# CABRILLO BROKER, L.L.C. X-17A-5 (2019-02-13) — Broker-dealer annual report - Company: CABRILLO BROKER, L.L.C. - Form: X-17A-5 - Filed: 2019-02-13 - Period: 2018-12-31 - Accession: 0001377503-19-000001 - CIK: 1377503 - File #: 8-67438 - Material weakness: No - Auditor: Bauer & Company LLC - Auditor location: Austin, TX - Contact: Chaiming Lin - Phone: 858-452-9500 - Website: bauerandcompany.com - Signed by: Chaiming Lin (Principal/CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1377503/000137750319000001/dec18_cabrillo_audit_v4.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response ... 12.00 > SEC FILE NUMBER 8-67438 | 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 ---~0~1/ | ~0=1/~1~8 | __
AND ENDING | 12/31/18 | |--------------------------------------------------------------------------|------------------------------------------------|------------------|--------------------------------| | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER -
DEALER: | CABRILLO BROKER, LLC | | | | | | | OFFICIAL USE ONLY | | | | | FIRM ID. NO. | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | 128 S. Oakhurst Dr. Unit 4 | | | | | | (No. and Street) | | | | Beverly Hills | CA | | 90212 | | (City) | (State) | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | Chaiming G. Lin | | | (858) 452-9500 | | | | | (Area Code -
Telephone No.) | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | Bauer & Company, LLC | | | | | (Name - | if individual, state last, first, middle name) | | | | P.O. Box 27887 | Austin | TX | 78755 | | (Address) | (City) | (State) | (Zip Code) | | CHECK ONE: | | | | | ~ Certified Public Accountant | | | | | D
Public Accountant | | | | | D
Accountant not resident in United States or any of its possessions. | | | | | | | | | | | FOR OFFICIAL USE ONLY | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See section 240.l 7a-5(e)(2).* SEC 1410 (06-02) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** I, Channing G. Lin , swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statements and supporting schedules pertaining to the firm of Cabrillo Broker, LLC , as of December 31, 2018, 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: None Notary Public **This report contains (check all applicable boxes):** - (x) (a) Facing page. - (x) (b) Statement of Financial Condition. - (x) (c) Statement of Income (Loss). - (x) (d) Statement of Cash Flows. - (x) (e) Statement of Changes in Stockholders' Equity. - ( ) (f) Statement of Changes in Subordinated Liabilities (not applicable) - (x) (g) Computation of Net Capital Pursuant to Rule 15c3-1 under the Securities Exchange Act of 1934. - ( ) (h) Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934. (not applicable) - ( ) (i) Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934 (not applicable). - (x) (j) A Reconciliation, including Appropriate Explanations, of the Computation of Net Capital Under Rule l 5c3-1 and the Computation for Determination of the Reserve Requirements Under Rule 15c3-3 - ( ) (k) A Reconciliation Between the Audited and Unaudited Consolidated Statements of Financial Condition With Respect to Methods of Consolidation (not applicable). - (x) (1) An Oath or Affirmation. - (x) (m) A Copy of the SIPC Supplemental Report. - (x) (n) Report on management's assertion letter regarding 15c3-3 Exemption Report - (x) (o) Management's assertion letter regarding 15c3-3 Exemption Report | State of Califo'.(lia
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,t,,.; C::!) | | | | ----------"'!' | - | i'-n-r- , proved to me | | ![](_page_1_Picture_23.jpeg) {2}------------------------------------------------ # CABRILLO BROKER, LLC # Financial Statements and Supplemental Schedules With Report of Independent Registered Public Accounting Firm December 31, 2018 {3}------------------------------------------------ # CABRILLO BROKER, LLC Index to Financial Statements and Supplemental Schedules December 31, 2018 | Report of Independent Registered Public Accounting Firm | 1 | |---------------------------------------------------------------------------------------------|----| | | | | FINANCIAL STATEMENTS | | | Statement of Financial Condition | 2 | | Statement of Operations | 3 | | Statement of Changes in Member's Equity | 4 | | Statement of Cash Flows | 5 | | Notes to the Financial Statements | 6 | | SUPPLEMENTAL SCHEDULES | | | I. Computation of Net Capital and Aggregate Indebtedness Under Rule 15c3-1 | 10 | | IL Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3 | 11 | | III.Information Relating to the Possession or Control Requirements Pursuant to Rule 15c3-3 | 12 | | Report of Independent Registered Public Accounting Firm on Management's
