# TELSEY ADVISORY GROUP LLC X-17A-5 (2022-03-01) — Broker-dealer annual report - Company: TELSEY ADVISORY GROUP LLC - Form: X-17A-5 - Filed: 2022-03-01 - Period: 2021-12-31 - Accession: 0001443209-22-000001 - CIK: 1443209 - File #: 8-67988 - Type: Broker-dealer - Material weakness: No - Auditor: EisnerAmpner LLP - Auditor location: NEW YORK, NY - Contact: Leigh Ekstein - Phone: 2125844604 - Signed by: LEIGH EKSTEIN (Vice Chairman) Original filing: https://www.sec.gov/Archives/edgar/data/1443209/000144320922000001/2021tagshort.pdf --- {0}------------------------------------------------ #### UNITED STATES SECUR]TIES AND EXCHANGE COMMISSION Washington, D.C.20549 | ANNUAL REPORTS | |----------------| | FORM X-l7A-5 | | PART II! | OMB APPROVAT OMB Number:3235-0723 Expires: Oct. 31,2023 Estimated average burden hours per response: 12 SEC FILE NUMBER | lnformation Required Pursuant to Rules L7a-5,L7a-L2, and 18a-7 under the Securities Exchange Act of 1934 | FACING PAGE | | | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|-------------------------------------------|-------------------------|------------|--| | FTLTNG FoR THE pERroD BEGTNNTNG oLlol'127 | | | tzl3tlzt | | | | | MM/DD/YY | AND ENDTNG | | MM/DDIYY | | | | A. REGISTRANT I DENTIFICATION | | | | | | TELSEY ADVISORY GROUP
NAME OF FIRM | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
El Broker-dealer E Security-based swap dealer
E Check here if respondent is also an OTC derivatives dealer
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | E lVtajor security-based swap participant | | | | | 555 FIFTH AVENUE, 7TH FLOOR | | | | | | | | (No. and Street) | | | | | | NEW YORK | NY | | 100L7 | | | | (City) | (State) | | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | JERRY S. ARZU | 21.2,584.46L4 | | JARZU @TELSEYG ROUP.COM | | | | (Name) | (Area Code - Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
EISNERAMPER LLP | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | 733 THIRD AVENUE | NEWYORK | NY | | LOO17 | | | (Address) | (City) | | (state) | (zip Code) | | | 09/29/2003 | | 274 | | | | | (Date of
with PCAOB | | | | Number, if | | | | FOR OFFICIAL USE ONLY | | | | | | * Clai
ms for exemption from the requirement that the annual reports be covered by the reports of an independent public
accountantmustbesupportedbyastatementoffactsandcircumstancesreliedonasthebasisoftheexemption.
CFR 240.17a-s(e)(1Xii), if applicable.
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form
displays a currently valid OMB control number. | | | | Seel,7 | | {1}------------------------------------------------ #### OATH OR AFFIRMATION | I, JERRY
financial report pertaining to the
DECEMBER 31 | S | ARZU , swear (or affirm) that, to the best of my knowledge and belief, the
as of
is true and correct. I further swear (or affirm) that neither the company nor any | |---------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | partner, officer, director, | ent | rson, as the case may be, has any proprietary interest in any account classified solely | | as that of a customer. | DAI{A,il}Ji( fiE,N*RV
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Title:CFO | | Public | | | #### This filing\*\* contains (check all applicable boxes): - tr (a) Statement of financial condition. - tr (b) Notes to consolidated statement of financial condition. - n (c) Statement of inco me (loss) or, if there is oth er compreh ensive income in the period(s) presented, a statement of comprehensive income (as defined in \$ 210.1-02 of Regulation S-X). - I (d) Statement of cash flows. - tr (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - tr (f) Statement of changes in liabilities subordinated to claims of creditors. - tr (g) Notes to consolidated financial statements. - tr (h) Computationof netcapital under17CFR240.15c3-1 or17 CFR 240.18a-L,asapplicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - tr (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - tr (k) Computation for determination of security-based swap reserve requlrements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.L8a-4, as applicable. - tr (l) Computation for Determination of PAB Requirements under Exhibit A to 5 240.15c3-3. - tr (m) lnformation relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - tr (n) lnformation relating to possession or control requirements for security-based swap customers under 17 CFR 2a0.15c3-3(p)(2\ or 17 CFR 240.18a-4, as applicable. - f (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.1,5c3-1,, !7 CFR 240,18a-L, or 1,7 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 77 CFR 240.1,8a-4, as applicable, if material differences exist, or a statement that no material differences exist. - f (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - tr (q ) Oath or aff irmation in accorda nce with L7 CFR 240.17 a-5, L7 CFR 240.t7 a-1,2, o r 17 CFR 240.1,8a-7 , as a pplicab le. - tr (r) Complia nce report in accord ance with 17 CFR 240.17a-5 or 17 CFR 240.