# HAMILTON CAVANAUGH INVESTMENT BROKERS, INC. X-17A-5 (2019-03-01) — Broker-dealer annual report - Company: HAMILTON CAVANAUGH INVESTMENT BROKERS, INC. - Form: X-17A-5 - Filed: 2019-03-01 - Period: 2018-12-31 - Accession: 0000920063-19-000001 - CIK: 920063 - File #: 8-46982 - Material weakness: No - Auditor: Morey, Nee, Buck & Oswald, LLC - Auditor location: Bethlehem, PA - Contact: Lindsay Hamilton - Phone: 914-761-6110 - Signed by: Lindsay Hamilton (General Counsel & Chief Compliance Officer) Original filing: https://www.sec.gov/Archives/edgar/data/920063/000092006319000001/2018PublicOCR.pdf --- {0}------------------------------------------------ Hamilton, Cavanaugh & Associates, Inc. ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill #### SEC FILE NO. 8-46982 FOR THE YEAR ENDED DECEMBER 31,2018 (with Report of Registered Independent Public Accounting Finn) {1}------------------------------------------------ PUBLIC UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | OMB APPROVAL | | |--------------------------|---------------------------| | OMB Number: | 3235-0123 | | Expires: August 31, 2020 | | | Estimated average burden | | | | hours per response 12.00 | | | SEC FILE NUMBER | | 8- | 046982 | # **ANNUAL AUDITED REPORT FORM X-17 A-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 | | | _________ 1~/~1/~2~01~8~ _______ ANDENDING _______ 1~2/~3_1/~2~01~8~----- | |--------------------------------------------------------------------------|-------------------------------------------------------|---------|---------------------------------------------------------------------------| | | MMIDDIYY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER-DEALER: | | | | | Hamilton Cavanaugh & Associates, Inc. | | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM 10. NO. | | 661 N. Broadway | | | | | | (No. and Street) | | | | White Plains | NY | | 10603-2408 | | (City) | (State) | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | Lindsay Hamilton | | | (941) 761-6110 | | | | | (Area Code-- Telephone No.) | | | B. ACCOUNT ANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | Morey, Nee, Buck & Oswald, LLC | | | | | | (Name-- ((individual, state last, first, middle name) | | | | 2571 Bagylos Circle, Suite B20 | Bethlehem | PA | 18020 | | (Address) | (City) | (State) | (Zip Code) | | CHECK ONE:
I!) Certified Public Accountant
0 Public Accountant | | | | | 0 Accountant not resident in United States or any of its possessions | | | | | | 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 exemption. See section 240.17a-5(e)(2).* SEC 1410 (11-05) *Potential persons who are to respond to tile collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.* {2}------------------------------------------------ #### **OATH OR AFFIRMATION** I, Lindsay Hamilton , swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Hamilton Cavanaugh & Associates, Inc. , as of December 31 ,20 , 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: AMELIA M ESTRELLA NOTARY PUBLIC - STATE OF COLORADO NOTARY 10 20114032972 MY COMM~S ON EX~~?S JUN 6, 2019 Signature *CevVNtA.* l c.)U --- This report\*\* contains (check all applicable boxes): - [RJ (a) Facing page. - IE] (b) Statement of Financial Condition. - 0 (c) Statement of Income (Loss) - D (d) Statement of Changes in Financial Condition - D (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital - D (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. - D (g) Computation of Net Capital - D (h) Computation for Determination of Reserve Requirements Pursuant to Rule 1Sc3-3. - D (i) Information Relating to the Possession or control Requirements Under Rule 1 Sc3-3. - D G) A Reconciliation, including appropriate explanation, of the Computation ofNet Capital Under Rule 15c3-l and the Computation for Determination 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 consolidation. - !XI (I) An Oath or Affirmation. - **D** (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. - **B** (o) Exemption from SEA Rule 15c3-3 {3}------------------------------------------------ #### TABLE OF CONTENTS | | Page No. | |---------------------------------------------------------|----------| | Report of Registered Independent Public Accounting Firm | 1 | | Financial Statements | | | Statement of Financial Condition | 2 | | Notes to Financial Statements | 3-6 | {4}------------------------------------------------ # I'lon'Y~ :\cr~ Buck & ()s\\ald~ LLC [ I I I --·---- ----------- -------- ! ,----------------------------! · ( L'lltli,·d l'uhli~.