# DEMPSEY FINANCIAL NETWORK, INC. X-17A-5 (2021-02-26) — Broker-dealer annual report - Company: DEMPSEY FINANCIAL NETWORK, INC. - Form: X-17A-5 - Filed: 2021-02-26 - Period: 2020-12-31 - Accession: 0000943698-21-000001 - CIK: 943698 - File #: 8-48194 - Material weakness: No - Auditor: Rubio CPA, PC - Auditor location: Atlanta, GA - Contact: S.Kay Dempsey - Phone: 404-266-8761 - Signed by: S. Kay Dempsey (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/943698/000094369821000001/dfnpublic2020.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 #### **ANNUAL AUDITED REPORT FORM X-17A-5 PART 111** | SEC FILE NUMBER | |-----------------| | 8- 48194 | | | 0MB APPROVAL OMS Number: 3235•0123 Expires: October 31, 2023 Estimated average burden hours per response .... 12.00 **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 --~0~1~/0~1=/~2~0 | MMIDDIYY | __
AND ENDING | 12/31/20
MM/DD/YY | | | | | | |----------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|--------------------|--------------------------------------------------|--|--|--|--|--| | A.
REGISTRANT IDENTIFICATION | | | | | | | | | | NAME OF BROKER-DEALER:
Dempsey Financial Network, Inc.
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
2951 Piedmont Road Suite 200 | | | OFFICIAL USE ONLY
FIRM 1.D. NO. | | | | | | | | (No. and Street) | | | | | | | | | Atlanta | GA | | 30305 | | | | | | | (City) | (Sta'te) | | (Zip Code) | | | | | | | S. Kay Dempsey
B.
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is cofltained in the Report*
Rubio CPA PC | ACCOUNTANT IDENTIFICATION | | (404) 266-8761
(Area Code - Tele hone Number) | | | | | | | (Name | if individual, slate Ian, f1rsi, m1ddle name) | | | | | | | | | 2727 Paces Ferry Rd SE. Ste 2-1680
(Address) | Atlanta
(City) | Georgia
(State) | 30339
(Zip Code) | | | | | | | CHECK ONE | | | | | | | | | | II Certified Public Accountant | | | | | | | | | | D
Public Accountant | | | | | | | | | | □ 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 core red by the opinion of an independent public accountan/ must be supported by a statement of facts and circumstances relied on as the basis for 1he exemption. See Section 240. !7a-5(ej(2)* > Potential persons who are to respond to the collection of infonnation contained in this form are not required to respond unless the fonn displays a currently valid 0MB control number. SEC 1410(11-05) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I. | -~S~-~K=a=-y'-'D=e~m=p~s~e'-v~--------------' swear (or affirm) that. to the best ofmy | |----|----------------------------------------------------------------------------------------| |----|----------------------------------------------------------------------------------------| knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of # of **\_\_\_\_ D""e""c.,e.,m=b=e.,\_r..,3"""'1.,\_, \_\_\_\_\_ ,,2c,Oc,2.,0~ ..** 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: | | | ~ | |----|-------|-------------------------------------------------------------------------------------------------------| | | | | | | | x~,e | | | | | | | | ,,,,111~11,,,,, | | | | | | | | .i''
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I | | | | This report** contains (check all applica'-¥,~T'l v ,,,'
,,,,,,,,,,,,,,,, | | ij | | | | ii | | (a) Facing Page. | | | | (b) Statement of Financial Condition.
D (c) Statement of Income (Loss). | | | | D (d) Statement of Changes in Financial Condition. | | | | O (e) Statement of Changes in Stockholders· Equity or Partners'' or Sole Proprietors·· Capital. | | 0 | | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | 0 | | (g) Computation of Net Capital. | | | | D (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | 0 | (i) | Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | 0 | U) | A Reconciliation, including appropriate explanation of the Computation of Net Capital Under | | | | Rule l 5c3-3 and the Computation for Determination of the Reserve Requirements Under Exhibit | | | | A of Rule I 5c3-3. | | 0 | | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with | | | | respect to methods of consolidation. | | | ~ (I) | An Oath or Affirmation. | | | | O (m) A copy of the S!PC Supplemental Report. | | | | D (n) A report describing any material inadequacies found to exist or found to have existed since the | \* *\*For conditions of COJ{(idential treatment of certain portions of this filing. see section 240. I 7z-5(e)(3).* ' date of the previous audit. {2}------------------------------------------------ # DEMPSEY FINANCIAL NETWORK, INC. Financial Statements For the Year Ended Report of Independent Registered Public Accounting Firm December 31, 2020 With {3}------------------------------------------------ **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlant a , GA 30339 Office: 770 690- 8995 Fax: 770 838· 7123 ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Stockholder of Dempsey Financial Network, Inc. Opinion of the Financial Statements We have audited the accompanying statement of financial condition Dempsey Financial Network, Inc. (the "Company") as of December 31 , 2020, and the related notes. In our opinion, the aforementioned financial statement presents fairly, in al I material respects, the financial position of the Company as of December 31 , 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 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 statement is free of material misstatement, whether due to error or fraud . The Company -is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of the internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement to 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2014. February 25, 2021 Atlanta, Georgia ~ *t l'A-;//t-* Rubio CPA, PC {4}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION December 31, 2020 DEMPSEY FINANCIAL NETWORK, INC. ### ASSETS | Cash | \$
735,590 | |--------------------------------------|---------------| | Commissions Receivable | 89,098 | | Prepaid expenses | 7,093 | | Property and equipment, net of | | | accumulated depreciation of \$19,572 | - | | Total Assets | \$
831,781 | ### LIABILITIES AND STOCKHOLDER'S EQUITY | LIABILITIES
Reserve for Chargebacks | 10,000 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------| | TOTAL LIABILITIES | 10,000 | | STOCKHOLDER'S EQUITY
