# LENOX FINANCIAL SERVICES, INC. X-17A-5 (2024-04-08) — Broker-dealer annual report - Company: LENOX FINANCIAL SERVICES, INC. - Form: X-17A-5 - Filed: 2024-04-08 - Period: 2023-12-31 - Accession: 0000922122-24-000001 - CIK: 922122 - File #: 8-47204 - Type: Broker-dealer - Material weakness: No - Auditor: Davila Advisory LLC - Auditor location: St. Louis, MO - Contact: Douglas Ruth - Phone: 815-485-5559 - Email: lenoxfin@jenoxfin.com - Website: jenoxfin.com - Signed by: Douglas Ruth (President) Original filing: https://www.sec.gov/Archives/edgar/data/922122/000092212224000001/lenoxfinancialaudit.pdf --- {0}------------------------------------------------ | | UNHIDSTATW
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U1 | |---|---------| | I | | - - - *l***2** S I - - - - - - - - - - - - - - - - - - - - - - - *i* M >• 2 i ! 4 **2**\***Ia** {2}------------------------------------------------ LENOX FINANCIAL SERVICES,INC. (An Illinois Corporation) FINANCIAL STATEMENT AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PURSUANT TO RULE 17a-5 FOR YEAR ENDED DECEMBER 31, 2023 Filed as confidential pursuant to Rule 17a-5(d) Of the Securities and Exchange Commission {3}------------------------------------------------ ### LENOX FINANCIAL SERVICES, INC. ### **(An Illinois Corporation)** #### TABLE OF CONTENTS | Oath Of
Affirmation | | 3 | |-------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------------| | Table of Contents | | 4 | | | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 5 - 6 | | FINANCIAL STATEMENTS | | | | | Statement of Financial Condition | 7 | | Statement of Income | | 8 | | | Statement of Changes in Shareholder's Equity | 9 | | | Statement of Cash Flows | 10 | | | Notes to FinancialStatements | 11 -
14 | | SUPPLEMENTAL SCHEDULES: | | | | Schedule 1: | Computation of Net Capital | 1 5
- 1 6 | | Schedule 2: | Computation for Determination of Reserve Requirements for
Broker-Dealers and Information for Possession or Control
Requirements | 17 | | | MANAGEMENT'S EXEMPTIONS REPORT | 18 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Shareholder of Lenox Financial Services # **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Lenox Financial Services (the "Company") as of December 31, 2023, and the related statements of income, changes in shareholder's equity 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 Lenox Financial Services as of December 31, 2023, 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 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 information in Schedule I and II (the "supplemental information") has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. 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 17 C.F.R. §240.17a-5. In our opinion, the supplemental information in Schedule I and II is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Lenox Financial Services's auditor since 2021. *, LC 8, 2024 **T ( 314) 965-9775 F** *' •* **( 314) 476 - 9660 W : www.davilaadvisory.com A10135 Manchester Rd , Suite 206 , St. Louis, MO 63122** {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholder of Lenox Financial Services We have reviewed management's statements, included in the accompanying exemption report, in which (1 ) Lenox Financial Services identified the following provisions of 17 C.F.R.section 15c3-3(k) under which Lenox Financial Services claims an exemption from 17 C.F.R. section 240.15c3-3(k)(2)(ii) (the "exemption provisions") and (2) Lenox Financial Services stated that Lenox Financial Services met the identified exemption provisions throughout the most recent fiscal year ended December 31, 2023 without exception. Lenox Financial Services'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 Lenox Financial Services'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)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. *. L314) 965- 9775 F : (314) 476- 9660 W : www.davilaadvisory.com A: 10135 Manchester Rd, Suite 206, St. Louis, MO 63122** {6}------------------------------------------------ ### **LENOX FINANCIAL SERVICES, INC Balance Sheet** #### **December 31, 2023** ### **ASSETS** | | Cash
Due From Broker
Securities Owned, at Fair Value
Accounts Receivable | \$
51,370
10,656
103,421
13,000 | |----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------| | | Total Assets | \$
178,447 | | | Liablities and Shareholder's Equity | | | Liabilities | Accounts Payable & Accrued Expenses | \$
21,973 | | | Total Liabilities | 21,973 | | Shareholder's Equity | | | | | Capital Stock - Common; 0.10 Par Value; 1,000 shares
Authorized, Issued and Outstanding
Additional Paid In Capital
Retained Earnings | 100
41,584
114,690 | | | Total Shareholder's Equity | 156,474 | | | Total Liabilities and Shareholder's Equity | \$
178,447 | The accompanying notes to the financial statements are an integral part of this statement. {7}------------------------------------------------ ### **LENOX FINANCIAL SERVICES, INC Income Statement 12 Months Ended December 31, 2023** #### **INCOME** | Annuity Income | \$
19,561 | | |---------------------------------------|--------------|---------------| | Mutual Fund Income | 14,576 | | | Commission Income | 39,678 | | | Management Fee | 15,000 | | | Equity Sales | 1,402 | | | Advisory Fees | 1,560 | | | Interest | 4,353 | | | Unrealized Gain (Loss) on Investments | 123 | | | Other Income | 6,981 | | | | | | | Total Sales | | \$
103,234 | #### **Operating Expenses** | Wages | 56,225
\$ | | | |------------------------------|--------------|-------|----------------| | Commissions | 18,179 | | | | Clearing Charges | 11,973 | | | | Employer PR Taxes | | 4,715 | | | Legal & Accounting | | 9,500 | | | Rent/Storage | 11,000 | | | | Outside Services | | 0 | | | Pension Expense | | 3,620 | | | Office Expense | | 432 | | | Management Fees | 20,672 | | | | Utilities-Telephone/Internet | | 7,176 | | | Total Operating Expenses | | \$ | 143,492 | | Operating Income (Loss) | | | ( 40.258,
