# KATALYST SECURITIES LLC X-17A-5 (2020-03-11) — Broker-dealer annual report - Company: KATALYST SECURITIES LLC - Form: X-17A-5 - Filed: 2020-03-11 - Period: 2019-12-31 - Accession: 0001139140-20-000004 - CIK: 1139140 - File #: 8-53260 - Material weakness: No - Auditor: Lerner & Sipkin, CPAs. LLP - Auditor location: New York, NY - Contact: Jennifer Goro - Phone: 2124006993 - Signed by: Michael Silverman (Managing Director) Original filing: https://www.sec.gov/Archives/edgar/data/1139140/000113914020000004/katpublic19.pdf --- {0}------------------------------------------------ # KATALYST SECURITIES, LLC (A Limited Liability Company) ## STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2019 {1}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 August 31, 2020 Expires: Estimated average burden hours per response.. . . . . . . 12.00 ## ANNUAL AUDITED REPORT FORM X-17A-5 PART III | | SEC FILE NUMBER | |---------|-----------------| | 8-53260 | | FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | 01/01/2019 | AND ENDING | 12/31/2019 | |-----------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | MM/DD/YY | | MM/DD/YY | | | | | | | | OFFICIAL USE ONLY | | | | FIRM I.D. NO. | | | | | | (No. and Street) | | | | NY | | 10017 | | (State) | | (Zip Code) | | | | 212 400 6993 | | | | (Area Code - Telephone Number) | | | | | | | | | | | | | | | | | | 132 Nassau Street, Suite 1023 New York | NY | 10038 | | (City) | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | A. REGISTRANT IDENTIFICATION
Katalyst Securities LLC
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
(Name - if individual, state last, first, middle name)
Accountant not resident in United States or any of its possessions.
FOR OFFICIAL USE ONLY | \*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(c)(2) > Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1410 (06-02) {2}------------------------------------------------ #### OATH OR AFFIRMATION | | Michael Silverman | the best of the course , swear (or affirm) that, to the best of | |----|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------| | | Katalyst Securities LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | of | December 31 | , 20 19 | | | classified solely as that of a customer, except as follows: | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | | | | | | | | | | | Signature- | | | | DIRECTOR
MANA ETNE | | | | Title | | | | | | | | JENNIFER GORO | | | Notary Public | NOTARY PUBLIC-STATE OF NEW YORK | | | This report ** contains (check all applicable boxes): | No. 01GO6205718 | | | (a) Facing Page. | Qualified in Queens County
My Commission Expires 05-11-2021 | | | (b) Statement of Financial Condition. | | | | (c) Statement of Income (Loss). | | | | (d) Statement of Changes in Financial Condition. | | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | (1) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | | (g) Computation of Net Capital. | | | | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | (i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | | (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of | | | consolidation. | | | | (1) An Oath or Affirmation. | | | | (m) A copy of the SIPC Supplemental Report. | | | | | (1) A report describing any material inadequacies found to exist or found to have existed since the date of the previous andit. | | | | | \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). {3}------------------------------------------------ ### KATALYST SECURITIES, LLC (A Limited Liability Company) ### DECEMBER 31, 2019 ## TABLE OF CONTENTS Independent Auditors' Report | | Page | |-------------------------------------|------| | Statement of Financial Condition 1 | | | | | | Notes to Financial Statement 2-5 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 132 Nassau Street, New York, NY 10038 Tel 212.571.0064 / Fax 212.571.0074 Jay Lerner, C.P.A. jlerner@lernersipkin.com Joseph G. Sipkin, C.P.A. jsipkin@lernersipkin.com #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Members of Katalyst Securities LLC 630 Third Avenue, 5th Floor New York, NY 10017 #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Katalyst Securities LLC as of December 31, 2019, 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 Katalyst Securities LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion The financial statement is the responsibility of Katalyst Securities LLC's management. Our responsibility is to express an opinion on Katalyst Securities LLC'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 Katalyst Securities LLC 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 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 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. & Sipkin CP/ Certified Public Accountants (NY) We have served as Katalyst Securities LLC's auditor since 2015. New York, NY February 7, 2020 {5}------------------------------------------------ ### KATALYST SECURITIES, LLC (A Limited Liability Company) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2019 #### ASSETS | KATALYST SECURITIES, LLC
(A Limited Liability Company)
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2019 | | |--------------------------------------------------------------------------------------------------------------------|---------------| | | | | ASSETS | | | Cash | \$
37,607 | | Fees receivable | 75,000 | | Prepaid expenses | 40,560 | | Other assets | 60,872 | | Total assets | \$
214,039 | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities: | | | Accounts payable and accrued expenses | \$
24,844 | | Member's equity | 189,195 | | Total liabilities and member's equity | \$
