# BACKSTROM MCCARLEY BERRY & CO., LLC X-17A-5 (2024-02-29) — Broker-dealer annual report - Company: BACKSTROM MCCARLEY BERRY & CO., LLC - Form: X-17A-5 - Filed: 2024-02-29 - Period: 2023-12-31 - Accession: 0001208116-24-000002 - CIK: 1208116 - File #: 8-65679 - Type: Broker-dealer - Material weakness: No - Auditor: LMHS, P.C. Certified Public Accountants & Advisors - Auditor location: Norwell, MA - Contact: Vincent McCarley - Phone: (415) 857-6101 - Email: vmccarley@bmcbco.com - Website: bmcbco.com - Signed by: Vincent McCarley (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1208116/000120811624000002/audit24.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** | 0MB APPROVAL | | | | | |--------------------------|--|--|--|--| | 0MB Number: 3235-0123 | | | | | | Expires: Nov. 30, 2026 | | | | | | Estimated average burden | | | | | | hours per response: 12 | | | | | # **ANNUAL REPORTS FORM X-17A-5 PART** Ill | 65679 | | |-------|--| #### **FACING PAGE** **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** | FILING FOR THE PERIOD BEGINNING | 1/1/2023
MM/DD/YY | AND
ENDING | 12/31/2023
MM/DD/YY | | | | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|---------------|------------------------|--|--|--|--| | A. REGISTRANT IDENTIFICATION | | | | | | | | | NAME oF FIRM: Backstrom Mccarley Berry & Co., LLC | | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
□
□
l!:I Broker-dealer
Security-based swap dealer
Major security-based swap participant
D Check here if respondent is also an OTC derivatives dealer | | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | | | 130 Battery Street, Suite 560 | | | | | | | | | | (No. and Street) | | | | | | | | San Francisco | CA | | 94111 | | | | | | (City) | (State) | | (Zip Code) | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | | Vincent E. Mccarley | (415)857-6101 | | vmccarley@bmcbco.com | | | | | | (Name) | (Area Code -Telephone Number)
(Email Address) | | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
LMHS, P.C. - Certified Public Accountants and Advisors | | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | | | | 80 Washington Street, Building S | Norwell | MA | 02061 | | | | | | (Address) | (City) | (State) | (Zip Code) | | | | | | 2/24/2009 | | 3373 | | | | | | | | | | | | | | | #### **FOR OFFICIAL USE ONLY** \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17aꞏS(e)(l)(ii), if applicable. **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 0MB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | | a
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iii(a) Statement of financia condition. | | | | | | | D | (b) Notes to consolidated statement of financial condition. | | | | | | | | iii (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of | | | | | | | | comprehensive income (as defined in § 210.1-02 of Regulation S-X). | | | | | | | iii | (d) Statement of cash flows. | | | | | | | iii | (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | | | | | □ | (f) Statement of changes in liabilities subordinated to claims of creditors. | | | | | | | iii
iii | (g) Notes to consolidated financial statements. | | | | | | | | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-l, as applicable. | | | | | | | □
iii | (i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | | | | | □ | (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
(k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or
Exhibit A to 17 CFR 240.18a-4, as applicable. | | | | | | | | D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3.
