# HAMILTON CAVANAUGH INVESTMENT BROKERS, INC. X-17A-5 (2024-04-12) — Broker-dealer annual report
- Company: HAMILTON CAVANAUGH INVESTMENT BROKERS, INC.
- Form: X-17A-5
- Filed: 2024-04-12
- Period: 2023-12-31
- Accession: 0000920063-24-000001
- CIK: 920063
- File #: 8-46982
- Type: Broker-dealer
- Material weakness: No
- Auditor: Goldman & Company, CPA's
- Auditor location: Marietta, GA
- Contact: Lindsay Hamilton
- Phone: 914-761-6110
- Email: lindsayh@hamcav.com
- Website: hamcav.com
- Signed by: Lindsay Hamilton (Chief Compliance Officer)
Original filing: https://www.sec.gov/Archives/edgar/data/920063/000092006324000001/HCA2023pub.pdf
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
| ANNUAL REPORTS |
|----------------|
| FORM X-17A-S |
| PART Ill |
| OMB APPROVAL | |
|--------------------------|--|
| OMB Number: 3235-0123 | |
| Expires: Nov. 30, 2026 | |
| Estimated average burden | |
| hours per response: 12 | |
SEC FILE NUMBER 8-046982
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 01 /01 /2023 AND ENDING 12/31 /2023
MM/DD/VY
MM/DD/VY
A. REGISTRANT IDENTIFICATION
NAME oF FIRM: Hamilton Cavanaugh and Associates, Inc.
TYPE OF REGISTRANT (check all applicable boxes):
0 Broker-dealer D Security-based swap dealer D Maj or security-based swap participant D Check here if respondent is also an OTC derivatives dealer
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)
# 2975 Westchester Avenue, Ste 114
| | | (No. and Street) | | | |
|------------------------------------------------------------------------------------------------------|--|------------------------------------------------------------|-----------------|---------------------|--|
| Purchase | | NY | | 10577 | |
| (City) | | (State) | | (Zip Code) | |
| PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | |
| Lindsay Hamilton | | (941) 761-6110 | | lindsayh@hamcav.com | |
| (Name) | | (Area Code - Telephone Number) | {Email Address) | | |
| | | B. ACCOUNTANT IDENTIFICATION | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this fil
Goldman & Company, CPAs, PC | | (Name - if individual, state last, first, and middle name) | ing* | | |
| 3535 Roswell Road, Ste 32 Marietta | | | GA | 30062 | |
| (Address) | | (City) | (Stat e) | (Zip Code) | |
| 06/25/2009 | | | 1952 | | |
| l"
of Reg;" "tloo w;th PCAOB){;f '''"" ble}
FOR OFFICIAL USE ONLY | | | | | |
| | | | | | |
\*Claims for exempt ion from the requirement that the 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 exempt ion. See 17 CFR 240.l 7a-S(e)(l )(ii), if applicable.
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
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| | OATH OR AFFIRMATION | | | | | | |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|--|--|
| | swear (or affirm) that, to the best of my knowledge and belief, the
I, Lindsay Hamilton | | | | | | |
| | financial report pertaining to the firm of Hammon, Cavanaugh arid Assoclatas, Inc.
as of | | | | | | |
| | 2~ is true and correct. I further swear (or affirm) that neither the company nor any
12/31 | | | | | | |
| | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | | | | | |
| | as that of a customer.
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| | This flling"'* contains (check all applicable boxes): | | | | | | |
| | ii (a) Statement of financial condition. | | | | | | |
| | iil (b) Notes to consolidated statement offlnancial 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 ofRegulation S-X). | | | | | | |
| 0 | (d) Statement of cash flows. | | | | | | |
| 0 | (e) Statement of chang~ in stockholders' or partners' or sol~ proprietor's equity. | | | | | | |
| D | (t) Statement of changes in liabilities subordinated to claims of creditors. | | | | | | |
| D | (g) Notes to consolidated financial statements. | | | | | | |
| D | (h) Computation of net capital under 17 CFR 240.15c3-l 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 pu~uant to Exhibit B to 17 CFR 240.15c3-3 or | | | | | | |
| | Exhibit A to 17 CFR 240.18a-4, as applicable. | | | | | | |
| 0 | (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. | | | | | | |
| 0 | (m) lnformatiol') relating to possession or control requirements for customers under 17 CFR 240.15c3-3. | | | | | | |
| 0 | (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR | | | | | | |
| 0 | 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
(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 CFR240.18a-2, as applicable, and the 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 offinanclal condition. | | | | | | |
| | lil (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.lSa-7, as applicable. | | | | | | |
| 0 | (r) Compliance report in accordance with 17 CFR 240.17a-5or17 CFR 240.lSa-7, as applicable. | | | | | | |
| 0 | (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | | | | |
| | ij (t) Independent public accountant's report based on an examination of the statement of financial condition. | | | | | | |
| 0 | ( 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. | | | | | | |
- 0 (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.lBa-7, as applicable.
