# GULFSTAR GROUP I, LTD. X-17A-5 (2019-02-27) — Broker-dealer annual report - Company: GULFSTAR GROUP I, LTD. - Form: X-17A-5 - Filed: 2019-02-27 - Period: 2018-12-31 - Accession: 0000877810-19-000001 - CIK: 877810 - File #: 8-43999 - Material weakness: No - Auditor: Harper & Pearson Company, P.C. - Auditor location: Houston, TX - Contact: Stephen Lasher - Phone: 713-300-2002 - Signed by: Stephen Lasher (President and Chief Compliance Officer) Original filing: https://www.sec.gov/Archives/edgar/data/877810/000087781019000001/2018auditgulfstar-.pdf --- {0}------------------------------------------------ UNITED ST ATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours oer resoonse ...... 12.00 | | SEC FILE NUMBER | |---------|-----------------| | 8-43999 | | **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section** 17 **of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder** | --------
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ING 01/01/2018
REPORT FOR THE PERIOD BEGI | | | AND E DING 12/31
/2018 | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|---------|--------------------------------|--|--| | | -
MM/DD/ Y Y | | MM/DD/VY | | | | | A. REGISTRANT IDENTIFICATION | | | | | | AME OF BROKER-DEALER: | Gulfstar Group I, LTD. | | OFFICIAL USE ONLY | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box | | o.) | FIRM 1.0. NO. | | | | 700 Louisiana Street, STE 3800 | | | | | | | | (No. and Street) | | | | | | Houston | TX | | 77002 | | | | (City) | (State) | | (Zip Code) | | | | AME A D TELEPHONE
Stephen Lasher | UMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | 713-300-2002 | | | | | | | (Area Code - Telephone Number) | | | | I DEPE DENT PUBLIC ACCOU TANT whose opinion is contained in this Report*
Harper & Pearson Company, P.C. | {Name - if individual, state last, firs I. middle name) | | | | | | One Riverway, STE 1900 | Houston | TX | | | | | (Address} | (City) | (State) | 77056
(Zip Code) | | | | CHECK ONE:
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Certified Pub I ic Accountant
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Public Accountant
Accountant not resident in United States or any of its possessions. | | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | *must be supported by a statement of facts and circumstances relied on as the basis/or the exemption. See Section 240. l7a-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 0MB control number. SEC 141 O (06-02) {1}------------------------------------------------ ### **OATH OR AFFIRMATION** I, \_S\_t\_ep\_h\_e\_n\_L\_a\_s\_h\_e\_r \_\_\_\_\_\_\_\_ \_ \_ \_ \_\_\_ \_\_\_\_\_\_\_\_\_\_ , swear ( o r affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Gulfstar Group I, LTD. ----------------------------------- ---------, as of December 31 20 18 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 c lassified solely as that of a c ustomer, except as fol lows: **ALICIA NEAL Notary** ID **#125792481** My Commission Expires December 17, 2022 President and Chief Compliance Officer Title This report\*\* contains (check all applicable boxes): 00 (a) Facing Page. - 00 (b) Statement o f Financial Condition. - 00 (c) Statement of Income (Loss). - 0 (d) Statement of Changes in Financial Condition. - 0 (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. - D (f) Statement of Changes in Liabilities Subordinated to Claims of Cred itors. - 0 (g) Computation o f Net Capital. - IE (h) Computation for Determinatio n of Reserve Requireme nts Pursuant to Rule 15c3-3. - 0 (i) In formation Relating to the Possession or Control Requirements Under Rule l 5c3-3. - 0 (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule I 5c3- 1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3. - D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. - @ (I) An Oath or Affirmation. X - D (m) A copy of the SIPC Supplemental Report. - D (n) A report describing any material inadequacies found to exist or fo und to have existed since the date of the previous audit. *\*\*For condi1ions of confidential treatment of certain portions of this filing, see section 240. I 7a-5(e)(3).* {2}------------------------------------------------ GULFSTAR GROUP I, LTD. FINANCIAL STATEMENTS DECEMBER 31, 2018 {3}------------------------------------------------ | Report of Independent Registered Public Accounting firm 2 | | |-----------------------------------------------------------------------------------|----| | Statement of Financial Condition 3 | | | Statement of Income 4 | | | Statement of Changes in Partners' capital 5 | | | Statement of cash Flows 6 | | | Notes to Financial Statements 7 - | 10 | | Schedule I 11 | | | Schedule II 12 | | | Report of Independent Registered Public Accounting Firm -
