# THE SECURITIES GROUP, LLC X-17A-5 (2019-02-27) — Broker-dealer annual report
- Company: THE SECURITIES GROUP, LLC
- Form: X-17A-5
- Filed: 2019-02-27
- Period: 2018-12-31
- Accession: 0001146248-19-000001
- CIK: 1146248
- File #: 8-53635
- Material weakness: No
- Auditor: Watkins Uiberall, PLLC
- Auditor location: Memphis, TN
- Contact: Christie Michelle Vincent
- Phone: 901-328-4814
- Website: wucpas.com
- Signed by: Christie Michelle Vincent (President)
Original filing: https://www.sec.gov/Archives/edgar/data/1146248/000114624819000001/full.pdf
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| | UNITEDSTATES | | OMB APPROVAL |
|---------------------------------------------------------------------------|-----------------------------------------------------------|---------------------------------------------------------|-------------------------------|
| | SECURITJESANDEXCHANGECOMMJSSION | | OMB Number:
3235-0123 |
| Washin&ton, D.C. 20549 | | August 31, 2020
Expires:
Estimated average burden | |
| | ANNUAL AUDITED REPORT | | nse 12.00
hours
r |
| | FORM X·17A·5 | | |
| | PART Ill | | SEC FILE NUMBER |
| | | | &-53635 |
| | FACING PAGE | | |
| Information Required of Brokers and Dealers Pursuant to Section 17 of the | | | |
| | Securities Exchange Act of 1934 and Rule 17a-S Thereunder | | |
| REPORT FOR THE PERIOD BEGINNING | 01/01/18 | AND ENDING | 12/31/18 |
| | MMIDDIYY | | MMIOD/YY |
| | A. REGISTRANT IDENTIFICATION | | |
| NAME OF BROKER-DEALER: THE SECURITIES GROUP' LLC | | | OFFICIAL USE ONLY |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: , (Do not use P.O. Box No.) | | | FIRM 1.0. NO., |
| 6465 N. QUAIL HOLLOW ROAD, SUITE 400 | | | |
| | (No. and Street) | | |
| MEMPHIS | TN | | 38120 |
| (City) | (SDtc) | | (Zip Code) |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | |
| CHRISTIE MICHELLE VINCE!fl' | | | 901-328-Accountant not resident in United States or any of its possessions. | | | |
| | FOR OFFICIAL USE ONLY | | |
| | | | |
| | | | |
| | | | |
*must be supported by a statement of facts and CITCU'7"tances relied on as the basis/or the exemption. See Section 141. I 77·5(e)(2)* I I • I
> Potential peraona who are to reapond to the collection of lnformaUon contained In thla form 1re not required to reapond unleaa the form dlapl• a currently valid OMB control number.
SEC 141 0 (06-02)
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#### OATH OR AFFIRMATION
| J, CHRISTIE MICHELLE VINCENT | , swear (or affirm) that, to the best of |
|-----------------------------------------------------------------------------------------------------------------|------------------------------------------|
| my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the finn of | |
| THE SECURITIES GROUP, UC | |
of --~~~~-------------------------------- DECEMBER 31 --------------------------------------· ~ • 20\_1\_8 \_ \_\_\_, are true and correct J further swear (or affirm) that
neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account classified solely as that of a customer, except as follows;
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| This report •• contains (check all applicable boxes):
0 (a) Facing Page .
.t (b) Statement of financial Condition.
(c) Statement of Income (Loss).
1
(d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners• or Sole Proprietors' Capilal.
(f) 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 I Sc3·3.
(i) Information Relating to the Possession or Control Requirements Under Rule 1Sc3·3.
consolidation.
§ (I) An Oath or Affim1ation.
(m) A copy of the SIPC Supplemental Report. | (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule I Sc3·1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 1Sc3·
3.
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of |
| | ( n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. |
| u For conditions of confidential treatment of certoi11 portions ofthfs filing. see section 240. | /7a-5(e)(J). |
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#### FINANCIAL STATEMENTS
DECEMBER 31,2018
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| REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM | 1 |
|-----------------------------------------------------------------------------------------------------------|----|
| FINANCIAL STATEMENTS | |
| Statement of Financial Condition | 2 |
| Statements of Income (Loss) and Changes in Members' Equity | 3 |
| Statement of Cash Flows | 4 |
| Notes to Financial Statements | 5 |
| SUPPLEMENTARY INFORMATION | |
| Computation of Net Capital Under Rule 15c3-1
Schedule I - | 9 |
| Computation for Determination of Reserve
Schedule II -
Requirements Under Rule 15c3-3 (Exemption) | 10 |
| Information for Possession or Control
Schedule Ill
--
Requirements Under Rule 15c3-3 (Exemption) | 11 |
| REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM | 12 |
| EXEMPTION REPORT | 13 |
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1661 Aaron Brenner Drive • Suite 300 Memphis, Tennessee 38120 901 .761 .2720 • Fax: 901 .683.1120
417 West Main Street · Suite 100 Tupelo, Mississippi 38804 662.269.4014 Fax: 662.269.4016
**www.wucpas.com**
#### **Report of Independent Registered Public Accounting Firm**
To the Members of The Securities Group, LLC
#### **Opinion on the Financial Statements**
We have audited the accompanying statement of financial condition of The Securities Group, LLC as of December 31 , 2018, the related statements of income (loss) and changes in members' equity, and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of The Securities Group, LLC as of December 31 , 2018, and 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 Securities Group, LLC's management. Our responsibility is to express an opinion on The Securities Group, LLC'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 Securities Group, 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 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. 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.
