# ALDERMAN & COMPANY CAPITAL, LLC X-17A-5 (2020-02-21) — Broker-dealer annual report

- Company: ALDERMAN & COMPANY CAPITAL, LLC
- Form: X-17A-5
- Filed: 2020-02-21
- Period: 2019-12-31
- Accession: 0001333276-20-000001
- CIK: 1333276
- File #: 8-67019
- Material weakness: No
- Auditor: Knight Rolleri Sheppard CPAS, LLP
- Auditor location: Fairfield, CT
- Contact: Kris Goldbach
- Phone: 7047836658
- Signed by: William H. Alderman (President)

Original filing: https://www.sec.gov/Archives/edgar/data/1333276/000133327620000001/1aacfs123119.pdf

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Alderman & Company Capital, LLC Report Pursuant to Rule 17 A-5 of The Securities and Exchange Commission December 31, 2019

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**INVESTMENT BANKERS** TO THE **AEROSPACE** & **DEFENSE INDUSlRY** 

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**UNlTEDSTATES SECURITIES AND EXCHANGECOMMISSIO Washington, D.C. 20549** 

# **ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill**

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| 0MB Number:<br>August 31 , 2020 |  |  |  |  |
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| SEC RLE NUMBER |
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| B-67019        |

**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 BEGINNING 01/01f19                             |                                                          | NG 12/31/19                                                                                                                                                                                                                                                                                                                                                                                                 |  |
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| NAME OF BROKER-DEALER: Alderman & Company Capital, LLC               |                                                          |                                                                                                                                                                                                                                                                                                                                                                                                             |  |
| ADDRESS OF PRI<br>CIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) |                                                          | FIRM I.D. NO.                                                                                                                                                                                                                                                                                                                                                                                               |  |
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|                                                                      | Knight Rolleri Sheppard CPAS, LLP<br>Fairfield<br>(City) | AND ENDI<br>A. REGISTRANT IDENTIFICATION<br>NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT<br>B. ACCOUNT ANT IDENTIFICATION<br>INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*<br>(Name - if individual, state last, first, middle name)<br>CT<br>(State)<br>Accountant not resident in United States or any of its possessions.<br>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. /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 (11-05)

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#### **OATH OR AFFIRMATION**

**<sup>1</sup>**William H. Alderman , swear (or affirm) that, to the best of '------------------------------ my knowledge and belief the accompanying financial statement and supporting schedules pertain ing to the firm of \_\_\_\_ Alderman & \_\_ Company Capital, LLC as ..:,\_\_.:.,\_.;.\_....;\_ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ '

of December 31 20 19 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:

**~;gaaturn** 

President

Title

This report\*\* contains (check all applicable boxes):

- **0 (a)** Facing Page.
- **[2]** (b) Statement of Financial Condition.
- IZ] (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 §2 10.1 -02 of Regulation S-X).
- ✓ {d) Statement of Changes in Financial Condition.
- [2] (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
- 0 (f) 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 **l** 5c3-3.
- (i) Information Relating to the Possession or Control Req uirements Under Rule 15c3-3.
- **0** G) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule I 5c3- I and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3~3.
- 0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with res pect to methods of consolidation.
- **[ZI** (I) An Oath or Affirmation.
- **D** (m) A copy of the SIPC Supplemental Report.
- **0** (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.* / *7a-5(e)(3).* 

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# **Alderman & Company Capital, LLC Table of Contents**

| Report of Independent Registered Public Accounting firm                                                                                                                             |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|
| Statements of Financial Condition                                                                                                                                                   | 2   |
| Statements of Income                                                                                                                                                                | 3   |
| Statements of Changes in Member's Equity                                                                                                                                            | 4   |
| Statements of Cash Flows                                                                                                                                                            | 5   |
| Notes to Financial Statements                                                                                                                                                       | 6-7 |
| Supplementary Schedules<br>Computation of Net Capital Under<br>Schedule I -<br>Rule l 5c3-I of the Securities and<br>Exchange Commission                                            | 8   |
| Reconciliation of Net Capital From<br>Schedule II -<br>Rule 17a-5(d)(4) of the<br>Quarterly Focus -<br>Securities and Exchange Commission to<br>Annual Audited Financial Statements | 9   |
| l:leview Report of Independent Registered Public Accounting Firm<br>on Exemption Report                                                                                             |     |
| Statement Regarding Exemptive Provision under Rule I 5c3-3<br>of the Securities and Exchange Commission                                                                             | 11  |

