# MTS SECURITIES, LLC X-17A-5 (2021-03-10) — Broker-dealer annual report - Company: MTS SECURITIES, LLC - Form: X-17A-5 - Filed: 2021-03-10 - Period: 2020-12-31 - Accession: 0001112446-21-000005 - CIK: 1112446 - File #: 8-52515 - Material weakness: No - Auditor: Marcum LLP - Auditor location: new york, NY - Contact: JOHN PALMA - Phone: 6469756560 - Signed by: Dennis Conroy (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1112446/000111244621000005/MTSSecuritiesPUBLIC.pdf --- {0}------------------------------------------------ UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 #### OMB Number: 3235-0123 Expires: Estimated average burden hours per response OMB APPROVAL # ANNUAL AUDITED REPORT FORM X-17A-5 PART III | 011 15500 135. I 2.00 | |-----------------------| | | | SEC FILE NUMBER | | 8-52515 | FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING 01/01/2020 | | | AND ENDING 12/31/2020 | | | |------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------|-----------------------|--------------------------------|--| | | | MM/DD/Y Y | | MM/DD/Y Y | | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: MTS Securities, LLC | | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | FIRM I.D. NO. | | | 623 Fifth Avenue | 14th Floor | | | | | | | | (No. and Street) | | | | | New York | | NY | | 10022 | | | (City) | | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Dennis Conroy | | | | 212-887-2171 | | | | | | | (Area Code - Telephone Number) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | Marcum LLP | | | | | | | | | (Name - if individual, state last, first, middle name) | | | | | 750 Third Avenue | 11th Floor | New York | NY | 10017 | | | (Address) | | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | | Certified Public Accountant | | | | | | | Public Accountant | | | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | | | | \*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(c)(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 valid OMB control number. SEC 1410 (11-05) {1}------------------------------------------------ #### OATH OR AFFIRMATION | Dennis Conroy | sweat ( | |----------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | ny knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
MTS Securities, LLC | | | of December 31 | 20 20 ________________________________________________________________________________________________________________________________________________________________________ | | | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | classified solely as that of a customer, except as follows: | | | | | | | | | | | | | Signature | | | CFO | | | Title | | | CHRISTINA A LEONARD | | Notary Public | NOTARY PUBLIC-STATE OF NEW YORK
No. 01LE6377898 | | This report ** contains (check all applicable boxes): | Qualified in Westchester County | | (a) Facing Page. | My Commission Expires 07-16-2022 | | (b) Statement of Financial Condition. | | | of Comprehensive Income (as defined in §210.1-02 of Regulation S-X). | (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | (d) Statement of Changes in Financial Condition. | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | (g) Computation of Net Capital. | | | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | (j) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | | (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of | | consolidation. | | | (1) An Oath or Affirmation. | | | (m) A copy of the SIPC Supplemental Report. | (n) A report describing any material inadequacies found to have existed since the date of the previous audit. | | | | \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e){3). {2}------------------------------------------------ # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020 {3}------------------------------------------------ ### CONTENTS | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|--| | Financial Statement | | | Statement of Financial Condition | | | Notes to Financial Statement | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of MTS Securities, LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of MTS Securities, LLC (the "Company") as of December 31, 2020 and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of the Company as of December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** Thisfinancial statement isthe 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) (the "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 audit 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 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. Marcum LLP We have served as the Company's auditor since 2009. New York, NY March 8, 2021 ![](_page_4_Picture_13.jpeg) {5}------------------------------------------------ ### STATEMENT OF FINANCIAL CONDITION # DECEMBER 31, 2020 | Assets | | | |---------------------------------------|-----------------|-----------------| | Cash and cash equivalents | S
12,007,048 | | | Marketable securities | 3,207,327 | | | Non-marketable securities | 1,827,059 | | | Accounts receivable, net | 1,762,500 | | | Prepaid expenses | 123,746 | | | Total Assets | | 18,927,680
6 | | Liabilities and Member's Equity | | | | Liabilities | | | | Accrued expenses | S
33,581 | | | Payable to Parent | 3,370,192 | | | Total Liabilities | | S
3,403,773 | | Member's Equity | | 15,523,907 | | Total Liabilities and Member's Equity | | 18,927,680
6 | The accompanying notes are an integral part of this financial statement. {6}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT # DECEMBER 31, 2020 #### NOTE 1 - NATURE OF BUSINESS MTS Securities, LLC (the "Company") was organized on August 10, 2001 as a Delaware limited liability company for the purpose of providing financial consulting services, which includes financial valuation and modeling, the preparation of financial and marketing materials, financial structuring and strategic consulting. The Company is a wholly owned subsidiary of MTS Health Partners, L.P. (the "Parent") and all of the Company's services are provided in conjunction with, or on behalf of its Parent. The Company is a broker-dealer registered with the Securities and Exchange Commission (the "SEC") under the Securities and Exchange Act of 1934. The Company operates under a membership agreement with the Financial Industry Regulatory Authority ("FINRA") and is a member of the Securities Investor Protection Corp ("SIPC"). The term of the Company shall continue in perpetuity unless the Company is dissolved in accordance with the provisions of its articles of organization. ### NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES #### BASIS OF PRESENTATION The accompanying financial statement has been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### USE OF ESTIMATES The preparation of a financial statement in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statement. Actual results could differ from these estimates. #### SUBSEQUENT EVENTS The Company has evaluated events that occurred subsequent to December 31, 2020 through the date this financial statement was issued, for matters that required adjustment to or disclosure in this financial statement. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment to or disclosure in the financial statement. {7}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT # DECEMBER 31, 2020 ### NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED) ### CASH AND CASH EQUIVALENTS The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2020, the Company had cash equivalents totaling \$11,988,848. #### MARKETABLE AND NON-MARKETABLE SECURITIES The Company periodically receives shares of common stock of public companies as compensation for investment banking services. The common stock is restricted and is classified as non-marketable until it may be freely traded, which is conditioned upon the effectiveness of a registration statement covering the securities or upon the satisfaction of the requirements of Rule 144 under the Securities Act of 1933, including the requisite holding period. ### ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company extends unsecured credit in the normal course of business to its clients. The allowance for doubtful accounts reflects management's best estimates of probable losses inherent in the accounts receivable balance. Management determines the allowance based on known troubled accounts, historical experience and other currently available evidence. At December 31, 2020, an allowance for doubtful accounts has been provided for, since in the opinion of management, one account is deemed uncollectible. ### FAIR VALUE Accounting Standards Codification "ASC") - Fair Value Measurement defines fair value, establishes a framework for measuring fair value and establishes a hierarchy of fair value inputs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by ASC 820, are used to measure fair value. {8}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT # DECEMBER 31, 2020 # NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED) # FAIR VALUE (CONTINUED) The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: - · Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. - · Level 2 Inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly or indirectly. - · Level 3 Unobservable inputs for the asset or liability. # INCOME TAXES The Company is a Delaware Limited Liability Company ("LL") and files consolidated federal, state and local tax returns with its Parent, which is a limited partnership ("LP"). The members of an LLC and partners in an LP are taxed on their proportionate share of a company's federal and state taxable income. Accordingly, no provision or liability for federal or state income taxes has been included in this financial statement. The Company's share of the consolidated group's New York City Unincorporated Business Tax is calculated as if the Company files on a separate return basis and tax payments are paid to the Parent for its proportionate share of taxes. The Company recognizes and measures its unrecognized tax benefits in accordance with ASC 740 - Income Taxes. Under that guidance, the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available, or when an event occurs that requires a change. The Company recognizes the accrual of any interest and penalties related to unrecognized tax benefits. As of December 31, 2020, no liability for unrecognized tax benefits was required to be recorded. The Parent files income tax returns in its local jurisdictions. Generally, taxing authorities may examine the Company's tax returns for three years from the date of filing. There were no tax examinations in progress as of December 31, 2020. {9}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT ### DECEMBER 31, 2020 ### NOTE 3 - FAIR VALUE Certain financial instruments are carried at cost on the balance sheet, which approximates fair value due to their short-term, highly liquid nature. These financial instruments include cash, accounts receivable, deposit, prepaid expenses and accounts payable and accrued expenses. The following table presents the Company's fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2020: | Financial Assets: | Level I | Level 2 | Level 3 | Total | |-------------------------|-------------|---------|------------|----------------| | | | | | | | Common stock | \$3,207,327 | S | ಳ | -- \$3.207.327 | | Restricted common stock | 1,319,827 | | 507,232 | 1,827,059 | | Total | \$4.517.154 | | \$ 507.232 | \$5.034.386 | There were no transfers between Level 1 and Level 2 during the year. The fair values of publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified as Level 1 in the fair value hierarchy. Estimated fair values for privately held equity securities are determined using discounted cash flow, earnings multiple and other valuation models that require a substantial level of judgment around inputs and therefore are classified within Level 3 of the fair value hierarchy. ### NOTE 4- CONCENTRATIONS AND CREDIT RISK The Company maintains checking and money market accounts in a financial institution. At times, cash may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit. The Company has not experienced any losses in the account. The Company performs certain credit evaluation procedures and generally does not require collateral. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its clients, and based upon factors surrounding the credit risk of its clients, establishes an allowance for uncollectible accounts and, therefore, believes that its accounts receivable credit risk exposure beyond such allowances is limited. At December 31, 2020, the Company had four customers that accounted for 100% of the Company's total accounts receivable. {10}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT ### DECEMBER 31, 2020 #### NOTE 5 - RELATED-PARTY TRANSACTIONS The Company maintains a services agreement with its Parent, under which the Parent provides various administrative and back office services in the ordinary course of business, as well as office space, office equipment and supplies, to the extent required, in exchange for receiving a services fee. As of December 31, 2020, the Company had a payable to Parent of \$3,370,192. The accompanying financial statement has been prepared from the separate records maintained by the Company and, due to certain transactions and agreements with affiliated entities may not necessarily be indicative of the financial condition that would have existed had the Company operated as an unaffiliated entity. #### NOTE 6-COMMITMENTS AND CONTINGENCES The Company's commitments and contingencies include the usual obligations of a registered broker-dealer in the normal course of business. In the opinion of management, such other matters are not expected to have material adverse effect on the Company's financial position or results of operations. Currently, the Company is not aware of any active commitments and contingencies as of December 31, 2020. #### NOTE 7 - NET CAPITAL REQUIREMENTS The Company is subject to the SEC Uniform Net Capital Rule (SEC 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, should not exceed 15 to 1. At December 31, 2020, the Company had net capital of \$11,192,518, which was \$10,965,600 in excess of its required net capital of \$226,918. The Company's percentage of aggregate indebtedness to net capital was 30.41%. #### NOTE 8-COVID-19 In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a global pandemic, which continues to spread throughout the United States. While the disruption is currently expected to be temporary, there is uncertainty around the duration. The ultimate impact of the pandemic on the Company's future consolidated financial statements cannot be reasonably estimated at this time. However, the Company does not expect this matter will have a material negative impact on its business, results of operations, and financial position. {11}------------------------------------------------ # NOTES TO FINANCIAL STATEMENT # DECEMBER 31, 2020 #### NOTE 9 - SUBSEQUENT EVENTS The Company has evaluated subsequent events through March 9, 2021, which is the date the financial statements were issued and determined that no additional recognition or disclosure is necessary. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.