iii (m) Information relating to possession or control requirements for customers under 17 CFR 240.1Sc3-3. | | | | | | | □ | (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR
240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. | | | | | | | | iii (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net | | | | | | | | worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-l, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17
CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences
exist. | | | | | | | □ | (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. | | | | | | | | (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. | | | | | | | | D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
(s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | | | | | □ | (t) Independent public accountant's report based on an examination of the statement of financial condition. | | | | | | | | (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 | | | | | | | | CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. | | | | | | | | D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 | | | | | | | iii | CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
(w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 | | | | | | | | CFR 240.18a-7, as applicable. | | | | | | | iii | (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12,
as applicable. | | | | | | | □ | (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or
a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). | | | | | | | D | (z) Other: | | | | | | *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d){2), as applicable.* {2}------------------------------------------------ **BACKSTROM MCCARLEY BERRY & CO., LLC Report Pursuant to Rule 17a-5(d) Financial Statements For The Year End December 31, 2023** {3}------------------------------------------------ ### **BACKSTROM MCCARLEY BERRY & CO., LLC** #### **TABLE OF CONTENTS** | Report of Independent Registered Public Accounting Firm Page 1 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Statement of Financial Condition Page 2 | | Statement of Income Page 3 | | Statement of Changes in Members' Equity Page 4 | | Statement of Cash Flows Page 5 | | Notes to Financial Statements Pages 6-13 | | Supplementary Information: | | Schedule I - Computation of Net Capital under Rule 15c3-1 of the Securities
and Exchange Commission Page 14 | | Schedule II – Computation for Determination of Reserve
Requirements and Information Relating to Possession or Control
Requirements Pursuant to Rule 15c3-3 Page 15 | | Review Report of Independent Registered Public Accounting Firm Page 16 | | SEA 15c3-3 Exemption Report Page 17 | | Agreed-upon Procedures Report SIPC 7 Pages 18-19 | | SIPC 7… Pages 20-21 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) *Report of Independent Registered Public Accounting Firm* To the Members of Backstrom McCarley Berry & Co., LLC San Francisco, California #### *Opinion on the Financial Statements* We have audited the accompanying statement of financial condition of Backstrom McCarley Berry & Co., LLC, as of December 31, 2023, and the related statements of income, 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 Backstrom McCarley Berry & Co., LLC as of December 31, 2023, 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 entity's management. Our responsibility is to express an opinion on these 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 Backstrom McCarley Berry & Co., 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. #### *Supplemental Information* The supplemental information appearing on pages 14 through 15 has been subjected to audit procedures performed in conjunction with the audit of Backstrom McCarley Berry & Co., LLC's financial statements. The supplemental information is the responsibility of Backstrom McCarley Berry & Co., 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 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. LMHS, P.C. We have served as the Backstrom McCarley Berry & Co., LLC 's auditor since 2020. Norwell, Massachusetts February 29, 2024 ![](_page_4_Picture_15.jpeg) {5}------------------------------------------------ # **BACKSTROM MCCARLEY BERRY & CO., LLC Statement of Financial Condition December 31, 2023** #### **Assets** | Cash | \$
202,820 | |------------------------------------|-----------------| | Deposit With Clearing Organization | 744,685 | | Investments, At Fair Market Value | 1,013,460 | | Prepaid Expenses | 43,724 | | Operating Lease Right-Of-Use Asset | 66,686 | | Total assets | \$
2,071,375 | ### **Liabilities and Members' Equity** #### **Liabilities** | Accounts Payable And Accrued Expenses | \$
234,688 | |---------------------------------------|---------------| | Pension Payables | 350,000 | | Operating Lease Liability | 67,036 | | Total liabilities | 651,724 | Commitments and contingencies #### **Members' Equity** | Members' Equity | 1,419,651 | |---------------------------------------|-----------------| | Total Members' Equity | 1,419,651 | | Total Liabilities And Members' Equity | \$
2,071,375 | {6}------------------------------------------------ # **BACKSTROM MCCARLEY BERRY & CO., LLC Statement of Income** # **For The Year End December 31, 2023** #### **Revenues** | Underwritting fees | \$
