# PPHB SECURITIES LP X-17A-5 (2020-02-07) — Broker-dealer annual report - Company: PPHB SECURITIES LP - Form: X-17A-5 - Filed: 2020-02-07 - Period: 2019-12-31 - Accession: 0001293534-20-000001 - CIK: 1293534 - File #: 8-66550 - Material weakness: No - Auditor: Phillip V. George, PLLC - Auditor location: Celeste, TX - Contact: Michael Schaps - Phone: 281-367-2454 - Signed by: Michael Schaps (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1293534/000129353420000001/2019pphb-public.auditrpt.pdf --- {0}------------------------------------------------ **UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** # hours per response 12.00 **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** OMB APPROVAL OMB Number: 3235-0123 Expires: August 31,2020 Estimated average burden | SEC FILE NUMBER | |-----------------| | s-66550 | **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 | 01/01/2019 | 12/31/2019
AND ENDING | | | |-------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------------------------|-----------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | REGISTRANT
IDENTIFICATION
A. | | | | | NAME OF BROKER-DEALER: PPHB
Securities,
LP | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O.
Box No.) | | | FIRM I.D.
NO. | | | 1900
Saint
James
Place, | STE
125 | | | | | | ( No. and Street ) | | | | | Houston | TX | | 77056 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Michael Schaps | | | 281-367-2454 | | | | | | (Area Code -
Telephone Number) | | | B. | ACCOUNTANT
IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Phillip
V.
George,
PLLC | | | | | | | (Name -if
individual, slate last, fu st, middle name ) | | | | | 1026
5179
CR | Celeste | TX | 75423 | | | ( Address) | (City) | (State) | (Zip Code ) | | | CHECK ONE: | | | | | | Certified Public Accountant
Public Accountant | Accountant not resident in United States or any of its possessions. | | | | | | FOR OFFICIAL USE | ONLY | | | | | | | | | | | | | | | | | | | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement offacts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)( 2)* **Potential persons who are to respond to the collection of information contained in this form are not required to respond** SEC 1410 **unless the form displays a currently valid OMB control number.** (11-05) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I
Michael Schaps | ,
swear
(or affirm) that, to
the best of | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | my knowledge and belief
the accompanying
financial
PPHB Securities, LP | statement
and supporting
schedules
pertaining
to the firm
of
,
as | | December 31
of
, | 2 0 1 9
are
true and
correct. I
further
swear
(or affirm) that | | neither
the company nor any partner,
proprietor,
principal
a customer,
classified
solely as that of
except
as follows: | officer
or director
has any proprietary
interest
in any account | | | Signature
Chief Financial Officer
Title | | basics
Notary Public
This report
** contains
(check
all applicable
boxes):
0 | | | (a ) Facing Page.
0
( b) Statement of
Financial
Condition.
(c) Statement of
(Loss) or,
Income
if there
is other
Income (as
of Comprehensive
defined
in §210.1-02 of
Condition.
(d) Statement of
Changes
in Financial
Changes
in Stockholders' Equity
(e) Statement of | the period(s) presented,
comprehensive
income in
a Statement
Regulation
S-X).
or Partners'
Proprietors' Capital.
or Sole | | in Liabilities
Subordinated
(f) Statement of
Changes
(g) Computation of
Net Capital.
for Determination
of
Reserve
(h) Computation
( i ) Information Relating
to the Possession
or Control
(j)
A Reconciliation,
including
appropriate
explanation
Computation for Determination
of
the Reserve Requirements | to Claims
of Creditors.
to Rule 15c3-3.
Requirements
Pursuant
Requirements
Under Rule 15c3-3.
the
Computation
of
Net Capital
Under Rule 15c3-
1 and the
of
Rule 15c3-3.
A of | | audited
(k ) A Reconciliation
between the
consolidation.
0
(1) An Oath or Affirmation.
copy of the SIPC
Supplemental
(in) A
Report.
( n ) A report describing
any material
inadequacies | Under Exhibit
Condition
and unaudited Statements
of
Financial
with respect
to methods of
since
of the previous audit.
found to exist
or found to
have existed
the date | | of confidential
**For
conditions
treatment
of certain | filing,
240.17a-5(e)(3).
