# MWA FINANCIAL SERVICES INC. X-17A-5 (2023-03-31) — Broker-dealer annual report - Company: MWA FINANCIAL SERVICES INC. - Form: X-17A-5 - Filed: 2023-03-31 - Period: 2022-12-31 - Accession: 0001139077-23-000002 - CIK: 1139077 - File #: 8-53255 - Type: Broker-dealer - Material weakness: No - Auditor: CROWE LLP - Auditor location: New York, NY - Contact: Neil Eigenbrod - Phone: 2176710009 - Signed by: Clint J. Pogemiller (President) Original filing: https://www.sec.gov/Archives/edgar/data/1139077/000113907723000002/formx17a5final.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) Touching lives. Securing futures.® #### CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION MWA Financial Services, Inc. Year Ended December 31, 2022 With Reports of Independent Registered Public Accounting Firm {1}------------------------------------------------ **STATES AND EXCHANGE COMMISSION D.C. 20549 REPORTS X-17A-5 FACING** **PART** **UNITED** **Washington,** **FORM** **ANNUAL** **SECURITIES** APPROVAL Number: Expires: Estimated average burden per response: SECFILE NUMBER OMB OMB hours ### **III PAGE Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** NAME FOR THE PERIOD BEGINNING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY **REGISTRANT IDENTIFICATION** OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TYPE ### OF REGISTRANT (check all applicable boxes): Security-based swap dealer Major security-based swap participant Check **A.** here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(No. and Street) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(City) #### PERSON **Information** Broker-dealer FILING | 

(City)
PERSON
TO
CONTACT
WITH
REGARD | 
(State)
TO
THIS
FILING | | 
(Zip
Code) | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|-------------------------------------------------|---------------------------------------| | _____________________________________________________________________________________ | | | | | | | | | | 

(Name) | 
(Area
Code
ñ
Telephone
Number)
B.
ACCOUNTANT
IDENTIFICATION | (Email
Address) | | | INDEPENDENT
PUBLIC
ACCOUNTANT | whose
reports
are
contained | in
this
filing*

 | 

 | | | | | | | _____________________________________________________________________________________ | | | | | 
(Name
_____________________________________________________________________________________ | ñ
if
individual,
state
last,
first,
and | middle
name) | | | 
_____________________________________________________________________________________
(Date
of
Registration
with
PCAOB)(if
applicable)



 | 
FOR
OFFICIAL
USE
ONLY | 

(PCAOB
Registration
 | 
Number,
if
applicable) | | | | | | | *
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
CFR
240.17a-5(e)(1)(ii),
if
applicable. | statement
of
facts
and
circumstances | relied
on
as
the
basis
of
the | exemption.
See
17 | | Persons
who
are
to
respond
to
the
collection
displays
a
currently
valid
OMB
control | of
information
contained
in
number. | thisform
are
not
required
to | respond
unlessthe
form | | | | | | **a currently valid OMB control number.** {2}------------------------------------------------ #### OATH OR AFFIRMATION | Clint J. Pogemiller
swear (or affirm) that, to the best of my knowledge and belief, the | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | tinancial report pertaining to the firm of MWA Financial Services, Inc.
, as ot | | 12/31
2 022 _ 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 proprietary interest in any account classified solely
as that of a customer.
OFFICIAL SEAL
DENISE A. THOMPSON
Notary Public - State of Illinois
Signatyre
My Commission Expires 1/11/2027
litle: | | President | | Notary Public | | This filing** contains {check all applicable boxes):
(a) Statement of financial condition.
[ (b) Notes to consolidated 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 cash flows.
= (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | LJ (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 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
ال {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. | | (1) 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.
