# BERCHWOOD PARTNERS LLC X-17A-5 (2021-02-26) — Broker-dealer annual report
- Company: BERCHWOOD PARTNERS LLC
- Form: X-17A-5
- Filed: 2021-02-26
- Period: 2020-12-31
- Accession: 0001132576-21-000003
- CIK: 1132576
- File #: 8-53091
- Material weakness: No
- Auditor: MAZARS USA LLP
- Auditor location: NEW YORK, NY
- Contact: William J. Zwart
- Phone: 2122013929
- Website: mazars.us
- Signed by: DAVID W. BERCHENBRITER (Managing Partner)
Original filing: https://www.sec.gov/Archives/edgar/data/1132576/000113257621000003/2020BerchWoodFSShortPublic.pdf
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#### COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 2020
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# REPORT INDEX
#### DECEMBER 31, 2020
#### PAGE
| FACING PAGE TO FORM X-17A-5 | 1 |
|---------------------------------------------------------|---|
| AFFIRMATION | 2 |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 3 |
| COMBINING FINANCIAL STATEMENTS: | |
| Combining Statement of Financial Condition | 4 |
| Notes to the Combining Financial Statements | 5 |
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UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549
| ANNUAL AUDITED REPORT | | |
|-----------------------|--------------|--|
| | FORM X-17A-5 | |
| | PART III | |
| OMB Number: | 3235-0123 | |
|--------------------------|---------------------------|--|
| | Expires: October 31, 2023 | |
| Estimated average burden | | |
| | hours per response | |
OMB APPROVAL
| SEC FILE NUMBER |
|-----------------|
| 8-53091 |
FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunde
| REPORT FOR THE PERIOD BEGINNING 01/01/2020 | | AND ENDING 12/31/2020 | |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|-----------------------|--------------------------------|
| | MM/DD/YY | | MM/DD/Y Y |
| | A. REGISTRANT IDENTIFICATION | | |
| NAME OF BROKER-DEALER: BERCHWOOD PARTNERS LLC | | | OFFICIAL USE ONLY |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
424 MADISON AVENUE, 3RD FLOOR | | | FIRM I.D. NO. |
| | (No. and Street) | | |
| NEW YORK | NEW YORK | | 10017 |
| (City) | (State) | | (Zip Code) |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
WILLIAM J. ZWART (212) 201-3929 | | | |
| | | | |
| | B. ACCOUNTANT IDENTIFICATION | | (Area Code - Telephone Number) |
| | | | |
| | | | |
| | (Name - if individual, state last, first, middle name) | | |
| 135 W 50TH STREET | NEW YORK | NEW YORK | 10020 |
| (Address) | (City) | (State) | (Zip Code) |
| | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
MAZARS USA LLP
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 report of the exemption. See Section 240c accoimian . See Section 240 1745 (e) (2)
SEC 1410 (11-05)
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 O
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#### OATH OR AFFIRMATION
#### T. DAVID W. BERCHENBRITER . . . . . . . . . . . . . . . . . . . . . . . . . . swear (or affirm) that, to the best of
my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of BERCHWOOD PARTNERS LLC , as
20 20 20 20 are true and correct. I further swear (or affirm) that of DECEMBER 31
# 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 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|-------------------------------------------------------------------------------|
| | MANAGING PARTNER | |
| | | Title |
| Notary Public | | RONALD E REATHERFORD
Notary Public - State of New York
NO. 01 RE6207490 |
| This report ** contains (check all applicable boxes):
(a) Facing Page. | | Qualified in Suffolk County
My Commission Expires Jun 15, 2021 |
| (b) Statement of Financial Condition.
(c) Statement of Income (Loss) or, if there is other comprehensive in the period(s) presented, a Statement
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(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.
(i) A Reconciliation, including appropriate explanation of the Computation 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 exist or found to have existed since the date of the previous audit. | | |
| | A The State To Callery Control Concession | |
\*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).
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# mazaris
Tel: 212,812,7000 www.mazars.us
# Report of Independent Registered Public Accounting Firm
#### To the Members of BerchWood Partners LLC and BerchWood Partners LLP
#### Opinion on the Financial Statement
We have audited the accompanying statement of financial condition of Berch Wood Partners LLC and Berch Wood Partners LLP (the "Company" and the "Affiliate", respectively), as of December 31, 2020, and the related notes (collectively referred to as the "financial statement"). In our opinion, the combining statement of financial condition presents fairly, in all material respects, the financial position of the Affiliate as of December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
#### Basis for Opinion
This financial statement is the responsibility of the Affiliate's management. Our responsibility is to express an opinion on the Company and the Affiliate's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board ("CAOB") and are required to be independent with respect to the Company and the Affiliate in accordance with 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 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 everall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion.
