# PARSONEX SECURITIES, INC. X-17A-5 (2022-03-15) — Broker-dealer annual report - Company: PARSONEX SECURITIES, INC. - Form: X-17A-5 - Filed: 2022-03-15 - Period: 2021-12-31 - Accession: 0001402593-22-000001 - CIK: 1402593 - File #: 8-67652 - Type: Broker-dealer - Material weakness: No - Auditor: BRIAN W. ANSON, CPA - Auditor location: TARZANA, CA - Contact: Anthony Diamos - Phone: 404-536-6984 - Email: anthony@parsonex.com - Website: parsonex.com - Signed by: JONATHAN MILLER (CHIEF EXECUTIVE OFFICER) Original filing: https://www.sec.gov/Archives/edgar/data/1402593/000140259322000001/PSIpubli.pdf --- {0}------------------------------------------------ ## **PUBLIC** **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** ## **ANNUAL REPORTS** ### **FORM X-17 A-5** #### **PART Ill** **FACING PAGE** 0MB APPROVAL 0MB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 **SEC FILE** NUMBER | Information Required Pursuant to Rules 17a-S, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | | | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|------------------------------------------------------------|------------|-----------------|-----------------------------------------| | FILING FOR THE PERIOD BEGINNING | | 01/01/2021
MM/00/YY | AND ENDING | | 1 2/31/2021
MM/00/YY | | | | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME oF FIRM: Parsonex Securities, Inc. | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
0 Broker-dealer
D Security-based swap dealer
D Check here if respondent is also an OTC derivatives dealer | | | | | □ Major security-based swap participant | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | 8310 S. Valley Highway, Suite 110 | | | | | | | | | (No. and Street) | | | | | Englewood | co | | | 80112 | | | (City) | (State) | | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Anthony Dia.mos | | ( 404) 536-6984 | | | anthony@parsonex.com | | (Name) | | (Area Code - Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUE:LIC ACCOUNTANT whose reports are contained in this filing• | | | | | | | Brian W. Arson, CPA | | | | | | | ., | | (Name - if individual, state last, first, and middle name) | | | | | 18455 Burba.ilk Blvd. Suite 404 Tarzana | | | | CA | 91356 | | (Address) | | (City) | | (State) | (Zip Code) | | 09/15/2005 | | | | 2370 | | | ofReg;m,tioa .-;,h PCAOB)(;f '"';cable) | F | FF | y | | (PCAOB .,,,m,uo, N,mbe,, If appHcahle) | | r" | OR O | ICIAL U
SE ON L | | | | | | | | | | I | | • Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public
accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 | | | | | | CFR 240.17a-S(e)(l)(1i). if applicable. 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 va:id 0MB control number.** **PUBLIC** {1}------------------------------------------------ | | OATH OR AFFIRMATION | | |--|---------------------|--| |--|---------------------|--| | 1, | Jonathan Miller | | | swear (or affirm) that, to the best of my knowledge and belief, the | | |----------------------------------------------------------|-----------------|--------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|-------| | December 31 | | financial report pertaining to the firm of | | Parsonex Securities, Inc.