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Knight • Rolleri • Sheppard, CPAS, LLP Michael J. Kntgrt, CPA. CVA. CFE.ABV John M. Rolleri, CPA. CFE Ryan C. Sheppard, CPA. CFF

To the Member

of Aldennan & Company Capital LLC

#### **Opinion on the Financial Statements**

We have audited the accompanying statements of financial condition of Aldennan & Company Capital, LLC as of December 31 , 2019 and 2018, the related statements of income, changes in member's equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly in all material respects, the financial position of Aldennan & Company Capital, LLC as of December 31 , 20 19 and 2018, and the results of its operations and its cash flows for the years then ended in confonnity with accounting principles generally accepted in the United States of America.

#### **Basis for Opinion**

These financial statements are the responsibility of Aldennan & Company Capital, LLC's management. Our responsibility is to express an opinion on Aldennan & Company Capital, LLC's financial statements based on our audits. 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 Aldennan & Company Capital, LLC 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 audits 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 performing 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 audits 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 audits provide a reasonable basis for our opinion.

#### **Auditor's Report on Supplemental Information**

Schedule I - Computation of Net Capital Under Rule I 5c3-1 of the Securities and Exchange Commission and Schedule II - Reconciliation of et Capital From Quarterly Focus - Rule l 7a-5(d)(4) of the Securities and Exchange Commission to Annual Audited Financial Statements has been subjected to audit procedures perfonned in conjunction with the audit of Alderman & Company Capital, LLC's financial statements. The supplemental infonnation is the responsibility of Aldennan & Company Capital, LLC's management. Our audit procedures included detennining whether the supplemental infonnation 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. I 7a-5. In our opinion, the Schedule I - Computation of Net Capital Under Rule 15c3- I of the Securities and Exchange Commission and Schedule II - Reconciliation of Net Capital From Quarterly Focus - Rule 17a-5(d)(4) of the Securities and Exchange Commission to Annual Audited Financial Statements is fairly stated, in all material respects, in relation to the financial statements as a whole.

# *K~.J* CPA-.>,, '--<-/J

Knight Rolleri Sheppard CPAS, LLP We have served as Alderman & Company Capital, LLC's auditor since 2006.

Fairfield, Connecticut February 12, 2020

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## **Alderman** & **Company Capital, LLC Statements of Financial Condition December 31, 2019 and 2018**

|                                      |        | 2019 |            | 2018 |           |
|--------------------------------------|--------|------|------------|------|-----------|
|                                      | Assets |      |            |      |           |
| Current assets                       |        |      |            |      |           |
| Cash and equivalents                 |        | \$   | 54 531     | \$   | 46,742    |
| Prepaid expenses                     |        |      | 1,650      |      | 1,650     |
| Total current assets                 |        |      | 56,1<br>81 |      | 48,392    |
| Property and equipment               |        |      |            |      |           |
| Electronic data processing equipment |        |      | 4 218      |      | 4,2<br>18 |
| Accumulated depreciation             |        |      | (4,218)    |      | (3,903)   |
| Net property and equipment           |        |      |            |      | 315       |
| Total assets                         |        | \$   | 56,<br>181 | \$   | 48,707    |

#### **Liabilities and Member's Equity**

| Member's equity<br>Total liabilities and member's equity | \$<br>40,981<br>56,181 | \$<br>33,557<br>48,707 |
|----------------------------------------------------------|------------------------|------------------------|
|                                                          |                        |                        |
| Total current liabilities                                | 15,200                 | 15,150                 |
| Accrued liabilities                                      | 14,000                 | 14,250                 |
| Accounts payable                                         | \$<br>I 200            | \$<br>900              |
| Current liabilities                                      |                        |                        |