Exemption Review 13 | | | Exemption Report 14 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Partners of GulfStar Group I, Ltd. ### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of GulfStar Group I, Ltd. as of December 31, 2018, the related statements of income, changes in partners' capital, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of GulfStar Group I, Ltd. as of December 31, 2018, 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 GulfStar Group I, Ltd.'s management. Our responsibility is to express an opinion on GulfStar Group I, Ltd.'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 GulfStar Group I, Ltd. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ### **Auditor's Report on Supplemental Information** The Computation of Net Capital Under Rule 15c3-1 of the Securities Exchange Commission and the Computation for Determination of Reserve Requirements and Information Relating to Possession or Control of Securities Under Rule 15c3-3 of the Securities Exchange Commission have been subjected to audit procedures performed in conjunction with the audit of GulfStar Group I, Ltd.'s financial statements. The supplemental information is the responsibility of GulfStar Group I, Ltd.'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 17 C.F.R. §240. l 7a-5. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as GulfStar Group I, Ltd.'s auditor since 2004. Houston, Texas February 25, 2019 > 2 One Riverway · Suite 1900 · Houston, Texas 77056-1973 · 713.622.2310 · 713.622.5613 iax h;irperpearson.com {5}------------------------------------------------ | ASSETS | |--------| |--------| | Cash and cash equivalents
Accounts receivable, affiliate
Notes receivable, affiliate
Prepaid management fees, affiliate | \$
527,890
130,986
502,800
128,000 | |----------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------| | TOTAL ASSETS | \$
1,289,676 | | LIABDITlES AN> PAR'Tt£RS' CAPITAL | | | Accounts payable, affiliate
Accrued margin tax | \$
11,257
30,000 | | TOT AL LIABILITIES | 41,257 | | Partners' capital | 1,248,419 | | TOTAL LIABILITIES AND PARTNERS' CAPITAL | \$
1,289,676 | The accompanying notes are an integral part of the Financial Statements. 3 {6}------------------------------------------------ # **Gl.FSTA R ~ou> I, LTD. STA Tl:MENT OF INCOME R>R THE YEAR EN>ED DECEMBER 31, 2018** | Revenues | | |----------------------------------|-----------------| | Management Fee Income, affiliate | 300,000
\$ | | Commissions and retainer fees | 4,907,759 | | Tota I Revenues | 5,207,759 | | Expenses | | | Management fees | 1,536,000 | | Managing directors fees | 1,357,653 | | Referral fees | 433,500 | | Payroll taxes | 39,270 | | Professional fees | 66,755 | | Licenses and registrations | 4,568 | | Margin tax | 30,000 | | Other | 650 | | Total Expenses | 3,468,396 | | Net Income | 1,739,363
\$ | The accompanying notes are an integral part of the Financial Statements. {7}------------------------------------------------ ## **Q.l.FSTAR GROlJ> I, LTD. STATEMENT OF CHAr«iES IN PARThERS' CAPITAL FOR THE YEAR EN>ED DECEMBER 31, 2018** | | General
Partner | Lirm:ed
Partners | Total | |----------------------------|--------------------|---------------------|-----------------| | Balance, December 31, 2017 | \$
84,431 | \$ 1,799,625 | \$
1,884,056 | | Distributions | (238) | (2,374,763) | (2,375,000) | | Net Income | 174 | 1,739,189 | 1,739,363 | | Balance, December 31, 2018 | \$
84,367 | \$ 1,164,052 | \$
1,248,419 | The accompanying notes are an integral part of the Financial Statements. {8}------------------------------------------------ ### **G.LFSTAR GROlP** I, LID. ### **STATEMENT OF CASH R.OWS** ### **FOR lliE YEAR EN>ED DECEMBER 31, 2018** | CASH FLOW FROM OPERATING ACTIVITIES | | |------------------------------------------------|---------------| | Net Income | \$ 1,739,363 | | Adjustments to reconcile Net Income | | | to net cash provided by operating activities: | | | Increase in Accounts Receivable, affiliate | (105,295) | | Decrease in Prepaid Management Fees, affiliate | 895,999 | | Increase in Accounts Payable, affiliate | 2,673 | | Increase in Accrued Margin Tax | 11444 | | Net cash provided by Operating Activities | 2,544,184 | | CASH FLOW FROM FINANCING ACTIVITIES | | | Distributions to Partners | ~2,375,000} | | Net cash used in Financing Activities | ~2,375,000} | | Net cash increase for period | 169,184 | | Cash at beginning of period | 358,706 | | Cash at end of period | 527,890