214,039 | See notes to the financial statement {6}------------------------------------------------ #### 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Katalyst Securities, LLC, (the "Company") was organized as a Pennsylvania limited liability company on February 23, 2001, and was a wholly owned subsidiary of Katalyst LLC ("Katalyst"). On October 26, 2010, FINRA approved the change in ownership of Katalyst Securities LLC. The former Katalyst LLC sold 100% ownership interest to Securities Operations Specialists Inc., a New York Corporation (the "Parent"). The Company, located in New York, is a broker and dealer in securities registerd with the Securities and Exchange Commission ("SEC") and is a member of FINRA. The Company operates under the provisions of Paragraph (k)(2)(i) of Rule 15c3-3 of the Securities Exchange Commission, which provides an exemption when a "Special Account for the Exclusive Benefit of customers" is maintained. #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Basis of accounting The financial statements of the Company have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. #### Cash and cash equivalents The Company considers as cash all short-term investments with an original maturity of three months or less to be equivalents. #### Revenue recognition In accordance with ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASC Topic 606") revenues from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Company's progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services (i.e., the "transaction price"). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any. {7}------------------------------------------------ #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) #### Revenue recognition (continued) #### Advisory fees The Company provides advisory services on mergers and acquisitions (M&A). Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. #### Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### Fair value of financial instruments Financial instruments that are subject to fair value disclosure requirements are carried in the financial statements at amounts that approximate fair value and include cash and cash equivalents. Fair values are based on quoted market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk. #### Comprehensive income Statement of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income, establishes requirements for disclosure of Comprehensive Income that includes certain items previously not included in the statement of income, including unrealized gains and losses on available-for-sales securities and foreign currency translation adjustment among others. During the year ended December 31, 2019, the Company did not have any component of Comprehensive Income to report. #### Concentration of risk The Company maintains cash in bank accounts which are non-interest bearing. As of January 1, 2013, interest bearing and non-interest bearing accounts are insured by the FDIC up to \$250,000 per financial institution. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. {8}------------------------------------------------ #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) #### Income taxes As a wholly-owned limited liability company, the Company is not subject to Federal, state or local income taxes. All items of income, expense, gains and losses are reportable by the member for tax purposes. The Company is considered to be a disregarded entity and is thus not subject to Federal, state and local income taxes and does not file income tax returns in any jurisdiction. The Company has no unrecognized tax benefits at December 31, 2018. #### Uncertain tax positions The Company adopted the provisions of the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification No. 740 ("ASC 740") Subtopic 05 "Accounting for Uncertainty in Income Taxes." As a result of the implementation, the Company was not required to recognize any amounts from uncertain tax positions. The Company's conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof as well as other factors. Generally, federal, state and local authorities may examine the Company's tax returns for three years from the date of filing; consequently, the respective tax returns for years prior to 2016 are no longer subject to examination by tax authorities. 2020 68,547 \$ #### 3. COMMITMENTS AND CONTINGENCIES #### Office lease The Company entered into a short term occupancy agreement commencing October 1, 2019 through September 30, 2020. Minimum aggregate annual rentals for office space at December 31, 2019 are approximately as follows: For the Years Ending December 31: Amount Occupancy expense for the year ended December 31, 2019 was \$93,239. #### Other The Company is a defendant in two pending civil court actions in which it is alleged unsuitable investment, breach of contract, negligence, breach of fiduciary duty, and failure to supervise regarding investments in a private placement offering in which the Company acted as the placement agent. The claimants made this investment having full disclosure about the risks in making such investments. The claimants did not file their complaints for almost two years from the date of investment and continue to own the investment. #### See independent auditors' report {9}------------------------------------------------ ### 3. COMMITMENTS AND CONTINGENCIES (continued) #### Other (continued) No discovery has, as yet, been conducted and so the likelihood of an outcome especially in an arbitration, cannot be determined. The potential range of loss is from zero to \$80,000, plus interest and expenses. #### 4. POSSESSION OR CONTROL REQUIREMENTS The Company does not have any possession or control of customer's funds or securities. There were no material inadequacies in the procedures followed in adhering to the exemptive provisions of SEC Rule 15c3-3(k)(2)(i) by promptly transmitting all customer funds or securities to the "Special Account for the benefit of customers." #### 5. NET CAPITAL REQUIREMENTS The Company is subject to the uniform net capital requirements of Rule 15c3-1 of the Securities and Exchange Act, as amended, which requires the Company to maintain, at all times, sufficient liquid assets to cover indebtedness. In accordance with the Rule, the Company is required to maintain defined minimum net capital of the greater of \$5,000 or 6 2/3% of aggregate indebtedness. At December 31, 2019, the Company had net capital as defined, of \$12,763, which exceeded the required minimum net capital of \$5,000 by \$7,763. Aggregate indebtedness at December 31, 2019 totaled \$24,844. The Company's percentage of aggregate indebtedness to net capital was 194.66 %. #### 6. SUBSEQUENT EVENTS Management of the Company has evaluated events and transactions that have occurred since December 31, 2019, through the date of the report and determined that there are no material events that would require disclosures in the Company's financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.