# WORDEN CAPITAL MANAGEMENT LLC X-17A-5 (2020-02-28) — Broker-dealer annual report - Company: WORDEN CAPITAL MANAGEMENT LLC - Form: X-17A-5 - Filed: 2020-02-28 - Period: 2019-12-31 - Accession: 0001444402-20-000001 - CIK: 1444402 - File #: 8-68010 - Material weakness: No - Auditor: Depietto CPA PC - Auditor location: Lake Success, NY - Contact: Tiffany Riordan - Phone: 2127514422 - Signed by: Jamie Worden (Member, CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1444402/000144440220000001/wordencapmgtpub19.pdf --- {0}------------------------------------------------ # **WORDEN CAPITAL MANAGEMENT LC** Financial Statement and Notes to Financial Statement Pursuant to Rule 17a-5 under the Securities Exchange Actof1934 December 31, 2019 (With Report of Independent Registered Public Accounting Firm Thereon) {1}------------------------------------------------ #### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | | OMB APPROVAL | |-------------|--------------------------| | OMB Number: | 3235-0123 | | | Expires: August 31, 2020 | | | Estimated average burden | | | hours per response 12.00 | | | SEC FILE NUMBER | 8 - 868010 # ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill #### FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | ----------~~------------- | | 12/31/2019 | | | |-------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--| | MM/00/YYYY | | -------~--~---------
MM/00/YYYY | | | | | | | | | | | | OFFICIAL USE ONLY | | | | Worden Capital Management LLC | | | | | | | | | | | | | | | | | | | | | | | | NY | | 11530 | | | | (~tate) | | (Zip Code) | | | | | | | | | | | | 516-439-4192 | | | | | | (Area Code -- Telephone No.) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lake Success | NY | 11042
(Zip Code) | | | | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
DePietto CPA PC
(City)
0 Accountant not resident in United States or any of its possessions | A. REGISTRANT IDENTIFICATION
100 Ring Road West Suite 210
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
B. ACCOUNT ANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report*
(Name-- i(individua/, state last, first, middle name)
(State)
FOR OFFICIAL USE ONLY | | | *\*Claims for exemption from the requiremenlthat 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 240.17a-5(e)(2).* > Potential 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. SEC 1410 (06-02) {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, | Jamie Worden
, swear (or aftlnn) that, to the | | | |----|---------------------------------------------------------------------------------------------------------------------------------------------------|---------|--| | | best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the finn of | | | | | Worden Capital Management LLC | , as of | | | | 12/31/2019
, arc true and correct. I further swear (or aftlrm) that neither the company | | | | | nor any partner, proprietor, principal oftlcer or director has any proprietary interest in any account classified solely as that of | | | | | a customer, except as follows: | | | | | | | | | | | | | | | | | | | | ~
~ | | | | | | | | | | | | | | | | | | | | Member, CEO | | | | | Title | | | | | | | | | | JANICEPARISE
Pt1blle;-State of New York | | | | | No. 41-4968956 | | | | | Qualified In Queena County Q2zr-
n Explms July 9, 2Cf,
•,j c:~ mm ss | | | | | | | | | | This report** contains (check all applicable boxes): | | | | 0 | (a) Facing page. | | | | 0 | (b) Statement of Financial Condition. | | | | D | (c) Statement of Income (Loss). | | | | | | | | | | B (d) Statement of Changes in Financial Conditton.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | D | (t) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | | D | (g) Computation of Net Capital. | | | | | | | | | D | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | | D | (i) lnfonnation Relating to the Possession or control Requirements Under Rule 15c3-3. | | | | D | U) A Reconciliation, including appropriate explanation, of the Computation of Net Capital Under Rule 15c3-l and the | | | | | Computation for Detennination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | | D | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of con | | | | | solidation. | | | | 0 | (I) An Oath or Aftlnnation. | | | | D | (m) A copy of the SIPC Supplemental Report. | | | | D | (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | D | (o) Exemption report | | | | | | | | *\*\*For conditions of confidential treatment of' certain portions of this .filing, see section 240.17a-5(e)(3).* {3}------------------------------------------------ # WORDEN CAPITAL MANAGEMENT LLC Table of Contents As of December 31, 2019 | Report of Independent Registered Public Accounting Firm 1 | | | |------------------------------------------------------------|--|--| | Financial Statement | | | | Statement of Financial Condition 2 | | | | Notes to Financial Statements _ 3-7 | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 1981 Marcus Ave.Ste C100 Lake Success, NY 11 042 **T.** 516.326.9200 **F.