# INNER CIRCLE SPORTS LLC X-17A-5 (2020-02-21) — Broker-dealer annual report - Company: INNER CIRCLE SPORTS LLC - Form: X-17A-5 - Filed: 2020-02-21 - Period: 2019-12-31 - Accession: 0001252392-20-000001 - CIK: 1252392 - File #: 8-66043 - Material weakness: No - Auditor: Ohab & Company, PA - Auditor location: Maitland, FL - Contact: Robert Tilliss - Phone: 212-370-4411 - Signed by: Robert Tilliss (President) Original filing: https://www.sec.gov/Archives/edgar/data/1252392/000125239220000001/dec19_audit_ics_public.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | OMB APPROVAL | |--------------------------| | OMB Number: 3235-0123 | | Expires: August 31, 2020 | | Estimated average burden | | hours per response 12.00 | | | | I SEC FILE NUMBER | 8-66043 ## ANNUAL AUDITED REPORT FORM X-17A-5 PART III #### FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING | MM/DD/YY | 01/01/2019 AND ENDING | 12/31/19
MM/DD/YYY | |--------------------------------------------------------------------------|--------------------------------------------------------|-----------------------|-----------------------------------------------| | A. REGISTRANT DENTIFICATION | | | | | NAME OF BROKER - DEALER: | | | | | Inner Circle Sports LLC | | | OFFICIAL USE ONLY
FIRM ID. NO. | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | 441 Lexington Avenue, 17th Floor
(No. and Street) | | | | | New York, NY 10017-3926
(City)
(State) | | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | Robert Tilliss | | | (212) 370-4411
(Area Code - Telephone No.) | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | Ohab & Company, PA | | | | | | (Name - if individual, state last, first, middle name) | | | | 100 East Sybelia Ave, Ste 130, Maitland, FL 32751
(Address)
(City) | | (State) | (Zip Code) | | CHECK ONE: | | | | | X Certified Public Accountant | | | | | Public Accountant | | | | | Accountant not resident in United States or any of its possessions. | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | \* Clains for exemption from the reguirement that the opinion of ar independent public accountant nuthic accountant nut be supported by a statenent of facts and circumstances relied on as the basis for the exemption. See section 240.17a-5(e){2}. SEC 1410 (06-02) {1}------------------------------------------------ #### OATH OR AFFIRMATION I, Robert Tilliss, swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statements and supporting schedules pertaining to the firm of Inner Circle Sports LLC, as of December 31, 2019, are true and correct. I 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: None a dillum sille stille salde saldo saldo saldo saldera di band de se DAVID BREWSTER Notary Public - State of Now York NO 01005191604 Qualified in Kings County My Commission Expires 08/18 Robert Tilliss, CEO Notary Public #### This report contains (check all applicable boxes): - (x) (a) Facing page. - Statement of Financial Condition. (x) (b) - Statement of Income (Loss). ( ) (c) - (d) Statement of Cash Flows. ( ) - ( ) (e) Statement of Changes in Stockholders' Equity. - ( ) (f) Statement of Changes in Subordinated Liabilities (not applicable) - ( ) (g) Computation of Net Capital Pursuant to Rule 15c3-1 under the Securities Exchange Act of 1934. - ( ) (h) Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934. (not applicable) - ( ) (i) Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934 (not applicable). - ( ) Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Rule 15c3-3 - ( ) (k) of Financial Condition With Respect to Methods of Consolidation (not applicable). - An Oath or Affirmation. (1) (x) - ( ) (m) A Copy of the SIPC Supplemental Report. - ( ) (n) Report on management's assertion letter regarding 15c3-3 Exemption Report - ( ) (o) Management's assertion letter regarding 15c3-3 Exemption Report {2}------------------------------------------------ ## **INNER CIRCLE SPORTS LLC Statement of Financial Condition As of December 31, 2019** #### **Assets** | Cash | \$
733,945 | |-----------------------------------|---------------| | Accounts receivable | 122,529 | | Employee Receivable | 41,425 | | Payroll Receivable | 23,960 | | Prepaid Taxes | 15,000 | | Furniture and equipment, net | 59,752 | | Security deposit | 141,014 | | Right-of-Use Asset (Office Lease) | 781,533 | | Total Assets | \$ 1,919,159 | ## **Liabilities and Members' Equity** | Credit card payable
Accrued expenses | \$
11,060
44,898 | |-----------------------------------------|------------------------| | Payroll payable | - | | Pension Plan payable | - | | Client Advances | 512 | | Lease Liability (Office Lease) | 781,533 | | Total Liabilities | 838,003 | | Members' Equity | 1,081,156 | | Total Liabilities and Members' Equity | \$ 1,919,159 | The accompanying notes are an integral part of these financial statements. {3}------------------------------------------------ ## **1. Nature of Operations and Summary of Significant Accounting Policies** ### Nature of Operations Inner Circle Sports, LLC (the "Company") is a broker-dealer registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). The Company is a limited liability company formed in the State of Delaware. The Company assists buyers and sellers of sports teams and related sporting venue properties in merger & acquisition transactions. Management has evaluated subsequent events through February 19, 2020, the date on which the financial statements were available to be issued. Company is not aware of any additional significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the financial statements. ## Revenue Recognition ## Significant Judgement Revenue from contracts with customers includes commission income and fees from investment banking and asset management services. 