# PENSERRA SECURITIES, LLC X-17A-5 (2022-02-28) — Broker-dealer annual report

- Company: PENSERRA SECURITIES, LLC
- Form: X-17A-5
- Filed: 2022-02-28
- Period: 2021-12-31
- Accession: 0001420524-22-000001
- CIK: 1420524
- File #: 8-67773
- Type: Broker-dealer
- Material weakness: No
- Auditor: Moss Adams
- Auditor location: San Francisco, CA
- Contact: Anthony Castelli
- Phone: 6464590581
- Email: george.madrigal@penserra.com
- Website: penserra.com
- Signed by: Anthony Castelli (CCO/COO)

Original filing: https://www.sec.gov/Archives/edgar/data/1420524/000142052422000001/pubfix.pdf

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# Report of Independent Registered Public Accounting Firn and Financial Statements

Penserra Securities LLC SEC ID. NO 8-67773 **Year Ended December 31, 2021** 

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#### **UNITED STATES** 0MB APPROVAL **SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549**

## **ANNUAL REPORTSFORM X-17A-5 PART** III

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| SEC FILE NUMBER          |

8-67773

**FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** 

| FILING FOR THE PERIOD BEGINNING                                                       |                            | -----------<br>01/01/2021<br>MMID D NY             | AND ENDING                                | ---------<br>12/31/2021<br>MMIDDNY |
|---------------------------------------------------------------------------------------|----------------------------|----------------------------------------------------|-------------------------------------------|------------------------------------|
| REGISTRANT IDENTIFICATION                                                             |                            |                                                    |                                           |                                    |
| NAME OF FIRM: PENSERRA SECURITIES LLC                                                 |                            |                                                    |                                           |                                    |
|                                                                                       |                            |                                                    |                                           |                                    |
| TYPE OF REGISTRANT (check all applicable boxes):                                      |                            |                                                    |                                           |                                    |
| IX I<br>Broker-dealer<br>□ Check here if respondent is also an OTC derivatives dealer | Security-based swap dealer |                                                    | Major security-based swap participant     |                                    |
|                                                                                       |                            |                                                    |                                           |                                    |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)                   |                            |                                                    |                                           |                                    |
| 4 ORINDA WAY, SUITE 100-A                                                             |                            |                                                    |                                           |                                    |
|                                                                                       |                            | (No. and Street)                                   |                                           |                                    |
| ORINDA                                                                                |                            | CA                                                 |                                           | 94563                              |
| (City)                                                                                |                            | (State)                                            |                                           | (Zip Code)                         |
| PERSON TO CONTACT WITH REGARD TO TIDS FILING<br>JORGE MADRIGAL                        | 925-594-5001               |                                                    | GEORGE.MADRIGAL@PENSERRA.COM              |                                    |
| (Name)                                                                                |                            | (Area Code - Telephone Number)                     | (Email Address)                           |                                    |
|                                                                                       |                            | B. ACCOUNTANT IDENTIFICATION                       |                                           |                                    |
|                                                                                       |                            |                                                    |                                           |                                    |
| INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*             |                            |                                                    |                                           |                                    |
| MOSS ADAMS LLP                                                                        |                            |                                                    |                                           |                                    |
|                                                                                       | (Name-                     | if individual, state last, first, and middle name) |                                           |                                    |
|                                                                                       |                            | SAN FRANCISCO                                      | CA                                        | 94105                              |
| 101 SECOND STREET                                                                     |                            |                                                    |                                           |                                    |
| (Address)                                                                             |                            | (City)                                             | (State)                                   | (Zip Code)                         |
| (Date of Registration with PCAOB)(if applicable)<br>I                                 |                            |                                                    | (PCAOB Registration Number, if applicable |                                    |

\* *Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public nrrn11ntnnt mu.of hP. .011nnnrtP.d hv n .otntP.mP.nt nf fnrto nnd rirr11m.otnnrP..o rP.UP.d nn no thP. hn.oi.o nf thP. P.rP.mntinn\_ SP.P. l 7(;FR 24n\_ l 7n-*

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#### **OATH OR AFFIRMATION**

I, **JORGE MADRIGAL,** swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the 1 **PENSERRA SECURITIES** LLC , as of **DECEMBER** 31. 2021, is true and correct. I further swear (or affirm) that neitt company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any a classified solely as that of a customer.

