                            | \$<br>3,000,000    |
| COMMrrM ENTS AN<br>D CONTINGENCIES (NOTE 1 2)                       |                    |
| STOCKHOLDER'S EQU<br>ITY                                            |                    |
| Common stock, par value \$1.00 per share; 7,<br>500 shares          | \$<br>2,000        |
| authorized; 2,000 shares iss<br>ued and outstanding                 |                    |
| Additional paid-in capital                                          | 400,645            |
| Retained earnings                                                   | 997,873            |
|                                                                     | 1 ,400,51<br>8     |
| TOTAL LIABILITIES AND STOCKHOLDE<br>R'S EQUITY                      | \$<br>6,600,204    |

The accompanying notes are an integral part of these financial statements.

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#### NOTES TO FI NANCIAL STATEMENTS DECEMBER 31 , 2020

# **1. ORGANIZATION**

Guzman & Company (the "Company") is a Florida corporation registered with the Securities and Exchange - Commission ("SEC") as a broker-dealer, and is a member of the Financial Industry Regulatory Authority ("FINRA"), the New York Stock Exchange and the Nasdaq Stock Market, Inc. The Company is a wholly owned subsidiary of Guzman, Inc.

The Company is engaged in a single line of business as a securities broker-dealer, which is comprised of several classes of services, including principal transactions, agency transactions, and participation in underwriting .

# **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

# **Basis of Presentation**

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

# **Securities Owned and Sold, but not yet Purchased, at Fair Value**

Securities owned and sold, but not yet purchased, are valued at fair value. Unreal ized appreciation or depreciation is reflected in income currently.

# **Fair Value of Financial I nstruments**

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 6. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular I nstruments. Changes in assumptions or in market conditions could significantly affect the estimates.

#### **Furniture, Equipment and Leasehold Improvements, net**

Furniture, equi pment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation of these assets is computed over their estimated useful lives, 3 to 5 years, using the straight-l ine method . Leasehold improvements are amortized using the straight-l ine method over either the economic useful life of the improvement or the lease term, whichever is shorter.

### **Leases**

Effective January 1, 201 9, the Company adopted Accounting Standards Codification 842, Leases ("ASC 842"). The Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the control period and other facts and circumstances.

The Company evaluates the classification of leases as operating or finance at inception. Leases that meet one or more of the following criteria will be classified as finance leases:

- The Company can acquire the leased asset at the end of the lease term for a below-market price.
- The ownership of the leased asset is transferred to the Company at the end of the lease period .
- The duration of the lease encompasses at least 75% of the useful life of the leased assets.
- The present value of the minimum lease payments under the lease represent at least 90% of the fair value of the leased asset.

The Company is the lessee in a lease contract when they obtain the right to control the asset. Right-of-use (''ROU") assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the Company's leases do not provide an impl icit interest rate, the Company uses the Daily Treasury Yield Curve Rate from the U.S. Department of the Treasury over the period of the lease based on the information available at the commencement date in determining the present value of future payments.

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## **NOTES TO FINANCIAL STATEMENTS DECEMBER 31 , 2020**

# **2. SUMMARY OF SIGNI FICANT ACCOUNTING POLICIES (CONTINUED)**

### **Leases (Continued)**

**Leases with a lease term of 12 months or less at inception are not recorded on the Company's balance sheets and are expensed on a straight-l ine basis over the lease term.** 

## **Reclassification**

**Certain prior year amounts have been reclassified to conform to current year presentation.** 

### **Accounting Estimates**

**The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabi lities and the disclosure of conti ngent assets and liabil ities at December 31 , 2020 and revenues and expenses during the year then ended. The actual outcome of the estimates could differ from the estimates made in the preparation of the financial statements.** 

### **Government and Other Regulation**

**The Company's busi ness is subject to significant regulation by various governmental agencies and self-regulatory organizations. Such regulation includes, among other things, periodic examinations by these regulatory bodies to determine whether the Company is conducti ng and reporti ng its operations in accordance with the applicable requirements of these organizations. As a registered broker dealer, the Company is subject to the SEC's net capital rule (Rule 1 5c3-1 ), which req uires that the Company maintain a minimum net capital, as defined.** 

