# KIPPSDESANTO & COMPANY X-17A-5 (2019-02-26) — Broker-dealer annual report - Company: KIPPSDESANTO & COMPANY - Form: X-17A-5 - Filed: 2019-02-26 - Period: 2018-12-31 - Accession: 0001067122-19-000001 - CIK: 1067122 - File #: 8-51183 - Material weakness: No - Auditor: Rubio CPA, PC - Auditor location: Atlanta, GA - Contact: Robert Kipps - Phone: 703-442-1400 - Website: kippsdesanto.com - Signed by: Robert Kipps (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1067122/000106712219000001/kasshort.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response ...... 12.00 ## **ANNUAL AUDITED REPORT FORM X-17** A-5 **PART Ill** | SEC FILE NUMBER | |-----------------| | B-51183 | FACING PAGE Information Required ofBrokers and Dealers Pursuant to Section 17 of t he Secll!rities Exchan ge Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PElUOD BEGINNING 01 | /01/18 | AND ENDING 12/31/18 | | | |-------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|-----------------------------------|------------------------------------|--| | MMmDIYY | | ---------------------
MM/DD/YY | | | | | A. REGISTRANT IDENTIFICATION | | | | | NAMEOFBROKER-DEALER: KIPPS DESANTO & COMPANY
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | OFFICIAL USE ONLY
FIRM I.D. NO. | | | | | | | | | 8000 TOWERS CRESCENT DRIVE, SUITE 1200 | | | | | | | (No. and Street) | | | | | TYSONS CORNER | VA | | 22182 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO TillS REPORT | | | | | | ROBERT KIPPS | | | 703442-1400 | | | | | | (ArCll Code- Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report• | | | | | | RUBIO CPA, PC | | | | | | | (Name - if individual, slate last, first, middle name) | | | | | 900 CIRCLE 75 PARKWAY, SUITE 1100 ATLANTA | | GA | 30339 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | IV' I
Certified Public Accountant | | | | | | Public Accountant | | | | | | | | | | | | B
Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | *\*Claims for exemption from the requil·emenl 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 unless the form displays a currently vallcil OMB control number. SEC 141 0 (06-02) {1}------------------------------------------------ #### OATH OR AFFIRMATION | I, ROBERT KIPPS | , swear (or affirm) that, to the best of | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
KIPPS DESANTO & COMPANY
--------------------------------------------------------------------------------------- | 'as | | of DECEMBER 31 | are true and correct. I further swear (or affirm) that | | classified solely as that of a customer, except as follows: | neither Ute company nor any partner, proprietor, principal officer or director bas any proprietary interest in any account | | Notary Public
This report** contains {check aU applicable boxes):
~ (a) Facing Page.
(b) Statement ofFinancial Condition.
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(c) Statement oflocome (Loss).
(d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Slockholders' 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 l 5c3-3.
0 G)
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
consolidation. | CEO
Title
JAFFAR A SHAIKH
Notary Po bile
Commonwealth ofVirgtnla
Registration No. 7734349
My Commission Expires May 31. 202 1
A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule 15c3-l and the
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | 0 (I) An Oath or Affirmation.