\$ | | | | The accompanying notes are an integral part of the Financial Statements. 5 {9}------------------------------------------------ ![](_page_9_Picture_0.jpeg) {10}------------------------------------------------ ### NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GulfStar Group I, Ltd. (a Texas limited partnership) (the Partnership) maintains its accounts on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). Accounting principles followed by the Partnership and the methods of applying those principles which materially affect the determination of financial position, results of operations and cash flows are summarized below: Description of Business - The Partnership is located in Houston, Texas and is a private investment banking firm. Accordingly, the Partnership has claimed an exemption from Rule 15c3-3 under section (K)(2)(i). The Partnership is registered as a Broker-Dealer with the Securities and Exchange Commission, and is a member of the Financial Industry Regulation Authority **(FINRA).** Statement Presentation - The unclassified statement of financial condition is presented in accordance with industry standards. Estimates - The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. cash and cash Eguivalents - The Partnership considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. Income Taxes - The Partnership's income, losses, and tax credits will be included in the income tax returns of the Partners. Accordingly, the Partnership does not record a provision for Federal income taxes. The Partnership accrues Texas Margin taxes if owed. For the year ended December 31, 2018, the partnership accrued Margin tax expense of \$30,000. The Partnership believes that all tax positions will more likely than not be sustained upon examination. As of December 31, 2018, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are from the year 2015 forward (with limited exceptions). Tax penalties and interest, if any, would be accrued as incurred and would be classified as tax expense in the statement of income. Revenue Recognition - Revenue from contracts with customers includes fees from investment banking services. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Investment banking fees are recorded in accordance with the terms of the respective contract when the service is complete, and the revenue is reasonably determinable. Investment banking fees from securities related transactions are recognized when transactions close and receivables are recorded at that time. {11}------------------------------------------------ ![](_page_11_Picture_0.jpeg) {12}------------------------------------------------ NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) > In 2014, Financial Accounting Standards Board issued ASC 606, Revenue from Contracts with Customers, which superseded nearly all existing revenue recognition guidance under GAAP. The core principle of this standard is that revenue should be recognized for the amount of consideration expected to be received for promised goods or services transferred to customers. This standard was effective for the Company for the annual reporting period beginning January 1, 2018. The Company has evaluated the new guidance and the adoption did not have an impact on the Company's financial statements and a cumulative effect adjustment under the modified retrospective method of adoption was not necessary. > Subsequent Events - The Partnership has evaluated subsequent events through February 25, 2019, the date the financial statements were available to be issued. No subsequent events other than the item noted in Note F occurred, which required adjustment or disclosure to the financial statements at December 31, 2018. #### NOTE B **ORGANIZATION** The Partnership's general partner is GulfStar Group GP, LLC, owning a 0.01 % interest. Through December 31, 2007, GulfStar Investment of Nevada Inc. (Nevada) and IBC Subsidiary Corporation (IBC) owned 29.997% and 69.993% in limited partnership interests, respectively. Effective January 1, 2008, the limited partnership interest was reallocated between Nevada and IBC to 49.995% and 49.995%, each. The Partnership can remain in existence until December 31, 2050. All Partnership profits, losses, and distributions are to be allocated to the partners in proportion to their respective percentage interests. #### NOTEC RELATED PARTY TRANSACOONS The Partnership utilizes the services of GulfStar II, Ltd. (GulfStar II) (a company affiliated by ownership) for the day-to-day operation and management of the Partnership's business, including financial services management, information systems, bookkeeping, recordkeeping, clerical services, furnishing office space, equipment, and supplies; assisting in compliance with all reporting and administrative obligations of the Partnership; assisting in preparation and updating of a business plan, preparation of budgets, providing marketing and sales support, obtaining research, analysis, and informational services; and arranging for monitoring of legal, accounting, and other professional services. As compensation for these services the Partnership paid GulfStar II an incremental allocation services fee of \$128,000 per month for the year of 2018. The incremental allocation services fee is payable monthly in advance or at such other times as the parties may mutually agree. At December 31, 2018 there were no amounts payable to GulfStar II related to incremental allocation service