PRESIDENT AND CEO

Notary Public

This report\*\* contains (check all applicable boxes):

- X ( a) Statement of financial condition.
- X (b) Notes to consolidated statement of financial condition.
- D (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 (d) Statement of cash flows.
- D (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) ' tes to consolidated financial statements.
- D (h) Computation of net capital under 17 CFR 240. I 5c3-1 or 17 CFR 240. I **8a-** I, as applicable.
- D (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- □ U) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240. I 5c3-3.
- □ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240. I 5c3 or Exhibit A to 17 CFR 240. I 8a-4, as applicable.
- □ (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240. I 5c3-3.
- D (m) Information relating to possession or control requirements for customers under 17 CFR 240. I 5c3-3.
- D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240. I 5c3-3(p )(2) or 17 CFR 240.1 8a-4, as applicable.
- D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible <sup>1</sup> worth under 17 CFR 240. I 5c3-1, 17 CFR 240. I 8a- l, or 17 CFR 240.18a-2, as applicable, and the reserve requirements un, 17 CFR 240. I 5c3-3 or 17 CFR 240. I 8a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- X (q) Oath or affirmation in accordance with 17 CFR 240. I 7a-5, 17 CFR 240. I 7a-12, or 17 CFR 240.18a-7, as applicable.
- D (r) Compliance report in accordance with 17 CFR 240. I 7a-5 or 17 CFR 240. I 8a-7, as applicable.
- D (s) Exemption report in accordance with 17 CFR 240. I 7a-5 or I 7 CFR 240. I 8a-7, as applicable.
- □ (t) Independent public accountant's report based on an examination of the statement of financial condition.
- D (u) Independent public accountant's report based on an examination of the financial report or financial statements under I'. 240. I 7a-5, 17 CFR 240. J 8a-7, or 17 CFR 240. I 7a- I 2, as applicable.
- D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under I CFR 240.l 7a-5 or 17 CFR 240. I 8a-7, as applicable.
- □ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240. I 7a-5 or I 7 CFR 240. I **8a-7,** as applicable.
- D (x) Supplemental reports on applying agreed-upon procedures, in accordance with I 7 CFR 240. I 5c3- I e or 17 CFR 240.17 as applicable.
- D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audi1 statement that no material inadequacies exist, under I 7 CFR 240. I 7a- I 2(k). □ (z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_
- 

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| W,;'Qi~~~~~~~OO~                                                                                                                                          | ~~!~~!lQliffl@l~~&i~M"!lilJ91~~129~~~j~~                                                                                                                     |
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| n~<br>Attached Document (Notary to cross out lines 1-6 below)<br>b's;; Statement Below (lines 1-6 to be completed only by document signer[s]. not Notary) |                                                                                                                                                              |
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| Signature of Document Signer No. 1                                                                                                                        | Signature of Document Signer No. 2 (if any)                                                                                                                  |
| to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.                                                  | A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document                            |
| /'<br>State of California<br>=a-~<br>.L---'--~~---"----<br>Countyof                                                                                       | Subscribed and sworn to (or affirmed) before me<br>~<br>~<br>20~<br>on this tJ3<br>day of<br>~/,J<br>,<br>~<br>by<br>Date<br>Yea<br>J1u/µ~<br>-------<br>(1) |
| IHDY OUBONLATH KEOPHITHOUN<br>Notary Public - California<br>~<br>Contra Costa County<br>~<br>Commission II 2240243<br>My Comm. E~ires May 8, 2022         | _____________<br>(and (2)<br>_<br>Name(s) of Signer(s)<br>proved to<br>he basis of satisfactory evidence t(<br>be the per<br>eared before me.                |
| Place Notary Seal and/or Stamp Above                                                                                                                      | Signature                                                                                                                                                    |
| ~----------------                                                                                                                                         | ----<br>-----------<br>OPTIONAL<br>-                                                                                                                         |
|                                                                                                                                                           | Completing this information can deter alteration of the document or<br>fraudulent reattachment of this form to an unintended document.                       |
| Description of Attached Docy'.)'ent<br>,<br>Title or Type of Document: -~~:::::_.:!!~::1£::___~0~ ~---=-,.,~~-'£laa.LI~iac::::L-4                         | ('_<br>~~<br>?/M'---'-<br>_,_<br><br>::=-'Cl.~--A-~~'-""'~M!~~,-:c,,,                                                                                        |
| Document Date: -<br>~~&µ~-~=-+'ka.c,,,,c,.-41),                                                                                                           | o::<br>_____<br>c;.,," ____ =er<br>~                                                                                                                         |
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| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |  |  |  |  |  |
|---------------------------------------------------------|--|--|--|--|--|
|                                                         |  |  |  |  |  |
| FINANCIAL STATEMENTS                                    |  |  |  |  |  |