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### **Alderman** & **Company Capital, LLC Statements of Income For the Years Ended December 31, 2019 and 2018**

|                                     | 2019           |    | 2018      |  |
|-------------------------------------|----------------|----|-----------|--|
| Fee revenue and reimbursed expenses | \$<br>15,934   | \$ | 50,000    |  |
| Operating expenses                  |                |    |           |  |
| Accounting and audit fees           | 26,400         |    | 26,182    |  |
| Airfare                             | 1,680          |    | 3,997     |  |
| Bank charges                        | 75             |    | 67        |  |
| Computer software and supplies      | 116            |    | 76        |  |
| Conferences                         | 50             |    | 2,251     |  |
| Connectivity charges                | 5,379          |    | 9,106     |  |
| Consultants                         | 10,200         |    | 9,200     |  |
| Depreciation                        | 315            |    |           |  |
| Dues and subscriptions              | 160            |    |           |  |
| Gas, parking and tolls              | 372            |    | 26        |  |
| Hotel and lodging                   | 1,513          |    | 290       |  |
| Insurance                           | 576            |    | 576       |  |
| Legal fees                          | 267            |    | 549       |  |
| Local transportation                | 518            |    | 202       |  |
| Marketing and promotion             | 80             |    | 255       |  |
| Meals                               | 291            |    | 16        |  |
| Office supplies                     | 351            |    | 340       |  |
| Regulatory fees                     | 9,690          |    | 13,666    |  |
| Taxes                               |                |    | 125       |  |
| Total operating expenses            | 58,033         |    | 67,766    |  |
| (Loss) income from operations       | (42,099)       |    | (17,766)  |  |
| Other income (expenses)             |                |    |           |  |
| Interest income                     | 23             |    | 20        |  |
| Total other income (expenses)       | 23             |    | 20        |  |
| Net (loss) income                   | \$<br>(42,076) | \$ | (I 7,746) |  |

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## **Alderman** & **Company Capital, LLC Statements of Changes in Member's Equity For the Years Ended December 31, 2019 and 2018**

| Member's equity, December 31, 2017 | \$<br>38,765 |
|------------------------------------|--------------|
| Member contributions during 2018   | 43,000       |
| Member distributions during 2018   | (30,462)     |
| Net loss, 2018                     | (17,746)     |
| Member's equity, December 31, 2018 | 33,557       |
| Member contributions during 2019   | 60,500       |
| Member distributions during 2019   | (11,000)     |
| Net loss, 2019                     | (42,076)     |
| Member's equity, December 31, 2019 | \$<br>40,981 |

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## **Alderman** & Company **Capital, LLC Statements of Cash Flows For the Years Ended December 31, 2019 and 2018**

|                                                       | 2019           | 2018           |
|-------------------------------------------------------|----------------|----------------|
| Cash flows from operating activities:                 |                |                |
| Net (loss) income                                     | \$<br>(42,076) | \$<br>(17,746) |
| Adjustments to reconcile changes in net (loss) income |                |                |
| to cash (used in) operating activities:               |                |                |
| Depreciation                                          | 315            | 842            |
| (Increase) in prepaid expenses                        |                | (200)          |
| Increase in accounts payable                          | 300            | 200            |
| (Decrease) increase in accrued liabilities            | (250)          | 2,125          |
| Total adjustments                                     | 365            | 2,967          |
| Net cash (used in) operating activities               | (4<br>1,711)   | (14,779)       |
| Cash flows from financing activities:                 |                |                |
| Member contributions                                  | 60,500         | 43,000         |
| Member distributions                                  | (11,000)       | (30,462)       |
| Net cash provided by financing activities             | 49,500         | 12,538         |
| Net increase (decrease) in cash and equivalents       | 7,789          | (2,241)        |
| Beginning cash and equivalents                        | 46,742         | 48,983         |
| Ending cash and equivalents                           | \$<br>54,531   | \$<br>46,742   |

