# DIVERSIFIED RESOURCES, LLC X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: DIVERSIFIED RESOURCES, LLC - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0001063516-21-000002 - CIK: 898635 - File #: 8-45497 - Material weakness: No - Auditor: Sandler & Company, P.C. - Auditor location: Needham, MA - Contact: Karen J. Bacon - Phone: 401-941-1500 - Signed by: Karen J. Bacon (Principal) Original filing: https://www.sec.gov/Archives/edgar/data/898635/000106351621000002/2020auditdr.pdf --- {0}------------------------------------------------ **DIVERSIFIED RESOURCES, LLC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2020** {1}------------------------------------------------ ### **DIVERSIFIED RESOURCES, LLC FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** #### **Contents** | Facing page | 1-2 | |-------------------------------------------------------------------------------------------------------------------------------------------------|------| | Report of independent registered public accounting firm | 3-4 | | Financial statements | | | Statement of financial condition | 5 | | Statement of operations | 6 | | Statement of changes in member's
equity | 7 | | Statement of cash flows | 8 | | Notes to the financial statements | 9-12 | | Supplementary information | | | Schedule I -
Computation of net capital under Rule 15c3-1 of the Securities
and Exchange Commission | 13 | | Schedule II
-
Computation for determination of reserve requirements under
Rule 15c3-3 of the Securities and Exchange Commission | 14 | | Schedule III
-
Information relating to possession and control requirements
under Rule 15c3-3 of the Securities and Exchange Commission | 15 | | Report of independent registered public accounting firm
on exemption report | 16 | | Exemption report
pursuant
to
SEC Rule
17a-5
of the Securities and
Exchange Commission | 17 | {2}------------------------------------------------ **UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: 3235-0123 Expires: 0DUPCFS Estimated average burden **8-** SEC FILE NUMBER 45497 # hours per response.. . . . . 12.00 **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** **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\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** NAME OF BROKER-DEALER: ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) OFFICIAL USE ONLY FIRM I.D. NO. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (No. and Street) (City) (State) (Zip Code) NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT (Area Code – Telephone Number) **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report\* (Name – *if individual, state last, first, middle name*) (Address) (City) (State) (Zip Code) **CHECK ONE:** Certified Public Accountant Public Accountant Accountant not resident in United States or any of its possessions. FOR OFFICIAL USE ONLY DIVERSIFIED RESOURCES, LLC WARWICK RI 144 GOULD STREET, SUITE 204 NEEDHAM MA ✔ January 1, 2020 December 31, 2020 70 JEFFERSON BOULEVARD 02888 KAREN J. BACON (401) 941-1500 SANDLER & COMPANY PC 02494 *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2)* **Potential persons who are to respond to the collection of information contained in this form are not required to respond** SEC 1410 () **unless the form displays a currently valid OMB control number.** {3}------------------------------------------------ #### OATH OR AFFIRMATION | DIVERSIFIED RESOURCES, LLC | my knowledge and belief the accompanying financial statement and supporting schedules perfaining to the firm of | |-----------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | of DECEMBER 31 | , 2020 , are true and correct. I further swear (or affirm) that | | | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | classified solely as that of a customer, except as follows: | | | | | | | | | | enature | | | PRINCIPAL | | Notary Public
This report ** contains (check all applicable boxes
(a) Facing Page.
(b) Statement of Financial Condition. | PUBLIC
(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 Changes in Financial Condition. | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | (g) Computation of Net Capital. | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | | (i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | consolidation. | (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of | | (1) An Oath or Affirmation. | | | (m) A copy of the SIPC Supplemental Report. | (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous andit. | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Sandler & Company, P.C. Certified Public Accountants and Advisors 144 Gould Street, Suite 204, Needham, MA 02494 | www.sandlercpa.com Tel. (781) 455-1480 Fax. (781) 455-6239 Report of Independent Registered Public Accounting Firm To the Member of Diversified Resources, LLC #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Diversified Resources, LLC as of December 31, 2020, and the related statements of operations, changes in member'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 Diversified Resources, LLC as of December 31, 2020 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 Diversified Resources, LLC's management. Our responsibility is to express an opinion on Diversified Resources, LLC'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 Diversified Resources, LLC 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}------------------------------------------------ #### Auditor's Report on Supplementary Information The supplementary information including, Schedule I, Computation of Net Capital Under SEC Rule 1503-1, Schedule II, Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3 (exemption), and Schedule III, Information Relating to Possession or Control Requirements Under SEC Rule 15c3-3 (exemption), have been subjected to audit procedures performed in conjunction with the audit of Diversified Resources, LLC's financial statements. The supplementary