# ANDERSON LENEAVE & CO. X-17A-5 (2020-02-24) — Broker-dealer annual report - Company: ANDERSON LENEAVE & CO. - Form: X-17A-5 - Filed: 2020-02-24 - Period: 2019-12-31 - Accession: 0001114839-20-000002 - CIK: 1114839 - File #: 8-52584 - Material weakness: No - Auditor: Cherry Bekaert LLC - Auditor location: Richmond, VA - Contact: Greg LeNeave - Phone: 704-552-9212 - Signed by: Gregory M LeNeave (President) Original filing: https://www.sec.gov/Archives/edgar/data/1114839/000111483920000002/Public1.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response ...... 12.00 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** | SEC FILE NUMBER | |-----------------| | 8- | **FACING PAGE Ip.formation Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-S Thereunder** | AND ENDING 12/31/2019
A. REGISTRANT IDENTIFICATION | MM/DDIYY | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | | | | NAME OF BROKER-DEALER: Anderson LeNeave & Co.
OFFICIAL USE ONLY
FIRM 1.D. NO.
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
5805 Morrison Blvd., Suite 210 | | | | | | | 28211 | | | (Zip Code) | | | 704-552-9212 | | | (Area Code -Telephone Number) | | | | | | 28204 | | (State) | (Zip Code) | | | | | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report*
(Name - if individual, stale last, first, middle name)
NC
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(e)(2)* > **Potential persons who are to respond to the collection of information contained In this form are rmt required to respond unless the form displays a currently valid 0MB control number.** SEC 1410 (11-05) {1}------------------------------------------------ ## **OATH OR AFFIRMATION** **1,** Gregory M. LeNeave , swear ( or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Anderson LeNeave & Co. -------------------------------------------, as of December 31 are true and correct. I further swear (or affirm) that neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account classified solely as that of a customer, except as follows: Notary Public This report\*\* contains (check all applicable boxes): **l&J** (a) Facing Page. **!Kl** (b) Statement of Financial Condition. **Deborah L Moore NOTARY PUBLIC Mecklenburg County, NC My Commission Expires January 30, 2024** D (c) Statement oflncome (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). 8 ( d) Statement of Changes in Financial Condition. (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. **D** (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. D (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule l 5c3-l a\ld the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. **0** (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. ~ (1) An Oath or Affirmation. **D D** (m) A copy of the SIPC Supplemental Report. (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. *\*\*For conditions of confidential treatment of certain portions of this filing, see section 240.17 a-5 (e)(3).* {2}------------------------------------------------ Financial Statements and Accompanying Information As of and for the Years Ended December 31, 2019 and 2018 {3}------------------------------------------------ ## Contents | Report of Independent Registered Public Accounting Firm . | | |------------------------------------------------------------|-----| | Statements of Financial Condition | 2 | | Notes to Financial Statements | 3-7 | # Page {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ## **Report of Independent Registered Public Accounting Firm** To the Stockholders Andersqn LeNeave & Co. Charlotte, North Carolina #### **Opinion on the Financial Statements** We have audited ttie accompanying statements of financial condition of Anderson LeNeave & Co. (the "Company") as of December 31, 2019 and 2018 that is filed pursuant to Rule 17a-5 under the Securitie~ Exchange Act of 1934. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, in conformity with generally accepted accounting principles in the United States. #### **Basis for Opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. 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 Exchang~ Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether d4e to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financicJI statements, 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 audits 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 audits provide a reasonable basis for our opinion. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Raleigh, North Carolina February 20, 2020 We have served as the Company's auditor since 2010. {5}------------------------------------------------ #### Statements of Financial Condition | Assets | |--------| | | | | December 31,
2019 | December 31,
2018 | |---------------------------------------------------------|----------------------|----------------------| | Cash and cash equivalents | 183,933
\$ | \$
184,276 | | Accounts receivable | 10,124 | | | Prepaid expenses and other assets | 16,865 | 6,681 | | Right-of-use asset | 376,082 | | | Total assets | 587,004
\$ | \$
190,957 | | Liabilities | | | | Lease Liability | \$
376,082 | \$ | | Total liab~lities | \$
