# INLET SECURITIES, LLC X-17A-5 (2020-11-30) — Broker-dealer annual report - Company: INLET SECURITIES, LLC - Form: X-17A-5 - Filed: 2020-11-30 - Period: 2020-09-30 - Accession: 0001357789-20-000002 - CIK: 1357789 - File #: 8-67301 - Material weakness: No - Auditor: Hacker, Johnson & Smith PA - Auditor location: Orlando, FL - Contact: Jessica Gilday - Phone: 386-426-2440 - Signed by: Jessica Gilday (Managing Member) Original filing: https://www.sec.gov/Archives/edgar/data/1357789/000135778920000002/Financials093020ShortReport3.pdf --- {0}------------------------------------------------ # STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM SEPTEMBER 30, 2020 {1}------------------------------------------------ U!"liTEDSTATES SECURITIESA~D EXCHA!\GE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 323S-D123 Expires: October 31, 2023 Estimated average burden hours per response ...... 12.00 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** | | SEC FILE NUMBER | | |--|-----------------|--| | | | | B-67301 FACING PACE 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 BEG JNNI~G _ | ____
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MMiDDIYY | | | | | |-------------------------------------------------------------------------------|-------------------------------------------------------|---------|---------------------------------------------------------|--|--|--|--| | | MM/1)1)/YY | | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | NAME OF BROKER-DEALER: | INLET SECURITIES, LLC | | OFFICIAL USE ONLY | | | | | | ADDRESS OF PR ~CIPAL PLACE OF BLSII\'ESS: {Do not use P.O. Box No.} | | | FIRM 1.0. NO. | | | | | | 233 North Causeway, SuiteD | | | | | | | | | | (Nu. and Street) | | | | | | | | New Smyrna Beach | Fl | | 32169 | | | | | | (C t~ I | !Stattl | | (/.1p Codcl | | | | | | NAME AND TELEPHONE NU\1BER OF PERSON TO C'O"'JT<\C'T IN REGARD TO THIS REPORT | | | | | | | | | Jessica Gilday | | | 386
426-2440 | | | | | | | | | (An·a Code- Telephone Number) | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is. contained in this Report* | | | | | | | | | Hacker, Johnson & Smith, P.A. | | | | | | | | | | (:-lame- sfmdmrf1wl. store lasr.fsr:;t. middl~ namt') | | | | | | | | 5401 S. Kirkman Road, Suite 620 Orlando | | Florida | 32819 | | | | | | ( Addre~ l | | !State! | | | | | | | HECKO~E: | | | | | | | | | l/
lcertificd Public Accountant | | | | | | | | | DPublic Accountant | | | | | | | | | D | | | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | | | | | *\*Claims for exemption from the requirement that* 1he *annual report be contred hy the opinion* of *an independenT public accountant must he supf!Orted hy a Slr.Jtement offacts and circumstances relied on as* rhe *hasis.for* 1hr: *exemption. See Section 2-10. /7a-5(ej(2J* > Potential persons who are to respond to the collection of information contained in this form are not required to respond un I ess the form dlspl ays a currently valid OMB control number. {2}------------------------------------------------ ### OATH OR AFFIRMATION | I,
Jessica Gilday | , swear (or affinn) that, to the best of | |-----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | INLET SECURITIES, LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | of
September 30 | ------------------------------------------------------------------------------------------
, as
are true and correct. I further swear (or affirm} that | | classified solely as that of a customer, except as follows: | neither the company nor a ny partner, proprietor, principal officer or director has any proprietary interest in any account | | | None--------------- | | | | | | | | | | | This report ** contains (check all applicable boxes):
0
(a) Facing Page. | | | 0
(b) Statement of Financial Condition. | | | of Comprehensive 1 ncome (as defined in §2
n
(d) Statement of Changes in Financial Condition. | D (c) Statement of Income (Loss) or. if there is other comprehensive income in the period(s) presented. a Statement
1 0.1-02 of Regulation S-X). | | 0 | (e) Statement of Changes in Stockholders· Equity or Partners' or Sole Proprietors' Capital. | | 0 | (0 Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | § (g) Computation of~e
t Capital. | | | | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | 0 | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
(j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule 15c3-l and the | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | 0