information is the responsibility of Diversified Resources. LLC's management. Our audit procedures included determining whether the supplementary 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 supplementary information. In forming our opinion on the supplementary information, we evaluated whether the supplementary information, including its form and content, is presented in conformity with 17 C.F.R. 240.17a-5. In our opinion, Schedule I, Computation of Net Capital Under SEC Rule 15c3-1, Schedule II, Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3 (exemption), and Schedule III, Information Relating to Possession or Control Requirements Under SEC Rule 15c3-3 (exemption) are fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Diversified Resources, LLC's auditor since 2016. Needham, Massachusetts February 27, 2021 {6}------------------------------------------------ ## **DIVERSIFIED RESOURCES, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020** | Assets | | | |----------------------------------------------------------------------|---------------|--| | Cash | \$
109,983 | | | Accounts receivable | 362,355 | | | Prepaid expenses | 12,518 | | | Furniture and equipment, net of accumulated depreciation of \$51,152 | 1,749 | | | Investment in mutual fund, cost basis \$32,165 | 32,875 | | | Total assets | \$
519,480 | | # **Liabilities and Member's Equity** | Total liabilities and member's equity | \$
519,480 | |---------------------------------------------------|------------------------| | Member's equity | 390,371 | | Accounts and accrued expenses payable
PPP Loan | \$
61,712
67,397 | | Liabilities | | {7}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2020** | Revenue | | |---------------------------------------|---------------| | Investment advisor fees | \$ 1,247,824 | | Mutual fund commissions | 170,195 | | Insurance and annuity commissions | 45,132 | | Other fees | 2,000 | | Dividends | 1,266 | | Change in unrealized gains and losses | 1,103 | | Total revenue | 1,467,520 | | Expenses | | | Compensation | 336,946 | | Legal and Professional fees | 73,886 | | Technology and communication | 66,741 | | Occupancy | 35,721 | | Office | 18,673 | | Insurance | 13,000 | | Regulatory fees | 10,512 | | Travel, meals and entertainment | 7,718 | | Local taxes | 5,849 | | Marketing and advertising | 5,100 | | Dues and subscriptions | 2,584 | | Depreciation | 2,375 | | Other | 1,028 | | Total
expenses | 580,133 | | Net
Income | \$
887,387 | {8}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC STATEMENT OF CHANGES IN MEMBER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2020** | Member's
equity, December 31, 2020 | \$
390,371 | |---------------------------------------|---------------| | Net Income | 887,387 | | Distributions to member | (862,833) | | Member's
equity, December 31, 2019 | \$
365,817 | {9}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2020** | Cash flows from operating activities: | | |--------------------------------------------------------------------------------|---------------| | Net Income | \$
887,387 | | Adjustments
to reconcile net income
to net cash provided by
operating | | | activities: | | | Depreciation | 2,375 | | Dividends automatically reinvested | (1,266) | | Change in unrealized gains and losses | (1,103) | | Changes in operating assets and liabilities | | | Increase
in accounts receivable | (33,093) | | Decrease in prepaid expenses | 2,509 | | Decrease
in accounts and accrued expenses payable | (229) | | Total adjustments | (30,807) | | Net cash provided
by operating activities | 856,580 | | Cash flows from financing activities | | | PPP Loan | 67,397 | | Distributions to member | (862,833) | | Net cash used
by financing activities | (795,436) | | Net increase
in cash | 61,144 | | Cash, beginning of year | 48,839 | | Cash, end of year | \$
109,983 | Non-cash investing activity: During the year dividend income of \$1,266 from the mutual fund investment was automatically reinvested to purchase additional shares of the mutual fund. # **Supplemental Disclosures** | Cash paid for income taxes | \$
- | |----------------------------|---------| | Cash paid for interest | \$
- | {10}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** #### **NOTE 1 – ORGANIZATION** Diversified Resources, LLC ("the Company") was organized in 2001 in the State of Rhode Island. The Company is registered with the Securities and Exchange Commission as a Registered Investment Advisor ("RIA") and also as a Broker and Dealer. The Company earns fees as an RIA for asset management services and investment advice and also earns commissions as a broker from the sale of mutual fund shares and annuity and insurance products. Client funds and investments under management by the Company are held by a third-party custodian, SEI Investments Company or one of its affiliates ("SEI"). SEI offers no-load mutual funds in various asset allocation models. The Company does not hold funds, investments or other customer accounts for its clients. Karen J. Bacon owns 100% of the Company's outstanding member interests. The Company is subject to regulation by the Securities Exchange and Commission. The Company is a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. ### **NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### *Basis of presentation* The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. #### *Accounting basis* The Company uses the accrual basis of accounting for financial statement reporting. Accordingly, revenues are recognized when services are earned and expenses are recognized when the obligation is incurred. ### *Estimates* The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results may differ from these estimates. #### *Cash* Cash is a checking account held at a bank. {11}------------------------------------------------ ### **DIVERSIFIED RESOURCES, LLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** #### **NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### *Property