# SMH CAPITAL INVESTMENTS LLC X-17A-5 (2022-03-31) — Broker-dealer annual report - Company: SMH CAPITAL INVESTMENTS LLC - Form: X-17A-5 - Filed: 2022-03-31 - Period: 2021-12-31 - Accession: 0000846554-22-000001 - CIK: 846554 - File #: 8-40904 - Type: Broker-dealer - Material weakness: No - Auditor: Tuttle & Bond, PLLC - Auditor location: Fredericksburg, TX - Contact: Dwayne Moyers - Phone: 817-569-7000 - Email: dwayne.moyers@smhca.com - Website: smhca.com - Signed by: Dwayne Moyers (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/846554/000084655422000001/SMHCIPublic21.pdf --- {0}------------------------------------------------ #### SMH CAPITAL INVESTMENTS LLC Report Pursuant to Rule 17a-5 of The Securities and Exchange Commission December 31, 2021 {1}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** # **ANNUAL REPORTS FORM X-17A-5 PART** Ill | 0MB APPROVAL | | |--------------------------|--| | 0MB Number: 3235-0123 | | | Expires: Oct. 31, 2023 | | | Estimated average burden | | | hours per response: 12 | | | | | | | SEC FILE NUMBER | | | |--|-----------------|---------|--| | | | | | | | | 8-24535 | | #### **FACING PAGE** **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** | FILING FOR THE PERIOD BEGINNING | ____
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_ | | |---------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|------------|---------------------------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF FIRM : | SMH Capital Investments LLC | | | | | TYPE OF REGISTRANT (check all applicable boxes):
Ix] Broker-dealer
D Check here if respondent is also an OTC derivatives dealer | □ Security-based sw ap dealer | D M | ajor security-based swap participant | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | 4200 S. Hulen, Suite 534 | | | | | | | (No. and Street) | | | | | Ft. Worth | TX | | 76109 | | | (City) | (State) | | (Zip Code) | | | PERSON TO CONTACT W ITH REGARD TO THIS FILING | | | | | | Dwayne Moyers | 817-569-7000 | | dwayne.moyers@smhca.com | | | (Name) | (Area Code - Telephone Number)
(Email Address) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT w hose reports are contained in this filing*
Tuttle & Bond, PLLC | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | 2954 Goehmann Lane | Fredericksburg | TX | 78624 | | | (Address) | (City) | | (State)
(Zip Code) | | | 03/19/201
9 | | 6543 | | | | | FOR OFFICIAL USE ONLY | | I
(PCAOB Regis""''" N,
mbe,, if applirable) | | \* Claims for exemption from t he requirement that t he 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 t he basis of t he exemption. See 17 CFR 240.17a-S(e)(l )(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required t o respond unless the form displays a currently valid 0MB control number. {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | ents LLC
SMH Ca ital Investm
as of
is true and correct. I further swear (or affirm) that neither thy, ompany nor any
partner, officer, director, or equivalent person, as the case may be, has any proprietary in erest in any ace6unt classified solely | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | Signature: | | | | | - ~ (b) Notes to consolidated statement of financial condition. - D (c) Statement of income (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 cash flows. - D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated to claims of cred itors. - D (g) Notes to consolidated financial statements. - D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - D (m) Information relating to possession or control requirements for customers under 17 CFR 240.1Sc3-3. - D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and t he reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - 0 (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - lXl (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - 0 (s) Exemption report in accordance with 17 CFR 240.l 7a-5 or 17 CFR 240.18a-7, as applicable. - IX] (t) Independent public accountant's report based on an examination of the statement of financial condition. - D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - 0 (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). D (z) Other:-------------------------------------- - *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5{e}(3) or 17 CFR 240.18a-7{d)(2), as applicable.* {3}------------------------------------------------ ## SMH CAPITAL INVESTMENTS LLC # FINANCIAL STATEMENT and REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ## CONTENTS Page(s) | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | |---------------------------------------------------------|-------| | Financial Statement: | | | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3 - 2 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### **-** To Member of SMH Capital Investments LLC #### **Opinion on The Financial Statements** We have audited the accompanying statement of financial condition of SMH Capital Investments LLC (the "Company") as of , and the related statements of operations, member's equity and cash flows for the year then ended, including the related notes (collectively referred to as "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of , and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of 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 of these financial statements in accordance with 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 from 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 audits, 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 the audit provides a reasonable basis for our opinion. #### **Report on Supplementary Information** The accompanying information contained in the Supplementary Information section has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statement. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Rule 17a-5 under the Securities Exchange Act of 1934 and, if applicable, under Regulation 1.10 under the Commodity Exchange Act. In our opinion, the information contained in the Supplementary Information section is fairly stated, in all material respects, in relation to the financial statements as a whole. Fredericksburg, Texas 0DUFK We have served as the SMH Capital Investments LLC's auditor since 2019. {5}------------------------------------------------ ## SMH CAPITAL INVESTMENTS LLC # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021 #### Assets | Cash
Clearing deposit
Investment in equity securities, at fair value
Accounts receivable
Prepaid expenses | S | 15,925
100,000
297,350
5,255
3,605 | |-----------------------------------------------------------------------------------------------------------------------|---|------------------------------------------------| | Total assets | S | 422,135 | | Liabilities and Member's Equity | | | | Liabilities
Accounts payable and accrued expenses
Due to affiliate | S | 3,728
11,175 | | Total liabilities | | 14,903 | | Member's equity
Accumulated other comprehensive income (loss)
Net income (loss) | | 259,695
(18,438)