consolidation. | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | 0 (I) An Oath or Affirmation. | | | 0 (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 ofthe previous audit. u *For conditions of confidentialtrcatmem of certain porriorrs of !his filing, see section 2.JO. 1 7a-5 (e)( 3).* {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) **HACKER,** ~OHNSON **& SMITH PA** Fore l..euderdale Orlando Tampa Certif ied Pub lic Accou ntants # Report of Independent Regjster ed Public Accounting Firm To the Members of Inlet Securities, LLC New Smyrna Beach, Florida ### Opinion on the Statement of Financial Condition We have audited the accompanying statement of financial condition of Inlet Securities, LLC (the "Company") as of September 30, 2020, 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 the Company as of September 30, 2020, in conformity 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 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 statements are tree 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 fi-aud, and performing procedures that respond to those risks. Such procedures included exami ning, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaJuating 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. HACKER, JOHNSON & SMITH PA We have served as Inlet Securities, LLC's auditor since 2019. Orlando, Florida November 24, 2020 {4}------------------------------------------------ #### STATEMENT OF FINANCIAL CONDITION #### SEPTEMBER 30, 2020 #### ASSETS | Cash
Receivable from broker/dealers
Office furniture and equipment (net of \$30
557
,
accumulated depreciation) | \$ 115
238
,
40
604
,
352 | | |--------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|--| | Other assets | 721 | | | TOTAL ASSETS | \$ 156,915 | | | LIABILITIES AND MEMBERS
'
CAPITAL | | | | LIABILITIES
Accounts payable
accrued expenses
,
and other liabilities
Notes payable | 17
058
\$
,
29
100
, | | | TOTAL LIABILITIES | 46
158
\$
, | | | '
CAPITAL
MEMBERS | \$ 110
757
, | | | TOTAL LIABILITIES AND MEMBERS
'
CAPITAL | \$ 156,915 | | The accompanying notes are an integral part of these financial statements. {5}------------------------------------------------ # NOTES TO FINANCIAL STATEMENTS ### YEAR ENDED SEPTEMBER 30. 2020 ## NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization - Inlet Securities, LLC (the "Company") was organized in the state of Florida in August, 2005. The Company is registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). The Company's principal business activity is the sale of securities. Basis of Presentation - The fmancial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Revenue Recognition - The Company has adopted the provisions of the Financial Accounting Standards Board (F ASB) Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue from contracts with customers is recognized when: (i) a contract has been identified, (ii) the performance obligation(s) in the contract have been identified, (iii) the transactions price has been determined, (iv) the transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the performance obligation. Brokerage commissions and concessions. The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. Office Furniture and Equipment - Depreciation IS provided usmg the straight-line method over a five year period. Concentrations of Credit Risk - The Company is engaged in various brokerage activities in which the counterparties primarily include broker/dealers, banks, other financial institutions, and the Company's own customers. In the event the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty. {6}------------------------------------------------ # NOTES TO FINANCIAL STATEMENTS ### YEAR ENDED SEPTEMBER 30. 2020 ## NOTE I - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - continued In addition, all of the Company's cash is on deposit at one financial institution and the balance at times may exceed the federally insured limit. The Company believes it is not exposed to any significant credit risk to cash. Estimates - The preparation of financial statements in conformity with GAAP 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. Subsequent Events - Management has evaluated events occurring subsequent to the balance sheet dated November 24, 2020 (the financial statement issuance date), determining no events require additional disclosure in the financial statements. ## NOTE 2 - INCOME TAXES As a limited liability company, the Company has elected to file as an S-Corporation for federal income tax purposes. Income taxes are therefore the responsibility of the individual members ofthe Company. Management is not aware of any uncertain tax