# PCS SECURITIES, INC. X-17A-5 (2022-02-25) — Broker-dealer annual report - Company: PCS SECURITIES, INC. - Form: X-17A-5 - Filed: 2022-02-25 - Period: 2021-12-31 - Accession: 0001087710-22-000002 - CIK: 1087710 - File #: 8-51822 - Type: Broker-dealer - Material weakness: No - Auditor: Withum Smith & Brown - Auditor location: New York, NY - Contact: Richard Daniels - Phone: 212-751-4422 - Email: rdaniels@dfppartners.com - Website: dfppartners.com - Signed by: Richard Daniels (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1087710/000108771022000002/PCSFinancials2021Shortedgar.pdf --- {0}------------------------------------------------ STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2021 {1}------------------------------------------------ ### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ## ANNUAL REPORTS FORM X-17A-5 PART III FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 REPORT FOR THE PERIOD BEGINNING\_01/01/2021 AND ENDING 12/31/2021 MM/DD/YY MM/DD/YY #### A. REGISTRANT IDENTIFICATION NAME OF FIRM: PCS Securities, Inc. TYPE OF REGISTRANT (check all applicable boxes): �Broker-dealer □Security-based swap dealer □ Check here if respondent is also an OTC derivatives dealer □Major security-based swap participant ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | 19020 88th Ave. W. | | | | | | |--------------------------------------------------|---------------------------------------------------------------------------|----|--------------------------------------------|--|--| | | (No. and Street) | | | | | | Edmonds | VA/2 | | 98026 | | | | (City) | (State) | | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Richard Daniels | 212-751-4422 | | rdaniels@dfppartners.com | | | | (Name) | (Area Code - Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | | WithumSmith&Brown, PC | | | | | | | (Name - if individual, state last, first, middle name) | | | | | | 1411 Broadway | New York | NY | 10018 | | | | 10/08/2003 | | | 100 | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | \* Claims for exemption from the requirement that the annual 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-5(e)(1)(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 OMB control number. OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 SEC FILE NUMBER 8-51822 {2}------------------------------------------------ #### OATH OR AFFIRMATION I, Richard Daniels, swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of PCS Securities, Inc., as of December 31, 2021, 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. MARYROSE MERCADO NOTARY PUBLIC, STATE OF NEW YORK Registration No. 01ME6423025 Qualified in Queens County Commission Expires October 4, 2025 Signature: Title: FINOP / CFO arv Publi #### This filing\*\* contains (check all applicable boxes): - 区 (a) Statement of financial condition. - 2 (b) Notes to consolidated statement of financial condition. - [ (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X). - [ (d) Statement of cash flows. - [] (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - [] (f) Statement of changes in liabilities subordinated to claims of creditors. - [ (g) Notes to consolidated financial statements. - | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - 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 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - [ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - [] (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - [] (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - | (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - [ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - മ (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [.] (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - 2 (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 statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - □ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - | (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - | (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-12, as applicable. - [] (y) Report describing any material inadequacies 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 240.18a-7(d)(2), as applicable. {3}------------------------------------------------ ### CONTENTS | Report of Independent Registered Public Accounting Firm | | | |---------------------------------------------------------|-------|--| | Financial Statement | | | | Statement of Financial Condition | 2 | | | Notes to Financial Statement | 3 - 7 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and Those Charged With Governance of PCS Securities, Inc .: #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of PCS Securities, Inc. (the "Company") 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 the Company 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 the Company's management. Our responsibility is to