· \,·Lilllltl~tltt-.. ;111d \d' '"11r-.. · L------- ---- --------------~--------·--- --------- --------~----' #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors of Hamilton Cavanaugh & Associates, Inc. #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Hamilton Cavanaugh & Associates, Inc. as of December 31, 2018, and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Hamilton Cavanaugh & Associates, Inc. as of December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of Hamilton Cavanaugh & Associates, Inc.'s management. Our responsibility is to express an opinion on Hamilton Cavanaugh & Associates, Inc.'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 Hamilton Cavanaugh & Associates, Inc. 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 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. ~ , Ad/ 14«-q. J.J(! Morey, Nee, Buck & Oswald, LLC We have served as Hamilton Cavanaugh & Associates, Inc.'s auditor since 2014. Bethlehem, Pennsylvania February 28, 2019 1120 N. Bethlehem Pike· Suite 107 ·PO Box 459 • Spring House, PA 19477• Phone: 610-882-1000 2571 Baglyos Circle • Suite 820 • Bethlehem, PA 18020 • Phone: 610-882-1000 27 E. High Street • Suite A • Somerville, NJ 08876 • Phone: 908-393-0549 {5}------------------------------------------------ ## **Hamilton, Cavanaugh & Associates, Inc. STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2018** | ASSETS | | |-------------------------------------------------------|---------------| | Cash | \$
126,426 | | Receivable from broker-dealers and plan sponsors | 65,229 | | Receivable from customers | 81,492 | | | | | Property and equipment, less accumulated depreciation | 123,041 | | Other assets | 32,258 | | TOTAL ASSETS | \$
428,446 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | LIABILITIES | | | Notes payable | \$
100,072 | | Payable to affiliate | 3,032 | | Accounts payable and accrued expenses | 65,805 | | | | | TOTAL LIABILITIES | 168,909 | | | | | STOCKHOLDER'S EQUITY | | | Common stock, no par value | | | 200 shares authorized, | | | Issued and outstanding | 16,000 | | Retained earnings | 243,537 | | TOTAL STOCKHOLDER'S EQUITY | 259.537 | | TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | \$
428,446 | The accompanying notes are an integral part of this statement. 2 {6}------------------------------------------------ #### **NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### **NATURE OF BUSINESS** Hamilton, Cavanaugh & Associates, Inc. (the "Company"), a New York State corporation, is a registered broker-dealer in securities under the Securities Act of 1934 and is a member of the Financial Industry Regulatory Authority and Securities Investor Protection Corporation. The Company is engaged in the sale of variable annuities and mutual funds. #### **INCOME TAXES** The Company is organized as an S corporation under the applicable provisions of the Internal Revenue Code. In lieu of corporate income taxes, the shareholders of an S corporation are taxed on their proportionate share of the Company's taxable income. Therefore, no provision or liability for federal income taxes has been included in the financial statements. The Company has determined that there are no material uncertain tax positions that require recognition or disclosure in its financial statements. Taxable years ended from December 31, 2015 through the present are subject to examination by the taxing authorities. #### **USE OF 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 liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### **REVENUE FROM CONTRACTS WITH CUSTOMERS** On January 1, 2018, the Company adopted ASC Topic 606, "Revenue from Contracts with Customers" using the full retrospective method which did not result in a cumulative-effect adjustment at the date of adoption. Revenue from contracts with customers is recognized when, or as, the Company satisfies performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized when it is determined the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for those promised goods or services (i.e., the "transaction price"). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of the Company's influence, such as market volatility or the judgment and actions of third parties. {7}------------------------------------------------ ## **NOTE 2: PROPERTY AND EQUIPMENT** Depreciation is calculated by the straight-line method for financial reporting purposes at rates based on the following estimated useful lives. | | YEARS | | |-------------------------------------------------------|-------|---------------| | Equipment | 5-7 | | | Fixtures | 7 | | | Autos | 5 | | | At December 31 , 2018: | | | | Equipment | | \$
