# MIDDLE MARKET TRANSACTIONS, INC. X-17A-5 (2020-02-27) — Broker-dealer annual report - Company: MIDDLE MARKET TRANSACTIONS, INC. - Form: X-17A-5 - Filed: 2020-02-27 - Period: 2019-12-31 - Accession: 0001304578-20-000001 - CIK: 1304578 - File #: 8-66675 - Material weakness: No - Auditor: Kerber, Eck & Braeckel LLP - Auditor location: Springfield, IL - Contact: Patrick C Nolan - Phone: 2174290202 - Website: kebcpa.com - Signed by: Patrick C Nolan (Chairman & CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1304578/000130457820000001/mmtiaudit1.pdf --- {0}------------------------------------------------ UNITED ST ATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours oer resoonse ...... 12.00 8- SEC FILE NUMBER # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** FACING PAGE Information Required of Brokers and Dealers P ursuant to Section 17 of the Securiti es Excha nge Act of 1934 a nd Rule l 7a-5 T hereunder | REPORT FOR THE PERIOD BEGINNING 01/01/2019 | ----------- | AND ENDING 12/31/2019 | | |----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|-----------------------|--------------------------------| | | MM/DD /Y Y | | MM/DD/VY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER-DEALER: MIDDLE MARKET TRANSACTIONS, INC. | | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM I.D. NO. | | | 158 West Prairie Ave., Suite 111 | | | | | | (No. and Street) | | | | Decatur | IL | | 62523 | | (Ciry) | (State) | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Patrick C. Nolan 217-429-0202 | | | | | | | | (Area Code - Telephone Number) | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contai ned in this Report* | | | | | Kerber, Eck & Braeckel LLP | | | | | | (Name - if individual. s1a1e las/, firs,. middle name) | | | | 3200 Robbins Road Suite 200A Springfield | | IL | 62704 | | (Address) | (City) | (State) | (Zip Code) | | CH ECK ONE: | | | | | certified Public Accountant | | | | | Public Accountant | | | | | D | 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 of facts and circumstances relied on as the basis for the exemption. See Section 240.* J *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. SEC 1410 (06-02) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Patrick C. Nolan | , swear (or affirm) that, to the best of | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
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MIDDLE MARKET TRANSACTIONS, INC. | , as | | of December 31 | are true and correct. I further swear ( or affirm) that | | classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | OFFICIAL SEAL
BARBARA J NOON
NOTARY PUBLIC, STATE OF ILLINOIS
My Commission Expires October 14, 2020 | ~
{_ . ND L____
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Signature
Chairman & CCO
Title | | This report** contains check all applicable boxes):
0 (a) Facing Page.
✓ (b) Statement of Financial Condition.
✓ (c) Statement of Income (Loss).
( d) Statement of Changes in Financial Condition
✓ (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabil
ities 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 15c3-3.
0 U)
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3.
consolidation.
[2] (I) An Oath or Affirmation.
