# COBALT CAPITAL, INC. X-17A-5 (2021-03-16) — Broker-dealer annual report
- Company: COBALT CAPITAL, INC.
- Form: X-17A-5
- Filed: 2021-03-16
- Period: 2020-12-31
- Accession: 0001330760-21-000003
- CIK: 1330760
- File #: 8-66979
- Material weakness: No
- Auditor: Spicer Jeffries LLP
- Auditor location: Denver, CO
- Contact: Pam Ohab
- Phone: 407-740-7311
- Website: spicedeffries.com
- Signed by: Benjamin Schick (President)
Original filing: https://www.sec.gov/Archives/edgar/data/1330760/000133076021000003/cobaltpublic2020.pdf
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**ANNUAL AUDITED REPORT FORM X-17A-5 PARTIII FACING PAGE** Estimated average burden hours per response ...... 12.00 SEC FILE NUMBER **B-66979 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 **Q 1/01 /20** AND ENDING **12/31 /20** ----------- MM/DD/YY **A. REGISTRANT IDENTIFICATION** NAME oF BROKER-DEALER: Cobalt Capital Inc. ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) 600 Wilkinson Street, Ste 300 Orlando (City) (No. and Street) FL (State) MM/DD/YY OFFICIAL USE ONLY FIRM I.D. NO. 32803 (Zip Code) NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report\* Spicer Jeffries (Name - *if individual, state last, first, middle name)* 4601 OTC Blvd. Ste 700 Denver (Address) (City) **CHECK ONE:** ✓ I Certified Public Accountant BPublic Accountant Accountant not resident in United States or any of its possessions. **FOR OFFICIAL USE ONLY** (Area Code - Telephone Number) co 80237 (State) (Zip Code)
**UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549**
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*\*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 240.17a-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 dis plays a currently valid 0MB control number.**
SEC 1410 (11-05)
PUBLIC
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#### **OATH OR AFFIRMATION**
| I, Benjamin Schick | , 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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Cobalt Capital Inc. | | |
| of December 31 | as
are true and correct. I further swear (or affirm) that | |
| neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | |
| classified solely as that of a customer, except as follows: | | |
| | | |
| | | |
| - | | |
| ----
NCR'ARYPl&IC | Signature | |
| STATE 0/F PLORIOA
0Dnmll 00121321 | President | |
| E:,q,1191 712312021 | Title | |
| | | |
| This report ** contains (check all applicable boxes): | | |
| 0 (a) Facing Page.
0 (b) Statement of Financial Condition. | | |
| D (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 (d) Statement of Changes in Financial Condition.
DD (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | |
| (t) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | |
| §
(g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | |
| (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | |
| D U) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-l and the | | |
| Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | |
| consolidation. | | |
| 0 (1) An Oath or Affirmation.
D (m) A copy of the SIPC Supplemental Report. | | |
| 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). | | |
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4601 DTC BOULEVARD· SUITE 700 DENVER, COLORADO 80237 TELEPHONE: (303) 753-1959 FAX: (303) 753-0338 www.spicedeffries.com
#### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Board of Directors and Shareholders of Cobalt Capital, Inc.
#### **Opinion on the Financial Statements**
We have audited the accompanying statement of financial condition of Cobalt Capital, Inc. (the "Company") as of December 31, 2020, and the related notes to the statement of financial condition. 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 statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as Cobalt Capital, Inc.'s auditor since 2008.
Denver, Colorado February 24, 2021
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## STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020
#### ASSETS
| CASH AND CASH EQUIVALENTS | \$ | 295,018 |
|--------------------------------------------------------|----|---------|
| COMMISSIONS RECEIVABLE | | 33,315 |
| FEES RECEIVABLE | | 501,191 |
| OTHER RECEIVABLE | | 28,320 |
| OPERA TING LEASE ASSET | | 12,983 |
| OTHER ASSETS | | 1,915 |
| Total assets | \$ | 8722742 |
| LIABllITIES AND SHAREHOLDERS' EQUITY | | |
| LIABILITIES: | | |
| Accrued expenses | \$ | 46,048 |
| OPERATING LEASE LIABILITY | | 15,227 |
| PAYCHECK PROTECTION PROGRAM LOAN | | 44,447 |
| Total liabilities | | 105,722 |
| SHAREHOLDERS' EQUITY | | |
| Common stock, \$1 par value; 10,000 shares authorized, | | |
| 200 shares issued and outstanding | | 200 |
| Additional paid-in-capital | | 32,752 |
| Retained earnings | | 734,069 |
| Total shareholders' equity | | 767,021 |
| Total liabilities and shareholders' equity | s | 872,743 |
The accompanying notes are an integral part of this statement.
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# **NOTES TO FINANCIAL STATEMENTS**
# *NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES*
## *Organization and business*
Cobalt Capital, Inc. (the "Company") is a Florida corporation incorporated on March 10, 2005. The Company operates as a limited broker-dealer managing the distribution and marketing of real estate limited company units of direct participation programs. The Company operates as the managing brokerdealer which will function as the "distributor" or "wholesaler" broker-dealer and will engage other broker-dealers to make its programs available for retail distribution. The Company is registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA").
# *Revenue recognition*
Commissions from the sale of units of private placements and partnership interests are recognized when escrow closes on the respective programs.
