# MWA FINANCIAL SERVICES INC. X-17A-5 (2025-03-28) — Broker-dealer annual report - Company: MWA FINANCIAL SERVICES INC. - Form: X-17A-5 - Filed: 2025-03-28 - Period: 2024-12-31 - Accession: 0001139077-25-000002 - CIK: 1139077 - File #: 8-53255 - Type: Broker-dealer - Material weakness: No - Auditor: CROWE LLP - Auditor location: New York, NY - Contact: Clint J. Pogemiller - Phone: 309-558-3101 - Signed by: Clint J. Pogemiller (President) Original filing: https://www.sec.gov/Archives/edgar/data/1139077/000113907725000002/financials2024.pdf --- {0}------------------------------------------------ **STATES AND EXCHANGE COMMISSION D.C. 20549 REPORTS X-17A-5 FACING** **PART** **UNITED** **Washington,** **FORM** **ANNUAL** **SECURITIES** Estimated # **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 OMB Number: Expires: SEC per response: OMB hours APPROVAL average burden FILE NUMBER ## 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
ifindividual,
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
accountant
must
be
supported
by
a | that
the
annual
reports
be
covered
statement
of
facts
and
circumstances | by
the
reports
of
an
relied
on
as
the
basis
of
the | independent
public
exemption.
See
17 | | CFR
240.17a-5(e)(1)(ii),
if
applicable. | | | | | Persons
who
are
to
respond
to
the
collection
displays
a
currently
valid
OMB
control | of
information
contained
in
thisform
number. | are
not
required
to | respond
unlessthe
form | | | | | | **a currently valid OMB control number.** {1}------------------------------------------------ | 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 of | | 12/31 | | 2 024 | | | | | 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. | OFFICIAL SEAL
DENISE A. THOMPSON
Notary Public - State of Illinois
My Commission Expires 1/11/2027 | Signature: /
17
Title: | | | Villa . A 11/10011 2.100 | | President | | - - - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ ### MWA Financial Services, Inc. Consolidated Financial Statements and Supplemental Information Year Ended December 31, 2024 #### **Contents** | Report
of
Independent
Registered
Public
Accounting
Firm1 | | |---------------------------------------------------------------------------------------------------------|--| | Consolidated
Financial
Statements | | | ís
Equity
5
Consolidated
Statement
of
Financial
Condition
3 | | | Consolidated
Statement
of
Operations4 | | | Consolidated
Statement
of
Changes
in
Stockholder | | | Consolidated
Statement
of
Cash
Flows
6 | | | Notes
to
Consolidated
Financial
Statements7 | | | Supplemental
Information
ñ
Computation
of
Net | | | ñ
Informa
Supplemental
Schedules: | | | Schedule
I
Capital
Under
SEC
Rule
15c3-120 | | | Schedule
II
tion
Relating
to
the
Possession
or
Control
Requirements
Under | | | SEC
Rule
15c3-321 | | {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholder and the Board of Directors MWA Financial Services, Inc. Rock Island, Illinois #### **Opinion on the Financial Statements** We have audited the accompanying consolidated statement of financial condition of MWA Financial Services, Inc. (the "Company") as of December 31, 2024, the related consolidated statements of operations, changes in stockholderís equity, and cash flows for the year ended December 31, 2024, 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, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. #### **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 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 thatour audit provides a reasonable basis for our opinion. #### **Supplemental Information** The Schedule I ñ Computation of Net Capital Under SEC Rule 15c3-1, Schedule II ñ Computation for Determination of Reserve Requirements Pursuant to Exhibit A of SEC Rule 15c3-3, and Schedule III ñ Information Relating to the Possession or Control Requirements under SEC Rule 15c3-3 (collectively the ìSupplemental Informationî) has been subjected to audit procedures performed in conjunction with the audit of the Companyís financial statements. The Supplemental Information is the responsibility of the Companyís management. Our audit procedures included determining whether the Supplemental Information reconciles to the financial statements orthe underlying accounting and other records, as applicable, and performing procedures to testthe completeness and accuracy of the information presented in the Supplemental Information. {4}------------------------------------------------ In forming our opinion on the Supplemental Information, we evaluated whether the Supplemental Information, including its form andcontent 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. Crowe LLP We have served as the Companyís auditor since 2022. New York, New York March 27, 2025 {5}------------------------------------------------ #### Consolidated Statement of Financial Condition | | December
31,
2024 | | | |---------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--|--| | Assets | | | | | Cash
and
cash
equivalents | \$
4,673,353 | | | | Receivables
from
brokers,
dealers,
and
others
(net
of
allowance
for
credit
losses
