# AUGUSTAR DISTRIBUTORS, INC. X-17A-5 (2026-03-05) — Broker-dealer annual report - Company: AUGUSTAR DISTRIBUTORS, INC. - Form: X-17A-5 - Filed: 2026-03-05 - Period: 2025-12-31 - Accession: 0001014778-26-000003 - CIK: 1014778 - File #: 8-49296 - Type: Broker-dealer - Material weakness: No - Auditor: Crowe LLP - Auditor location: Cincinnati, NY - Contact: Teresa Cooper - Phone: 513-794-6162 - Signed by: Marc A. Socol (Chairman of the Board and President) Original filing: https://www.sec.gov/Archives/edgar/data/1014778/000101477826000003/adipublicaudit.pdf.pdf --- {0}------------------------------------------------ | Pactima eNotary (RON) Package ID: Sw3JbeUmLvpoImF6Q_1gV / Document ID: [2] MGq7ZFjVgWAT7uxkN53Ee | | | | | | |--------------------------------------------------------------------------------------------------|--|--|--|--|--| | | SECURITIES AND EXCHANGE COMMISSION | OMB APPROVAL
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SEC FILE NUMBER | | | | |--------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------|--|--| | | | | | | | | | FORM X-17A-5 | | | | | | | PART III | | | | | | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | FACING
PAGE | | | | | | | | | | | | | FILING
FOR
THE PERIOD BEGINNING | MM/DD/YY | AND ENDING | MM/DD/YY | | | | | A.
REGISTRANT
IDENTIFICATION | | | | | | NAME OF FIRM: | | | | | | | TYPE
OF
REGISTRANT
(check
all
Broker-dealer
Check here if respondent is also an OTC derivatives dealer | applicable
boxes):
Security-based swap dealer | | Major security-based swap participant | | | | ADDRESS
OF
PRINCIPAL
PLACE
OF | BUSINESS:
(Do
not
use
a
P.O.
box | no.) | | | | | | | | | | | | | (No. and Street) | | | | | | | | | | | | | (City) | (State) | | (Zip Code) | | | | PERSON
TO
CONTACT
WITH
REGARD TO | THIS
FILING | | | | | | | | | | | | | (Name) | (Area Code – Telephone Number) | | (Email Address) | | | | | B.
ACCOUNTANT
IDENTIFICATION | | | | | | INDEPENDENT
PUBLIC
ACCOUNTANT | whose
reports
are
contained
in | this
filing* | | | | | | (Name – if individual, state last, first, and middle name) | | | | | | | | | | | | | (Address) | (City) | (State) | (Zip Code) | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | | | FOR
OFFICIAL
USE
ONLY | | | | | | | | | | | | CFR 240.17a-5(e)(1)(ii), if applicable. **Persons who are to respond to the collection of information contained in thisform are not required to respond unlessthe form displays a currently valid OMB control number.** {1}------------------------------------------------ # **OATH OR AFFIRMATION** I, , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of , as of , 2 , is true and correct. I further swear (or affirm) that neither the company nor any 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. ![](_page_1_Picture_6.jpeg) Signature: Title: Darlene Cook, Notary Public; Commission Expires 2/17/2030 # **Thisfiling\*\* contains(check all applicable boxes):** - (a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - (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 of Regulation S-X). - (d) Statement of cash flows. - (e) Statement of changes in stockholders' or partners' orsole proprietor's equity. - (f) Statement of changes in liabilities subordinated to claims of creditors. - (g) Notes to consolidated financial statements. - (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - (i) Computation of tangible net worth under 17 CFR 240.18a-2. - (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - (l) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 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 CFR 240.18a-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. - (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (t) Independent public accountant's report based on an examination of the statement of financial condition. - (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. - (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 240.18a-7, as applicable. - (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.17a-12, as applicable. - (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 CFR 240.17a-12(k). - (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.