' | The accompanying notes to the financial statements are an integral part of this statement. {8}------------------------------------------------ # Lenox Financial Services, Inc. (An Illinois Corporation) Statement of Changes in Shareholder's Equity For the Year Ended December 31, 2023 | | Capital | Additional
Paid In | Retained | | |-----------------------------------|---------|-----------------------|----------|-----------| | | Stock | Capital | Earnings | Total | | January 1, 2023
Balance
- | \$100 | \$106,051 | \$48,997 | \$155,148 | | Contributions | | \$41,584 | | \$41,584 | | Income (Loss)
Net | | | S40.258; | (S40.258) | | December 31, 2023
Balance
- | \$100 | \$147,635 | \$8,739 | \$156,474 | The accompanying notes to the financial statements are an integral part of this statement. {9}------------------------------------------------ | Lenox Financial Sen/ices, Inc
Corporation)
(An
Illinois
Cashflows
Statement
of
2023
December
31,
for
the
Year Ended | | | | | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|-----------------|----------|----------| | ACTIVITIES
OPERATION
CASH
FLOWS
FROM
From Operations
Net
loss | | | S | (40 258) | | INCOME
TO
ADJUSTMENTS
TO
RECONCILE
NET
ACTIVITIES
OPERATING
PROVIDED
BY
CASH
Gain
(Loss) on
Unrealized
Investments
Interest
Income | \$
S | 123
i4 422) | | | | CHANGES
IN:
NET
Prepaid
Expenses
Accrual
Payable
&
Expenses
Accounts
from
Broker
Due | \$
\$
S | 9,001
( 177) | | | | Net Changes
Adjustments
and
Total | | | \$ | 4,525 | | Operating Activities
Net Cash
Used
By | | | S | (35.733) | | BY FINANCING
ACTIVITIES
PROVIDED
FLOWS
CASH
Contributions
Distributions | \$ | 41,584 | | | | Activities
Financing
Cash
Provided
By
Net | | | \$ | 41,584 | | INCREASE
CASH
NET
IN | | | \$ | 5,851 | | - BEGINNING
OF
YEAR
CASH | | | \$ | 45,519 | | OF
YEAR
CASH
END
- | | | \$ | 51,370 | | FLOW DISCLOSURES
CASH
SUPPLEMENTAL
Tax
Payments
Income
Interest
Payments | | | \$
\$ | | The accompanying notes to the financial statements are an integral part of this statement. {10}------------------------------------------------ # LENOX FINANCIAL SERVICES, INC. (An Illinois Corporation) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 # NOTE1-ORGANIZATION AND NATURE OF BUSINESS Lenox FinancialServices, Inc. (the Company) was incorporated in the state of Illinois on March 28, 1994. The Company is registered with the Securities and Exchange commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). The Company operates as an introduction broker and as a fully disclosed broker dealer. # NOTE 2-SIGNIFICANT ACCOUNTING POLICIES # **Basis of Presentation** The financial statements have been prepared in conformity with accountingprinciples generally accepted inthe United States of America (GAAP). # **Use of Estimates** The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. # **Revenue Recognition** The Company follows ASC Topic 606,Revenue from Contracts with Customers ("ASC Topic 606"). The new revenue recognition guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price,(d) allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies the performance obligation. Income is derived from the commissions, brokerage fees and management fees charged. Income is recognized when fees are charged in compliance with GAAP when all performance obligations have been satisfied. In regard to ASC Topic 606, revenue has been disaggregated on the Statement of Operations. No further disaggregation is warranted at December 31,2023. # **Securities Transactions** Settled profit and loss arising from all securities transactions are entered into for the account and risk of the Company and are therefore recorded on a trade date basis. Marketable securities, held by the company are valued at fair market value. {11}------------------------------------------------ # LENOX FINANCIAL SERVICES, INC. (An Illinois Corporation) NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31,2023 # NOTE 2 -SIGNIFICANT ACCOUNTING POLICIES-CONTINUED # **Income Taxes** The Company is taxed as an S Corporation;therefore its income flows through to its stockholder's tax returns. As a result,no federal income tax provision is made by the Company. The Company is liable,however,for the Illinois replacement tax of 1.5% of net prescribed income. As of December 31,2023,the Company's tax returns for the years 2020 through 2022 are subject to review by its taxing jurisdictions. # **Statement of Cash Rows** For purposes of the statement of cash flows,the Company has defined cash equivalents as highly liquid investments, with original maturities of less than ninety days which are not held for sale in the ordinary course of business. # **Employees' Pension Plan** The Company provides a Simplified Employee Pension Plan to its employees who are not under a collective bargaining agreement of certain contract, have performed services for the Company for at least one year, attained the age of 21,and had total annual compensation in excess of \$400. Contributions are based upon each eligible employee's compensation,excluding compensatory leave. The Company contributions are calculated as an amount that can be deducted for federal tax purposes;the Company contribution for 2023 was \$3,620. The Pension Plan is administered by an outside financial institution. # NOTE 3- MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENT FASB ASC 820 defines fair value,establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sellthe asset or transfer the