portions of
this
see section | {2}------------------------------------------------ PPHB SECURITIES, L.P. 2019 AUDITED FINANCIAL STATEMENTS PUBLIC REPORT {3}------------------------------------------------ #### CONTENTS | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 | |-------------------------------------------------------------------------------------------|----------| | FINANCIAL STATEMENTS
Statement of financial condition
Notes to financial statements | 2
3-5 | | | | {4}------------------------------------------------ # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Partners PPHB Securities, L.P. ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of PPHB Securities, L.P. as of December 31, 2019, and the related notes (collectively referred to as the financial statement). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of PPHB Securities, L.P. as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of PPHB Securities, L.P.'s management. Our responsibility is to express an opinion on PPHB Securities, L.P.'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 PPHB Securities, L.P. 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. PHILLIP V. GEORGE, PLLC We have served as PPHB Securities, L.P. auditor since 2009. Celeste, Texas January 24, 2020 {5}------------------------------------------------ # **PPHB SECURITIES, L.P. Statement of Financial Condition December 31, 2019** #### **ASSETS** | Cash | \$
2,008,962 | |-----------------------------------------------------|-----------------| | Prepaid
expenses | 5,083 | | | | | TOTAL
ASSETS | \$
2,014,045 | | | | | LIABILITIES
AND
PARTNERS'
CAPITAL | | | Liabilities | | | accrued
expenses
Accounts
payable
and | \$
14,298 | | to
PPHB
Due
LP | 26,456 | | -
Income
payable
state
tax | 29,059 | | TOTAL
LIABILITIES | 69,813 | | Partners'
Capital | 1 ,944,232 | | PARTNERS'
AND
TOTAL
LIABILITIES
CAPITAL | \$
2,014,045 | See notes to financial statements. {6}------------------------------------------------ #### **PPHB SECURITIES, L.P. Notes to Financial Statements December 31, 2019** ## **Note 1 Nature of Business and Summary of Significant Accounting Policies** Nature of Business: PPHB Securities, L.P., (the Partnership) was organized in April 2004 as a Texas limited partnership. The Partnership is registered as a broker/dealer with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC). The Partnership operates under the exemptive provisions of Rule 15c3-3(k)(2)(i) of the Securities Exchange Act of 1934, and accordingly, is exempt from the remaining provisions of that Rule. The Partnership does not hold customer funds or securities. The general partner of the Partnership is Parks Paton Hoepfl & Brown, LLC, a Texas limited liability company (General Partner). The General Partner has the authority to manage and control the business affairs of the Partnership. The Partnership is a Capital Acquisition Broker whose operations consist primarily in merger and acquisition services, through referrals from a related party, to oilfield service companies located throughout the United States. Significant Accounting Policies: Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### Fair Value of Financial Instruments The Partnership's financial asset and liability amounts reported in the statement of financial condition are short-term in nature and approximate fair value. {7}------------------------------------------------ #### **PPHB SECURITIES, L.P. Notes to Financial Statements December 31, 2019** #### **Note 1 Nature of Business and Summary of Significant Accounting Policies (continued)** #### Revenue Recognition Revenue from contracts with customers includes fees from merger and acquisition (M&A) 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 Partnership's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Revenue from M&A services is generally recognized at the point in time that performance under the arrangement is completed, the closing date of the transaction. #### Income Taxes Taxable income or loss of the Partnership is included in the income tax returns of the partners; therefore, no provision for federal income taxes has been made in the accompanying financial statements. The Partnership is subject to state income taxes. As of December 31, 2019, open Federal tax years subject to examination include the tax years ended December 31, 2016 through December 31, 2018. # **Note 2 Net Capital Requirements** The Partnership is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-l ), which 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. Rule 15c3-l also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2019, the Partnership had net capital of \$1,939,149, which was \$1,934,149 in excess of its net capital requirement of \$5,000. The Partnership's net capital ratio was .04 to 1 . ### **Note 3 Related Party Transactions/Concentrations/Economic Dependency** The Partnership and PPHB, LP (PPHB LP) are both under the control of the General Partner and the Partnership is economically dependent on its General Partner and PPHB LP. The existence of that control and dependency creates operating results and financial position significantly different than if the Companies were autonomous. Transactions between the Partnership and PPHB LP were not consummated on terms equivalent to arm's length transactions. {8}------------------------------------------------ #### **PPHB SECURITIES, L.P. Notes to Financial Statements December 31, 2019** #### **Note 3 Related Party Transactions/Concentrations/Economic Dependency** The Partnership provides merger and acquisition services through referrals from PPHB LP. During 2019, the Partnership earned all of its merger and acquisition services revenue through referrals from PPHB LP. The limited partners, who are also registered securities representatives, generated substantially all of the Partnership's revenue for the year. In lieu of compensation, the limited partners received distributions totaling \$8,830,000 during the year. The Partnership is economically dependent on the limited partners due to the concentration of revenue generated by them. PPHB LP and the Partnership entered into an office and administrative services agreement effective August 1, 2004, for a one year term, automatically renewable, unless canceled by either Party. The agreement has automatically renewed through July 31, 2020. Under the agreement PPHB LP provides all management and back office services required by the Partnership, including, but not limited to administrative services, office space, office equipment and supplies, payroll, marketing, sales, legal and accounting services. The agreement required the Partnership to pay a proportional allocation servicesfee of \$9,683 per month for 2019. Fees under the agreement totaled \$116,198 for the year ended December 31, 2019. #### **Note 4 - Concentration of Credit Risk** At various times during the year the Partnership maintains cash balances at one national bank in excess of federally insured amounts. Cash balances fluctuate on a daily basis. At December 31, 2019, the uninsured balance totaled \$1 ,758,962. ## **Note 5 Contingencies** There are currently no asserted claims or legal proceedings against the Partnership, however, the nature of the Partnership's business subjects it to various claims, regulatory examinations, and other proceedings in the ordinary course of business. The ultimate outcome of any such action against the Partnership could have an adverse impact on the financial condition, results of operations, or cash flows of the Partnership. #### **Subsequent Events Note 6** Management has evaluated the Partnership's events and transactions that occurred subsequent to December 31, 2019, through January 24, 2020, the date which the financial statements were available to be issued. The Partnership made distributions to partners totaling \$1,600,000 during January 2020**.** Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.