* {2}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Financial Statements and Schedules December 31, 2025 (With Report of Independent Registered Public Accounting Firm Thereon) {3}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) #### **Table of Contents** | | Page | |------------------------------------------------------------------------------------------------------------------------------------------------------------|------| | Report
of
Independent
Registered
Public
Accounting
Firm | 1 | | Statement
of
Financial
Condition,
December
31,
2025 | 3 | | Statement
of
Operations,
Year
ended
December
31,
2025 | 4 | | Statement
of
Changes
in
Stockholder's
Equity,
Year
ended
December
31,
2025 | 5 | | Statement
of
Cash
Flows,
Year
ended
December
31,
2025 | 6 | | Notes
to
Financial
Statements | 7 | | Schedules | | | 1
–
Computation
of
Net
Capital
under
Rule
15c3-1
of
the
Securities
Exchange
Act
of
1934,
December 31, 2025 | 15 | | 2
–
Computation for the Determination of the Reserve Requirements under Rule 15c3-3 of the
Securities Exchange Act of 1934, December 31, 2025 | 16 | | 3
–
Information Relating to Possession or Control Requirements under Rule 15c3-3 of the
Securities Exchange Act of 1934, December 31, 2025 | 17 | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ![](_page_4_Picture_1.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors AuguStar Distributors, Inc. Cincinnati, Ohio # **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of AuguStar Distributors, Inc. (the "Company") as of December 31, 2025, the related statements of operations, changes in stockholder's equity, and cash flows for the year ended December 31, 2025, 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 the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, 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. {5}------------------------------------------------ # **Supplemental Information** The Schedule 1 Computation of Net Capital Under Rule 15c3-1 of the Securities Exchange Act of 1934, Schedule 2 Computation for the Determination of the Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Act of 1934, and Schedule 3 Information Relating to Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Act of 1934 (collectively the "Supplementary Information") have 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 Supplement Information, including its form and content is presented in conformity with 17 C.F.R. § 240.17a-5. In our opinion, the Supplemental Information is fairly stated, in all material respects, in relation to the financial statements as a whole. Crowe LLP We have served as AuguStar Distributor's, Inc. auditor since 2022. New York, New York February 27, 2026 {6}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Statement of Financial Condition As of December 31, 2025 #### **Assets** | Cash | \$ | 3,526,817 | |--------------------------------------------------------------------------------------------------------|----|-------------| | Accounts
receivable
from
affiliates,
net
(note
3) | | 4,488,870 | | Federal
income
taxes
receivable
(note
2) | | 3,196 | | Prepaid
state
income
taxes | | 11,315 | | Other
assets | | 13,512 | | Total
assets | \$ | 8,043,710 | | Liabilities
and
Stockholder's
Equity | | | | Liabilities: | | | | Accounts
payable
and
accrued
expenses | \$ | 90,062 | | Commissions
payable
(note
3) | | 5,357,889 | | Total
liabilities | | 5,447,951 | | Stockholder's
equity
(note
4): | | | | Common
stock,
without
par
value.