165,975 | | Total equity | | 407,232 | | Total liabilities and member's equity | S | 422,135 | The accompanying notes are an integral part of this financial statement. {6}------------------------------------------------ #### SMH CAPITAL INVESTMENTS LLC Notes to Financial Statement December 31, 2021 (See Report of Independent Registered Public Accounting Firm) ## NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS SMH Capital Investments LLC (the Company) is a registered broker-dealer with the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority, Inc. (FINRA). The Company is a Texas limited liability company. The Company is exempt from Rule 15c3-3 of the SEC under paragraph (k)(2)(i) of that rule. The Company is a wholly owned subsidy of Moyers Organization LLC (the Parent). On November 10, 2017, the Parent entered into an agreement with Westport Resources Investment Services, Inc. to buy 100% of the outstanding shares of the Company. SMH Capital Investments LLC is a whollyowned subsidiary of the Parent. Effective July 19, 2018, the Company received approval from FINRA, pursuant to Rule 1017, thereby authorizing change of ownership and control of the Company. On October 5, 2018, the Company received approval from FINRA authorizing a conversion of corporate structure to a Texas Limited Liability Corporation and authorizing a name change from Westport Resource Investment Services, Inc. #### NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting - The Company maintains its books and records on the accrual basis of accounting for financial reporting purposes, which is in accordance with U.S. generally accepted accounting principles and is required by the SEC and FINRA. The financial statements include only the assets and liabilities of the Company and are not combined with the related companies. Cash and equivalents - For the purposes of the statement of cash flows, the Company considers cash in banks and all highly liquid debt instruments with maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash. Revenue recognition - Effective January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). The new revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. At December 31, 2021, contract liabilities were \$0. Disaggregation can be found on statement of operations for the year ended December 31, 2021. Use of accounting estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosures. Accordingly, the actual amounts could differ from those estimates. Any adjustments applied to the estimated amounts are recognized in the year in which such adjustments are determined. Accounts receivable - Accounts receivables are carried at cost or have been written down to net realizable value. No allowance for uncollectable accounts is required at December 31, 2021. Management evaluates each receivable on a case-by-case basis for collectability and they write the receivable down to net realizable value. {7}------------------------------------------------ ## SMH CAPITAL INVESTMENTS LLC Notes to Financial Statement December 31, 2021 (See Report of Independent Registered Public Accounting Firm) #### NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and equipment - Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Asset lives are five years for office automation equipment. The Company follows the policy of capitalizing all major additions, renewals and betterments. Minor replacements, maintenance, and repairs are expensed currently. Income taxes - The Company is a limited liability company treated as a disregarded entity. Accordingly, in lieu of Federal and state income taxes, the member is taxed on their proportionate share of the Company's taxable income. Therefore, no provision or liability for Federal or state taxes has been included in these financial statements. The Company's sole member's tax return remains subject to examination by the appropriate taxing jurisdiction for tax years ending after December 31, 2018. #### NOTE 3-CONCENTRATIONS AND CREDIT RISK 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 fulfill 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 credit standing of each counterparty. As of December 31, 2021 the Company's cash in bank did not exceeds federally insured limits. #### NOTE 4 - NET CAPITAL REQUIREMENT The Company is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital; ratio would exceed 10 to 1. At December 31, 2021, the Company had net capital of \$339,735, which was \$239,735 in excess of its required net capital of \$100,000. The Company's ratio of indebtedness to net capital was 4.39%. #### NOTE 5 - FAIR VALUE MEASUREMENTS The Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving sigmificant unobservable inputs (Level 3 measurements). The three of the fair value hierarchy are as follows: Level 1 Quoted prices (unadjusted) 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. The following table represents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as at December 31, 2021: | | Level 1 | Level 2 | Level 3 | Total | |--------------------------------------------|-----------|---------|---------|-----------| | Assets at fair value:
Security holdings | \$297,350 | | | \$297.350 | | | | | | | {8}------------------------------------------------ #### SMH CAPITAL INVESTMENTS LLC Notes to Financial Statement December 31, 2021 (See Report of Independent Registered Public Accounting Firm) ## NOTE 6 - INVESTMENTS The Company's investment in marketable equity securities are classified as available-for-sale and are carried in the financial statements at fair value. Realized gains and losses are included in earnings; unrealized holding gains and losses are reported in other comprehensive income. ## NOTE 7-SUBSEQUENT EVENTS In accordance with FASB Accounting Standards Codification 855, Subsequent Events, the Company has evaluated subsequent events to the Statement of Financial Position date of December 31, 2021 through March 30, 2022, which is the date the financial statements were issued. Management has determined that there are no subsequent events that require disclosure. ## NOTE 8-RELATED PARTY TRANSACTIONS On April 1, 2018, The Company, its Parent and an affiliate entered into an expense sharing agreement (the Agreement), which may be revised from time to time, but not less than annually. The agreement states that certain shared expenses; accounting, legal, finance, compliance, back office and other administrative services are to be paid by the affiliate. For the year ended December 31, 2020, fees charged to the Company by the affiliate for services related to the Agreement totaled \$26,820. At December 31, 2021, \$11,175 was due to affiliate as shown on the Statement of Financial Condition. ## NOTE 9-COMMITMENTS AND CONTINGENCIES The Company does not have any commitments, guarantees or contingencies including arbitration or other litigation claims that may result in a loss or future obligation. The Company is not aware of any threats or other circumstances that may lead to the assertion of a claim at a future date. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.