1,280,224 | |-----------------------------------------------|-----------------| | Financial advisory fees | 982,174 | | Commissions | 30,575 | | Interest income | 48,731 | | Other income | 495,070 | | Total revenues | 2,836,774 | | Expenses | | | Employee compensation and benefits | 1,548,358 | | Commission expenses | 61,215 | | Communication and data processing | 105,048 | | Occupancy | 85,405 | | Professional fees | 178,315 | | Insurance | 156,020 | | Travel expenses | 55,085 | | Other operating expenses | 621,409 | | Total expenses | 2,810,855 | | Net income (loss) before income tax provision | 25,919 | | Income tax provision | 10,696 | | Net income (loss) | \$
15,223 | {7}------------------------------------------------ # **BACKSTROM MCCARLEY BERRY & CO., LLC Statement of Changes in Members' Equity For the Year Ended December 31, 2023** | | Total | |-----------------------------------|-----------------| | | Members' | | | Equity | | Balance at December 31, 2022 | \$
1,622,802 | | Redemption of membership interest | (218,374) | | Net income (loss) | 15,223 | | Balance at December 31, 2023 | \$
1,419,651 | {8}------------------------------------------------ | BACKSTROM MCCARLEY BERRY & CO., LLC | |-------------------------------------| | Statement of Cash Flows | | December 31, 2023 | | Cash flow from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net | | | \$ | 15,223 | |----------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------------------------|----|--------------------------| | cash and cash equivalents provided by (used in) operating activities:
Change in measurement of operating lease
(Increase) decrease in : | \$ | 350 | | | | Deposit with clearing organization
Investments, at fair market value | | (565,414)
(1,013,460) | | | | Prepaid expenses
(Decrease) increase in : | | 17,375 | | | | Accounts payable and accrued expenses
Pension payables
Total adjustments | | (19,724)
(200,000) | | (1,780,873) | | Net cash and cash equivalents provided by (used in) operating activities | | | | (1,765,650) | | Net cash and cash equivalents provided by (used in) investing activities
- | | | | | | Net cash and cash equivalents provided by (used in) financing activities | | | | - | | Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at December 31, 2022 | | | | (1,765,650)
1,968,470 | | Cash and cash equivalents at December 31, 2023 | | | \$ | 202,820 | | Cash paid during the year for:
Interest
Income taxes | \$
\$ | -
10,696 | | | | Schedule of Noncash Investing and Financing Transactions:
Assumed Right of Use Asset - Operating Leases
Assumed Lease Liability - Operating Leases | \$
\$ | 86,081
(86,081)
- | | | {9}------------------------------------------------ #### **NOTE 1: GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** ### *Organization* Backstrom McCarley Berry & Co., LLC (the "Company") was organized in the State of California on June 4, 2002. The Company is a registered broker-dealer in securities under the Securities and Exchange Act of 1934. The Company is a member of the Financial Industry Regulatory Authority ("FINRA"), and the Securities Investor Protection Corporation ("SIPC"), and is registered with the Municipal Securities Rulemaking Board ("MSRB"). The Company provides public finance services as a municipal securities broker-dealer, government securities broker-dealer, non-profit securities broker-dealer, and financial advisor. Regarding municipal fixed income securities, the Company services primarily major institutional clients and specializes in selling bonds to small and medium sized institutional buyers, in addition to retail clients of bank trust departments, money managers, and advisors. Under its membership agreement with FINRA and pursuant to Rule 15c3-3(k)(2)(ii), the Company conducts business on a fully disclosed basis and does not execute or clear securities transactions for customers. Accordingly, the Company is exempt from the requirement of Rule 15c3-3 under the Securities Exchange Act of 1934 pertaining to the possession or control of customer assets and reserve requirements. ### *Summary of Significant Accounting Policies* The presentation 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. For purposes relating to the Statement of Cash Flows, the Company has defined cash equivalents as highly liquid investments, with original maturities of less than three months, that are not held for sale in the ordinary course of business. {10}------------------------------------------------ ### **NOTE 1: GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** Accounts receivable are stated at face amount with no allowance for doubtful accounts. An allowance for doubtful accounts is not considered necessary because probable uncollectible accounts are immaterial. Investment in CDs are recorded at fair value in accordance with FASB ASC 820, Fair Value Measurement, as described in Note 7. Net realized gains or losses from the sale of these securities are computed based on specific identification of historical cost. Net unrealized gains or losses arises from changes in the fair value of these securities during the period is included in income. Securities transactions are recorded on a trade date basis with related commission income and expenses also recorded on a trade date basis. Underwriting fees are recorded at the time the underwriting is completed and the income is reasonably determined. Financial advisory fees are recognized as earned on a pro rata basis over the term of