# EM SECURITIES LLC X-17A-5 (2020-12-14) — Broker-dealer annual report - Company: EM SECURITIES LLC - Form: X-17A-5 - Filed: 2020-12-14 - Period: 2020-09-30 - Accession: 0001443552-20-000001 - CIK: 1443552 - File #: 8-67997 - Material weakness: No - Auditor: WithumSmith & Brown - Auditor location: Whippany, NJ - Contact: Kathy Efrem - Phone: 2128971686 - Signed by: Robert Stanley (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1443552/000144355220000001/em20s.pdf --- {0}------------------------------------------------ # FINANCIAL STATEMENT # AND # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM For the year ended September 30, 2020 {1}------------------------------------------------ UNITED STA TIS SECURITIES AND EXCHANGECOMMISSION Washington, D.C. 20549 | OM3 APPROVAL | | |---------------------------|----------------| | OM3 ttirrber: | 3235-0123 | | Expires: October 31, 2023 | | | Estimated average burden | | | hours per response 12.00 | | | | SEC FLE NlM3ER | | | | # **ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill** | 8- | 67997 | |----|-------| | | | ### **FACING PAGE** # **Infonnation Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of1934 and Rule 17a-5 Thereunder** | REPORTFORTHEPFRIODBEGINNING | -----------
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9/30/2020 | |-------------------------------------------------------------------------------------------------|--------------------------------------------------------|---------------|--------------------------| | | MM!DD/YY | | MM/DDIYY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER-DEALER: | | | | | EM Securities LLC | | | OFFICIAL USE 01\1 Y | | ADDRF.SS OF PRINCIPAL PIA CE OF BUSINFSS: (Do not use P.O. Box No.) | | | FIRMD.NO. | | | 405 Lexington Ave, 20th Floor | | | | New York | NY | | 10174 | | (City) | (tilate) | | (Zip Code) | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | B. ACCOUNTANT IDENTIFICATION | | | | | WithumSmith+Brown, PC | | | | | (Name ·· if individual state las1,jirst. middle name ) | | | | 200 JEFFERSON PARK, SUITE 400 | Whippany | NJ
(State) | 07981-1070
(Zip Code) | | (Address) | (City) | | | | CHFCKONE:
GJ Certified Public Accountant
0 Public Accountant
D Accountant not resident | in United States or any of its possessions | | | | | FOR OFFICIAL USE ONLY | | | | | | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See section 240.17 a-5(e)(2).* | SEC 1410 (06-02) | |------------------| |------------------| SEC 1410(06-02) *Pote11tial persons wl,o are to respo11d to tlie collectio11 of i1iformatio11 contained i11 tllis form are not req11ired to respo11d 1111/ess tile form displays a c11rre11tlv valid 0MB control number.* {2}------------------------------------------------ ### **AFFIRMATION** L Robert Stanley, affirm that, to the best of my knowledge and belief, the accompanying financial statements and supplemental schedules pertaining to EM Securities LLC for the year ended September 30, 2020, are true and correct. I further affirm that neither the Company nor any officer or director has any proprietary interest in any account classified solely as that of a customer. **proved to me** on **the balls** of **sa sfactory evldenc-.** to be the person(s) who appeared before me. Notary Signature ~ ![](_page_2_Picture_8.jpeg) {3}------------------------------------------------ ## **This report\*\* contains (check all applicable boxes):** - [x] Report of Independent Registered Public Accounting Finn. - [x] Facing Page. - [x] Statement of Financial Condition. - [ ] Statement of Operations. - [ ] Statement of Changes in Members' Equity. - [ ] Statement of Cash Flows. - [ ] Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable). - [ ] Computation of Net Capital for Brokers and Dealers Pursuant to Rule l Sc3-1 - under the Securities Exchange Act of 1934. - [ ] Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule I Sc3-3 under the Securities Exchange Act of 1934. - [ ] Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 1 Sc3-3 under the Securities Exchange Act of 1934 (not applicable). - [ J A Reconciliation, including appropriate explanations, of the Computation of Net Capital Pursuant to Rule 15c3-1 and the Computation for Detennination of Reserve Requirements Under Rule 15c3-3 (included in item (g)). - [ ] A Reconciliation Between the Audited and Unaudited Statements of Financial Condition With Respect to Methods of Consolidation (not applicable). - (x] An Oath or Affirmation. - [ J A copy of the SIPC Supplemental Report. - [ ] A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit (Supplemental Report on Internal Control). - [ ) Independent Auditors' Report on Internal Control Required by SEC Rule l 7a-5(gXI ). - [ ] Independent Auditors' Report Regarding Rule 1 Sc3-3 Exemption. - [ ] Rule l 5c3-3 Exemption Repo1t - \*\* *For conditions of confidential treatment of certain portions of this filing, see section 240 .17a-5(e) (3).* {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Management and Member, EM Securities LLC: ### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition EM Securities LLC (the "Company"), as of September 30, 2020, 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 September 30, 2020, 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 this 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 2016. December 11, 2020 {5}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION ## SEPTEMBER 30, 2020 ## ASSETS | Cash | \$1,441,205 | |--------------------------|-----------------| | Accounts receivable, net | 250,000 | | Total assets | \$ 1,691,205 | | MEMBER'S EQUITY | \$
