# HENLEY & COMPANY LLC X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: HENLEY & COMPANY LLC - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0001289005-22-000001 - CIK: 1289005 - File #: 8-66463 - Type: Broker-dealer - Material weakness: No - Auditor: DeMarco Sciaccotta Wilkens & Dunleavy, LLP - Auditor location: Frankfort, IL - Contact: Francis Gemino - Phone: 516-794-5520 - Email: fgemino@henleyco.net - Website: henleyco.net - Signed by: Francis Gemino (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1289005/000128900522000001/henleyfspublic21.pdf --- {0}------------------------------------------------ FINANCIAL STATEMENT OF CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2021 {1}------------------------------------------------ | SECURITIES AND EXCHANGE COMMISSION | | | OMB APPROVAL | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------------------------|--| | | | | OMB Number:
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12.00 | | | | ANNUAL REPORTS | | | | | | FORM X-17A-5 | | SEC FILE NUMBER | | | | | | | | | | PART III | | 8-66463 | | | REPORT FOR THE PERIOD BEGINNING_01/01/2021 AND ENDING | FACING PAGE
Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | | | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF FIRM: Henley & Company LLC | | | | | | TYPE OF REGISTRANT {check all applicable boxes): | | | | | | & Broker-dealer
L Check here if respondent is also an OTC derivatives dealer | □Security-based swap dealer | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | | | | | | | | | (No. and Street) | | | | | | NY | | 11556 | | | (City) | (State) | | (Zip Code) | | | | | | | | | | 516-794-5520 | | fgemino@henleyco.net | | | | (Area Code - Telephone Number) | | (Emall Address) | | | | B. Accountant Identification | | | | | | | | | | | | | | | | | | | | | | | | (Name - Ifindividual, state last, first, middle name) | | | | | | Frankfort
(City) | (State) | 60423
(Zip Code) | | | 12/01/2010 | | | | | | 1290 RXR Plaza
Uniondale
PERSON TO CONTACT WITH REGARD TO THIS FILING
Francis Gemino
(Name)
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
De Marco Sciaccotta Wilkens & Dunleavy, LLP
20646 Abbey Woods Ct N, Suite 201
(Address)
(Date of Registration with PCAOB)(if a pplicable) | | | 5376
(PCAOB Registration Number, if applicable) | | UNITED STATES \* Claims for exemption from the requirement that the annual 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)(i), if a pplicable. 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, Francis Gemino, swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of Broker Dealer, as of December 31, 2021, is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account class ified solely as that of a customer. ![](_page_2_Figure_2.jpeg) Notary Public ### This filing\*\* contains (check all applicable boxes): - 区 (a)Statement of financial condition. - 四 (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). - O (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 tangiblenet 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. - O (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit 8 to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - □ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3 -3. - O (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} Reconcillations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 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. - 口 (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-12, or 17 CFR 240.18a-7, as applicable. - [] {r}Compliancereportinaccordancewith 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - | (s) Exemption report in accordance with 17 CFR 240.18a-7, as applicable. - - □ (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 1.7 CFR 240.15c3-1e or 17 CFR 240.17a-12, as applicable. - 口 (y) Report describing any material inadequacies 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 filling, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Henley & Company LLC ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Henley & Company LLC (the "Company") as of December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Henley & Company LLC as of December 31, 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 Henley & Company LLC's auditor since 2014. Frankfort, Illinois February 23, 2022 {4}------------------------------------------------ ### **CONTENTS** **Report of Independent Registered Public Accounting Firm** #### **Financial Statement** | Statement of Financial Condition | 3 | |----------------------------------|-----| | Notes to the Financial Statement | 4-9 | {5}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION | December 31, 2021 | | |------------------------------------------------------------------------------------------------|--------------------| | ASSETS | | | Cash and cash equivalents | \$
835,773 | | Receivable from clearing broker, net (includes
clearing deposit of \$100,000 and securities | | | owned at fair value of \$14,740) | 491,853 | | Office equipment, net | 11,506 | | Operating lease right of use asset (net of amortization of \$233,897) | 233,767 | | Prepaid expenses and other assets | 72,560 | | Total Assets | \$
1,645,459 | | LIABILITIES AND MEMBER'S EQUITY | | | LIABILITIES | | | Accounts payable and accrued expenses | 394,587 | | Lease liability
Due to affiliate | 283,822
158,281 | | Total Liabilities | 836,690 | | Member's equity | 808,768 | | Total Liabilities and Member's Equity | \$