of
\$30,800) | 1,409,300 | | | | Software
(net
of
accumulated
amortization
of
\$345,843) | 55,505 | | | | Other
assets | 148,291 | | | | ís
equity
Total
assets | \$
6,286,449 | | | | Liabilities
and
stockholder | | | | | Liabilities: | | | | | Due
to
Parent | \$
335,912 | | | | Accounts
payable
and
accrued
expenses | 2,881,929 | | | | ís
equity:
Total
liabilities | 3,217,841 | | | | ñ
10,000
Stockholder | | | | | ñ
1,000
Common
stock,
\$1,000
per
share
stated
value: | | | | | Authorized
shares | | | | | Issued
and
outstanding
shares | 1,000,000 | | | | ís
equity
Additional
paid-in
capital | 16,025,000 | | | | ís
equity
Accumulated
deficit | (13,956,392) | | | | Total
stockholder | 3,068,608 | | | | Total
liabilities
and
stockholder | \$
6,286,449 | | | {6}------------------------------------------------ #### Consolidated Statement of Operations | | Year
Ended | |------------------------------------------------------|------------------| | | December
31, | | | 2024 | | Revenues | | | Concession
income | \$
31,743,647 | | Investment
advisory
fees | 2,520,256 | | Variable
product
distribution
fee
income | 1,481,616 | | Interest
income | 107,232 | | Field
reimbursements | 1,081,360 | | Other
income | 68,273 | | Total
revenues | 37,002,384 | | Expenses | | | Commissions | 28,422,885 | | Salaries
and
related
expenses | 4,911,001 | | Communications
and
Data
Processing | 1,289,655 | | Licenses
and
fees | 823,871 | | Professional
fees | 169,925 | | Other
operating
expenses | 889,770 | | Total
expenses | 36,507,107 | | Net
income | \$
495,277 | | | | {7}------------------------------------------------ # Consolidated Statement of Changes in Stockholderís Equity | | Common
Stock | | Additional | | | |------------------------------------------|-----------------|-----------------|--------------------|------------------------|-------------| | | Shares | Stated
Value | Paid-In
Capital | Accumulated
Deficit | Total | | Balance
at
January
1,
2024 | ñ
1,000 | ñ
1,000,000 | ñ
16,025,000 | (14,451,669) | 2,573,331 | | Net
income | | | | 495,277 | 495,277 | | Balance
at
December
31,
2024 | 1,000 | \$1,000,000 | \$16,025,000 | \$
(13,956,392) | \$3,068,608 | {8}------------------------------------------------ #### Consolidated Statement of Cash Flows | | | Year
Ended
December
31,
2024 | | |----------------------------------------------------------------------------------------|----|------------------------------------------|--| | Operating
activities | | | | | Net
Income | \$ | 495,277 | | | Adjustments
to
reconcile
net
income
to
net
cash
provided
by | | | | | operating
activities: | | | | | Amortization
expense | | 100,302 | | | Provision
for
Credit
Losses | | 10,200 | | | Changes
in
operating
assets
(increase)/decrease: | | | | | Receivables
from
brokers,
dealers,
and
others | | (200,191) | | | Other
assets | | (14,013) | | | Changes
in
operating
liabilities
(decrease)/increase: | | | | | Due
to
Parent | | (99,760) | | | Accounts
payable
and
accrued
expenses | | 578,402 | | | Net
cash
provided
by
operating
activities | | 870,217 | | | Increase
in
cash
and
cash
equivalents | | 870,217 | | | Cash
and
cash
equivalents
at
beginning
of
year | | 3,803,136 | | | Cash
and
cash
equivalents
at
end
of
year | \$ | 4,673,353 | | {9}------------------------------------------------ #### Notes to Consolidated Financial Statements December 31, 2024 #### **1. Summary of Significant Accounting Policies** #### **Organization and Basis of Presentation** MWA Financial Services, Inc. (the Company), a wholly owned subsidiary of Modern Woodmen of America (Parent), was incorporated on February 2, 2001, and began operating as a broker-dealer on October 10, 2001, upon its approval for membership with Financial Industry Regulatory Authority (FINRA). The Company deals primarily in the sale of proprietary and non-proprietary investment products. The Company clears its securities transactions on a fully disclosed basis through its clearing broker. The consolidated financial statements 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. #### **Use of Estimates** The preparation offinancial statements in conformity with U.S. generally accepted accounting principles (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. #### **Cash and Cash Equivalents** For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amounts reported in the statement of financial condition for cash and cash equivalents approximate their fair value because of the short maturity of these instruments. 