Authorized
10,000
shares; | | | | issued
and
outstanding
3,300
shares
at
stated
value
of
\$10
per
share | | 33,000 | | Additional
paid-in
capital | | 12,397,000 | | Retained
deficit | | (9,834,241) | | Total
stockholder's
equity | | 2,595,759 | | Total
liabilities
and
stockholder's
equity | \$ | 8,043,710 | | | | | {7}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) #### Statement of Operations #### For the Year Ended December 31, 2025 | Revenues | | | |-----------------------------------------------------------|---------|-----------------| | Trail
concessions
(note
3) | \$ | 56,513,244 | | Affiliate
sales
load
(note
3) | 788,358 | | | Asset
marketing
allowance
(note
3) | | 3,699,860 | | Service
fee
income
(note
3) | | 454,478 | | Concession
revenue | | 61,455,940 | | Expenses | | | | Trail
commission
expense
(note
3) | | 56,513,244 | | Sales
load
due
to
affiliate
(note
3) | | 788,358 | | Asset
marketing
allowance
expense
(note
3) | | 3,699,860 | | Prospectus
printing
expenses
(note
3) | | 454,353 | | Production
marketing
allowance
expense | | 2,204 | | Regulatory
fees
and
expenses | | 212,864 | | General
expenses | | 107,465 | | Total
expenses | | 61,778,348 | | Loss
before
income
taxes | | (322,408) | | Income
taxes(note
2) | | | | Current
expense | | 9,906 | | Net
loss | | \$
(332,314) | {8}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Statement of Changes in Stockholder's Equity As of December 31, 2025 | | | Total | | | |------------------------------|-----------------|----------------------------------|---------------------|-------------------------| | | Common
stock | Additional
paid-in
capital | Retained
deficit | stockholder's
equity | | Balance at January 1, 2025 | \$
33,000 | 12,397,000 | (9,501,927) | 2,928,073 | | Net loss | — | — | (332,314) | (332,314) | | Balance at December 31, 2025 | \$
33,000 | 12,397,000 | (9,834,241) | 2,595,759 | {9}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Consolidated Statement of Cash Flows For the Year Ended December 31, 2025 | Cash
flows
from
operating
activities: | | |----------------------------------------------------------------------------------------------------------------|-----------------| | Net
loss | \$
(332,314) | | Adjustments
to
reconcile
net
income
to
net
cash
used
in
operating
activities: | | | Decrease
in
accounts
receivable
from
affiliates | 572,799 | | Increase
in
income
taxes
receivable | (8,405) | | Increase
in
other
assets | (13,026) | | Decrease
in
accounts
payable
and
accrued
expenses | (682,604) | | Net
cash
used
in
operating
activities | (463,550) | | Decrease
in
cash | (463,550) | | Cash
at
beginning
of
year | 3,990,367 | | Cash
at
end
of
year | \$
3,526,817 | | Federal
income
tax
paid
to
AuguStar
Life
Insurance
Company | \$
6,409 | {10}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 # **(1) General Information and Significant Accounting Policies** #### *Basis of Presentation and Nature of Business* AuguStar Distributors, Inc. (the "Company" or "ADI"), was incorporated in Ohio in 1996. The Company commenced operations in August of 1997. The Company, which is a wholly owned subsidiary of Constellation Insurance, Inc. ("CII"), is registered as a wholesale broker and dealer under the Securities and Exchange Commission ("SEC") Act of 1934 and is a member of the Financial Industry Regulation Authority. The Company is the underwriter of CII registered variable annuity and variable life products and enters into distribution and underwriting agreements with affiliates. CII is a stock holding company organized under Ohio insurance laws and wholly owned by Constellation Insurance Holdings, Inc. ("CIHI"). The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United State of America ("U.S. GAAP"). Management of the Companies has made a number of estimates and assumptions related to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the reporting period to prepare these consolidated financialstatements in conformity with U.S. GAAP. Actual results could differ from those estimates. # *Cash and Cash Equivalents* Cash is carried at cost which approximates fair value. All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. ## *Accounts Receivable from Affiliates* As of December 31, 2025, the Company has certain commission expense reimbursements for trail concessions and other service contract expenses that have been recognized but not received by the Company. These amounts are included in accounts receivable from affiliates on the statement of financial condition. The Company estimates expected credit losses in accordance with FASB ASC 326-20 over the life of its receivables based on the relevant information about past events, current conditions and reasonable and supportable forecasts. Receivables amounts are generally settled short-term and, as such, credit losses on amounts due from affiliates would be immaterial and no allowance was recorded. # *Revenue and Expense Accounting Policy* The Company has entered into distribution and underwriting agreementsto sell variable life insurance contracts on behalf