# CAROLINA SECURITIES, INC. X-17A-5/A (2022-03-07) — Broker-dealer annual report
- Company: CAROLINA SECURITIES, INC.
- Form: X-17A-5/A
- Filed: 2022-03-07
- Period: 2021-12-31
- Accession: 0001035474-22-000002
- CIK: 1035474
- File #: 8-50043
- Type: Broker-dealer
- Material weakness: No
- Auditor: OHAB AND COMPANY, P.A.
- Auditor location: MAITLAND, FL
- Contact: ANDREW BURCH
- Phone: 919-349-8332
- Email: pam@ohabco.com
- Website: ohabco.com
- Signed by: ANDREW G. BURCH (PRESIDENT)
Original filing: https://www.sec.gov/Archives/edgar/data/1035474/000103547422000002/csiaudit2021pub.pdf
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| | | ANNUAL REPORTS | SEC FILE NUMBER | |
| | | FORM X-17A-5 | 8-50043 | |
| | | PART Ill
I | | |
| | | FACING PAGE | | |
| Information Required Purst ant to Rules | | 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | |
| FILING FOR THE PERIOD BE( INNING | | /
1/2021
AND ENDING
1 | 12/31/2021 | |
| | | MM/DD/YY | MM/DD/YY | |
| | | A. REGISTRANT IDENTIFICATION | | |
| NAME OF FIRM: | | CAROLI NA SECURITIES,
INC. | | |
| X Broker -dealer | 0 s curity-b sed | swap dealer | 0 Major security-based swap participant | |
| □ Check here if respondent s also an t TC derivatives dealer | | ADDRESS OF PRINCIPAL PU CE OF BUSINESS: (Do not use a P.O. box no.)
1506 SANTA LUCIA ST | | |
| | | (No. and Street) | | |
| WAKE FOi EST | | NC | 27587 | |
| (City)
PERSON TO CONTACT WIT K REGA | | (State)
TO THIS FILING | (Zip Code) | |
| ANDREW BURCH | | i
919-349-8332 | ABURCH@CAROLINASECURITIES.C | |
| (Name) | | -T
(Area Code
elephone Number) | (Email Address) | |
| | | B. ACCOUNTANT IDENTIFICATION | | |
| INDEPENDENT PUBLIC AC( | OUNTA | f
T whose reports are contained in this filing
OHAB AND COMPANY, P.A. | | |
| | (Nam; | t
if individual, state last, first, and middle name) | | |
| 100 E. SYBELIA AVE
(Address) | UE, S | ITE 130
MAITLAND
(City) | FL
32751
(State)
(Zip Code) | |
| | | | | |
| 7/28/2004
(Date of Registration with PCAO (if | | applicable) | 1839
(PCAOB Registration Number, if applicable) | |
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#### **OATH OR AFFIRMATION**
| ANDREW G. BURCH
I, | st of my knowledge and belief, the
· | | | | |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| financial report pertaining to the firm of | as of
is true and correct. I further swear (or affirm) that neither the company nor any | | | | |
| DECEMBER 31 | ,
2 021 | | | | |
| partner, officer, director, or equival nt persou | as the case may be, has any proprietary interest in any account classified solely | | | | |
| as that of a customer. | | | | | |
| | .4
A.
«
0 | | | | |
| | Title:
PRESIDENT | | | | |
| | | | | | |
| | | | | | |
| This filing contains (check all ap | icable boxes): | | | | |
| (a) Statement of financial conditi
[y
o | n. | | | | |
| (b) Notes to consolidated statem nt of financial condition.
C | | | | | |
| D | (c) Statement of income {loss) or if there is other comprehensive income in the period(s) presented, a statement of | | | | |
| | comprehensive income (as defined in \$ 210.1-02 of Regulation S-X). | | | | |
| (d) Statement of cash flows.
