# WATERWAY CAPITAL LLC X-17A-5 (2025-03-31) — Broker-dealer annual report - Company: WATERWAY CAPITAL LLC - Form: X-17A-5 - Filed: 2025-03-31 - Period: 2024-12-31 - Accession: 0001259484-25-000005 - CIK: 1259484 - File #: 8-66108 - Type: Broker-dealer - Material weakness: No - Auditor: Withum Smith and Brown PC - Auditor location: Whippany, NJ - Contact: Ana Ward - Phone: 6172268110 - Email: award@waterwaycap.com - Website: waterwaycap.com - Signed by: Thomas A Sargent (President) Original filing: https://www.sec.gov/Archives/edgar/data/1259484/000125948425000005/waterwaypb.pdf --- {0}------------------------------------------------ PUBLIC COPY WATERWAY CAPITAL LLC CRD:128212 SEC: 8-66108 FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2024 {1}------------------------------------------------ | OMB APPROVAL | | |--------------------------|----| | OMB Number: 3235-0123 | | | Expires: Nov. 30, 2026 | | | Estimated average burden | | | hours per response: | 12 | | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | FACING PAGE | | | |-------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------------------------------------------| | FILING FOR THE PERIOD BEGINNING = | 01/01/2024 ___________________________________________________________________________________________________________________________________________________________________ | | 12/31/2024 | | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF FIRM: Waterway Capital LLC | | | | | TYPE OF REGISTRANT (check all applicable boxes):
& Broker-dealer
C Check here if respondent is also an OTC derivatives dealer | □ Security-based swap dealer | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | 699 Boylston Street, 8th Floor | | | | | | (No. and Street) | | | | Boston | MA | | 02116 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Ana Ward | 617-226-8110 | | | | (Name) | (Area Code - Telephone Number) | award@waterwaycap.com
(Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Withum Smith & Brown PC | | | | | | (Name - if individual, state last, first, and middle name) | | | | 200 Jefferson Park, Suite 400 | Whippany | NJ | 17981 | | (Address) | (City) | (State) | (Zip Code) | | 10/08/2003 | | 100 | | | (Date of Registration with PCAOB)(if applicable) | FOR OFFICIAL USE ONLY | | (PCAOB Registration Number, if applicable) | {2}------------------------------------------------ | Thomas A. Sargent | | swear (or affirm) that, to the best of my knowledge and belief, the | |--------------------------------------------|----------------------|---------------------------------------------------------------------| | financial report pertaining to the firm of | Waterway Capital LLC | | - - - - - - - - - - - - - - - - - - - - - - - - - - - | Signature: | | | |------------|-----------|--| | Title: | | | | | President | | | | | | {3}------------------------------------------------ WATERWAY CAPITAL, LLC FINANCIAL STATEMENTS DECEMBER 31, 2024 {4}------------------------------------------------ ## CONTENTS | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|--| | Financial Statements | | | Statement of Financial Condition | | | | | | Notes to Financial Statements -1 | | {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member and Management of: Waterway Capital LLC: #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Waterway Capital LLC (the "Company") as of December 31, 2024, 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 December 31, 2024, 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 this 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2018. Whippany, New Jersey March 31, 2025 {6}------------------------------------------------ #### STATEMENT OF FINANCIAL CONDITION #### DECEMBER 31, 2024 | STATEMENT OF FINANCIAL CONDITION | | |--------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------| | DECEMBER 31, 2024 | | | Assets | | | Cash
Deposits and other prepaids
Due from affiliates
Right of use assets
Property and equipment, net
Security deposit | \$
604,046
50,454
5,494
1,797
11,148
14,021 | | Total Assets | \$
686,960 | | Liabilities and Member's Equity | | | Liabilities | | | Accounts payable
Accrued expenses and other liabilities
Due to affiliates
Lease liabilities | \$
197,345
216,553
473
1,797 | | Total Liabilities | 416,168 | | Member's Equity | 270,792 | | Total Liabilities and Member's Equity | \$