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** Capitalized software development costs represent the capitalization ofcertain costs incurred to develop 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 less accumulated amortization. {10}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **1. Summary of Significant Accounting Policies (continued)** #### **Deferred Income Taxes** Deferred income tax assets or liabilities are computed based on the difference between the financial 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 not that some portion, or all, of the deferred tax assets will not be realized. #### **Fair Value Measurements and Disclosures** Accounting Standards Codification (ASC) 820, defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality ofinputs 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 investment. It is the Companyís policy to maximize 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. The three-tier hierarchy of inputs is summarized below: ï - Level 1 ñ quoted prices in active markets for identical investments ï - Level 2 ñ other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) ïLevel 3 ñ significant unobservable inputs (including the Companyís own assumptions in - determining the fair value of investments) The Company did not have any fair value Level 2 or Level 3 assets or liabilities at December 31, 2024. {11}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **1. Summary of Significant Accounting Policies (continued)** 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, 2024. #### **Current Expected Credit Losses (CECL)** The Company accounts for estimated credit losses on financial assets measured at an amortized cost basis and certain off-balance sheet credit exposures in accordance with FASB ASC 326-20, Financial Instruments ñ Credit Losses. FASB 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. The Company 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 that adjusts the assetís amortized cost basis. Changes in the allowance for credit losses are reported in Credit Loss expense. . The Companyís receivables from broker-dealers and others include amounts receivable from unsettled trades, estimated 12b-1 payments, cash deposits, amounts due from representatives and a clearing firm deposit. A portion of the Companyís 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. 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, 2024, there were no amounts to be indemnified to the clearing broker for these customer accounts. {12}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **Adoption of New Accounting Pronouncements** #### **Improvements to Reportable Segment Disclosures** In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entitiesí segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segmentís profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective for the Companyís Annual Report for the fiscal year ended December 31, 2024. #### **Improvements to Income Tax Disclosures** In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (ASU 2023-09), which requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, this ASU requires certain disclosures of state versus federal income tax expense and taxes paid. This ASU is effective for our Annual Report for the year ended December 31, 2025, with early adoption permitted. The Company does not expect the adoption of ASU 2023-09 to have a material impact on its financial statements. {13}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) The Company is a single reporting segment comprised ofMWA Financial Services, Inc. and MWAGIA, Inc. The Company is considered a single reporting segment as its operations are managed and reviewed on a consolidated basis for decision-making and performance evaluation purposes. All revenues are from customerslocated in the United States of America with no revenue from transactions with other operating segments. MWA Financial Services, Inc. is involved in the sale of registered proprietary and non-proprietary securities products and MWAGIA, Inc. is involved in the sale of non-proprietary general insurance products. The accounting policiesforsegment reporting profit/loss and assets are the same asthose described in the summary of significant accounting policies. The measure of segment assets is reported on a consolidated basis in the consolidated statement of financial condition (page 3). The chief operating decision maker (CODM) is the president and chief executive officer of the Company. The CODM assesses the performance for the segment and determines the allocation of resources based on net income, as reported in the consolidated statement of operations (page 4). The CODM also uses excess net capital (see note 5), which is not a measure of profit and loss, to make operational decisions while maintaining capital adequacy. The Company does not have intra entity sales or transfers. Consolidated revenue from external customers in 2024 was \$24,284,104. {14}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **3. Revenues from Contracts with Customers** The following table provides a disaggregation of revenue from contracts with customers by revenue type and a reconciliation to total revenues in the consolidated statement of operations: | | Year
ended
December
31,
2024 | |------------------------------------------------------------------------------------------|------------------------------------------| | Revenue | | | Concession
Revenue | | | Policy
concessions | \$18,494,685 | | Mutual
fund
concessions | 12,969,092 | | Brokerage
equity
concessions | 279,870 | | Total
Concession
Revenue | 31,743,647 | | Investment
advisory
fees | 2,520,256 | | Field
