# LSH PARTNERS SECURITIES LLC X-17A-5 (2020-02-28) — Broker-dealer annual report - Company: LSH PARTNERS SECURITIES LLC - Form: X-17A-5 - Filed: 2020-02-28 - Period: 2019-12-31 - Accession: 0001385971-20-000005 - CIK: 1681732 - File #: 8-69817 - Material weakness: No - Auditor: Raich, Ende & Malter Co., LLP - Auditor location: New York, NY - Contact: Chad Kirschenblatt - Phone: 5162229111 - Signed by: James Kempner (President) Original filing: https://www.sec.gov/Archives/edgar/data/1681732/000138597120000005/lshpublic19.pdf --- {0}------------------------------------------------ # PARTNE SEC RITIES, LLC # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2019 {1}------------------------------------------------ UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 # ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill OMS APPROVAL OMS Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours oar resconse ..•••• 12.00 | SEC FILE NUMBER | |-----------------| | &-69817 | 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 | ___
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AND ENDING _1_2_/3_1_/2_0_1_9 | | |-----------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------|-------------------------------------------|--| | | MM/DD/VY | | MMIDDIYY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: | LSH Partners Securities, LLC
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | OFFICIAL USE ONLY | | | | | | FIRM 1.0. NO. | | | 152 West 57th Street,
5th floor | | | | | | New York | (No. and Street) | | | | | | NY | 10019 | | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Chad Kirschenblatt | | | 516.222.9111 | | | | | | (Area Code Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Raich, Ende & Malter Co. LLP | | | | | | | {Name - if individ11a/, state last, first, middle name) | | | | | 1375 Broadway | New York | NY | 10018 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | l./lcertified Public Accountant | | | | | | | | | | | | B 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 mus/ be supported by a statement of facts and circumstances relied* 011 *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 OMB control number. SEC 1410 (06-02) {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | | l, __________
J_a_m_e_s_L_._K_e_m_p~n_e_r | ______________
, swear (or affirm) that, to the best of | |---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------| | | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the finn of | | | LSH Partners Securities, LLC
_____
________ | ·----.as | | of | o_e_c_e_m_b_e_r_3_1 | ~2019
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 ofa customer, except as follows: | | | | | | | | | | | | | | | | | | | | | Title | | | ~Of)eri{'<- | | | | Notary Public | Lori A Dowe
NOTARY PUBLIC, STATE OF NEW YORK | | | | Regis1ralion No. 4868323 | | | This report** contains (check all applicable boxes): | Qualified In New Yori< Ccun | | | Ii] (a) Facing Page. | Commission Expires August 18, | | 0 | l&l (b) Statement of Financial Condition.
(c) Statement of Income (Loss). | | | 0 | (d) Statement of Changes in Financial Condition. | | | 0 | (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. | | | 0 | (g) Computation of Net Capital. | | | 0
0 | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule J 5c3-3. | | | 0
G) | | A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule l Sc3-l and the | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | 0 | | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | consolidation. | | | li1J | (I) An Oath or Affirmation. | | 0 (m) A copy of the SIPC Supplemental Report. **D (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit.** *••For conditions of confidential treatment of certain portions of this filing, see section 240.* I *7a-5(e}(3).* {3}------------------------------------------------ # **DECEMBER** 31, **2019** #### **TABLE OF CONTENTS** | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|------| | | Page | | Statement of Financial Condition 1 | | | Notes to Financial Statement 2-6 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) **1375 Broadway, 15th Floor New York, New York 10018 212.944.4433 212.944.5404 jfax) cpa®rent·co.com** #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Managing Member of LSH Partners Securities, LLC New York, New York #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of LSH Partners Securities, LLC as of December 31, 2019, and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of LSH Partners Securities, LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of LSH Partners Securities, LLC's management. Our responsibility is to express an opinion on LSH Partners Securities, 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 LSH Partners Securities, 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 statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. RAICH ENDE MALTER & CO. LLP We have served as LSH Partners Securities, LLC's auditor since 2017. New York, New York February 28, 2020 ![](_page_4_Picture_13.jpeg) {5}------------------------------------------------ # PARTNERS LLC #### STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2019 #### ASSETS | Cash | \$
250,655 | |---------------------------------------|---------------| | Accounts receivable | 387,052 | | Prepaid expenses | 35,472 | | | | | Total assets | \$