#### **Auditor's Report on Supplemental Information**
The information on Schedules I, II, and Ill have been subjected to audit procedures performed in conjunction with the audit of The Securities Group, LLC's financial statements. The supplemental information is the responsibility of The Securities Group, LLC's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the 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. §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.
We have served as The Securities Group, LLC's auditor since 2006. Memphis, Tennessee February 26, 2019
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#### **STATEMENT OF FINANCIAL CONDITION**
#### **AS OF DECEMBER 31, 2018**
| ASSETS | |
|-----------------------------------------------------------|---------------|
| Current Assets: | |
| Cash and cash equivalents | \$
136,265 |
| Accounts receivable, less allowance for doubtful accounts | 25,797 |
| Other assets | 2,194 |
| Total Current Assets | 164,256 |
| Property and Equipment: | |
| Office furnishings and equipment | ,669
21 |
| Less: accumulated depreciation | (14,961) |
| Total Property and Equipment | 6,708 |
| Total Assets | \$
170,964 |
| LIABILITIES AND MEMBERS' EQUITY | |
| Current Liabilities: | |
| Accounts payable | \$
15,232 |
| Due to related party | 2,027 |
| Total Current Liabilities | 17,259 |
| Members' equity: | 153,705 |
| Total Liabilites & Members' Equity | \$
170,964 |
The accompanying notes are an integral part of these financial statements.
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#### **STATEMENTS OF INCOME (LOSS) AND CHANGES IN MEMBERS' EQUITY**
#### **FOR THE YEAR ENDED DECEMBER 31,2018**
| Revenues: | |
|------------------------------------|---------------|
| Commissions | \$
245,000 |
| Interest income | 28 |
| Total Revenues | 245,028 |
| | |
| Expenses: | |
| Administative fees | ,659
11 |
| Automobile | 1,813 |
| Computer & networking | 17,428 |
| Commissions | 125,000 |
| Depreciation | 4,192 |
| Guaranteed payments to members | 26,000 |
| Insurance | 758 |
| Taxes and licenses | 10,689 |
| Legal and professional | 15,537 |
| Rent | 6,000 |
| Telephone | 2,139 |
| Miscellaneous | 3,742 |
| Total Expenses | 224,957 |
| | |
| Net Income (Loss) | 20,071 |
| Members' equity, beginning of year | 133,634 |
| Members' equity, end of year | \$
153,705 |
The accompanying notes are an integral part of these financial statements.
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#### **STATEMENT OF CASH FLOWS**
#### **FOR THE YEAR ENDED DECEMBER 31, 2018**
| Cash Flows Provided By (Used For) Operating Activities:
Net Income (loss) | \$
20,071 |
|------------------------------------------------------------------------------|---------------|
| Adjustment to Reconcile Net Loss to Net Cash: | |
| Provided By (Used for) Operating Activities: | |
| Depreciation | 4,192 |
| Change in Operating Assets and Liablities: | |
| Increase (Decrease) in Cash and cash equivalents: | |
| Accounts receivable | (25,797) |
| Other assets | 840 |
| Accounts payable | 14,480 |
| Total adjustments | (6,285) |
| Net cash used for operating activities | 13,786 |
| Cash Flows Used For Investing Activities: | |
| Purchase of equipment | (2,367) |
| Net decrease in cash and cash equivalents | 11,419 |
| Cash and cash equivalents at beginning of year | 124,846 |
| Cash and cash equivalents at end of year | \$
136,265 |
The accompanying notes are an integral part of these financial statements.
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## **NOTES TO FINANCIAL STATEMENTS**
## **DECEMBER 31, 2018**
## **NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
#### Organization
The Securities Group, LLC (a Florida limited liability company, the "Company") began operations on August 1, 2001 and is a registered securities broker and dealer operating in the United States of America. The company was organized to sell healthcare securities and shall have a perpetual existence unless terminated as provided in the Operating Agreement. The Company has a single class of members. Except as expressly provided in the Operating Agreement, no member shall be required under any circumstances to contribute or lend any money or property to the Company beyond their initial capital contribution.
## Method of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
#### 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 amount of assets and liabilities and disclosures 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.
