# COLDSTREAM SECURITIES, INC. X-17A-5 (2024-02-22) — Broker-dealer annual report - Company: COLDSTREAM SECURITIES, INC. - Form: X-17A-5 - Filed: 2024-02-22 - Period: 2023-12-31 - Accession: 0001077686-24-000001 - CIK: 1077686 - File #: 8-51549 - Type: Broker-dealer - Material weakness: No - Auditor: Moss Adams LLP - Auditor location: Seattle, WA - Contact: MS. ERIKA YELLE - Phone: 4252831600 - Email: yelle@coldstream.com - Website: coldstream.com - Signed by: Erika Yelle (Chief Compliance Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1077686/000107768624000001/X-17a5_CSIPub2023.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORTS FORM X-17A-5 PART** Ill **FACING PAGE** 0MB APPROVAL 0MB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 SEC FI LE NUMBER **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** FILING FOR THE PERIOD BEGINNING 01/01/2023 ~M/£?D/\'Y AND ENDING 12/31/2023 **A. REGISTRANT IDENTIFICATION** NAME OF FIRM: Coldstream Securities, Inc. TYPE OF REGISTRANT (check all applicable boxes): MM/DD/VY 1:6 Broker-dealer D Security-based swap dealer D Major security-based swap participant D Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) One 100th Ave NE Ste 102 (No. and Street) Bellevue, WA 98004 (City) (State) PERSON TO CONTACT WITH REGARD TO THIS FILING (Zip Code) Erika Yelle (Name) 425-283-1604 (Area Code - Telephone Number) erika. yelle@coldstream.com (Email Address) **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* Moss Adams LLP (Name - if individual, *state* last, first, and middle name) 900 Third Avenue Ste 2800 (Address) 10/16/2003 Seattle (City) 659 **WA** (State I 98104-4019 (Zip Code) (Date of ReRistration with PCAOB)(lf applicable) (PCAOB Registration Number, ifapplicable) **FOR OFFICIAL USE ONLY** \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-S{e)(I)(ii), if applicable. **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 valid 0MB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Erika Yelle | swear (or affirm) that, to the best of my knowledge and belief, the | |------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------| | financial report pertaining to the firm of Coldstream Securities, Inc. | as of | | 2~
February 22 | 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_2.jpeg) | Title: | | |--------------------------|--| | Chief Compliance Officer | | | | | #### **This filing\*\* contains (check all applicable boxes):** - ~ (a) Statement of financial condition. - □ (bl Notes to consolidated statement of financial condition. - 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 (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - □ (fl Statement of changes in liabilities subordinated to claims of creditors. - Ila (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. - D (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 240.1Sc3-3 or Exhibit A to 17 CFR 240.lSa-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.1Sc3-3. - □ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.1Sc3-3(p)(2) or 17 CFR 240.lSa-4, as applicable. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.1Sc3-1, 17 CFR 240.18a-1, or 17 CFR 240.lSa-2, as applicable, and the reserve requirements under 17 CFR 240.1Sc3-3 or 17 CFR 240.lBa-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - D (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.lBa-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.lSa-7, as applicable. - □ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.l&a-7, as applicable. - D (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 stat ements under 17 CFR 240.17a-S, 17 CFR 240.lSa-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.lSa-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. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-l e or 17 CFR 240.17a-12, as applicable. - D (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}------------------------------------------------ **COLDSTREAM SECURITIES, INC.** Report of Independent Registered Public Accounting Firm and Financial Statements with Supplementary Information Year Ended December 31, 2023 This report is deemed CONFIDENTIAL in accordance with Rule 17a-S(e}(3} under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT. {3}------------------------------------------------ # **Report of Independent Registered Public Accounting Firm** To the Shareholder and the Board of Directors Coldstream Securities, Inc. ### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Coldstream Securities, Inc. (the "Company") as of December 31, 2023, that is filed pursuant to Rule 1 ?a-5 under the Securities Exchange Act of 1934, and the related notes (the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. ### **Basis for Opinion** ® MOSSADAMS This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. 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 to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. Seattle, Washington February 21, 2024 We have served as the Company's auditor since 2014. {4}------------------------------------------------ ## **COLDSTREAM SECURITIES, INC. STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2023** #### ASSETS | ASSETS | | | |-----------------------------------------------------|----|-----------| | Cash (Note 1) | | 167,296 | | Accounts receivable (Note 1) | | 2,210 | | Due from related party (Note 3) | | 18,940 | | Other assets | | 44,368 | | TOT AL ASSETS | \$ | 232,814 | | LIABILITIES AND SHAREHOLDER'S EQUITY | | | | LIABILITIES | | | | Accounts payable and accrued expenses | \$ | 5,747 | | TOTAL LIABILITIES | | 5,747 | | CONTINGENCIES (Note 4) | | | | SHAREHOLDER'S EQUITY | | | | Common stock, no par, 112 shares authorized, issued | | | | and outstanding | | 10,000 | | Additional paid-in capital | | 677,741 | | Accumulated deficit | | (460,674) | | TOTAL SHAREHOLDER'S EQUITY | | 227,067 | | TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | \$ | 232,814 | The accompanying notes are an integral part of these financial statements. 