fees. {13}------------------------------------------------ ### NOTEC RELATED PARTY TRANSACTIONS (continued) Total fees paid by the Partnership pursuant to the agreement were \$1,536,000 for the year ended December 31, 2018. **At** December 31, 2018 the Partnership had prepaid management · fees totaling \$128,000. In addition to management fees pursuant to the agreement, the Partnership also pays fees to managing directors based on a tiered percentage of the Partnership's success fee earned from closing a financing transaction. Managing Directors fees totaled \$1,357,653 for the year ended December 31, 2018. Effective January 2, 2009, GulfStar II agreed to pay the Partnership a management fee on a monthly basis. Total management fees received by the Partnership were \$300,000 for the year ended December 31, 2018. In the ordinary course of business the Partnership will receive retainer fees earned by GulfStar II for consulting services provided in the issuance of debt and/or equity. These fees are immediately considered payable to GulfStar II and are not recorded in the accompanying income statement. At December 31, 2018 the amount payable to GulfStar II related to retainer fees was \$0. #### NOTED NET CAPITAL REQUIREMENTS Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934, the Partnership is required to maintain a minimum net capital, and comply with a ratio of aggregate indebtedness to net capital as defined under such provisions. Net capital and the related ratio of aggregate indebtedness to net capital may fluctuate on a daily basis. At December 31, 2018 the Partnership had net capital of \$471,512 and a net capital requirement of \$5,000. The Partnership's ratio of aggregate indebtedness to net capital was .09 to 1 at December 31, 2018. The Securities and Exchange Commission permits a ratio of aggregate indebtedness to net capital for the Partnership at this time of no greater than 15 to 1. #### NOTE E CONCENTRATIONS AND CREDIT RISK The Partnership has cash deposits in correspondent financial institutions in excess of the amount insured by the FDIC in the amount of \$277,769 at December 31, 2018. It is the Partnership's practice to utilize high net worth financial institutions to minimize credit risk. Additionally the Partnership has credit risk related to the note receivable from GulfStar II. The Partnership's management does not believe significant credit risk exists in relation to this receivable and that no reserves are required. {14}------------------------------------------------ NOTE F NOTES RECEIVABLE, AFFILIATE The Partnership created intercompany receivables for cash advances with its affiliate GulfStar II on February 26, 2009 and October 1, 2011 in the amounts of \$270,000 and \$107,100, respectively. These interest free notes were renewed and will mature on February 23, 2019 and October 1, 2019, respectively. The note maturing on February 23, 2019 was renewed subsequent to year end for a one year term. On February 27, 2012 the Partnership created an additional intercompany note receivable with its affiliate GulfStar II in the amount of \$125,700. This interest free note was renewed for a one year term during 2018 and will mature on February 27, 2019. Subsequent to year end this note was renewed for a one year term. The imputed interest on the notes is not significant. {15}------------------------------------------------ ## **QI..FSTAR GRou> I, LTD. SCHEDt.1.£** I **COMPUTATION OF l'ET CAPITAL lN>ER Rt.I.£ 150-1 OF 11-tE SECURITIES AN> EX CHA ra COMMISSION DECEMBER 31, 2018** | NET CAPITAL | | |---------------------------------------------------------------------------------------------------------|-----------------| | Total partners' capital qualified for net capital | \$
1,248,419 | | Nonallowable assets: | | | Cash | (121) | | Accounts receivable, affiliate | (130,986) | | Notes receivable, affiliate | (502,800) | | Prepaid management fees; affiliate | {128,000} | | Total nonallowable assets | (761,907) | | Excess Fidelity Bond Deductible | (15,000) | | | (776,907) | | | | | Net capital | \$
471,512 | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENTS
Minimum net capital required (6.66% of total aggregate | | | indebtedness) | \$
2 750 | | Minimum dollar net capital requirement | \$
5,000 | | Net capital requirement (greater of above two minimum | | | requirement amounts) | \$
5,000 | | Excess net capital | \$