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# **Report of Independent Registered Public Accounting Firm**

To the Members and the Board of Directors Penserra Securities LLC

#### **Opinion on** *the Financial Statement*

We have audited the accompanying statement of financial condition of Penserra Securities LLC (the Company) as of December 31, 2021 that is filed pursuant to Rule 1 ?a-5 under the Securities Exchange Act of 1934, and the related notes (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, 2021, in conformity with accounting principles generally accepted in the United States of America.

#### *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 to 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. /l! ,1UI.- ~ *t--L-1* 

San Francisco, California February 22, 2022

We have served as the Company's auditor since 2012.

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FINANCIAL STATEMENTS

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#### **PENSERRA SECURITIES LLC STATEMENT OF FINANCIAL CONDITION December 31, 2021**

| Cash and cash equivalents                                           | \$<br>5,873,774  |
|---------------------------------------------------------------------|------------------|
| Marketable securities, at fair value                                | 3,195,426        |
| Receivables:                                                        |                  |
| Brokers, dealers, and clearing organizations                        | 2,016,633        |
| Customers and counter-parties                                       | 1,250,890        |
| Affiliates and employees                                            | 432,014          |
| Prepaid expenses                                                    | 126,118          |
| Brokerage account deposit                                           | 494,233          |
| Property, plant and equipment:                                      |                  |
| Furniture and equipment, net of accumulated depreciation            | 100,985          |
| Operating lease right-of-use-asset, net of accumulated amortization | 1,208,203        |
| Intangible assets:                                                  |                  |
| Internal-use software                                               | 79,489           |
| Goodwill                                                            | 2,543,770        |
| Other assets                                                        | 82,516           |
| Total assets                                                        | \$<br>17,404,051 |
| LIABILITIES AND MEMBER'S EQUITY                                     |                  |
| Payables:                                                           |                  |
| Brokers, dealers, and clearing organizations                        | \$<br>616,276    |
| Customers and counter-parties                                       | 21,127           |
| Affiliates and employees                                            | 2,918,008        |
| Accrued expenses                                                    | 174,403          |
| Operating lease liability                                           | 1,213,379        |
| Total liabilities                                                   | 4,943,193        |
| Member's equity                                                     | 12,460,858       |
| Total liabilities and member's equity                               | \$<br>17,404,051 |

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#### **NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS**

Penserra Securities LLC ("the Firm") was established on February 27, 2007, a single member New York Limited Liability Con and is a registered broker-dealer with the Securities and Exchange Commission and the Financial Industry Regulatory Autl (FINRA). The Firm has employees with a combination of buy-side and sell-side experience from major bulge bracket firm: Firm uses that experience to provide global equity trading, fixed income trading, and investment banking. The Firm was forrr a boutique brokerage firm to specifically serve large and sophisticated institutional customers. The principal office of the F located at 4 Orinda Way in Orinda, California with additional locations in Chicago, Illinois and Long Island, New York. The Fin received minority business certification from various public and private organizations.