\8a-7 , as a pplica ble. - [ (s) Exemption report in accordance with L7 CFR 240.17a-5 or 17 CFR 24O.l8a-7, as applicable. - I (t) lndependent public accountant's report based on an examination of the statement of financial condition. - I (u) lndependent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.1.8a-7, or 17 CFR 240.17a-tl, as applicable. - n (v) lndependent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.1"7a-5 or 17 CFR 240.78a-7, as applicable. - tr (w) ln dependent public accou nta nt's report based on a review of the exemption report u nder 17 CtR 240.!7 a-5 or 17 CFR 240.18a-7, as applicable. - n (x) Su pplementa I reports on applying agreed-u pon procedu res, in accorda n ce with 17 CF R 240.15c3 -Le or t7 CFR 240.77 a-12, as applicable. - n (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or astatement that no material inadequacies exist, under t7 CFR240.17a-12(k). - /,\ r\+h^'. \*\*To request confidentiol treatment of certain portions of this filing, see 17 CFR 240.L7o-5(e)(3) or 17 CFR 240.L8o-7(d)(2), os applicoble. {2}------------------------------------------------ STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTNG FIRM DECEMBER 31, 2021 {3}------------------------------------------------ # **CONTENTS** | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-------------| | Financial Statement | | | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3
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8 | {4}------------------------------------------------ # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members of Telsey Advisory Group LLC #### *Opinion on the Financial Statement* We have audited the accompanying statement of financial condition of Telsey Advisory Group LLC (the "Company") as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 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 that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2014 EISNERAMPER LLP New York, New York February 28, 2022 ![](_page_4_Picture_12.jpeg) "EisnerAmper" is the brand name under which EisnerAmper LLP and Eisner Advisory Group LLC provide professional services. EisnerAmper LLP and Eisner Advisory Group LLC are independently owned firms that practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. EisnerAmper LLP is a licensed CPA firm that provides attest services, and Eisner Advisory Group LLC and its subsidiary entities provide tax and business consulting services. Eisner Advisory Group LLC and its subsidiary entities are not licensed CPA firms. {5}------------------------------------------------ #### **STATEMENT OF FINANCIAL CONDITION** **December 31, 2021** | | \$
6,589,288 | |---------------------------------------------------------|------------------| | | 7,376 | | | 247,265 | | | 516,649 | | | 3,000,000 | | | 5,464 | | | 129,321 | | | 281,748 | | | | | | \$
10,777,111 | | | | | | | | Accounts payable and accrued expenses | \$
2,902,529 | | Total liabilities | 2,902,529 | | Liabilities subordinated to claims of general creditors | 3,000,000 | | Members' equity | 4,874,582 | | | \$
10,777,111 | {6}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENT** #### **1. Nature of business and summary of significant accounting policies** #### *Nature of Business* Telsey Advisory Group LLC (the "Company") is a Limited Liability Company organized under the laws of the state of Delaware on May 28, 2008. The Company's operations consist primarily of generating and distributing financial equity research to institutions, providing investment banking services and institutional trading. The Company is a registered broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company became a registered broker-dealer in March 2009. #### *Basis of Presentation* The financial statement has been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### *Concentrations of Credit Risk* The Company maintains cash in bank accounts which, at times, may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. #### *Accounts Receivable* The Company carries its accounts receivable at cost less an allowance for credit losses. #### *Allowance for Credit Losses* In accordance with ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"), certain financial assets measured at amortized cost are required to have a current expected credit loss (CECL) methodology to estimate expected credit losses over the entire life of the financial assets as of the reporting date. The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including fees receivable and receivable from clearing broker utilizing the CECL framework. The Company's expectation is that the credit risk associated with fees receivable and receivable from clearing broker is that any client or financial institution with which it conducts business with is unable to fulfill its contractual obligations. Management monitors the credit risk of clients and currently there is not a foreseeable expectation of an event or change which could result in these receivables being unpaid based on individual facts and circumstances. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company has no allowance for credit losses as of December 31, 2021. #### *Revenue Recognition* The Company follows ASC 606- Revenue from Contracts with Customers ("ASC Topic 606"). The guidance requires that an entity recognize revenue to depict the transfer of promised goods or service to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when the entity satisfies a performance obligation. {7}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENT** #### *Commissions* *Brokerage commissions.* The Company buys and sells securities on behalf of its customers and each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. #### *Direct Research* *Direct research revenue.* The Company compiles and distributes financial equity research reports to investment advisory institutions and financial business entities. Revenues are earned from direct billing related to the distribution of these reports. The Company believes that the date of distribution is the appropriate point to recognize revenue related to direct research, because that is when their performance obligation is satisfied, the pricing is agreed upon, and the benefit of information contained within the reports is available to the customer. Under some circumstances, the amount of consideration to be received for the delivery of reports is determined shortly subsequent to the date of delivery. In these cases, the Company recognizes revenue only when it is probable that a significant reversal of the cumulative amount of revenue recognized will not occur. #### *Investment Banking* *Underwriting fees.* The Company underwrites securities for business entities that want to raise funds through a sale of securities. Revenues are earned from fees arising from securities offerings in which the Company acts as an underwriter. Revenue is recognized on the trade date (the date on which the Company purchases the securities from the issuer) for the portion the Company is contracted to buy. The Company believes that the trade date is the appropriate point in time to recognize revenue for securities underwriting transactions as there are no significant actions which the Company needs to take subsequent to this date and the issuer obtains the control and benefit of the capital markets offering at that point. *M&A advisory fees.* The Company provides advisory services on mergers and acquisitions (M&A). Revenue for M&A contracts with customers is generally recognized at the point in time that performance obligations under the contract are satisfied (the closing date of the transaction) or the contract is cancelled. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company. Fee arrangements are based on a contractually agreed upon rate. Fees are received in accordance with the timeframe defined in each individual contract and are recognized as revenue at that time as they relate specifically to the services provided in that period, which are distinct from the services provided in other periods. No such fees have been earned during the year ended December 31, 2021. #### *Significant Judgments* The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time and when to recognize revenue based on the appropriate measure of the Company's progress under the contract. {8}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENT** #### *Receivable from Clearing Broker* The Company has a clearing agreement with Mirae Asset Securities (USA), Inc. The Clearing Broker clears the Company's security transactions, and the Company is required to maintain certain deposits with the Clearing Broker. #### *Fair Value of Financial Instruments* At December 31, 2021, the carrying value of the Company's financial instruments, such as, cash, cash segregated, clearing deposit, receivable from clearing broker, accounts receivable, due from Parent, and accounts payable and accrued expenses, approximate their fair values due to the nature of their short term maturities. #### *Property and Equipment* Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is provided for utilizing the straight-line method over the estimated useful lives of the related assets as follows: | | Estimated | |-------------------------------|---------------| | Asset | Useful Lives | | Computer and office equipment | 3 years | | Furniture and fixtures | 5 years | | Website development | 3 years | | Leasehold improvements | Term of lease | {9}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENT** #### *Use of Estimates* The preparation of financial statement in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the amounts disclosed in the financial statement. Actual results could differ from those estimates. #### *Soft Dollar Payables* The Company ensures that all payments made on behalf of customers qualify for the safe harbor of Section 28(e) of the Securities Exchange Act of 1934 and that customers have appropriately disclosed and received approval from investors to pay for services