[] (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 apropriate explanations, of the FOCUS Report with computation of 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 1.7 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences
exist. | | □ {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 240.18a-7, as applicable. | | □ {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. | | O (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 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 240.15c3-1e or 17 CFR 240.17a-12, as applicable. - □ (y) Report describing any material inadequacies 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}. - (z) Other: Copy of the SIPC Supplemental Report - \*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(2), as applicable. {3}------------------------------------------------ #### Financial Services, Inc. Consolidated Financial Statements and Supplemental Information YearEnded December 31, 2022 MWA **Contents** | Report
of
Independent
Registered
Public
Accounting
Firm1 | | |-----------------------------------------------------------------------------------------------------------------------------|--| | Consolidated
Financial
Statements | | | Consolidated
Statements
of
Financial
Condition3
Consolidated
Statements
of
Operations4 | | | C
on
solidated
Statem
en
ts
of
Chan
ges
in
Stockholder's
E
quity5 | | | Consolidated
Statements
of
Cash
Flows6 | | | Notes
to
Consolidated
Financial
Statements7 | | | | | | Supplemental
Information | | | Supplemental
Schedules:
Schedule
I–C
om
putation
of
N
etCapital
Under
SEC
Rule
15c3-118 | | | Schedule
II–C
om
putation
for
D
eterm
in
ation
of
Reserve
Requirements
Pursuant
to | | | Exhibit
A
of
SEC
Rule
15c3-319 | | | Schedule
III–Inform
ation
Relatin
gtothe
Possession
or
Control
Requirements | | | Under
SEC
Rule
15c3-319 | | | | | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) **Crowe** ![](_page_4_Picture_1.jpeg) To MWA ### OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM the Shareholder and the Board of Directors Financial Services, Inc. Rock Island, IL **Opinion** #### **on the Financial Statements** WeServices, REPORT have audited the accompanying consolidated statement of financial condition of MWA Financial Inc. (the "Company") as of December 31, 2022, the related consolidated statements of operations,changesinstockholder'sequity,andcashflows for the year ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. **Basisfor Opinion** #### Theseexpress financial statements are the responsibility of the Company's management. Our responsibility is to an opinion on the Company's financial statements 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 auditto obtain reasonable assurance about whether the financial statements are 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 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 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. **SupplementalInformation** #### SchedulesI,II,andIII(collectivelythe"SupplementalInformation")hasbeensubjectedperformed to audit procedures in conjunction with the audit of the C ompany's financialstatements. The Supplemental Information is the responsibility oftheC ompany'smanagement.O urauditprocedures included determining whether the Supplemental Information reconciles to the financial statements orthe underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the Supplemental Information. In forming our opinion on the Supplemental Information, we evaluated whether the Supplemental Information, including its form and content is presented in conformity with 17 C.F.R. ß 240.17a-5. In our opinion, the Supplemental Information is fairly stated,in all material respects, in relation to the financial statements as a whole. (Continued) 1. {5}------------------------------------------------ Crowe LLP Crowe LLP We have served as the Company's auditor since 2022. New York, New York March 31, 2023 {6}------------------------------------------------ ### Financial Services, Inc. ConsolidatedStatement of Financial Condition MWA | Assets
Cash
and
cash
equivalents | \$
3,287,112 | |---------------------------------------------------------------------------------------------|-----------------| | Receivables
from
brokers,
dealers,
and
others
(net
of
allowance | | | for
credit
losses
of
\$9,500) | 949,453 | | Software
(net
of
accumulated
amortization
of
\$131,470) | 197,990 | | Due
from
Modern
Woodmen
of
America | 104,245 | | Other
assets | 124,508 | | Total
assets | \$
4,663,308 | | | | | Liabilitiesandstockholder'sequity | | | Liabilities:
Accounts
payable
and
accrued
expenses | \$
1,964,705 | | Total
liabilities | 1,964,705 | | | | | Stockholder's
equity:
Common
stock,
\$1,000
per
share
stated
value: | | | A
uthorized
shares
–10,000 | | | Issued
and
outstanding
shares
–1,000 | 1,000,000 | | Additional
paid-in
capital | 16,025,000 | | Accumulated
deficit | (14,326,397) | | Totalstockholder's
equity | 2,698,603 | | Totalliab
ilities
an
d
stockholder's
equity | \$
4,663,308 | | | | | | | {7}------------------------------------------------ ### Financial Services, Inc. ConsolidatedStatement of Operations MWA | Revenues
Concession
income | 2022
\$
29,061,448 | |--------------------------------------------------------------------------------|--------------------------| | Investment
advisory
fees | 912,122 | | Variable
product
distribution
fee
income | 330,000 | | Interest
income | 13,539 | | Field
reimbursements | 569,109 | | Other
income | 71,012 | | Total
revenues | 30,957,230 | | | | | Expenses | | | Commissions
Salaries
and
related
expenses | 24,715,467
4,098,177 | | Licenses
and