reimbursements | 1,081,360 | | Variable
product
distribution
fee | 1,481,616 | | Total
revenues
from
contracts
with
customers | 36,826,879 | | Interest
income | 107,232 | | Other
income | 68,273 | | Revenues
as
included
in
the
consolidated
statement
of
operations | \$37,002,384 | The following discussions describe the nature, timing and uncertainty of revenues and cash flows arising from the Companyís contracts. #### **Policy concessions** The Company has entered into agreements with several organizations to sell variable and fixed annuities as well as medical, dental, long term care, disability, disability income, and accidental death insurance to its customers. The Companyís 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 concessions when amounts are known and transaction price can be determined and allocated. 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 Companyís control. Such factors include length of time policies remain active and amount of additional premiums paid by the policy holder. {15}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **3. Revenues from Contracts with Customers (continued)** Variable amounts are recorded as policy administrative fees (12b-1 fees) and are based on the average daily policy net asset balances and agreed upon contractual rate. As the uncertainty is dependent on the value of the policy at future points in time as well as the length of time the investor remains in the policy, both of which are highly susceptible to factors outside the Companyís influence, the Company does not believe that it can overcome this constraint until the market value of the policy and the investor activities are known, which are usually monthly or quarterly. 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 policy balances and assets under administration. #### **Mutual fund concessions** The Company has entered into agreements with several organizations to sell mutual funds to its customers. The related performance obligation is the successful sale of the mutual fund assets. The Company may receive distribution fees paid by the fund up front, over time, upon the investorís exit from the fund, or as a combination thereof. 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 concession revenues at the point in time the performance obligation has been satisfied, which is the trade date. Variable amounts are recorded as fund administrative fees (12b-1 fees) and are based on the average daily fund netasset balances multiplied by the agreed upon contractual rate. 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 Companyís 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. 12b-1 fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods. #### **Brokerage equity commissions** The Company has entered into agreements with its clearing broker to buy or sell equity investments to 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 {16}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **3. Revenues from Contracts with Customers (continued)** 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. The Company will recognize equity sales commission revenues at the point in time the performance obligation has been satisfied, which is the trade date. #### **Investment advisory fees** The Company has entered into agreements with several organizations to earn fees for servicing investment advisory accounts of its customers. The related 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. 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 Companyís control. 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. #### **Field reimbursements** The Company has entered into agreements with the registered representatives that sell the Companyís products. The Company charges those registered representativesí fees to be properly licensed and registered with FINRA andother states or regulatory authorities, and firm technology fees. 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. #### **Variable product distribution fee** The Company has entered into agreements with Modern Woodmen of America to sellits variable annuity to its customers. The related performance obligation is the successful sale, subsequent ongoing servicing and monitoring of the variable annuity assets. For the subsequent ongoing {17}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **3. Revenues from Contracts with Customers (continued)** servicing and monitoring of the variable annuity assets, the Company receives an agreed upon monthly fee based on assets under management and sales. The Company recognizes variable product distribution fee revenues at the point in time the performance obligation has been satisfied, which is monthly. #### **4. Income Taxes** The Company and its subsidiary file consolidated income tax returns, including only their own operations, since the ultimate parent company, Modern Woodmen ofAmerica, is a tax-exempt fraternal benefit society. At December 31, 2024, the Company had a tax net operating loss carryover of \$11,477,498. The tax net operating losses carryover of \$11,225,744 