liability occurs in the principal market for the asset or liability or,in the absence of principle market,the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB ASC 820,are used to measure fair value. {12}------------------------------------------------ # LENOX FINANCIAL SERVICES,INC. (An Illinois Corporation) NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2023 # NOTE 3-MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENT-CONTINUED The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: - Level1 inputs are quoted prices in active markets for identical assets or liabilities the Company has the ability to assess. - Level 2 inputs are inputs (otherthan quoted prices included in levell) that are observable to the asset or liability, either directly or indirectly. - Level 3 are unobservable inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs should be developed based on the best information available in the circumstances and may include the Company's own data.) The Company's financial assets that are reported at fair value in the accompanying statement of financial condition as of December 31, 2023 are as follows: | | | Level 1 | Level 2 | Level
3 | Total | |------------|------------------------------|---------|----------|------------|-----------| | Securities | | | | | | | | Total Assets
affair value | \$5,810 | \$97,612 | | \$103,421 | | | | | | | | NOTE 4-FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK The Company can enter into various transactions involving derivatives and other off-balance sheet financial instruments. These financial instruments include exchange-traded futures,forwards and options. These derivative transactions are entered into a conduct trading activities,and manage market risks, and are,therefore, subject to varying degrees of market and credit risk. Derivative transactions are entered into for trading purposes or to economically hedge the other positions or transactions.The Company traded no derivatives during the year ended December 31, 2023. In addition, the Company can sell securities that it does not currently own and would therefore be obligated to purchase such securities at a future date. The Company would record these obligations in the financial statements at fair value of the related securities and would incur a loss if the fair value of the securities subsequently increase. The Company sold no securities that it did not own duringthe year ended December 31, 2023. {13}------------------------------------------------ # **(An Illinois Corporation)** NOTES TO FINANCIAL STATEMENTS-CONTINUED DECEMBER 31,2023 ### NOTE 5-CONCENTRATION OF CREDIT RISK The Company engages in various trading and brokerage activities in which counterparties primarily include other financial institutions.In the event counterparties do not fulfill their obligations, the Company may be exposed to risk.The risk default depends on the creditworthiness of the counterparty or insurer of the instrument.It is the Company's policy to review,as necessary,the credit standing of each counterparty. The company maintains cash deposits with its bank that never exceed the insurance provided by the Federal Deposit Insurance Corporation ("FDIC"). ### NOTE 6-RELATED PARTY TRANSACTIONS The Company shares office space and expenses with two affiliated companies. The Company's stockholder is principal of both affiliated companies. During 2023, the Company paid the affiliated companies \$15,896 for shared expenses. During 2023,the Company was paid \$0 for the affiliated companies for services performed. Each of the related party transactions was conducted as arm's length transactions. At December 31, 2023, the company had no outstanding accounts receivable from,or accounts payable due to these affiliated companies. ### NOTE 7-ACCOUNTS RECEIVABLE POLICY Accounts receivable are stated at the original invoice amount less an allowance for credit losses, based on a review of all outstanding accounts, in accordance with FASB ASC 326-20, which requires the Company to estimate expected credit losses over the life of its financial assets and certain off-balance sheet exposures as of the reportingdate based on relevant information about past events,current conditions,and reasonable and supportable forecasts. The allowance for credit losses is reported as a valuation account on the statement of financial condition that adjusts the asset's cost basis. Changes in the allowance for credit losses are reported as credit loss expense.Receivables are written off when deemed uncollectible. Any recoveries of receivables previously written off are recorded when received. Management has determined that an allowance for credit losses was not necessary at December 31,2023. ### NOTE 8-NET CAPITAL As a broker-dealer, the Company is subject to the net capital provisions of Rule 15c3-1 of the Securities and Exchange Commission (the Uniform Net Capital Rule). The Company computes its net capital under the aggregate indebtedness method which requiresthe Company to maintain minimum net capital,as defined, equal to the greater of 6-2/3% of aggregate indebtedness, as defined, or \$5,000. At December 31, 2023,the Company had net capital of \$149,077 which was in excess of its requirement of \$5,000 by \$144,077. ### Note 9-SUBSEQUENT EVENTS In accordance with the provisions set forth in FASB ASC 855,*Subsequent Events*, management has evaluated subsequent events through the date the financial statement were available for issuance. Management has determined that there are not material events that would require adjustments to, or disclosure in,the Company's financial statements. {14}------------------------------------------------ | Lenox Financial
Services, Inc.