Mazars USA LL
We have served as the Company and the Affiliate's auditor since 2017.
New York, NY February 25, 2021
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# "ADJ[5]" "RJE[6]" BERCHWOOD PARTNERS LLC AND AFFILIATE
#### COMBINING STATEMENT OF FINANCIAL CONDITION
#### DECEMBER 31, 2020
#### ASSETS
| | | | | BerchWood | | BerchWood | |
|-----------------------------------------|-----------------------|---------------------------------|-----------------|-----------|--------------|-----------|---------|
| | Total
Eliminations | | Partners LLC | | Partners LLP | | |
| Cash and cash equivalents | \$ | 326,647 | \$
- | \$ | 228,814 | \$ | 97,833 |
| Fees receivable | | 361,892 | - | | 35,100 | | 326,792 |
| Other assets | | 65,718 | - | | 39,433 | | 26,285 |
| Property and equipment, | | | | | | | |
| net of accumulated depreciation | | 10,220 | - | | 10,220 | | - |
| Restricted cash | | 49,955 | - | | 49,955 | | - |
| Investment in affiliate | | - | (85,982) | | 85,982 | | - |
| Due from affiliate | | - | (233,383) | | 233,383 | | - |
| TOTAL ASSETS | \$ | 814,432 | \$
(319,365) | \$ | 682,887 | \$ | 450,910 |
| | | LIABILITIES AND MEMBERS' EQUITY | | | | | |
| LIABILITIES: | | | | | | | |
| Accrued expenses | \$ | 152,386 | \$
- | \$ | 97,638 | \$ | 54,748 |
| Deferred revenue | | 20,000 | | | 20,000 | | - |
| Paycheck protection program loan | | 173,100 | - | | 173,100 | | - |
| Retirement plan payable | | 23,424 | - | | 23,424 | | - |
| Due to affiliate | | - | (233,383) | | - | | 233,383 |
| Total Liabilities | | 368,910 | (233,383) | | 314,162 | | 288,131 |
| COMMITMENTS AND | | | | | | | |
| CONTINGENCIES | | | | | | | |
| MEMBERS' EQUITY: | | | | | | | |
| Members' equity | | 407,542 | (85,982) | | 368,725 | | 124,799 |
| Accumulated other comprehensive income: | | | | | | | |
| Foreign currency translation income | | 37,980 | - | | - | | 37,980 |
| Total Members' Equity | | 445,522 | (85,982) | | 368,725 | | 162,779 |
| TOTAL LIABILITIES | | | | | | | |
| AND MEMBERS' EQUITY | \$ | 814,432 | \$
(319,365) | \$ | 682,887 | \$ | 450,910 |
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#### NOTES TO THE COMBINING FINANCIAL STATEMENTS
#### DECEMBER 31, 2020
#### NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
#### Organization and Principles of Combination
BerchWood Partners LLC (the 2000, as a limited liability company. The Company wholly owns BerchWood h is a partner in BerchWood Partners located in the United Kingdom financial statements include the accounts of the Company and the Affiliate as the Company and the Affiliate are entities under common control and management. All transactions and accounts between and among the Company and the Affiliate have been eliminated. BerchWood Ltd. had no operations during the year.
In December 2018, the Affiliate amended and restated its limited liability partnership agreement. The partners of the Affiliate are BerchWood Ltd. and a 50% member of the Company, each with a 50% voting interest. However, 100% of the net income (loss) of the Affiliate is allocated to the Company.
#### Principal Business Activity
The Company is a registered broker-dealer with the Securities and Exchange private equity and alternative U.S. and non-U.S. investment fund managers.
The Affiliate is registered with the UK Financial Conduc Affiliate is engaged in raising capital for private equity and alternative investment fund managers in the UK and Continental Europe.
