# UNION CAPITAL COMPANY X-17A-5 (2022-03-30) — Broker-dealer annual report - Company: UNION CAPITAL COMPANY - Form: X-17A-5 - Filed: 2022-03-30 - Period: 2021-12-31 - Accession: 0001133841-22-000002 - CIK: 1133841 - File #: 8-53127 - Type: Broker-dealer - Material weakness: Yes - Auditor: Sanville & Company - Auditor location: Dallas, TX - Contact: Francisco Almada - Phone: 5206642001 - Signed by: Francisco Almada (President) Original filing: https://www.sec.gov/Archives/edgar/data/1133841/000113384122000002/auditpub2021.pdf --- {0}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: KĐƚ͘ϯϭ͕ϮϬϮϯ Estimated average burden hours per response: # **ANNUAL REPORTS FORM X-17A-5 PART III** | SEC FILE NUMBER | |-----------------| | 8- 53127 | | FILING FOR THE PERIOD BEGINNING _____________________ AND ENDING ______________________
Union Capital Company
NAME OF FIRM: _______________________________________________________________________
TYPE OF REGISTRANT (check all applicable boxes): | MM/DD/YY
A. REGISTRANT IDENTIFICATION | | MM/DD/YY | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|---------------------------------------|--------------------------------------------| | | | | | | | | | | | | | | | | ܆
܆
y
Broker-dealer
܆ Check here if respondent is also an OTC derivatives dealer | ܆
Security-based swap dealer | Major security-based swap participant | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | 6407 E. Grant Rd.
_____________________________________________________________________________________ | | | | | | (No. and Street) | | | | Tucson
_____________________________________________________________________________________ | AZ | | 85715 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Frank Almada
_____________________________________________________________________________________ | 520-664-2001 | | | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Sanville & Company
_____________________________________________________________________________________ | | | | | | (Name – if individual, state last, first, and middle name) | | | | 1514 Old York Road
_____________________________________________________________________________________ | Abington | PA | 19001 | | (Address) | (City) | (State) | (Zip Code) | | 9/18/2003
_____________________________________________________________________________________ | | 169 | | | (Date of Registration with PCAOB)(if applicable) | FOR OFFICIAL USE ONLY | | (PCAOB Registration Number, if applicable) | accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. **Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | Frank Almada
1, | swear (or affirm) that, to the best of my knowledge and belief, the | | |--------------------------------------------|-------------------------------------------------------------------------------------------|---------| | financial report pertaining to the firm of | Union Capital Company | . as of | | December 31 | 2 021 , is true and correct. I further swear (or affirm) that neither the company nor any | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. ![](_page_1_Picture_3.jpeg) | s;gnat"'e~ | | | |------------|-----------|--| | Title: | President | | #### **This filing\*\* contains (check all applicable boxes):** - **!Kl** (a) Statement of financial condition . - !Kl (b) Notes to consolidated statement of financial condition. - D (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. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - D (g) Notes to consolidated financial statements. - (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (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 appl icable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (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. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (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. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (t) Independent public accountant's report based on an examination of the statement of financial condition . - D (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. - D (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). D(z) Other:-------------------------------------- - *\*\*To* request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e}(3} or 17 CFR 240.18a-7(d}(2}, as applicable. {2}------------------------------------------------ ROBERT F. SANVILLE, CPA MICHAEL T. BARANOWSKY, CPA JOHN P. TOWNSEND, CPA NATHANIEL S. HARTGRAVES, CPA CERTIFIED PUBLIC ACCOUNTANTS 1514 OLD YORK ROAD ABINGTON, PA 19001 Sanville & Company (215) 884-8460 (215) 884-8686 FAX MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET, 8th FLOOR NEW YORK, NY 10005 (212) 709-9512 #### Report of Independent Registered Public Accounting Firm To the Board of Directors of Union Capital Company #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Union Capital Company (the "Company") as of December 31, 2021, 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, 2021 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on 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 statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2020. Dallas, Texas March 29, 2022 {3}------------------------------------------------ #### **Union Capital Company** #### **Statement of Financial Condition December 31, 2021** #### **Assets** | Cash | \$
105,564 | |----------------------------------------------------------|---------------| | Clearing deposit | 35,000 | | Commissions receivable | 114,781 | | Deposits | 780 | | Total assets | \$
256,125 | | | | | Liabilities and Stockholder's Equity | | | Liabilities: | | | Accounts payable and accrued expenses | \$
33,614 | | Commissions payable | 106,507 | | Due to Parent | 50,529 | | Total liabilities | 190,650 | | Stockholder's equity: | | | Common stock, no par value, 2,000,000 shares authorized, | | | 1,308,941 shares issued and outstanding | \$
458,624 | | Accumulated deficit | (393,149) | | Total stockholder's equity | 65,475 | | | | | Total liabilities and stockholder's equity | \$
256,125 | The accompanying notes are an integral part of these financial statements. {4}------------------------------------------------ ## **Union Capital Company** ## **Notes to Statement of Financial Condition December 31, 2021** ### **Note 1 - Summary of Significant Accounting Policies** #### Nature of Business Union Capital Company (Company), an Arizona corporation, began operations in December 1999 as lnversionista Online.com, Inc. and became a registered securities broker-dealer during 2001. The name was changed to Union Capital Company during 2002. The Company provides securities brokerage, sales of mutual funds, variable annuities and certain limited partnership interests and investment advisory services to retail and institutional customers. As is typical in the industry, the Company engages in activities with various financial institutions and brokers. In the event these counter parties do not fulfill their obligations, the Company may be exposed to risks. The Company is a wholly owned subsidiary of Union Capital Holdings Corp. ("the Parent"). #### Cash and Cash Equivalents For purposes of reporting the statement of cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash balances in excess of FDIC and similar insurance coverage are subject to the usual banking risks associated with funds in excess of those limits. At December 31, 2021, the Company had no uninsured cash balances. #### Estimates The preparation of financial statements in accordance 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. #### Commissions Receivable Commissions receivable primarily consists of trade receivables from brokerage services. The Company regularly reviews its accounts receivable for any uncollectible amounts. The review of uncollectible amounts is based on an analysis of the Company's collections experience, customer credit worthiness, and current economic trends. Based on management's review no allowance for credit losses is considered necessary. {5}------------------------------------------------ ## **Notes to Statement of Financial Condition December 31, 2021** ### **Note 1 - Summary of Significant Accounting Policies (continued)** #### Property and equipment Property and equipment are recorded at cost. Repair and maintenance costs are charged to operations as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any gains or losses are included in operations. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives of the related assets. #### Income Taxes The Company is included in the consolidated tax return filed by Union Capital Holdings Corp. Income taxes are calculated as if the Company filed on a separate basis, and the amount of current tax or refund receivable is either remitted to or received from Union Capital Holdings Corp. The Company evaluates all significant tax positions as required by accounting principles generally accepted in the United States of America. As of December 31, 2021, the Company does not believe that it has taken any positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year. It is the Company's policy to recognize any interest and penalties in the provision for taxes. The federal and state income tax returns of the Company for 2020, 2019 and 2018 are subject to examination by the IRS and state taxing authorities, generally for 3 years after they were filed. #### Revenue from Contracts with Customers The company recognizes revenue from contracts with customers pursuant to ASU 2014-09 *Revenue from Contracts with Customers* and all subsequent amendments to the ASU (collectively, "ASC 606"). ASC 606 created a single framework for recognizing revenue from contracts with customers that fall within its scope. Under ASC 606 revenue is recognized upon satisfaction of performance obligations by transferring control over goods or service to 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. {6}------------------------------------------------ ## **Union Capital Company** ## **Notes to Statement of Financial Condition December 31, 2021** ### **Note 1 - Summary of Significant Accounting Policies (continued)** #### Revenue from Contracts with Customers (continued) #### 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 that 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. #### 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. ### Distribution fees The Company enters into arrangements with managed accounts or other pooled investment vehicles (funds) to distribute shares to investors. The Company may receive distribution fees paid by the fund up front, over time, upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Distribution fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods. {7}------------------------------------------------ ## **Notes to Statement of Financial Condition December 31, 2021** ### **Note 2 - Net Capital Requirements** The Company is subject to the Securities and Exchange Commission's Uniform Net Capital Rule (Rule15c3-1), which requires the maintenance of minimum net capital at an amount equal to the greater of \$5,000 or 6 2/3% of aggregate indebtedness, and requires that the ratio of aggregate indebtedness to net capital not exceed 15 to 1. At December 31, 2021, the Company had net capital of \$64,695 which was \$51,985 in excess of its minimum net capital requirement and its ratio of aggregate indebtedness to net capital was 2.95 to 1. ### **Note 3 - Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk** The Company's customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company's Clearing Broker extends credit to the customer, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the customer's account. As a result of guaranteeing customer margin balances carried by the Clearing Broker, the Company may be exposed to off-balance sheet risk in the event margin requirements are not sufficient to fully cover losses the customer may incur. At December 31, 2021, margin accounts guaranteed by the Company were not material. The Company is also exposed to off-balance sheet risk of loss on transactions during the period from the trade date to the settlement date, which is generally three business days. If the customer fails to satisfy its contractual obligations to the Clearing Broker, the Company may have to purchase or sell financial instruments at prevailing market prices in order to fulfill the customer's obligations. Settlement of these transactions is not expected to have a material effect on the Company's financial position. The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory and the Clearing Broker's guidelines. The Company monitors required margin levels daily and, pursuant to such guidelines, requires customers to deposit additional collateral, or to reduce positions, when necessary. The Company maintains cash and other deposits with banks and brokers, and, at times, such deposits exceed applicable insurance limits. The Company reduces its exposure to credit risk by maintaining such deposits with high quality financial institutions. {8}------------------------------------------------ ## **Notes to Statement of Financial Condition December 31, 2021** ### **Note 4 - Income Tax** The Company files a consolidated income tax return with its parent. Income taxes are charged by the Company based on the amount of income taxes the parent would have paid had it filed its own income tax return. In accordance with FASB ASC Topic 740, "Accounting for income Taxes," allocation of the consolidated income tax expense is necessary when separate financial statements are prepared for the affiliates. As a result, the Company uses a method that allocates current and deferred taxes to the members of the consolidated group by applying the liability method to each member as if it were a separate taxpayer. The components of income tax expense are as follows: | | Current | Deferred | Total | |-----------------|--------------|----------|--------------| | Federal | \$
40,970 | \$
- | \$
40,970 | | State and local | 9,559 | | 9,559 | | Total | \$ 50,529 | \$
- | \$ 50,529 | Differences between income tax expense for the year and the amount of income tax expense that would result from applying statutory rates to pretax income were attributed to non-deductible expenses. As a result of the allocation methodology described above the Company had \$50,529 due to the Parent for income taxes as of December 31, 2021. #### **Note 5 – Operating Lease** The Company leases office space on a month-to month basis. Rent expense was \$17,400 for the year ended December 31, 2021. The Company has elected, for all underlying classes of assets, to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease cost associated with short-term leases on a straight-line basis over the lease term. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.