of AuguStar Life Assurance Corporation ("ALAC"), an affiliate. The Company also has entered into distribution and underwriting agreements to sell variable annuity contracts and fixed annuity contracts on behalf of AuguStar Life Insurance Company ("ALIC"), and National Security Life and Annuity Company ("NSLAC"), affiliates, and the O.N. Equity Sales Company {11}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 ("ONESCO"), an affiliate and to unrelated third-party broker dealers. On December 31, 2025, ALIC entered into an agreement with ALAC to merge the legal entities, with ALIC being the surviving entity to the merger. ALAC's contracts automatically transfer to ALIC. In its capacity as the underwriter and distributor for Constellation Insurance products, the Company has certain performance obligations that include but are not limited to all duties and functions which are necessary and proper for wholesale distribution and sale of Constellation Insurance products. The performance obligation is fulfilled at a point in time, once distribution of contracts is complete. Once a contract is distributed to the policyholder the Company has a right to the concession payment from the insurer equal to the amount incurred to distribute the contract. The Company is the contractual counter party to selling agreements for third party distributors that sell and therefore has legal obligation for payment of related commissions. There are multiple performance obligations related to these contracts. The initial performance obligation is satisfied at the time of each individual sale. The portion of the revenue recognized at the time of sale is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. For the year ended December 31, 2025, the Company had no revenue related to the initial sale of contracts. The second portion of revenue, trailing concessions, is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the annuity contract or value of the insurance policy. Trailing concessions is not recognized at the time of sale because it is variably constrained due to factors outside of the Company's control including market volatility and client behavior (such as how long clients hold their annuity contract or insurance policy). The revenue is not recognized until it is probable that a significant reversal will not occur. Accordingly, the Company records these transactions as trail concessions in the statement of operations. The Company receives fees from variable annuity contracts under Rule 12b-1 of the Investment Commission Act of 1940 which are based on fees for providing information to distributors and shareholders related to distribution of shares, including but not limited to, responding to phone inquiries, advertising, and providing information to distributors and shareholders regarding fund performance. These services to customers represent the performance obligation and are considered a series of distinct services that are substantially the same. The revenue is recognized over the time the Company's client owns the investment and is generally earned based on contractual rates applied to the average daily net asset value invested in the fund. These fees are considered satisfied over time as contracts are simultaneously received and consuming the benefits as they are provided by the Company. Transaction price is variable and constrained until the point of time when the fee is determined. Revenue from 12b-1 fees is reported in ONESCO "affiliate" sales load on the statement of operations. The Company incurs a marketing expense from the distribution related to the sale or marketing of contracts,salesload to and from ONESCO, printing and distributing prospectuses, and other expenses incurred with the distributing the sale of contracts. NSLAC reimburses the Company for expenses incurred by the Company for the distribution of the NSLAC products. ALIC reimburses the Company {12}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 for expenses incurred by the Company for the distribution of the Constellation Insurance products. These expenses are recorded as asset marketing allowance in the statement of operations. Relative to the sale of the affiliated variable life, fixed and annuity products, the Company acts as a principal and receives revenue from the affiliates that is paid out directly to the third parties. The Company provides services for these products and acting as the principal to the contract, the Company recognizesthese revenue dollarsin a gross manner. The accompanying financial statements have been prepared from separate records maintained by the Company and reflect significant balances and transactions with affiliates. Such financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations if the Company operated on a standalone basis and these transactions were with unrelated parties. # *Commissions Payable* Commissions for marketing allowances are recognized on trade date basis and are paid quarterly. Marketing allowance commissions of \$912,033 and accrued commission amounts due of \$4,445,856 are included in commissions payable on the statement of financial condition. # *Financial Instruments* Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income, and cost approaches. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is required to categorize its assets and liabilities that are carried at estimated fair value on the statement of financial condition into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement. The levels of fair value hierarchy are as follows: - **Level 1** Fair value is based on unadjusted quoted prices for identical assets or liabilities in an active market at the measurement date. The types of assets utilizing Level 1 valuations include U.S. government securities, actively traded equity securities, investments in publicly traded mutual funds, cash and cash equivalents, and exchange traded derivatives. - **Level 2** Fair value is based on significant inputs, other than quoted prices included in Level 1 that are observable in active markets or that are derived principally from or corroborated by {13}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 observable market data through correlation or other means for identical or similar assets and liabilities. • **Level 3** – Fair value is based on unobservable inputs for the asset or liability for which there is little or no market activity at the measurement date. Unobservable inputs used in the valuation reflect management's best estimate about the assumptions market participants would use to price the asset or liability. As of December 31, 2025, the Company did not have any investment securities or other financial assets or liabilities that are carried at fair value. ## *New Accounting Pronouncements* In December 2023, the FASB issued ASU 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*. The new standard is effective for annual periods beginning on or after December 15, 2024. The amendments require all entities to disclose, on an annual basis, the amount of income taxes paid (net of refunds received), disaggregated by federal (national), state, and foreign jurisdictions. Additionally, taxes paid must be further disaggregated by individual jurisdictions where the amount equals or exceeds 5% of total income taxes paid (net of refunds received). The Company is included in the consolidated federal income tax return filed by ALIC. Federal income taxes are determined as if each entity filed a separate return, with any resulting current tax liability or benefit settled with ALIC. Current and deferred income taxes are calculated as of the financial statement date, using enacted tax laws and rates in effect at that time. Deferred tax expense or benefit reflects changes in deferred tax assets and liabilities year over year. The Company accounts for uncertain tax positions in accordance with ASC 740. Positions are evaluated based on their technical merits, and the Company recognizes the largest benefit that is more likely than not to be sustained upon examination. Unrecognized tax benefits are remeasured as new information becomes available or when events occur that warrant a change. The Company adopted the new accounting pronouncement effective January 1, 2025, and it did not have a material impact on our financial position or results of operations. # **(2) Income Taxes** The Company files a consolidated federal income tax return with ALIC. The method of allocation between companies is subject to a written agreement. Allocations are based upon separate return calculations with current credit for net losses. Intercompany tax balances are settled monthly. {14}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is determined that it is more likely than not that the deferred tax asset will not be fully realized. As of December 31, 2025, there is no federal deferred tax asset or liability. As of December 31, 2025, there are deferred tax assets of \$295,980 for which it is more likely than not the state deferred tax assets will not be realized. As of December 31, 2025, there is a full valuation allowance of \$295,980 which has not changed since December 31, 2024. The Company provides for federal and state income taxes based on amounts it believes it will owe in accordance with FASB Accounting Standards Codification ("ASC") 740-10, *Income Taxes – Recognition*. This guidance addresses the accounting and disclosure of uncertain tax positions. This guidance also prescribes a recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for a position in accordance with this guidance and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. As of December 31, 2025, there are no reserves for uncertain tax positions. Tax years subject to examination include 2021 through the current period. Total income tax expense for the year ended December 31, 2025, differs from the amount computed by applying the U.S. federal income tax rate of 21% to income before federal income tax expense as follows: | | | Amount | Percentage | | |----------------------------------|---|----------|------------|--| | U.S. Federal statutory tax rate | S | (67,706) | 21.00 % | | | Intercompany tax cost adjustment | | 73.976 | (22.94) | | | Other adjustments | | 3.636 | (1.13) | | | Total expense and effective rate | | 9.906 | (3.07) % | | The Company's policy for recording interest and penalties associated with audits, claims, and tax adjustments is to record such amount(s) as a component of income taxes. The Company does have amounts related to state and local income tax within the Other Adjustments line in the rate reconciliation above which is below the 5% disaggregation threshold. The Company does not have any foreign tax effects, effects of changes in tax laws, tax credits, non-deductible items, changes in valuation allowances, and unrecognized tax benefits in the rate reconciliation above. The Company is not currently under tax examination by any Federal or State taxing jurisdiction(s). The Company's open years of examination under statute of limitations are for the tax periods 2022 through the current tax year. {15}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 Taxes paid (refunded) for the year ended December 31, 2025: | | | 2025 | |---------------------------------------------------|---|--------| | U.S. Federal | S | 6.409 | | State: | | | | California | | 2,800 | | District of Columbia | | 1,000 | | Idaho | | 1,000 | | Massachusetts | | 1,000 | | Montana | | 1.000 | | New Mexico | | તે રેણ | | Texas | | 2,829 | | Other® | | 150 | | State subtotal | | 10,729 | | Foreign | | | | Total cash paid for income taxes (net of refunds) | S | 17,138 | #### **(3) Related-Party Transactions** Service contract expense is recognized ratably over the year based on annual cost models for direct and indirect costs related to services performed. ADI has service contract agreements with ALIC, CII and ONESCO. ADI is billed from ALIC for legal and professional services, data processing services, office space, equipment and other materials and administrative services necessary to the operation of the business. The Company is billed from CII for services, office space, equipment, and materials necessary to the operation of the business. ADI is billed from ONESCO for services and support including contracting and licensing, marketing, compliance, and training support. The expenses related to the service contract agreements are reviewed quarterly with appropriate Management for reasonableness and approval. The service contract expense of \$24,000 for the year ended December 31, 2025, comprised services expenses all from ALIC and is included in general expenses on the statement of operations. For the year ended December 31, 2025, the Company incurred \$56,513,244 related to commission expense to third-parties, \$788,358 of affiliate salesload expense related to fixed annuities, \$3,699,860 of asset-based marketing allowance expense, \$454,353 of prospectus printing expenses, and \$125 of advertising fees. Accordingly, the Company received \$61,455,940 of commission revenue from affiliates. See Note 1 – Revenue and expense accounting policy. At December 31, 2025, the Company had accrued concessions receivable from affiliates of \$4,445,856, accrued printing and prospectus receivable of \$42,049 offset by net asset-based marketing allowance payable of \$18,612. {16}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 At December 31, 2025, the Company paid to ONESCO \$153,286 of asset marketing allowance expense and \$27 of production marketing allowance expense reported in the statement of operations, respectively. These expenses are for marketing support services related to the sale and distribution of ALIC annuity contracts, per a selling agreement with the Company. The Company has an underwriting agreement with NSLAC and bills NSLAC for employee benefit chargebacks, which reduce the service contracts expenses. There is no assurance that these costs would be similar if the Company had to obtain such services and support on its own. The Company is also reimbursed by NSLAC for expenses related to distributing variable annuity and variable universal life contracts issued by NSLAC, per the underwriting agreement. For the year ended December 31, 2025, the Company received \$170,867 in reimbursement of expenses reported in asset marketing allowance expense in the statement of operations and received \$125 in reimbursement of expenses reported in regulatory fees and expenses in the statement of operations. At December 31, 2025, the Company had reimbursement due of \$20,925. The affiliated amounts owed to the Company as of December 31 were as follows, which are shown on the face of the statement of financial condition: | | 2025 | |---------------------------------------------------------------|-----------------| | Trail
concessions
accrued | \$
4,445,856 | | Printing
and
prospectus
reimbursement | 42,049 | | Asset-based
marketing
allowance,
net | (18,612) | | Other
expenses
due
to
ALIC | (1,348) | | NSLAC
reimbursements | 20,925 | | Total
accounts
receivable
from
affiliates,
net | \$