Exemption Report | 13 | | Management's Assertion of Exemption | 14 | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Member of Cabrillo Broker, LLC #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Cabrillo Broker, LLC as of December 31 , 2018, the related statements of operations, changes in member's equity, and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Cabrillo Broker, LLC as of December 31 , 2018, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of Cabrillo Broker, LLC's management. Our responsibility is to express an opinion on Cabrillo Broker, LLC'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 Cabrillo Broker, 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 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 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. #### **Supplemental Information** The Computation of Net Capital Pursuant to Rule 15c3-l (Schedule I), the Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3 (Schedule II) and the Information Relating to the Possession or Control Requirements Pursuant to Rule 15c3-3 (Schedule III) (collectively, the "Supplemental Information") has been subjected to audit procedures performed in conjunction with the audit of Cabrillo Broker, LLC's financial statements. The supplemental information is the responsibility of Cabrillo Broker, LLC's management. Our audit procedures included determining whether the Supplemental Information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the Supplemental Information. In forming our opinion on the Supplemental Information, we evaluated whether the Supplemental Information, including its form and content, is presented in conformity with 17 C.F.R. §240.l 7a-5. In our opinion, the Supplemental Information is fairly stated, in all material respects, in relation to the financial statements as a whole. **BAUER & COMPANY, LLC** We have served as Cabrillo Broker, LLC's auditor since 2015. Austin, Texas February 12, 2019 Bauer & Company, LLC 5910 Courtyard Drive #230 Austin, TX 78731 Tel 512.731.3518 / www.bauerandcompany.com {5}------------------------------------------------ # CABRILLO BROKER, LLC Statement of Financial Condition December 31, 2018 #### ASSETS | Cash and cash equivalents | \$
31,887 | |------------------------------------------------------|--------------| | Accounts receivable from affiliates | 1,296 | | Prepaid assets | 1,195 | | Total assets | \$
34,378 | | LIABILITIES AND MEMBER"S EQUITY | | | Liabilities
Accounts payable and accrued expenses | \$ | | Total liabilities | | | Mem ber"s equity | 34,378 | | Total liabilities and member"s equity | \$
34,378 | {6}------------------------------------------------ # CABRILLO BROKER, LLC Statement of Operations December 31, 2018 | Revenues | | | |-------------------------------------------------|----|--------| | Investment banking advisory and consulting fees | \$ | | | Investment banking retainers | \$ | | | Total revenues | | | | | | | | Expenses | | | | Related party administrative expenses | | 7,000 | | Outside services | | 6,850 | | Professional fees | | 12,016 | | Professional development | | 1,136 | | Regulatory fees | | 2,344 | | Other expenses | | 335 | | Total expenses | | 29,681 | | | | | | Net loss | \$ | 29,681 | {7}------------------------------------------------ # CABRILLO BROKER, LLC Statement of Changes in Member's Equity December 31, 2018 | Balance, beginning of year | \$
24,059 | |----------------------------|--------------| | Contributions | 40,000 | | Net loss | {29,681) | | Balance, end of year | \$
34,378 | {8}------------------------------------------------ # CABRILLO BROKER, LLC Statement of Cash Flows December 31, 2018 | Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to cash used in operating activities
Changes in operating assets and liabilities | \$
(29,681) | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------| | Accounts receivable due from affiliates
Prepaid assets | 15,604
205 | | Net cash used in operating activities | (13,872) | | Cash flows provided by financing activities
Contributions | 40,000 | | Net cash provided by financing activities | 40,000 | | Net increase in cash | 26,128 | | Cash and cash equivalents, beginning of year | 5 759 | | Cash and cash equivalents, end of year | \$
31,887 | | | | | Supplemental disclosure of cash flow information:
Income taxes paid | \$ | | Interest paid | \$ | {9}------------------------------------------------ # CABRILLO BROKER, LLC Notes to Financial Statements December 31, 2018 ## 1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES The Company. Cabrillo Broker, LLC (the "Company") is a Texas limited liability company. *The Business.* The Company is a registered broker-dealer licensed by the United States Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority. The Company provides investment banking services primarily to emerging and middle market companies. These services include consultation and assistance with private offerings of equity and debt securities, mergers, acquisitions, divestitures, joint ventures, and other corporate finance transactions. *Liquidity and Capital Resources.* The Company's prospects are subject to certain risks, expenses and uncertainties frequently encountered by companies in rapidly evolving markets. These risks include the failure to market the Company's offerings, as well as other risks and uncertainties. The Company has historically funded its operations through investment banking services and equity contributions. The Company's ability to continue to generate positive cash flows depends on a variety of factors including the continued development and successful marketing of the Company's services. Management of the Company expects to be successful in maintaining sufficient working capital and will manage operations commensurate with its level of working capital. *Basis of Accounting.