express an opinion on this 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 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 for our opinion. We have served as the Company's auditor since 2015. February 23, 2022 {5}------------------------------------------------ ### STATEMENT OF FINANCIAL CONDITION | December 31, 2021 | | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|-----------------------------------| | | | | | ASSETS | | | | Cash and cash equivalents | | 820,448 | | Due from affiliate | | 40,000 | | Other assets | | 11,555 | | Total assets | ക | 872,003 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | | Liabilities
Accrued payables on research costs | | 57,499 | | Accrued expenses | | 59,925 | | Total liabilities | | 117,424 | | Stockholder's equity
Common stock, \$.01 par value, 1,000 shares
authorized and 100 issued and outstanding
Additional paid-in capital
Retained Earnings
Total stockholder's equity | | 1
697,323
57,255
754,579 | | | ತಿ | 872,003 | {6}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENT #### Nature of business ー PCS Securities, Inc. (the "Company") is a broker-dealer that is registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry ("FINRA"). The Company is a broker-dealer facilitating independent research products to institutional investors in which a broker-dealer provides research to a customer in return for a certain volume of commission revenue from that customer. The Company's affiliate, PCS Research Group LLC ("PRG"), sells third-party research to institutional money managers on a hard-dollar basis. The money managers remit payment for these services to the Company. The Company performs services, including payment to the research producers for their research and retains a research processing fee for these services. The Seatle, Washington office and opened a New York office in March 2021. The Company conducts its business within the safe harbor of Section 28(e) of the Securities Exchange Act of 1934, as amended. In that regard, the Company executes brokerage transactions for investment advisors, money managers and plan sponsors ("Money Managers") at a negotiated commission rate. As an incentive to use the Company's services for the execution of such brokerage transactions, the Company has developed a system to provide third-party research services to Money Managers based upon the level of brokerage transactions. The amount of third-party research services that the Company will furnish to the Money Managers is based on the amount of commissions that the Company receives or expects to receive for execution of brokerage transactions. It is understood by the Money Managers and the Company that the commission total balance is not redeemable in cash and may only be used to obtain third-party research services through the Company. #### 2. Summary of significant accounting policies #### Basis of Presentation The statement of financial condition has been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The statement of financial condition was approved by management and are available for issuance on February 23, 2022. Subsequent events have been evaluated through this date. #### Cash and Cash Equivalents The Company considers money market accounts and all highly liquid debt instruments with original maturities of three months or less to be cash equivalents {7}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`D49F@9ED9;A>7Bcd\_`D49F@6SJ@>6BA57A7;6;A@AG>6<9M;@K6>6N6;J6A9?6F@7;B=6>9=F>9E@B6?M99?B9>B6>N@<6BA9B@;7; 7E9J;AA57A>6=867A@9;A9:5@<5A566;A@AG6IF6A59B6M99?B9> B6>N@<6BR456MJ@?7;<6>6SJ@>6B7;6;A@AGA9=9889:7=@N6BA6FE9?68A9c7f@?6;A@=GA56<9;A>7L cCf@?6;A@=GA56F6>=9>E7;<69C8@M7A@9;B@;A56<9;A>7E@;6A56A>7;B7@<6Lc?f7889<7A6A56 A>7;B7@<6A9A56F6>=9>E7;<69C8@M7A@9;B@;A56<9;A>76<9M;@K6>6N6;J6:56;c9>7BfA566;A@AG B7A@B=@6B7F6>=9>E7;<69C8@M7A@9;R gJ>F>@;<@F78B9J><6B9=>6N6;J67>6?6>@N6?=>9EA:9B6ME6;ABh>6B67><5F>9<6BB@;M=66B7;?<9EE@BB@9;BR456 =9889:@;M@B7?6B<>@FA@9;9=F>@;<@F7877A6?CG>6N6;J6BA>67EL=>9E:5@<5A56D9EF7;GM6;6>7A6B @AB>6N6;J6R ### ,\*3\*0+-)i+]-\*33.[^j\*\*3 456D9EF7;G67>;B>6B67><5F>9<6BB@;M=66B:56>6CG@A@B<9EF6;B7A6?=9>=7<@8@A7A@;MA56C@88@;ML<98866E@AA@;M9=F7GE6;AB7BB9<@7A6?:@A5>6B67><5?@BA>@CJA@9;7E@;6?A57A>6N6;J6@B >6<9M;@K6?7A7F9@;A@;A@E6:@A5A56<9EF86A@9;9=7A>7;B76B67><57JA59>BR456 D9EF7;G>6<9M;@K6B>6N6;J6JF9;>6E@AA@;MF7GE6;AA9>6B67><57JA59>B=9>A56>6B67><5F>9N@?6?A9A56 B7BA57A@B:56;A56F6>=9>E7;<69C8@M7A@9;@B<9EF86A6?R456F7GE6;AA9A56>6B67><57JA59>B<7;;9A C6F>9<6BB6?J;A@87=A6>=J;?B=>9EA56B7>6>6<6@N6?Rb6B67><5F>9<6BB@;M=66B7>6F>6B6;A6?;6A7B A56D9EF7;G@B7A56B6A>7;B76B6;AB>6B67><5 F>9<6BB@;M=66B;6A7BA56D9EF7;GLYf?96B;9A<9;A>98A56>6B67><5Zf?96B;9AE9?