# HWJ CAPITAL PARTNERS II, LLC X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: HWJ CAPITAL PARTNERS II, LLC - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0001294254-21-000002 - CIK: 1294254 - File #: 8-66560 - Material weakness: No - Auditor: Berkower, LLC - Auditor location: Iselin, NJ - Contact: Joseph W. Harch - Phone: 561 226 6199 - Signed by: Joseph W. Harch (Managing Member) Original filing: https://www.sec.gov/Archives/edgar/data/1294254/000129425421000002/hwjpub.pdf --- {0}------------------------------------------------ # **HWJ CAPITAL PARTNERS II, LLC** ## **STATEMENT OF FINANCIAL CONDITION** **DECEMBER 31, 2020** {1}------------------------------------------------ **UNITEDSTATES SECURJTI ES AND EX CHANG ECOMMISSJON Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response .. .. .. 12.00 ### **ANNUAL AUDITED REPORT FORM X-17A-5 PARTIII** | SEC FILE NUMBER | | |-----------------|--| | 8-66560 | | **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule l 7a-5 Thereunder** | REPORT FOR THE PERIOD BEG INN ING | __ o_1_1_0_1_12_0_2_0 _
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_ _ | | |------------------------------------------------------------------------------|---------------------------------------------------------------------|---------------------|------------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: | HWJ Capital Partners 11, LLC | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM 1.0. NO. | | | | 7400 North Federal Highway, Suite AS | | | | | | | (No. and Street) | | | | | Boca Raton | | Florida | 33478 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT: Joseph w. Harch 561.226.6199 | | | | | | | | | (Area Code - Telephone Number) | | | | 8. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Berkower, LLC | | | | | | | (Name - if ind1vid11a/, s/are las/. f,rsl. middle name) | | | | | 517 Route One | lselin | NJ | 08830 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | lvlc
ertified Public Accountant | | | | | | Public Accountant | | | | | | | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | B | 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 of/acts and circumstances relied on as the basis/or the exemption. See Section 240. ! 7a-5(e)(2)* > **Potential 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 0MB control number.** {2}------------------------------------------------ ### **OATH OR AFFIRMATION** | 1, Joseph W. Harch | , swear (or affirm) that, to the best of | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | ____
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(e) Statement of Changes in Stockho | lders' Equity or Partners' or Sole Proprietors' Capital. | | (t) Statement of Changes in Li | abilities Subordinated to Claims of Creditors. | | § (g) Computation of Net Capital. | (h) Computation for Determination of Reserve Requirements Pursuant to Rule I 5c3-3. | | (i) | Information Relating to the Possession or Control Requirements Under Rule I 5c3-3. | | | D G) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule I 5c3-I and the | | | Computation fo r Dete rmination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3.
D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | consolidation. | | | 0 (I) An Oath or Affirmation.
D (m) A copy of the SIPC Suppl | | | D (n) A report describing any material inadequacies found to ex | emental Report.
ist or found to have existed since the date of the previous audit. | | | | *\*\*For conditions of confidential treatment of certain por1ions of this.filing, see section 240. !7a-5(e)(3).* {3}------------------------------------------------ | Oath or Affirmation 1 | | |------------------------------------------------------------|--| | Report of Independent Registered Public Accounting Firm 3 | | | Financial Statement: | | | Statement of Financial Condition 4 | | | Notes to the Financial Statement 5 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members of HWJ Capital Partners 11 , LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition HWJ Capital Partners II, LLC (the "Company") as of December 31, 2020 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, 2020, 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 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. Berkower LLC lselin, New Jersey February 25, 2021 {5}------------------------------------------------ #### **ASSETS** | Current assets: | | |--------------------------------------------|---------------| | Cash and cash equivalents | \$
73,765 | | Receivable from clearing organization | 81,904 | | Deposit with clearing organization | 50,000 | | Accounts receivable from related party | 20,781 | | Prepaid expenses | 1,627 | | Total current assets | 228,077 | | Deposit | 264 | | Total assets | \$
228,341 | | LIABILITIES AND MEMBERS' EQUITY | | | Current liabilities: | | | Accounts payable and accrued expenses | \$
5,454 | | Total current liabilities | 5,454 | | Commitments and contingencies (See Note 5) | | | Members' equity | \$
222,887 | | Total liabilities and members' equity | \$