* These financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America. Revenues are recognized in the period earned and expenses when incurred. *Accounting Estimates.* The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. *Cash Equivalents.* For purposes of reporting cash flows, the Company has defined cash equivalents as highly liquid investments with original maturities of less than ninety days that are not held for sale in the ordinary course of business. *Revenue Recognition.* Revenue from contracts with customers includes advisory and consulting fees and retainers related to investment banking services. The recognition {10}------------------------------------------------ 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. Advisory and consulting fees related to investment banking are recognized as the related services are rendered. Nonrefundable retainers related to investment banking are recognized when billed. Costs connected with investment banking services are expensed as incurred. *Income Taxes.* Effective 2016, the Company has elected to be taxed as an \$- Corporation, which provides for all profits or losses to be reported directly on the member' personal income tax returns. As such, the Company does not pay federal corporate income taxes on its taxable income. The Company has adopted the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under FASB ASC 740-10, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status, including its status as a pass-through entity, and the decision not to file a return. The Company has evaluated each of its tax positions and has determined that it has no uncertain tax positions for which a provision or liability for income taxes is necessary. The Company files income tax returns in the U.S. in both federal and various state jurisdictions. *Concentration of Credit Risk.* The Company maintains a cash balance with a financial institution. Management performs periodic evaluations of the relative credit standing of the institution. The Company has not sustained any material credit losses from this instrument. #### *Recent Accounting Pronouncements.* Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606"). The new accounting standard, along with its related amendments, replaces the current rules-based U.S. GAAP governing revenue recognition with a principles-based approach. The Company adopted the new standard on January 1, 2018 using the modified retrospective approach, which requires the Company to apply the new revenue standard to (i) all revenue contracts entered into after January 1, 2018 and (ii) all existing revenue contracts as of January 1, 2018 through a cumulative adjustment to equity. In accordance with this approach, revenues for periods prior to {11}------------------------------------------------ January 1, 2018 will not be revised. The core principle in the new guidance is that a company should recognize revenue in a manner that fairly depicts the transfer of goods or services to customers in amounts that reflect the consideration the company expects to receive for those goods or services. In order to apply this core principle, companies will apply the following five steps in determining the amount of revenue to recognize: (i) identify the contract; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the performance obligation is satisfied. Each of these steps involves management's judgment and an analysis of the material terms and conditions of the contract. We do not anticipate that there will be material differences in the amount or timing of revenues recognized following the new standard's adoption date. Although total revenues may not be materially impacted by the new guidance, we do anticipate significant changes to our disclosures based on the additional requirements prescribed by ASC 606. These new disclosures include information regarding the significant judgments used in evaluating when and how revenue is (or will be) recognized and data related to contract assets and liabilities. ## 2. RELATED PARTY TRANSACTIONS During the year ended December 31, 2018, the Company incurred \$7,000 of administrative expenses under an expense sharing arrangement with Cabrillo Advisors, Inc. ("Advisors", an entity with common ownership). The expenses are categorized as appropriate in the accompanying statement of operations. As of December 31, 2018, the Company has a net receivable of \$1,296 from Cabrillo Advisors, Inc., which is recorded as a receivable from affiliates in the accompanying statement of financial condition. ## 3. NET CAPITAL REQUIREMENTS Under Rule 15c3-I of the Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital (as defined) and a ratio of aggregate indebtedness to net capital (as defined) not exceeding 15 to 1. The Company's ratio at December 31, 2018 was O to 1. The basic concept of the Rule is liquidity, its object being to require a broker-dealer in securities to have at all times sufficient liquid assets to cover its current indebtedness. At December 31, 2018, the Company had net capital of \$31,887, which was \$26,887 in excess of the amount required by the SEC. The Company's minimum net capital as of December 31, 2018 was \$5,000. 4. INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS FOR BROKER DEALERS PURSUANT TO RULE 15C3-3 {12}------------------------------------------------ The Company is exempt from Rule 15c3-3 under the exemptive provisions of paragraph (k)(2)(i) and, accordingly, has no possession or control requirements. 5. COMPUTATION OF DETERMINATION OF RESERVE REQUIREMENTS FOR BROKER DEALERS PURSUANT TO RULE 15c3-3 Because the Company does not hold funds or securities for the account of any customers, as defined by Securities and Exchange Commission Rule 15c3-3, no reserve is required. Consequently, a reserve requirement was not calculated and a reconciliation to that calculation is not included herein. #### 6. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date of the Report of Independent Registered Public Accounting Firm, the date the financial statements were available to be issued, and determined there are no material subsequent events requiring adjustment to or disclosure in its financial statements. \*\*\*\* {13}------------------------------------------------ #### CABRILLO BROKER, LLC # Schedule I Computation of Net Capital and Aggregate lndebetness Under Rule 15c3-1 #### December 31, 2018 | Total member's equity | \$
34,378 | |------------------------------------------------------------------------------------------------------|----------------| | Less non-allowable assets
Prepaid assets
Accounts receivable from affiliates | 1,195
1,296 | | Net capital before haircuts on security positions | 31,887 | | Less haircuts on security positions | | | Net Capital | 31,887 | | Total aggregate indebtedness | | | Computation of basic net capital requirement | | | Minimum net capital required (greater of \$5,000
or 6 2/3% of aggregate indebtedness') | \$
5,000 | | Net capital in excess of minimum requirement | \$
26,887 | | Net capital less greater of 10% of aggregate
indebtedness or 120% of minimum net capital required | \$
25,887 | | Ratio of aggregate indebtedness to net capital | 0% | The above computation does not differ from the computation of net capital under Rule 15c3-1 as of December 31, 2018 as reported by Cabrillo Broker, LLC on January 16, 2019 on Form X-17A-5. Accordingly, no reconciliation is deemed necessary. {14}------------------------------------------------ ## CABRI LLO BROKER, LLC # Schedule II Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3 ## December 31, 2018 The Company is exempt from Rule 15c3-3 under the exemptive provisions of section (k)(2)(i) and, accordingly, has no reserve requirements. Consequently, a reserve requirement was not calculated in Part II of Form X-17A-5 of this Company's FOCUS report as of December 31, 2018; and a reconciliation to that calculation is not included herein. {15}------------------------------------------------ ## CABRI LLO BROKER, LLC Schedule Ill Information Relating to the Possession or Control Requirements Pursuant to Rule 15c3-3 ## December 31, 2018 The Company is exempt from Rule 15c3-3 under the exemptive provisions of section (k)(2)(i) and, accordingly, has no possession or control requirements. {16}------------------------------------------------ ![](_page_16_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Member of Cabrillo Broker, LLC We have reviewed management's statements, included in the accompanying Exemption Report Year Ended December 31 , 2018, in which (1) Cabrillo Broker, LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Cabrillo Broker, LLC claimed an exemption from 17 C.F.R. §240.15c3-3: (2)(i) (the "exemption provisions") and (2) Cabrillo Broker, LLC stated that Cabrillo Broker, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. Cabrillo Broker, 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 Cabrillo Broker, 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 opm10n. 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 l 5c3-3 under the Securities Exchange Act of 1934. **BAUER & COMPANY, LLC** Austin, Texas February 12, 2019 {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) Cabrillo Broker, LLC (The "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d) (1) and (4). To the best of its knowledge and belief, the Company states the following: (1) The Company claimed an exemption from 17 C.F.R. § 240.15c3-3 under the following provisions of 17 C.F.R. § 240.15c3-3 (k)(2)(i) (2) The Company met the identified exemption provisions in 17 C.F.R. § 240.15c3-3(k)(2)(i) Throughout the most recent fiscal year without exception. Cabrillo Broker, LLC I, Chai ming G. Lin, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. By: Title: Lead General Securities Principal Date: 2/12/19 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.