fees | 695,965 | | Professional
fees | 90,334 | | Other
operating
expenses | 1,522,492 | | Total
expenses | 31,122,435 | | Net
loss | \$
(165,205) | | | | | See
accompanying
notes
to
consolidated
financial
statements. | | {8}------------------------------------------------ #### MWA Financial Services, Inc. #### Consolidated Statement of Changes in Stockholder's Equity | | Common Stock | | Additional | | | |----------------------------------------|--------------|-----------------|--------------------|-----------------------------------------------------------|------------------------| | | Shares | Stated
Value | Paid-In
Capital | Accumulated
Deficit | Total | | | | | | | | | Balance at January 1, 2022
Net loss | 1,000 | | 1,000,000 | (14,161,192)
(165,205) | 2,863,808
(165,205) | | Balance at December 31, 2022 | | | | 1,000 \$1,000,000 \$16,025,000 \$(14,326,397) \$2,698,603 | | See accompanying notes to consolidated financial statements. {9}------------------------------------------------ ### Financial Services, Inc. ConsolidatedStatement of Cash Flows MWA | Operating
activities
Net
loss | | December
31
2022
\$
(165,205) | | |--------------------------------------------------------------------------------------------------------------------------------------|----|-------------------------------------------|--| | Adjustments
to
reconcile
net
income
to
net
cash
used
in | | | | | operating
activities: | | | | | Amortization
expense | | 58,781 | | | Changes
in
operating
assets
and
liabilities: | | | | | Receivables
from
brokers,
dealers,
and
others | | 222,767 | | | Other
assets | | (9,289) | | | Due
to/from
Modern
Woodmen
of
America | | (814,758) | | | Accounts
payable
and
accrued
expenses | | (52,764) | | | Net
cash
provided
by
(used
in)
operating
activities | | (760,468) | | | | | | | | Investing
Activities | | | | | Purchases
of
software
Disposal
of
property
and
equipment | | (52,500)
33,322 | | | Net
cash
used
in
investing
activities | | (19,178) | | | | | | | | Increase
(decrease)
in
cash
and
cash
equivalents | | (779,646) | | | Cash
and
cash
equivalents
at
beginning
of
year
Cash
and
cash
equivalents
at
end
of
year | \$ | 4,066,758
3,287,112 | | | | | | | | See
accompanying
notes
to
consolidated
financial
statements. | | | | {10}------------------------------------------------ MWA ### to Consolidated Financial Statements December31, 2022 ### **Summary of Significant Accounting Policies Organizationand Basis of Presentation** #### MWA Financial Services, Inc. (the Company), a wholly owned subsidiary of Modern Woodmen America, was incorporated on February 2, 2001, and began operating as a broker-dealer on October 10, 2001, upon its approval for membership in the Financial Industry Regulatory Authority (FINRA). The Company deals primarily in the sale of non-proprietary mutual fund shares and variable products. The Company clears its securities transactions on a fully disclosed basis through Pershing LLC (the clearing broker). The consolidated financial statements (see Note 2) include the accounts of the Company and its wholly owned subsidiary, MWAGIA, Inc., which is involved in the sale of non-proprietary insurance products. All intercompany accounts and transactions have been eliminated. **Useof Estimates** #### Theprinciples **1.** of preparation of financial statements in conformity with U.S. generally accepted accounting (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. It is possible that actual experience could differ from the estimates and assumptions utilized. **Cashand Cash Equivalents** #### Forliquid purposes of the consolidated statements of cash flows, the Company considers all highly investments with a maturity of three months or less when purchased to be cash equivalents. From time to time, cash balances exceed federally insured limits at certain financial institutions.The Company has not incurred any losses to date regarding these excess balances. **Software** #### Capitalizeddevelop software development costs represent the capitalization of certain costs incurred to new software or to enhance existing software which is utilized by the Company to process client transactions. Capitalized software development costs are amortized using the straight-line method over their estimated useful lives, generally three years and is stated at cost lessaccumulated amortization. {11}------------------------------------------------ # to Consolidated Financial Statements (continued) ### **Summary of Significant Accounting Policies (continued) DeferredIncome Taxes** MWA #### Deferredfinancial **1.** income tax assets or liabilities are computed based on the difference between the statement and income tax bases of assets and liabilities using the enacted tax rate. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The Company evaluates the deferred tax assets for recoverability and establishes a valuation allowance when it is determined that it is more likely than notthat some portion or all of the deferred tax assets will not be realized. **FairValue Measurements and Disclosures** #### Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Fair value is defined as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the in vestm en t.It isthe C om pan y's policytom aximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy in ASC 820. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. Thethree-tier hierarchy of inputs is summarized below: • - Level 1–quoted prices in active markets for identical investments •investments, - Level 2– other sign ifican t ob servab le inputs (including quoted prices for similar interest rates, prepayment speeds, credit risk, etc.) • Level 3–sign ifican tun ob servable inputs (including the Compan y's own assum ption s in determining - the fair value of investments) {12}------------------------------------------------ # to Consolidated Financial Statements (continued) #### **Summary of Significant Accounting Policies (continued)** Cashmarket MWA and cash equivalents are reported at current value on a recurring basis and include money instruments. Fair values of these cash and cash equivalents may be determined using public quotations, when available, which are reflected in Level 1. When public quotations are not available, because of the highly liquid nature of these assets, carrying amounts may be used to approximate fair values, which are reflected in Level 2. The Company used Level 1 valuation techniques to measure fair value of cash and cash equivalents of \$3,287,112 during the year ended December 31, 2022. The Company did not have any fair value Level 2 or Level 3 assets or liabilities at December 31, 2022. Transfers between fair value hierarchy levels are recognized at the beginning ofthe reporting period. The Company did not have any transfers between levels during the years ended December 31, 2022. **CurrentExpected Credit Losses (CECL)** #### Thecost **1.** Company accounts for estimated credit losses on financial assets measured at an amortized basis and certain off-balance sheet credit exposures in accordance with FASB ASC 326-20, F in an cialIn strum en ts –C redit Losses.F A SB ASC 326-20 requires the Company to estimate expected credit losses over the life of its financial assets and certain off-balance sheet exposures as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts. TheCompany records the estimate of expected credit losses as an allowance for credit losses. For financial assets measured at an amortized cost basis the allowance for credit losses is reported as a valuation account on the balance sheet thatadjusts the asset's amortized cost basis. Changes in the allowance for credit losses are reported in Credit Loss expense. Receivables from broker-dealers and others.The C om pan y's receivab les from b roker-dealers and others include amounts receivable from unsettled trades, estimated 12b-1 payments and cash deposits.A portion of the C om pan y's trades and contracts 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. Amount Due from Modern Woodmen of America. The C om pan y's receivab les from M odern Woodmen 9of America represent expenses incurred by the Company on behalf of Modern {13}------------------------------------------------ # to Consolidated Financial Statements (continued) #### **Summary of Significant Accounting Policies (continued)** WoodmenWoodmen **1.** MWA of America. Generally, this is a liability for which the Company reimburses Modern ofAmerica for expenses incurred on the C om pan y's behalf and therefore no credit loss is estimated. Transactions with customers. For transactions in which the Company, through the clearing broker, extends credit to customers, the Company seeks to control the risks associated with these activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. The Company and the clearing broker monitor required margin levels daily and, pursuant to such guidelines, request customers to deposit additional collateral or reduce securities positions when necessary. The Company has agreed to indemnify the clearing broker for any losses that it may sustain from the customer accounts introduced by the Company. At December 31, 2022, there were no amountsto be indemnified to the clearing broker for these customer accounts. {14}------------------------------------------------ MWA # to Consolidated Financial Statements (continued) #### **Revenues from Contracts with Customers** Therevenue 2**.** following table provides a disaggregation of revenue from contracts with customers by type and a reconciliation to total revenues in the consolidated statements of operations: **Year** | Revenue | 2022 | |----------------------------------------------------------------------------------------------|-------------------------| | Concession
Revenue | | | Policy
concessions | \$17,443,656 | | Mutual
fund
concessions
Brokerage
equity
commissions | 11,313,134
304,658 | | Total
Concession
Revenue | 29,061,448 | | Investment
advisory
fees | 912,122 | | Field
reimbursements | 569,109 | | Variable
product
distribution
fee | 330,000 | | Total
revenues
from
contracts
with
customers | 30,872,679 | | Interest
income | 13,539 | | Other
income | 71,012 | | Revenues
as
included
in
the
consolidated
statements
of
operations | \$30,957,230 | | | | | following
discussions
describe
the
nature,
timing
and
uncertainty
of | revenues
and
cash | gfrom the C ompan y's con tracts. **Policyconcessions** #### Theannuities The arisin Company has entered into agreements with several organizations to sell variable and fixed as well as medical, dental, long term care, disability, disability income, and accidental death in suran ce toits custom ers.The C om pan y's performance obligations are for the initial sale of a policy and subsequent ongoing servicing of the policies. The Company receives consideration daily, weekly and monthly and recognizes revenue for these commissions when amountsare known and transaction price can be determined and allocated. The Company does {15}------------------------------------------------ # to Consolidated Financial Statements (continued) #### **Revenues from Contracts with Customers (continued)** notbe MWA recognize revenue for these fees until amounts are known as the revenue the Company will entitled to is highly uncertain and susceptible to factors outside of the C ompan y's con trol. Such factors include length of time policies remain active and the amount of additional premiums paid by the policy holder. Variable amounts are recorded as fund administrative fees (12b-1 fees), and are based on the average daily fund net asset balances and agreed upon contractual rate. 12b-1 fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods, but have been constrained until the current period because the fees are affected by changes in average daily fund balances and asset under administration. **Mutualfund concessions** #### Thecustomers. average **2.