# LIBERUM CAPITAL INC X-17A-5 (2019-03-01) — Broker-dealer annual report

- Company: LIBERUM CAPITAL INC
- Form: X-17A-5
- Filed: 2019-03-01
- Period: 2018-12-31
- Accession: 0001442141-19-000001
- CIK: 1442141
- File #: 8-67976
- Material weakness: No
- Auditor: BDG-CPAs
- Auditor location: Ridgewood, NJ
- Contact: Steven Bender
- Phone: 6462907248
- Signed by: Steven C Bender (Financial & Operations Principal)

Original filing: https://www.sec.gov/Archives/edgar/data/1442141/000144214119000001/lium2018.pdf

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l TEDSTATES SECURITfESA'IO E.XCHA1'CE CO:\l\fJ 10~ Wuhiogtoo, D.C. lOS-49

### ANNUAL AUDITED REPORT FORM X-17A-s PART Ill

| OMB Number | 3235-0123                |
|------------|--------------------------|
| &pues:     | August 31, 2020          |
|            | Estimated average burden |
| hours      | e  12 00                 |
|            |                          |
|            | SEC ALE NUMBER           |

S.67976

OMS Al?PROVAL

FACING PAGE

Information Required of Broker~ and Dealers !Pursuant to cc:tion J 7 of the ecuritie E~cba ge Act of 1934 and Rule I 7a-5 Thereunder

| REPORT FOR TIJE PERJOD B.EGIN"llNG January 1, 2018 |            | AND END! G December 31<br>, 20_1_8_ |  |
|----------------------------------------------------|------------|-------------------------------------|--|
|                                                    | \,f\f 00), | MY DD'YY                            |  |

| fl.AMf OF BROKER-DEALl:.R· Liberum Capital Inc<br>ADDRESS OF PRINCIPAL PLACE OF BlJSNESS (Do not ui,c P 0<br>575 Fifth Avenue, 20th Floor<br>New York<br>(Chy)<br>?\AME AND TELEPHOXE NUMBER OF PERSO~ TO CO~AL"T l'\i REGARD TO THlS REPORT | . Bo"< No.)<br>(No. aod Slll:Cll<br>NY<br>IStakJ |             | OFFICIAL USE ONLY<br>FIRM 1.0. NO. |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|-------------|------------------------------------|--|
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|                                                                                                                                                                                                                                              |                                                  |             | 10017                              |  |
|                                                                                                                                                                                                                                              |                                                  | 11.tp Code> |                                    |  |
| s:-ca.no."''<br>2IO nee                                                                                                                                                                                                                      |                                                  |             |                                    |  |
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| B. ACCOUNTA 1                                                                                                                                                                                                                                | T lDENTlFICATJO                                  |             |                                    |  |
| l?'DEPEJl.DENT PUBLIC ACCOUNTA!lo'T "hoe opinion is containl!J in thi) R~FX'n<br>BDG-CPAs                                                                                                                                                    |                                                  | •           |                                    |  |
| 78 North Walnut St                                                                                                                                                                                                                           | Ridgewood                                        | NJ          | 07450                              |  |
|                                                                                                                                                                                                                                              |                                                  | 1.C:lalcl   |                                    |  |
| CHECK ONE:<br>l/"IC1"rtilicd Public Accounrnnl<br>Public Accoun1an1                                                                                                                                                                          |                                                  |             |                                    |  |
| B<br>Accountan1 not n:sidcnl in United! Sute~ or ao)· of us po<>sessions.                                                                                                                                                                    |                                                  |             |                                    |  |
|                                                                                                                                                                                                                                              | fOll OPPICIAL USE OML Y                          |             |                                    |  |

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> Potential pwreorw who ar• to r .. pond to the collection of lnformetlon cont•lned In thl1 form are not required to raapond unl•H the form dlapl•Y• • currenUy valid OMB control numb•r.

SEC 1410 (1 l -05)

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#### OATU OR \FflRMATIO'

1 Steven C Bender ·~~~~~~~~~~~~~~~~~~~~~~~~~~~~- swear (or affirm) 1h1u to lhe bc:s1 u(

my knowledge and belief the accompnnying financ1al statement and supponrng schedules peru1mng to the firm of Uberum Capital Inc ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-· ·~

of December 31 • .20 18 • are t.rue and correct. I funher S\\t'U {or affirm) that

neither the comp:my nor llll) l)3rtner. propnelor. pnnc1pal offict"r or d1~ctor h•n an) propnetary interest many 3ccoun1 cla~i;1fted solel) as that ofa cll.i;tomet, t'\cept ns follows·