1,645,459 | {6}------------------------------------------------ ## **NOTES TO THE FINANCIAL STATEMENTS** #### **1. Nature of business** Henley & Company 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's operations consist principally of engaging in securities principal transactions. The Company is incorporated in New York, with two locations in the same state. #### **2. Summary of significant accounting policies** #### *Basis of Presentation* The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### *Cash and Cash Equivalents* The Company considers money market accounts to be cash equivalents. #### *Valuation of Investments in Securities at Fair Value - Definition and Hierarchy* In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: *Level 1* - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. *Level 2* - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. *Level 3 -* Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. {7}------------------------------------------------ ## **NOTES TO THE FINANCIAL STATEMENTS** ## **2. Summary of significant accounting policies (continued)** *Valuation of Securities Owned at Fair Value - Definition and Hierarchy (continued)* In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls, is determined based on the lowest level input that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy. #### *Valuation Techniques* The Company values Level I securities owned that are freely tradable and are listed on a national securities exchange or reported on the NASDAQ national market at their last sales price as of the last business day of the year. #### *Office Equipment* Office equipment is stated at cost of \$51,563 less accumulated depreciation and amortization of \$40,057. The Company provides for depreciation and amortization as follows: | Asset | Estimated
Useful Life | Principal Method | |-------------------|--------------------------|------------------| | Computer hardware | 5 years | Straight-line | | Computer software | 3 years | Straight-line | #### *Income Taxes* The Company is a limited liability company, and treated as a disregarded entity for income tax reporting purposes. The Internal Revenue Code ("IRC") provides that any income or loss is passed through to the member for federal and state income tax purposes. Accordingly, the Company has not provided for federal or state income taxes. At December 31, 2021, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. The Company is subject to New York City unincorporated business tax. The sole member is subject to U.S. federal and state income tax audits for all periods subsequent to 2018. #### *Allowance for credit losses* Effective January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments – Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire {8}------------------------------------------------ ## **NOTES TO THE FINANCIAL STATEMENTS** ### **2. Summary of significant accounting policies (continued)** life of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to determine there are no expected credit losses in certain circumstances. The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. Management does not believe that an allowance is required as of December 31, 2021. #### *Leases* The Company recognizes and measures its leases in accordance with FASB ASC 842, Leases. The Company is a lessee in a noncancellable operating leases, for office space. The Company recognized a lease liability and a right of use (ROU) asset as at January 1, 2019, the effective date of ASC 842. The lease liability is initially and subsequently recognized based on the present value of its future lease payments. The discount rate is the implicit rate if it is readily determinable or otherwise the Company uses its incremental borrowing rate. The implicit rates of our leases are not readily determinable and accordingly, the Company used its incremental borrowing rate based on the information available at the commencement date for all leases. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received, and any impairment recognized. Lease cost for lease payments is recognized on a straight-line basis over the lease term. The discount rate used to determine the lease liability and right of use asset was 6%. The Company has elected, for all underlying classes of assets, to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease cost associated with its short-term leases on a straight-line basis over the lease term. ### *Use of Estimates* The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts disclosed in the financial statements. Actual results could differ from those estimates. #### *Coronavirus* The outbreak of the novel coronavirus ("COVID-19") in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The World Health Organization has declared COVID-19 a "Public Health Emergency of International Concern." The global impact of the outbreak continues to evolve, and as cases of the virus have continued to be identified, many countries have reacted by instituting quarantines and restrictions on travel. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 could have a material impact on the Company's financial statements. {9}------------------------------------------------ ## **NOTES TO THE FINANCIAL STATEMENTS** ## **2. Summary of significant accounting policies (continued)** #### *Cares Act* During May 2020, the Company applied for and received a promissory note (the "PPP Loan") evidencing an unsecured loan in the amount of approximately \$196,800 made to the Company pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020. In July 2021, the Company received notification from Citi Bank that the bank and the Small Business Administration had completed their review and that all principal and interest of approximately \$196,800 under the loan is forgiven in full. ### **3. Deposit with clearing broker** Pursuant to an agreement with its clearing broker, the Company is required to maintain a clearing deposit of \$100,000. #### **4. Fair value measurements** The Company's assets recorded at fair value have been categorized based upon a fair value hierarchy as described in the Company's significant accounting policies in Note 2. The following table presents information about the Company's assets measured at fair value as of December 31, 2021: | | Active
