# COMMERCE STREET CAPITAL, LLC X-17A-5 (2024-04-01) — Broker-dealer annual report - Company: COMMERCE STREET CAPITAL, LLC - Form: X-17A-5 - Filed: 2024-04-01 - Period: 2023-12-31 - Accession: 0001396145-24-000001 - CIK: 1396145 - File #: 8-67606 - Type: Broker-dealer - Material weakness: No - Auditor: Eisner Amper LLP - Auditor location: New York, NY - Contact: Bobby Hashaway - Phone: 214-545-6813 - Email: bmaimo@cstreetholdings.com - Website: cstreetholdings.com - Signed by: Bobby Hashaway (Executive Vice President) Original filing: https://www.sec.gov/Archives/edgar/data/1396145/000139614524000001/csc2023auditshort.pdf --- {0}------------------------------------------------ | | UNITED STATES | | OMB APPROVAL | | |------------------------------------------------------------|--------------------------------------------------------------------|-----------------------|------------------------------------------------------|--| | | OMB Number: 3235-0123
SECURITIES AND EXCHANGE COMMISSION | | | | | Washington, D.C.
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30, 2026
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12 | | | | ANNUAL
REPORTS | | SEC FILE NUMBER | | | X-17A-5
FORM | | | 8-67606 | | | | III
PART | | | | | | | | | | | Information Required Pursuant to Rules 17a-5, | FACING PAGE
17a-12,
and lSa-7 | | under the Securities Exchange Act of 1934 | | | | 01/01/2023 | | 12/31/2023 | | | FILING FOR THE PERIOD BEGINNING | | AND ENDING | | | | | MM/DD/YY | | MM/DD/YY | | | | A.
REGISTRANT IDENTIFICATION | | | | | Commerce
NAME OF FIRM: | Street
Capital,
LLC | | | | | | | | | | | TYPE OF REGISTRANT (check all applicable | boxes): | | | | | I l
Security-based
Broker-dealer | swap dealer
Major | security-based swap | participant | | | Check here if respondent is also an OTC derivatives dealer | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: | (Do not
use a P.O. | box no.) | | | | Ste.
Ross
Ave.,
1445 | 2700 | | | | | | (No. and Street) | | | | | Dallas | Texas | | 75202 | | | (City) | (State) | | (Zip Code) | | | | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Bobby
Hashaway | 214-545-6813 | | bmaimo@cstreetholdings.com | | | (Name) | (Area Code -Telephone
Number)
(Email Address) | | | | | | B.
ACCOUNTANT IDENTIFICATION | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports | are contained | filing*
in
this | | | | EisnerAmper
LLP | | | | | | | (Name -if
individual,
state last,
first, and middle name) | | | | | Third
733
Avenue | New
York | NY | 10017 | | | | (City) | (State) | (Zip Code) | | | (Address) | | 274 | | | | 9/29/2003 | | | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAQB Registration Number,if
applicabIe) | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | A. \* > **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.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | Bobby Hashaway , swear (or affirm) that, to the best of my knowledge and belief, the *j* as of financial report pertaining to the firm of Commerce Street Capital, LLC is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be,has any proprietary interest in any account classified solely 12/31 , 2 ^ 23 as that of a customer. ![](_page_1_Picture_3.jpeg) Signature: Title: Executive Vice President #### **This filing\*\* contains (check all applicable boxes):** - H (a) Statement of financial condition. - @ (b) Notes to consolidated statement of financial condition. - I I (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 § 210.1-02 of Regulation S-X). - II (d) Statement of cash flows. - IJ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - (f) Statement of changes in liabilities subordinated to claims of creditors. - I 1 (g) Notes to consolidated financial statements. - I J (h) Computation of net capital under 17 CFR 240.15c3-lor 17 CFR 240.18a-l, as applicable. - [ I (i) Computation of tangible net worth under 17 CFR 240.18a-2. - [ I (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - I 1 (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - I 1 (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - [ 1 (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - LI (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - f I (o) Reconciliations,including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-l, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable,if material differences exist, or a statement that no material differences exist. - LJ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - H (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a -7, as applicable. - I 1 (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - H ( t) Independent public accountant's report based on an examination of the statement of financial condition. - (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - I 1 (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ! 1 (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - I 1 (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - U (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - (z) Other: \*\*76 *request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.ISa-7(d)(2), as applicable.* {2}------------------------------------------------ STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2023 {3}------------------------------------------------ ### **CONTENTS** | DECEMBER 31, 2023 | | |------------------------------------------------------------|-----| | Report of Independent Registered
