# ULTRALAT CAPITAL MARKETS, LLC X-17A-5 (2020-02-27) — Broker-dealer annual report - Company: ULTRALAT CAPITAL MARKETS, LLC - Form: X-17A-5 - Filed: 2020-02-27 - Period: 2019-12-31 - Accession: 0001336040-20-000001 - CIK: 1336040 - File #: 8-67048 - Material weakness: No - Auditor: Kaufman Rossin & Co. - Auditor location: Miami, FL - Contact: Steven Singer - Phone: 5617848922 - Signed by: Juan Pablo Galan (CEO/President) Original filing: https://www.sec.gov/Archives/edgar/data/1336040/000133604020000001/ultrapublic2019.pdf --- {0}------------------------------------------------ # **Ultralat Capital Markets, LLC** **STATEMENT OF FINANCIAL CONDITION** **December 31, 2019** {1}------------------------------------------------ **UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response.. . . . . 12.00 **8-** SEC FILE NUMBER 67048 ## **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** | 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______________________________ AND ENDING______________________________ | 01/01/19 | | 12/31/19 | |--------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|---------|------------------------------------------------| | | MM/DD/YY | | MM/DD/YY | | A. | REGISTRANT IDENTIFICATION | | | | NAME OF BROKER-DEALER: | Ultralat Capital Markets, LLC | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | 801 Brickell Avenue, Suite 1020
___________________________________________________________________________________________________________________ | | | | | | (No. and Street) | | | | Miami
Miami
_____________________________________________________________________________________________________________________ | FL
FL | | 33131 | | (City) | (State) | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | _____________________________________________________________________________________________________________________
Steven Singer | | | 561-784-8922
(Area Code – Telephone Number) | | B. | ACCOUNTANT IDENTIFICATION | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | Kaufman Rossin & Co., P.A.
_____________________________________________________________________________________________________________________ | | | | | | (Name – if individual, state last, first, middle name) | | | | 2699 S. Bayshore Drive
_____________________________________________________________________________________________________________________ | Miami | FL | 33133 | | (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 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** SEC 1410 (11-05) **unless the form displays a currently valid OMB control number.** {2}------------------------------------------------ | Juan Pablo Galan
swear ( | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
Ultralat Capital Markets, LLC | | | , 20 19 are true and correct. I further swear (or affirm) that
December 31
of | | | neither the company nor any partner, principal officer or director has any proprietary interest in any account
classified solely as that of a customer, except as follows: | | | 0
TEPHANIE M. TOKRE
Signature
4Y COMMISSION # GG96477
EXPIRES: April 20, 2021
CEO/President
התחתן המועדות המועד
Title
IDA 10 6455-420-71-3
Notary Publis | | | This report ** contains (check all applicable boxes):
(a) Facing Page.
(b) Statement of Financial Condition.
(c) Statement of Income (Loss) or, if there is other comprehensive in the period(s) presented, a Statement
of Comprehensive Income (as defined in \$210.1-02 of Regulation S-X).
(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 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.
(i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
(k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of
consolidation.
(1) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report.