D (m) A copy of the SJPC Supplemental Report. | A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
D (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | ** For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). | | {2}------------------------------------------------ Middle Market Transactions, Inc. Financial Statements and Supplemental Schedules Required by the U.S. Securities and Exchange Commission Including Independent Auditor's Report Thereon 12/31/2019 {3}------------------------------------------------ | Report of Independent Registered Public Accounting Firm 3 | | |---------------------------------------------------------------|--| | Financial Statements •••••••••.• | | | Statement of Financial Condition 5 | | | Statement of Income 6 | | | Statement of Changes in Ownership Equity 7 | | | Statement of Cash Flows 8 | | | Notes to Financial Statements 9 | | | Supplementary Schedules Pursuant to SEA Rule 17a-5 | | | Computation of Aggregate Indebtedness and Net Capit
al 12 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) CPAs af'd Management Consultants 3200 **Robbins Road** Suite **200A** Springfield, IL **62704-6525** ph **217.789.0960 fax 217.789.2822 www.kebcpa.com** # Repo1t of Independent Registered Public Accounting Finn To the Board of Directors Middle Market Transactions, Inc. ## **Opinion on the Financial Statements** We have audited the accompanying statement of :financial condition of Middle Market Transactions, Inc. ( an Illinois corporation) as of December 31, 2019, the related statements of income, changes in ownership equity, and cash flows for the year then ended, and the related notes and supplementary schedules pursuant to SEA Rule 17a-5 ( collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of Middle Market Transactions, Inc. (the Company) as of December 31, 2019, and the results of its operations and its cash flows for the year ended in confonnity with accounting principles generally accepted in the United States of America. ## **Basis for Opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's :financial statements based on our audit. We are a public accounting finn 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 perfonn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included perfotming procedures to assess the risks of material misstatement of the financial statements, 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. {5}------------------------------------------------ #### **Auditors' Report on Supplemental Information** The supplementary schedules pUISuant to SEA Rule 17a-5 have been subjected to audit procedures performed in conjunction with the audit of Middle Market Transactions, Inc. 's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.l 7a-5. In our opinion, the supplementary schedules pursuant to SEA Rule 17a-5 are fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Middle Market Transactions, Inc.'s auditor since 2017. Springfield, Illinois February 20, 2020 {6}------------------------------------------------ ## **Middle Market Transactions, Inc. Statement of Financial Condition 12/31/2019** #### **ASSETS** | Cash
Prepaid Expenses | \$174,328
922 | |--------------------------------------------------------------------------------------------------------------|----------------------------------| | TOT AL ASSETS | \$175.250 | | LIABILITIES & EQUITY | | | TOTAL LIABILITIES | \$ | | OWNERSHIP EQUITY | | | Common stock, 1,000 authorized,
issued and outstanding
Additional paid in capital
Retained Earnings | 1,000
\$
42,489
131 761 | | TOTAL OWNERSHIP EQUITY | \$175 250 | | TOTAL LIABILITIES & EQUITY | \$175 250 | {7}------------------------------------------------ ## Middle Market Transactions, Inc. Statement of Income For the year ended 12/31/2019 | Income | | |-----------------------------------|-------------| | Success Fees | \$125,000 | | Total Income | \$125,000 | | Expense | | | | | | NRS
Small Business Replacement | \$
2,993 | | Tax | 1,580 | | Regulatory Director | 10,500 | | Professional Fees | 10,985 | | Regulatory Fees | 6,061 | | Occupancy | 3,600 | | Miscellaneous | 1,716 | | Total Expense | \$ 37,435 | | Net Income | \$ 87,565 | |------------|-----------| | | | {8}------------------------------------------------ ## **Middle Market Transactions, Inc. Statement of Changes in Ownership Equity For the year ended 12/31/2019** | | | | | | | Total | |-------------------------------|--------------|-------------|-----------------|----------|--------------|------------| | | | | Additional | | Retained | Ownership | | | Common Stock | | Paid-in-Capital | | Earnings | Equity | | | Shares | Amount | Shares | Amount | Amount | Amount | | | | | | | | | | Balance at January 1, 2019 | 1,000 | \$1,000 | 1,000 | \$42,489 | \$ 44,196 | \$ 87,685 | | Net Income | --
- | -
-
- | --
- | --