673,179 | | | | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities: | | | Due to member | \$
109,298 | | Accounts Payable | 2,405 | | Total liabilities | 111,703 | | Member's equity | 561,476 | | Total liabilities and member's equity | | | | 673,179
\$ | The accompanying notes are an integral part of this financial statement {6}------------------------------------------------ # PARTNERS SECURITIES, NOTES TO THE FINANCIAL STATEMENT # DECEMBER 31, 2019 # 1. ORGANIZATION AND DESCRIPTION OF BUSINESS LSH Partners Securities, LLC (the "Company") is wholly-owned by LSH Partners, LLC (the "Member"). The Company was organized on May 31, 2016 as a Delaware limited liability company and is registered to do business in New York as a foreign limited liability company. The Company is a registered broker-dealer under the Securities Exchange Act of 1934 and is a member of both the Financial Industry Regulatory Authority, Inc. ("FINRA") and the Securities Investors Protection Corporation ("SIPC") as of November 15, 2016. The operating agreement provides for the limited liability company to exist in perpetuity. The member's limit on liability is based on the relevant state law. The Company renders financial advisory services to selected clients with respect to capital raising, business restructurings and other financial services. The Company operates under the exemptive provisions of paragraph (k)(2)(i) of Rule 15c3- 3 of the Securities Exchange Act of 1934 which provides that the Company carries no margin accounts, promptly transmits all customers' funds and delivers all securities received in connection with the Company's activities as a broker or dealer, and does not otherwise hold funds or securities for, or owe money or securities to customers. #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES # *Basis of presentation* The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). # *Use of estimates* The preparation of financial statements in conformity with U.S. 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. #### *Revenue recognition* In accordance with ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASC Topic 606") revenues from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied *over* time is recognized by measuring the Company's progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. {7}------------------------------------------------ # PARTNERS #### NOTES TO THE FINANCIAL STATEMENT #### DECEMBER 31, 2019 #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES *(continued)* #### *Revenue recognition (continued)* The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services (i.e., the "transaction price"). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any. The Company provides advisory services on mergers and acquisitions (M&A). Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgment is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities. As part of their corporate advisory work the Company will earn a success fee to assist clients with capital raising which includes introducing potential investors and or assisting in the sale of the company or the private placement of securities in furtherance of a capital raise. Management believes that the performance obligation is satisfied on the closing date of the transaction, which is when the pricing is agreed upon. Retainers received may be deducted when determining the success fee. Retainers and other fees received from clients before recognizing revenue are reflected as deferred revenues. Advisory fees and success fees were earned over time and point in time, respectively for the year ended December 31, 2019. The following table provides information about receivables and contract liabilities from contracts with customers: | | December31 | | | | |----------------------------------------------------------------|------------|--------|------|------------| | | 2018 | | 2019 | | | Accounts receivable | \$ | 10,000 | | \$ 387,052 | | Contract liabilities, which were included in deferred revenues | \$ | 25,000 | \$ | | {8}------------------------------------------------ # PARTNERS # **NOTES TO THE FINANCIAL STATEMENT** **DECEMBER 31, 2019** ### 2. **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** *(continued)* ### *Accounts Receivable* Accounts receivable are reported net of an allowance for doubtful accounts. The allowance is based on management's estimate of the amount of receivables that will actually be collected. Management determined that at December 31, 2019, an allowance for doubtful accounts was not necessary, # *Valuation of Investments at Fair Value* The Company applies the provisions of ASC 820, Fair Value Measurements, which, among other matters, requires disclosures about investments that are measured and reported at fair value. ASC 820 establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Management reviews on a periodic basis financial information to determine the fairness of the valuation inputs obtained for any level 3 investment. Investments measured and reported at fair value are classified and disclosed in one of the following categories: *Level 1* - Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. *Level 2* - Observable inputs other than