4,488,870 | The Company files a consolidated federal income tax return with ALIC. Tax payments paid to ALIC for 2025 were \$6,409. #### **(4) Regulatory Requirements** The Company's broker dealer business is limited to the distribution of annuity and insurance products of affiliated insurance companies. The Company carries no customer accounts. The Company has claimed exemption under the Customer Protection Rule, SEC Rule 15c3 3, Section k(1) which limits the Company to transactions in certain redeemable securities of registered investment companies or insurance products and allows the Company to briefly handle customer funds and/or securities but requires such funds or securities to be transmitted promptly. The Company, as a registered broker and dealer in securities, issubject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1 or the "Rule"). Under the computation provided by the Rule, the Company is required to maintain "net capital" equal to the greater of \$5,000 or 1/15 of {17}------------------------------------------------ (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Notesto Financial Statements December 31, 2025 "aggregate indebtedness," as those terms are defined in the Rule. The Rule also provides that equity capital may not be withdrawn, or cash dividends paid if the resulting indebtedness to net capital ratio would exceed 10 to 1. At December 31, 2025, the Company had a minimum capital requirement of \$363,197, "aggregate indebtedness" of \$5,447,951, "net capital" of \$2,524,722, and a ratio of aggregate indebtedness to net capital of 2.16 to 1. #### **(5) Segment Reporting** The Company follows ASC 280, Segment Reporting (including adoption of ASU 2023-07), which requires companies to disclose segment data based on how management makes decisions about allocating resources to segments and evaluating performance. The Company is engaged in a single line of business as a securities broker-dealer, which is comprised of a single class for wholesale distribution. The Company has identified its President as the chief operating decision maker ("CODM"), who uses net income that is reported on the accompanying income statement of this report as net income to evaluate the results of the business, predominantly in the forecasting process, to manage the Company. Additionally, the CODM uses net capital (see Note 4), which is not a measure of profit and loss, to make operational decisions while maintaining capital adequacy, such as whether to reinvest profits, pay dividends or request contributions from its parent to maintain capital adequacy. The Company's operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of general information and significant accounting policies. The significant expenses of the segment are reported on the accompanying statement of operations of these financial statements. The company derived 99 percent of its total revenues from a single external customer in 2025. #### **(6) Contingencies** The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred, and the amount of the loss can be reasonably estimated. Legal costs are accrued by the Company as incurred and for the estimated amount to be incurred. On a quarterly and annual basis, the Company reviews relevant information with respect to the liabilities for litigation, regulatory investigations, and litigation-related contingencies. If a liability is required, it would be reflected in accounts payable and accrued expenses on the statement of financial condition. #### **(7) Subsequent Events** The Company has evaluated events occurring after December 31, 2025, and have concluded that there are no events that require recognition or disclosure in the financial statements. {18}------------------------------------------------ #### **Schedule 1** #### **AUGUSTAR DISTRIBUTORS, INC.** (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) #### Computation of Net Capital under Rule 15c3-1 of the Securities Exchange Act of 1934 #### As of December 31, 2025 | Aggregate
indebtedness: | | |--------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------| | Total
liabilities | \$
5,447,951 | | Net
capital | 2,524,722 | | Minimum
capital
required
to
be
maintained
(greater
of
\$5,000
or
1/15
of
aggregate
indebtedness of \$5,447,951) | 363,197 | | Net
capital
in
excess
of
requirements | \$
2,161,525 | | Percentage
of
aggregate
indebtedness
to
net
capital | 215.78 | | Net
worth: | | | Common
stock | \$
33,000 | | Additional
paid-in
capital | 12,397,000 | | Retained
deficit | (9,834,241) | | Total
net
worth | 2,595,759 | | Deduct: | | | Nonallowable
assets: | | | Accounts
receivable
from
affiliates | 43,014 | | Other
assets | 28,023 | | | 71,037 | | Net
capital
before
haircuts
on
securities
positions | 2,524,722 | | Haircuts
on
securities
computed
pursuant
to
Rule
15c3-1:
Other
securities | — | | Net
capital | \$