228,341 | See accompanying notes to financial statements. {6}------------------------------------------------ #### **NOTE 1 – NATURE OF BUSINESS** HWJ Capital Partners II, LLC (the "Company") (a Florida Limited Liability Company) is a broker-dealer located in Boca Raton, Florida. The Company is registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). #### **NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### *Basis of Accounting* The Company prepares the financial statement on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. #### *Use of Estimates* The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. #### *Cash and Cash Equivalents* The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. All cash balances are held with a major financial institution within the United States of America. #### *Revenue Recognition – Investment Advisory Fees* The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). This revenue recognition guidance requires that entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The Company entered into a fee sharing agreement with a related party for fees on specific investor accounts (see Note 4). Revenue for investment advisory fees is recognized as work is performed and amounts are earned. #### *Income Taxes* The Company is not a taxpaying entity for federal income tax purposes therefore, no federal income tax expense has been recorded in the financial statement. Taxable results are passed through to the members of the Company. All current and future tax assessments are attributable to those members, and there is no income tax expense reflected in the statement of operations. There are no tax penalties recognized this year. The financial statement remains subject to U.S federal tax examination for tax years 2017-2020. #### **NOTE 3 – NET CAPITAL REQUIREMENT** The Company, as a registered broker-dealer and as a member of FINRA, must comply with the Net Capital rule of the Securities and Exchange Commission. The Company has a capital requirement of the greater of \$100,000 or 6 2/3% of aggregate indebtedness. The Company had net capital as computed under Rule 15c3- 1 of \$200,215, which is above the \$100,000 amount required to be maintained at December 31, 2020. The ratio of aggregate indebtedness to net capital is .0272. #### **NOTE 4 – RELATED PARTIES** {7}------------------------------------------------ The Company's members also own Harch Capital Management, LLC ("HCM") (a Florida Limited Liability Company). HCM provides the use of employees, office space, secretarial and services to the Company in accordance with an office sharing agreement. The agreement is for a period of twelve months and shall be extended for successive one year periods unless canceled by either party, in writing, upon thirty days' prior written notice. Operating results of the Company might be significantly different if the companies were autonomous. The Company was owed \$5,781 from HCM, net, as of December 31, 2020. At its full discretion, HCM pays the Company \$15,000 or 15-25% of the fees earned and received by HCM, quarterly in connection with the profits generated in Client Accounts. The term of this Agreement shall be perpetual unless earlier terminated in writing by both HCM and the Company. The Company was owed \$15,000 from HCM at December 31, 2020. #### **NOTE 5 – COMMITMENTS AND CONTINGENCIES** The Company maintains a Fully Disclosed Clearing Agreement (the "Agreement") with Axos Clearing, LLC (previously named COR Clearing, LLC.) The initial term of the Agreement was effective through May 6, 2013 and calls for automatic renewals for successive periods equal to the initial term unless terminated by either party within ninety (90) days prior to the expiration of the initial or renewal term. Under the Agreement, early termination fees apply, including the monthly fees due on the remaining term of the Agreement. Refer to Note 3 with respect to FINRA Regulatory requirements. The Company has a clearing agreement with Axos Clearing, LLC and is required to maintain a minimum deposit of \$50,000. As of December 31, 2020, the balance with Axos clearing, LLC is \$50,000. As of December 31, 2020, there is a receivable from Axos Clearing of \$81,904. #### **NOTE 6 – CONCENTRATION OF CREDIT RISK** The Company is engaged in various trading and brokerage activities in which counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty. The Company maintains a bank account at one financial institution of which the balance is insured by the Federal Deposit Corporation ("FDIC") up to \$250,000. The Company also maintains accounts held at a brokerage firm of which the balance is insured by the Securities Investor Protection Corporation ("SIPC") up to \$500,000 for securities and \$250,000 for cash and cash equivalents. All of the Company's revenues are earned from the Investment Fee Sharing Agreement with HCM. Refer to Note 4 with respect to related parties. #### **NOTE 7 – SUBSEQUENT EVENTS** Management of the Company has evaluated events and transactions that have occurred since December 31, 2020, and determined that there are no material events that would require disclosures in the Company's financial statement. {8}------------------------------------------------ #### **NOTE 8 – COVID - 19** The Company's management has performed subsequent events procedures through February 25, 2021, which is the date the financial statement was available to be issued. There were no subsequent events requiring adjustment to the financial statement or disclosures as stated herein except as follows. On March 11, 2020, the World Health Organization ("WHO") declared the coronavirus (COVID 19), a global pandemic and public health emergency. The WHO has recommended containment and mitigation measures worldwide and domestically self-isolation and shelter-in-place requirements have been or are being put in place. The pandemic has continued subsequent to December 31, 2020. The Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which this disruption may impact its financial statement and future results of operations. We haven't seen any decrease of revenue and will continue to monitor and evaluate the nature and extent of the impact on our ongoing and future results of operations, financial condition and liquidity Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.