(n) A report describing any material inadequacies found to have existed since the date of the previous audit. | | {3}------------------------------------------------ | C O N T E N T S | | | | |-----------------|--|--|--| | | | | | | Page | |------| |------| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 | |---------------------------------------------------------|-------------| | FINANCIAL STATEMENT | | | Statement of Financial Condition | 2 | | Notes to Statement of Financial Condition | 3
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8 | {4}------------------------------------------------ 12 #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Members of Ultralat Capital Markets, LLC #### *Opinion on the Financial Statement* We have audited the accompanying statement of financial condition of Ultralat Capital Markets, LLC as of December 31, 2019, 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 Ultralat Capital Markets, LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. #### *Change in Accounting Principle* As discussed in Note 1 to the financial statements, Ultralat Capital Markets, LLC has changed its method of accounting for leases due to the adoption of Accounting Standards Update 2016-02, Leases. #### *Basis for Opinion* This financial statement is the responsibility of Ultralat Capital Markets, LLC's management. Our responsibility is to express an opinion on Ultralat Capital Markets, LLC'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 Ultralat Capital Markets, 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 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. ![](_page_4_Figure_11.jpeg) Kaufman, Rossin & Co., P.A. We have served as Ultralat Capital Markets, LLC's auditor since 2006. Miami, Florida February 19, 2020 ![](_page_4_Picture_15.jpeg) {5}------------------------------------------------ # **ULTRALAT CAPITAL MARKETS, LLC** # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2019 #### **ASSETS** | CASH AND CASH EQUIVALENTS | \$
4,100,495 | |------------------------------------------------------------------------------|--------------------------| | SECURITIES OWNED AT FAIR VALUE | 500,705 | | RECEIVABLE FROM BROKERS | 6,779 | | RESTRICTED CASH | 300,158 | | RIGHT-OF-USE LEASE ASSETS, NET | 685,642 | | PROPERTY AND EQUIPMENT, NET | 168,704 | | OTHER ASSETS | 195,969 | | | \$
5,958,452 | | LIABILITIES AND MEMBER'S
EQUITY | | | LIABILITIES
Accounts payable and accrued liabilities
Lease liabilities | \$
286,009
786,129 | | LEASE COMMITMENTS
AND CONTINGENCIES | | | MEMBER'S
EQUITY | 4,886,314 | | | \$
5,958,452 | See accompanying notes. {6}------------------------------------------------ #### **NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### *Description of Business and Organization* Ultralat Capital Markets, LLC (the Company), is a member of the Financial Industry Regulatory Authority (FINRA) and is a registered broker dealer. The Company primarily acts in a principal capacity, buying and selling securities on a riskless basis with customers and other dealers within Latin America, principally Colombia. The Company is also authorized to buy and sell equities, mutual funds, corporate debt, and U.S. Government debt, for its customers, and charge a commission. The Company is a Florida Limited Liability Company and wholly owned subsidiary of Ultralat Group, Inc. (Group). Group is a wholly owned subsidiary of Ultra Holdings Group, Inc (the Parent). In November 2019, the Parent's ultimate owner, Ultraserfinco S.A., was purchased by subsidiaries of Credicorp Ltd., a Colombian publicly traded entity that is listed on both the New York Stock Exchange and the Lima Stock Exchange Group. #### *Government and Other Regulation* The Company's business is subject to significant regulation by various governmental agencies and self-regulatory organizations. Such regulation includes, among other things, periodic examinations by these regulatory bodies to determine whether the Company is conducting and reporting its operations in accordance with the applicable requirements of these organizations. ### *Cash and Cash Equivalents* The Company considers all highly liquid debt instruments having maturities of three months or less at the date of acquisition to be cash equivalents. The Company may, during the ordinary course of business, maintain account balances in excess of federally insured limits. The Company does not expect any risk of loss with regard to these deposits. ### *Restricted Cash* Restricted cash consists of contractually restricted account balances held at the Company's clearing brokers. The Company accounts for restricted cash based upon Accounting Standards Update (ASU) 2016-18. Accordingly, the cash balances in the accompanying statement of cash flows include those amounts that are deemed to be restricted cash. ### *Property and Equipment* Property and equipment is recorded at cost. Expenditures for major betterments and additions are charged to the asset accounts while replacements, maintenance and repairs which do not improve or extend the lives of the respective assets are charged to expense currently. {7}------------------------------------------------ #### **NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** #### *Depreciation and Amortization* Depreciation of property and equipment is computed using the straight-line method at various rates based upon the estimated useful lives of the assets. The range of estimated useful lives is summarized as follows: | Furniture and fixtures | 7 years | |------------------------|-----------| | Leasehold improvements | 5-6 years | | Office equipment | 2-5 years | #### *Leases* The Company adopted ASC 842 – *Leases* on January 1, 2019, which requires the recordation of a right-of-use asset and related lease liability on the statement of financial condition. Such amounts are based on the net present value of future lease obligations, using an incremental borrowing rate to determine the Company's effective cost of capital (see Note 6). #### *Defined Contribution Plan* The Company maintains a 401(k) plan covering substantially all employees, with the Company matching up to 6% of employee payroll deferrals. Matching contributions to the Plan for the year ended December 31, 2019 totaled \$35,041 with \$35,041 due at year-end. #### *Income Taxes* The Company is a disregarded entity for federal income tax purposes. Instead, its taxable income or loss is reflected on Group's income tax return and thereafter, there is no provision for income taxes included in the accompanying financial statements, as Group does not allocate income taxes to the Company. The Company assesses its tax positions in accordance with "*Accounting for Uncertainties in Income Taxes*" as prescribed by the Accounting Standards Codification, which provides guidance for financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return for open tax years (generally a period of three years from the later of each return's due date or the date filed) that remain subject to examination by the Company's major tax jurisdictions. The Company assesses its tax positions and determines whether it has any material unrecognized liabilities for uncertain tax positions. The Company records these liabilities to the extent it deems them more likely than not to be incurred. Interest and penalties related to uncertain tax positions, if any, would be classified as a component of income tax expense. The Company believes that it does not have any significant uncertain tax positions requiring recognition or measurement in the accompanying statement of financial condition. {8}------------------------------------------------ #### **NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** #### *Use of Estimates in the Preparation of the Statement of Financial Condition* The preparation of the statement of financial condition 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 statement of financial condition. Actual results could differ from those estimates. #### *Fair Value of Financial Instruments* FASB ASC 820, *Fair Value Measurement*, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: *Level 1*- Valuations for assets and liabilities traded in active exchange markets, or interest in open-end mutual funds that allow a company to sell its ownership interest back at net asset value ("NAV") on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities or funds. *Level 2*- Valuations for assets and liabilities traded in less active dealer, or broker markets, such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active. Level 2 includes U.S. Treasury, U.S. government and agency debt securities, and mortgage-backed securities. Valuations are usually obtained from third party pricing services for identical or comparable assets or liabilities. *Level 3*- Valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. The availability of observable inputs can vary from instrument to instrument and in certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement of an instrument requires judgement and consideration of factors specific to the instrument. {9}------------------------------------------------ #### **NOTE 2. NET CAPITAL REQUIREMENTS** As a registered broker-dealer, the Company is subject to the Uniform Net Capital Rule of the Securities and Exchange Commission, which requires that "Net Capital", as defined, shall be at least the greater of \$100,000 or 6-2/3% of "Aggregate Indebtedness", as defined. At December 31, 2019, the Company's "Net Capital" was \$4,444,409 which exceeded requirements by \$4,344,409. The ratio of "Aggregate Indebtedness" to "Net Capital" was 0.09 to 1 at December 31, 2019. #### **NOTE 3. FAIR VALUE MEASUREMENTS** The following table sets forth by level, within the fair value hierarchy, the Company's net securities owned at fair value on a recurring basis as of December 31, 2019: | | Level 1 | | Level 2 | Level 3 | Total | |-----------------|---------|---|---------------|---------|---------------| | U.S. Treasuries | \$ | - | \$
500,705 | \$
- | \$
500,705 | | Total | \$ | - | \$
500,705 | \$
- | \$