1,691,205 | Tlie accompanying notes are an integral part of this financial statement. {6}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENT** ### **SEPTEMBER 30, 2020** #### NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS EM Securities LLC (the "Company") provides broker dealer services including financial advisory services, underwriting and selling group participant, placement agent and similar services, and investing in securities. The Company is a broker dealer registered with the Securities and Exchange Commission (''SEC'') and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company is a wholly owned subsidiary of Evolution Media Capital LLC ("EMC''). #### NOTE2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ### Basis of Presentation These financial statements were prepared in conformity with accounting principles generally accepted in the United States of America **(''GAAP")** which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. ### Fair Value of Financial Instruments The Company follows Financial Accounting Standards Board ("F ASB" ) guidance on Fair Value Measurements which defines fair value and establishes fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level l inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable inputs and are used to the extent that observable inputs do not exist. The Company's Level 3 investments have been valued using unadjusted inputs that have not been internally developed by the Company. including third-party transactions and quotations. As a result, there were no unobservable inputs that have been internally developed by the Company in determining the fair values of its investments as of September 30, 2020. As a matter of policy, valuations determined by Management are required to be supported by market data, third-patty pricing sources, industry accepted pricing models, counterparty prices or other methods Management deems to be appropriate. including the use of internal proprieta1y pricing models. Recent transactions often are the best indicators of fair value. The Company does not regularly hold level 3 assets and typically distributes them to its Parent as an in-kind distribution after it receives them as compensation. {7}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENT** ### **SEPTEMBER 30, 2020** #### NOTE2. SUMMARY OF SlGNIFlCANT ACCOUNTING POLICIES (Continued) #### Securities owned The following is a reconciliation of Level 3 financial instruments for the year ended September 30, 2020: | | Balance
September 30, | | | | | Balance
September 30, | | |-----------------------------|--------------------------|--|-------------|---------------|---------------|--------------------------|--| | | 2019 | | Acgu~itions | | Distributions | 2020 | | | Assets
Equity Securities | \$ | | | ,949
\$ 51 | (51
,949) | \$ | | | Total assets | \$ | | | \$ 51,949 | \$ (51,949) | \$ | | #### Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations on each customer's financial condition and senior management reviews accounts receivable on a periodic basis to determine if any receivable will potentially be uncollectible. After all attempts to collect a receivable have failed, the receivable is written off. #### Income Taxes The Company is a limited liability company, treated as a disregarded entity for federal, state and most city income tax purposes; it is subject to minor city income taxes but these are assumed by the Company's parent. The Company therefore does not incur income taxes at the Company level. Instead its earnings and losses are passed through to the member and included in the calculation of the member's tax liability. Accordingly, no provision for income taxes has been made in the accompanying financial statements. #### Uncertain Tax Positions In accordance with GAAP, the Company is required to determine whether a tax position of the Company 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 to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce member's equity. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities. {8}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENT** ## **SEPTEMBER 30, 2020** #### NOTE2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ### Uncertain Tax Positions (continued) However, management'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 analysis of and changes to tax laws, regulation and interpretations thereof. Management has analyzed the Company's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded as of September 30, 2020. #### New Accounting Pronouncement Jn June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Cun·ently, GAAP requires an "incurred loss" methodology that delays recognition until it is probable a loss has been incurred. Under the new standard, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This provision of the guidance requires a modified retrospective transition method with a cumulative-effect adjustment in retained earnings upon adoption. This guidance is effective for the Company on October I, 2020, and the Company adopted this guidance on that date. The impact of this guidance is not expected to be material to the Company. ### Concentrations All cash deposits are held by one financial institution and therefore are subject to the credit risk at that financial institution. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits. For the year ended September 30, 2020, approximately 87% of the Company's revenues are from 3 clients. #### NOTE3. RELATED PARTY TRANSACTIONS The Company has an agreement with EMC, under which expenses of the Company are borne by EMC. For the year ended September 30, 2020, operating expenses of the Company amounting to approximately \$1 ,815,000 met the conditions as defined in the agreement and were borne by EMC. {9}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENT** # **SEPTEMBER 30, 2020** #### NOTE4. NET CAP IT AL REQUIREMENTS As a broker dealer the Company is subject to the SEC Uniform Net Capital Rule (SEC Rule l 5c3-1 ). In accordance with the net capital provisions of Rule l 5c3-l, the Company is required to maintain minimum net capital as defined of not less than the greater of \$100,000 or 6-2/3% of the Company's total aggregate indebtedness. The basic concept of the net capital rule is liquidity; its objective being to require a broker dealer to have at all times sufficient liquid assets to meet its current liabilities. As of September 30, 2020, the Company had net capital of \$1,441,205, which exceeded the minimum requirement of \$100,000 by \$1,341,205. #### NOTES. RULE 15C3-3 The Company does not handle cash or securities on behalf of customers and accordingly has no obligation under SEC Rule 15c3-3. #### NOTE6. ECONOMIC **RISKS** On January 30, 2020, the World Health Organization has declared COVID-19 to constitute a "Public Health Emergency of International Concern". This pandemic has disrupted economic markets and the economic impact, duration and the continued spread of the COVID- 19 virus is uncertain at this time. The financial performance of the Company is subject to future developments related to the COVID-19 outbreak and possible government advisories and restrictions placed on the financial markets and business activities. The impact on financial markets and overall economy, all of which are highly uncertain, cannot be predicted. If the financial markets and/or overall economy are impacted for an extended period, the Company's results may be materially affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.