** Company has entered into agreements with several organizations to sell mutual funds to its The related performance obligation is the successful sale of the mutual fund assets. The Company believes that the performance obligation is satisfied on the trade date as that is when the underlying financial instrument or purchaser is identified, the pricing agreed upon and the risks and rewards of ownership have been transferred. The amount of revenue earned is determined by the value and type of each instrument sold based upon the contractual rate. The Company will recognize mutual fund sales commission revenues at the point in time the performance obligation has been satisfied, which is the trade date. Variableamounts are recorded as fund administrative fees (12b-1 fees), and are based on the daily fund net asset balances multiplied by the agreed upon contractual rate. 12b-1 fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods, but have been constrained until the current period because the fees are affected by changes in average daily fund balances and asset under administration. **Brokerageequity commissions** #### Theits Company has entered into agreements with its clearing broker to sellequity investments to customers. The Company believes that the performance obligation is satisfied on the trade date as that is when the underlying financial instrument or purchaser is identified, the pricing agreed upon and the risks and rewards of ownership have been transferred. The amount of revenueearned is determined by the value and type of each instrument sold. The Company will {16}------------------------------------------------ # to Consolidated Financial Statements (continued) #### **Revenues from Contracts with Customers (continued)** recognizebeen MWA equity sales commission revenues at the point in time the performance obligation has satisfied, which is the trade date. **Investmentadvisory fees** #### Theinvestment **2.** Company has entered into agreements with several organizations to earn fees for servicing advisory accounts of its customers. The related performance obligation is the servicing ofthe assets, including processing purchases and sales. The Company receives asset based fees quarterly for satisfying the performance obligations, and are based on a percentage of the net assets maintained. The Company does not recognize revenue for these fees until amounts are known as the revenue the Company will be entitled to is highly uncertain and susceptible to factors outside of the C om pan y's con trol.Such factors include market value of assets under management and the length of time investors hold their accounts. Costs to fulfill the contracts with customer include commissions paid to agents for sales and servicing ofthe related assets and insurance products. These costs are related to performance obligations already satisfied and are expensed when incurred. **Fieldreimbursements** #### TheC Company has entered into agreements with the registered representatives that sell the om pan y's products.The C om pan ycharges those registered representatives fees to be properly licensed and registered with FINRA and any other states or regulatory authorities. The expenses incurred by the Company are recorded within licenses and fees and other expenses on the statement of operations. The Company will recognize field reimbursement revenues at the point in time the performance obligation has been satisfied, which is the date the fee is charged. **Variableproduct distribution fee** #### Thevariable Company has entered into agreements with Modern Woodmen of America to sell its annuity to its customers. The related performance obligation is the successful sale, subsequent ongoing servicing and monitoring of the variable annuity assets. As part of the subsequent ongoing servicing and monitoring of the variable annuity assets, the Company receives an agreed upon monthly fee. The Company will recognize variable product distribution feerevenues at the point in time the performance obligation has been satisfied, which is monthly. {17}------------------------------------------------ MWA # to Consolidated Financial Statements (continued) #### **Income Taxes** Theoperations, **3.