#### **NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION**

The financial statements of the Firm have been prepared in accordance with accounting principles generally accepted in the l States of America (GAAP).

**Revenue recognition** - The Firm follows the provisions of Financial Accounting Board (F ASB) Accounting Standards Codifi< (ASC) 606 - *Revenue from Contracts with Customers.* The standard outlines a single comprehensive model for entities to depi transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitl exchange for those goods or services. The standard also requires disclosure about the nature, amount, timing and uncertai1 revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and , recognized from costs incurred to obtain or fulfill a contract with customers.

The Firm has four primary lines of business from: (i) commissions charged for equity trade execution services, (ii) commi~ charged for equity exchange trading, (iii) income generated from the mark-up and mark-down of fixed income orders as ri: principal or principal trades, and (iv) underwriting fees from participating in the underwriting syndicate of new corporatE issues and equity initial public offerings as a co-manager. Commission and fee revenue is generally recognized at a point ir upon the delivery of contracted services based on a predefined contractual amount or on the trade date for trade exec services based on prevailing market prices and internal and regulatory guidelines.

Because equity commissions are earned on a per-transaction basis, such revenues fluctuate from period to period depending <sup>1</sup> the volume of shares traded in the U.S., (b) the notional value of securities traded outside the U.S. in Latin America, Europe ar Asia Pacific region and (c) the Firm's commission rates. Certain factors that affect the Firm's volumes and notional value t include macro trends and volatility in the global equities markets that affect overall institutional equity trading ac competitive pressure, including pricing, created by the existence of execution competitors; and potential changes in m structure in the U.S. and other regions. Equity exchange trading commission are earned on complex, multi-party U.S. equity t tied to derivative strategies, or stock option packaged trades. The volume of shares traded will fluctuate based on market vol: and the opportunity to package these bundled trades. In addition, revenues from fixed income executions are impacted by in1 rates, liquidity and other macro-economic factors. Underwriting fees are related to the issue of new corporate debt or E securities, which are also impacted by credit liquidity, interest rates, and macro-economic factors.

Revenue recognition does not require significant judgements or estimates, recognized amounts are based on actual fees e: from transactions at a defined point.

**Leases** - The Firm follows the provisions of ASC 842 - *Leases,* which requires an entity that is a lessee to recognize the asset liabilities arising from leases with terms longer than 12 months on the statement of financial position. Leases are to be classif either operating or finance, with classification affecting the pattern of expense recognition in the statement of activities.

In addition, the Firm made an accounting policy election to keep leases with an initial term of 12 months or less off of the statE of financial position. The Company will continue to recognize those lease payments for short-term leases on a straight-line over the lease term.

**Customer concentration** - During the fiscal year 2021, one customer comprised 11 % percent of total gross revenue.

**Use of estimates** - The preparation of financial statements in conformity with accounting principles generally accepted i United States of America requires management to make estimates and assumptions that affect the reported amounts of asset liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amou revenues and expenses during the reporting period. The most significant estimates include the determination of the fair va ~~~..:i, .. :11 A"+••~l -~"••1+" "~ .. 1..:1 ..:IH'"J'~- JC"-~- +l.~"~ ~"+:-~+~"

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#### **PENSERRA SECURITIES LLC NOTES TO FINANCIAL STATEMENTS**

**Cash and cash equivalents** - Cash and cash equivalents include cash in bank accounts and cash equivalent investments h certain major financial institutions with original maturities of 90 days or less. At times, cash balances may be in excess <sup>1</sup> amounts insured by the Federal Deposit Insurance Corporation.

**Concentration of credit risk** - Concentration of credit risk associated with a lack of diversification, such as having subst investments in a few individual issuers, thereby exposing the Firm to great risks resulting from adverse economic, pol regulatory, geographic, industrial or credit developments. Financial instruments that potentially subject us to concentratic credit risk consist of cash and cash equivalents, receivables from broker-dealers and clearing firms, and investment securities.

