# DAIWA CORPORATE ADVISORY LLC X-17A-5 (2023-05-26) — Broker-dealer annual report - Company: DAIWA CORPORATE ADVISORY LLC - Form: X-17A-5 - Filed: 2023-05-26 - Period: 2023-03-31 - Accession: 0001272515-23-000002 - CIK: 1272515 - File #: 8-66273 - Type: Broker-dealer - Material weakness: No - Auditor: KPMG LLC - Auditor location: New York, NY - Contact: Peter Pacitto - Phone: 2129049488 - Email: peter.pacitto@dcadvisory.com - Website: dcadvisory.com - Signed by: Peter Pacitto (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1272515/000127251523000002/print.pdf --- {0}------------------------------------------------ DAIWA CORPORATE ADVISORY LLC (SEC I.D. No. 8Ͳ66273) STATEMENT OF FINANICAL CONDITION AS OF MARCH 31, 2023 AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM \* \* \* \* \* \* \* This report is filed pursuant to Rule 17aͲ5(e)(3) under The Securities Exchange Act of 1934 as a PUBLIC DOCUMENT. {1}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: KĐƚ͘ϯϭ͕ϮϬϮϯ Estimated average burden hours per response: > SEC FILE NUMBER 8͈66273 # **ANNUAL REPORTS FORM X-17A-5 PART III** **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 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 4/1/2022 3/31/2023 MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** #### NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ DAIWA CORPORATE ADVISORY LLC TYPE OF REGISTRANT (check all applicable boxes): ܆ Broker-dealer ܆ Security-based swap dealer ܆ Major security-based swap participant ܆ Check here if respondent is also an OTC derivatives dealer ■ ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) #### \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 605 Third Ave, 11th Floor | | (No. and Street) | | | |--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|--------------------------------------------| | New
York | NY
_____________________________________________________________________________________ | | 10171 | | (City) | (State) | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Peter
Pacitto | 212-904-9488
_____________________________________________________________________________________ | Peter.Pacitto@dcadvisory.com | | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | KPMG
LLP | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
_____________________________________________________________________________________
(Name – if individual, state last, first, and middle name) | | | | 345
Park
Avenue | New
York
_____________________________________________________________________________________ | NY | 10154 | | (Address) | (City) | (State) | (Zip Code) | | 10/20/2003 | 185
_____________________________________________________________________________________ | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | 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 240.17a-5(e)(1)(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 OMB control number.** {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, ___________________________________________, swear (or affirm) that, to the best of my knowledge and belief, the
Peter Pacitto | | | |------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|--| | financial report pertaining to the firm of ____________________________________________________________, as of | Daiwa Corporate Advisory LLC | | | 3/31
______________________________, 2_____, is true and correct. I further swear (or affirm) that neither the company nor any
023 | | | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | | | as that of a customer. | | | | | Signature: | | ĂƐĞĚƵƉŽŶƚŚĞƐƚĂƚĞŵĞŶƚĨƌŽŵŽŵŵŝƐƐŝŽŶ ƐƚĂĨĨĂŶĚĚŝĨĨŝĐƵůƚŝĞƐĂƌŝƐŝŶŐĨƌŽŵŽǀŝĚͲϭϵ͕ǁĞ ǁŝůůƐƵďŵŝƚƚŚŝƐĨŝůŝŶŐǁŝƚŚŽƵƚĂŶŽƚĂƌŝnjĂƚŝŽŶ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Title: Chief Financial Officer \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ | Notary Public | | |---------------|--| |---------------|--| #### **This filing\*\* contains (check all applicable boxes):** ܆) a) Statement of financial condition. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ - ܆) b) Notes to consolidated statement of financial condition. - ܆) 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). - ܆) d) Statement of cash flows. - ܆) e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - ܆) f) Statement of changes in liabilities subordinated to claims of creditors. - ܆) g) Notes to consolidated financial statements. - ܆) h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - ܆) 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. - ܆) l) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - ܆) m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - ܆) 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. - ܆) 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-1, 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. - ܆) 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. - ܆) v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 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. - ܆) x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e 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). - ܆) 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.