- | 87.565 | 87,565 | | Balance at December 31 , 2019 | =1.QQQ | ~ | =1.QQQ | \$42 489 | \$:13:1 Z6:I | \$:IZ5 250 | {9}------------------------------------------------ ### **Middle Market Transactions, Inc. Statement of Cash Flows For the year ended 12/31/2019** | OPERA TING ACTIVITIES
Reconciliation of net income to net cash
provided by operating activities | | |-------------------------------------------------------------------------------------------------------|------------| | Net Income | \$ 87,565 | | Net cash provided by Operating Activities | \$ 87,565 | | INVESTING ACTIVITIES | | | Decreases in Prepaid FINRA Fees | 85) | | Net cash used in Investing Activities | \$(
85) | | Net cash increase for Year | \$ 87,480 | | Cash at beginning of Year | \$ 86,848 | | Cash at end of Year | \$174,328 | {10}------------------------------------------------ ## **Middle Market Transactions, Inc. Notes to Financial Statements 12/31/2019** #### NOTE A-SUMMARY OF ACCOUNTING POLICIES Accounting principles followed by the Company and the methods of applying those principles which materially affect the determination of financial position, results of operation and cash flows are summarized below: #### Organization Middle Market Transactions, Inc. (the Company) was incorporated in the State of Illinois effective August 11, 2004 and subsequently elected "S" Corporation status for federal income tax purposes. The Company has adopted a calendar year. #### Description of Business The Company, located in Decatur, Illinois, is a broker and dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of FINRA. The Company operates under SEC Rule 1Sc3-3(k)(2)(i), which provides that the company maintain a Special Account for the Benefit of Customers. Middle Market Transactions, Inc. offers merger and acquisition services to sellers and buyers of privately held middle market companies. #### Basis of Accounting The financial statements of the Company have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. #### Cash and Cash Equivalents The Company considers as cash all short-term investments with an original maturity of three months or less to be cash equivalents. #### Revenue Recognition The Company, along with a related entity, Patrick C. Nolan & Assoc. Ltd. (Nolan), contracts with entities seeking merger and acquisition services and receives a success fee upon closing of a transaction. The contracts with these entities provide for a single performance obligation, which is to complete the merger or acquisition transaction. The Company has a revenue sharing agreement with Nolan that provides a success fee in the calendar year a transaction is closed. The Company recognizes the success fee at the point in time the transaction has closed. {11}------------------------------------------------ ## **Middle Market Transactions, Inc. Notes to Financial Statements 12/31/2019** #### Income Taxes The Company, with the consent of its stockholders, has elected pursuant to the Internal Revenue Code to be taxed as an S corporation. Accordingly, the income taxes on the net earnings for the year are payable personally by the stockholders and no provision has been made for Federal income taxes. The Company is subject to the Illinois replacement income tax, which is 1.5% of taxable income. The Company has recognized in the financial statements the effects of all tax positions and continually evaluates expiring statutes of limitations, audits, changes in tax law, and new authoritative rulings. The Company is not aware of any circumstances or events that make it reasonably possible that unrecognized tax benefits may increase or decrease within 12 months of the balance sheet date. Penalties and interest assessed by taxing authorities are included in the provision for income taxes, if applicable. There were no interest or penalties paid during 2019. #### Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts. Accordingly, actual results could differ from those estimates. #### Subsequent Events Management 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 20, 2020, which is the date the financial statements were available to be issued. Based upon this review, the Company has determined that there were no events which took place that would have a material impact on its financial statements. #### NOTE B - NET CAPITAL REQUIREMENTS Pursuant to the net capital provisions of Rule 15c3-3 of the Securit ies and Exchange Act of 1934, the Company is required to maintain a minimum net capital and requires that the ratio of aggregate indebtedness to net capital shall not exceed 15 to 1. At December 31, 2019, the Company had net capital of \$174,328 which was \$169,328 in excess of its minimum required net capital of \$5,000. In addition, the Company's ratio of aggregate indebtedness to net capital did not exceed 15 to 1 at December 31, 2019 {12}------------------------------------------------ #### NOTE C - RELATED PARTY