0 (m) A copy ofthe SIPC Supplemental Report. | 0 (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | *\*\*For conditions of confidential treatment of certain portions of this firing, see section 240.17a-5(e)(3).* {2}------------------------------------------------ ## **KIPPSDESANTO & COMPANY** Financial Statements For the Fiscal YearEnd December31 , 2018 With Report of Independent Registered Public Accounting Firm PUBLIC DOCUMENT {3}------------------------------------------------ # RUBIO CPA, PC CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2. Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders of KippsDeSanto & Company ### Opinion of the Financial Statements We have audited the accompanying statement of financial condition ofKippsDeSanto & Company (the "Company") as of December 31, 2018, and the related notes. In our opinion, the aforementioned financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting finn registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement to the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis of our opinion. We have served as the Company's auditor since 2006. February 18, 2019 Atlanta, Georgia > ~~bto CPa ~ Rubio CPA, PC {4}------------------------------------------------ ### KIPPSDESANTO & COMPANY Statement of Financial Condition December31 , 2018 #### Assets | Cash | \$
4,918,275 | |------------------------------------------------------------------------------|-----------------| | Accounts Receivable | 31,536 | | Prepaid Expense | 146,244 | | Deposits | 104,199 | | Other receivables | 25,000 | | Office furniture and equipment, net of accumulated depreciation of \$763,986 | 265,776 | | Total assets | \$
5,491,031 | | Liabilities and Stockholders' Equity | | | Liabilities | | | Accounts payable and accrued expenses | \$
118,457 | | Deferred rent | 166,043 | | Accrued compensation | 103,917 | | Deferred revenue | 421,895 | | Total Liabilities | \$
810,311 | | Stockholders' Equity | 4,680,719 | | Total Liabilities and Stockholders' Equity | \$
5,491,031 | See accompanying notes. {5}------------------------------------------------ ### **KIPPSDESANTO & COMPANY NOTES TO FINANCIAL STATEMENTS December 31, 2018** ### **Note 1 - Summary of Significant Accounting Policies** Organization and Description of Business: KippsDeSanto & Company (the "Company"), is a securities broker-dealer registered with the Securities and Exchange Commission ("SEC") that is regulated by the Financial Industry Regulatory Authority. The Company is primarily engaged in investment banking and advisory services. The Company's customers are located throughout the United States. Depreciation: Depreciation is provided on a straight-line basis using estimated useful lives of five to ten years. Cash: The Company maintains its deposits in high credit quality financial institutions. Balances at times may exceed insured limits. Income Taxes: The Company is taxed as an S corporation. Therefore, the income or losses of the Company flow through to its stockholders and no income taxes are recorded in the accompanying financial statements. The Company has adopted the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes. Under FASB 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 return. The Company has evaluated each of its tax positions and has determined that no provision or liability for income taxes is necessary. Estimates: Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements. Leases: In February 2016, the FASB issued a new accounting pronouncement regarding lease accounting for reporting periods beginning after December 15, 2019. A lessee will be required to recognize on the balance sheet the assets and liabilities for leases with lease terms of more than 12 months. Management is currently evaluating the effect this pronouncement will have on the financials statements and related disclosures. Accounts Receivable: Accounts ~receivables are non-interest bearing uncollateralized obligations receivable in accordance with the terms agreed upon with each client. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. Management individually reviews all delinquent accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Customer receivables at December 31, 2018 are believed to be fully collectible; accordingly, no allowance for doubtful accounts is reflected in the accompanying financial statements. Date of Management's Review: Subsequent events were evaluated through the date the financial statements were issued. {6}------------------------------------------------ ### **KIPPSDESANTO & COMPANY NOTES TO FINANCIAL STATEMENTS December 31, 2018** ### **Note 2 - Net Capital** The Company, as a registered broker dealer is subject to the Securities and Exchange Commission Uniform Net Capital Rule (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. At December 31, 2018, the Company had net capital of \$4,211,880 which was \$4,192,913 in excess of its required net capital of \$18,967 and its ratio of aggregate indebtedness to net capital was .067 to 1.0 .. ### **Note** 3 - **Lease** The Company has a lease for office premises that expire in March 2024. The office premises lease contains periods of free rent. The deferred rent liability arises from allocation of rent payments over the term of the lease to the free rent period. The future minimum lease payments under the office premises lease are approximately as follows: | Total | \$