# **3. RELATED PARTY TRANSACTIONS**

**Aragon Galiano Holdings LLC provides office space to the Company for a monthly property management fee of \$25,000.** 

**The Company entered into an expense sharing agreement with Guzman Energy LLC ("Energy") in August 201 5. Energy is related to the Company by virtue of common ownership. The Company agreed to provide for certain employee compensation, benefits, and other administrative services in exchange for a monthly fee to be paid by Energy to the Company. The agreement remains in effect for one year with the option to renew in successive one-year periods. The agreement can also be cancelled by either party with a 5 day notice of cancel lation. As of December 31 , 2020, the Company had \$0 due from Energy.** 

**As of December 31 , 2020, the Company had \$4,258 due from its affil iate Guzman Investment Strategies related to corporate fi lings, \$53,073 due from its affil iate Guzman Global and \$35,078 due from its parent company Guzman, Inc.** 

# **4. CASH SEGREGATED UNDER REGULATORY REQUIREMENTS**

**Cash of \$58,490 has been segregated in a special reserve bank account for the benefit of customers under Rule 1 5c3-3 of the SEC.** 

### **5. RECEIVABLE FROM AND PAYABLE TO BROKER-DEALERS AND CLEARING ORGANIZATIONS**

**Receivables from clearing organizations at December 31 , 2020 were \$3,095,444. Payables to broker-dealers and clearing organizations at December 31 , 2020 were \$0. The Company clears its proprietary and customer transactions on a fully disclosed basis through Merrill Lynch Broadcort. Pursuant to a clearing agreement, the Company is required to maintain a certain mi nimum capital with the clearing organization, in the form of either cash or securities. The level is agreed upon from time to time based on the nature of the Company's clearing activities. As of December 31 , 2020, the agg regate required minimum collateral deposit under the clearing agreement was \$500 ,000. The Company complies with clearing broker-dealer requirements for obtaini ng col lateral from customers.** 

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#### NOTES TO FINANCIAL STATEMENTS DECEMBER 3 1 , 2020

# **6. FAIR VALUE MEASUREMENTS**

# **Fair Value Measurements**

**The Financial Accounting Standards Board ("FASS") ASC 820, Fair Value Measurement, establ ishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sel l an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the pri ncipal market for the asset or liabil ity or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the marl<et, income or cost approach , as specified by FASB ASC 820, are used to measure fair value.** 

**The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair val ue into three broad levels:** 

- **Level 1 Inputs are quoted prices (unadj usted) in active markets for identical assets or liabilities that the Company 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 or liability, either directly or indirectly.**
- **Level 3 Unobservable Inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability.**

# **Determination of Fair Value**

**The Company maintains policies and procedures to value its financial instruments using the highest level and most relevant data available. In addition, management reviews valuations, including i ndependent price validation, for certain instruments. The following describes the valuation methodologies the Company uses to measure different fi nancial instruments at fair value, including an ind ication of the level in the fair value hierarchy in which each instrument is generally classified.** 

**For many financial instruments, fair value is based on independent sources such as quoted market prices or dealer price quotations. To the extent certain financial instruments trade infrequently or are not marketable, they may not have read ily determinable fair values. In these instances , the Company estimates fair value using various pricing models and available information that management deems most relevant.** 

**Among the factors considered by the Company in determining the fair value of financial Instruments are discounted anticipated cash flows, the cost, terms and liquidity of the instrument. the fi nancial condition, operating results and credit ratings of the issuer or underlying company, the quoted market price of publ icly traded securities with similar quality and yield , and other factors generally pertinent to the valuation of financial instruments.** 

*Corporate stocks and options.* **Corporate stocks and options are valued based on quoted market prices. Corporate stocks that trade in active markets are classified within Level 1.** 

### **Items Measured at Fair Value on a Recurring Basis**

**The following table presents the Company's fi nancial instruments that are measured at fair value on a recurri ng basis as of December 31 , 2020 , for each fair value hierarchy level.** 

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### NOTES TO FINANCIAL STATEMENTS DECEMBER 31 , 2020