and equipment* Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. #### *Investments* All investment securities are classified as "available for sale." Securities classified as "available for sale" are carried in the financial statements at fair value. Realized gains and losses, determined using the first-in, first-out (FIFO) cost method, or for mutual funds, the average cost basis, are included in net income. Changes in unrealized gains and losses are also included in net income. #### *Fair value measurements* Under generally accepted accounting principles, there is a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the management's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: - Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. - Level 2. Inputs other than quoted prices included in level 1 that are observable for the assets or liability either directly or indirectly. - Level 3. Inputs are unobservable for the assets or liability. #### *Revenue recognition* #### Commissions The Company earns commissions from sales of several types of investments, including shares of mutual funds and other securities, annuities, and various insurance products. Commissions and related clearing expenses are recorded on the trade date. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks of ownership have been transferred to the customer. {12}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** ### **NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** The Company also earns commissions paid by mutual funds over the period of time that the Company's customers continue to hold investments in the mutual funds. The services performed for such commissions are considered to be performed over time as the Company advises its customers to continue holding investments in the mutual funds, and the revenue is therefore recognized at the time of payment. #### Investment advisory fees The Company provides investment advisory services for many of its customers on a continuing basis. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company. Fee arrangements are based on a percentage applied to the customer's assets under management. Fees are received quarterly and recognized as revenue at that time as they relate specifically to the services provided in each quarter. #### Income taxes The Company is treated as a disregarded entity for federal and state income tax purposes. Taxable income of the Company is passed through to its sole member and is reported on her individual tax return. Accordingly, no federal or state income tax expense has been recorded in the Company's financial statements. ### **NOTE 3 – RELATED PARTY TRANSACTIONS** The Company rents its office space from its sole member on a month-to-month basis. The lease provides that the Company pays condominium fees and real estate taxes in addition to the base rent of \$2,000 per month. Rent expense including base rent and condominium fees was \$33,325 in 2020. The Company also paid \$5,849 of real estate taxes which is included in local taxes on the statement of operations. For the year ended December 31, 2020 a consulting fee in the amount of \$40,000 was paid to a relative of the Company's owner, included in legal and professional fees on the statement of operations. ### **NOTE 4– RETIREMENT PLAN** The Company maintains a defined contribution and profit sharing retirement plan under Section 401(k) of the Internal Revenue Code. This plan covers all employees meeting eligibility requirements based on age and length of service and is funded by employee payroll deferrals and Company contributions. The Company made a safe harbor non-elective contribution of 3% for any eligible employee's annual compensation. In 2020, the safe harbor contribution totaled \$15,490. The amount of annual contribution for profit sharing is at the discretion of management. The Company made a profit sharing contribution of \$30,000 to the plan in 2020. {13}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** ## **NOTE 5 – CONCENTRATION OF CREDIT RISK** Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains its cash in a bank account, the balance of which, at times, may exceed Federal insured limits. Exposure to credit risk is reduced by placing such deposits in high quality financial institutions. A substantial portion of accounts receivable are investment advisory fees due from SEI, the custodian of investment accounts belonging to the Company's clients. Such fees are charged to the client accounts at the end of each quarter, and are typically remitted by SEI to the Company within several days. ### **NOTE 6 – FAIR VALUE MEASUREMENTS** The Company's investment in a mutual fund is carried at fair value, using the published net asset value per share of the fund as of December 31, 2020. The net asset value per share is the price at which the fund offers and redeems its shares. Fair value measurements as of December 31, 2020 are summarized as follows: | | Level 1 | Level 2 | Level 3 | Total | |---------------------------|-----------|---------|---------|-----------| | Investment in Mutual Fund | \$ 32,875 | - | - | \$ 32,875 | # **NOTE 7 – NET CAPITAL REQUIREMENT** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires maintaining a minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. The Company is required to maintain minimum net capital of \$5,000. At December 31, 2020 the Company had net capital of \$78,850 and \$73,850 of excess net capital. At December 31, 2020 the Company's aggregate indebtedness to net capital ratio was 0.78 to 1. # **NOTE 8 – PAYROLL PROTECTION PROGRAM LOAN** In May 2020, the Company received a loan of \$67,397, which is guaranteed by the U.S. Small Business Administration under the Paycheck Protection Program (PPP). Some or all of the loan may be forgiven. Any amount not forgiven will accrue interest for 6 months, then be repaid over a 24 