2,524,722 | Note: The above computation does not materially differ from the computation of net capital under Rule 15c3-1 at December 31, 2025 amended on unaudited Form X-17A-5, Part IIA on February 11, 2026. See accompanying report of independent registered public accounting firm. {19}------------------------------------------------ **Schedule 2** # **AUGUSTAR DISTRIBUTORS, INC.** (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Computation for the Determination of the Reserve Requirements under Rule 15c3-3 of the Securities Exchange Act of 1934 As of December 31, 2025 The Company is exempt from Rule 15c3-3 pursuant to the provisions of the subparagraph (k)(1) of that rule. See accompanying report of independent registered public accounting firm. {20}------------------------------------------------ **Schedule 3** ## **AUGUSTAR DISTRIBUTORS, INC.** (A Wholly Owned Subsidiary of Constellation Insurance, Inc.) Information Relating to Possession or Control Requirements under Rule 15c3-3 of the Securities Exchange Act of 1934 As of December 31, 2025 The Company is exempt from Rule 15c3-3 pursuant to the provisions of the subparagraph (k)(1) of that rule. See accompanying report of independent registered public accounting firm. {21}------------------------------------------------ ![](_page_21_Picture_1.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have reviewed management's statements, included in the accompanying AuguStar Distributors, Inc., Exemption Report in which (1) AuguStar Distributors, Inc. identified the following provisions of 17 C.F.R. § 15c3-3(k) under which AuguStar Distributors, Inc. claimed an exemption from 17 C.F.R. § 240.15c3-3: (k)(1) (the "exemption provisions") and (2) AuguStar Distributors, Inc. stated that AuguStar Distributors, Inc. met the identified exemption provisions throughout the year ended December 31, 2025 without exception. AuguStar Distributors, Inc.'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 AuguStar Distributor's, Inc.'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 conditions set forth in paragraph (k)(1) of Rule 15c3-3 under the Securities Exchange Act of 1934. Crowe LLP New York, New York February 27, 2026 {22}------------------------------------------------ One Financial Way Cincinnati, Ohio 45242 Post Office Box 237 Cincinnati, Ohio 45201-0237 513.794.6100 constellationinsurance.com ![](_page_22_Picture_2.jpeg) AuguStar5M Distributors, Inc., Member FINRA # Exemption Report AuguStar Di:stributors, Inc.,(the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: The Company claimed an exemption from 17 C.F.R. §240.15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3 (k)(1). The Company has met the identified exemption provisions for the fiscal year ended December 31, 2025 without exception. AuguStar Distributors, Inc. ·I, Marc Socol, affirm that, to my best knowledge and belief, this Exemption Report is true and correct. Title: Chairman of the Board and President Date: February 27, 2026 {23}------------------------------------------------ ![](_page_23_Picture_1.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPLYING AGREED-UPON PROCEDURES To the Management and Board of Directors of AuguStar Distributors, Inc. We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below, on the accompanying Certification of Exclusion From Membership (Form SIPC-3) for the year ended December 31, 2025. Management of AuguStar Distributors, Inc (the "Company") is responsible for its Form SIPC-3 and for its compliance with the applicable instructions on Form SIPC-3. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the exclusion requirements from membership in SIPC under section 78(a)(2)(A) of the Securities Investor Protection Act of 1970 for the year ended December 31, 2025, as noted on the accompanying Form SIPC-3. Additionally, SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed, and the associated findings are as follows: - 1. Compared the Total amount included in the accompanying Schedule of Form SIPC-3 Revenues prepared by the Company for the year ended December 31, 2025, to the total revenues in the Company's audited financial statements included on Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2025, noting no differences. - 2. Compared the amount in each revenue classification reported in the Schedule of Form SIPC-3 Revenues prepared by the Company for the year ended December 31, 2025, to supporting schedules and working papers, noting no differences. - 3. Recalculated the arithmetical accuracy of the Total Revenues amount reflected in the Schedule of Form SIPC-3 Revenues prepared by the Company for the year ended December 31, 2025, and in the related schedules and working papers, noting no differences. We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to, and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-3 and for its compliance with the applicable instructions on Form SIPC-3 for the year ended December 31, 2025. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. {24}------------------------------------------------ We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Company and SIPC and is not intended to be, and should not be, used by anyone other than these specified parties. Crowe LLP New York, New York February 27, 2026 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.