|                                                                                                                                                                                                                                                                                                        | Financial & Operations Pnncipal<br>T11le                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                        | TAllHIY l wtcl<tWI<br>:?'J~~<br>@MY<br>~IOtol I G0070155<br>,<br>EXPIRES flbnary 08, 2021<br>•,                            |
| This repon • • conuun~ I check all nppl11:nble bo"es)<br>0 (a) foc1ns Pov.e.<br>0 (b) Src11t>mcnt of Financial Conduion<br>0 (c;) S111c:mc:nt of Income tLo:.s) or. 1fthere as other compr-h-n>t\C income m the penodl!>I<br>ol' Comprehc:n<,1"e Income (I) defined tn f:!I 0 1-0:! or Rcgulahon c;.x) | pr~~h.oJ a Statement                                                                                                       |
| Cd) State mc:nt of Changes rn Fm.ancial Condillt'n<br>Ce) ~tatement of Chang~ 1n Stockholders' Equ1t) or Panners or Sole Proprietors· Capital<br>(f) StBtcmcnt of C. hanges in L1Bb1htte!S Subordinated 10 C'l:.11mi; of Creditors<br>~                                                                |                                                                                                                            |
| § (g) Compu11111u11 of "ii.:1 Cep11al<br>(h) C'ompumuon for Di.:cem1inB1ion of Resene Requirenu:n!J Pursuani to Rule I Scl·l                                                                                                                                                                           |                                                                                                                            |
| (1) lnformJlllOn Relating (4) me p~~~SIOO or Control Retju1rements Under Rule IScl-J<br>Compu1auon for Deurminauon of the tu~~ne Requuemerns Under Exhibit A of Rule I Sd-3.                                                                                                                           | 0 (J) A Reconc1l1a1ion, mcludini; appropriate it\'.plan:rnon of1hc Compuust1on oDlet C:ap1llll Under Rull' I 5c3-1 and the |
| con,ohd.111on                                                                                                                                                                                                                                                                                          | 0 (k) A Reconc1ho11on bel\'.i«n lhe aud11ed and unauJ11eJ Stattmcnts of F1nan,;ial ('ond1t1on \\ 11h rcspcet to methods of |
| , (I) An O.uh ur Afflrmn11on<br>(m) A cop~ of the SI PC Supplemental Rcpon<br>"                                                                                                                                                                                                                        |                                                                                                                            |
|                                                                                                                                                                                                                                                                                                        |                                                                                                                            |

(n) A rcpon dcscnbmg any m111crn1l m:idequ:ic1es found to C\l~t or founm 10 ha\e e io;1c:O since the cl.1te of the previous audit

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#### FINANCIAL STATEMENTS

DECEMBER 31, 2018

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#### TABLE OF CONTENT S

| Report of Independent Registered Public Accounting Firm                                                                                                  |      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|------|
| Financial Statements                                                                                                                                     |      |
| Statement of Financial Condition                                                                                                                         | 3    |
| Statement of Income                                                                                                                                      | 4    |
| Statement of Changes in Stockholder's Equity                                                                                                             | 5    |
| Statement of Cash Flows                                                                                                                                  |      |
| Notes to Financial Statements                                                                                                                            |      |
| ntary Information Required by Rule 17a-5 of<br>Suppleme<br>The Securities and Exchange Commission                                                        |      |
| Schedule of Computation of Alternate Net Capital under<br>Rwle 15c3-I of the Securities and Exchange Commission                                          | 14   |
| ule of Reconciliation of Net Capital per FOCUS Report<br>Sched<br>W1th Audit Report                                                                      | l 5  |
| Exemption Report under Rule 17 a-5 of the Securities and Exchange Commission                                                                             | 1 -6 |
| eport of Independent Registered Public Accounting Firm<br>Review R                                                                                       | 17   |
| Report of Independent Registered Public Accounting Firm on Applying Agreed-Upon<br>Procedures Related ito an Entity's SIPC Assessment R<br>econciliation | 18   |

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![](_page_4_Picture_0.jpeg)

76 North WaJnut Street Judgewood, New Jersey 07450 20.1-652-4040 fax: 201-652-040 I www.bdgcpa.com

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

To the Board of Directors and Stockholder of Liberum Capital Inc.:

#### **Opini-0n on the Financial Statements**

We have audited the accompanying statement of finan-cial condition of Liberum Capital lnc. as of December 31, 2018, 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 tbe "financial statements,,). ln our opinion, the financial statements present fairly, fo all material respects, the financial position of Liberum Capital lnc. as of December 31 , 2018, 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 th.e responsibility of Liberum Capital Inc. 's management. Our responsibility is to express an opinion on Liberum Capital Inc. 's financial statements based on our audit. We are a public accounting firm registered with the PUJblic Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent w:ith respect to Liberum Capital. Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities aod Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are 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 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. 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 statements. We believe that our audit provides a reasonable basis for our opinion.

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#### **Audit<>r's Report on Supplemental Information**

The supplemental infomrntion listed in the accompanying Table of Contents has been subjected to audit procedures perfonned in conjunction with the audit of Liberum Capital Inc. 's financial statements. The supplementaJ information is the responsibility of Liberum Capital Inc. 's management. Our mudit 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 infonnation presen ted in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240. l 7a-5. In our ·opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

We have served as Liberum Capital Inc. 's auditor since 2014.