Markets for
Identical Assets
(Level 1) | Other
Observable
Inputs
(Level 2) | Significant
Observable
Inputs
(Level 3) | Balance
as of
December 31, 2021 | | |--------------------------------------------------|--------------------------------------------------------|--------------------------------------------|--------------------------------------------------|---------------------------------------|--------| | Assets owned, at fair value
Equity Securities | \$
14,740 | | | \$ | 14,740 | ### **5. Related party transactions** The affiliate is a registered investment advisor separately owned by the Company's sole member. The Company receives the affiliate's advisory fees through its clearing broker. At December 31, 2021 amounts due to this affiliate were \$158,281. These amounts are non-interest bearing and are due on demand. ### **6. Net capital requirement** As a member of FINRA, the Company is subject to the SEC Uniform Net Capital Rule 15c3-1. This Rule requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1, and that equity capital may not be withdrawn if the resulting net capital ratio would exceed 10 to 1. At December 31, 2021, the Company's net capital was \$715,445 which was \$615,445 in excess of its minimum requirement of \$100,000. ### **7. Exemption from Rule 15c3-3** The Company is exempt from the SEC Rule 15c3-3 pursuant to the exemptive provisions under sub-paragraph (k)(2)(ii). {10}------------------------------------------------ ## **NOTES TO THE FINANCIAL STATEMENTS** ## **8. Off-balance sheet risk and concentrations of credit risk** Pursuant to a clearance agreement, the Company introduces all of its securities transactions to its sole clearing broker on a fully-disclosed basis. All of the customers' money balances and long and short security positions for these securities are carried on the books of the clearing broker. Under certain conditions, as defined in the clearance agreement, the Company has agreed to indemnify the clearing broker for losses, if any, which the clearing broker may sustain from carrying securities transactions introduced by the Company. The clearing agreement is also subject to termination fees of \$250,000. In accordance with industry practice and regulatory requirements, the Company and the clearing broker monitor collateral on the securities transactions introduced by the Company. In the normal course of business, the Company's customer activities will involve the execution, settlement, and financing of various customer securities transactions. These activities may expose the Company to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss. The Company maintains all of its cash balances at three financial institutions. At times, these balances may exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts. #### **9. Retirement plan** The Company has a 401(k) plan (the "Plan") which covers employees who work a minimum of 1,000 hours per year and are at least 18 years of age. Employees may defer a percentage of their salary up to the maximum percentage allowable not to exceed the limits of Internal Revenue Code Section 401(k). Employee contributions are vested immediately. The Plan does not provide for the Company to make any matching contributions. ### **10. Lease Commitments** The Company has obligations as a lessee for office space, with initial noncancellable terms in excess of one year. The term of the lease is five and a half years. The Company classified this lease as an operating lease. The Company's lease does not include termination options for either party to the lease or restrictive financial or other covenants. Amounts reported in balance sheet as of December 31, 2021 were as follows: Operating lease ROU asset \$ 233,767 Operating lease liability \$ 283,822 Maturities of lease liabilities under noncancellable operating leases as of December 31, | Year ending December 31, | Minimum Lease | |--------------------------|---------------| | | Commitments | | 2022 | 112,655 | | 2023 | 116,034 | | Thereafter | 79,483 | | | \$
308,172 | | Imputed interest | (24,350) | | Lease liability | \$
283,822 | The Company also rents space through a Regus office. This lease is on a month to month basis. {11}------------------------------------------------ ## **NOTES TO THE FINANCIAL STATEMENTS** ### **11. Contingencies** In October 2021 a statement of claim was filed against the Company, but at the time of the issued financial statements there is no estimate of the amount or range of potential loss. The Company intends to vigorously defend this claim. ### **12. Subsequent Events** The Company has evaluated events subsequent to the balance sheet date for items requiring recording or disclosure in the financial statements. The evaluation was performed through February 23, 2022, which is the date the financial statement were available to be issued. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.