� is true and correct. I further swear (or a irm) that neither the company nor any | as of | | partner, officer, director, �-
as that of a customer. | 1 | | ABBY WILLIAMS
NOTARY PUBLIC
STATE OF COLORADO
NOTARY ID 20204042715
ISSION EXPIRES DECEMBER 07, 2024 | r equivalent person, as the case may be, has any proprie� ry nt rest in any account classified solely
/
Signatur
Title:
Chief Execu ve Officer | | **Notary Public** #### **This filing .. contains (check all applicable boxes):** - **!! (a) Statement of financial condition.** - **D (b) Notes to consolidated statement of financial condition.** - **!! (c) Statement of incom\_e (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).** - **!! (d} Statement of cash Hows.** - **!! (e) Statement of chang':!s in stockholders' or partners' or sole proprietor's equity.** - **D (f) Statement of changc\_s in liabilities subordinated to claims of creditors.** - **!! (g) Notes to consolidatid financial statements.** - **!! (h) Computation of net capital under 17 CFR 240.1Sc3-1 or 17 CFR 240.18a-1, as applicable.** - **D (i) Computation of tanglble net worth under 17 CFR 240.18a-2.** - **D (j) Computation for det�rmination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.1Sc3-3.** - **D (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.** - **D (I) Computation for Dei:ermination of PAS Requirements under Exhibit A to § 240.1Sc3-3.** - **D (m) Information relatirg to possession or control requirements for customers under 17 CFR 240.1Sc3-3.** - **D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.1Sc3-3(p)(2) or 17 tFR 240.18a-4, as applicable.** - **!! (o) Reconciliations, inclliding appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.lSa-l, or 17 CFR 240.lSa-2, as applicable, and the reserve requirements under 17 CFR 240.1Sc3-3 or 17 CfR 240.lSa-4, as applicable, if material differences exist, or a statement that no material differences exist.** - **D (p) Summary of financi�I data for subsidiaries not consolidated in the statement of financial condition.** - **!! (q} Oath or affirmation'in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.lSa-7, as applicable.** - **D (r) Compliance report** d, **accordance with 17 CFR 240.17a-S or 17 CFR 240.lSa-7, as applicable.** - **!! (s) Exemption report in**=-**accordance with 17 CFR 240.17a-5 or 17 CFR 240.lSa-7, as applicable.** - **D (t) Independent public :iccountant'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-S, 17 CFR �40.18a-7, or 17 CFR 240. l 7a-12, as applicable.** - **□ (v) Independent public :3ecountant'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.** - **!! (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.lSa-7, as appl;cable.** - □ **(x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-le or 17 CFR 240.17a-12, as applicable.** - □ **(y) Report describing a·11y material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no m�terial inadequacies exist, under 17 CFR 240.17a-12(k).** - **D (z) Other: \_\_\_\_ ;\_ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_** - *0To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5{e){3) or 17 CFR 240.18a-7(d){2), as applicable.* {2}------------------------------------------------ # **PARSONEX SECURITIES, INC.** STATEMENT OF FINANCIAL CONDITION FOR THE YEAR ENDED DECEMBER 31, 2021 WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM {3}------------------------------------------------ ### **PARSONEX SECURITIES, INC.** #### CONTENTS Independent Auditor's Report FINANCIAL ST A1EJ\1ENTS Statement of Financial Condition Notes to Financial Statements {4}------------------------------------------------ #### **BRIAN W. ANSON** *Certified Public Accountant* 18455 Burbank Blvd., Suite 404, Tarzana, CA 91356 • Tel. (818) 636-5660 • Fax (818) 881-2605 ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Stockholder's and Board of Directors of Parsonex Securities, Inc. #### **Opinion on the Financial Statements** I have audited the accompanying statement of financial condition of Parsonex Securities, Inc. as of December 31, 2021, the related statements of income, changes in stockholder's equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In my opinion, the financial statements present fairly, in all material respects, the financial position of Parsonex Securities, Inc. as of December 31, 2021, 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 Parsonex Securities, Inc.'s management. My responsibility is to express an opinion on Parsonex Securities, Inc.' s financial statements based on my audit. I am a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and am required to be independent with respect to Parsonex Securities, Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. I conducted my audit in accordance with the standards of the PCAOB. Those standards require that I 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. My 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. My audit also included evaluating the accounting principles used and significant estimates made by management, as evaluating the overall presentation of the financial statements. I believe that my audit provides a reasonable basis for my opinion. #### **Auditor's Report on Supplemental Information** The information contained in Schedule I, II, and III ("Supplemental Information") has been subjected to audit procedures performed in conjunction with the audit of the Parsonex Securities, Inc.' s financial statements. The Supplemental Information is the responsibility of the Parsonex Securities, Inc. 's management. My 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 my opinion on the Supplemental Information, I evaluated whether the Supplemental Information, including its form and content is presented in conformity with 17 C.F.R. § 240.17a-5. In my opinion, Schedules I, II, and III are fairly stated, in all material respects, in relation to **th�l statements taken as a whole.** Brian W�A I have served as Parsoenx Securities, Inc.'s auditor since 2021. Tarzana, California February 25, 2022 {5}------------------------------------------------ ## **PARSONEX SECURITIES, INC. STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021** #### **ASSETS** | Cash | \$