* {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) KPMG LLP 345 Park Avenue New York, NY 10154-0102 ## **Report of Independent Registered Public Accounting Firm** To the Member and Management Daiwa Corporate Advisory LLC: #### *Opinion on the Financial Statement* We have audited the accompanying statement of financial condition of Daiwa Corporate Advisory LLC (the Company) as of March 31, 2023, and the related notes (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of March 31, 2023, in conformity with U.S. generally accepted accounting principles. #### *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 2019. New York, New York May 26, 2023 {4}------------------------------------------------ Statement of Financial Condition March 31, 2023 | ASSETS | | |------------------------------------------------------------------------|--------------| | Cash and cash equivalents | 4,025,734 | | Receivable from broker dealer | 21,383,370 | | Security deposits | 528,690 | | Accounts receivable, net of allowance of \$0 | 4,056,293 | | Property and equipment, net of accumulated depreciation of \$1,536,491 | 420,240 | | Deferred taxes | 4,103,981 | | Current taxes receivable | 3,860,726 | | Goodwill | 28,765,047 | | Lease right of use assets | 10,202,546 | | Prepaid and other assets | 1,876,247 | | Total assets | 79,222,874 | | LIABILITES AND MEMBER'S CAPITAL | | | LIABILITES | | | Accounts payable | 560,105 | | Accrued expenses | 18,289,613 | | Deferred income | 493,316 | | Lease liabilities | 12,103,326 | | Total liabilities | 31,446,360 | | MEMBER'S CAPITAL | | | Common stock | 75 | | Additional paid-in capital | 102,441,730 | | Accumulated (deficit) | (54,665,291) | | TOTAL MEMBER'S CAPITAL | 47,776,514 | | Total liabilities and member's capital | 79,222,874 | | | | See accompanying notes to statement of financial condition {5}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **1. ORGANIZATION** Daiwa Corporate Advisory LLC (the "Company"), formerly known as DCS Advisory LLC, is a Delaware limited liability company and provides financial advisory services to clients in connection with mergers, acquisitions, financings, restructurings and other transactions. The Company may also act as a placement agent, arranger, dealerͲmanager and/or underwriter in certain transactions. The Company's clients consist of public and private companies in a variety of industries, including private equity firms. The Company maintains offices in the United States located in New York, California, Washington DC and Illinois. The Company is a whollyͲowned subsidiary of Daiwa Corporate Advisory Holdings Inc. ("Holdings), which is a whollyͲowned subsidiary of Daiwa Capital Markets Americas Holdings Inc. ("Daiwa"). The Company is a member of the Financial Industry Regulatory Authority ("FINRA") and is a registered brokerͲdealer with the Securities and Exchange Commission (the "SEC"). # **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** *Use of Estimates* ͲThe preparation of the Company's statement of financial condition in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the statement of financial condition and related disclosures.Actual results could differ materially from these estimates. *Fair Value of Financial Assets and Liabilities*ͲThe carrying value of financial assets and liabilities, including accounts receivable and certain other assets, and accounts payable and accrued expenses approximates their fair value due to the shortͲterm nature of these financial assets and liabilities. {6}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 *Cash and Cash Equivalents*ͲThe Company considers all liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash held at two major U.S. financial institutions. *Fees Receivables* – Receivables are stated net of an allowance of doubtful accounts. The Company generally does not require collateral and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of clients, nonͲpayment risk of clients, historical trends and other information. It is the Company's policy to review all receivables greater than 90 days and record an allowance, if necessary. Credit risk related to fees receivable is dispersed across a large number of clients. Once the receivable is considered uncollectible based upon the credit worthiness of the client, it is chargeͲoff.The allowance recorded in the statement of financial condition is \$0 as of March 31, 2023. *Property and Equipment*ͲProperty and equipment consists of furniture, fixtures, equipment, leasehold improvements, and computer hardware and software, which are stated at cost. Depreciation is computed using the straightͲline method over the lesser of the estimated useful life or five years of the relevant furniture, fixtures and office equipment, and three years for computer hardware and software. Leasehold improvements are amortized using the straightͲline method over the lesser of the economic useful life of such improvements or the life of the lease. Maintenance and repair costs are charged to expenses as incurred. The Company periodically evaluates the carrying value of property and equipment when events and circumstances suggest that such assets may be impaired and no such indicators were identified during the current year. *LeasesͲ*The Company's operating leases, where the Company is a lessee, include real estate, such as office space, and various types of office equipment. These leases have a weighted average remaining lease term of approximately five years as of March 31, 2023. The operating lease ROU asset and lease liability were approximately \$10 million and \$12 million, respectively, as of March 31, 2023. {7}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 *Goodwill and Other Intangible Assets* –The Company does not amortize goodwill, but tests it annually for impairment, or sooner when circumstances indicate an impairment may exist, using a quantitative approach. The Company may elect to perform a qualitative assessment. The Company performed a Step zero analysis as a qualitative assessment according to ASC 350 to determine whether it is more likely than not the fair value of the reporting unit is less than its carrying amount. Intangible assets with definite useful lives are amortized over their useful lives to their residual values. **Income Taxes** – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as the estimated future tax consequences attributable to net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years 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. The Company's results of operations are included in the consolidated federal and certain combined state and local income tax returns filed by the Parent. In accordance with the tax sharing agreement, the Parent allocates to the Company its proportionate share of the consolidated federal and combined state and local tax liabilities on a separateͲcompany basis. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained in accordance to ASC 740, Income Taxes. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties recognized are classified as income tax expense. **Recent Accounting Standards**ͲͲIn December 2022, the FASB released ASU 2022Ͳ06, Reference Rate Reform (Topic 848 Update). It defers the sunset date of the Reference Rate Reform from December 31, 2022, to December 31, 2024, to extend the ability to apply the guidance in Topic 848, which providestemporary optional guidance to ease the burden in accounting for reference rate reform on financial reporting. The Company is presently evaluating the effect of the ASU and expects no material impact to its financial results or statement of financial condition. {8}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **3. GOODWILL** The Company performed a goodwill impairment test with respect to estimating the Fair Value of the Company in February 2023. The changes in the carrying amount of goodwill for the year ended March 31, 2023 are as follows: # **Goodwill** | Balance
as
of
March
31,
2022 | \$
28,765,047 | |---------------------------------------------|------------------| | Accumulated
impairment
losses | Ͳ | | Balance
as
of
March
31,
2023 | \$
28,765,047 | ## **4. SECURITY DEPOSITS** Each of the longͲterm leases for the Company's offices in the United States required a security deposit. The Company has provided a cash deposit or fully cash collateralized letter of credit through a major financial institution in the United States to each of the landlords in connection with the respective office leases. No amounts have been drawn under any of the letters of credit. Total security deposits at March 31, 2023 were \$528,690. A portion of the security deposits will be reduced at various times throughout the applicable lease period with the final reductions arising no later than sixty days after the applicable lease expiration date. {9}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **5. PROPERTY AND EQUIPMENT** As of March 31, 2023, property and equipment consist of the following: | Furniture
and
fixtures | \$
101,185 | |---------------------------------------------|-------------------| | Computer
and
software |
688,42
6 | | Leasehold
improvements |
1,167,12
0 | | | 1,956,731 | | Less:
Accumulated
depreciation
and | | | amortization |
(1,536,491) | | | | | Property
and
equipment,
net | \$
420,240 | ## **6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES** As of March 31, 2023, accounts payable and accrued expenses consist of the following: | Accrued
compensation
and
benefits | \$
18,289,612 | |--------------------------------------------|------------------| | Accrued
professional
fees |
309,032 | | Others |
251,075 | | | \$18,849,719 | {10}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **7. RELATED PARTY TRANSACTIONS** The Company entered into a Business Alliance with Daiwa Securities Capital Markets Co. Ltd. ("DSCM") and Daiwa Capital Markets America Inc. ("Daiwa CM America"). The purpose of the Business Alliance with DSCM is to increase crossͲborder investment banking opportunities for the Company, DSCM and its related parties, as well as their respective clients. Pursuant to the Business Alliance, the Company provides services to Daiwa's related parties. Information services means the continuous research and analysis and the provision of information, with respect to and not limited to, acquisition or investment opportunities, acquisition criteria and industry information, in each case using services. Pursuant to the Transaction, the Company and Daiwa's related parties collaborate to provide services to certain clients. In connection with any such collaboration, client billing responsibility is assigned to either the Company or Daiwa's related parties, which creates either a receivable or payable for the Company with Daiwa's related parties when client billings arise. In addition, pursuant to certain secondment agreements between the Company, Daiwa's related parties and certain Company employees, the Company is reimbursed by Daiwa's related parties for certain employee benefits and related administrative costs. The Company maintains a securities account with Daiwa CM America. As of March 31, 2023 the account balance was \$21,383,370 which is included in receivable from broker dealer in the statement of financial condition. Receivable from and payable to relates parties are recorded gross, by entity, and do not bear interest. Receivables from and payables to related parties represent advisory fees, ongoing support costs and vendor outͲofͲpocket expenses. {11}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **8. LEASES** *Operating Leases*ͲThe Company leases both longͲterm and shortͲterm office space at various locations in the United States pursuant to operating leases expiring at various times through December 2028. As of March 31, 2023, the future minimum payments under these operating leases are as follows: | Leases | | | |--------------------------------------------------------------------------------------------------|-------|------------------| | | Lease | payments | | FYE