Corporation)
(An
Illinois
Rule
Capital
15c
3-1
of
Linder
Computation
Net
- Continued
Commission
Securities
and
Exchange
of
the
Ended
December
31, 2023
Year
for
the | | Schedule
1 | | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|---------------|------------|--| | Equity
Shareholder's
Total | | \$ | 156,474 | | | Less
Nonallowable
Assets
- | | | | | | \$
Other | | | | | | -Allowable
Assets
Total
Non | | \$ | | | | Equity
Before
Haircuts
Net | | \$ | 156,474 | | | Haircuts on Securities
S | ( 7.397) | | | | | on Securities
Haircuts
Total | | S | (7
397) | | | Net
Capital | | \$ | 149,077 | | | Capital
Requirement
Minimum
Net | | \$ | 5,000 | | | Net
Capital
Excess | | \$ | 144,072 | | | 120% of
Net
Capital Requirement
Net Capital Less | | \$ | 143,077 | | | | | | | | There are no material differences between the computations above and the Company's coresponding unaudited FOCUS Report Part IIA filing. See Independent Registered Auditor's Report {15}------------------------------------------------ # Schedule 1 # Lenox Financial Services, Inc. (An Illinois Corporation) Computation of Net Capital Under Rule 15c 3-1 of the Securities and Exchange Commission - Continued for the Year Ended December 31, 2023 Computation of Aggregate Indebtedness # Aggregate Indebtedness Items included in the Statement of Financial Condition: | Payable
Accounts
Aggregate Indebtedness
Total | \$21,973
\$21,973 | | |--------------------------------------------------------|----------------------|--| | | | | Percentage of Aggregate Indebtedness to Net Capital 14.74% There are no material differences between the computations above and the Company's coresponding unaudited FOCUS Report Part IIA filing. See Independent Registered Auditor's Report 16 {16}------------------------------------------------ ### SCHEDULE II LENOX FINANCIAL SERVICES,INC. (An Illinois Corporation) COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS FOR BROKER-DEALERS UNDER RULE 15C3-3 AND INFORMATION FOR POSSESSION FOR CONTROL REQUIREMENTS UNDER RULE 15C3-3 FOR YEAR ENDED DECEMBER 31, 2023 The company does not carry customer accounts and defined by rule 15c3-3 of the Securities Exchange Act of 1934. Therefore, the Company is exempt from provisions of that rule. See Independent Registered Auditor's Report {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) *E-Mail: lenoxfin@Jenoxfin.com* **LenoxFinancialServices** *Douglas S. Ruth, Broker* # **Innovative Solutions to AchievellnanclalGala.** # **The Exemption Report** The following statements are made to the best knowledge and belief of Douglas Ruth as President for Lenox Financial Services, Inc. I, Douglas Ruth, as the President for Lenox Financial Services, Inc., (the Company) am responsible for complying with 17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers" and complying with 17 C.F.R. §240.15c3-3(k)(ii) (the "exemption provisions"). I have performed an evaluation of the Company's compliance with the requirements of 17 C.F.R. §240.17a-5 and the exemption provisions. Based on this evaluation, I assert the following: (1) I identified the following provisions of 17 C.F.R. § 15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240.15c3-3: k(2)(ii) (the "exemption provisions") and (2) the Company met the identified exemption provisions throughout the most recent fiscal year December 31, 2023 without exception. *& !udt>* Douglas Ru April 8, 2024 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.