the contract. The Company records its revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, which requires qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations. The following table disaggregates the Company's revenue based on timing of satisfaction of performance obligation for the year ended December 31, 2023: | Performance Obligation Satisfied at a Point in Time | \$ 1,854,600 | |-------------------------------------------------------|--------------| | Performance Obligation Satisfied at a Point Over Time | 982,174 | | | \$ 2,836,774 | Advertising costs are expensed as incurred. For the year ended December 31, 2023, advertising expense was \$4,728. The Company, with the consent of its Members, has elected to be a California Limited Liability Company. For tax purposes the Company is treated like a partnership, therefore in lieu of business income taxes, the Members are taxed on the Company's taxable income. Accordingly, no provision or liability for Federal Income Taxes is included in these financial statements. {11}------------------------------------------------ # **NOTE 2: DEPOSIT AT CLEARING FIRM** The Company has a brokerage agreement with its clearing firm to carry its account and the accounts of its clients as customers of the clearing firm. The clearing firm has custody of the Company's cash balances which serve as collateral for any amounts due to the clearing firm as well as collateral for securities sold short or securities purchased on margin. Interest is paid monthly on these cash deposits at the average overnight repurchase rate. The balance at December 31, 2023 was \$744,685. # **NOTE 3: INVESTMENTS, AT FAIR MARKET VALUE** Investments, at fair market value consist of various of certificates of deposit with the average maturity dates of three months. As discussed in Note 1, these investments are stated at their fair market value based on quoted market prices. At December 31, 2023, these securities are carried at their fair market value of \$1,013,460. FASB ASC 820 defines fair value, establishes a frame work for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the assets or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB ASC 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1 – Quoted prices in active markets for identical securities. Level 2 – Observable inputs other than quoted prices included in level 1, such as quoted prices for similar securities in active markets; quoted prices for identical or similar securities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data (Including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) {12}------------------------------------------------ # **NOTE 3: INVESTMENTS, AT FAIR MARKET VALUE (Continued)** Level 3 – Pricing inputs are unobservable that are significant to the fair value measurement and include situations where there is little if any market activity for the investment. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following tables presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2023: | Assets | Level 1 | Level 2 | Level 3 | | Total | |-----------------------------------|--------------------|---------|---------|---|-----------------| | Investments, at fair market value | \$
1,013,460 | \$
- | \$ | - | \$
1,013,460 | | | - | - | | - | - | | TOTALS | \$
1,013,460 \$ | - | \$ | - | \$
1,013,460 | # **NOTE 4: INCOME TAXES** As discussed in the Summary of Significant Accounting Policies (Note 1), all tax effects of the Company's income or loss are passed through to the members. Therefore, no provision or liability for Federal Income Taxes in included in these financial statements. The Company is subject to a limited liability company gross receipts tax, with a minimum franchise tax. As of December 31, 2023, the income tax provision consists of the following: | Franchise tax | \$
800 | |-----------------------------|--------------| | Gross receipts tax | 9,896 | | Total income tax provisions | \$
10,696 | {13}------------------------------------------------ #### **NOTE 5: PENSION PLAN** The Company provides certain retirement benefits to its eligible employees. In accordance with Financial Accounting Standard Board ASC 712, such costs are to be accounted for on the accrual basis. Effective January 1, 2012, the Company adopted a qualified 401(K) Profit Sharing Plan (the "Plan"). All employees, 18 years of age or older, are eligible to participate in the Plan, provided they have been employed for more than a year with the Company. The employer's non-elective profit sharing contributions vest 100% after three years. The Company profit sharing contributions are discretionary and are determined each year by the Company. At December 31, 2023, the Company has accrued \$350,000 of contributions. # **NOTE 6: OPERATING LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITY** In February 2016, the FASB issued ASC 842, "Leases" (ASC 842). The core principle of ASC 842 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASC 842 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as finance or operating lease. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the new accounting guidance is effective for fiscal years beginning after December 15, 2019, and interim periods with fiscal years beginning after December 15, 2020. On January 1, 2019, the Company adopted ASC 842 using a modified retrospective approach. All remaining future lease payments was result in a gross up in the statement of financial position with a liability for the amount of discounted future lease payments and a corresponding amount allocated to a lease asset. As of December 31, 2023, the operating lease right-of-use asset and lease liability are valued at \$66,686 and \$67,036, respectively. The Company has elected to use a portfolio approach to apply a single incremental borrowing rate of 5.05% on its operating leases. For purpose of net capital computation, the operating lease right-of-used asset is classified as an allowable asset to the extent of the corresponding lease liability. Moreover, the corresponding lease liability is excluded from the total aggregate indebtedness to the extent of the associated operating lease asset. {14}------------------------------------------------ # **NOTE 6: OPERATING LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITY (Continued)** Future minimum lease payments under non-cancellable operating lease as of December 31, 2023 are as follows: | For the year ended December 31, | Amount | | | |------------------------------------|--------|---------|--| | 2024 | \$ | 47,486 | | | 2025 and Thereafter | | 24,094 | | | Total | \$ | 71,580 | | | Less: Amount representing interest | | (4,544) | | | Operating Lease Liability | \$ | 67,036 | | At December 31, 2023, the weighted average remaining lease term was 1.5 years. # **NOTE 7: COMMITMENTS AND CONTINGENCIES** ### *Contingencies* The Company maintains bank accounts at financial institutions. These accounts are insured either by the Federal Deposit Insurance Commission ("FDIC"), up to \$250,000, or the Securities Investor Protection Corporation ("SIPC"), up to \$500,000. At times during the year, cash balances held in financial institutions were in excess of the FDIC and SIPC's insured limits. The Company has not experienced any losses in such accounts and management believes that it has placed its cash on deposit with financial institutions which are financially stable. ### **NOTE 8: REDEMPTION OF MEMBERSHIP INTEREST** During the year ended December 31, 2023, the Company and one of its member entered into an agreement to redeem 100% of his ownership interest for the value of his capital account. The agreement calls for the full payment of the redemption price on March 31, 2024. Accordingly, the total amount of his capital account of \$218,374 was recorded as a payable and included in accrued expense. {15}------------------------------------------------ ### **NOTE 9: GUARANTEES** FASB ASC 460, Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460 defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying factor (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of indebtedness of others. The Company has issued no guarantees at December 31, 2023 or during the year then ended. ### **NOTE 10: CONCENTRATION OF CREDIT RISK** The Company is engaged in various trading and brokerage activities in which counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counter-parties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counter-party or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counter-party. ### **NOTE 11: SUBSEQUENT EVENTS** The Company has evaluated other events subsequent to the balance sheet date for items requiring recording or disclosure in the financial statements. The evaluation was performed through the date the financial statements were available to be issued. Based upon this review, the Company has determined that there were no other events which took place that would have a material impact on its financial statements. {16}------------------------------------------------ ### **NOTE 12: NET CAPITAL REQUIREMENTS** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC 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. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. Net capital and aggregate indebtedness change day to day, but on December 31, 2023, the Company had net capital of \$1,624,581 which was \$1,524,581 in excess of its required net capital of \$100,000; and the Company's ratio of aggregate indebtedness of \$235,039 to net capital was 0.14 to 1. {17}------------------------------------------------ # **BACKSTROM MCCARLEY BERRY & CO., LLC Schedule I - Computation of Net Capital Requirements Pursuant to Rule 15c3-1 As of December 31, 2023** ### **Computation of net capital** | Members' Equity | 1,419,651 | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|----------------------------| | Total Members' Equity | | \$
1,419,651 | | Add:
Other allowable credits | | 350,000 | | Total Members' Equity qualified for net capital | | 1,769,651 | | Prepaid expenes | (43,724) | | | Total non-allowable assets | | (43,724) | | Net capital before haircuts | | 1,725,927 | | Less: Haircuts and undue concentration
Total haircuts and undue concentration
Net Capital | (101,346) | (101,346)
1,624,581 | | Computation of net capital requirements
Minimum net capital requirement
6 2/3 percent of net aggregate indebtedness
Minimum dollar net capital required
Net capital required (greater of above)
Excess net capital | \$
15,669
\$
100,000 | \$
100,000
1,524,581 | | Aggregate indebtedness | | \$