471,826 | | Fixtures | | 120,886 | | Autos | | 262,957 | | Subtotal | | 855,669 | | Accumulated depreciation | | (732.628) | | Property and equipment, less accumulated depreciation | | \$
123.041 | #### **NOTE 3: CREDIT AND MARKET RISK** The Company maintains its cash balances at one financial institution. The Federal Deposit Insurance Company (FDIC) insures up to \$250,000 of deposits maintained in non-interest-bearing transaction accounts at any member financial institution. At December 31 , 2018, the Company had no uninsured balance at a financial institution. ### **NOTE 4: CONCENTRATION OF CUSTOMER REVENUES AND RECEIVABLES** For the year ended December 31, 2018, five customers accounted for 85% of the Company's accounts receivable. Three customers accounted for 64% of the Company's revenue. #### **NOTE 5: NOTES PAYABLE** As of December 31, 2018: | Great America Financial services, collateralized by equipment, due | | |--------------------------------------------------------------------|--------------| | in monthly payments of \$1
,188, including interest | | | at 10.50%, through October 2022 | \$
44,006 | | | | | Current maturities | (10, 102) | | | | | Long-term notes payable | \$
33,904 | {8}------------------------------------------------ Principal payments on notes payable are due as follows, for years ended December 31 : | 2019 | 10,102 | |------|--------------| | 2020 | 11,216 | | 2021 | 12,454 | | 2022 | 10 234 | | | \$
44 006 | As of December 31 , 2018: | Bank of America, collateralized by equipment, due
in monthly payments of \$1 ,464, including interest | | |----------------------------------------------------------------------------------------------------------|--------------| | at 4.99%, through June 2022 | \$
56,066 | | Current maturities | (15.164) | | Long-term notes payable | \$
40.902 | Principal payments on notes payable are due as follows, for years ended December 31 : | 2019 | 15,164 | |------|--------------| | 2020 | 15,933 | | 2021 | 16,752 | | 2022 | 8 217 | | | \$
56.066 | #### **NOTE 6: COMMITMENTS AND CONTINGENCIES** Lease expense for certain office equipment for the year ended December 31 , 2018 was \$17,967 and is included in occupancy and equipment expense. #### **NOTE 7: RELATED PARTY TRANSACTIONS** All related parties are controlled by the stockholder of the Company. Related party transactions for the year ended December 31, 2018 are as follows: Pursuant to an Expense Sharing Agreement the Company received \$133,961, from Aspire Advisors, Inc. ("Aspire"), a related company, for certain services provided to the related company. Company policy is to record the receipts as a reduction of expense. The expense reductions received from Aspire for the year ended December 31, 2018 were: | Compensation and benefits | \$
27,906 | |------------------------------------|---------------| | Insurance | 27,667 | | Occupancy and equipment | 55,333 | | Other expenses | 23.055 | | Expense Sharing Agreement receipts | \$
133 961 | {9}------------------------------------------------ As of December 31 , 2018, the Company has a payable of \$3,032 due to Aspire. The Company paid \$120,000 to Hamilton Cavanaugh, LLC, a related company, for office space utilized by the Company. The Company paid \$7,006 to Hamilton Cavanaugh, Inc., a related company, for an auto utilized by the Company. #### **NOTE 8: NET CAPITAL REQUIREMENTS** The Company is subject to the SEC's Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital, as defined and requires that the ratio of aggregate indebtedness, as defined, to net capital, shall not exceed 15 to 1. At December 31 , 2018 the Company had net capital of (\$7,836) which was \$19,097 below its required net capital of \$11,261 . The Company's ratio of aggregate indebtedness to net capital was -21.56 to 1. Capital withdrawals are subject to certain notification and other provisions of the net capital rules of the SEC. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.