500,705 | ### **NOTE 4. RISK CONCENTRATIONS** #### *Clearing and Depository Concentrations* The clearing and depository operations for the Company's securities transactions are provided by two brokerage firms one located in Jersey City, New Jersey, and one located in New York, New York. At December 31, 2019, the restricted cash, the receivable from brokers, the securities owned, and \$4,062,610 of cash and cash equivalents are held by and due from these brokerage firms. #### *Other Risk Concentrations* In the normal course of business, the Company's customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose the Company to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss. The Company's customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company's clearing brokers extend credit to its customers, subject to various regulatory and internal margin requirements, collateralized by cash and the securities in the customers' accounts. In connection with these activities, the Company executes customer transactions involving the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations. Such transactions may expose the {10}------------------------------------------------ #### **NOTE 4. RISK CONCENTRATIONS (continued)** Company to significant off-balance-sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event the customer fails to satisfy its obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill customer's obligations. The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. The Company monitors required margin levels daily and pursuant to such guidelines, requires the customer to deposit additional collateral or to reduce positions when necessary. #### **NOTE 5. PROPERTY AND EQUIPMENT** Property and equipment at December 31, 2019 consisted of the following: | Furniture and fixtures | \$
251,114 | |-------------------------------------------------|---------------| | Office equipment | 397,035 | | Leasehold improvements | 337,084 | | Website development | 29,650 | | Artwork | 20,040 | | | 1,034,923 | | Less: accumulated depreciation and amortization | 866,219 | | | \$
168,704 | #### **NOTE 6. LEASE COMMITMENTS** In January 2019, the Company adopted ASC 842, Leases ("ASC 842"), which requires substantially all leases (with the exception of leases with a term of one year or less) to be recorded on the statement of financial condition using the right-of- use (''ROU") asset approach. Upon adoption, the Company recognized a lease liability of approximately \$1,004,000, with an offsetting ROU asset of approximately \$883,000, and an approximate \$121,000 reduction of deferred rent resulting in no impact to equity. The discount rate used to calculate the present value of future minimum lease payments was 5%. The Company is obligated under a non-cancelable operating lease for its office facility in Miami, Florida, expiring in 2022. The Company has a security deposit held by the landlord in the amount of \$80,000. This amount is included in other assets in the accompanying statement of financial condition. In addition, the Company is obligated under a non-cancelable operating lease with the Affiliate for its foreign office facility in Bogota, Colombia, expiring in 2023. {11}------------------------------------------------ #### **NOTE 6. LEASE COMMITMENTS (continued)** The approximate minimum annual lease payments required under our operating lease liabilities together with their present value as of December 31, 2019 are as follows: | 2020
2021
2022
2023
2024 | \$ | 271,000
280,000
289,000
9,000
0 | |------------------------------------------------------|----|---------------------------------------------| | Total payments due under operating lease liabilities | | 849,000 | | Less discount to present value | ( | 62,871) | | Total operating
lease liabilities | \$ | 786,129 | The weighted average remaining lease term for the operating leases is approximately 36 months. #### **NOTE 7. RELATED PARTY TRANSACTIONS** #### *Referral Fee Agreement* The Company has a sub-clearing agreement with a Colombian broker dealer, which through November 1, 2019, was the sole stockholder of the Parent (the Affiliate). The Affiliate introduces foreign customers to the Company in exchange for approximately 75% of the gross revenue generated by the Company in the trading accounts of the foreign customers. At December 31, 2019, the Company owed referral fees to the Affiliate of \$921. #### *Expenses Paid on Behalf of Affiliate* During the year, the Company paid certain expenses on behalf of its affiliate, UltraAdvisors (UA). At December 31, 2019 UA owed the Company \$16,067, which is included in other assets on the statement of financial condition. #### **NOTE 8. CONTINGENCIES** During the normal course of operations, the Company, from time to time, may be involved in lawsuits, arbitrations, claims, and other legal or regulatory proceedings. The Company does not believe that these matters will have a material adverse effect in the Company's financial position, results of operations, or cash flows. #### **NOTE 9. SUBSEQUENT EVENTS** The Company has evaluated subsequent events through February 19, 2020, the date the statement of financial condition was issued, and determined that no additional financial statement recognition or disclosure is necessary. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.