# MONARCH CAPITAL GROUP, LLC X-17A-5 (2024-02-29) — Broker-dealer annual report - Company: MONARCH CAPITAL GROUP, LLC - Form: X-17A-5 - Filed: 2024-02-29 - Period: 2023-12-31 - Accession: 0001090020-24-000001 - CIK: 1090020 - File #: 8-51911 - Type: Broker-dealer - Material weakness: No - Auditor: Fulvio & Associates, LLP - Auditor location: New York, NY - Contact: Edward Cohen - Phone: 2035576070 - Email: mpotter@monarch-capital.com - Website: monarch-capital.com - Signed by: Michael Potter (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1090020/000109002024000001/public.pdf --- {0}------------------------------------------------ # MONARCH CAPITAL GROUP LLC A WHOLLY-OWNED SUBSIDIARY OF MONARCH HOLDINGS, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2023 **PUBLIC** {1}------------------------------------------------ # UNITED STATES SECURITIES AND EXCHANGE COMMISSION \_\_\_\_\_\_\_OMB APPROVAL 0M B Number: 3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response: 12 Washington, D.C 20549 | SECFILE NUMBER | | | |----------------|--|--| | | | | | | | | #### FACING PAGE # MM/DD/YY # NAME OF FIRM: Monarch Capital Group LLC | | UNITED STATES | _______OMB
APPROVAL | |----------------------------------------------|-----------------------------------------------------------------------------------------------|------------------------------------------------| | | SECURITIES
AND
EXCHANGE
COMMISSION | Expires: Nov. 30, 2026 | | | Washington, D.C 20549 | Estimated average burden | | | | hours
per response: 12 | | | REPORTS
ANNUAL | SECFILE NUMBER | | | FORM X-17A-5 | 8-51911 | | | PART III | | | | FACING PAGE | | | Information | Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | | 01/01/2023 | 12/31/2023 | | FILING FOR THE PERIOD BEGINNING | AND ENDING
MM/DD/YY | MM/DD/YY | | | | | | | A. REGISTRANT IDENTIFICATION | | | NAME | OF FIRM: Monarch Capital Group LLC | | | | | | | TYPE OF REGISTRANT (check
S Broker-dealer | all applicable boxes):
Security-based swap
dealer | Major security-based swap participant | | Checkhere if respondent is | also an OTCderivatives dealer | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | | 370 Lexington Avenue, Suite 308 ____________________ | | | | (No. and Street) | | | New York | ________________NY _____________10017 | | | (City) | (State) | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | Michael Potter | (212) 808-4380 | | | (Name) | (Area Code-Telephone
Number) | mpotter@monarch-capital.com
(Email Address) | | | | | | | B. ACCOUNTANT
IDENTIFICATION | | | INDEPENDENT PUBLIC ACCOUNTANT | whose reports are contained in this | filing* | | | Fulvio & Associates, LLP ___________________________ | | | | (Name
- if individual, state last, first, and middle name) | | | 5 West 37th Street, 4th Floor | New York______NY | 10018 | | | | | | (Address) | (City) | (State)
(Zip Code) | | 12/20/2018 | ______________________ | ___________
6529 | | (Date of Registration with PCAOB)(if | applicable) | (PCAOBRegistration Number, if applicable) | | | 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 basisof the exemption. See17 CFR 240.17a-5(e)(l)(ii), if applicable. Persons who are to respond to the correctionof Information contained In this form are not required to respond unlessthe form displays a currently valid OMB control number. {2}------------------------------------------------ #### OATH OR AFFIRMATION | | OATH OR
AFFIRMATION | |--------|----------------------------------------------------------------------------------------------------------------------------------------------------------| | | f swear (or affirm) that, to the best of my knowledge and belief, the
I, Michael Potter | | | financial report pertaining to the firm of Monarch Capital Group LLC
o f | | | / as
12/31
t 2
23
t js 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. | | | r
VITA IVANOVA | | | i
Signature:
Notary Public - State of New York
NO. 01IV64141 10 | | | )
Qualified in Kings County
I | | | Title:
My Commission Expires Feb 16, 2025
I
Chief Executive Officer | | | | | | Notary Public | | | | | | This filing**
contains (check
all
boxes):
applicable | | | (a) Statement of
financial condition. | | m | (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
or
17 CFR
as
applicable. | | □
□ | 240.15c3-l
240.18a-l,
(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. | | | (l) Computation for Determination of
PABRequirements 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 FOCUSReport
with computation of
net
capital or tangible net | | | worth under 17 CFR
17 CFR
or
240.18a-2, as applicable, and the
reserve requirements under
17 CFR
17
240.15c3-l,
240.18a-l, | | | 240.15c3-3 or
17 CFR
240.18a-4, as applicable, if
material differences exist, or
a statement
that no material differences