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### **Alderman** & Company **Capital, LLC Notes to Financial Statements December 31, 2019 and 2018 (See Report of Independent Registered Public Accounting Firm)**

#### **NOTE l** - **ORGANIZATION AND NATURE OF BUSINESS**

Alderman & Company Capital, LLC (the "Company") is a registered broker-dealer with the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority, Inc. (FIN RA). The Company provides investment banking expertise to issuers in the aerospace and defense industries. The Company received its FINRA approval for membership on January 27, 2006. The Company's sole member is William H. Alderman. The Company is exempt from Rule 15c3-3 of the SEC under paragraph (k)(2)(i) of that rule.

#### **NOTE 2** - **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of accounting** - The Company maintains its books and records on the accrual basis of accounting for financial reporting purposes, which is in accordance with U.S. generally accepted accounting principles and is required by the SEC and FINRA.

**Cash and equivalents** - For the purposes of the statements of cash flows, the Company considers cash in banks and all highly liquid debt instruments with maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.

**Revenue recognition** - Effective January I 2018, the Company adopted ASC Topic 606, *Revenue from Contracts with Customers.* The new revenue recognition guidance requires that an 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.

Revenue from contracts with customers includes commission income and fees from investment banking. 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 Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events.

Revenues from investment banking services are recogn ized when the transaction closes. on-refundable retainers are recognized as revenue in accordance with the terms of the contract and may be applied against transaction fees upon closing.

**Use of accounting estimates** - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosures. Accordingly, the actual amounts could differ from those estimates. Any adjustments applied to the estimated amounts are recognized in the year in which such adjustments are determined.

**Accounts receiv;.ble** - Accounts receivable are carried at cost. No allowance for uncollectable accounts was required at December 31, 2019 or 2018 since there were no accounts receivables at either year-end.

**Property and equipment** - Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Asset lives range from three to five years.

**Advertising -** The Company policy is to expense advertising as incurred.

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#### **Alderman** & **Company Capital, LLC Notes to Financial Statements December 31, 2019 and 2018 (See Report of Independent Registered Public Accounting Firm)**

**Income taxes** - The Company is a limited liability company treated as a disregarded entity. Accordingly, in lieu of Federal and state income taxes, the member is taxed on their proportionate share of the Company's taxable income. Therefore, no provision or liability for Federal or state taxes has been included in these financial statements. The member's tax years subject to examination by regulatory authorities are from December 3 I, 2016 and after.

### **NOTE 3** - **CONCENTRATIONS**

The Company has several contracts with clients that generate more than I 0% of total annual revenues. For the year ended December 31 , 20 I 9, a single client accounted for 90% of total revenue. For the year ended December 31, 2018, a single client accounted for 100% of total revenue.

The Company operates in the aerospace and defense industry.

#### **NOTE 4** - **NET CAPITAL REQUIREMENT**

The Company is subject to the SEC Uniform Net Capital Rule (Rule I Sc3-I ), which requires the maintenance of net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to I. Rule 1 Sc3-1 also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed IO to I. At December 31, 201 9, the Company had net capital of \$39,331, which was \$34,331 in excess of its required net capital of \$5,000. The Company's ratio of indebtedness to net capital was .39 to 1.

## **NOTE 5** - **RELATED PARTY TRANSACTIONS**

The Company has periodically engaged Myles Alderman, the managing partner's brother and a lawyer at Alderman & Alderman, LLC, to perform legal services. The Company paid \$267 and \$549 of legal fees to Alderman & Alderman, LLC in 2019 and 2018, respectively.

The Company has two sister companies: Alderman & Company Consulting, LLC, a Connecticut consulting company, and Alderman & Company Wings, LLC, a Connecticut aircraft holding company. There were no transactions between the three companies in 2019 or 2018. A th ird sister company, Aldennan & Company Advisors, LLC, a Connecticut registered investment advisor company, ceased operations in early 2018.