arising in 2005 through 2017 may be carried forward until 2025 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, 2024. Management has established a valuation allowance for the full amount of the related netdeferred tax assets of \$2,410,275 at December 31, 2024, because of the uncertainty of future income necessary for its ultimate realization. The Company has analyzed all material tax provisions under the guidance of ASC 740, , and has determined that there are no tax benefits that should not be recognized as of December 31, 2024. There are no unrecognized tax benefits that would affect the effective tax rates. The Company does not believe it would be subject to any penalties or interest relative to any open 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 2021 through 2024 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. {18}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) #### **5. Net Capital Requirements** The Company is subject to the uniform net capital requirements of the SEC under Rule 15c3-1. The SECís requirements provide that equity capital may 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, 2024, the Company had net defined capital of \$2,097,845, which was \$1,914,141 in excess of the required net capital of \$183,704 at that date. At December 31, 2024, the Companyís ratio ofaggregate indebtedness to net capital was 1.31 to 1. Various other regulatory agencies may impose additional capital requirements. Under the clearing arrangement with the clearing broker, the Company is also required to maintain certain minimum levels of net capital and comply with other financial ratio requirements. At December 31, 2024, the Company was in compliance with all such requirements. The Company 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. #### **6. Related-Party Transactions** The Companyís variable product distribution fee income relates to services performed in connection with the distribution ofthe variable annuity ofModern Woodmen ofAmerica, its parent. Modern Woodmen of America compensated the Company \$1,481,616 under a distribution agreement that commenced in June 2001 and was amended in 2010, 2017 and 2024. Concessions income derived from proprietary variable product transactions, which were fully distributed in commissions to representatives selling those products, or retained by the Parent, totaled \$10,048,072 in 2024. Substantially all of the Companyís operating expenses represent allocations from, or payments by, Modern Woodmen of America, which are then reimbursed by the Company. During 2024, total net expenses reimbursed to Modern Woodmen of America were \$5,204,985. This includes the cost of the Companyís employees and the allocated costs of their participation in various qualified employee benefit plans covering substantially all employees and sponsored by Modern Woodmen of America. 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. {19}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) # As of December 31, 2024, the amount due to Parent was \$335,912 and comprised primarily of the cost of employees, including the allocated costs of their participation in various qualified employee benefit plans, variable product distribution fee and other allocations from, or payments by, the Parent and reimbursed by the Company. From time-to-time Modern Woodmen ofAmerica contributes capital to the Company. During 2024, no capital contributions were made. The Company records an allowance for credit losses. Management evaluated current market conditions 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: | Balance
at
December
31,
2023 | \$
20,600 | |--------------------------------------------------|--------------| | Write-offs | (18,434) | | Provision
for
expected
credit
losses | 28,634 | | Balance
at
December
31,
2024 | \$
30,800 | There were no recoveries collected in 2024. ## In the normal course of business, the Company discusses matters with its regulators raised during regulatory 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 financial performance. However, the Company is unable to predict the outcome or the timing ofthe ultimate resolution ofthese matters or the potential fines, penalties or injunctive or other equitable relief, if any, that may result from these matters. {20}------------------------------------------------ #### Notes to Consolidated Financial Statements (continued) ## In the normal course of business, the Company enters into contracts that contain a variety of representations which provide general indemnifications. The Companyís 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 the risk of loss to be remote. {21}------------------------------------------------ Supplemental Information {22}------------------------------------------------ # Schedule I ñ Computation of Net Capital Under SEC Rule 15c3-1 December 31, 2024 | Computation
of
Net
Capital | | | | | |-------------------------------------------------------------------------------------------------------------|------------------------|-------------|-----------------|--| | 1.