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. ### M&A advisory fees The Company provides advisory services on mergers and acquisitions (M&A). Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgment is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities. {4}------------------------------------------------ # **INNER CIRCLE SPORTS LLC** ## Notes to Financial Statements December 31, 2019 ## Revenue Recognition (continued) Disaggregated Revenue from Contracts with Customers The following table presents revenue by major source. | Revenue from contracts with customers | | |---------------------------------------------|--------------| | Success Fees | \$11,915,418 | | Retainer Fees | 1,025,817 | | Other Income | 323,157 | | Total Revenue from contracts with customers | \$13,264,392 | ## Practical Expedient The following practical expedient available under the modified retrospective method was applied upon adoption ASC 606. The company applied the practical expedient outline under ASC 340-40-25-4 and did not capitalize the incremental cost to obtain a contract in the amortization period for the asset is one year or less. ### Use of Estimates The preparation of the 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 these estimates. #### Income Taxes As a limited liability company, the Company's taxable income or loss is allocated to the members, except for New York City income taxes. Management has evaluated the Company's income tax positions and concluded that the Company has taken no uncertain tax positions that require adjustment to or disclosures in the financial statements. The Company's 2016 through 2019 tax years are open for examination by federal, state and local tax authorities. The Company complies with FASB ASC 740-10-1 through 25 (formerly SFAS No. 109, "Accounting for Income Taxes"), in its computation of the "NYC Unincorporated Income Taxes", which require an asset and liability approach to financial accounting and reporting for income taxes. Deferred income taxes payable represent deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. {5}------------------------------------------------ #### Cash Equivalents The Company has defined cash equivalents as highly liquid investments, with original maturities of three months or less. ### Marketing Costs The Company expenses marketing costs as incurred. Total marketing costs for the year ended December 31, 2019 were \$ 6,123. ## Concentration of Credit Risk The Company maintains its cash balances in accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes there is little or no exposure to any significant credit risk. #### Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records an allowance for doubtful accounts, which is the Company's best estimate of the amount of probable credit losses on the existing trade accounts receivable balance. This allowance is determined based on the Company's historical write-off experience, age of accounts, general economic conditions, and client specific knowledge. The allowance for doubtful accounts is reviewed on a monthly basis. Past due balances over 90 days and over a specified amount are reviewed individually each month for collectability and specific bad debt reserves are recorded as deemed necessary. Account balances are written off and removed from the allowance for doubtful accounts calculation when the Company determines that it is probable the amount will not be recovered. As of December 31, 2019 management determined that no allowance was necessary. #### Depreciation Depreciation is calculated using the straight-line method over the estimated useful life of the assets which are between five and fifteen years. ## Concentration of Customer Revenues For the year ended December 31, 2019, three customers accounted for 69% of the Company's revenue. The revenue percentages are 38%, 18%, and 18%, respectively. These three customers accounted for 0%, of accounts receivable as of December 31, 2019. {6}------------------------------------------------ ### Foreign Currency The U.S. dollar is the functional currency of the Company's worldwide continuing operations. All foreign currency asset and liability amounts are re-measured into U.S. dollars at end-ofperiod exchange rates. Foreign currency income and expenses are re-measured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts re-measured at historical exchange rates. Exchange gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income in the period in which they occur. ## **2. Commitments and Contingencies** The Company's lease, began in October of 2019 for a term of four years. The company moved into the new office in October of 2014. Future minimum annual lease payments are as follows: | 2019 | \$294,818.75 | |------|----------------| | 2020 | 267,885.76 | | 2021 | 275,922.32 | | 2022 | 284,200.04 | | | \$1,122,826.87 | Rent expense charged to operations for the year ended December 31, 2019 was \$294,819. The Company has obligations as a lessee for office