BDG-CPAs, PC Ridgewood, New Jersey Febrnary 28, 2019

![](_page_5_Picture_5.jpeg)

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#### STATEMENT OF FINANCIAL CO NDITION

|                                                                          |    | DECEMBER 31,<br>2018 |  |
|--------------------------------------------------------------------------|----|----------------------|--|
| ASSETS                                                                   |    |                      |  |
| Cash                                                                     | \$ | 1,998,993            |  |
| Deposit with clearing organization                                       |    | 250,000              |  |
| Receivable from clearing organization                                    |    | 111,471              |  |
| Prepaid expenses, receivables, and other assets (no valuation allowance) |    | 292,717              |  |
| Prepaid income taxes                                                     |    | 136,456              |  |
| Fixed assets, net                                                        |    | 104,426              |  |
| Security deposit                                                         |    | 152,600              |  |
| Investment -<br>parent                                                   |    | 116,076              |  |
| Due from parent                                                          |    | 2,696,991            |  |
| Total assets                                                             | \$ | 5,859,730            |  |
| LIABILITIES AND STOCKHOLDER'S EQUITY                                     |    |                      |  |
| Liabilities                                                              |    |                      |  |
| Accounts payable and accrued expenses                                    | \$ | 1,267,489            |  |
| Deferred tax liability, net                                              |    | 29,000               |  |
| Total liabilities                                                        |    | 1,296,489            |  |
| Stockholder's equity                                                     |    |                      |  |
| Common stock, \$0 par value; 1,000 shares authorized                     |    |                      |  |
| 155 issued and outstanding                                               |    | 155,000              |  |
| Series A preferred stock, \$0 par value; 9,000 shares authorized         |    |                      |  |
| 1,091 issued and outstanding                                             |    | 1,091,000            |  |
| Additional paid-in capital                                               |    | 1,621,815            |  |
| Retained earnings                                                        |    | 1,695,426            |  |
| Total stockholder's eq<br>uity                                           |    | 4,563,241            |  |
| Total liabilities and stockholder's equity                               | \$ | 5,859,730            |  |

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#### STATEM ENT OF INCOME

|                                              | YE | AR ENDED<br>DECEMBER 31,<br>2018 |
|----------------------------------------------|----|----------------------------------|
| Revenue                                      | \$ | 5,604,436                        |
| Direct Costs                                 |    | 196,150                          |
| Gross Profit                                 |    | 5,408,286                        |
| Operating expenses                           |    |                                  |
| Wages and salaries                           |    | 2,847,208                        |
| Other sttaff costs                           |    | 41 3,132                         |
| Travel and subsistence                       |    | 30<br>1,604                      |
| Market data                                  |    | 230,020                          |
| Trading systems                              |    | 159,742                          |
| Communications                               |    | 79,574                           |
| Hardware and software                        |    | 48,687                           |
| Service agreements                           |    | 38,630                           |
| Marketing, public relations and entertaining |    | 79,995                           |
| Professional fees                            |    | 195,457                          |
| Premises costs                               |    | 494,518                          |
| Office expense                               |    | 19,447                           |
| Other costs                                  |    | 16,077                           |
| Total ope<br>rating expenses                 |    | 4,924,091                        |
| Income from operations before income taxes   |    | 484,195                          |
| Income taxes                                 |    | 142,162                          |
| Net income                                   | \$ | 342_,033                         |

*The accompanying notes are an integral p art of these financial statements.* 

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#### ST A TEMENT OF CHANGES IN STO CKHOLDER'S EQUITY

|                                                                              | Common<br>Stock | Preferred<br>Stock | Additional<br>Paid-in<br>Capital | R etained<br>Earnings | Total<br>Stockholder's<br>Equity |
|------------------------------------------------------------------------------|-----------------|--------------------|----------------------------------|-----------------------|----------------------------------|
| Balance - January 1, 2018                                                    | \$<br>155,000   | \$<br>1,09 1,000   | \$<br>1,678,526                  | \$<br>1,353,393       | \$<br>4,277,919                  |
| Contribution to capital of Parent's<br>shares for Share Plans                |                 |                    | 2,9 17                           |                       | 2.917                            |
| Reduction of capital of Parent's<br>shares for forfeitures in<br>Share Plans |                 |                    | (59,628)                         |                       | (59,628)                         |
| Net income                                                                   |                 |                    |                                  | 342,033               | 342,033                          |
| Balance -<br>December 31, 20 l 8                                             | \$<br>1.5.5,000 | \$<br>1.091,000    | \$<br>1,621,81.5                 | \$<br>1,69.5 '426     | \$<br>4 ,.56 3 ,241              |