** Taxes open Company and its subsidiary file consolidated income tax returns, including only their own since the ultimate parent company, Modern Woodmen of America, is a tax-exempt fraternal benefit society. At December 31, 2022, the Company had a tax net operating loss carryover of \$13,324,677. The tax net operating losses carryover of \$13,072,923 arising in 2003 through 2017 may be carried forward until 2023 through 2037. The tax net operating loss arising in 2018 and later of \$251,754 does not have an expiration date. The net operating loss carryover represents the only significant temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes at December 31, 2022. Management has established a valuation allowance for the full amount of the related net deferred tax assets of \$2,798,182 at December 31, 2022, because of the uncertainty offuture income necessary for its ultimate realization. TheCompany has analyzed all material tax provisions under the guidance of ASC 740, Income Related to the Accounting for Uncertainty in Income Tax, and has determined that there are no tax benefits that should not be recognized as of December 31, 2022. There are no unrecognized tax benefits that would affect the effective tax rates. TheCompany does not believe it would be subject to any penalties or interest relative to any tax years and, therefore, has not accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions. The 2019 through 2022 U.S. federal tax years are subject to income tax examination by tax authorities. The Company classifies any interest and penalties (if applicable) as income tax expense in the financial statements. **4.Net Capital Requirements** #### The Company is subject to the uniform net capital requirements of the SEC under Rule 15c3-1. The SE C's requirem en ts provide thatequitycapitalmay not be withdrawn or cash dividends paid if certain minimum net capital requirements are not met, and that the ratio of aggregate indebtedness to net capital as defined therein shall not exceed 15 to 1. At December 31, 2022, the Company had net defined capital of \$1,657,514, which was \$1,553,302 in excess of the required net capital of \$104,212 at that date. At December 31,2022,the C om pan y's ratioof aggregate indebtedness to net capital was 0.94 to 1. Various other regulatory agencies may impose additionalcapital requirements. {18}------------------------------------------------ MWA # to Consolidated Financial Statements (continued) #### **Net Capital Requirements (continued)** Undermaintain **4.** the clearing arrangement with the clearing broker, the Company is also required to certain minimum levels of net capital and comply with other financial ratio requirements. At December 31, 2022, the Company was in compliance with all such requirements. TheCompany is exempt from maintaining a special reserve bank account under Rule 15c3- 3(k)(2)(ii) in that the Company introduces customers to its clearing broker on a fully disclosed basis. **5.Related-Party Transactions** #### Theconnection Com pan y's variab le product distrib ution fee income relates to services performed in with the distribution ofthe variable annuity ofModern Woodmen ofAmerica, its parent. Modern Woodmen of America compensated the Company at the rate of \$27,500 per month under a distribution agreement that commenced in June 2001 and was amended in 2010 and 2017. Concessions income derived from proprietary variable product transactions, which were substantially distributed in commissions to representatives selling those products, totaled \$10,982,102 in 2022. Commissions paid to representatives totaled \$9,967,871 in 2022. Substantially all of the C om pan y's operating expenses represent allocations from, or payments by, Modern Woodmen ofAmerica, which are then reimbursed by the Company. During 2022, total net expenses reimbursed to Modern Woodmen of America were \$4,473,436. This includes the cost of the C om pan y's em ployees and the allocated costs of their participation in various qualified employee benefit plans covering substantially all employees and sponsored by Modern Woodmen ofAmerica. Separate plan information disaggregated by the subsidiary company is not available on the components of pension cost or on the funded status of the defined-benefit pension plan. From time-to-time Modern Woodmen ofAmerica contributes capital to the Company During 2022, no capital contributions were {19}------------------------------------------------ # to Consolidated Financial Statements (continued) #### **Allowance for Credit Losses** Theconditions **6.** Company records an allowance for credit losses. Management evaluated current market warranted using historical losses as well as rating agency provided forecasted default rates to estimate the current year provision for expected credit losses. A roll forward ofthe allowance for credit losses is as follows: Balanceat January 1, 2022 \$ 9,800 | Provision
for
expected
credit
losses | (300) | |--------------------------------------------------|-------------| | Balance
at
December
31,
2022 | \$
9,500 | | There | | MWA were no write-offs charged against the allowance or recoveries collected in 2022. **7.Commitments and Contingencies** #### **RegulatoryMatters** #### Inregulatory the normal course of business, the Company discusses matters with its regulators raised during examinations or otherwise subject to their inquiry. These matters could result in censures, fines, penalties or other sanctions. Management believes the outcome of any resulting actions will not be material to the Company's Statement of Financial Condition. However, the Company is unable to predict the outcome or the timing ofthe ultimate resolution of these matters or the potential fines, penalties or injunctive or other equitable relief, if any, that may resultfrom these matters. **Indemnifications** #### In representations the normal course of business, the Company enters into contracts that contain a variety of which provide general indemnication s.The C om pan y's maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects therisk of loss to be remote. {20}------------------------------------------------ Information Supplemental {21}------------------------------------------------ # Financial Services, Inc. Schedule MWA ### I–C om putation of N etCapital Under SEC Rule 15c3-1 December31, 2022 **Computation** ### **of Net Capital** | 1.