- D (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5or17 CFR 240.18a-7, as applicable.
- 0 (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable.
- 0 (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 CFR240.17a-12(k). 0 (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.
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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, 2023
(with Report of Registered Independent Public Accounting Firm)
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### **TABLE OF CONTENTS**
| Report of Registered Independent Public Accounting Firm | 1 |
|---------------------------------------------------------|---|
| Statement of Financial Condition | 2 |
| Notes to Financial Statements | 3 |
**Page** No.
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### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FTRM
To the Shareholder of Hamilton Cavanaugh & Associates, Inc.
### Opinion on the Financial Statements
We have audited the accompanying statement of financial condition of Hamilton Cavanaugh & Associates, Inc., as of December 31, 2023, and the related footnotes (collectively referred to as the "financial statement"). 0.. In our opinion, the financial statement presents fairly, in all material respects, the financial position ~ ~ Hamilton Cavanaugh & Associates, Inc. as of December 31, 2023 in conformity with accounting principles O 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. 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.
We have served as the Company's auditor since 2022.
Goldman & Company, CPA's, P.C. Marietta, Georgia April 11, 2024
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## Hamilton, Cavanaugh & Associates, Inc. STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2023
# Hamilton, Cavanaugh & Associates, Inc. STATEMENT OF FINANCIAL CONDITION DECEMBER 31 , 2023
| ASSETS | |
|--------------------------------------------------|---------------|
| Cash and cash equivalents | \$
120,731 |
| Receivable from broker-dealers and plan sponsors | 15,827 |
| Other assets | 6 720 |
| TOTAL ASSETS | \$
143,278 |
| LIABILITIES AND STOCKHOLDER'S EQUITY | |
| LIABILITIES | |
| Accounts payable and accrued expenses | 13 813 |
| | |
| TOTAL LIABILITIES | 13,813 |
| | |
| STOCKHOLDER'S EQUITY | |
| Common stock, no par value | |
| 200 shares authorized, | |
| Issued and outstanding | 16,000 |
| Additional paid-in capital | 150,000 |
| Retained earnings | (36,535) |
| | |
| TOTAL STOCKHOLDER'S EQUITY | 129.465 |
| TOT AL LIABILITIES AND STOCKHOLDER'S EQUITY | \$
143 278 |
The accompanying notes are an integral part of this statement.
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# **Hamilton, Cavanaugh & Associates, Inc. NOTES TO FINANCIAL ST A TEMENTS DECEMBER 31, 2023**
## **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, primarily in New York and New Jersey.
#### **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 , 2019, 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**
The Company follows ASC Topic 606, "Revenue from Contracts with Customers." 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.
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### **NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED**
The following provides detailed information on the recognition of the Company's revenue from contracts with customers:
### **Significant Judgements**
Revenue from contracts with customers includes comm1ss1on income. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement 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 the Company's progress under the contract, and whether constraints on variable consideration should be applied due to uncertain future events.
#### **Broker Dealer Distribution Fees**
The Company acts as a distributor for certain mutual funds and insurance companies. The Company earns distribution fees from front-end sales that occur at the point of sale as well as trailing fees for which the Company provides ongoing support and education to its clients. Front-end sales fees are based on a percentage of the share price and are recognized as revenue on a trade-date basis, which is when the Company's performance obligations in generating the fees have been satisfied. Distribution fees include mutual fund, and fixed and variable product trailing fees, which are recurring in nature. These trailing fees and 128-1 fees are earned by the Company based on a percentage, as defined in the mutual fund prospectus or contract with the insurance company, of the current market value of clients' investment holdings in trail-eligible assets and recognized over the period during which services are performed. Accounts receivable from broker-dealers was \$15,827 at December 31, 2023. Management has determined no allowance for credit losses is necessary at December 31, 2023.
#### **Disaggregated Revenue**
| Variable Annuities Fees | 81, 191
\$ |
|-------------------------|---------------|
| Service Fees | 23,838 |
| Mutual Funds Fees | 17,453 |
| 12b-1 Fees | 6 786 |
| | \$
129 268 |
#### **Service Fees Revenue**
Service fees are asset-based fees for services provided to retirement plans such as assisting plan participants with plan questions, providing plan education, or other administrative services. Service fees are calculated based on a percentage of assets in retirement plans serviced by the Company. These fees are paid by the recordkeeper monthly and are recognized when received.
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# **Hamilton, Cavanaugh & Associates, Inc. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023**
# **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.
| Autos | 5 | | |
|--------------------------|--------------------------------------------------------------------------|----------------------------------------------------------------------------|-----------|
| | | | |
| | | | 471 ,826 |
| | | | 120,886 |
| Autos | | | 262,957 |
| Subtotal | | | 855,669 |
| Accumulated depreciation | | | (855,669) |
| | | \$ | 0 |
| | Equipment
Fixtures
At December 31 , 2023:
Equipment
Fixtures | YEARS
5-7
7
Property and equipment, less accumulated depreciation | \$ |
## **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 , 2023, the Company had no uninsured balance at a financial institution.