TRANSACTION The Company has a sublease and administrative service agreement with a company with common ownership (related party). The agreement may be terminated by either party as of the end of any month. Under the agreement, the Company will pay the related party, Nolan Associates, Ltd., on a monthly basis, \$150 to sublease office space, \$150 for administrative services and reimburse it for expenses paid on the Company's behalf. The total of said expenses for the year was \$3,600. The Company receives \$25,000 per transaction for all stock transactions closed by The Company. The Company holds the license required for all closed stock transaction engagements and Nolan staffs and runs the engagement with appropriately licensed personnel from start to finish. The \$25,000 stock transaction fees are paid by Nolan to the Company before the end of the calendar year in which the subject stock transactions are closed. {13}------------------------------------------------ ## **Middle Market Transactions, Inc. Supplementary Schedules Pursuant to SEA Rule 17a-5 Of the Securities and Exchange Act of 1934 12/31/2019** #### **Computation of Aggregate Indebtedness** | Total Aggregate Indebtedness
Percentage of Aggregate Indebtedness to Net Capital | \$
0.00% | | | | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|------------|-----------|--| | Computation of Net Capital | | | | | | Stockholder's Equity | | | \$175,250 | | | Non-Allowable Assets
Prepaid Expenses
Total Non-Allowable Assets | \$
\$ | 922
922 | | | | Net Allowable Capital | | | \$174,328 | | | Computation of Net Capital Requirement | | | | | | Minimum Net Capital Required as a Percentage of Aggregate Indebtedness
Minimum Dollar Net Capital Requirement of Reporting Broker-Dealer
Net Capital Requirement
Excess Net Capital | | | | | There are no significant differences between the computation above and the computation filed with the December 31, 2019 Focus IIA. {14}------------------------------------------------ ## MIDDLE MARKET TRANSACTIONS, INC. ## EXEMPTION REPORT AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM December 31, 2019 {15}------------------------------------------------ ![](_page_15_Picture_0.jpeg) CPAs and Management Consu'tants **3200 Robbins Road Suite 200A** Springfield, IL **62704-6525** ph **217.789.0960 fax 217.789.2822 www.kebcpa.com** ## Report of Independent Registered Public Accounting Firm To Pat C. Nolan, Chairman Middle Market Transactions, Inc. We have reviewed management's statements, included in the accompanying Exemption Repo1t, in which (1) Middle Market Transactions, Inc. (the Company) identified the following provisions of 17 C.F.R. § l 5c3-3(k) under which the Company claimed an exemption from C.F.R. § 240.15c3-3(k)(2)(i) (exemption provisions) and (2) the Company stated that the Company met the identified exemption provisions throughout the most recent fiscal year without exception. The Company's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(i) of Rule 15c3-3 under the Secmities Exchange Act of 1934. Springfield, Illinois February 20, 2020 {16}------------------------------------------------ Middle Market Transaction, Inc. Supplementary Schedules Pursuant to SEA Rule 17a-5 Of the Securities and Exchange Act of 1934 As of and for the Year-Ended 12/31 /2019 Exemption Report Pursuant to SEA Rule 17a-5(d)(1)(i)(B)(2) ![](_page_16_Picture_3.jpeg) January 22, 2020 Mr. Phil Capps 3200 Robbins Road Suite 200A Springfield, IL 62704-6525 RE: Exemption Statement Rule 15c3-3 (k) (2) (i) for FYE December 31, 2019 Dear Mr. Capps, Please be advised that Middle Market Transactions, Inc. has complied with Exemption Rule 15c3-3 (k) (2) (i), for the period of January 1, 2019 through December 31, 2019. Middle Market Transactions, Inc. did not hold customer securities or funds at any time during this period and does business on a limited basis (publicly registered non-trades REITS, and oil & gas partnerships). Middle Market Transactions, Inc.'s past business has been of similar nature and has complied to this exemption since registered as a broker dealer. Patrick C. Nolan, the Chairman of Middle Market Transactions, Inc. has made available to Kerber, Eck & Braeckel, LLP all records and information including all communications from regulatory agencies received through the date of this review December 31, 2019. Patrick C. Nolan has been responsible for compliance with the exemption provision throughout the fiscal year. Also, there were not any known events or other factors that might have affected Middle Market Transactions, Inc.'s compliance with this exemption. If you would like additional information or have any questions, feel free to call me directly at (217) 429-0202. Very truly yours, Middle Market Transactions, Inc. Patrick C. Nolan Chairman & Chief Compliance Officer Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.