D | I | | | | |
| D
(f) Statement of changes in liabiliti | (e) Statement of changes in stoc holders' or partners' or sole proprietor's equity.
es subordinated to | | | | |
| [l | l
claims of creditors.
statements. | | | | |
| (g) Notes to consolidated financi
[
El
a | | | | | |
| (h) Computation of net capital under 17 | CFR 240.15c3-1 0r 17 CFR 240.18a-1, as applicable. | | | | |
| (i) Computation of tangible net
C
[l (j) Computation for determinati | 4orth under 17 CFR 240.18a-2. | | | | |
| | of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
(k) Computation for determinati n of security-based swap reserve requirements pursuant to Exhibit 8 to 17 CFR 240.15c3-3 or | | | | |
| D
Exhibit A to 17CFR 240.18a4, a applicable. | l | | | | |
| (I) Computation for Determination of PA
D | Requirements under
Exhibit A to§ 240.1Sc3-3. | | | | |
| | L (m) Information relating to poss ssion or antral requirements for customers under 17 CFR 240.15c3-3. | | | | |
| D (n) Information relating to poss | sion or ;ontrol requirements for security-based swap customers under 17 CFR | | | | |
| [
r
240.15c3-3(p)(2) 0r 17 CFR 240. | a-4, as +pplicable. | | | | |
| (o) Reconciliations, including app | opriate explanations, of the FOCUS Report with computation of net capital or tangible net | | | | |
| 40.18a-l
, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17
worth under 17 CFR 240.15c3-1, 17 CFR
CFR 240.15c3-3 0r 17 CFR 240.18a-4, as appli | | | | | |
| exist. | cable, if material differences exist, or a statement that no material differences | | | | |
| D | (p) Summary of financial data fo subsidia ies not consolidated in the statement of financial condition. | | | | |
| (0) Oath or affirmation in accor
& | dhince wit!
17 CFR 240.17a-5, 17 CFR 240.17a-12, 0r 17 CFR 240.18a-7, as applicable. | | | | |
| 0 (r) Compliance report | in accorda ce with 7 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | | |
| [
(s) Exemption report in accordanc | t
h 1 CFR 240.17a-5 0r 17 CFR 240.18a-7, as applicable.
e wi | | | | |
| (t) Independent public accountant'
x | s report based on an examination of the statement of financial condition. | | | | |
| [
(u) Independent public accountan | t
's report based on an examination of the financial report or financial statements under 17 | | | | |
| | CFR 240.17a-5, 17 CFR 240.18a-z, or 17 CFR 240.17a-12, as applicable. | | | | |
| [] (v)Independent public account
an | t
's report based on an examination of certain statements in the compliance report under 17 | | | | |
| CFR 240.17a-5 or 17 CFR 240.18-7 | , as applicable. | | | | |
| Independent public accountant's report based on
0 (w)
CFR 240.18a-7, as applicable. | a review of the exemption report under 17 CFR 240.17a-5 or 17
i
I | | | | |
| (x) Supplemental reports on applying agr
D
as applicable. | ed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.173-12, | | | | |
| D | (y) Report describing any materi I inadeq acies found to exist or found to have existed since the date of the previous audit, or | | | | |
| a statement that no material ina
cl | equacie
s exist, under 17 CFR 240.17a-12(k). | | | | |
| D (z) Other: | --
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+-
+- | | | | |
| | | | | | |
*.,To request confidential treatment of* certjin *portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7{d)/2), as opplicoble.*
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100 E. Sybelia Ave. Suite 130 Maitland, FL 32751
*Certified Public Accountants* Email: pam@ohabco.com
Telephone 407- 740-7311 Fax 407-740-6441
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder's of Carolina Securities, Inc.
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Carolina Securities, Inc. as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of Carolina Securities, Inc. as of December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
#### **Basis for Opinion**
This financial statement is the responsibility of Carolina Securities, lnc.'s management. Our responsibility is to express an opinion on Carolina Securities, lnc.'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 Carolina Securities, Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Ohab and Company, PA We have served as Carolina Securities, lnc.'s auditor since 2016. Maitland, Florida February 12, 2022 Except for Note 7
March 7, 2022
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## STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021
## ASSETS
| CURRENT
ASSETS:
Cash
Property
and
equipment,
at
cost,
less
accumulated | \$ | 10,697 |
|---------------------------------------------------------------------------------------------------|---------|----------------------|
| depreciation
and
amortization
of
\$754
Shareholder
loan
Prepaid
expenses | | 274
24,000
758 |
| Total
current
assets | I | 35,729 |
| TOTAL | \$
I | 35,729 |
# LIABILITIES AND STOCKHOLDER'S EQUITY
| CURRENT
LIABILITIES:
Accounts
payable
and
accrued
expenses | \$ | 515 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|---------------------------|
| Total
current
liabilities | I | 515 |
| STOCKHOLDER'S
EQUITY
Common
stock,
\$0.01
par
value;
100,000
shares
authorized,
200
shares
issued
and
outstanding
Additional
paid-in
capital
Accumulated
deficit | | 2
145,453
(110,241) |
| Total
stockholder's
equity | I | 35,214 |
| TOTAL | \$
I | 35,729 |
See Independent Auditors' Report and Notes to Financial Statements.
