# H & L EQUITIES, LLC X-17A-5 (2021-02-26) — Broker-dealer annual report - Company: H & L EQUITIES, LLC - Form: X-17A-5 - Filed: 2021-02-26 - Period: 2020-12-31 - Accession: 0001143598-21-000003 - CIK: 1143598 - File #: 8-53371 - Material weakness: No - Auditor: Rubio CPA, PC - Auditor location: Atlanta, GA - Contact: Charlie Mathes - Phone: 404-892-3300 - Signed by: Charlie Mathes (CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1143598/000114359821000003/financial_report_1.pdf --- {0}------------------------------------------------ # **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Fe rry Road SE Building 2, Suite 1680 Atlanta, GA. 30339 Office: 770 690-8995 Fax: 770 83 8· 7123 ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members·of H & L Equities, LLC Opinion on the Financial Statements We have audited the accompanying statement of financial condition of **H** & L Equities, LLC (the "Company") as of December 31, 2020, the related statements of operations, changes in members' equity, and cash flows for the year then ended 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, 2020, anq the results of its operations and its cash flows for the year then ended 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement to 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 present.ation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. #### Supplemental Information The information contained in Schedules I and II has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the information in Schedules I and II reconciles to the financial statements or the underlying accounting and other records, as applicable, and perfonning procedures to test the completeness and accuracy of the information presented in the accompanying schedules. In forming our opinion on the accompanying schedules, we evaluated whether the supplemental information, including its fonn and content, is presented {1}------------------------------------------------ in conformity with 17 C.P.R. §240.17a-5. In our opinion, the aforementioned supplemental infonnation is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2013. February 26, 2021 Atlanta, Georgia Rubio CPA, PC {2}------------------------------------------------ #### H&L EQUITIES, LLC #### FINANCIAL STATEMENTS AND SCHEDULES For the Year Ended December 31,2020 With Report of Independent Registered Public Accounting Firm {3}------------------------------------------------ #### H&L Equities, LLC STATEMENT OF FINANCIAL CONDITION December 31,2020 #### ASSETS | Total Assets | \$
357,838 | |------------------------------------------|---------------| | Prepaid Expenses | 2,053 | | Commissions Receivable-
Related Party | 12,500 | | Cash | \$
343,285 | #### LIABILITIES AND MEMBERS' EQUITY | Commissions Payable | 7,500 | |---------------------------------------|------------| | Due to Related Party | 40,977 | | Accounts Payable and Accrued Expenses | 3,500 | | Total Liabilities | 51,977 | | Members' Equity | 305,861 | | Total Liabilities and Members' Equity | \$ 357,838 | {4}------------------------------------------------ #### **H&L Equities, LLC STATEMENT OF OPERATIONS For the Year Ended December 31, 2020** | REVENUE: | | |---------------------------|---------------| | Commissions | \$ 2,110,675 | | Total Revenue | 2,110,675 | | EXPENSES: | | | Commission Expense | 1,266,405 | | Compensation and Benefits | 257,900 | | IT, Data, & Communication | 14,123 | | Occupancy | 38,289 | | Other | 31,253 | | Total Expenses | 1,607,970 | | NET INCOME | \$
502,705 | {5}------------------------------------------------ #### H&L Equities, LLC STATEMENT OF MEMBERS' EQUITY For the Year Ended December 31, 2020 | Balance, December 31,2020 | \$
305,861 | |----------------------------|---------------| | Distributions to Members | (500,000) | | Net Income | 502,705 | | Balance, December 31, 2019 | \$
303,156 | {6}------------------------------------------------ #### **H&L Equities, LLC STATEMENT OF CASH FLOWS For the Year Ended December 31, 2020** | CASH FLOWS FROM OPERATING ACTIVITIES: | | |---------------------------------------------------|------------| | Net Income | \$ 502,705 | | Adjustments to reconcile net income to net cash | | | provided by operating activities: | | | Decrease in Prepaid Expenses | 42 | | Decrease in Due from Related Party | 14,109 | | Increase in Due to Related Party | 40,977 | | Decrease in Commissions Payable | (54,375) | | Decrease in Accounts Payable and Accrued Expenses | (50) | | Net cash provided by operating activities | 503,408 | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | Distributions to Members | (500,000) | | Net cash used by financing activities | (500,000) | | NET INCREASE INi CASH | 3,408 | | CASH | | | Beginning of year | 339,877 | | End of year | \$ 343,285 | {7}------------------------------------------------ #### **H&L Equities, LLC NOTES TO FINANCIAL STATEMENTS** #### **NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### **Nature of Business:** The Company, formed on May 30, 2001, operates as a broker-dealer in the private placements of Real Estate Investment Trusts (REITs). The Company is registered with the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA"). As a limited liability company, the members' liability is limited to their investment. #### **Income Taxes:** The Company is treated as a partnership for federal income tax purposes. Consequently, income taxes are not payable by, or provided for, the Company. Members are taxed individually on their shares of the Company's earnings. The Company has adopted the provisions ofFASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under FASB ACS 7 40-10, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status, including its status as a pass-through entity, and the decision not to file a return. The Company has evaluated each of its tax positions and has determined that it has no unc,ertain tax positions for which a provision or liability for income taxes is necessary. #### **Revenue Recognition:** Revenue from contracts with customers includes private placements of REITs. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on appropriate measure of the Company's progress under contract; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events. The Company recognizes revenue upon the closing of an offering with funds remitted to the REIT customer as this satisfies the only performance obligation identified by the Company. The Company maintains its cash in a high credit quality bank. Balances at times may exceed federally insured limits. #### **Use of Estimates:** The iPreparation of financial statements in accordance with accounting principles generally acceiPted in the United States of America requires reliance on accounting information based on estimates which may or may not reflect actual future results. #### **Subsequent Events:** Subsequent events were evaluated through the date the financials were issued {8}------------------------------------------------ #### **NOTE 2: RELATED PARTY TRANSACTIONS** The Company has an expense allocation agreement with a company partially owned by one of its members. Under the agreement, the Company pays the related company monthly fees for personnel services, the use of office facilities, including office furniture and equipment, supplies, and other administrative services. The amount expensed for 2020 under the arrangement is approximately \$313,654. The due to related party of\$40,978 arises from this arrangement. In addition, the Company earns all of its revenues from private placements of REITs referred by the company partially owned by one of its members. The commissions receivable from related party arose from these transactions. Financial positions and results of operations would differ from the amounts in the accompanying financial statements if these related party transactions did not exist. #### **NOTE 3: NET CAPITAL REQUIREMENTS** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 1Sc3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2020, the Company had net capital of \$298,808, which was \$293,808 in excess of its required net capital of \$5,000 and the ratio of aggregate indebtedness to net capital was 0.17 to 1.0. #### **NOTE 4: CONTINGENCIES** The Company is subject to litigation in the normal course of business. The Company has no litigation in progress as of December 31, 2020. #### **NOTE 5: ECONOMI1 C RISKS** In March 2020, the World Health Organization (WHO) dedared COVID-19 a global pandemic. This pandemic event has resulted in significant business disruption and uncertainty in both global and U.S. markets. While the Company believes that it is in an appropriate position to sustain the potential short-term effects of these world-wide events, the direct and long-term impact to the Company and its financial statements is undetermined at this time. {9}------------------------------------------------ #### H&L Equities, LLC #### Supplementary Information Pursuant to Rule 17a-5 oftbe Securities Exchange Act of 1934 #### December 31, 2020 The accompanying schedule is prepared in accordance with the requirements and general format of FOCUS FormX-17 A-5. {10}------------------------------------------------ #### **H&L Equities, LLC SCHEDULE I COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMIMISSION ACTOF1934** **December 31, 2020** | Net Capital | | |-------------------------------------------------|---------------| | Total members' equity qualified for net capital | \$
305,861 | | Deduction for non-allowable assets: | | | Commissions receivable, net | (5,000) | | Prepaid expense | (2,053) | | Net capital before haircuts | 298,808 | | Less haircuts | | | Net capital | 298,808 | | Minimum net capital required | 5,000 | | Excess net capital | \$
293,808 | | Aggregate Indebtedness:
Liabilities | 51,977 | | Ratio of aggregate indebtedness to net capital | .17 to 1 | RECONCILATION WITH COMPANY'S COMPUTATION OF NET CAPITAL INCLUDED IN PART IIA OF FORM X-17A-5 AS OF DECEMBER 31,2020. There is no difference between capital as reported in the FOCUS Part IIA filed january 26, 2021 and net capital as reported above. {11}------------------------------------------------ #### H&L Equities, LLC #### SCHEDULE II COMPUTATION FOR DETERMINATION OF THE RESERVE REQUIREMENTS UNDER THE SECURITIES AND EXCHANGE COMMISSION RULE 15c3-3 AND INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER SECURITIES AND EXCHANGE COMMISSION RULE 15c3-3 DECEMBER 31, 2020 The Company does not claim exemption from Rule 1Sc3-3 in reliance upon Footnote 74 of the 2013 Release. The Company does not hold customer funds or securities. {12}------------------------------------------------ ## **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office; 770 690-8995 Fax: 770 838-7123 #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members of **H** & L Equities, LLC We have reviewed management's statements included in the accompanying Broker Dealers Annual Exemption Report in which (l) H & L Equities, LLC did not claim an exemption from Rule 15c3~3 in reliance upon Footnote 74 of the 2013 Release, and (2) H & L Equities, LLC stated that H & L Equities, LLC met the identified conditions for such reliance throughout the most recent fiscal year without exception. H & L Equities, LLC's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about **H** & L Equities, LLC's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in Footnote 74 of the 2013 Release. February 26, 2021 Atlanta, GA Rubio CPA, PC {13}------------------------------------------------ ![](_page_13_Picture_0.jpeg) **H & L EQUITIES, LLC** 1175 Peachtree Street NE, Suite 2200 Atlanta, GA 30361 Phone: 404-892-3300; Fax: 404-892-7559 #### BROKER DEALER ANNUAL EXE:MPTION REPORT We, as members of management of H & L Equities, LLC (the "Company"), are responsible for complying with Rule 17a-5 - Reports to be made by certain brokers and dealers. We have performed an evaluation of the Company's compliance with the requirements of Rule l7a-5 and the exemptive provisions of Rule 15c3-3(k) (the "exemptive provisions"), and of the 2013 Release adopting amendments to Rule l7a-5, including Footnote 74 of the 2013 Release ("Footnote 74"). We have determined that the Company does not operate pursuant to any of the exemptive provisions of paragraph (k) of Rule 15c3-3, but also (1) does not directly or indirectly receive, holdl, or otherwise owe funds or securities for or to customers, other than money or other consideration received and promptly transmitted in compliance with paragraph (b)(2) of Rule 15c2-4; (2) does not carry accounts of or for customers; and (3) does not carry PAB accounts (as defined in Rule 15c3-3). Accordingly, based on our evaluation we make the following statements to the best knowledge and belief of the Company: - 1. The Company has no possession or control obligations under Rule 15c3-3(b) or reserve deposit obligations under Rule 15c3-3(e), because its business is limited to effecting securities transactions via subscriptions and participating in distributions of securities in accordance with the requirements of paragraph (b)(2) of Rule 15c2-4; - 2. We reviewed the provisions of Rule 15c3-3 and related guidance and confirmed that the Company could rely on Footnote 74; and - 3. The Company met the identified conditions for reliance on Footnote 74 throughout the period of January 1, 2020 to December 31, 2020 without exception. ~~ Charlie B. Mathes Chief Compliance Officer January 22, 2021 Securities products and seiVices offered by H & L Equities, LLC, member FINRA and the Securities Investor Protection Corporation ("SIPC"). You may obtain information about SJPC, including the SIPC broch'ure, by contacting SIPC at (202) 371-8300 or visiting their website at www,sipc,oro. {14}------------------------------------------------ RUBIO CPA, PC CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770690· 8995 Fax: 770 838-7123 ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPLYING AGREED-UPON PROCEDURES To the Members of H & L Equities, LLC We have performed the procedures included in Rule l7a-S(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below and were agreed to by H & L Equities, LLC and the SIPC, solely to assist you and SIPC in evaluating H & L Equities, LLC's compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2020. H & L Equities, LLC's management is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with standards established by the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency ofthese procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we perfonned, and our findings are as follows: - 1) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amount reported on the Annual Audited Report Fonn X-17 A-5 Part Ill for the year ended December 31, 2020 with the Total Revenue amount reported in Fonn SIPC-7 for the year ended December 31, 2020, noting no differences; - 3) Compared any adjustments reported in Fonn SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on H & L Equities, LLC's compliance with the applicable instructions of the Form SIPC-7 for the year ended December 31, 2020. Accordingly, we do not express such an opinion or conclusion. Had we perfonned additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the infonnation and use of H & L Equities, LLC