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#### STATEMENT OF CASH FLOWS

|                                                             | YEAR ENDED<br>DECEMBER 31,<br>2018 |  |  |
|-------------------------------------------------------------|------------------------------------|--|--|
| Cash flows from operations                                  |                                    |  |  |
| Net income                                                  | \$<br>342,033                      |  |  |
| Adjustments to reconcile net income to net cash provided by |                                    |  |  |
| opera ling activities:                                      |                                    |  |  |
| Depreciation expense                                        | 22,371                             |  |  |
| Share awards compensation                                   | 23,222                             |  |  |
| Security deposit                                            | (16,960)                           |  |  |
| Deferred taxes                                              | 113,000                            |  |  |
| Decrease in operating assets:                               |                                    |  |  |
| Receivable from clearing organization                       | 56,200                             |  |  |
| Prepaid expenses, receivables, and other assets             | (124,180)                          |  |  |
| Prepaid income taxes                                        | (62,490)                           |  |  |
| Due to/from parent                                          | (484,965)                          |  |  |
| Increase in operating liabilities:                          |                                    |  |  |
| Accounts payable .and accrued expenses                      | 256,045                            |  |  |
| Net cash provided by operating activities                   | 124,276                            |  |  |
| Cash flows from inves1ing activities.                       |                                    |  |  |
| Purchase of fixed assets                                    | (l 02,089)                         |  |  |
| Net cash used by investing activities                       | (102,089)                          |  |  |
| Cash flows from financing activities                        |                                    |  |  |
| Increase in cash                                            | 22,187                             |  |  |
| beginning of the year<br>Cash -                             | 1,976,806                          |  |  |
| end of the year<br>Cash -                                   | \$<br>1,998,993                    |  |  |

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#### NOTES TO FINANCIAL ST A TEMENTS DECEMIJER 31, 2018

### *Note* I - *Organization* tm <l *Nature of Oper<1tions*

Liberum Capital Inc. (th.e "Company"), a New York corpor.ation organize<l in February 2008, is a wholly owned subsidiary ofLiberum Capital Limited (the "Parent"). The Company is a registered broker-dealer with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority ("FINRA"). The Company received its FINRA approval for membership on January 23, 2009. The Company provides sales and marketing services to the Parent and engages in a general securities business with institutional investors.

## *Note 2* - *S ummary of Signific<mt Accounting Policies*

*Revenue R ecognition* - The Company provides sales and marketing services to the Parent. The fee for services is calculated based on direct and certain indirect costs incurred plus ten percent {l 0%).

*Cle"ring Transactions* - The Company transmits all transactions through a clearing broker who maintains the customers' accounts on a fully disclosed basis\_

*Receivables* - Receivables are recorded at the amount the Company expects to collect on balances outstanding at year-end .. Management closely monitors outstanding balances and writes off, as of yearend, all balances deemed uncollectible. No allowance was considered necessary at December 31, 201 8.

*Property and Equipment* - Property and equipment are carried at cost. When assets are sold or retired, the cost and related accumulated depreciation are eliminated from the accounts, aod any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred.

DepreciatDon is computed on the straight-line basis over the assets' useful lives.

*Income Taxes am/ Deferred Tllxes* - The Company has elected to be taxed as a C-corporation pursuant to the Internal Revenue Code and applicable state laws. The Company accounts for income taxes in accordance with FASB ASC 740, *In come Taxes,* which requires the recognition of deferred income taxes for differences between the basjs of assets and 1 iabiftities for financial statement and income tax purposes. The differences relate princ ipally to depreciation and amortization of fixed assets, and stockbased compensation. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be deductible or taxable whe n the assets and liabilities are recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation .allowance is recognized.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxab le income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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#### NOTES TO FINANCIAL ST A TEMENTS DECEMIJER 31, 2018

### *Note 2* - *Summary of Significant Accounting Policies (continued)*

*Advertising -* The Company expenses the cost of advertising and promotions as incurred.

*Uncertain Tax Positions* - The Company is required to recognize, measure, classify, and disclose in the financial statements uncertain tax positions taken or expected to be taken in the Company's tax returns. Management has determined that the Company does not have any uncertain tax positions and associated unrecognized benefits that materially impact the financial statements or related disclosures. Since tax matters are subject to some degree of W1Certainty, there can be no assurance that the Company's tax returns will not be challenged by the taxing authorities and that the Company will not be subject to additional tax, penalties, and interest as a result of such challenge. Generally, the Company's current and prior three years tax retums remain subject for income tax examination as of December 3 J, 201 8.

*Foreign Currency Translation* - Assets and liabilities that are translated use exchange rates in effect at the balance sheet date and revenues and expenses that have occurred throughout the current fiscal year are converted at a weighted-average rate of exchange for the entire year. Resulting transla6 on adjustments are recorded directly in accumulated other -comprehensive income whi.ch is a separate component of stockholder's equity.

*Share-bllsed Compensation* - The Company recognizes compensation expense for share awards granted to employees in accordance with the fair value recognition provisions of F ASB ASC 7 1 8, *Compensation*  - *Stock Compensation,* at their estimated fair market value on the date of the grant.

*Compenst1ted Absences* - Employees. are entitled to paid vacations, sick days and personal days off, depending on job classification, length of service, and other factors. It is impractical to estimate the amount of compensation for future absences, and accordingly, no liability has been recorded in the accompanying financial statements. It is the Company's policy to recognize the cost of compensated absence when actually paid.

*Statement of Cash Flows* - For purposes of the Statement of Cash Flows, the Company has defined cash equivalents as highly liquid assets, with original maturities of less than three months that are not held for sale in the ordinary course of business.