positions. The Company accounts for any potential interest or penalties related to possible future liabilities for unrecognized income tax benefits as interest/other expense. The Company is no longer subject to examination by tax authorities for federal, state or local income taxes for periods before 2016. ## NOTE 3 - CLEARING AGREEMENT AND OFF-BALANCE-SHEET RISK The Company's customers may sell securities that they do not currently own (short sales) and will therefore be obligated to purchase such securities at a future date. However, since the Company enters into these transactions solely for the benefit of its customers, the Company does not bear any of the credit or market risk associated with them, with the exception of risk to the Company should its customers fail to honor their obligations related to the foregoing transactions, as mentioned below. {7}------------------------------------------------ # NOTES TO FINANCIAL STATEMENTS #### YEAR ENDED SEPTEMBER 30. 2020 # NOTE 3 - CLEARING AGREEMENT AND OFF-BALANCE-SHEET RISK- continued In order to facilitate the above transactions, as well as other securities transactions, the Company has entered into an agreement with another broker/dealer (Clearing Broker/dealer) whereby the Company forwards (introduces) customer securities transactions to the Clearing Broker/dealer, fully disclosing the customer name and other information. The processing and, if applicable, any fmancing pertaining to the introduced securities transactions are performed by the Clearing Broker/dealer. The customer account is therefore maintained and recorded in the books and records of the Clearing Broker/dealer on the Company's behalf. In consideration for introducing customers to the Clearing Broker/dealer, the Company receives commissions and other consideration, less the processing and other charges of the Clearing Broker/dealer. As part of the terms of the agreement between the Company and Clearing Broker/dealer, the Company is held responsible for any losses arising when the customers introduced by the Company to the Clearing Broker/dealer fail to meet their contractual commitments pertaining to the purchase, sale and possible financing of securities transactions. The Company may therefore be exposed to off-balance-sheet risk in the event the customer is unable to fulfill its contracted obligations and it is necessary for the Clearing Broker/dealer to purchase or sell the securities at a loss. The Company's exposure to risk would consist of the amount of the loss realized and any additional expenses incurred pertaining to the transaction or other customer activity. According to the terms of the aforementioned agreement, the Company is required to maintain a \$20,000 deposit with Clearing Broker/dealer. This amount is included in receivable from broker/dealers on the statement of fmancial condition. Monthly minimum and termination charges are included therein. The Company is also prohibited from entering into an agreement with another broker/dealer to perform similar services without prior written approval from the Clearing Broker/dealer. # NOTE 4- NOTES PAY ABLE On May 11, 2020, the Company received a \$29,100 loan under the Paycheck Protection Program ("PPP"). Certain amounts of this loan may be forgivable based on the terms of the PPP. Based on current projections the Company estimates that substantially all of the loan will be forgivable under the provisions of the PPP. The remaining balance will convert to a two-year loan at 1% and mature in May 2022. Payments of principal and interest can be extended to ten months from the date the Small Business Administration {"SBA") remits the loan forgiveness amount. {8}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS #### YEAR ENDED SEPTEMBER 30. 2020 ### NOTE 5 - NET CAPITAL REQUIREMENTS As a registered broker/dealer and member of the FINRA, the Company is subject to the SEC Uniform Net Capital Rule (rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 1500%. At September 30, 2020, the Company's net capital and required net capital were \$138,784 and \$5,000 respectively. The ratio of aggregate indebtedness to net capital was 12%. #### NOTE 6 - OPERATING AGREEMENT The Company's operating agreement places certain restnct10ns on the transfer of ownership interests. Additional information is included therein. # NOTE 7-RELATED PARTY TRANSACTIONS The Company occupies office space leased by one of its members. The Company reimbursed the member approximately \$1 1,000 in rental expense. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.