Public Accounting Firm | 1 | | Financial Statement | | | Statement of Financial Condition | 2 | | Notes to Statement of Financial
Condition | 3-9 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of Commerce Street Capital, LLC #### *Opinion on the Financial Statement* We have audited the accompanying statement of financial condition of Commerce Street Capital, LLC (the "Company") as of December 31, 2023 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 the Company as of December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. #### *Going Concern* The accompanying financial statement has been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statement, the Company generated a net loss of \$2.9 million and net cash outflows from operations of \$0.25 million for the year ended December 31, 2023, that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statement does not include any adjustments that might result from the outcome of this uncertainty. #### *Basis for Opinion* This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 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 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. We have served as the Company's auditor since 2015. EISNERAMPER LLP New York, New York March 28, 2024 "EisnerAmper" is the brand name under which EisnerAmper LLP and Eisner Advisory Group LLC and its subsidiary entities provide professional services. EisnerAmper LLP and Eisner Advisory Group LLC are independently owned firms that practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law,regulations and professional standards. EisnerAmper LLP is a licensed CPA firm that provides attest services, and Eisner Advisory Group LLC and its subsidiary entities provide tax and business consulting services. Eisner Advisory Group LLC and its subsidiary entities are not licensed CPA firms. {5}------------------------------------------------ ### **STATEMENT OF FINANCIAL CONDITION** | DECEMBER
31, 2023 | | |--------------------------------------------------------------------------------------------|-----------------| | ASSETS | | | Cash | \$
1,352,531 | | net
Accounts
receivable, | 550,367 | | Furniture
and
equipment,
net
of
accumulated
depreciation
of \$471,128 | 54,197 | | Lease
right-of-use
assets | 2,173,309 | | Prepaid
expenses | 72,493 | | | \$
4,202,897 | | LIABILITIES
AND
MEMBER'S
CAPITAL | | | Liabilities | | | Lease
liabilities | \$
2,980,070 | | Other
liabilities | 276,840 | | Total
liabilities | 3,256,910 | | Member's
Capital | 945,987 | | | \$
4,202,897 | See *accompanying notes to statement of financial condition* {6}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** #### **December 31, 2023** #### **1. Nature of Business and Summary of Significant Accounting Policies** #### *Nature of Business* Commerce Street Capital, LLC (the "Company") is a limited liability company organized under the laws of the state of Texas on January 18, 2007. The Company is a wholly owned subsidiary of Commerce Street Holdings, LLC ("CSH" or the "Parent"). CSH is a multi-member LLC. The Company is a registered broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company's primary business is investment banking services including private placement transactions and other financial advisory services. #### *Basis of Presentation* #### *Going Concern* The accompanying statement of financial condition is prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists. Primarily due to a decline in revenue, the Company generated a net loss of \$2.9 million and net cash outflows from operations of \$0.25 million for the year ended December 31, 2023. The Company will require additional liquidity from other sources to continue its operations over the next 12 months. The Company's liquidity needs will be largely determined by the success of its existing pipeline of customer contracts and its ability to decrease expenses. The Company is evaluating additional strategies to obtain the required additional funding for its operations. These strategies may include, but are not limited to, obtaining equity financing through additional capital contributions by its member, issuing debt or entering into other financing arrangements. However, the Company may be unable to access such additional capital or debt financing when needed. Accordingly, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The statement of financial condition does not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. #### *Revenue from Contracts with Customers* Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied over time or at a point in time. 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. 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. {7}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** #### **December 31, 2023** #### **1. Nature of Business and Summary of Significant Accounting Policies** #### *Revenue from Contracts with Customers (continued)* The amount of revenue recognized reflects the consideration to which the Company expects to be entitled 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. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of the Company's influence, such as market volatility or the judgment and actions of third parties. The Company earns revenue from contracts with customers and other sources. #### *Investment Banking Revenues* Investment banking revenues include fees earned from providing advisory services for merger-and-acquisition transactions, private placement, and related financial advisory work. Revenue is recorded when services are provided and/or when transactions close, or the contract is cancelled as specified by the terms of the contract. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are provided by the Company and consumed by the customer.In some circumstances, significant judgement 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 revenues are reflected as contract liabilities. At December 31, 2022 and 2023, the contract liabilities amounted to approximately \$285,000 and \$185,000 respectively, which was included in other liabilities on the statement of financial condition. #### *Furniture and Equipment* Furniture and equipment are stated at cost less accumulated depreciation. Depreciation is provided using the straightline method over the estimated useful lives of the assets, generally three to seven years. #### *Income Taxes* The Company is a single member limited liability company and thus is treated as a disregarded entity for income tax reporting purposes. All the tax on income or loss of the Company is borne by its member. Accordingly, the Company has not provided for income taxes. At December 31, 2023, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. #### *Use of Estimates* The preparation of statement of financial condition in conformity with U.S. GAAP requires the Company's management to make estimates and assumptions that affect the amounts disclosed in the statement of financial condition. Actual results could differ from those estimates. {8}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** #### **December 31, 2023** #### **1. Nature of Business and Summary of Significant Accounting Policies (continued)** #### *Leases* Operating leases with terms longer than 12 months are recognized as lease assets and lease liabilities in the statement of financial condition. The Company does not have any finance leases. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments. As the rates implicit in the Company's leases are not readily determinable, the Company uses its derived incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments. The determination of an appropriate incremental borrowing rate requires judgment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability, less the unamortized balance of lease incentives received. Lease cost for lease payments is recognized on a straight-line basis over the lease term. #### *Credit Losses* The Company measures the credit loss on financial instruments in accordance with Accounting Standards Update ("ASU") No 2016-13 that requires management's measurement of current expected credit loss ("CECL") to be based on past events, current conditions, and a broad spectrum of future considerations. Refer to Note 2 for CECL estimated for the year 2023. #### *Financial instruments* The following table presents the carrying values and estimated fair values at December 31, 2023 of financial assets and liabilities, and information is provided on their classification within the fair value hierarchy. At December 31, 2023, the carrying values of the Company's financial instruments approximate their fair value. | Asset | Carrying Value | Level
1 | Level
2 | Level | 3 Total
Estimated Fair
Value | |--------------------------------|----------------|------------|------------|-------|------------------------------------| | Cash | 1,352.531 | 1,352.531 | | | 1,352.531 | | receivable,
Accounts
net | 550,367 | | 550.367 | | 550.367 | | Other liabilities | 276,840 | | 276.840 | | 276,840 | {9}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** #### **December 31, 2023** #### **2. Accounts Receivable** The Company's accounts receivable, which primarily consist of balances due from customers for investment banking services, are carried at amortized cost less the allowance for credit losses. Accounts receivable are generally due upon receipt. Account balances outstanding longer than the contractual payment terms are considered past due. The credit risk associated with receivables is that any customers with which it conducts business is unable to fulfill contractual obligations. The allowance for credit losses is based on the Company's expectation of the collectability of such receivables utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with receivables is not significant until it is past due based on the contractual arrangement and expectation of collection in accordance with industry standards. The Company records an estimated allowance for credit loss for any balances that are deemed to be uncollectible. Management monitors the credit risk of customers, including historical experience, current conditions, reasonable assurance and supportable forecasts to determine expected credit loss. The Company had net accounts receivable of \$1,971,551 and \$550,367 outstanding, net of allowance for credit losses of \$54,000 and \$0 as of December 31, 2022, and December 31, 2023, respectively. #### **3. Related Party** The Company has an expense sharing agreement with CSH. Pursuant to this agreement 1) CSH will pay on behalf of the Company primarily all its direct expenses and the Company will reimburse CSH 100% of such expenses; 2) the Company will share certain personnel, personal property and general and administrative expenses with CSH and will be allocated its proportional share of such expenses. At December 31, 2023, there was no balance due from or due to Parent. During the year ended December 31, 2023, certain employees of CSH, as well as members of CSH, were independent passive investors in investment banking customers. #### **4. Furniture and Equipment** Furniture and equipment as of December 31, 2023, is as follows: | | Acquisition