#### **NOTE 6** - **CONTINGENCIES**

The Company evaluates contingencies on an ongoing basis. At December 31, 20 19 and 2018, the Company was not aware of any contingent liabilities that could have a subsequent material adverse effect on its results of operations.

#### **NOTE 7** - **SUBSEQUENT EVENTS**

In accordance with F ASB Accounting Standards Codification 855, Subsequent Events, the Company has evaluated subsequent events from the statement of financial position date of December 31, 2019 through February 12, 2020 which is the date the financ ial statements were issued. Management has detennined that there are no subsequent events that require disclosure.

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# **Alderman** & **Company Capital, LLC Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2019 Schedule** I

| Net Capital                                                  |              |
|--------------------------------------------------------------|--------------|
| Total member's equity                                        | \$<br>40,981 |
| Deduct member's equity not allowable                         |              |
| for net capital                                              |              |
| Total member's equity qualified for net capital              | 40,981       |
| Additions/other credits:                                     |              |
| Total member's equity and allowable subordinated liabilities | 40,981       |
| Deductions/other charges:                                    |              |
| Prepaid expenses                                             | 1,650        |
| et property and equipment                                    |              |
| Total deductions/other charges                               | 1,650        |
| Net capital                                                  | \$<br>39,331 |
| Aggregate indebtedness                                       |              |
| Accounts payable and accrued expenses                        | \$<br>15,200 |
| Total aggregate indebtedness                                 | \$<br>15,200 |
| Computation of basic net capital requirement                 |              |
| Minimum net capital required                                 | \$<br>5,000  |
| Excess net capital                                           | \$<br>34,331 |
| Ratio: Aggregate indebtedness to net capital                 | 38.65%       |

There are no material differences between the computations above and the computations included in the Company's corresponding unaudited Form X-17 A-5 Part IIA filing.

**See report of independent registered public accounting firm.** 

**8** 

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# Alderman & Company Capital, LLC Reconciliation of Net Capital from Quarterly Focus - Rule 17a-5(d)(4) of the Securities and Exchange Commission to Annual Audited Financial Statements As of December 31, 2019 Schedule II

| Net Capital as reported on 4th Quarter Focus Report | \$<br>39,331 |
|-----------------------------------------------------|--------------|
| Adiustments from 4th Quarter Focus to Annual Audit  |              |
| Audit adjustment                                    |              |
| Rounding                                            |              |
| Total adjustments                                   |              |
| Revised Net Capital as reported in the Annual Audit | \$<br>39,331 |

See report of independent registered public accounting firm.

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Knight • Rolleri • Sheppard, CPAS, LLP "11chae 1-Kntgh. CPA, CVA, CFE ABV john M. Rolleri, CPA, CFE Ryan C. Sheppard, CPA, CFF

To the Member

of Aldennan & Company Capital, LLC

We have reviewed management's statements, included in the accompanying Statement Regarding Exemptive Provision Under Rule I 5c3-3 of the Securities and Exchange Commission, in which (I) Alderman & Company Capital, LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Aldennan & Company Capital, LLC claimed an exemption from 17 C.F.R. §240. I 5c3-3 : (k)(2){i) (exemption provisions) and (2) Alderman & Company Capital, LLC stated that Alderman & Company Capital, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. Alderman & Company Capital, LLC'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 Alderman & Company Capital, LLC'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 I 5c3-3 under the Securities Exchange Act of 1934.

*f<;l.* ,5 cPA--I, *L-£.f)* 

Knight Rolleri Sheppard CPAS, LLP Fairfield, Connecticut February 12, 2020

IO

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## **Statement Regarding Exemptive Provision Under Rule 15c3-3 of the Securities and Exchange Commission December 31, 2019**

Aldennan & Company Capital, LLC (The Company) asserts, to its best knowledge and belief the following:

- I) The Company claims an exemption from SEC Rule I Sc3-3 under subsection (k)(2)(i)
- 2) The Company met such exemption provisions in SEC Rule I Sc3-3 under subsection (k)(2)(i) from January I, 2019 to December 3 I, 2019 without exception.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.
