# PARSONEX SECURITIES, INC. X-17A-5 (2023-03-30) — Broker-dealer annual report - Company: PARSONEX SECURITIES, INC. - Form: X-17A-5 - Filed: 2023-03-30 - Period: 2022-12-31 - Accession: 0001402593-23-000005 - CIK: 1402593 - File #: 8-67652 - Type: Broker-dealer - Material weakness: No - Auditor: LMHS, P.C. - Auditor location: Norwell, MA - Contact: Anthony Diamos - Phone: 4045366984 - Email: anthony@parsonex.com - Website: parsonex.com - Signed by: Jonathan Miller (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1402593/000140259323000005/psipubl.pdf --- {0}------------------------------------------------ ## **PUBLIC** .U�ITED STATES SECURITIE� ANO E�CHANGE COMMISSION Washington, O.C. 20549 ## **ANNUAL REPORTS FORM X-17A-5 PART 111** | OMS i\PPROV/11 | | |--------------------------|--| | OMS Number: 3235-0i2l | | | Expires: Oct. 31, 2023 | | | Estimated average burden | | | hours per response: 12 | | | | | **SEC FILE NUMBER** 8-67652 **FACING PAGE** **Information Required Pursu an t t o R u 1 es 17 a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** FILING FOR THE PERIOD BEGINNING **\_0\_1\_/\_0\_1\_/2\_0\_2\_2 \_\_** AND ENDING **12/31/2022** MM/DD/YY MM/OD/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 :J Check here if respondent is also an OTC derivatives dealer D 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 | | | |---------------------------------------------------------------------------|-----------------------------------------|-----------------|--------------------------------------------| | | (Nci. and Street) | | | | Englewood | co | | 80112 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Anthony Diamos | ( 404) 536-6984 | | anthony@parsonex.com | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | B. ACCOUNTANT IDENTIFICATION | | | | LMHS, P.C.
(Name - if individ� | al, state last, first, and middle name) | | | | 80 Washington Street Building S Norwell | | MA | 02061 | | (Address) | (City) | (State)
3373 | (Zip Code) | | February 24, 2009 | | | )PCAOB Re,fof Regfst"Uoo with PCADB)) it applicable) | OR OFFICIAL USE ONL
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F | | | CFR 240.17a-S(e)(l)(ii), 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 valid 0MB control number. **PUBLIC** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I,
Jono1han M,llor | | swear (or afnrm) that, to the best of my knowledge and belief, thNOTARY PUBLIC
STATE OF COLORADO | Title: | | Chier **Executive omcer** ``` f\ o 1 /'\ �J, 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 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).** - **� (d) Statement of cash flows.** - **� (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.** - **D (f) Statement of changes In liabilities subordinated to claims of creditors.** - **� (g) Notes to consolidated financial statements.** - **� (h) Computation of net capital under 17 CFR 240.1Sc3-l** *or* **17 CFR 240.18a-l, as applicable.** **NOTARY ID 20204042715 --\_!J]0MMISSION EXPIRES DECEMBm 07, 2024** - **0 (i) Computation of tangible net worth under 17 CFR 240.18a-2.** - **D Ul Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.** - **0 (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.lSa-4, as applicable.** - **D** (I) **Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3.** - **0 (m) Information relating to possession or control requirements** *for* **customers under 17 CFR 240.1Sc3-3.** - **0 (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.lSa-4, as applicable.** - **� (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-1,** *or* **17 CFR 240.lSa-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3** *or* **17 CFR 240.lSa-4, as applicable, if material differences exist,** *or* **a statement that no material differences exist.** - **D (p) Summary of financial 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 in accordance with 17 CFR 240.17a-S** *or* **17 CFR 240.lSa-7, as applicable.** - **� (s) Exemption report in accordance with 17 CFR 240.l 7a-5 or 17 CFR 240.18a-7, as applicable.** - **D (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-S, 17 CFR 240.lBa-7, or 17 CFR 240.17a-12, as applicable.** - **O (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.** - **� (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.** - **D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable.** - **0 (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).** - **D (z ) Other:-------------------------------------** - *"\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-S(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, 2022 WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM {3}------------------------------------------------ # **PARSONEX SECURITIES, INC.** #### CONTENTS Report oflndependent Registered Public Accounting Firm Statement of Financial Condition Notes to Financial Statements {4}------------------------------------------------ ## **PARSONEX SECURITIES, INC. STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2022** #### **ASSETS** | Cash | \$
82,022 | |----------------------------------------------------------------------|---------------| | Accounts receivable | 159,163 | | Prepaid expenses and other | 11,792 | | Right of use asset | 154,473 | | Furniture and equipment, net of accumulated depreciation of \$20,539 | 1,145 | | Total Assets | 408,595 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | LIABILITIES | | | Accounts payable and accrued expenses | 29,631 | | Commissions payable | 128,282 | | Lease liability | 158,969 | | Total Liabilities | 316,882 | | 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 | (23,287) | | Total Stockholder's Equity | 91,713 | | Total liabilities and stockholder's equity | \$
408,595 | *The accompanying notes are an integral part of this statement.* {5}------------------------------------------------ #### *NOTE 1* - *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* (ASC 606) core principle states that an entity must recognize revenue in a manner that depicts the transfer of the promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Included among the requirements of ASC 606 is that the entity must appropriately allocate revenues to the corresponding goods or services and recognize such revenues at the time when the entity has performed under its respective obligations. 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. {6}------------------------------------------------ *NOTE 1* - *ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)* #### *Revenue Recognition (continued)* 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 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 FASB 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. {7}------------------------------------------------ #### *NOTE 1* - *ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)* #### *Income Taxes (continued)* 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, 2019, 2020 & 2021. #### *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, 2022, the Company had a net capital of \$78,776, which was \$67,949, in excess of its required net capital of \$10,827. The Company's aggregate indebtedness to net capital ratio was 2.06 to 1. {8}------------------------------------------------ ## *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. During 2022, 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 \$521,629 during 2022 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 2022 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 that was extended to February 28, 2026. The Company recognizes and measures its leases in accordance with FASB 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. {9}------------------------------------------------ #### *NOTE* **5** - *LEASES (continued)* The Company uses an incremental borrowing rate of 7% 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: Year Ending December 31 | | 2026 | 158,969 | |-------|------|---------------| | Total | | \$
158,969 | 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 for the year ended December 31, 2022 was \$51,538. The lease liability exceeds the ROU asset due to an unamortized lease incentive. #### *NOTE 6* - *SUBSEQUENT EVENTS* The management has reviewed the results of operations for the period of time from its year end December 31, 2022 through March 30, 2023 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. {10}------------------------------------------------ ## *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, 2022. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.