3,328,000 | |------------|-----------------| | Thereafter | 169,000 | | 2023 | 667,000 | | 2022 | 649,000 | | 2021 | 631 ,000 | | 2020 | 614,000 | | 2019 | 598,000 | ### **Note 4 - Stock Option Plan** The Company has a stock option and equity plan whereby shares of the Company's common stock are reserved for grants to employees of the Company. 320,000 of the options outstanding at December 31, 2018 vest at 25% annually on the fifth, sixth, seventh and eighth anniversaries of the date of grant. Pro forma information regarding net income and earnings per share is required by SFAS No. 123, as amended, determined as if the Company had accounted for its employee stock options granted subsequent to December 31, 1994, under the fair value method of SFAS No. 123. The fair value for these options was estimated at the date of grant by management. Option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics signiflicantly different from those of traded options, and because changes in the· subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The market value of the Company's stock under the agreemelilt is determined pursuant to a formula based on trailing revenues for the preceding two years as well as stockholders' equity. {7}------------------------------------------------ ### **KIPPSDESANTO & COMPANY NOTES TO FINANCIAL STATEMENTS December 31, 2018** ### **Note 4-Stock Option Plan (continued)** For purposes of pro forma disclosures under SFAS No. 123, as amended by SFAS No. 148, the estimated fair value of the options is amortized to expense over the options' vesting period. A summary of the Company's stock options granted to employees and related information tis as follows: | | Number of
Shares | Exercise Price
Per Share | Weighted Average
Exercise Price | |-------------------------------------------|---------------------|-----------------------------|------------------------------------| | Outstanding at December 31 , 2017 | 332,500 | | | | Granted during 2018 | 5,000 | 6.15 | | | Exercise of option for shares during 2018 | {7,500) | 3.00 | | | | {5,000) | 5.00 | | | | (5,000) | 4.45 | | | Outstanding at December 31 , 2018 | 320,000 | | \$
5.12 | ### **Note 5 - Retirement Plan** The Company sponsors a Safe Harbor 401 (k) plan benefiting employees who have attained age 21 and service requirement of 1,000 hours of service in a one-year computation period. ### **Note 6 - Contingencies** The Company has no litigation in progress or contingencies as of December 31, 2018. {8}------------------------------------------------ ![](_page_8_Picture_0.jpeg) 8000 Towers Crescent Drive. Suite 1200 Tysons Corner. VA 22182 P 703.442.1400 F 703.442.1498 www.kippsdesanto.com ### **EXEMPTION REPORT SEA RULE 17a-5(d)(4)** February 7, 2019 RUBIO CPA, PC 900 Circle 75 Parkway Suite 1100 Atlanta, Georgia 30339 To Whom it May Concern: The below information is designed to meet the Exemption Report criteria pursuant to SEA Rule 17a-S(d)(4): KippsDeSanto & Company is a broker I dealer registered with the SEC and FINRA. Pursuant to paragraph 1<(2) (i) of SEA Rule 15c3-3, the Company *is* claiming an exemption from SEA Rule 15c3-3 for the fiscal year end,ed December 31, 2018. The Company has met the identified exemption provisions throughout the most recent fiscal year without exception. The above statement is true and correct to the best of my and the Company's knowledge . Signed~ Name: Robert Kipps Title: CEO {9}------------------------------------------------ # RUBIO CPA, PC CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Rood SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders of KippsDeSanto & Company We have reviewed management's statements, included in the accompanying Broker Dealers Annual Exemption Report in which (1) KippsDeSanto & Company identified the following provisions of 17 C.F.R. § 15c3-3(k) under which KippsDeSanto & Company claimed an exemption from 17 C.F.R. § 240.1 Sc3-3: (k)(2)(i) (the "exemption provisions"); and, (2) KippsDeSanto & Company stated that KippsDeSanto & Company met the identified exemption provisions throughout the most recent fiscal year without exception. KippsDeSanto & Company'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 KippsDeSanto & Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects. based on the provisions set forth in paragraph (k)(2)(i), of Rule 1 Sc3 -3 under the Securities Exchange Act of 1934. February 18, 2019 Atlanta. GA A~o "PJ\, P~ Rubio CPA, PC Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.