#### 6. FAIR VALUE MEASUREMENTS (CONTINUED)

### **Items Measured at Fair Value on a Non-Recurring Basis**

|                                     | December 31, 2020   |          |          |  |          |  |       |          |
|-------------------------------------|---------------------|----------|----------|--|----------|--|-------|----------|
|                                     | Level 1             |          | Level 2  |  | Leve l 3 |  | Total |          |
| ASSETS                              |                     |          |          |  |          |  |       |          |
| Securities ow ned :                 |                     |          |          |  |          |  |       |          |
| Corporate stocks and options        | \$                  | 342,478  | \$       |  | \$       |  | \$    | 342,478  |
| Total                               | \$                  | 342,478  | \$       |  | \$       |  | \$    | 342,478  |
|                                     |                     |          |          |  |          |  |       |          |
|                                     | De cember 31, 2020  |          |          |  |          |  |       |          |
|                                     | Level 1<br>Leve l 2 |          | Leve l l |  | Total    |  |       |          |
| LIABILmES                           |                     |          |          |  |          |  |       |          |
| Securities sold, not yet purchased: |                     |          |          |  |          |  |       |          |
| Corporate stocks and options        | \$                  | 251 ,729 | \$       |  | \$       |  | \$    | 251 ,729 |
| Total                               | \$                  | 251 ,729 | \$       |  | \$       |  | \$    | 251 ,729 |
|                                     |                     |          |          |  |          |  |       |          |

The Company does not have any fi nancial assets or liabil ities that are measured at fair value on a non-recurring basis as of December 31 , 2020.

# **7, FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS OF CREDIT RISK**

The Company enters into various transactions involving off-balance sheet financial Instruments. These financial instruments include securities purchased and sold on a when-issued basis (when-issued securities). These financial instruments are used to meet the needs of customers, cond uct trading activities, and manage market risks and are, therefore, subject to varying degrees of market and credit risk.

The Company's customer securities activities are provided to a diverse group of governmental, institutional, corporate and individual investors. In the normal course of business, the Company's customer activities i nvolve the execution, settlement, and financi ng of various customer securities transactions. These activities may expose the Company to off-balance-sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss.

The Company is engaged in various trading and brokerage activities in which counterparties primarily include broker/dealers, banks, and other financial institutions. In the event counterparties do not fulfi ll their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the cred it standing of each counterparty.

# **8. NET CAPITAL REQUIREMENT**

The Company, as a registered broker-dealer in securities, is subject to the SEC's Net Capital Rule (Rule 1 5c3-1 }, which requires that the Company maintain "Net Capital" equal to the greater of \$250,000 or 6 2/3% of "Aggregate Indebtedness", as defined, and requires that the ratio of aggregate indebtedness to net capital shall not exceed 15 to 1. At December 31 , 2020, the Company's "Net Capital" was \$4,430,560 which was \$4,1 80,560 in excess of the "Required Net Capital" of \$250 ,000. At December 31 , 2020, the Company's ratio of aggregate indebtedness to net capital was 0.41 to 1.

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#### **NOTES TO FINANCIAL STATEMENTS DECEMBER 31 , 2020**

# **9. NOTES PAYABLE**

#### **Paycheck Protection Program (PPP) loan**

**The Company received a Small Business Administration ("SBA") loan through Bank United in the amount of \$527,300 under the Payroll Protection Program established by the Coronavirus Aid , Relief, and Economic Security ("CARES") Act. The loan is subject to a note dated 04/30/2020 and may be forgiven to the extent proceeds of the loan are used for eligible expend itures such as payroll and other expenses described in the CARES Act. The loan bears interest at a rate of 1 % and is payable in monthly instal lments of principal and interest over 24 months beginning 6 months from the date of the note. The loan may be repaid at any time with no prepayment penalty.** 

**As of December 31 , 2020, total outstanding balance was \$527,746, inclusive of accrued interest of \$446 . In January 2021 , the Company appl ied for loan forgiveness which the SBA approved . The amount of debt extl ngulshment was \$527,746 , inclusive of Interest.** 

## **Subordinated Loans**

**As of December 31 , 2020, the Company has two subordinated loan agreements with its majority stockholder which total \$3,000,000, bear interest at 5% per year and mature on June 1 4, 2021 . The loan agreements renews automatically at the maturity date for an additional one year term.** 

**The subordinated borrowings are covered by agreements approved by FINRA and are thus allowable in computing net capital under the SEC's uniform net capital rule. To the extent that such borrowings are required for the Company's continued compliance with minimum net capital requirements, they may not be repaid (NOTE 8).** 