*Use of Estimates* - The preparation of the financial statements in confonnity with accounting principles generally accepted in the United States of America ("GAAP"), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting peri od. Actual results could differ from those estimates.

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#### NOTES TO FINANCIAL ST A TEMENTS DECEMIJER 31, 2018

#### *Note 2* - *S ummary of Significant Accounting Policies (continued)*

*S ubsequent Events* - Management has reviewed and evaluated all events and transactions from December 31, 2018 (statement of financial condition date) through February 28, 2019, the date that the financial statements are available for issuance. The effects of those events and transactions that provide additional pertinent infonnation about conditions that existed at the statement of financial condition date have been recognized in the accompanying financial statements.

#### *Note 3* - *Property and E11uipment*

Property and equipment at December :> l, 2018, consisted of lthe following:

| Furniture and fixtures   | \$<br>77,538  |
|--------------------------|---------------|
| Equipment                | l 13,288      |
|                          | 190,826       |
| Accumulated depreciation | (86,400)      |
|                          | \$<br>104,426 |

#### *Note 4* - *Operating Lease*

The Company occupies office space under a lease agreement that expires in October 2025. The lease agreement requires monthly rent of \$38,150 commencing on April l, 2019 and increasing to \$40,693 per month on November 1, 2021 for the remainder of the lease. Aggregated future minimum annual rental payments under the lease agreement are as follows:

| 2019  | 343,350<br>\$ |
|-------|---------------|
| 2020  | 457,800       |
| 2021  | 462,887       |
| 2022  | 488,320       |
| 2023  | 488,320       |
| 2024  | 488,320       |
| 2025  | 406,933       |
| Total | ~3 135.930    |

Rent expense for the year ended December 31, 20 18 amounted to \$398,050.

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#### NOTES TO FINANCIAL ST A TEMENTS DECEMIJER 31, 2018

#### *Note 5* - *Investment - Parent*

The Parent has adopted stock-based compensation plans that eligible employees of the Company may participate in (See Note 14). When an employee of the Company is awarded shares under the plans, the Company records a contribution to additional paid-in capital, and a corresponding investment in parent for the fair market value of the Parent's shares on the date of the award. As compensation expense is recognized in accordance with FASB ASC 718, *Compensation* - *Stock Compensation,* the investment in parent is reduced accordingly.

#### *Note 6* - *Income Taxes*

The income tax expense (benefit) for t he year ended December 31, 201 8 consists of the following:

| Current         |             |
|-----------------|-------------|
| Federa<br>l     | 8,964<br>\$ |
| State and local | 20 198      |
|                 | 29,l62      |
| Deferred        |             |
| Federal         | 72,600      |
| State and local | 40 400      |
|                 | 11 3 000    |
|                 | \$ 142 162  |

The income tax expense reported on the statement of income differs from the amounts that would result from appDying statutory tax rates to income before income taxes primarily because of share awards deductibility upon vestjng. The defe1Ted tax liability of \$29,000 as of December 31 , 20 18 relates primarily to accelerated tax depreciation versus book depreciation, this item is non-current. The Company has chosen to early adopt the amendments in F ASB Accoun ting Standards Update (ASU) 20.1 5- 17, *Balance Sheet Classifications of Deferred Taxes,* prior periods were not retrospectively adjusted.

#### *Note* 7 - *R elllted Party Transactions*

At December 31, 201 8 the Company bas a receivable from the Parent totaling \$2,696,9'9 l. There are no repayment terms associated with this transaction.

{14}------------------------------------------------

#### NOTES TO FINANCIAL ST A TEMENTS DECEMIJER 31, 2018

#### *Note 7* - *Helatetl Party Jr11nsllctions (continued)*

The Company has a service agreement with the Parent. Under the service agreement, the Company will provide sales and marketing services. to the Parent. The fee earned by the Company for sales and marketing services is to be calculated based on direct and certain indirect costs incurred by the Company plus ten percent (10%). For the year ended December 31, 2018, the fees earned by the Company from the Parent for these services amounted to \$5,605,444.

#### *Note 8* - *Cllpital*

During 2010, the Company amended its Certificate of incorporation as filed with the New York State Departme!l1t of State, Division of Corporation, to provide that the Company shall be entitled to issue I 0,000 shares, consisting of I ,000 shares of common stock with no par value and 9 ,000 shares of preferred stock with no par value. The total of 9,000 shares of preferred stock shall be designated as a series known as Series A Preferred Stock.

The holders of Common Stock shatl be entitled to receive dividends out of the funds legally avai1a ble therefore at 2% above LIBOR at such times and in such amounts as the Board of Directors may determine in its sole discretion. Such dividends shall be non-cumulative. For 2018, the Board of Directors d id not declare any dividends.

Upon liquidation, dissolution or winding up of the Company, each holder of each outstanding share of Series A Preferred Stock shall be entitled to be paid out of the assets of the Company available for distribution, whether such assets are capital, surplus or earnings before any amount shall be paid or distributed to the holders of the Common Stock or any other series or class of capital stock of the Company ranking on liquidation junior to the Series A Preferred Stock~ an amount per share equal to any declared but unpaid dividends to which such holder of Series A Preferred Stock is then entitled.