CFR | (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. □ - (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. UJ IH - (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. □ - (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 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-le or 17 CFR 240.17a-12, as applicable. □ - (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). O (z) Other: \_\_\_\_\_\_\_\_\_\_ \_\_ \_\_\_\_\_\_\_ □ exist. \*\*To request confidential treatment of certain portions of this filing, see 17 CFR240.17a-5(e)(3) or 17 CFR240.18a-7(d)(2), as applicable. {3}------------------------------------------------ New York, New York 10018 www.fulviollp. com TEL:212-490-3113 FAX:21 2-575-51 59 Connecticut Office: 95B Ro wayton Avenue Rowayton, CT 06853 TEL:203-857-4400 FAX:203-857-0280 #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the sole member of Monarch Capital Group, LLC #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Monarch Capital Group LLC (the "Company") as of December 31, 2023, 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, 2023, 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 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 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. We have served as the Company's auditor since 2023. New York, New York February 29, 2024 {4}------------------------------------------------ # DECEMBER 31, 2023 # CONTENTS | | PAGE | |---------------------------------------------------------|------| | Facing Page - Oath or
Affirmation | | | Report of Independent Registered Public Accounting Firm | 1 | | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3-13 | {5}------------------------------------------------ #### STATEMENT OF FINANCIAL CONDITION #### DECEMBER 31, 2023 #### ASSETS Cash and cash equivalents Receivable from clearing broker Commissions receivable Right of use asset - Operating lease Advisory fees receivable Other assets \$ 74,014 1,747,925 13,235 278,623 2,000 13,822 TOTAL ASSETS \$2,129,619 #### LIABILITIES AND MEMBER'S EQUITY | LIABILITIES | | |----------------------------------------|--------------| | Accrued expenses and other liabilities | 31,359
\$ | | Due to parent | 92,163 | | Operating lease liability | 309,408 | | TOTAL LIABILITIES | 432,930 | | MEMBER'S EQUITY | 1,696,689 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$2,129,619 | {6}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENT #### DECEMBER 31, 2023 #### 1. ORGANIZATION AND NATURE OF BUSINESS Monarch Capital Group, LLC (the "Company") was organized under the Limited Liability Company Law of the State of New York in March 1999. The Company is a registered broker-dealer with the U.S. Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA"). In this capacity, it executes agency transactions for its customers and forwards all such transactions to Pershing, LLC ("Pershing") the Company's clearing agent, on a fully disclosed basis. In addition, the Company provides advisory services and originates, places, and acts as an agent for private equity, public offerings and bond securities. The Company is a wholly-owned subsidiary of Monarch Holdings, LLC. ("Holdings"). In the normal course of its business, the Company enters into financial transactions where the risk of potential loss due to changes in market (market risk) or failure of the other party to the transaction to perform (counterparty risk) exceeds the amounts recorded for the transaction. The Company's policy is to continuously monitor its exposure to market and counterparty risk through the use of a variety of financial, position and credit exposure reporting and control procedures. In addition, the Company has a policy of reviewing the credit standing of each broker-dealer, clearing organization, customer and/or other counterparty with which it conducts business. The Company introduces its customer transactions to Pershing with whom it has a correspondent relationship for execution and clearance in accordance with the terms of a clearance agreement. In connection therewith, the Company has agreed to indemnify Pershing for losses that the clearing broker may sustain related to the Company's customers. As of December 31, 2023, amounts were owed to the clearing broker by these customers, which were in connection with normal, delivery-against-payment, cashaccount transactions. Securities purchased by customers in connection with those transactions are held by the clearing broker as collateral for the amounts owed. #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Basis of Presentation and use of estimates The Company maintains its books and records on an accrual basis in accordance with accounting principles generally accepted in the United States of America {7}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 # 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (U.S. GAAP) which requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates. #### Revenue recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606) ("ASU 2014-09"), as subsequently amended, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance also specifies the accounting for certain incremental costs of obtaining a contract, and costs to fulfill a contract with a customer. 