#### Basis of Presentation
The accompanying combining financial statements are presented in conformity with accounting principles generally accepted in
Although the Company has experienced recent losses, due to successful cost cutting efforts at the end of 2020, which will be in effect for the entire fiscal year 2021, management believes that its current projected cash inflows from operations for the coming year are more than sufficient to fund any expenses it expects to incur during the same period of time.
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# NOTES TO THE COMBINING FINANCIAL STATEMENTS
# DECEMBER 31, 2020
# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
#### Use of Estimates
The preparation of the combining financial statements in conformity with U.S. GAAP 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 combining financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
# Credit Losses
Effective January 1, 2020, the Company adopted ASC Topic 326, Financial ). ASC 326 impacts the impairment model for certain financial assets by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset. Under the accounting update, the Company has the ability to determine that there are no expected credit losses in certain circumstances (e.g., based on the credit quality of the customer).
The Company identified fees receivables and other receivables as impacted by the new guidance. ASC 326 specifies that the Company adopt the new guidance prospectively by means of a cumulative-effe equity as of January 1, 2020. Accordingly, the Company recognized no adjustment upon adoption.
# Cash, Cash Equivalents and Restricted Cash
The Company and the Affiliate consider all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Restricted cash represents funds held as collateral for letter of credit in lieu of security deposit for an office lease. The Company has no ability to draw on the restricted funds.
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# NOTES TO THE COMBINING FINANCIAL STATEMENTS
# DECEMBER 31, 2020
# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
#### Fees Receivable and Allowance for Doubtful Accounts
customers, and presented on the Combining Statement of Financial Condition net of the allowance for doubtful accounts, if required. The allowance is determined by a variety of factors, including the age of the receivables, current economic conditions, historical losses and other information management obtains regarding the financial condition of customers. The policy for determining the past due status of receivables is based on how recently payments have been received. Receivables are charged off when they are deemed uncollectible, which may arise when customers file for bankruptcy or are otherwise deemed unable to repay the amounts owed to the Company and the Affiliate. There was no allowance for doubtful accounts as of December 31, 2020.
The Company may provide services covering a period of time which includes the current and subsequent years for which the billing occurs in the subsequent period. The Company recognizes the earned but unbilled revenue in the period it is earned and as part of its fees receivable.
# Property and Equipment
Property and equipment are stated at cost. Depreciation is computed on the straightline method over the estimated useful lives of the assets.
# Leases
Effective January 1, 2019, the Company and the Affiliate adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). ASC 842 requires lessees to recognize on the Combining Statement of Financial Condition, at lease commencement, the lease assets and related lease liabilities for the rights and obligations created by operating and financing with lease terms of more than 12 months.
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#### NOTES TO THE COMBINING FINANCIAL STATEMENTS
# DECEMBER 31, 2020
# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
#### Leases (Continued)
The Company and the Affiliate assess whether an arrangement is or contains a lease at the inception of the agreement. Operating lease is included in right-of-use to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease interest rate of similar financing arrangements based on the information available at the commencement date. Lease expense is recognized on a straight-line basis over the lease term.
#### Income Taxes
No provision is required for federal or state taxes on the income of the Company. Under the Internal Revenue Code and similar state regulations, the Company is treated as a partnership; accordingly, the income of the Company is taxed to the members. However, the Company is subject to the New York City Unincorporated Business Tax, and a provision has been reflected in the combining financial statements. Deferred income tax expense has been recognized in the combining financial statements primarily as a result of the Company being on a cash basis for tax purposes and relates primarily to fees receivable.
No provision is required for taxation on the profits of the Affiliate, which is a limited liability partnership. Under UK tax legislation, the limited liability partnership is tax transparent. As a result, each member is assessed for income tax on its share of the limited liab
#### Foreign Currency Translation and Transactions
Fees receivable denominated in foreign currencies are measured at the foreign exchange rate on the transaction date. At the balance sheet date and upon settlement, the receivable is re-measured at the then current rate. Gains and losses resulting from these transactions are included in net income (loss).
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#### NOTES TO THE COMBINING FINANCIAL STATEMENTS
# DECEMBER 31, 2020
#### NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign Currency Translation and Transactions (Continued)
The accounts of the Affiliate are measured in its functional currency, which is the local currency (British Pounds) and translated into U.S. Dollars. All asset and liability accounts have been translated using the current rate of exchange at the balance sheet date. Revenue, expenses, gains and losses have been translated using the average rates prevailing throughout the year. Translation gains or losses, if significant, are included in other comprehensive income.