@=GA56>6B67><5L7;?XfA56 D9EF7;GHBF6>=9>E7;<69C8@M7A@9;@BA9B@EF8G7>>7;M6A566I<57;M69=A56>6B67><5=>9EpbqA9A56R #### r.30^^+\*^0(.][]s,\*/\*[\\* W@B7MM>6M7A@9;<7;C6=9J;?9;A56BA7A6E6;A9=9F6>7A@9;B=9>A56G67>6;?6?W6<6EC6>XYLZUZYCGAGF69= >6N6;J6BA>67ER {8}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT #### 2. Summary of significant accounting policies (continued) #### Contract Assets and Liabilities The Company had no receivables from customers on January 1, 2021 and December 31, 2021. All receivables were collected upon during the year. The Company had no contract assets or liabilities as of January 1, 2021 or December 31, 2021. #### Research Costs Amounts relating to all customers with a positive total balance are reflected in the accompanying statement of financial condition as accrued payables on research costs. Such amounts represent the rely research services to be provided to all customers from whom the Company has earned commissions for execution of brokerage transactions or revenue from direct sales for the period ended December 31, 2021. #### Use of Estimates The preparation of financial statements in conformity with GAAP 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 reporting period. Actual results could differ from those estimates. #### Income Taxes The stockholder of the Company has elected to be treated as an "S" corporation under Subchapter S of the Internal Revenue Code. Accordingly, no provision has been made for federal income or loss of the Company is allocated to the individual stockholders for inclusion in their personal income tax return. The state of Washington does not impose an income tax. At December 31, 2021, management has the Company had no uncertain tax positions that would require financial statement recognition. This determines will always be subject to ongoing reevaluation as facts and circumstances may require. The Company has no open years prior to 2017 relating to its tax filings. #### Leases In February 2016, the FASB issued Topic 842, Leases ("Topic 842"). Topic 842 requires all leases with a term greater than 12 months to be recognized on the statement of financial condition through a right of use asset and a lease liability and the disclosure of key information pertaining to leasing arrangements. At December 31, 2021, management has determined that the Company had no lease obligations that would require financial statement recognition will always be subject to ongoing reevaluation as facts and circumstances may require. {9}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS #### 3. Net capital requirement The Company is a member of FINRA and subject to the SEC Uniform Net Capital Rule 15c3-1. This Rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and 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's net capital was approximately \$703,000, which was approximately \$695,000 in excess of its minimum requirement of approximately \$8,000. #### 4. Related party transactions The Company incurred research fees of approximately \$0 to companies owned wholly or in part by the Company's shareholder. The Company terminated its administrative services agreement with Institutional Research Services Inc and entered into an administrative services agreement on March 1, 2021 with PCS Research Group LLC. The Company provides processing services related to the sale of independent research products and the payment of vendors associated with the sale. The Company receives fees for providing these services. As of December 31, 2021, the Company had payments in advance under this administrative service agreement with the affiliate in the amount of \$40,000. The Company at December 31, 2021 owed approximately \$44,000 and had a receivable of approximately \$0 with an affiliate all within the ordinary course of business. During the year ended December 31, 2021, the Company received 100% of revenues from PCS Research Group in the amount of \$575,122. As of December 31, 2021, approximately \$0 is due from PCS Research Group. #### 5. Concentrations The Company maintains all of its cash and cash equivalents at one financial institution which at times may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fuffill contractual obligations on its behalf. Management monitors the financial condition of such financial institution and does not anticipate any losses from these counterparties. At December 31, 2021 cash and cash equivalents totaled approximately \$820,000. The Company's customers are concentrated in the financial services industry and include investment banks, institutional investors and private equity funds. The Company derives most of its revenue from customers located within the United States. The Company generally does not require collaters credit worthiness on a customer basis based on the reputation of the customer within the industry, historical trends and other information. {10}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENT #### 6. Subsequent Events There are no subsequent events which require disclosure in the notes to the financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.