month term on an annual interest rate of 1%. The Company has utilized the entirety of the proceeds of this loan to pay expenses covered by the PPP as of December 31, 2020. ### **NOTE 9 – SUBSEQUENT EVENTS** The Company has performed an evaluation of events that have occurred subsequent to December 31, 2020, and through February 27, 2021, the date of the filing of this report. Effective February 27, 2021 the Company is in the process of updating its membership to a Non-Covered Firm and will no longer claim an exemption from Rule 15c3-3 in reliance upon footnote 74 SEC Release No. 34-70073 dated July 30, 2013 and as discussed in question 8 of the related FAQ released by SEC staff. The Company does not hold customer funds or securities. {14}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC SCHEDULE I COMPUTATION OF NET CAPITAL UNDER RULE 15C3-1 OF THE SECURITIES AND EXCHANGE COMMISSION DECEMBER 31, 2020** | Net capital | | | | |----------------------------------------------------------------------------------------------------|----------|----------------|--| | Total member's
capital | \$ | 390,371 | | | Add
Allowable credits | | 67,397 | | | Liabilities subordinated to claims of general creditors allowable in | | | | | computation of net capital | | -- | | | Less Non-allowable assets | | (375,959) | | | Net capital before haircuts and undue concentration on securities | | | | | positions | | 81,809 | | | Haircuts and undue concentration on securities positions | | (2,959) | | | Net Capital | \$ | 78,850 | | | | | | | | Aggregate indebtedness | | | | | Items included in the statement of financial condition: | | | | | Accrued expenses and other liabilities | \$ | 61,712 | | | | \$ | 61,712 | | | Ratio: aggregate indebtedness to net capital | | 0.78
to 1 | | | | | | | | Computation of basic
net capital requirement | | | | | Minimum net capital required
(6 2/3% of total aggregate | | | | | indebtedness)
Minimum dollar net capital required | \$
\$ | 4,114
5,000 | | | Net capital required (greater of 6 2/3 % of total aggregate | | | | | indebtedness and minimum dollar net capital required) | \$ | 5,000 | | | | | | | | Net capital in excess of requirement | \$ | 73,850 | | | | | | | | | | | | | Net capital less greater of 10% of aggregate indebtedness or
120% of minimum dollar net capital | \$ | 72,679 | | # **Reconciliation of December 31, 2020 audited computation of net capital and Company's unaudited December 31, 2020 Part IIA of Form X-17A-5.** | Net capital
as above | \$ | 78,850 | | |------------------------------------------------------------------|----------|--------|--| | Reconciling items | | -- | | | as originally filed | \$ | 78,850 | | | Unaudited December 31, 2020
net capital per December 31, 2020 | Part IIA | | | *See report of independent registered public accounting firm.* {15}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC SCHEDULE II COMPUTATION OF RESERVE REQUIREMENTS FOR BROKER-DEALERS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2020** The company is exempt from SEC rule 15c3-3 pursuant to the exemptive provisions under subparagraph (k)(1) and, therefore, is not required to maintain a "Special Reserve Bank Account for the Exclusive Benefit of Customers." {16}------------------------------------------------ # **DIVERSIFIED RESOURCES, LLC SCHEDULE III INFORMATION RELATING TO POSSESSION OR CONTROL REQUIREMENTS FOR BROKERS AND DEALERS PURSUANT TO RULE 15c3-3 AS OF DECEMBER 31, 2020** The company had no items reportable as customers' fully paid securities: (1) not in the Company's possession or control as of the audit date (for which instructions to reduce to possession or control had been issued as of the audit date) but for which the required action was not taken by the Company within the time frames specified under Rule 15c3-3 or (2) for which instructions to reduce to possession or control had not been issued as of the audit date, excluding items arising from "temporary lags which result from normal business operations" as permitted under Rule 15c3-3. {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) Sandler & Company, P.C. Certified Public Accountants and Advisors 144 Gould Street, Suite 204, Needham, MA 02494 | www.sandlercpa.com Tel. (781) 455-1480 Fax. (781) 455-6239 # Report of Independent Registered Public Accounting Firm on Exemption Report To the Member of Diversified Resources, LLC We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Diversified Resources, LLC identified the following provisions of 17 C.F.R. Section 15c3-3(k) under which Diversified Resources, LLC claimed an exemption from 17 C.F.R. Section 240.15c3-3: (k)(1) (the "exemption provision") and (2) Diversified Resources, LLC stated that Diversified Resources, LLC met the identified exemption provision throughout the most recent fiscal year without exception. Diversified Resources, LLC's management is responsible for compliance with the exemption provision 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 Diversified Resources, LLC's compliance with the exemption provision. 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. Needham, Massachusetts February 27, 2021 -16- {18}------------------------------------------------ #### DIVERSIFIED RESOURCES, LLC EXEMPTION REPORT PURSUANT TO SEC RULE 17a-5 OF THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2020 Diversified Resources, LLC is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission. 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: Diversified Resources, LLC operates pursuant to paragraph 15c3-3(k)(1) of SEC Rule 15c3-3 under which the Company claims an exemption from SEC Rule 15c3-3. The Company has met the identified exemption provision throughout the most recent year without exception. I, Karen J. Bacon, affirm that, to my best knowledge and belief, this Exemption Report is true and correct. Karen J. Bacon President Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.