## *Deferred svndication costs*
Costs incurred in the organization and sale of equity interests in real estate ventures are deferred until the related revenues are recognized. The Company incurs syndication costs related to the organization and future sale of partnership interests. These costs are deferred until escrow closes and are included in the accompanying statement of operations. At December 31, 2020, the Company had no deferred syndication costs.
# *15c3-3 exemption*
The Company is not claiming an exemption from SEC Rule 15c3-3, in reliance on footnote 74 to SEC Release 34-70073 and as discussed in Q&A 8 of the related FAQ issued by SEC staff. The Company applied for this exemption and was accepted on September 18, 2020. The Company does not carry or clear customer accounts and does not hold funds or securities on behalf of customers.
## *Cash and cash equivalents*
For purposes of cash flows, the Company considers money market funds with maturities of three months or less to be cash equivalents.
## *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 of 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.
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#### *NOTE* **1-** *ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)*
## *Income taxes*
The Company is recognized as an S-Corporation by the Internal Revenue Service. The Company's shareholders are liable for federal and state income taxes on the Company's taxable income.
The Company is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any tax related appeals or litigation processes, based on the technical merits of the position. The Company files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states. The Company is not subject to income tax return examinations by major taxing authorities for years before 2017. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces net assets. However, the Company's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company recognizes interest accrued related to unrecognized tax benefits and penalties related to unrecognized tax benefits in income taxes payable, if assessed. No interest expense or penalties have been recognized as of and for the year ended December 31, 2020.
# *NOTE2- NET CAPITAL REQUIREMENTS*
Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital, as defined under such provisions. At December 31, 2020, the Company had net capital and net capital requirements of \$246,726 and \$5,000 respectively. The Company's net capital ratio (aggregate indebtedness to net capital) was 19.57% to 1. According to Rule 15c3-l, the Company's net capital ratio shall not exceed 15 to 1.
# *NOTE3- LEASES*
The Company adopted the new guidance for leases prospectively effective January 1, 2019. The new guidance requires that the Company determine if an arrangement is a lease at inception of the transaction. Operating lease assets are included in right-of-use ( .. ROU") assets while the corresponding lease liabilities are included in operating lease liabilities in the statement of financial condition. Finance leases are included in property and equipment while the related liabilities are included in loans payable in the statement of financial condition.
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#### **NOTES TO FINANCIAL STATEMENTS**
#### *NOTE3- LEASES (continued)*
A ROU asset represents the Company's right to use an underlying asset for the lease term while the related operating lease liability represents the obligations to make future lease payments arising from the lease. A ROU asset and related operating lease liability are recognized at lease commencement date, based on the present value of lease payments over the lease term. The Company does not borrow funds and does not have a determinable incremental borrowing rate. The incremental borrowing rate used is the Treasury Bill Rate approximating the term of the operating lease.
The ROU asset also includes any lease payments made and excludes lease incentives. The lease tenn may include options to extend or terminate the lease when it is reasonably certain that the Company exercise that option. The lease expense for a ROU asset is recognized on a straight-line basis over the lease term
The components of lease expense for the year ended December 31, 2020 were as follows:
| Operating lease costs: | | |
|------------------------|--|--|
|------------------------|--|--|
| Amortization of right-of-use assets | \$20,345 |
|-----------------------------------------|----------|
| Interest on operating lease liabilities | 2,244 |
| Total operating lease costs | \$22,589 |
Supplemental statement of financial condition at December 31, 2020, relating to leases were as follows:
| Operating lease: | |
|--------------------------------|-----------|
| Right-of-use assets | \$61,071 |
| Accumulated amortization | 48,088 |
| Right-of-use assets, net | \$12,983 |
| Operating lease liabilities | \$15,227 |
| Average Remaining Lease Terms: | .67 years |
| Average Discount Rate: | 2.5% |
The Company leases office space from unrelated parties under a non-cancelable operating lease expiring through August 2021. Future minimum rental commitments to the Company under the rental agreement are approximately as follows:
| Year | Amount |
|------|--------|
| 2021 | 16,536 |
Total rental expense, including the lease referred to above, is included in occupancy costs and totaled \$24,725 (including sales tax) for the year ended December 31, 2020.
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# **NOTES TO FINANCIAL STATEMENTS**
# *NOTE 4* - *PAYCHECK PROTECTION PROGRAM LOAN*
In April of 2020, the Company received a loan in the amount of \$44,447 under the Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The loan may be forgiven to the extent that proceeds are used for eligible expenditures described in the CARES Act. The Company has spent 100% of loan proceeds to pay eligible expenses. The loan bears interest at a rate of 1 % and is payable in monthly installments of principal and interest over 24 months beginning 10 months from the last date of the covered period. The loan may be repaid at any time with no prepayment penalty.
# *NOTES- FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES*
The Company's future operating results may be affected by several factors. These factors are comprised of, but are not limited to the overall downturn of the real estate industry and the general and local economic, political and social conditions that can affect the real estate market.
The Company's financial instruments, including cash and cash equivalents, commissions' receivable, other receivables, other assets and accrued expenses, are carried at amounts that approximate fair value due to the short-term nature of these instruments.
## *NOTE6- RECENT ACCOUNTING PRONOUNCEMENTS*
The Company has implemented F ASB ASC 842, for leases - effective for fiscal years beginning after December 15, 2018 and has updated its recognition of the corresponding lease assets and liabilities.
## *NOTE* 7- *SUBSEQUENT EVENTS*
The Company has performed an evaluation of subsequent events through the date the financial statements were issued. The evaluation did not result in any subsequent events that required disclosures and/or adjustments.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.