space, computers, and other office equipment with initial noncancelable terms in excess of one year. The Company classified these leases as operating leases. These leases generally contain renewal options for the periods ranging from two to five years. Because the Company is not reasonably certain to exercise these renewal options, the optional periods are not included in determining the lease term, and associated payments under these renewal options are excluded from lease payments. The Company's leases do not include termination options for either party to the lease or restrictive financial or other covenants. Payments due under the lease contracts include fixed payments plus, for many of the Company's leases, variable payments. The Company's office space leases require it to make variable payments for the Company's proportionate share of the building's property taxes, insurance, and common area maintenance. These variable lease payments are not included in lease payments used to determine lease liability and are recognized as variable costs when incurred. {7}------------------------------------------------ # **INNER CIRCLE SPORTS LLC** ## Notes to Financial Statements December 31, 2019 ## **Commitments and Contingencies (continued)** Amounts reported in the balance sheet as of December 31, 2019 were as follows: Operating leases: | Operating lease ROU assets | \$781,533 | |-----------------------------|-----------| | Operating lease liabilities | \$781,533 | The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the financial position or operations of the Company. There are no pending lawsuits nor claims at the time of the issuance of these financial statements. ## **3. Furniture and Equipment** Furniture and equipment at December 31, 2019 consisted of the following: | Furniture and fixtures | \$
96,365 | |--------------------------------|--------------| | Computer equipment | 135,815 | | | 232,180 | | Less: accumulated depreciation | (172,428) | | Furniture and equipment, net | \$
59,752 | Depreciation expense for the year ended December 31, 2019 was \$28,376. ### **4. Net Capital and Aggregate Indebtedness Requirements** The Company is subject to the Securities and Exchange Commission's Uniform Net Capital Rule 15c3-1 (SEC Rule 15c3-1), which requires the Company to maintain a minimum net capital balance and a ratio of aggregate indebtedness to net capital not exceeding 15 to 1. At December 31, 2019, the Company's net capital balance as defined by SEC Rule 15c3-1 was \$677,475 which exceeded the minimum requirement of \$55,867. At December 31, 2019, the Company's aggregate indebtedness to net capital as defined by SEC Rule 15c3-1 was .44 to 1.0. {8}------------------------------------------------ ### **5. Rule 15c3-3 Exemption** The Company is exempt from the provisions of Part 240 Rule 15c3-3 of the Securities Exchange Act of 1934 (SEC Rule 15c3-3) under paragraph (k)(2)(i) in that the Company carries no margin accounts; promptly transmits all customer funds and delivers all securities received; does not otherwise hold funds or securities for, or owe money or securities to customers. ## **6. Defined Benefit Pension Plan** On January 1, 2018 the plan was amended to a Cash Balance Plan. The following table details information regarding the Company's pension plan at December 31: | | 2019 | |----------------------------------|--------------| | Fair value at beginning of year | \$1,782,237 | | Actual return on assets | 274,077 | | Company contributions | 635,800 | | Employee contributions | 0 | | Benefits paid | 0 | | Other, including expenses paid | (
17,744) | | Fair Value of assets end of year | \$2,674,370 | Management expects the contribution for the year ended December 31, 2019 will be \$762,400. Management has contributed \$762,400 of the 2019 contribution in 2019. {9}------------------------------------------------ # **INNER CIRCLE SPORTS LLC** Notes to Financial Statements December 31, 2019 ### **Defined Benefit Pension Plan (continued)** #### **Plan Assets** As of December 31, 2019 Plan assets were comprised of the following: | Cash and Money Fund | \$
450,537 | |---------------------|---------------| | Mutual Funds | \$2,223,832 | | Total | \$2,674,369 | All investments in the plan are considered level 1 investments. ### **Defined Contribution Pension** The company sponsors a Defined Contribution Profit Sharing Plan. All employees 21 age and over who have completed 2 years of service are able to participate in the plan. Contributions to the plan in 2019 were \$76,200. #### **7. Income Taxes** Income tax expense for the year ended December 31, 2019, consisted of the following: | Current tax expense
NY City | \$207,000 | |--------------------------------|-----------| | Total current tax expense | \$207,000 | | Total income tax expenses | \$207,000 | #### **8. Prior Period Adjustment** There was a prior period adjustment made in 2019 in the amount of \$390,000, for an expense accrued in 2018 that did not materialize. This accrual has been reversed in 2019. ### **9. Foreign Currency Adjustments** Foreign currency translation adjustments included in net income were \$2,486 for the period ended December 31, 2019. The company had cumulative foreign currency translation on accounts receivable denominated in a foreign currency at December 31, 2019. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.