376,082 | \$ | | Stockholders' Equity | | | | Common stock, no par value, I 00,000 shares authorized, | | | | 10,000 shares issued and outstanding | 81,066 | 81,066 | | Retained earnings | 129,856 | 109,891 | | Total stockholders' equity | 210,922 | 190,957 | | Total liabilities and stockholders' equity | \$
587,004 | \$
190,957 | The accompanying notes are an integral part of these statements. {6}------------------------------------------------ Notes to Financial Statements December 31, 2019 and 2018 # **Note 1** - **Nature of operations** Anderson LeNeave & Co. (the "Company"), a North Carolina corporation, is a full-service investment banking firm providing corporate finance services, including merger and acquisition advisory services and private financing placement and advisory services to middle market companies. The Company has elected to be registered as a broker-dealer, is a member of the Financial Industry Regulatory Authority (FINRA) and thus is subject to various rules and regulations promulgated by the Securities and Exchange Commission (SEC). Accordingly, the accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America as applicable to brokers and dealers in securities. # **Note 2** - **Summary of significant accounting policies** ## **Cash and Cash Equivalents** For purposes of the statement of cash flows, the Company considers all highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. ## **Accounts receivable** Trade accounts receivable are stated net of an a!lowance for doubtful accounts. Credit is extended to customers after an evaluation of the custom~r's financial condition, and generally collateral is not required. Management's determination of the allowance for doubtful accounts is based on an evaluation of the accounts receivable, past experience, current economic conditions, and other risks inherent in the accounts receivable portfolio. Trade accounts receivable are written-off when, in the opinion of management, such receivables are deemed to be uncollectible. No bad debt expense was incurred in 2018 and 2017. While management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the assumptions used in making the evaluations. The Company's outstanding accounts receivable balance as of December 31, 2019 and 2018 was \$10,124 and zero, respectively. #### **Use of estimates in the preparation of financial statements** 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. {7}------------------------------------------------ Notes to Financial Statements December 31, 2019 and 2018 ## **Note 2** - **Summary of signifi~ant accounting policies (continued)** # **Fee Revenue** The Company provides advisory services on mergers and acquisitions (M&A) and private financing placementrelated advisory services. 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. At December 31, 2019, all amounts were immaterial. Other revenues relate primarily to billable transaction costs. Billable transaction costs include travel, other out-ofpocket expenses, reproduction and other transaction costs incurred by the Company that are billed to customers under the terms of agreements in place with those customers. These costs are expensed as incurred and billed in accordance with the agreed-upon terms. Effective January 1, 2018, the Company adopted Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers. The new revenue recognition guidance requires that an entity recognize 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 or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) idelltify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The Company evaluated the new revenue recognition accounting standard and determined that the accounting standard did not require a change in the Company's revenue recognition practices. # **Advertising** Advertising costs are expensed as incurred. ## **Income taxes** The Company has elected to be treated as an S Corporation for state and federal income tax purposes. As such, substantially all income of the Company is reported by the stockholder on his individual income tax returns. Accordingly, no provision for income taxes has been included in the accompanying financial statements. Management has evaluated the tax positions of the Company and it is the opinion of management that there are no uncertain tax positions that would be material to these financial statements. The Company did not incur any federal income tax expense in 2019 or 2018. {8}------------------------------------------------ Notes to Financial Statements December 31 , 2019 and 20 I 8 # **Note 2** - **Summary of significant accounting policies (continued)** # **Lease Accounting** We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for office space and are included within operating lease right-of-use ("ROU") assets and lease liabilities on the consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recog11ized at the commencement date based on the present value of lease pay.ments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our lease do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets also include any lease payments made and exclude lease incentives, if any. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Recently adopted accounting pronouncements In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 20 I 8-J 1, Targeted Improvements. The new standard establishes a right-of-use model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition on the income statement. The new standard is effective for the Company on January I, 2019, which is also the day we elected to adopt the new standard. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. We chose the effective date c\S our date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients permitted under the· transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification of those leases in place as of January I, 2019. As of January I, 2019, the Company had one office lease and recorded a right of use asset and a related lease liability i11 the amount of \$63,974. The lease expired in October 2019. As such, there was no remaining balance sheet impact of this lease as of December 31, 2019. ## **Note 3** - **Property and equipment** Property and equipment at December 31, consists of the following: | | 2019 | 2018 | |-------------------------------------|-----------|-----------| | Computer equipment | \$ 19,219 | \$ 19,219 | | Office furniture and equipment | 25,000 | 25,000 | | Computer software | 3,711 | 3,711 | | Total property and equipment, gross | 47,930 | 47,930 | | Less: Accumulated depreciation | (47,930) | (47,930) | | Total prope1iy and equipment, net | \$ | \$ | | | | | {9}------------------------------------------------ # **Note 4** - **Capital requirements** The Company is subject to the Securities and Exchange Commission's Uniform Net Capital Rule 15c3-l, which requires the maintenance of minimum net capital of \$5,000 and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed I 5 to 1. Rule I 5c3-I further requires that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed IO to I. The net capital and net capital ratio, which agree with our Focus Report as of December 31, were as follows: | | 2019 | 2018 | |-----------------------------------------------------|---------------|---------------| | Net capital | \$194,057 | \$184,276 | | Net capital ratio (ratio of indebtedness to capital | Less than I % | Less than I % | ## **Note 5** - **Part** I, **Form X-17a-5:** The most recent annual report of the Company is available for examination and copying at the office of the Company and at the Atlanta Regional Office of the Securities and Exchange Commission. #### **Note 6** - **Profit sharing plan** Employees of the Company who are at least 21 years old and have completed one year of service are eligible to participate in the Anderson LeNeave & Co. Profit Sharing Plan (the "Plan"). The Plan allows the Company to make discretionary contributions on behalf of eligible employees of up to 20% of each employee's compensation, subject to statutory limitations. The Company made discretionary contributions of \$143,100 and zero to the Plan for the years ended December 31, 2019 and 2018, respectively. Participants vest in their portion of employer contributions over a three-year period. #### **Note 7** - **Operating Lease** As described in Note 2, the Company adopted ASC 842 as of )anuary 1, 201•9. The impact of the adoption for a preexisting lease as of the implementation date is outlined in Note 2. On November 1, 2019, the Company entered into a 65 month non-cancelable operating lease which expires on March 31, 2025. Rent expense consists of both operating lease expense from amortization of our ROU assets as well as variable lease expense which consists of non-lease components of office leases (i.e. common area maintenance). Total rent expense for the year ended December 31, 2019 was \$77,094 and related to an operating lease that expired during 20 I 9 and the new lease entered into during November 2019. The weighted average interest rate used to determine the lease liability was 6.0% and the remaining term of the lease at December 31, 2019 was 63 months. As of December 31, 2019, the CUITent portion of the lease I iability was approximately \$61,000. {10}------------------------------------------------ Notes to Financial Statements December 31, 2019 and 2018 Future minimum lease payments at December 3 I, 2019 are as follows: | Year | Amount | | |-------|-----------|--| | 2020 | \$60,815 | | | 2021 | 83,377 | | | 2022 | 85,879 | | | :2023 | 88,455 | | | 2024 | 91,108 | | | 2025 | 23,344 | | | Total | \$432,278 | | #### **Note 8** - **Concentration of credit risk** The Company places its cash and cash equivalents on deposit with a North Carolina financial institution. The balance at the financial institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to \$250,000. From time-to-time, the Company may have balances in excess of the FDIC insured limit. ## **Note 9** - **Subsequent Event** The Company has evaluated subsequent events through February 11, 2020, in connection with the preparation of these financial statements which is the date the financial statements were available to be issued. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.