The Firm's cash in correspondent bank accounts, at times may exceed FDIC insured limits. We place cash and cash equiv; with high quality financial institutions, periodically monitor their credit worthiness and limit the amount of credit exposure any one institution. The firm's counterparties, with respect to broker-dealers and clearing agents, are generally large well-k financial services companies with strong credit ratings.

**Receivables** - On June 16, 2016, the FASB issued an Accounting Standards Update (ASU) 2016-13, *Financial Instruments* - <sup>1</sup> *Losses* (Topic 326). The update improves financial reporting by requiring timelier recording of credit losses on loans and financial instruments held by financial institutions and other organizations. Additionally, the ASU eliminates the probable recognition threshold in previous GAAP and, instead, reflects an organization's current estimate of all expected credit losse~ the contractual term.

The Firm accounts for estimated credit losses on financial assets measured at an amortized cost basis and certain off-balance credit exposure. ASC 326-20 *Financial Instruments* - *Credit Losses* requires the Firm to estimate expected credit losses over ti of its financial assets and certain off-balance sheet exposures as of the reporting date based on relevant information abou events, current conditions, and reasonable and supportable forecasts.

The Firm takes into consideration the composition of the receivables, current economic conditions, the estimated net reali value of the underlying collateral, historical loss experience, delinquency, and bankrupt accounts when determining managen estimate of probable credit losses and the adequacy of the allowance for credit losses. Any receivables deemed uncollectib written off against the allowance. The Firm did not have receivables related to contracts with customers or financial asse which an allowance for credit losses was necessary at December 31, 2021.

**Furniture and equipment** - Furniture and equipment is carried at cost less accumulated depreciation. Depreciation is com on a straight-line basis over the estimated useful lives of the assets. For computer equipment the estimated useful life is years. For furniture and equipment, the estimated useful life is five years. For the year ended December 31, 2021, fixed asset of depreciation) totaled \$100,985.

**Income taxes** - As a limited liability corporation, net income of the Firm is allocated to the member for recognition of in con liability or benefit. As such, the Firm is not subject to federal income tax. The Firm is subject to California limited liability con taxes, the California gross receipts tax, New York State LLC filing fee, and New York City gross receipts tax. During 2021, the incurred \$87,964 in state and local taxes. The Firm applies the topic of the FASB ASC relating to accounting for uncertai positions. The income taxes topic prescribes a minimum probability threshold that a tax position must meet before a fin, statement benefit is recognized. The minimum threshold is defined in the topic as a tax position that is more likely than not sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation proc based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit t greater than fifty percent likely of being realized upon ultimate settlement.

As of December 31, 2021, the Firm has no uncertain tax positions based on the criteria established under the income taxes whereby the effect of the uncertainty would be recorded if the outcome was considered probable and was reasonably estimab

**Line of credit** - The Firm currently has a line of credit, which originated in March of 2014 in the amount of \$1,000,000. interest rate on the Line of Credit is 5.25% per annum. The balance as of December 31, 2021, is \$0. The line of credit matures December with automatic renewal for an annual term.

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#### **PENSERRA SECURITIES LLC NOTES TO FINANCIAL STATEMENTS**

**Fair value - definition and hierarchy** - Fair value is defined as the price that would be received to sell an asset or paid to tn a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.

In determining fair value, the Firm uses various valuation approaches. A fair value hierarchy for inputs is used in measurin value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs are to be used when available. The fair value hierarchy is categorized into three levels based on the inp1 follows:

- *Level 1*  Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the has the ability to access.
- *Level 2*  Valuation based on inputs, other than quoted prices included in Level 1, that are observable either direc indirectly.
- *Level 3*  Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Fair value is a market-based measure, based on assumptions of prices and inputs considered from the perspective of a m participant that are current as of the measurement date, rather than an entity-specific measure. Therefore, even when m assumptions are not readily available, the Firm's own assumptions are set to reflect those that market participants would 1 pricing the asset or liability at the measurement date. The availability of valuation techniques and observable inputs can vary investment to investment and are affected by a wide variety of factors, including the type of investment, whether the investm new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transacti< the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determinat fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be matE higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the d of judgment exercised by the Firm in determining fair value is greatest for investments categorized in Level 3. In certain case inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair hierarchy in which the fair value measurement falls in its entirety is determined based on the lowest level input that is signi to the fair value measurement.

