# SAPENO INC. X-17A-5 (2022-01-13) — Broker-dealer annual report
- Company: SAPENO INC.
- Form: X-17A-5
- Filed: 2022-01-13
- Period: 2021-11-30
- Accession: 0001211535-22-000001
- CIK: 1211535
- File #: 8-65721
- Type: Broker-dealer
- Material weakness: No
- Auditor: YSL & ASSOCIATES LLC
- Auditor location: NEW YORK, NY
- Contact: Richard Malpas
- Phone: 44 20 7079 1603
- Signed by: Richard Malpas (CEO)
Original filing: https://www.sec.gov/Archives/edgar/data/1211535/000121153522000001/public.pdf
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# SAPENO INC. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION PURSUANT TO 17a-5(d) OF THE SECURITIES AND EXCHANGE COMMISSION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM NOVEMBER 30, 2021
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# **SAPENO INC. CONTENTS**
| Report oflndependent Registered Public Accounting Firm 1 | |
|-----------------------------------------------------------|--|
| Financial Statements: | |
| Statement of Financial Condition 2 | |
| Notes to Financial Statements 3-7 | |
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11 Broadway, Suite 700, New York, NY 10004 Tel: (212) 232-0122 Fax: (646) 218-4682
# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Board of Director and Shareholder of Sapeno Inc.
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Sapeno Inc. (the "Company") as of November 30, 2021 , and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of November 30, 2021 in conformity with accounting principles generally accepted in the United States of America.
#### **Basis for Opinion**
This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to 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 statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as Sapeno Inc.' s auditor since 2021 .
New York, NY
January 12, 2022
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#### **SAPENOINC.**
#### **STATEMENT OF FINANCIAL CONDITION**
#### **NOVEMBER 30, 2021**
#### **ASSETS**
| Cash | \$
23,227 |
|----------------------------|--------------|
| Accounts receivable | 28,500 |
| Prepaid expenses and other | 1,697 |
| Total assets | \$
53,424 |
#### **LIABILITIES AND SHAREHOLDER'S EQUITY**
| Liabilities: | |
|--------------------------------------------------------|----------------------|
| Accounts payable and accrued expenses
Deferred fees | \$
4,800
3,000 |
| Total liabilities | 7,800 |
| Shareholder's Equity | |
| Common stock, no par value, authorized 200 shares, | |
| issued and outstanding 100 shares | 5,000 |
| Additional paid-in capital | 1,572,623 |
| Accumulated deficit | (1 ,531
,999) |
| Total shareholder's equity | 45,624 |
| Total liabilities and shareholder's equity | \$
53 ,424 |
The accompanying notes are an integral part of these financial statements.
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# **SAPENOINC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 2021**
# **1. ORGANIZATION AND NATURE OF BUSINESS**
Sapeno Inc. ( the "Company" or "Sapeno") is a broker-dealer registered under Section 15(b) of the Securities Exchange Act of 1934. The Company is currently a member of the Financial Industry Regulatory Authority (FINRA), the securities industry's non-governmental regulatory organization, formed by consolidation of the regulatory operations of NASD and NYSE. It had been a member of the National Association of Securities Dealers (NASD) since June 5, 2003. The Company was incorporated on July 12, 2002 in the State of New York and has its principal business location in London, England. It is a wholly owned subsidiary of Sapeno Partners LLP ("SP") which is based in London, United Kingdom.
The Company does not carry securities accounts for customers, nor does it perform custodial functions relating to customer securities.
## Recent Issued Accounting Pronouncements
The Company does not believe that the adoption of any recently issued, but not yet effective, accounting standards will have a material effect on its financial position and results of operations.
# **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
# Basis of Presentation
The accompanying financial statements have been prepared in conformity with U.S generally accepted accounting principles ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission (the "Commission"). It is management's opinion, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.
# Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are carried at cost, which approximates market value.
# Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets, and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
#### Revenue Recognition
The Company's revenues are from advisory fee services. Fees are accrued when earned. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606, to supersede nearly all existing revenue recognition guidance under GAAP. ASU 2014-09 also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations. The Company adopted the provisions of this guidance on May 1, 2018 using the modified retrospective approach. The Company has performed an assessment of its revenue contracts as well as worked with industry participants on matters of interpretation and application and has not identified any material changes to the timing or amount of its revenue recognition under ASU 2014-09.
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## **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**
#### Revenue Recognition (continued)
The Company's accounting policies did not change materially as a result of applying the principles of revenue recognition from ASU 2014-09 and are largely consistent with existing guidance and current practices applied by the Company. The Company receives management fees for introduction to US Investors. Revenue is recognized and billed when services are performed. Management fee contracts are for multiple years. The Company is compensated by a percentage of the Asset Manager's money management fee. These fees are paid in arrears to the Asset Manager, usually within 45 days, after the end of each calendar quarter or month depending on the payment time frame of the particular strategy. The Company is then paid within 30 days after such fees are received by the Asset Manager. The Company measures completion based on services performed as per the agreements with the customers. Costs of providing services, including services accounted for in accordance with ASC 340-40-25, are expensed as incurred. If it is determined that services were not fully completed or are for a monthly fee for a period of time, revenue is deferred over the life of that agreement and amortized into current year revenue ratably over the life of the agreement.