686,960 | These financial statements and schedules are deemed confidential pursuant to sub-paragraph (e)(3). The accompanying notes are an integral part of these financial statements. {7}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## FOR THE YEAR ENDED DECEMBER 31, 2024 NOTE 1 - NATURE OF COMPANY Waterway Capital, LLC (the Company) is a broker-dealer registered with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The Company is a Massachusetts Limited Liability Company (LLC) that is a wholly-owned subsidiary of Waterway Partners, LLC (the Parent Company). The Company specializes in the private placement of debt securities among its insurance company, pension fund, bank and other money management clients. #### NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### BASIS OF PRESENTATION The financial statements are prepared on the accrual method 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 generally accepted accounting principles 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. ### PROPERTY AND EQUIPMENT, NET Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets. #### RISKS AND UNCERTAINTIES The Company has operated with recurring losses and related negative cash flows and is expected to have operating losses for the foreseeable future. At December 31, 2024, the Companys cash balance was \$604,046. Management has determined that additional funding will be necessary and remains committed to contributing capital for the foreseeable future to ensure net capital compliance is maintained. The Companys sole managing member has the means to provide and has formally committed to providing adequate capitalization and liquidity for the Companys business operations for at least one year from the issuance of the financial statements. {8}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## FOR THE YEAR ENDED DECEMBER 31, 2024 ### NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### INCOME TAXES The Company is organized as a single-member LLC. Under the provisions of the Internal Revenue Code, a single member LLC is considered a disregarded entity for income tax reporting purposes and, accordingly, is not subject to income taxes. Income of the Company flows to the Members of the Parent Company and is includable in the Members income tax returns. The Company follows Accounting for Uncertainty in Income Taxes, which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. For the year ended December 31, 2024, the Company has no material uncertain tax positions to be accounted for in the financial statements. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense. As of December 31, 2024, the Parent Companys federal and state tax returns generally remain open for possible examination for a period of three years after the date which the returns were filed. 1) Identify the contract(s) with a customer: before entering into an arrangement with a 2) Identify the performance obligations in the contract: Clearly identified in each contract #### REVENUE FROM CONTRACTS WITH CUSTOMERS ### REVENUE RECOGNITION The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects consideration of which the entity expects to be entitled in exchange for those goods or services. 3) Determine the transaction price: Terms are clearly defined in each contract for each As part of this analysis over the revenue recognition of ASC Topic 606 the Company examined the five steps to revenue recognition as follows: - customer, an executed, defined contract is completed. - that the performance obligation is facilitating the placement of debt and related real estate transactions. - performance obligation. {9}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## FOR THE YEAR ENDED DECEMBER 31, 2024 ### NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED) #### REVENUE RECOGNITION (CONTINUED) - 4) Allocate the transaction price to the performance obligations in the contract: Based on the terms of the contract, the transaction price is determined at contract inception for the distinct services underlying each performance obligation. - 5) Recognize revenue when (or as) the entity satisfies a performance obligation: Revenue is only recorded by the company once the respective performance obligation has been identified and satisfied. #### SIGNIFICANT JUDGMENTS Revenue from contracts with customers includes investment banking 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 measure of the Companys progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. ### INVESTMENT BANKING Advisory & placement services fees and revenue sharing: The Company provides advisory and placement services. Revenue for advisory arrangements is generally recognized at the point in time that the placement of debt under the arrangement is completed (the closing date of the transaction) or when the contract is cancelled. ### OTHER INCOME Revenue recorded in other income is generally recognized at the point in time that the transaction under the arrangement is completed (the closing date of the transaction) or when the contract is cancelled. {10}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## FOR THE YEAR ENDED DECEMBER 31, 2024 ## NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DISAGGREGATED REVENUE FROM CONTRACTS WITH CUSTOMERS #### Revenue from contracts with customers | WATERWAY CAPITAL, LLC | | | | |--------------------------------------------------------|----|-----------|--| | NOTES TO FINANCIAL STATEMENTS | | | | | FOR THE YEAR ENDED DECEMBER 31, 2024 | | | | | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) | | | | | DISAGGREGATED REVENUE FROM CONTRACTS WITH CUSTOMERS | | | | | Revenue from contracts with customers | | | | | Investment banking fees | | | | | Advisory and placement services | \$ | 1,316,492 | | | Other income | | 288,689 | | | Total investment banking fee revenue | | 1,605,181 | | | | | | | ### ADVERTISING The Company records expenses for advertising when the liability is incurred. There was no advertising expensed for the year ended December 31, 2024. ## FAIR VALUE MEASUREMENTS The Company follows accounting standards relative to fair value measurements which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs to determine the fair value. Also, in accordance with these standards, the Company categorizes its financial instruments, based on the priority of inputs to the valuation technique, into a threelevel hierarchy, as discussed below. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level I are quoted prices in active markets for identical investments that the Company has the ability to access at the measurement or reporting date. Level II are inputs (other than quoted prices in active markets included within Level I), which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. {11}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## FOR THE YEAR ENDED DECEMBER 31, 2024 #### NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### FAIR VALUE MEASUREMENTS (CONTINUED) Level III are unobservable inputs for the investment and includes situations where there is little, if any, market activity for the investment. Unobservable inputs are those that reflect the Companys own assumptions about the determination of fair value and require significant management judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investments level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Companys assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. #### ALLOWANCE FOR CREDIT LOSSES The Company records the estimate of expected credit losses as an allowance for credit losses. For financial assets measured at an amortized cost basis the allowance for credit losses is reported as a valuation account on the statement of financial condition that is deducted from the asset's amortized cost. Changes in the allowance for credit losses are reported in credit loss expense. The Company identified advisory and other receivables as impacted by the guidance. The allowance for credit losses is based on the Company's expectation of the collectability of financial assets including fees receivable and due from affiliates utilizing CECL framework. The Company considers factors such as historical experience, credit quality, age of the balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that credit risk associated with the receivables is not significant until they reach 90 days past due based on the contractual arrangement and expectation of collection. As of December 31, 2024 and for the year then ended the Company did not provide or experience any credit losses. {12}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENTS #### FOR THE YEAR ENDED DECEMBER 31, 2024 #### NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### RECENTLY ADOPTED ACCOUNTING POLICY Effective January 1, 2024, the Company adopted an accounting standard for segment reporting in accordance with the guidelines set forth by the Financial Accounting Standards Boards (FASB) Accounting Standard Update (ASU) 2023-07, Segment Reporting Topic 280: Improvements to Reportable Segment Disclosure. The guidance requires general purpose financial statements include segment information that is prepared using the method referred to as the management approach. The management approach requires that segment information be reported based on how management internally organizes the segments within the entity or purposes of allocating resources and assessing performance. See Note 11. There are no other recently released accounting standards that would impact the Company. NOTE 3 PROPERTY AND EQUIPMENT, NET Furniture and fixtures 7 years \$ 115,426 Computer equipment 3 years 92,569 Office equipment 3 years 28,593 Leasehold improvements Life of lease 71,627 Total Cost 308,215 Less: accumulated depreciation and amortization (297,067) Property and Equipment, Net \$ 11,148 Depreciation expense totaled \$15,786 for the year ended December 31, 2024. Property and equipment consists of the following as of December 31, 2024: | Estimated | | |--------------|--| | Useful Lives | | | | | | | | | | | | | | | | | | | | | | | #### NOTE 4 NET CAPITAL The Company is subject to the Securities & Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires 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. For the year ended December 31, 2024, the Company had net capital of \$189,675, which was in excess of the minimum net capital of \$27,625 in the amount of \$162,050. The Companys aggregate indebtedness to net capital ratio was 2.18 to 1. {13}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS #### FOR THE YEAR ENDED DECEMBER 31, 2024 #### NOTE 5 COMMITMENTS #### LEASE COMMITMENTS Occupancy expenses were \$437,069 for the year ended December 31, 2024. This includes rent expense of \$359,192, common area maintenance expense and real estate taxes of \$54,417, utilities expense of \$7,918, storage