#### *Note 9* - *Net Capital Requirement*

The Company is subje.ct to the SEC Uniform Net Capital Rule (Rule l 5c3-1 ), which requires the maintenance of minimum net capital. At December 31, 2018, the Company had net capital of \$1 ,063,97 5, which was \$763,975 in excess of its required net capital of \$300,000.

#### *Note I 0 - Indemnifications*

In the nonnaJ course of its business, the Company indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, again st specified potential losses in connections with their acting as an agent of, or providing services to, the Company or i.ts affiliates. The Company also indemnifies some clients against potential losses incurred im the event specified third-party service providers, including sub-custodians and third-party brokers, improperly execute transactions.

{15}------------------------------------------------

#### NOTES TO FINANCIAL STATEMENTS DECEMIJER 31, 2018

#### *Note JO - lmlemnijications (continuetl)*

The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and h.as not recorded any contingent liability in the financial s.tatements for these indemnifications.

The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are ente red into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications.

#### *Note 11* - *Cash Segregatetl 11nder Federal am/ Other Regulations*

The Company is not required to maintain a special reserve bank account for the protection of customers as required by Rule 15c3-3 of the Securities and Exchange Commission under Section K(2)ii of the rule.

### *Note 12* - *Concentration of Credit Risk anti Other Fimmciol Information*

Cash held by financial institutions which exceed the Federal Deposit Insurance Corporation ("FDIC') limits expose the Company to concentrations of credit risk. Balances throughout the year usually exceed the maximum coverage by the FDIC on insured de positor accounts. At December 3 1, 2018, the Compan <sup>s</sup>uninsured cash balance was \$ 1,748,993.

Supplemental Disclosure of Cash Flow Information

| Ca<br>sh paid during the year for: | Income taxes | \$ 101<br>,669 |
|------------------------------------|--------------|----------------|
|                                    | lnterest     | 0              |

{16}------------------------------------------------

#### NOTES TO FINANCIAL ST A TEMENTS DECEMIJER 31, 2018

#### *Note 13* - *Retirement Plan*

The Company has a 401 (k) retirement plan for its employees. The plan is available to al I employees meeting certain eligibility requirements. The Company did not make any contributions to the plan on behalf of 1!he employees in 2018.

#### *Note* 14 - *Share Plans am/ Stock-Based Compensation*

The Parent had adopted an Ordinary Share Scheme and a Growth Share Plan (the "Plans") for eligible employees as defined in the Plans. The shares of the Parent are awarded at a price that approximates the estimated fair value of the shares at the date of grant as detennined in accordance with the Plans. T he shares awarded vest under various provisions, not to exceed 5 years. For the year ended December 3 1, 2018, the Company recoTded compensation expense under the Plans of \$23,222.

{17}------------------------------------------------

#### SCHEDULE OF COMPlJTATION OF ALTERNATE NET CAPITAL UNDER SEC RULE 15c3-I

|                                                                      |    | DECEMBER 31,<br>2018 |  |
|----------------------------------------------------------------------|----|----------------------|--|
| Total stockholder's equity                                           | \$ | 4,563,241            |  |
| Add: Other or allowable credits                                      |    |                      |  |
| Deductions and/or charges:<br>Nonallowable assets:                   |    |                      |  |
| Prepaid expenses and other assets                                    |    | 292,717              |  |
| Prepaid income taxes                                                 |    | 136,456              |  |
| Fixed assets                                                         |    | 104,426              |  |
| Security deposit                                                     |    | 1521600              |  |
| Investment -<br>parent                                               |    | 116,076              |  |
| Due from parent                                                      |    | 2,696,991            |  |
|                                                                      |    | 3,499,266            |  |
| Net capital before haircuts: on securities positions                 |    | 1,063,975            |  |
| Haircuts on securities                                               |    |                      |  |
| Net capital                                                          | \$ | 1,063,975            |  |
| COMPUTATION OF ALTERNATE NET CAPITAL REQUIREMENT                     |    |                      |  |
| Minimum dollar net capital requirement of reporting broker or dealer | \$ | 250,000              |  |
| Excess net capital                                                   |    | 813,975              |  |
| Net capital in excess of J 20% of minimum net capital requirement    | \$ | 763,975              |  |

{18}------------------------------------------------

# **LIBERUM CAPITAL** INC.

#### **SCHEDULE OF RECONCILIATION OF NET CAPITAL PER FOCUS REPORT WITH AUDIT REPORT**

|                                   | DlECEMBER 3-1, |               |
|-----------------------------------|----------------|---------------|
|                                   | 2018           |               |
| Net capital -<br>per FOCUS Report | \$             | l,063,97<br>1 |
| Rounding                          |                | 4             |
| Net capital -<br>per audit report | \$             | l,063,975     |

{19}------------------------------------------------

675 Fifth Avenue, 20 .. Floor New York, NY 10017, United States of America T •1212696 4800 *IF* +1 21.2 SK 4898 www.llberum.com

Liberum Capital Inc.