85,804 | |----------------------------------------------------------------------|---------------| | Accounts receivable | 48,719 | | Prepaid expenses and other | 10,217 | | Right of use asset | 45,409 | | Furniture and equipment, net of accumulated depreciation of \$20,539 | 1,145 | | Total Assets | 191,294 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | | | | LIABILITIES | | | Accounts payable and accrued expenses | 14,818 | | Commissions payable | 34,117 | | Lease liability | 49,646 | | Total Liabilities | 98,581 | | STOCKHOLDER'S EQUITY | | | Common stock, \$.01 par value; 5,000,000 shares | | | authorized; 1,855,000 shares issued and outstanding | 18,550 | | Additional paid in capital | 96,450 | | Accumulated deficit | (22,287) | | Total Stockholder's Equity | 92,713 | | Total liabilities and stockholder's equity | \$
191,294 | *The accompanying notes are an integral part of this statement.* {6}------------------------------------------------ #### *NOTE I* - *ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES* #### *Organization and Business* Parsonex Securities, Inc. (the "Company") was incorporated in the State of Colorado on March 7, 2007. The Company is approved to operate as a broker-dealer as a member of the Financial Industry Regulatory Authority ("FINRA") and is registered with the Securities and Exchange Commission ("SEC"). The Company's activities are mainly selling mutual funds and variable annuity products. The Company is a wholly owned subsidiary of Parsonex Enterprises, Inc. #### *Cash* The Company maintains its bank accounts in a high credit quality institution. Balances at times may exceed federally insured limits. #### *Revenue Recognition* Revenue from contracts with customers includes commission income and fees from mutual funds. The recognition 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; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events. The Company recognizes commission revenue upon the issuance or renewal of an insurance policy as this satisfies the only performance obligation identified by the Company. The Company enters into arrangements with managed accounts or other pooled investment vehicles (funds) to distribute shares to investors. The Company may receive distribution fees paid by the fund up front, over time, upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points {7}------------------------------------------------ ### *NOTE I* - *ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)* #### *Revenue Recognition (continued)* in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. #### *Estimates* The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. #### *Income Taxes* The Company is a C corporation for tax purposes and is subject to income tax under the appropriate sections of the Internal Revenue Code and various sections of the state income tax statutes. The Company has adopted the provisions of F ASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under F ASB 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 and the decision not to file a return. Under ASC 740, deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 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 is subject to audit by taxing agencies for years ended December 31, 2018, 2019 & 2020. {8}------------------------------------------------ #### *NOTE 1* - *ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)* #### *Accounts Receivable* Accounts receivable are non-interest bearing uncollateralized obligations receivable in accordance with the terms agreed upon with each client. The Company regularly reviews its accounts receivable for any uncollectible amounts. The review for uncollectible amounts is based on an analysis of the Company's collection experience, customer credit worthiness, and current economic trends. Based on management's review of accounts receivable, no allowance for doubtful accounts is considered necessary. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost. The model replaces the probable, incurred loss model for those assets and broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized costs. The Company adopted ASU No. 2016-13 on January 1, 2020 using the modified retrospective approach with no material impact to its financial position, results of operations or cash flows. ### *NOTE 2* **-** *NET CAPITAL REQUIREMENTS* Pursuant to the net capital provisions of Rule 15c3-**l** of the Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital equal to the greater of \$5,000 or 6-2/3% of aggregate indebtedness as well as a ratio of aggregate indebtedness to net capital that shall not exceed 15 to 1, as defined under such provisions. At December 31, 2021, the Company had a net capital of \$81,351, which was \$76,351, in excess of its required net capital of \$5,000. The Company's aggregate indebtedness to net capital ratio was 0.65 to 1. #### *NOTE 3* - *RELATED PARTY TRANSACTIONS* The Company subleases a