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 time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. #### Commissions *Brokerage commissions:* The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on the trade date (the date the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). 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 and rewards of ownership have been transferred to/from the customer. {8}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 # 2. SIGNIFICANT ACCOUNTING POLICIES (continued) *Investment advisory fees:* The Company provides investment advisory services on a daily 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 are recognized as revenue at that time as they relate specifically to the services provided in that period, which are distinct from the services provided in other periods. #### Investment Banking *Underwriting fees:* The Company underwrites securities for business entities that want to raise funds through a sale of securities. Revenues are earned from fees arising from securities offerings in which the Company acts as an underwriter. Revenue is recognized on the trade date (the date on which the Company purchases the securities from the issuer) for the portion the Company is contracted to buy. The Company believes that the trade date is the appropriate point in time to recognize revenue for securities underwriting transactions as there are no significant actions which the Company needs to take subsequent to this date and the issuer obtains the control and benefit of the capital markets offering at that point. Underwriting costs that are deferred under the guidance in ASC 940-340-25-3 are recognized in expense at the time the related revenues are recorded. In the event that transactions are not completed and the securities are not issued, the Company immediately expenses those costs. *M&A advisory fees:* The Company provides advisory services on mergers and acquisitions (M&A). Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgment is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities. {9}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 ### 2. SIGNIFICANT ACCOUNTING POLICIES (continued) Security transactions and financing with the clearing broker are classified as operating activities on the statement of cash flows since this is the Company's principal business. Fair Value Measurement - Definition and Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Partnership uses various valuation approaches. A fair value hierarchy for inputs is 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 are to be used when available. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Partnership has the ability to access. Level 2 - Valuations based on inputs, other than quoted prices included in Level 1 that are observable either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Fair value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a market participant that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Partnership's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. {10}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 # 2. SIGNIFICANT ACCOUNTING POLICIES (continued) The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a wide variety of factors, including the type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Partnership in determining fair value is greatest for investments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement. Fair Value - Valuation Techniques and Inputs Investments in securities and securities sold short that are freely tradable and are listed on major securities exchanges are valued at their last reported sales price as of the valuation date. Many over-the-counter ("OTC") contracts have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that the marketplace participants are willing to pay for an asset. Ask prices represent the lowest price that the marketplace participants are willing to accept for an asset. For securities whose inputs are based on bid-ask prices, the Partnership's valuation policies do not require that fair value always be a predetermined point in the bid-ask range. The Partnership's policy for securities traded in the OTC markets and listed securities for which no sale was reported on that date are generally valued at their last reported "bid" price. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. Securities traded on {11}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 ### 2. SIGNIFICANT ACCOUNTING POLICIES (continued) inactive markets or valued by reference to similar instruments are generally categorized in Level 2 of the fair value hierarchy. #### Credit Losses The Company adopted ASC Topic 326 - "Financial Instruments - Credit Losses" ("ASC Topic 326") which replaces the incurred loss methodology with the current expected credit loss ("CECL") methodology. The new guidance applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets. Expected Credit losses on off-balance sheet credit exposures must be estimated over the contractual period the Company is exposed to credit risk as a result of a present obligation to extend credit. The Company adopted ASC topic 326 using the modified retrospective approach for all in-scope assets. The impact of the adoption of the current expected credit loss ("CECL") methodology to the current period was not material. *Receivables from clearing broker:* The Company's receivables from clearing broker include amounts receivable from unsettled trades, including amounts receivable for securities failed to deliver, accrued interest receivables and cash deposits. A portion of the Company's trades are cleared through a clearing organization and settled daily between the clearing organization and the Company. Because of this daily settlement, the amount of unsettled credit exposures is limited to the amount owed the Company for a very short period of time. The Company continually reviews the credit quality of its counterparties. #### Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity date of three months or less when purchased to be cash equivalents. {12}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 # 2. SIGNIFICANT ACCOUNTING POLICIES (continued) #### Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. The FASB also subsequently issued the following additional ASUs, which amend and clarify Topic 842: ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-1 1 , Leases (Topic 842): Targeted Improvements; ASU 2018-20, Narrow-scope Improvements for Lessors; and ASU 2019-01, Leases (Topic 842): Codification Improvements. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated/combined income statements. The Company elected to adopt these ASUs effective January 1 , 2022, and the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification, and initial direct costs. The adoption had a material impact on the Company's balance sheet but did not have a material impact on the income statement. While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to (1) the recognition of new right-of-use assets (ROU) and lease liabilities on our balance sheet for our [office and equipment] operating leases; (2) the derecognition of existing assets and liabilities for certain sale-leaseback transactions (including those arising from buildto-suit lease arrangements for which construction is complete and we are leasing the constructed asset) that currently do not qualify for sale accounting; (3) the derecognition of existing assets and liabilities for certain assets under construction in build-to-suit lease arrangements that we will lease when construction is complete; and (4) providing significant new disclosures about our leasing activities. The Company lease is for office space. The determination of whether an arrangement is a lease is made at the lease's inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. {13}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 ### 2. SIGNIFICANT ACCOUNTING POLICIES (continued) Operating leases are included in operating lease ROU assets and operating lease liabilities in the balance sheet. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments. ROU assets and liabilities are recognized at the lease commencement date, based on the present value of lease payments over the lease term. The Company uses the implicit rate when it is readily determinable. Since most of the Company's leases do not provide an implicit rate, to determine the present value of lease payments, management has elected to use a riskfree discount rate, determined using a period comparable with that of the lease term. ROU assets also include any lease payments made and exclude any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. ### 3. PROVISION FOR INCOME TAXES The Company is recognized as a single member Limited Liability Company (an "LLC") by the Internal Revenue Service. As such, it is treated as a disregarded entity and is not subject to income taxes. The Company's income or loss is reportable by its Parent on its tax return. However, the Company is subject to New York City Unincorporated Business Tax, and a \$8,400 provision is included in the statement of operations. FASB provides guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the financial statement. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained "when challenged" or "when examined" by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense and liability in the current year. The tax years that remain subject to examination are 2020, 2021, 2022 and 2023. For the year ended December 31, 2023 management has determined that there are no material uncertain income tax positions. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in portfolio maintenance fees, if assessed. No interest expense or penalties have been assessed for the period ended December 31, 2023. {14}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENT (continued) #### DECEMBER 31, 2023 #### 4. RELATED PARTY TRANSACTION The Company has an agreement with the Parent in which certain overhead expenses incurred by the Parent are allocated to the Company for its allowable share. In addition, 100% reimbursement is made to the Parent for expenses directly related to the Company. The Company owes \$92,1 63 to the Parent for the year ended December 31, 2023. #### 5. CONCENTRATION OF CREDIT RISK The Company maintains cash and cash equivalents with regulated financial institutions. Funds deposited with a single bank are insured up to \$250,000 in the aggregate by the Federal Deposit Insurance Corporation ("FDIC"). Deposits with a single brokerage institution are insured up to \$500,000 per customer, including up to \$250,000 for cash deposits, by the Securities Investor Protection Corp. ("SIPC"). #### 6. RECEIVABLE FROM CLEARING BROKER In the normal course of business, substantially all of the Partnership's securities transactions, money balances, and security positions are transacted with the Partnership's broker. The Partnership is subject to credit risk to the extent a broker with which it conducts business is unable to fulfill contractual obligations on its behalf. The Partnership's management monitors the financial condition of those brokers and does not anticipate losses from these counterparties. As of December 31, 2023 receivable from clearing broker included \$1,708,401 being held in money market funds. #### 7. SECURITIES OWNED, AT MARKET VALUE AND PLACEMENT FEES In its normal course of business, the Company receives restricted securities and warrants as fees for advisory services from various clients. The Company expects to continue to receive restricted securities and/or warrants, representing the right to purchase equity, in companies for which advisory services are provided as recurring fee based revenue. At December 31, 2023, management determines the market value of the restricted securities and warrants, based upon historical costs for non-publicly traded companies and exercise value where stock market quotations exist for publicly traded companies. Throughout the year ended December 31, 2023, the Company had not received or held any restricted securities. {15}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 ### 8. COMMITMENTS AND CONTINGENT LIABILITIES The Company had no underwriting commitments, or contingent liabilities at December 31, 2023. #### LEASING ARRANGEMENTS The Company leases certain office space with remaining lease term of 37 months. The lease is an operating lease. The Company has not committed to any leases which have not yet commenced. As of December 31, 2023, the ROU asset had a balance of \$278,623, as shown in assets on the balance sheet; the lease liability is included in liabilities \$309,408. The lease asset and liability were calculated utilizing the risk-free discount rate of 0.78%, according to the Company's elected policy. Additional information about the Company's leases for the year ended December 31, 2023 is as follows: | Operating:
Operating leases, included in operating expenses | \$ | 91,664 | |--------------------------------------------------------------------------------------------------------------------------------------------|----|---------| | Total lease expense | \$ | 91,664 | | Other information:
Cash paid for amounts included in measurement
of lease liabilities:
Operating cash flows from operating leases | \$ | 91,664 | | Leased asset obtained in exchange for lease liability:
Operating leases | \$ | 278,623 | | Lease term (in years) and discount rate: | | | | Weighted average remaining lease term - Operating leases
37 Months | | | {16}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT (continued) # DECEMBER 31, 2023 #### 8. COMMITMENTS AND CONTINGENT LIABILITIES (Continued) Weighted average discount rate - Operating leases 0.78% Maturities of lease liabilities: | Year Ending December 31: | Operating | |---------------------------------------|---------------| | 2024 | 99,037
\$ | | 2025 | 101,513 | | 2026 | 104,050 | | 2027 thereafter | 8,814 | | Total lease payments | 313,414 | | Less: Interest | (4,006) | | Present
value of lease liabilities | 309,408
\$ | #### 9. LIABILITIES SUBORDINATED TO THE CLAIMS OF GENERAL CREDITORS As of December 31, 2023, the Company had not entered into any subordinated loans agreements. #### 10. NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission's Net Capital 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, 2023, the Company had net capital of \$1,646,699 which exceeded the minimum requirement of \$250,000 by \$1,396,699. The Company's ratio of aggregate indebtedness to net capital ratio was 0.094 to 1. #### 11. RULE15C3-3 The Company is exempt from the provisions of Rule 15c3-3. #### 12. SUBSEQUENT EVENTS Events have been evaluated through the date that this financial statement was issued, and no events have been identified which require disclosure or adjustment to the financial statement. The financial statement is available to be issued as of February 29, 2024. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.