the quoted prices in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the prices for similar assets and liabilities and other observable information that can be corroborated by market data. *Level* 3 - Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the management's own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available. The Company did not have any investments at December 31, 2019. {9}------------------------------------------------ #### **NOTES TO THE FINANCIAL STATEMENT** **DECEMBER 31, 2019** #### **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** *[continued)* #### *Income taxes* As a wholly-owned limited liability company, the Company is considered to be a disregarded entity for tax reporting purposes and is thus not subject to Federal, state or local income taxes and does not file income tax returns in any jurisdiction. All items of income, expense, gains and losses are reportable by the Member for tax purposes. The Company has no unrecognized tax benefits at December 31, 2018. However, the Company may be liable to the Member for its share of the allocable income subject to New York City unincorporated business tax. ### *Uncertain tax positions* The Company applies the provisions of ASC 7 40 "Income Taxes" as they relate to uncertain tax positions. The Company was not required to recognize any amounts from uncertain tax positions as of December 31, 2019. The Company's conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof as well as other factors. In the event that tax authorities assess interest and penalties on unrecognized tax benefits, the Company will reflect such amounts in tax expense and income taxes payable ## *Adoption of new accounting standard* Effective January l, 2019, the Company adopted the new lease accounting guidance in Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASC Topic 842"). The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for its existing operating lease as an operating lease under the new guidance, without reassessing (a) whether the contract contains a lease under ASC Topic 842, (b) whether classification of the operating lease would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments (as of December 31, 2019) would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. The Company defines a short-term lease as a lease that, at the commencement date, has a lease term of 12 months or less and does not contain an option to purchase the underlying asset that the lease is reasonably certain to exercise. The Company elected to recognize short-term lease payments as an expense on a straight-line basis over the lease term. Related variable lease payments are recognized in the period in which the obligation is incurred. The Company's lease obligations are deemed to be short term. As such, there was no impact on the financial statements upon adoption. {10}------------------------------------------------ # PARTNERS SECURITIES, # **NOTES TO THE FINANCIAL STATEMENT** # **DECEMBER 31, 2019** #### 3. **CONCENTRATION OF CREDIT RISK** The Company's cash deposits are held by one financial institution and therefore, are subject to credit risk to the extent those balances exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of \$250,000. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on cash. #### **4. RELATED PARTY TRANSACTIONS** Pursuant to an expense sharing agreement, the Company reimburses the member for allocated salaries, rent and communication expenses paid for by the Member. These charges are updated periodically, and determined based on percentages of personnel time and other factors. For the year ended December 31, 2019, pursuant to a unanimous written consent, the Member of the Company made non-cash capital contributions of \$400,000 by forgiving debt incurred by the Company to the Member. In addition, the Member received a distribution of securities from the Company in the amount \$25,000 which did not result in any gain or Joss to the Company for the year ended December 31, 2019. The Company has recorded a due to member in the amount of \$109,298 related to unpaid allocated expenses as of December 31, 2019. Amounts due to member are non-interest bearing and are due on demand. #### 5. **NET CAPITAL REQUIREMENTS** The Company is subject to the uniform net capital requirements of Rule 15c3-1 ("The Rule") of the Securities and Exchange Act, as amended, which requires the Company to maintain, at all times, sufficient liquid assets to cover indebtedness. In accordance with the Rule, the Company is required to maintain defined minimum net capital of the greater of \$5,000 or 6 2/3% of aggregate indebtedness. At December 31, 2019, the Company had net capital, as defined, of \$123,952, which exceeded the required minimum net capital of \$7,447 by \$116,505. Aggregate indebtedness at December 31, 2019 totaled \$111,703. The Company's percentage of aggregate indebtedness to net capital was 90.12%. #### **6. SUBSEQUENT EVENTS** Management of the Company has evaluated events and transactions that have occurred through February 28, 2020, the date these financial statements were available to be issued and determined that there are no material events that would require disclosures in the Company's financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.