**Valuation techniques and inputs** - *Marketable Securities* - To determine the fair value of mortgage-backed securities, coq: bonds, and money market instruments, the Firm utilized recent market transactions for identical or similar securiti corroborate pricing service fair value measurements. Mortgage-backed assets are generally classified in Level 2 of the fair hierarchy and are categorized in marketable securities on the Statement of Financial Condition.

**Commitments and contingencies** - During the normal course of its operations, the Firm may incur additional liabilities d existing conditions, situations, legal claims, regulatory matters, or circumstances involving uncertainty as to possible loss 1 Firm that will ultimately be resolved when one or more future events occur or fail to occur. Management accrues for such liab to the extent that they are deemed probable and estimable. As of December 31, 2021, management believes that any such would not have a material or adverse effect on its continuing operations.

**Goodwill** - Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the c the business combination over the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. In the Firm performed an internal valuation utilizing Step 0 analysis to evaluate Goodwill for impairment at the reporting unit Upon completion of this evaluation, it was determined an impairment does not exist.

**Subsequent events** - The Firm has evaluated all events subsequent to the Statement of Financial Condition date of Decemh 2021 and has determined that there are no subsequent events that require disclosure or recognition in these financial staten other than the following: In February 2022, the Firm obtained a \$10,000,000 unsecured revolving credit agreement that b1 floating interest rate of Prime plus 2.5% per annum with a maturity date of February 29, 2024. When drawn upon, proceed: be used to manage inventory levels to meet client demands and general corporate purposes. The credit agreement was app by FINRA as a subordinated borrowing and is available in computing net capital under the SEC's uniform net capital rule. 1 extent that such borrowings are required for the Company's continued compliance with minimum net capital requirements may not be repaid.

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#### **NOTE 3** - **FAIR VALUE MEASUREMENT**

The Firm's assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy as described Firm's significant accounting policies in Note 2. As of December 31, 2021, the Firm held twenty-six collateralized mor obligations of U.S. government agencies (CM Os) with a fair value of \$1,838,608, fifty-three US Equities with a fair value of \$12: and four corporate bonds with a fair value of \$1,234,117. Management has categorized all as level 2 in the fair value hierarch: associated unrealized loss on the positions held by the Firm as of December 31, 2021 was \$157,629 and is included i Statement of Net Income as principal trading income.

|                            | Level 1 | Level 2         | Level 3 | Total           |
|----------------------------|---------|-----------------|---------|-----------------|
| US Government Agency CM Os | \$      | \$<br>1,838,608 | \$      | \$<br>1,838,608 |
| US Equities                |         | 122,701         |         | 122,701         |
| Corporate Debt             |         | 1,234,117       |         | 1,234,117       |
| Total                      | \$      | \$<br>3,195,426 | \$      | \$<br>3,195,426 |

### **NOTE 4- RECEIVABLES FROM BROKERS, CLEARING AGENTS AND OTHER**

The Firm's receivables from broker-dealers and clearing organizations include amounts receivable from unsettled trades, incl amounts related to futures contracts executed on behalf of customers, amounts receivable for securities failed to deliver, ac interest receivables and cash deposits. A portion of the Firm's trades and contracts are cleared through a clearing organizatio settled daily between the clearing organization and the Firm. Because of this daily settlement, the amount of unsettled 1 exposures is limited to the amount owed the Firm for a very short period of time. The Firm continually reviews the credit qua its counterparties.