Cost | | Accumulated
Depreciation | | Net
Book
Value | | |------------------------------------------|---------------------|---------|-----------------------------|-----------|----------------------|--------| | Computers
and
related
equipment | \$ | 395,237 | \$ | (341,038) | \$ | 54,197 | | Furniture
and
fixtures | | 130,088 | | (130,088) | | | | | \$ | 525,325 | \$ | (471,128) | \$ | 54,197 | {10}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** ### **December 31, 2023** ### **4. Furniture and Equipment (continued)** An analysis of the accumulated depreciation for the year ended December 31, 2023, is as follows: | Beginning
of year | \$ 449,970 | |-------------------------|------------| | Depreciation
expense | 21158 | | End
of
year | \$ 471,128 | #### **5. Net Capital Requirement** The Company, as a member of FINRA, is subject to the Securities and Exchange Commission Uniform Net Capital Rule 15c3-1. This Rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2023, the Company's net capital was \$268,930 which was \$168,930 in excess of its minimum requirement of \$100,000. The Company's ratio of aggregate indebtedness to net capital was 4.03 to 1. #### **6. Concentrations of Credit Risk** The Company maintains its cash balances in one financial institution. These balances are insured by the Federal Deposit Insurance Corporation ("FDIC") for up to \$250,000 per institution. As of December 31, 2023, approximately \$1,102,000 of the Company's cash was in excess of the FDIC insurance limits. ### **7. Leases** The Company and Commerce Street Investment Advisor, LLC (dba Commerce Street Investment Management) ("CSIA") have jointly entered into an operating lease for office space which expires November 30, 2029. The Company also has operating leases for certain office equipment which ended in 2023. Under the terms of the office lease, payments escalate annually based on a predetermined payment schedule. The effects of the escalated rent payments and all other terms of the lease are being captured to report rent on a straight-line basis over the life of the lease. The Company bears approximately 70% of the lease commitments. Per the lease agreement, the Company can utilize credit of approximately \$830,000 for improvements, construction, paying rent and other uses. The Company utilized the remaining available credit of approximately \$100,000 in the current year. As such, as of December 31, 2023, the Company has utilized all of the available credit. {11}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** #### **December 31, 2023** #### **7. Leases (continued)** The following is a schedule of the Company's portion of approximate future minimum lease commitments, required under the lease on an undiscounted basis, reconciled to the respective lease liabilities at December 31, 2023: | 2024
2025
2026
2027
2028 | \$
558,969
569,203
579,643
590,292
601,153 | |-------------------------------------------------------------|-----------------------------------------------------------| | Thereafter | 560,351 | | Total | 3,459,611 | | Less: imputed
interest | (479,541) | | 31,
Lease
liabilities
as
of
December
2023 | \$
2,980,070 | Supplemental information related to leases is as follows: | Remaining
lease
term (in
years) | 5.92 | |------------------------------------------|-------| | Discount
rate | 5.17% | #### **8. Sublease** The Company and CSIA have entered into a sub-lease agreement with a sub-tenant commencing on December 1, 2015. Under this sub-lease, payment escalates annually based on a predetermined payment schedule. This sub-lease expired on July 13, 2023 and was renewed for one year through July 13, 2024. The effects of the escalated rent payments and all other terms of the lease are being captured to report rental income on a straight-line basis over the life of the lease. Approximately 70% of the total sublease income is allocated to the Company. The following is a schedule of the Company's portion of the approximate future minimum sublease income required under the sub-lease: | 2024
(July) | \$ | 13,500 | |----------------|----|--------| | | \$ | 13,500 | {12}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** ### **December 31, 2023** #### **9. Employee Benefit Plan** CSH maintains a 401(k) plan (the "Plan") covering all eligible employees as defined. Voluntary contributions by the participants are allowed under the Plan up to the federal statutory limits. Contributions on behalf of the employees are discretionary and are determined annually by CSH. The Company shares the employer contribution to the Plan. ### **10. Subsequent Events** The Company has evaluated events through March 28, 2024, the date the statement of financial condition is available to be issued and determined that no other subsequent events or transactions were required to be recognized or disclosed. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.