## Accounts Receivable
Accounts receivable is recorded at the amount the Company expects to collect on balances outstanding at year-end. The determination of the amount of uncollectible accounts is based on the length of time each receivable has been outstanding, and a reasonable assessment of the capacity of the debtor to pay the receivable. The allowance for uncollectible amounts reflects the amount of loss that can be reasonably estimated by management and is included as part of operating expenses in the accompanying statement of operations. As of November 30, 2021 , the Company has not recorded an allowance for any potential noncollection.
## Income Taxes
Income taxes are accounted for under the asset and liability method in accordance with F ASB ASC 740, *Income Taxes.* Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized.
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### **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**
### Income Taxes (continued)
The principal components of the deferred tax assets relate to net operating loss carryovers. As of November 30, 2021 , the Company had net operating loss carryovers approximating \$1 ,245,000 Federal and state purposes. The net operating loss carryovers expire at various dates through 2036, and because of the uncertainty in the Company's ability to utilize the net operating loss carryovers, a full valuation allowance has been provided on the deferred tax asset at November 30, 2021.
On December 22, 2017, Public Law 115-97, informally referred to as the Tax Cuts and Jobs Act ("the TCJA") was enacted into law. The TCJA provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended, that impact corporate taxation requirements. Effective January 1, 2018, the federal tax rate for corporations was reduced from 35% to 21 % for US taxable income and requires onetime remeasurement of deferred taxes to reflect their value at a lower tax rate of 21 %.
The Company follows ASC 740 rules governing uncertain tax positions, which provides guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognition, classification and disclosure of these uncertain tax positions.
The Company is currently subject to a three-year statute of limitations by major tax jurisdictions and remains subject to examination for the year ended November 30, 2018 and thereafter. The Company files income tax returns in the U.S. federal jurisdiction and New York State.
#### Accounting basis
The Company uses the accrual basis of accounting for financial statements and income tax reporting. Accordingly, revenues are recognized when services are rendered, and expenses realized when the obligation is incurred.
#### Fair Values of Financial Instruments
Financial Accounting Standards Board Accounting Standards Codification ("ASC") 825, "Financial Instruments," requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company's financial instruments:
The carrying amount of cash, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses, and accounts payable to related parties, approximate fair value because of the short maturity of those instruments.
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# **3. NET CAPITAL**
The Company is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital of \$5,000, and requires that the ratio of aggregate indebtedness to net capital, both as defined, not exceed 15 to 1. The rule also provides that equity capital may not be withdrawn, cash dividends paid or the Company's operations expanded, if the resulting net capital ratio would exceed 10 to 1. At November 30, 2021 , the Company had net capital of \$18,427 which was \$13,427 in excess of the FINRA minimum net capital requirement of \$5,000.
# **4. SHAREHOLDER'S CONTRIBUTED CAPITAL**
At the time of its incorporation in New York, the Company was authorized to issue 200 shares of its no par value common stock. In 2002, the Company issued 100 shares of its no par value common stock for \$5,000. The Company has received shareholder contributions of additional paid-in capital net of return of capital aggregating \$1 ,572,623 from inception (July 12, 2002) through November 30, 2021.
# **5. SIPC RECONCILIATION REQUIREMENT**
Securities Exchange Act ("SEA") Rule 17 a-5( e )( 4) requires a registered broker-dealer to file a supplemental report which includes procedures related to broker-dealers SIPC annual general assessment reconciliation or exclusion from membership forms. In circumstances where the broker-dealer reports \$500,000 or less in gross revenue they are not required to file supplemental SIPC report. The Company is exempt from filing the supplemental report under SEA Rule 17a-5( e )( 4) because it is reporting less than \$500,000 in gross revenue.
# **6. CONCENTRATION OF CUSTOMER REVENUES**
For the year ended November 30, 2021 , one customer accounted for 92% of the Company's revenues. One customer accounted for 84% of accounts receivable as of November 30, 2021. Major customers are those that account for more than 10% of revenue.
# **7. COMMITMENTS AND CONTINGENCIES**
#### Litigation
The Company may be involved in legal proceedings in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Currently, the Company is not involved in any legal proceedings.
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# **8. ANNUAL REPORT ONFORMX-17A-5**
The annual report to the Securities and Exchange Commission on Form 17 A-5 is available for examination and copying at the Company's office and at the regional office of the Securities and Exchange Commission.
# **9. COVID-19**
During the fiscal year of 2021 , Coronavirus Disease (COVID-19) has continued to create major disruptions to the economy. The financial impacts to the Company have resulted in significantly reduced revenues. Management is monitoring the situation closely and expects to make needed changes to its operations should circumstances warrant in order to mitigate any negative long-term financial impacts on the Company.
# **10. NEW ACCOUNTING PRONOUNCEMENT**
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the FASB's guidance on the impairment of financial instruments. The ASU adds to GAAP, an impairment model (known as the current expected credit loss ("CECL") model) that is based on expected losses rather than incurred losses. Under the new guidance, the Company recognizes an allowance, its estimate of lifetime expected credit losses, which the FASB believes will result in more timely recognition of such losses, if any. The ASU is also intended to reduce the complexity of GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. Further, the ASU makes targeted changes to the impairment model for available-for-sale debt securities. The new CECL standard became effective on January 1, 2020 and had no impact on the Company as of that date.
## **11. SUBSQUENT EVENTS**
The Company evaluated events occurring between the end of its fiscal year, November 30, 2021 , and the auditor's report date, when the financial statements were issued. All subsequent events requiring recognition as of the auditor's report date, have been incorporated into these financial statements herein.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.