portion of its office space to a sister broker-dealer pursuant to a monthto-month sublease agreement. Rental income under this agreement was \$6,000 and has been included in other income in the accompanying statement of income. {9}------------------------------------------------ ## *NOTE 3* - *RELATED PARTY TRANSACTIONS (Continued)* During 2021, the Company entered into a revenue sharing agreement with its sister broker-dealer. The Company acts as a referral source for its sister broker-dealer and receives a fee for revenue generated from referred entities. Fees earned by the Company under this agreement were \$6,000 and have been included in other income in the accompanying statement of income. The Company has a facilities and management agreement in place with its affiliate whereby the Company is allocated its share of administrative and employee services based upon the relative time and effort spent by employees of the affiliate on the Company. Pursuant to this agreement, the Company paid its affiliate approximately \$627,178 during 2021 which has been included in compensation and benefits in the accompanying statement of income. Financial position and results of operations could differ from the amounts in the accompanying financial statements if these transactions did not exist. ## *NOTE 4* - *INCOME TAXES* The Company records deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws in effect when the differences are expected to be reversed. The provision for income taxes is recorded as the current tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. There were neither deferred tax effects occurring during 2021 nor a tax liability as the Company is filing its taxes on a consolidated basis. #### *NOTE* **5 -** *LEASES* The Company leases office space under a non-cancelable operating lease expiring in 2022. The Company recognizes and measures its leases in accordance with F ASB ASC 842, Leases. The Company recognizes a lease liability and a right of use (ROU) asset on its balance sheet by recognizing the lease liability based on the present value of its future lease payments. {10}------------------------------------------------ #### *NOTE* 5 - *LEASES (continued)* The Company uses an incremental borrowing rate of 6% based on what it would approximately have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability (present value of the remaining lease payments). The Company recognizes lease costs on a straight-line basis over the lease term. Maturity of the lease liability under the noncancelable operating lease is as follows: | 2022 | 51,545 | | |-----------------------------------|--------------|--------------| | Total | \$
51,545 | | | Total undiscounted lease payments | \$
51,545 | | | Less imputed interest | | ( 1,899) | | Total lease liability | | \$
49,646 | Year Ending December 31 The Company's office space lease requires it to make variable payments for the Company's proportionate share of operating expenses (i.e., building's property taxes, insurance, and common area maintenance). These variable lease payments are not included in lease payments used to determine lease liability and are thus recognized as variable costs when incurred. The total lease cost including variable costs associated with this lease for the year ended December 31, 2021 was \$53,896. The lease liability exceeds the ROU asset due to an unamortized lease incentive. {11}------------------------------------------------ ## *NOTE 6* - *SUBSEQUENT EVENTS* The management has reviewed the results of operations for the period of time from its year end December 31, 2021 through February 25, 2022 the date the financial statements were available to be issued, and have determined that no adjustments are necessary to the amounts reported in the accompanying financial statements nor have any subsequent events occurred, the nature of which would require disclosure. # *NOTE* 7 - *CONTINGENCIES* The Company is subject to litigation in the normal course of business. The Company has no litigation in progress at December 31, 2021. ## *NOTE 8* - *PAYCHECK PROTECTION PROGRAM LOAN* In 2020, the Company borrowed \$209,100 under the Paycheck Protection Program ("PPP") established by the Coronavirus Aid, Relief and Economic Security ("CARES") Act sponsored by the United States and administered by the Small Business Administration (the "SBA"). PPP loans may be forgiven to the extent proceeds of the loans are used for eligible expenditures such as payroll and other expenses described in the CARES Act. In 2021, SBA had determined that the Company was eligible for forgiveness, in whole. #### *NOTE 9* - *FAIR VALUE MEASUREMENT* ASB ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritized the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or liability or, in the absence of a principal market, the most advantageous market for the asset of liability. Valuation techniques that are consistent with the market, income or cost approach, as specified by F ASB ASC 820 are used to measure fair value. {12}------------------------------------------------ ## *NOTE 9* - *FAIR VALUE MEASUREMENT (CONTINUED)* The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company has the ability to access. Level 2 inputs are inputs ( other than quoted prices included within Level 1) that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs should be developed based on the best information available in the circumstances and may include the Company's own data.) There were no levels to measure at December 31, 2021. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.