# NOTE 2 - NET CAPITAL REQUIREMENTS
The Company is subject to the SEC Uniform Net Capital Rule (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. The Company maintains minimum regulatory net capital, as defined, equal to the greater of \$5,000 or 6-2/3% of aggregate indebtedness, as defined.
At December 31, 2020, the Company had net capital of \$87,752 which was \$78,348 in excess of its required aggregate indebtedness to net capital was 1.61 to 1.
The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3 and is relying on Footnote 74 of the SEC Release No. 34-70073 and adopted the amendments to 17 C.F.R. § 240.17a-5 as the Company limits its business activities exclusively to being a placement agent raising capital for private equity and hedge funds. The Company did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; did not carry accounts of or for customers; and did not carry PAB accounts (as defined in Rule 15c3-3) throughout the year.
#### NOTE 3 - FEES RECEIVABLE
The fees receivable of \$361,892 comprise amounts due from three customers at December 31, 2020, all of which have different installment arrangements. Two of these customers represent 89% and 10% of the fees receivable balance at December 31, 2020. Installments are payable through October 2021.
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#### NOTES TO THE COMBINING FINANCIAL STATEMENTS
# DECEMBER 31, 2020
#### NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment were comprised of the following at December 31, 2020:
| Equipment | \$
18,036 |
|--------------------------------|--------------|
| Less: Accumulated depreciation | 7,816 |
| Property and equipment, net | \$
10,220 |
#### NOTE 5 - PAYCHECK PROTECTION PROGRAM LOAN
As part of the Coronavirus Aid, Relief the Company received \$173,100 under the Paycheck Protection Program Loan (the interest at a fixed rate of 1% per annum. The Company has applied for the loan amount to be fully forgiven in accordance with the program and, if forgiveness is provided, would reduce the payments due. Such forgiveness amount was determined by maintaining employment levels for specified periods and by using the PPP loan proceeds for qualified expenses during the covered period as defined in the CARES Act and superseding acts.
#### NOTE 6 - COMMITMENTS AND CONTINGENCIES
#### Operating Leases
In February 2020, the Company entered into an agreement with its landlord to extend the lease for its New York office space and occupy alternative space in the same building, through January 2021. In January 2021, the Company entered into an agreement to license an office space in New York to use the premises, mailing address and virtual phones for a twelve month period through December 31, 2021. In January 2020, the Affiliate entered into an office lease with its existing landlord for an initial period of six months to access the lounge and hotdesking facilities and for the use of office address for mail handling and forwarding services. This lease was extended in January 2021 for a period of six months and is due to expire in July 2021.
Future minimum lease payments under the noncancellable operating lease at December 31, 2020 for 2021 are \$24,656.
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# NOTES TO THE COMBINING FINANCIAL STATEMENTS
# DECEMBER 31, 2020
# NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
#### Operating Leases (Continued)
The Company is obligated to obtain an irrevocable stand-by letter of credit in lieu of the security deposit on the office in New York City. The letter of credit is collateralized by a restricted certificate of deposit and is shown in cash - restricted on the Combining Statement of Financial Condition.
#### Cash Credit Risk Concentration
The Company maintains cash balances in one financial institution, which are insured by the Federal Deposit Insurance Corporation for up to \$250,000 per institution. From time to may exceed these limits.
The Affiliate maintains cash in a foreign bank account in the UK. The account is covered by the Financial Services Compensation Scheme for up to \$116,195 (£85,000).
# NOTE 7 - RETIREMENT PLANS
The Company maintains a defined contribution 401(k) pension plan which covers all eligible members and employees.
In addition, the Company has a Profit Shari all of its employees. Contributions to the Plan are at the discretion of the management. For the year ended December 31, 2020, there was no profit sharing contribution.
# NOTE 8 - SUBSEQUENT EVENTS
The Company and the Affiliate have evaluated events or transactions that occurred after December 31, 2020 through the date these combining financial statements were issued. During this period, there were no material subsequent events requiring disclosure, other than \$61,000 of contributions made by the members in 2021.
As part of the CARES Act, the Company received a second PPP Loan of \$173,100 in February 2021. The PPP Loan including interest is due in February 2026 and bears an interest at a fixed rate of 1% per annum. The Company anticipates applying for the loan to be forgiven once the amount is used on qualified expenses.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.