and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. February 26, 2021 Atlanta, GA ~ tt/#;1/~ Rubio CPA, PC {15}------------------------------------------------ | SIPC-7 | | | | |----------------|--|--|--| | (36-REV 12/18) | | | | #### SECURITIES INVESTOR PROTECTION CORPORATION P.O. Box 92185 Washington, D.C. 20090-2185 202-371-8300 #### General Assessment Reconciliation **SIPC-7** (36-REV 12/18) For the fiscal year ended 1213112020 (Read carefully the instructions in your Working Copy before completing this Form) #### TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS 1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for purposes of the audit requirement of SEC Rule 17a-5: I H&L Equities LLC 1175 Peachtree Street NE Suite 2200 Atlanta, GA 30361 L 2. A. General Assessment (item 2e from page 2) B. Less payment made with SIPC-6 filed (exclude interest) 7/30/2020 Date Paid C. Less prior overpayment applied D. Assessment balance due or (overpayment) \_j Note: II any of the information shown on the mailing label requires correction, please e-mail *any* corrections to form@sipc.org and so indicate on the form filed. Name and telephone number of person to contact respecting this form. \$3,166 ( 2,697 469 E. Interest computed on late payment (see instruction E) for \_\_ days at 20% per annum 0 F. Total assessment balance and interest due (or overpayment carried forward) G. PAYMENT: *...j* the box Check mailed to P.O. Box[{] Funds Wired0 ACH0469 Total (must be same as F above) \$ \_\_\_\_\_\_\_\_\_\_ \_ H. Overpayment carried forward 3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registration number'): | The Sl PC member submitting this form and the
person by whom it is executed represent thereby
that all information contained herein is true, correct | H&L Equities LLC | | |------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|--| | and complete. | | | | Dated the 22nd day of February
20~. | FINOP | | | | {Till•) | | | for a period of not less than 6 years, the latest 2 years in an easily accessible place. | This form arnd the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form | | | | ffi Dates
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_ | | | c:.:> Exceptions: | en Disposition of exceptions: | | | | {16}------------------------------------------------ ### **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** Amounts for the fiscal period beginning ...:.11:....:1:..=12:.:::02:..:0~-- and ending 12/31/2020 \ | Item No.
2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) | Eliminate cents
\$ 2,110,675 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------| | 2b. Additions: | | | (1) Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not included above. | 0 | | (2) Net toss from principal transactions in securities in trading accounts. | 0 | | (3) Net loss from principal transactions in commodities in trading accounts. | 0 | | (4) Interest and dividend expense deducted in determining Item 2a. | 0 | | (5) Net loss from management of or participation in the underwriting or distribution of securities. | 0 | | (6) Expenses other than advertising, printing, registration lees and legal lees deducted in determining net
profit from management of or participation in underwriting or distribution of securities. | 0 | | (7) Net loss from securities in investment accounts. | 0 | | Total additions | 0 | | 2c. Deductlons:
(1) Revenues from the distribution of shares of a registered open end investment company or unit
investment trust, from the sale of variable annuities, from the business of insurance, from investment
advisory services rendered to registered investment companies or insurance company separate
accounts, and from transactions in security futures products. | 0 | | (2) Revenues from commodity transactions. | 0 | | (3) Commissions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | 0 | | (4) Reimbursements for postage in connection with proxy solicitation. | 0 | | (5) Net gain from securities in investment accounts. | 0 | | (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and
(ii) Treasury bills, bankers acceptances or c·ommerclal paper that mature nine months or less
from Issuance date. | 0 | | (7) Direc~ expenses of printililg advertising and legal fees incurred in connection with other revenue
related to the securities business (revenue defined by Section 16(9)(L) of the Act). | 0 | | (8) Other revenue not related either directly or indirectly to the securities business. | | | (See Instruction C): | 0 | | (Deductions in excess of \$100,000 require documentation) | | | (9) (i) Total interest and dividend expense (FOC US line 22/PART IIA Line 13,
0
__________
Code 4075 plus line 2b(4) above) but not in excess
of total interest and dividend income.
\$
_ | | | (ii) 40% of margin Interest earned on customers securities
accounts (40% of FOCUS line 5, Code 3960). | | | Enter the greater of line (i) or (ii) | 0 | | Total deductions | 0 | | 2d. SIPC Net Operating Revenues | s 2,110,675 | | 2e. General Assessment@ .0015 | | | | (to page 1, line 2.A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.