466,512 | | Ratio: Aggregate indebtedness to net capital | .09 to 1 | No material differences existed between the audited computation of net capital pursuant to Rule 15c3-1 as of December 31, 2018 and the corresponding unaudited filing of part IIA of the FOCUS Report/form X 17A-5 filed by GulfStar Group I, Ltd. See report of independent registered public accounting firm. {16}------------------------------------------------ ### GULFSTAR GROUP I, LTD ### Information Relating to the Possession or Control Requirements under Rule 15c3-3 ### December 31, 2018 ### Exemption Provision The Company operates pursuant to section (k)(2)(i) exemptive provisions of Rule 15c3-3 of the Securities Exchange Act of 1934. Under these exemptive provisions, the Computation of Determination of the Reserve Requirements and Information Relating to the Possession or Control Requirements are not required. See report of independent registered public accounting firm. {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) To the Management of GulfStar Group I, Ltd. In planning and performing our audit of the financial statements of GulfStar Group I, Ltd. (the Partnership) as of and for the year ended December 31, 2018, we considered the Partnership's internal control in order to determine auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on the financial statements and not to provide assurance on internal control. However, we noted certain matters involving internal control and its operation that we consider to be a significant deficiencies and a control deficiency under standards established of the Public Company Accounting Oversight Board (PCAOB). A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, **or** a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Partnership's annual or interim financial statements will not be prevented or detected on a timely basis. We did not identify any control deficiencies that we believe to be material weaknesses. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the Partnership's financial reporting. We noted the following deficiencies that we believe to be significant deficiencies and a control deficiency. *Slgn,ficantdefiaendes* ### **Segregation of Duties** In consideration of design of internal controls, we noted a lack of segregation of duties for the cash receipts and cash disbursements areas. Though the control structure is considered appropriate for the size and nature of the entity, we would recommend mitigating controls such as a second review of reconciliations and dual signatures/approvals for cash disbursements be implemented to establish a system of checks and balances where appropriate. In addition, while performing our audit procedures, we identified that certain expenses were paid out of the incorrect partnership's bank account. These errors resulted in cash being withdrawn from the Partnership's account in error but were corrected during the fiscal year. Though corrected, the errors were not discovered during the review process. We recommend that expenditures paid from the Partnership account are carefully reviewed to make sure they are being paid out of the proper account. ### **Uncorrected Misstatements** In performance of audit procedures, we identified certain uncorrected misstatements related to accrued expenses and SIPC fees. Additionally, we identified an uncorrected misstatement related to retainer fees received from a customer that were not amortized over the period the services were to be provided. We recommend that accruals be reviewed carefully at each month end to determine they are properly stated in the quarterly FOCUS reports and that retainer fees are recognized ratably over the period covered by the consulting agreement. Uncorrected misstatements are identified in the management representation letter. {18}------------------------------------------------ ### Control deficiency ### **SIPC 6 and 7 Preparation** We noted while testing the preparation of the SIPC 6 and 7 reports that the related party consulting fees of \$300,000 were not included in the total revenues line of the assessment report. We believe those revenues should be included on line 2a of the report and removed on line 2c (8). The omission of those revenues did not impact the assessment calculation. This letter is intended solely for the information and use of management and others within the Partnership, and is not intended to be, and should not be, used by any one other than these specified parties. Houston, Texas February 25, 2019 {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Partners of GulfStar Group I, Ltd. We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) GulfStar Group I, Ltd. identified the following provisions of 17 C.F.R. §15c3-3(k) under which GulfStar Group I, Ltd. claimed an exemption from 17 C.F.R. §240.15c3-3 (k}(2)(i) (the exemption provisions) and (2) GulfStar Group I, ltd. stated that GulfStar Group I, Ltd. met the identified exemption provisions throughout the most recent fiscal year without exception. GulfStar Group I, Ltd.'s management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about GulfStar Group I, Ltd.'s compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(i) of Rule 15c3-3 under the Securities Exchange Act of 1934. Houston, Texas February 25, 2019 {20}------------------------------------------------ | I
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