235,039 | | Ratio of aggregate indebtedness to net capital | | 0.14 : 1 | There was no material difference between net capital computation showned here and the net capital computation shown on the Company's unaudited Form X-17A-5 reported dated December 31, 2023, as amended. {18}------------------------------------------------ # **BACKSTROM MCCARLEY BERRY & CO., LLC** # **Schedule II - Computation for Determination of the Reserve Requirements and Information Relating to Possession or Control Requirements For Brokers and Dealers Pursuant to SEC Rule 15c3-3** #### **as of December 31, 2023** The Company is exempt from the provision of Rule 15c3-3 under paragraph (k)(2)(ii) in that the Company carries no accounts, does not hold funds or securities for, or owe money or securities to customers. The Company will effectuate all financial transactions on behalf of its customers on a fully disclosed basis. Accordingly, there are no items to report under the requirements of this Rule. {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) *Report of Independent Registered Public Accounting Firm* To the Members Backstrom McCarley Berry & Co., LLC San Francisco, California We have reviewed management's statements, included in the accompanying exemption report, in which (1) Backstrom McCarley Berry & Co., LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Backstrom McCarley Berry & Co., LLC claimed an exemption from 17 C.F.R. §240.15c3-3(k)(2)(ii) (the "exemption provision") and (2) Backstrom McCarley Berry & Co., LLC stated that it met the identified exemption provision throughout the most recent fiscal year without exception. Backstrom McCarley Berry & Co., LLC's management is responsible for compliance with the exemption provision 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 the Company's compliance with the exemption provision. 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 paragraph (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. LMHS, P.C. We have served as Backstrom McCarley Berry & Co., LLC's auditor since 2020. Norwell, Massachusetts February 29, 2024 ![](_page_19_Picture_11.jpeg) {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) # **Assertions Regarding Exemption Provisions** We, as members of management of Backstrom McCarley Berry & Co., LLC ("the Company"), are responsible for compliance with the annual reporting requirements under Rule 17a-5 of the Securities Exchange Act of 1934. Those requirements compel a broker or dealer to file annual reports with the Securities Exchange Commission (SEC) and the broker or dealer's designated examining authority (DEA). One of the reports to be included in the annual filing is an exemption report prepared by an independent public accountant based upon a review of assertions provided by the broker or dealer. Pursuant to that requirement, the management of the Company hereby makes the following assertions: ### **Identified Exemption Provision:** The Company claims exemption from the custody and reserve provisions of Rule 15c3-3 by operating under the exemption provided by Rule 15c3-3, Paragraph (k)(2)(ii). #### **Statement Regarding Meeting Exemption Provision:** The Company met the identified exemption provision without exception throughout the period January 1, 2023 through December 31, 2023. Backstrom McCarley Berry & Co., LLC By: **Vincent E. McCarley, CEO Date: 2/29/2024** {21}------------------------------------------------ ![](_page_21_Picture_0.jpeg) *Report of Independent Registered Public Accounting Firm* To the Members Backstrom McCarley Berry & Co., LLC San Francisco, California We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below on the accompanying General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2023. Management of Backstrom McCarley Berry & Co., LLC (Company) is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2023. Additionally, SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The sufficiency of these 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 performed, 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 amounts reported on the Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2023, with the Total Revenue amounts reported in Form SIPC-7 for the year ended December 31, 2023 noting no differences; - 3. Compared any adjustments reported in Form 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; and - 5. Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed noting no differences. We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to, and did not conduct an examination or a review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2023. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. {22}------------------------------------------------ We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Company and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. LMHS, P. C. We have served as the Company's auditor since 2020. Norwell, Massachusetts February 29, 2024 ![](_page_22_Picture_7.jpeg) ![](_page_22_Picture_8.jpeg) {23}------------------------------------------------ ![](_page_23_Picture_0.jpeg) # SECURITIES INVESTOR PROTECTION CORPORATION Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001 **SIPC-7** (36-REV 12/18) **General Assessment Reconciliation** (36-REV 12/18) ![](_page_23_Picture_3.jpeg) For the fiscal year ended 12/31/2023 (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: | | Backstrom McCarley Berry & Co., LLC
130 Battery Street, Suite 560
San Francisco, CA 94111 | | Note: If 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.