#### Revenue Recognition
Revenue from contracts with customers includes commission income and fees from selling healthcare securities on behalf of its customers through private placement offerings. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. The Company believes that the performance obligation to recognize commission revenue is satisfied on the placement offering date because that is when the underlying purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. Any additional commission revenue from offering extensions is recognized based on terms of each placement offering contract and the revenue can be reasonably estimated to be collected.
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In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." This guidance replaces most existing revenue recognition guidance and provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance is effective for the periods ending after December 15, 2017. Due to the nature of our contracts, the adoption of this standard has not had a material impact on our financial statements.
## Concentrations and Credit Risks
The Company's credit risks relate to cash and cash equivalents. The Company maintains cash balances at a bank. Accounts are insured by the Federal Deposit Insurance Corporation up to an aggregate of \$250,000.
Two customers accounted for 100% of the Company's commission revenues for the year ended December 31, 2018.
#### Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with initial maturities of three months or less to be cash equivalents.
## Property and Equipment
Property and equipment are stated at cost. Depreciation is provided according to the straight line method over the estimated useful lives of 3 to 5 years.
#### I nco me Taxes
No provision has been made for income taxes since the results of operations are included in the tax returns of the members.
#### Date of Management's Review
The Company evaluated its December 31, 2018 financial statements for subsequent events through February 26, 2019, the date the financial statements were available to be issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.
# **NOTE 2- RELATED PARTY TRANSACTIONS**
The company rents office space, furniture and equipment for \$500 per month on a month-tomonth basis from a company in which a member has an ownership interest. Total related party rent expense for the year ended December 31 , 2018 was \$6,000. The company also makes monthly payments to this related company for accounting and administrative services which totaled \$11 ,659 for the year and had a related party payable of \$2,027 for the services and rent at year end.
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# **NOTE 3 - NET CAPITAL REQUIREMENTS**
The Company is subject to the Securities and Exchange Commission (SEC) Uniform Net Capital Rule (Rule 15c3-1 ), 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, 2018, the Company had net capital of \$118,478, which was \$113,478 in excess of its required net capital of \$5,000 and its percentage of aggregate indebtedness to net capital was 14.57%.
# **NOTE 4- POSSESSION OR CONTROL REQUIREMENTS**
The Company does not have any possession or control of customer funds or securities. There were no material inadequacies in the procedures followed in adhering to the exemption provisions of SEC Rule 15c3-3(k)(2)(i).
## **NOTE 5 - RETIREMENT PLAN**
The Company sponsors a Simplified Employee Pension Plan under the provisions of section 408(k) of the Internal Revenue Code. The plan covers all employees who are at least 21 years of age and have performed at least three years of service. The company did not make any contributions to the plan for the year ended December 31, 2018.
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#### SUPPLEMENTARY INFORMATION
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# **SCHEDULE I- COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1**
| Total Members' Equity | | \$
153,705 |
|------------------------------------------------------------------------------------------------------------------|--------|---------------|
| Deductions: Non-allowable assets | | |
| Accounts Receivable | 25,797 | |
| Other assets | 2,194 | |
| Property and Equipment, net | 6,708 | |
| Haircut amount on CD | 528 | (35,227) |
| Net Capital | | 118,478 |
| Less: minimum dollars net capital requirement | | (5,000) |
| | | |
| Excess Net Capital | | \$
113,478 |
| | | |
| Total Aggregate Indebtedness | | \$
17,259 |
| | | |
| | | |
| Percentage of Aggregate Indebtedness to Net Capital | | 14.57% |
| | | |
| Percentage of debt to debt-equity total computed in accordance | | |
| with Rule 15c3-1(d) | | 0% |
| | | |
| Reconciliation with Company's computation (included in Part II of Form X-17 A-5
as of December 31
, 2018): | | |
| Excess net capital, as reported in Company's Part II unaudited Focus Report | | \$
113,478 |
| Net audit adjustments | | |
| | | |
| Net Capital per above | | \$
113,478 |
#### **AS OF DECEMBER 31 , 2018**
There is no material difference between the preceding computation and the Company's corresponding unaudited Part II of Form X-17 A-5 as ad mended as of December 31 , 2018.
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# **SCHEDULE II- COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER RULE 15C3-3 (EXEMPTION)**
## **AS OF DECEMBER 31, 2018**
#### **EXEMPTION PROVISIONS:**
The Securities Group, LLC has claimed an exemption from Rule 15c3-3 under section (k)(2)(i) in which the Company's business is limited to a business brokerage only selling healthcare securities. As such, the Company maintains no security accounts for any of its customers and promptly transmits all customer funds.
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### **SCHEDULE** Ill - **INFORMATION FOR POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15C3-3 (EXEMPTION)**
#### **AS OF DECEMBER 31,2018**
#### **EXEMPTION PROVISIONS:**
The Securities Group, LLC has claimed an exemption from Rule 15c3-3 under section (k)(2)(i) in which the Company's business is limited to a business brokerage only selling healthcare securities. As such, the Company maintains no security accounts for any of its customers and promptly transmits all customer funds.
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1661 Aaron Brenner Drive • Su