The receivables from broker-dealers and clearing agents represents an unsecured commission receivable for which the Fin executed trades during December 2021 and received subsequent to year end. In the normal course of business, the Firm exe as agent, transactions on behalf of customers through its clearing broker. If the agency transactions do not settle becaus1 failure to perform by the customer, the Firm may be obligated to discharge the obligation of the customer and, as a result incur a loss if the market value of the security fluctuates to the detriment of the Firm. Historically, all amounts due counterparties have been collected in accordance with agreed upon contractual obligations. As such, as of December 31, 20: allowance for credit losses has not been recorded. The Firm does not anticipate nonperformance by customers in the ; situation. The Firm's policy is to monitor its market exposure and customer risk. In addition, the Firm has a policy of reviewi considered necessary, the credit standing of each customer with which it conducts business.

The Firm's receivables from brokers and clearing agents are represented per the below:

| Equity commission receivables          | \$<br>343,354 |
|----------------------------------------|---------------|
| Equity Exchange commission receivables | 636,324       |
| Underwriting receivables               | 1,228,496     |
| Cash held at broker                    | 1,059,349     |
| Total                                  | \$ 3,267,523  |

#### **NOTE 5 - CLEARING ORGANIZATION**

The Firm clears its transactions through another broker-dealer on a fully disclosed basis. A receivable from the de organization is the result of the Firm's activity with this clearing organization. The Firm may also have a payable to the de organization related to these transactions, which is collateralized by securities owned by the Firm. The Firm's de organization requires the Firm to maintain a cash deposit of \$494,233 with the organization. The amount is classified as brok account deposit on the Statement of Financial Condition as of December 31, 2 021.

{12}------------------------------------------------

### **NOTE 6- OPERATING LEASES**

The Firm carries operating lease assets and operating lease liabilities of approximately \$1,208,203 and \$1,213,379, respective of December 31, 2021. Total rent expense for 2021 is \$474,848.

| Year Ending December 31st                   |                 |
|---------------------------------------------|-----------------|
| 2022                                        | \$<br>420,928   |
| 2023                                        | 428,824         |
| 2024                                        | 269,188         |
| 2025                                        | 157,127         |
| 2026                                        | 120,019         |
| Total future lease commitments              | 1,396,086       |
| Less: present value discount                | (182,707)       |
| Operating lease liability                   | \$<br>1,213,379 |
| Weighted-average remaining lease (in years) | 2.37            |
| Weighted-average discount rate              | 6.50%           |

#### **NOTE 7 - REGULATORY REQUIREMENTS**

Under the net capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934, the Firm is required to maintain a min net capital, equivalent to the greater of \$100,000 or 1/lSth of aggregate indebtedness, as those terms are defined by the ru the Securities Exchange Commission (the SEC). Net capital, as defined in the regulation, as of December 31, 2021, was \$8,19 which exceeded minimum net capital requirements by \$8,098,916. The ratio of aggregate indebtedness to net capita approximately .16 to 1. The Firm claims an exemption from the SEC's customer protection Rule 240 15c3-3, under para1 k(2)(ii) for the year ended December 31, 2021.

#### **NOTE 8- CONTRIBUTION TO CAPITAL**

The Company is involved in financing and other transactions, and has significant related party balances, with its parent. ' balances are for intercompany expense allocations and loans of working capital.

In April of 2020, The Firm's holding company was granted a loan through the Small Business Administration (SBA) in the a11 of\$1,491,873, pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act (the Act), which was en March 27, 2020. The Loan amount was transferred to the Firm and utilized for eligible expenditures as defined under Section of the Act and was reflected on The Firm's Statement of Financial Condition as a payable to affiliate from the time of receipt th1 December 31, 2020. In May of 2021, the holding company received forgiveness of the loan from the SBA for the entire am01 \$1,491,873. The Firm subsequently converted the liability into a formal equity contribution from the holding company, a amount no longer needed to be paid by to the holding company due to the forgiveness granted. The Firm subsequently conv the liability into a formal equity contribution from the holding company, as this amount no longer needed to be paid back 1 holding company due to the forgiveness granted.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.