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## NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2021
## 1. ORGANIZATION AND NATURE OF BUSINESS
Carolina Securities, Inc. (the "Company") is a registered broker-dealer in securities with the Securities and Exchange Commission (the "SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company received its approval for membership on June 11, 1997. The Company is an independent, private equity placement and advisory firm focused on fund formation and marketing for highly differentiated, alternative institutional investment managers.
## 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
#### Basis of Accounting
The Company maintains its books and records on the accrual basis of accounting for financial reporting purposes, which is in accordance with U.S. generally accepted accounting principles and is required by the SEC and FINRA.
## Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
## Cash and Cash Equivalents
For the purposes of the statement of cash flows, the Company defines cash equivalents as highly liquid investments with original maturity dates of less than ninety days that are not held for sale in the ordinary course of business.
#### Revenue from Contracts with Customers
#### Significant Judgements
Revenue from contracts with customers includes commission income and fees from commissions. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure 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.
#### Investment Banking
Underwriting fees. The Company underwrites securities for business entities that want to raise funds through a sale of securities. Revenues are earned from fees arising from securities offerings in which the Company acts as an underwriter. Revenue is recognized on the trade date (the date on which the Company purchases the securities from the issuer) for the portion the Company in contracted to buy. The Company believes that the trade date is the appropriate point in time to recognize revenue for securities underwriting transactions as there are no significant actions which the Company needs to take subsequent to this date and the issuer obtains the control and benefit of the capital markets offering at that point.
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## NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2021
## 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Underwriting costs that are deferred under the guidance in FASB ASC 940-340-25-3 are recognized in expense at the time the related revenues are recorded. In the event that transactions are not completed and the securities are not issued, the Company immediately expenses those costs.
M&A advisory fees. The Company provides advisory services on mergers and acquisitions (M&A). Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgement is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities. At December 31, 2021, all amounts were immaterial.
#### Income Taxes
The Company, with the consent of its shareholder, has elected under the Internal Revenue Code to be an S corporation for both federal and state income tax purposes. In lieu of corporation income taxes, the shareholders of an S corporation are taxed on their proportionate share of the company's taxable income. Therefore, no provision or liability for federal or state income taxes has been included in the 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 for liability for income taxes is necessary. The shareholder and the Company are generally not subject to U.S. federal, state or local income tax examinations related to the Company's activities for the tax years before 2014.
## Property and Equipment
Property and equipment are carried at cost and depreciated using the straight-line method over the estimated useful lives of the asset which is estimated to be five years. Depreciation expense for the year ending December 31, 2021 equaled \$206.
## 3. NET CAPITAL REQUIREMENTS
The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 (and the rule of the "applicable" exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1). At December 31, 2021, the Company had net capital of \$10,182 which was \$5,182 in excess of its required net capital of \$5,000 The Company's percentage of aggregate indebtedness to net capital was 5.06%.
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## NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2021
## 4. COMMITMENTS AND CONTINGENCIES
The Company has no commitments or contingencies.
## 5. CONCENTRATION
There was a 71% concentration of revenue earned from one customer.
## 6. RELATED PARTY TRANSACTIONS
As of December 31, 2021, there was a shareholder loan totaling \$24,000 and prepaid expenses by a shareholder totaling \$38 on the balance sheet.
## 7. SUBSEQUENT EVENTS
The Company evaluated subsequent events through February 8, 2022, the date its financial statements were issued. The Company is under contract to be sold to a group out of Virginia. Presently, the deal is being reviewed by FINRA with meetings scheduled in March 2022. A final decision will be rendered after the FINRA meeting, and closing should be shortly thereafter. The Company did not identify any additional material subsequent events requiring adjustment to or disclosure in its financial statements.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.