Exemption Report

Uberum CapltaJ Inc (the "Company'") Is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F .R. §240.17a-5, •Reports to be made by certain brokers end dealers·). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(1) and (4) To the best of its knowledge and belief, the Company states the following:

(1) The Company claims an exemption from 17 C.F.R. § 240. 15c3-3(k}(2)(ii) (the "exemption provision") and (2) the Company met the exemption provision throughout the most recent fiscal year 2018 without exception.

Uberum Capital Inc.

Financial Principal

February 11, 2019

{20}------------------------------------------------

![](_page_20_Picture_0.jpeg)

76 North Walnut Street Ridgewood, New Jersey 07450 20.1-652-4040 fax: 201-652-040 I www.bdgcpa.com

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

To the Board of Directors and Stockholder of Liberum Capital Inc\_:

We have reviewed management's statements, included in the accompanying Exemption Report, in wbjch ( 1) Liberum Capital Inc. (the "Company" ) identified the following provisions of 17 C.F.R\_ § l 5c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240. l 5c3- 3: (k)(2)(ii) (the "exemption provisions") and (2) the Company stated that the Company met the identified exemption provisions throughout the most recent fiscal year without exception. The Company's management is respo11sible for compliance with the exemption provisions and its statements.

Out· review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inq\_uiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opm1on.

Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii) of Rule l 5c3-3 under the Securities Exchange Act of 1934.

BDG-CPAs, PC Ridgewood, New Jersey February 28, 20 I 9

{21}------------------------------------------------

![](_page_21_Picture_0.jpeg)

76 North Walnut Street Ridgewood, New Jersey 07450 20.1-652-4040 fax: 201-652-040 I www.bdgepa.com

#### Re1>ort of lnde1>endeot Registe red Pubilic Acco1mting F irm on Applying Agreed-Upon Procedures

To the Board of Directors and Stockholder of Libenun Capital Inc.:

We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, whjch are enumerated below and were agreed to by Libemm Capital Lnc. and rhe SIPC, solely to assist you and SIPC in evaluating Libemm Capital lnc. 's compliance with the applicable instnictions of the General Assessment Reconciliaition (form SJPC-7) for the year ended December 31, 2018. Liberum Capital lnc.'s management is responsible for its Form SJPC-7 and for its compliance with those requirements. Thms agreed-upon procedures engagement was conducted in accordance wit11 standards established by the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American £nstitute of Certified Public AccoUJltants. The suf(iciency of these procedures is solely the responsibility of LJ10se parties specified in tl1is repon. Consequently, we make no representation regarding the sufficiency of the procedures descrLbed below either for the purpose for which this report has been requested or for any other purpose. The procedures. we performed and our findjngs are as follows:

- I. Compared the listed assessment payments in Fonn SIPC-7 with respective cash disbursement records entries, noling no differences;
- 2. Compared the Total Revenue amount reported on the Annual Audited Report FQrm X-17 A-5 Part Ill for the year ended December 31 , 2018 with the Total Revenue amoun.t reported in Form SIPC-7 for the year ended December 31 , 2018. notLng no differences;
- 3. Compared any adjustments reported in Form SLPC-7 with supporting scheduJes and working papers, noting no diITerences;
- 4. Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting !he adjustments, noting no differences; and
- 5. Compared the amount of any overpayment applied to the current assessment with the Fonn SlPC-7 on which it was originally computed, noting no ciii fferences.

We were not engaged lo and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion,. respectively, on Liberum Capital Tnc.'s compliance with the applicable Lnstructions of the Fonn SLPC-7 for the year ended December 31 , 2018. Accordingly, we do not express such an opinion or conclusion. Had we perfonned additional procedures, other mailers might have come lo our attention that would have been reported to you.

This report is intended s.olely for the information and use of Libenun Capital Inc. and the SlPC and is not intended to be aud should not be used by anyone other than these specified partjes.

*8/JC-C!l?s* 

BDG-CPAs, PC Ridgewood, New Jersey February 28, 2019

{22}------------------------------------------------

| SIPC-7 |
|--------|
|        |

L

#### SECURITIES INVESTOR PROTECTION CORPORATION P.O. Box 92185 Washington, D.C. 20090-2185 202-371-8300 **SIPC-7**  ( 36-REV 12/18) General Assessment Reconciliation (36-REV 12/18)

![](_page_22_Picture_2.jpeg)

For the fiscal year ended 1213112018

(Read carefully lhe Instructions In your Working Copy before completing !his Form)

#### TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS

I . Name or Member, address, Designated Examining Authority, 1934 Act registration no. and month In which fiscal year ends for purposes of the audit requirement or SEC Rule 17a-5:

I 1•1·-·"200--·--ALLFORAAOC <sup>100</sup> 67976 FINRA DEC UBERUM CAPITAL INC' UBER UM 575 STH AVE 20TH FL NEW YORK, NY 10017-2422

Nole: If any of the information shown on the mailing label requires correction, please e-mail any corrections to form@sipc.org and so indicate on the form filed.