Total
ownership
equity
fromStatement
of
FinancialCondition | | | \$
3,068,608 | | | 3.
Total
ownership
equity
qualified
for
net
capital | | | 3,068,608 | | | 5.
Total
capital
and
allowable
subordinated
liabilities | | | 3,068,608 | | | 6.
Deductions
and/or
charges: | | | | | | A.
Total
nonallowable
assets
from
Statement
of
FinancialCondition: | | | | | | 1.
Investment
in
subsidiary | 385,393 | | | | | 2.
Prepaid
expenses
and
other
receivables | 532,865 | 918,258 | | | | D.
Other
deductions
and/or
charges | | - | (918,258) | | | 8.
Net
capital
before
haircuts
on
securities
positions | | | 2,150,350 | | | 9.
Haircuts
on
securities
[computed,
where
applicable,
pursuant | to
15c3-1(f)]: | | | | | C.
Trading
and
investment
securities: | | | | | | 1.
Exempted
securities | | 52,505 | | | | E.
Other | | - | (52,505) | | | 10.
Net
Capital | | | 2,097,845 | | | Computation
of
Basic
Net
Capital | Requirement | | | | | Part
A | | | | | | 11.
Minimumnet
capitalrequired
(6-2/3%
ofline
19) | | | \$
183,704 | | | 12.
Minimumdollar
net
capitalrequirement
of
reporting
broker | or
dealer
and | minimum | | | | net
capitalrequirement
ofsubsidiaries | | | 50,000 | | | 13.
Net
capitalrequirement
(greater
of
line
11
or
12) | | | 183,704 | | | 14.
Excess
net
capital(line
10
less
13) | | | 1,914,141 | | | 15.
Net
capital
less
greater
of
10%
of
line
19
or
120%
of
line
12 | | | 1,822,289 | | | Computation
of
Aggregate
ï
Accounts
payable
and
accrued
expenses | Indebtedness | | | | | 16.
Total
A.I.
liabilities
from
Statement
of
FinancialCondition: | | | | | | | ˜
by
line
10) | \$2,755,560 | \$
2,755,560 | | | 19.
Total
aggregate
indebtedness | | | 2,755,560 | | | 20.
Percentage
of
aggregate
indebtedness
to
net
capital(line
19 | | | 131.35% | | | Notes | | | | | There were no differences between the computation of net capital under Rule 15(c)3-1 included in this audited report and the computation included in the Companyís corresponding unaudited Form X-17A-5 Part IIA filing submitted to the FINRA on January 24, 2025. {23}------------------------------------------------ ## Schedule II ñ Information Relating to the Possession or Control Requirements under SEC Rule 15c3-3 December 31, 2024 The Company is exempt from SEC Rule 15c3-3 as itrelates to the possession or control requirements under paragraph (k)(2)(ii) of th s Rule. The Company clears all customer transactions through Pershing LLC ona fully disclosed basis. The Companyís other business activities contemplated by Footnote 74 of the SEC Release No. 34- 70073 adopting amendments to 17 C.F.R. ß 240.17a-5 are limited to effecting securities transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company, and the Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company): (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.