expense of \$8,711 and internet and equipment leases expense totaling \$6,831. See Note 9. #### NOTE 6 RELATED PARTY TRANSACTIONS In the normal course of business, the Company conducts certain transactions with related parties affiliated by common control. All of the entities are affiliated through common ownership by the parent company, Waterway Partners, LLC. The Parent Company also provides for the payment of certain direct expenses incurred by the Company in its operations as applicable and reasonably deemed necessary or appropriate to carry on the business activities of the Company. The Parent Company also provides other administrative services for which the Company pays an expense sharing service fee equal to the allocated amount of operating expenses including rent expense, common area maintenance expenses, real estate taxes and utilities expenses. During 2024, the Company incurred and reimbursed \$421,048 in operating expenses which were paid by the Parent Company. The Company has paid for various administrative and overhead expenses on behalf of the related parties. During 2024, the related parties incurred \$55,413 in expenses that were paid by the Company. The Company also recorded origination fees revenue for \$180,000 from WFF Eugene Holdings, LLC, and \$103,500 from WFF Brunswick Investor, LLC. At December 31, 2024, the Company has a balance due Waterway Family Funds of balance to Waterway Partners, LLC \$ . #### NOTE 7 PROFIT SHARING PLAN The Company maintains a discretionary profit-sharing plan that covers all employees of the Company who have met eligibility requirements as defined in the plan document. The Plan includes a provision where the Company will make a Safe Harbor Non-Elective Contribution to the individual account of each eligible employee in an amount equal to three percent of the employees compensation for the plan year. Company contributions to the Plan for the year ended December 31, 2024 were \$51,088. {14}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS #### FOR THE YEAR ENDED DECEMBER 31, 2024 #### NOTE 8 CONCENTRATION OF CREDIT RISK The Company maintains its cash at commercial bank The Federal Deposit Insurance Corporation (FDIC) covers \$250,000 for substantially all deposit accounts. At times the Companys balances may be greater than the federally insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Companys financial condition, results from operations, and cash flows. During 2024, the Company had three customers that represented 92.5% of total revenue. #### NOTE 9 LEASES #### LEASE RECOGNITION The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As most of the Company's leases do not provide an implicit rate, the Company estimates its incremental borrowing rate of 5.5% based on information available at the commencement date in determining the present value of future payments. Lease expense for net present value of payments is recognized on a straight-line basis over the lease term. For 2024, expenses for these operating leases totaled \$670 and amortization of the right of use asset totaled \$486. 2025 1,274 \$ 2026 710 2027 104 Total lease payments 2,088 Less: imputed interest (291) Total \$ 1,797 The maturities of lease liabilities as of December 31, 2024 were as follows: | 2025 | S | 1,274 | |------------------------|---|-------| | 2026 | | 710 | | 2027 | | 104 | | Total lease payments | | 2,088 | | Less: imputed interest | | 291 | | S
Total | | 1,797 | {15}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS #### FOR THE YEAR ENDED DECEMBER 31, 2024 #### NOTE 10 EXEMPTION STATUS The Company does not handle cash or securities on behalf of its customers. Accordingly, it has no obligations under SEC Rule 15c3-3. The Company is relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its business activities exclusively to: (1) broker or dealer retailing corporate debt securities; (2) municipal securities broker; and (3) private placements of securities, and the Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. #### NOTE 11 SEGMENT REPORTING The Company is engaged to provide advisory and placement services. The Company has identified Thomas A. Sargent as the chief operating decision maker (CODM), who uses net profits and loss and net capital to evaluate the results of the business, predominantly in the forecasting process, to manage the Companys and maintain its regulatory obligations. The CODM continually monitors the Companys net profits and loss and net capital to make operational decisions while maintaining capital adequacy. The Companys operations constitute a single operating segment and therefore a single reportable segment. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies. #### NOTE 12 MANAGEMENTS REVIEW OF SUBSEQUENT EVENTS Management has evaluated subsequent events for potential recognition and for disclosure in the December 31, 2024 financial statements through the date on which the financial statements were available to be issued. Based on this evaluation, the Company dentif Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.