Name and telephone number of person to contact respecting this form.

\_J Steue.rv ~eoder G'ilr-~"10 -l~Lti

\$ 'bll'i

)<jG,Y,

()

S"IY~

- 2. A. General Assessment (item 2e from page 2)
	- B. Less prmc nl Uade w1lh SIPC-6 filed (exclude Interest)

1 i1 2 Date Paid

c. Less prior overpayment app lied

D. Assessment balance due or (overpayment)

E lnleresl computed on late payment (see instruction E) for \_\_\_ days at 20% per annum 0

F. Total assessment balance and Interest due (or overpayment carried I orward) \$ 5J4l

G. PAYMENT: ..J the box .r:f Check malled to P.O. Box Funds Wired D ACH U Total (mus1 be same as F above) \$ 5 JY~

H. Overpayment carried forward \$( *()* 

en Disposition of excepllons:

3. Subsidiaries (S) and predecessors (P) Included i n this form (give name and 1934 Act registration number):

| Oaled the.JL. day 01_F_.-e  b_ _      |                   |                                                                                          |                                                                                                                                         |
|---------------------------------------|-------------------|------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|
|                                       | _ .<br>Jl_.<br>20 | for a period of not less than 6 years, the latest 2 years In an easily accesslble place. | (T tie)<br>Th is form and the assessment payment Is due 60 d11y~ ofter the end of the fiscal year. Retain the Working Copy of this form |
| ffi Dales:<br>:=<br>Post marked<br>uu | Received          | Reviewed                                                                                 |                                                                                                                                         |
| =-<br>Calculations _<br>_ _           |                   | Documentation _<br>_ _                                                                   | ___<br>Forward Copy                                                                                                                     |

{23}------------------------------------------------

#### DETERMINATION OF " SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT

Amoun1s for the fiscal period beginni ng 1 /1/201 B and ending 12/31/2018

\$ s-, ~os- yLj3

Eliminate cents

|  |  | Item No. |
|--|--|----------|
|  |  |          |
|  |  |          |

2a. Total revenue (FOCUS Line 12/Part !IA Line 9. Code 4030)

2b. Additions:

- (1) Total revenues from the securities business o I subsidiaries (except lorelg n subsidiaries) and predecessors nol included above.
- (2) Net loss from principal transactions in securi1 ies in trading accounts.
- (3) Net loss from principal transactions in commo dities in trading accounts.
- (4) Interest and dividend expense deducted in determining item 2a.
- (5) Net loss from management of or participation in !he underwriting or distribution ol securities.
- (6) Expenses other than adver1ising, printing, registration fees and legal fees. deducted in determining nel profit Imm management of or participation in underwriting or distribution of securities.
- (7) Net loss from securities in investment accoun ts.

Total additions

#### 2c. Deductions:

( 1) Revenues from the distribu lion of shares of a registered open end investment company or unit investment trusl, from lhe sale of variable annuities, lrom the business of insurance, lrom investment advisory services rendered to registered investment companies or insura11ce company separate accounts, and from transactions in security futures products.

(Z) Revenues from commodity transactions.

- (3) Commissions, floor brokerage and clearance paid to other SIPC members In connection with securiti;8S transactions.
- (4) Reimbursements for postage in connection with proxy sollcltation.
- (5) Net gain lrom securities in investment accounts.
- (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and (ii) Treasury bills, bankers acceptances or commercial paper that mature nine months or les.s from Issuance date.
- (7) Direct expenses ol printing advertising and legal fees incurred in connection with other revenue related lo the securities business (revenue defined by Section 16(9)(l) oi the Acl).
- (8) Other revenue not related either directly or irtdireclly to the securities business. (See Instruction C):

(Deductions in excess of \$100,000 require documentation)

(9) (i) Total interest and dividend expense (FOCUS Line 22/PART llA Line 13, Code 4075 plus line 2b(4) above) but not In excess 0 of total interest and dividend income. \$ \_ \_\_\_\_\_\_\_\_\_ \_

| Line 13, |   |  |
|----------|---|--|
| 2<br>2   | 0 |  |
|          |   |  |

\$ \_\_\_\_\_\_\_\_\_ <sup>~</sup>\_ \_

(ii) 40%. of margin interest earned on customers securities accounts (40% of FOCUS line 5, Code 39'60).

| Enter the greater of line (1) or (ii) |  |  |  |  |  |
|---------------------------------------|--|--|--|--|--|
|---------------------------------------|--|--|--|--|--|

- Total deductions
- 2d. SIPC Net Operating Revenues
- 2e. General Assessment @ .0015

| 0 |  |
|---|--|
|   |  |
|   |  |
|   |  |
| 0 |  |
| D |  |

()

| D |  |
|---|--|
| D |  |
|   |  |

| C> |  |
|----|--|

0

Q

0

| ()          |  |
|-------------|--|
|             |  |
|             |  |
| y<br><t>,\f |  |


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