Vincent McCarley (415) 857-6101 | | |---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | | | | | | | 2. A. | General Assessment (item 2e from page 2) | | \$ 1,828 | | | B. | Less payment made with SIPC-6 filed (exclude interest)
11/7/2023 | | ( 1,980
) | | | | Date Paid | | ( 152
) | | | C. | Less prior overpayment applied | *Overpayment | (152) | | | D. | Assessment balance due or (overpayment) | | | | | E. | Interest computed on late payment (see instruction E) for | days at 20% per annum | | | | F. | Total assessment balance and interest due (or overpayment carried forward) | *Credit | \$ 152 | | | | √
G. PAYMENT:
the box
Funds Wired
Check mailed to P.O. Box
□
□
Total (must be same as F above) | ACH
□
\$ 0 | | | | H. | Overpayment carried forward | \$( 152 | ) | | | | 3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registration number):
The SIPC member submitting this form and the
person by whom it is executed represent thereby | Backstrom McCarley Berry & Co., LLC | | | | and complete. | that all information contained herein is true, correct | (Name of Corporation, Partnership or other organization) | | | | | | | (Authorized Signature) | | | | , 20 24
Dated the 20th day
of February | CEO | | | | | This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form
for a period of not less than 6 years, the latest 2 years in an easily accessible place. | | (Title) | | | Dates:
WER | Postmarked
Received | Reviewed | | | | | Calculations | Documentation | Forward Copy | | | REVIE | Exceptions: | | | | | SIPC | Disposition of exceptions: | | | | {24}------------------------------------------------ ### **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** | Amounts for the fiscal period | | | |-------------------------------|--|--| | beginning 1/1/2023 | | | | and ending 12/31/2023 | | | | Item No. | 2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) | | Eliminate cents
\$ 2,836,773 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|---------------------------------| | 2b. Additions: | (1) Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not included above. | | | | | (2) Net loss from principal transactions in securities in trading accounts. | | | | | (3) Net loss from principal transactions in commodities in trading accounts. | | | | | (4) Interest and dividend expense deducted in determining item 2a. | | | | | (5) Net loss from management of or participation in the underwriting or distribution of securities. | | | | (6) Expenses other than advertising, printing, registration fees and legal fees deducted in determining net
profit from management of or participation in underwriting or distribution of securities. | | | | | | (7) Net loss from securities in investment accounts. | | | | | Total additions | | | | 2c. Deductions:
(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. | | | 1,556,568 | | | (2) Revenues from commodity transactions. | | | | | (3) Commissions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | 61,215 | | | | (4) Reimbursements for postage in connection with proxy solicitation. | | | | (5) Net gain from securities in investment accounts. | | | | | | (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and
(ii) Treasury bills, bankers acceptances or commercial paper that mature nine months or less
from issuance date. | | | | | (7) Direct expenses of printing 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). | | | | | (8) Other revenue not related either directly or indirectly to the securities business.
(See Instruction C): | | | | | (Deductions in excess of \$100,000 require documentation) | | | | | (9) (i) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
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) | | | | | Total deductions | | 1,617,783 | | | 2d. SIPC Net Operating Revenues | | \$ 1,218,990 | | 2e. General Assessment @ .0015 | | \$ 1,828 | | | | | | (to page 1, line 2.A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.