## **NOTE 4: CONCENTRATION OF CUSTOMER REVENUES AND RECEIVABLES**
For the year ended December 31, 2023, Four customers accounted for 94% of the Company's accounts receivable. Five customers accounted for 76% of the Company's revenue.
# **NOTE 5: RELATED PARTY TRANSACTIONS**
All related parties are controlled by the stockholder of the Company. Related party transactions for the year ended December 31 , 2023, are as follows:
The Company is party to an Expense Sharing Agreement (ESA) with Aspire Advisors, Inc. ("Aspire"), a related company, initially effective December 2015, amended May 2023 and updated in 2023 to revise allocations effective December 1, 2023. Under the ESA, the parties allocate certain expenses and services to one another. Company policy is to record the allocations to Aspire as a reduction of expense and the allocations from Aspire to the appropriate expense account. The expenses allocated to Aspire under the ESA for the year ended December 31 , 2023, were:
| Compensation and benefits | \$
125,098 |
|------------------------------------------|---------------|
| Insurance | 64,795 |
| Communication and computer expenses | 3 052 |
| Expense Sharing Agreement (ESA) receipts | \$
192.945 |
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# **Hamilton, Cavanaugh & Associates, Inc. NOTES TO FINANCIAL STATEMENTS DECEMBER** 31, **2023**
### **NOTE 5: RELATED PARTY TRANSACTIONS CONTINUED**
The expenses allocated to the Company under the ESA by Aspire totaled \$21 ,044. In addition, the Company paid operating expenses on behalf of Aspire totaling \$13, 199 and has a related receivable balance of \$2,944.
In connection with the ESA allocation revisions in 2023, the Company transferred two operating leases to Aspire (see Note 7, Leases), and transferred its prepaid insurance asset at its basis of \$19,202 for cash.
#### **NOTE 6: 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 , 2023 the Company had net capital of \$122,132 which was \$117,132 above its required net capital of \$5,000. The Company's ratio of aggregate indebtedness to net capital was .11 to 1.
Capital withdrawals are subject to certain notification and other provisions of the net capital rules of the SEC.
### **NOTE 7: LEASES**
The Company had obligations under two operating leases with initial non-cancelable terms expiring during the year covering office equipment. These leases were included in right-of-use assets and lease liabilities on the company's Statement of Financial Condition. The company's previous leases expired in 2023. The company replaced those leases and transferred the new leases to Aspire.
Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of future payments over the lease term. The discount rate used to determine the commencement date present value is the interest rate implicit in the lease, or when that is not readily determinable, the company uses its incremental borrowing rate. The company estimates its incremental borrowing rate of 5.5% over the remaining lease terms based on information available at the lease commencement in determining the present value of future payments. Lease expense for net present value of payments is recognized on a straight-line basis over the lease term.
Aggregate annual payments under these lease agreements at December 31, 2023 are approximately as listed in the table below:
Year Ending December 31,
### 2023 \$ 2.380
The Company terminated and transferred 2 operating leases to its related party. The leases terminated were for a postage machine and copier. The gain on early termination is \$1 , 155 and is recorded in other assets on the statement of financial condition. See note 5, Related Party Transactions.
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# **Hamilton, Cavanaugh & Associates, Inc. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023**
# **NOTE 8: ECONOMIC RISKS**
In early 2020, the World Health Organization declared COVID-19 to constitute a "Public health emergency of international concern." The COVID-19 pandemic has disrupted economic markets and the duration, spread, and economic impact of the virus is unknown at this time. The financial performance of the Company is subject to future developments related to the COVI D-19 outbreak and possible government restrictions or advisories affecting financial markets and business activities. The impact on financial markets and the overall economy, all of which are highly uncertain, cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the company's results may be materially affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
# **NOTE9:SUBSEQUENTEVENTS**
The Company has performed an evaluation of events that have occurred subsequent to December 31 , 2023, and through April 11 , 2024, the date the financial statements were available to be issued. There have been no material subsequent events that have occurred during such period that would require disclosure in this report or be required to be recognized in the financial statements as of December 31 , 2023.
# **NOTE 10: ACCOUNTS RECEIVABLE**
The Company has evaluated its receivables from affiliates and broker dealers and plan sponsors and has determined that no valuation allowance is needed. The accounts receivable at December 31, 2022 was \$20,565.
# **NOTE 11: BASIS OF ACCOUNTING**
The Company maintains its books and records on the accrual basis of accounting as required by FINRA and the SEC. The Company is evaluating new accounting standards and will implement as required.
# **NOTE 12: CASH AND CASH EQUIVALENTS**
The Company defines cash equivalents as highly liquid investments with original maturity dates of less than 90 days.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.