Common stock, \$1 par value; 100,000 shares
authorized, 1,000 shares issued and outstanding
Additional paid-in capital
Retained Earnings | 1,000
499,488
321,293 | | Total Stockholder's Equity | 821,781 | | TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | \$
831,781 | The accompanying notes are an integral part of these financial statements. {5}------------------------------------------------ #### DEMPSEY FINANCIAL NETWORK, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2020 #### NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Description of Business: The Company is a registered broker-dealer organized under the laws of the state of Georgia that began business in 1995. The Company is registered with the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the securities commissions of appropriate states. The Company provides market support and product placement services on behalf of certain insurance carriers that issue variable securities products. The Company is a "sub-wholesaler" for issuers of variable life and variable annuity products. Cash: The Company maintains its bank accounts at a high credit quality financial institution. The balances at times may exceed federally insured limits. Income Taxes: The Company has elected to be taxed as an S corporation. Therefore, the income or losses of the Company flow through to its stockholder and no income taxes are recorded in the accompanying financial statements. The Company has adopted the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under ASC 740-10, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status, including its status as a pass-through entity, and the decision not to file a tax return. The Company has evaluated each of its tax positions and has determined that no provision or liability for income taxes is necessary. Estimates: Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements. Date of Management's Review – Subsequent events were evaluated through the date the financial statements were issued. Revenue Recognition – Revenue from contracts with customers includes commission income. 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; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events. {6}------------------------------------------------ #### DEMPSEY FINANCIAL NETWORK, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2020 ### NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Revenue Recognition (continued) The Company recognizes commission revenue upon issuance or renewal of an insurance policy as this satisfies the only performance obligation identified in accordance with this standard. Reserve for Chargebacks – Certain policies sold by the Company are subject to chargeback/refund for a period of time in the event that the policyholder elects to cancel or reduce coverage. The Company has evaluated its exposure to chargebacks and provided a reserve on the accompanying Statement of Financial Condition. Property and Equipment – Property and equipment are recorded at cost. Depreciation is provided by use of straight-line method over the estimated useful lives of the respective assets, which ranges from five to seven years. Accounts Receivable – The Company provides for doubtful accounts when current market conditions indicate that collection of an account is doubtful. The allowance is estimated based on management's knowledge of its customers, historical loss experience and existing economic conditions. Based on management's review of accounts receivable, no allowance for doubtful accounts is considered necessary. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost. The model replaces the probable, incurred loss model for those assets and broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized costs. The Company adopted ASU No. 2016-13 on January 1, 2020 using the modified retrospective approach with no material impact to its financial position, results of operations or cash flows. #### NOTE B – NET CAPITAL The Company, as a registered broker-dealer, is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of a minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2020, the Company had net capital of \$725,590, which was \$720,590 in excess of its required minimum net capital of \$5,000 and the ratio of aggregate indebtedness to net capital was .01 to 1.0. #### NOTE C – RELATED PARTY TRANSACTIONS The Company has an expense sharing agreement with a related company owned by the Company's stockholder. The related company provides the Company with administrative staff, office space and related operating expenses in exchange for fees. The office facilities occupied by the related company that are shared with the Company are leased from the common {7}------------------------------------------------ #### DEMPSEY FINANCIAL NETWORK, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2020 #### NOTE C – RELATED PARTY TRANSACTIONS (cont.) stockholder. Fees are payable monthly in amounts sufficient to cover costs incurred by the related party considered allocable to the Company. Amounts expensed under the agreement for 2020 were approximately \$80,765. Financial position and results of operations might differ from the amounts in the accompanying financial statements if these related party transactions did not exist. #### NOTE D – CONCENTRATIONS Most of the Company's revenues are earned from business introduced to the Company by a related party, which is an insurance agency (See Note C). Approximately 72% of commission revenues earned during 2020 were from two customers. At December 31, 2020, approximately 94% of accounts receivable are due from one insurance carrier. #### NOTE E - CONTINGENCIES The Company is exposed to litigation in the normal course of business. There is no litigation in progress at December 31, 2020. #### NOTE F – ECONOMIC RISKS In March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. This pandemic event has resulted in significant business disruption and uncertainty in both global and U.S. markets. While management believes the Company is in an appropriate position to sustain the potential short-term effects of these world-wide events, the direct and long-term impact to the Company and its financial statements is undetermined at this time. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.