** 516.326.1100 ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Member of Worden Capital Management LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Worden Capital Management LLC. as of December 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Worden Capital Management LLC. as of December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of Worden Capital Management LLC's management. Our responsibility is to express an opinion on Worden Capital Management LLC'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 Worden Capital Management LLC 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 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. DePietto CPA PC We have served as Worden Capital Management LLC's auditor since 2009. Lake Success, New York February 28, 2020 {5}------------------------------------------------ # **WORDEN CAPITAL MANAGEMENT LLC Notes to the Financial Statement As of December 31, 2019** #### **1. Organization and Nature of Business** Worden Capital Management LLC (The "Company") is a limited liability company registered in the State of New York. The Company is a broker/dealer registered with the Securities and Exchange Commission ("SEC") and is a member of Financial Industry Regulatory Authority ("FINRA"). The Company operates eight branch offices throughout the New York metropolitan area. The Company operates under the provisions of Paragraph (k)(2)(ii) of Rule 15c3-3 of the SEC and accordingly, is exempt from the remaining provisions of that rule. The Company clears all U.S. transactions on a fully disclosed basis through Axes Clearing ("Axes"), an independent clearing firm. The Company does not hold customer funds or safe keep customer securities. #### **2. Summary of Significant Accounting Policies** ### **Basis of Presentation** The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. #### **Cash** The Company maintains its cash balances with financial institutions which, at times, exceed federallyinsured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on its accounts. At December 31, 2019, the Company had \$1,647,586 in cash which exceeded the federally insured limits. #### **Valuation of Investments in Securities at Fair Value - Definition and Hierarchy** In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. These financial statements and schedules are deemed confidential pursuant to subparagraph (e)(3) of Rule 17a-5 of the Securities Exchange Commission. {6}------------------------------------------------ # **WORDEN CAPITAL MANAGEMENT LLC Notes to the Financial Statements December 31, 2019** #### **2. Summary of significant accounting policies (continued)** #### **Valuation of Securities Owned at Fair Value- Definition and Hierarchy (cont.)** The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls, is determined based on the lowest level input that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company's own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy. #### **Fixed Assets** Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The estimated useful life for computer and equipment is five years. Expenditures for maintenance, repairs, and minor renewals and betterments are charged to operations as incurred; renewals and betterments of a major character are capitalized. When property is retired, sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. #### **Use of Estimates** The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. #### **Leases** The Company recognizes and measures its leases in accordance with FASB ASC 842, Leases. The Company is a lessee in two noncancellable operating leases, for office space. The Company recognized a lease liability and a right of use (ROU) asset as at January 1, 2019, the effective date of ASC 842. The lease liability for each lease is initially and subsequently recognized based on the present value of its future lease payments. The discount rate is the implicit rate if it is readily determinable or otherwise the Company uses its incremental borrowing rate. The implicit rates of our leases are not readily determinable and accordingly, the Company used its incremental borrowing rate based on the information available at the commencement date for all leases. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic {7}------------------------------------------------ #### **2. Summary of Significant Accounting Policies (cont.)** environment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received, and any impairment recognized. Lease cost for lease payments is recognized on a straight-line basis over the lease term. The Company has elected, for all underlying classes of assets, to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease cost associated with its shortterm leases on a straight-line basis over the lease term. #### **Significant Credit Risk** The responsibility for processing customer activity rests with the Company's clearing firm, Axos. The Company's clearing and execution agreement provides that Axes's credit losses relating to unsecured margin accounts receivable of the Company's customers are charged back to the Company. In accordance with industry practice, Axos records customer transactions on a trade date basis. Axos is therefore exposed to risk of loss on these transactions in the event of the customer's inability to meet the terms of its contracts, in which case Axos may have to purchase or sell the underlying financial instruments at prevailing market prices in order to satisfy its customer-related obligations. Any loss incurred by Axos is charged back to the Company. The Company, in conjunction with Axos, controls off-balance-sheet risk by monitoring the market value and marking securities to market on a daily basis and by requiring adjustments of collateral levels. Axos establishes margin requirements and overall credit limits for such activities and monitors compliance with the applicable limits and industry regulations on a daily basis. The preparation of financial statement in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain reported amounts and disclosures. Management believes that the estimates utilized in the preparation of financial statement in conformity with accounting principles generally accepted in the United States requires management of the Company to make estimates and assumptions that affect certain reported amounts and disclosures. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent; however; actual results could differ from those estimates. #### **Income Taxes** Effective January 1, 2019The Company was granted S corporation status for federal and New York State income taxes. All federal and New York state income taxes owed by the Company are the responsibility of the sole member. Therefore, all income taxes are reported by the sole member. In accordance with ASC 740, Income Taxes, the Company is required to disclose unrecognized tax benefits resulting from uncertain tax positions. At December 31, 2019, the Company did not have any unrecognized tax benefits or liabilities. The Company operates in the United States and in state and local jurisdictions, and the previous three years remain subject to examination by tax authorities. There are presently no ongoing income tax examinations. {8}------------------------------------------------ #### **3. Clearing Agreement** The Company introduces its customer transactions to a clearing broker with which it has a correspondent relationship for execution and clearance in accordance with the terms of a clearance agreement. In connection therewith, the Company is required to maintain a collateral account with its clearing broker that serves as collateral for any losses that the clearing broker may sustain as a result of the failure of the Company's customers to satisfy their obligations in connection with their securities transactions. As of December 31, 2019, the Company has a receivable of \$1,522,164 from Clearing Broker. #### **4. Fixed Assets** A summary of the cost and accumulated depreciation of fixed assets is as follows: | Furniture and Equipment | \$ | 121,307 | |--------------------------------|----|------------| | Less: accumulated depreciation | | (121 ,307) | | | \$ | | | Leasehold Improvement | | 37,418 | | Less: accumulated depreciated | | (37,418) | | | \$ | | #### **5. Commitments** The Company has obligations as a lessee for office space, with initial noncancellable terms in excess of one year. The Company classified these leases as an operating lease. The Company's leases do not include termination options for either party to the lease or restrictive financial or other covenants. Amounts reported in balance sheet as of December 31, 2019 were as follows: Operating lease ROU asset\$ 1,064,247 Operating lease liability \$1,731,747 Maturities of lease liabilities under noncancellable operating leases as of December 31, | 2020 | 313,476 | |-------|-----------| | 2021 | 339,144 | | 2022 | 345,936 | | 2023 | 352,848 | | 2024 | 89,976 | | Total | 1,441,380 | #### **6. Financial Instruments with Off-Balance-Sheet Risk** In the normal course of business, the Company executes, as agent, securities transactions on behalf of customers. If the agency transactions do not settle because of failure to perform by either the customer or the counterparty, the Company may be obligated to discharge the obligations of the nonperforming party and, as a result, may sustain a loss if the value of the security is different from the contract amount of the transaction. {9}------------------------------------------------ #### **7. Net Capital Requirements** As a member of FINRA, the Company is subject to the SEC Uniform Net Capital Rule 15c3-1. This Rule requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 8 to 1, and that equity capital may not be withdrawn if the resulting net capital ratio would exceed 10 to 1. At December 31, 2019, the Company's net capital was \$1,236,542 which was approximately \$1,107,661 in excess of its minimum requirement of \$128,881. #### **8. Retirement Plan** The Company establish a 401 (k) plan effectivity January 1, 2016 to which eligible employees may make voluntary contributions. The Company may, in its sole discretion make matching and/or profit sharing contributions. At December 31, 2019 the Company has a liability of \$725.60 in mandatory contributions. #### **9. Litigation** The Company from time to time is involved in claims and legal actions arising in the ordinary course of business. Management does not expect that the outcome of any such claims or actions will have a material effect on the Company's operations or financial condition. Accordingly, \$695,000 has been included in the Statement of Income in Litigation in regards to these cases. #### **10. Subsequent Events** The Company has evaluated events subsequent to the balance sheet date for items requiring recording or disclosure in the financial statements. The evaluation was performed through February 28, 2020, which is the date the financial statement were available to be issued. Based upon this review, the Company has determined that there were no events which took place that would have a material impact on its financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.