# **1 0. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET**

**Furniture, equipment and leasehold improvements, net, are summarized as follows:** 

| Furniture and E quipment      | \$<br>350,657 |
|-------------------------------|---------------|
| Leasehold Improvements        | 216, 1 87     |
|                               | 566,844       |
| Less accumulated depreciation | (549,906)     |
|                               | \$<br>1 6,938 |

# **11. LEASES**

#### **Operating Leases**

**The Company subleases office space through an operating lease that expires in 2021 .** 

**Operating lease assets and liabilities as of December 31 , 2020 are as follows:** 

| Operating lease ROU assets, net | \$<br>60,400  |  |
|---------------------------------|---------------|--|
| Operating lease liabi l ities   | \$<br>61 ,264 |  |

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### NOTES TO FINANCIAL STATEMENTS DECEMBER **31 , 2020**

# **11. LEASES (CONTINUED)**

# **Operating Leases (continued)**

**Estimated future minimum operating lease payments, excl usive of taxes and other charges are as fol lows:** 

| For the years ended December 31 ,       |                |
|-----------------------------------------|----------------|
| 2021                                    | \$<br>61 ,800  |
| Total future minimum lease payments     | \$<br>61 ,800  |
| Less: amount representi ng interest     | 536            |
| Present value of minimum lease payments | \$<br>61 , 264 |

**Information associated with the measurement of the remaining operating lease obligations as of December 31 , 2020 is as follows:** 

**Weighted-average remaining lease term in years 1 .00** 

**Weighted-average discount rate 1 .61%** 

### **Finance Leases**

**The Company leases certain furniture and equipment, under separate non-cancelable finance leases, with interest rates rangi ng between approximately 3% and 6%, expiring at various dates through 2023.** 

**Finance lease assets and liabil ities as of December 31 , 2020 are as follows:** 

| Finance lease ROU assets, net | \$<br>66,045 |
|-------------------------------|--------------|
| Finance lease liabilities     | \$<br>67,652 |

**Estimated future minimum finance lease payments, exclusive of taxes and other charges are as follows:** 

| For the years ended December 31 ,       |               |
|-----------------------------------------|---------------|
| 2021                                    | 49,551        |
| 2022                                    | 21 ,091       |
| 2023                                    | 675           |
| Total future mi nimum lease payments    | \$<br>71 ,317 |
| Less : amount representing interest     | 3,665         |
| Present value of minimum lease payments | \$<br>67,652  |

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**NOTES TO FINANCIAL STATEMENTS DECEMBER 31 , 2020** 

### **11. LEASES (CONTINUED)**

# **Finance Leases (continued)**

**Information associated with the measurement of the remaining operating lease obligations as of December 31 , 2020 is as follows:** 

**Weighted-average remaining lease term in years 1 .55** 

**Weighted-average discount rate 4.78%** 

# **12. COMMITMENTS AND CONTINGENCIES**

#### **Litigation**

**Certain claims, lawsuits and complaints arising in the ordinary course of business may have been filed or are pending against the Company. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered , are without merit or are of such kind , or involve such amounts, as would not have a significant effect on the financial position or results of operations of the Company, if disposed of unfavorably.** 

# **1 3. CORONAVIRUS**

**The outbreak of the novel coronavirus has adversely impacted global commercial activity and contributed to significant declines and volatil ity in financial markets. The coronavirus pandemic and government responses are creating disruption in global supply chains and adversely impacting many ind ustries. The outbreak could have continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The conti nued development and fluidity of this situation precl udes any prediction as to the ultimate material adverse impact of the novel coronavirus. Nevertheless, the novel coronavirus presents material uncertainty and risk with respect to the Company, its performance, and its financial results. At this point, the extent to which the coronavirus may impact our fi nancial cond ition or results of operations in future periods is uncertain.** 

**On March 27, 2020, the Coronavirus Aid, Rel ief, and Economic Security Act (the "CARES Act") was signed i nto law in response to the coronavirus pandemic. The CARES Act includes many measures to provide relief to companies. The Company has not taken advantage of any such measures, except for the Paycheck Protection Program loan (NOTE 9).** 

## **1 4. SUBSEQUENT EVENTS**

**The Company has evaluated subsequent events through March 29 , 2021 , which is the date the financial statements were avai lable to be issued .**


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.