3/31/24 | |
2,431,688 | | FYE
3/31/25 | |
2,515,077 | | FYE
3/31/26 | |
2,540,738 | | FYE
3/31/27 | |
2,567,306 | | FYE
3/31/28 | |
1,987,991 | | FYE
3/31/29 | |
1,127,320 | | Total
future
lease
payments
Less
imputed
interest
(based
on
weightedͲ | | 13,170,120 | | average
discount
rate
of
3.2%) | | (1,066,794) | | Lease
liability
| | \$12,103,326
| ## **9. COMMITMENT, CONTINGENCIES, AND GUARANTEES** *LitigationͲ*In the normal course of business, the Company may be named as a defendant in various lawsuits and may be involved in certain investigations and proceedings. Some of these matters may involve claims of substantial amounts. It is the opinion of management, after consultation with its counsel, that there are no matters pending against the Company that could have a material adverse effect on the Statement of financial condition of the Company at March 31, 2023. {12}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **10. FAIR VALUE OF FINANCIAL INSTRUMENTS** The Company applies the provisions of ASC 820, Fair Value Measurements and Disclosures, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability. ASC 820 establishes a hierarchy that categorizes financial instruments, based on the priority of the inputs to the valuation technique into the following threeͲlevels: - Level 1ͲUnadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. - Level 2ͲQuoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; and - Level 3ͲValuations that require inputs that are both unobservable and significant to the fair value measurement. At March 31, 2023, cash and cash equivalents amount to \$4,025,734, are maintained with a major commercial bank in the United States and are classified as level 1.There were no financial instruments reported at fair value classified as level 2 or level 3 as of March 31, 2023. #### **11. INCOME TAXES** The significant components of the Company's net deferred tax assets included in other assets in the accompanying statement of financial condition at March 31, 2023 are as follows: | Deferred tax assets: | | | |-------------------------------------------------|---|-------------| | Goodwill | 8 | 1,293,421 | | Lease liabilities | | 3,236,551 | | Bonus - deferred compensation | | 726,284 | | AMT credit and net operating loss carryforward | | 763,396 | | Mandates and pipeline | | 681,719 | | Deferred revenue | | 131,927 | | Depreciation | | 18,168 | | Total gross deferred tax assets | | 6.851.466 | | Valuation allowance | | | | Deferred tax assets, net of valuation allowance | | 6.851.466 | | Deferred tax liabilities: | | | | ROU assets | | (2,728,447) | | 481(a) Deferred Revenue | | (19,038) | | Gross deferred tax liabilities | | 2,747,485) | | Total deferred tax assets | | 4.103.981 | | | | | {13}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 A valuation allowance represents the portion of the Company's deferred tax assets for which it is more likely than not that the benefit of such items will not be realized. Management believes that the realization of the net deferred tax asset of \$4,103,981 at March 31, 2023 is more likely than not based on expectations of future taxable income. Income taxes receivable from affiliates of \$3,850,238 are included in other assets on the Statement of Financial Condition as of March 31, 2023. Major taxing jurisdictions for the Company and tax years for each that remain open to examination are as follows: | U.S.
Federal
| March
31,
2020
and
after | |-----------------------------|--------------------------------------| |
New
York
State | March
31,
2016
and
later | |
New
York
City
| March
31,
2017
and
later | | CaliforniaMarch | 31,
2019
and
later | As of March 31, 2023, the Company determined that it has no material uncertain tax positions, interest or penalties as defined within ASC 740, and accordingly, management has concluded that no additional ASC 740 disclosures are required. The Company does not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within the next 12 months. ## **12. CONCENTRATIONS** #### Major Clients At March 31, 2023, the accounts receivable balance was \$2,907,452, one client represented 33% of the Company receivable balance. ## Cash and Cash Equivalents and Security Deposit Concentrations The Company maintains cash and cash equivalent balances, including security deposits, with major commercial banks in the United States. From time to time, the Company maintains cash and cash equivalents balances in excess of federally insured amounts. The Company performs periodic evaluations of the relative credit standing of these financial institutions. {14}------------------------------------------------ Notes to Statement of financial condition March 31, 2023 #### **13. NET CAPITAL REQUIREMENT** The Company is subject to the SEC Uniform Net Capital Rule 15c3Ͳ1(a)(1)(ii) (the "Alternative Standard") which requires that the Company maintain minimum net capital, as defined, of \$250,000 or 2 percent of aggregate debit items computed in accordance with the formula for Determination of Reserve Requirements for Brokers and Dealers, whichever is greater. At March 31, 2023 the Company had net capital of \$4,165,290, which was in excess of its statutory requirement by \$3,915,290. #### **14. SUBSEQUENT EVENTS** The Company has evaluated subsequent events from the statement of financial condition date through May 26th, 2023, the date at which the statement of financial condition were available to be issued and determined that there are no other items to recognize or disclose. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.