Total
ownership
equity
\$
2,698,603 | | | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|-----------|------------------------| | 3.
Total
ownership
equity
qualified
for
net
capital
5.
Total
capital
and
allowable
subordinated
liabilities | | | 2,698,603
2,698,603 | | 6.
Deductions
and/or
charges: | | | | | A.
Total
nonallowable
assets | | | | | 1.
Investment
in
subsidiary | 408,445 | | | | 2.
Prepaid
expenses
and
other
receivables | 616,438 | 1,024,883 | 1,024,883 | | 8.
Net
capital
before
haircuts
on
securities
positions | | | 1,673,720 | | 9.
Haircuts
on
securities
[computed,
where
applicable, | | | | | pursuant
to
15c3-1(f)]: | | | | | C.
Trading
and
investment
securities:
Part
A | | | | | 1.
Exempted
securities | | 16,206 | 16,206 | | 10.
Net
capital | | | \$1,657,514 | | | | | | | Computation
of
Basic
Net
Capital | Requirement | | | | 11.
Minimum
net
capital
required
(6-2/3%
of
line19)
12.
Minimum
dollar
net
capital
requirement
of
reporting
broker | or | | \$
104,212 | | dealer
and
minimum
net
capital
requirement
of
subsidiaries | | | 50,000 | | 13.
Net
capital
requirement
(greater
of
line
11
or
12) | | | 104,212 | | 14.
Excess
net
capital
(line
10
less
13) | | | 1,553,302 | | 15.
Net
capital
less
greater
of
10%
of
line19
or
120%
of | | | | | line
12 | | | 1,501,197 | | | | | | | Computation
of
Aggregate | Indebtedness | | | | 16.
Total
A.I.
liabilities
from
Statement
of
Financial
Condition: | | | | | •
A
ccoun
ts
payab
le
an
d
accrued
expen
ses | \$ | 1,563,175 | 1,563,175 | | 19.
Total
aggregate
indebtedness | | | 1,563,175 | | 20.
Percentage
of
aggregate
indebtedness
to
net
capital
(line | 19
˜
by | | | | line
10) | | | 94.31% | | | | | | | Notes | | | | | There | | | | #### in were no differences between the computation of net capital under Rule 15(c)3-1 included this audited report and the computation included in the C om pan y's correspon din g un audited FormX-17A-5 Part IIA filing submitted to the FINRA on January 26, 2023. {22}------------------------------------------------ #### MWA Financial Services, Inc. #### Schedule II - Computation for Determination of Reserve Requirements Pursuant to Exhibit A of SEC Rule 15c3-3 Schedule III – Information Relating to the Possession or Control Requirements under SEC Rule 15c3-3 December 31, 2022 | Exemptive Provision | | | | | |---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|--| | | 22. If an exemption from Rule 15c3-3 is claimed,
identify below the section upon which such
exemption is based (check one only): | | | | | | A.
variable annuities only) | | | | | | B. (k)(2)(i) - "Special Account for the Exclusive
Benefit of Customers" maintained | | | | | | C. (k)(2)(ii) - All customer transactions cleared through
another broker-dealer on a fully disclosed basis.
Name of clearing firm: Pershing LLC | | X | | | | D. (k)(3) - Exempted by order of the Commission | | | | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.