2 **This report is deemed CONFIDENTIAL in accordance with Rule 17a-S(e)(3) under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT.** {5}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS December 31, 2023** #### NOTE 1-0RGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Coldstream Securities, Inc. (the "Company") is incorporated in the state of Delaware and is a wholly owned subsidiary of Coldstream Holdings, Inc. (the "Parent"). The Company is registered as a brokerdealer in securities with the Securities and Exchange Commission and conducts business primarily in private placements, variable annuities, mutual funds trails, 12b-1 fees, variable annuity commissions, referral fees and state directed 529 plan commissions to customers throughout the United States. Under its membership agreement with FINRA and relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, the Company (1) does not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (2) does not and will not carry accounts of or for customers, and (3) does not and will not carry PAB accounts. The Company limits its business activities exclusively to effecting securities transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company, receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients, and referring securities transactions to other broker-dealers. Cash consists of cash on hand, checking and savings accounts. There are no withdrawal restrictions on cash. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2023. The Company is affiliated with The Rainier Group, Inc. (RGI). RGI is a business consulting firm that advises the owners of mid-market, privately held companies on strategic issues such as management succession, ownership transition, key employee retention, corporate governance, and business valuation. While delivering its consulting services, RGI may advise a business owner that their best strategic option is to sell their business. RGI may determine it needs to refer the business owner to a reputable third-party mid-market investment banking firm that has expertise in the RGI client's industry to market the business for sale. RGI has referral agreements with various third-party investment banks which specify that upon the successful sale of the business by the investment bank, RGI shall receive a referral fee which is typically a percentage of the success fee the investment bank charges the seller, which is recorded as revenue by the Company. Referral fees are earned when the referral is accepted by the client. Referral fees are not recognized at the time the referral is completed because there are multiple requirements to meet per the contract due to the timing of closing of transactions between the referral and the client, the closing price and payment conditions established between the parties. Revenue will not be recognized until it is probable that a significant reversal will not occur. Coldstream Securities Inc. earned referral fee revenues in 2023 totaling \$43,575. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment is required to determine whether performance obligations are satisfied at a point in ### **This report is deemed CONFIDENTIAL in accordance with Rule 17a-S{e){3) under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT.** 3 {6}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS December 31, 2023** time or over time; how to allocate transaction prices where, and if, 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. Economic conditions that may affect the Company's performance primarily include the general economic and market conditions in the United States. Commission revenues are sourced from state directed 529 plans, mutual funds, and annuities. A portion of the revenue from mutual funds and annuities are based on a fixed rate applied, as the performance obligation is satisfied at the time of each individual sale. The remaining revenue 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 fund, or the value of the insurance policy or annuity contract. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company's control including market volatility and client behavior (such as how long clients hold their investment, insurance policy or annuity contract). The revenue will not be recognized until it is probable that a significant reversal will not occur. The timing of the Company's revenue recognition may differ from the timing of payment by the Company's customers. The Company records a receivable when revenue is recognized prior to payment and has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company performs an evaluation at contract inception to determine whether it is probable that the Company will collect substantially all of the consideration to which it will be entitled. The Company accounts for credit losses in accordance with ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the guidance, the Company has the ability to determine there are no expected credit losses in certain circumstances. An allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including receivables recognized under ASC 606. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with other receivables is not significant until they are 90 days past due based on the contractual arrangement and expectation of collection in accordance with industry standards. The Company had no allowance for credit losses for trade receivables at January 1, 2023, or December 31, 2023. The Company had receivables from contracts with customers of \$2,210 as of December 31, 2023, and \$4,220 as of December 31, 2022. The Company did not have deferred revenue as of December 31, 2023, and December 31, 2022. **This report is deemed CONFIDENTIAL in accordance with Rule 17a-S(e){3) under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT.** 4 {7}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS December 31, 2023** The Company files a consolidated federal tax return with its Parent. For financial statement purposes, the Company presents income tax information as if it filed a separate income tax return. The Company accounts for income taxes in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 740-10, Accounting for Income Taxes. Under the asset and liability method of FASB ASC Topic 740-10, deferred tax assets and liabilities are recognized for the estimated future tax consequences or benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any tax related appeals or litigation processes, based on the technical merits of the position. The Company files an income tax return in the U.S. federal jurisdiction and may file income tax returns in various U.S. states. The Company is not subject to income tax return examinations by major taxing authorities for years before 2020. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces net assets. However, the Company's conclusions regarding this policy may be subject to review and adjustment later based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company recognizes interest accrued related to unrecognized tax benefits and penalties related to unrecognized tax benefits as changes to income in income tax expense, if assessed. No interest expense or penalties have been recognized as of and for the year ended December 31, 2023. 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. #### NOTE 2- NET CAPITAL REQUIREMENTS Pursuant to the net capital provisions of Rule 15c3-1 ofthe Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital balance, as defined under such provisions. On December 31, 2023, the Company had net capital and net capital requirements of \$161,549 and \$5,000 respectively. The Company's net capital ratio (aggregate indebtedness to net capital) was 0.0356 to 1.0. According to Rule 15c3-1, the Company's net capital ratio shall not exceed 15 to 1. 5 **This report is deemed CONFIDENTIAL in accordance with Rule 17a-S{e){3) under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT.** {8}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS December 31, 2023** #### NOTE 3 - RELATED **PARTY TRANSACTIONS** The Company and its Parent are under common control and the existence of that control creates operating results and financial positions significantly different than if the companies were autonomous. Company utilizes space, personnel and other services and overhead which are incurred by affiliated companies. These services, totaling \$38,952, were transacted in the normal course of business, and were recorded as specific expenses in the period provided. Allocation of federal and state income taxes filed at the Parent's consolidated level has been made throughout 2022 and 2023. In connection with this allocation, for the 2023 tax year, \$18,940 is due from the parent as of December 31, 2023. ## NOTE 4- CONCENTRATIONS AND CREDIT RISK The Company may from time to time be involved in regulatory examinations, potential inquiries, investigations, and proceedings by the SEC, FINRA, or other state and local regulatory agencies. At December 31, 2023, Coldstream Securities, Inc. had an open regulatory examination with FINRA but there were no pending or threatened litigation, claims, or assessments or unasserted claims or assessments that are required to be accrued or disclosed in the financial statements in accordance with FASB ASC 450, Accounting for Contingencies. The Company maintains cash balances in one financial institution, which is insured by the Federal Deposit Insurance Corporation (FDIC) for up to \$250,000 per institution. From time to time, the Company's balances may exceed these limits. The Company has not experienced any losses in the accounts. The Company believes it is not exposed to any significant risk on cash. Management periodically assesses the financial condition of the bank and believes that any potential loss is minimum, if any. #### NOTE 5 - SUBSEQUENT EVENTS Subsequent events are events or transactions that occur after the date of the statement of financial condition but before financial statements are available to be issued. The Company recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the statement of financial condition, including the estimates inherent in the process of preparing the financial statements. The Company's financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the statement of financial condition but arose after the date of 6 **This report is deemed CONFIDENTIAL in accordance with Rule 17a-S(e){3) under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT.** {9}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS December 31. 2023** the statement of financial condition and before the financial statements were available to be issued. The Company has evaluated subsequent events through February 21st, 2024, which is the date the financial statements were available to be issued. The Company is not aware of subsequent events that would require recognition or disclosure in the financial statements other than the disclosure below. On February l5\ 2024, CSI received a \$100,000 capital infusion from Coldstream Holdings, Inc. **This report is deemed CONFIDENTIAL in accordance with Rule 17a-S(e){3) under the Securities Exchange Act of 1934. A statement of financial condition has been filed with the Securities and Exchange Commission herewith as a PUBLIC DOCUMENT.** Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.