outside of the Section 28(e) safe harbor. #### *Income Taxes* The Company is a limited liability company and is treated as a partnership for federal and state income tax purposes, accordingly, there is no provision for federal and state income taxes as the net income or loss of the Company is included in the income tax returns of the individual members. The Company is subject to New York City Unincorporated Business Tax. The Company follows an asset and liability approach to financial accounting and reporting for New York City Unincorporated Business Tax. Deferred income tax assets and liabilities are computed for the difference between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized. The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more-likelythan-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component of income tax expense. In accordance with GAAP, the Company is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. At December 31, 2021, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. The Company's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company files its income tax returns in the U.S. federal and various state and local jurisdictions. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state and local tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. {10}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENT** ### **2. Property and equipment** Property and equipment consist of the following as of December 31, 2021: | Computer and office equipment | \$
329,776 | |------------------------------------------------|---------------| | Furniture and fixtures | 33,125 | | Website development | 223,197 | | Leasehold improvements | 147,154 | | | 733,252 | | | | | Less accumulated depreciation and amortization | 727,788 | | | | | | \$
5,464 | #### **3. Net capital requirement** The Company, as a member of FINRA, is subject to the Securities and Exchange Commission Uniform Net Capital Rule 15c3-1. This Rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn or cash dividends paid if the resulting aggregate indebtedness to net capital ratio would exceed 10 to 1. At December 31, 2021, the Company's net capital was approximately \$7,211,000, which was approximately \$6,961,000 in excess of its minimum net capital requirement of \$250,000. #### **4. Loan payable – paycheck protection program** During April 2020, the Company applied for and received a promissory note (the "PPP Loan") evidencing an unsecured loan in the amount of approximately \$1,073,000 made to the Company pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020. The PPP Loan may be forgiven, in part or in whole, subject to certain conditions as stipulated under the PPP. The PPP Loan is being administered by Pursuit Lending LLC and bears interest at a rate of 1.0% per annum. In accounting for the PPP Loan, the Company is guided by ASC 470 Debt, and ASC 450-30 Gain Contingency and recorded the proceeds of the PPP Loan as debt and it will derecognize the liability when the loan is paid off or when forgiveness is reasonably certain. During July 2021, the Company received notification from Pursuit Lending LLC that the Small Business Administration had completed their review and that all principal of approximately \$1,073,000 under the loan is forgiven in full. #### **5. Related party transactions** Pursuant to an expense sharing agreement, as effectively modified in January 2021, (the "Agreement") with Telsey Holdings LLC (the "Parent"), the Company recognizes certain expenses based on the terms and conditions per the Agreement. The amount due from Parent was approximately \$282,000 at December 31, 2021. {11}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENT** ### **6. Employee benefit plan** The Company maintains a retirement plan (the "Plan"), pursuant to Section 401(k) of the Internal Revenue Code, for eligible participants to make voluntary contributions of a portion of their annual compensation, on a deferred basis, subject to limitations provided by the Internal Revenue Code. The Company did not make contributions to the Plan for the year ended December 31, 2021. ### **7. Liabilities subordinated to claims of general creditors** The subordinated loan agreement is with related party and is available in computing net capital under the SEC's uniform net capital rule. The Company had a \$3,000,000 subordinated loan agreement at December 31, 2021, which was in accordance with agreements approved by FINRA. The subordinated loan agreement matured October 31, 2021 and was automatically renewed for another year. The loan bears interest at 6% per annum. ### **8. Other uncertainties** The extent of the impact of the coronavirus ("COVID-19") outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak, related advisories and restrictions, and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period of time, the Company's results of operations may be materially adversely affected. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.