# JCRA FINANCIAL LLC X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: JCRA FINANCIAL LLC - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0001453599-21-000001 - CIK: 1453599 - File #: 8-68135 - Material weakness: No - Auditor: KBL LLP - Auditor location: New York, NY - Contact: G. Keith Downing - Phone: 484-731-0033 - Signed by: G. Keith Downing (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1453599/000145359921000001/public.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) To the Members' of JCRA Financial LLC #### Opinion on the **Financial** Statements We have audited the accompanying statement of financial crodition of JCRA Financial LLC (a Delaware limited liability company) (the "Company") as of December 31, 2020, the related statements of income, changes in members' equity, and cash flows for the period October 1, 2019 through December 31, 2020, and the related notes and schedule I (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of JCRA Financial LLC as of December 31, 2020, and the results of its operations and its cash flows for the period October I, 2019 through December 31, 2020 in confonnity with accounting principles generally accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of JCRA Financial LLC's management. Our responsibility is to express an opinion on JCRA Financial LLC's financial statements 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 JCRA Financial LLC in accordance with the U.S. fecleral 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 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. #### Supplemental Information The Computation of Net Capital Under SEC Rule 1Sc3-l , Computation for Determination of Reserve Requirements and Information relating to Possession or Control Requirements Under SEC Rule I Sc3-3 has been subjected to audit procedures performed in conjunction with the audit of JCRA Financial LLC's financial statements. The supplemental information is the responsibility of JCRA Financial LLC's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underl}ing accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented 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 confonnity with 17 C.F .R. §240.17a-S. 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 JCRA Financial LLC's auditor since 2010. KBL,LLP NewYork,NY March I, 2021 {1}------------------------------------------------ #### JCRA FINANCIAL LLC # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020 #### (IN U.S. **DOLLARS)** #### ASSETS | Cash | \$
950,139 | |------------------------------------------------------------------------------|-----------------| | Receivable from related parties | 219,455 | | Prepaid expenses and other | 3,633 | | Fumitw'e and computer equipment, net of accumulated depreciation of \$75,081 | | | Total assets | \$
1,173,227 | #### **LIABILITIES AND :MEMBERS' EQUITY** | Liabilities: | | |---------------------------------------|-----------------| | Accounts payable and accrued expenses | \$
800 | | Accounts payable to related parties | 52,500 | | Total Liabilities | 53,300 | | Members' equity: | | | Contributed capital | 1,782,000 | | Accumulated deficit | (662,073) | | Total members' equity | 1,119,927 | | Total liabilities and members' equity | \$
1,173,227 | The accompanying notes are an integral part of these financial statements. {2}------------------------------------------------ ## **1. ORGANIZATION AND NATURE OF** BUSINESS JCRA Financial LLC (the "Company") was organized as a Limited Liability Company on November 21, 2008 in the state of Delaware. The Company was granted membership in the Financial Industry Regulatory Authority ("FINRA") on September 2, 2009 and began operations on September 4, 2009, the Central Registration Depository ("CRD") membership effective date. It is a registered broker-dealer with the Securities and Exchange Commission ("SEC"), and is a member of the Securities Investor Protection Corporation ("SIPC"). The Company is a majority-owned subsidiary ofJCRA Group Limited (the "Parent") a company organized and based in the United Kingdom. JCRA Group Limited's primary UK operating company, J.C. Rathbone Associates Limited, is regulated by the UK's Financial Conduct Authority ("FCA"). On September 8, 2015, the Parent formed another subsidiary, JCRA Canada, Inc, in order to provide similar services in Canada. On August 25, 2017, the Company became a wholly owned subsidiary when it purchased the outstanding minority interests. On November 13, 2019 the Company obtained approval of the change of ownership of its parent company, JCRA Group Limited, a UK company, by Chatham Financial Corp. ("Chatham"), a U.S. domestic corporation. This transaction will result in the Company being 100% owned by Chatham. To facilitate this transaction, Chatham, through its subsidiary, Chatham Financial Europe, Ltd. ("Chatham Europe") acquired the entire share capital of Ensco 1240 Limited ("Ensco 1240") and its subsidiaries, which includes the Company. Through Ensco 1240, the JCRA Group is owned 63 .4% by the Parent's management/employees and 36.6% by Connection Capital LLP (Gateley Custodian & Nominee Services Limited), a private equity firm that invested in the Parent in 2017 as part of a management buyout ("Connection Capital"). The cUITent ownership structure of the Company was approved by FINRA in a CMA filed and approved in 2017. Chatham is a privately-owned Pennsylvania corporation with approximately 600 employees worldwide that was founded in 1991 . Chatham's headquarters is located in Kennett Square, Pennsylvania, with offices in Denver, London, Singapore, Melbourne and Krakow. Chatham's primary business worldwide is providing clients with advisory services and technology solutions to manage interest rate, commodity and foreign cUITency risks inherent in the client's balance sheet and to assist its clients in arranging hedging positions to offset those risks. Chatham also provides clients technology solutions with respect to our services and delivers the technology to clients via web-based software as a service ( or "SaaS") platform. On August 31, 2020, FINRA approved the Company's change of fiscal year-end from September 30, 2020 to December 31, 2020. #### Recent Issued Accounting Pronouncements The Company does not believe that the adoption of any recently issued, but not yet effective, accounting standards will have a material effect on its financial position and results of operations. #### **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** ### Basis of Presentation The accompanying financial statements have been prepared in confonnity with U.S generally accepted accounting principles ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission (the "Commission"). It is management's opinion, that all material adjustments (consisting of normal recurring adjustments) have been made which.are necessary for a fair financial statement presentation. {3}------------------------------------------------ #### 2. SUMl\lARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ## Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are carried at cost, which approximates market value. #### Accounting hasis The Company uses the accrual basis of accounting for financial statements and income tax reporting. Accordingly, revenues are recognized when services are rendered, and expenses realized when the obligation is incurred. ## Income Taxes The Company is a limited liability company, taxed as a partnership for federal income tax purposes, and, thus, no federal income tax expense has been recorded in the financial statements. Taxable income of the Company is passed through to the members and reported on their individual tax returns. However, the Company is subject to state and local taxes. Pursuant to accounting guidance concerning provision for uncertain income tax provisions contained in Accounting Standards Codification ("ASC") 740-10, there are no uncertain income tax positions. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. ### 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 those estimates. #### Revenue Recognition The Company provides strategic advisory services under time and material agreements with customers. Revenue under these agreements is recognized and billed as services are performed. The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. No cumulative adjustment to member's equity was required, as no material arrangements prior to the adoption were impacted by the new pronouncement. The Company typically enters into contracts with clients calling for periodic retainer fees to be paid during the term of the arrangement, and a success fee to be paid out once the merger or acquisition (the " transaction") is successfully completed. This success fee is typically based on a percentage of the total consideration of the transaction, although in certain cases it may be a flat fee. Accordingly, the Company recognizes retainer fees in the period earned, with separate revenue recognition when the performance obligations have been satisfied. As of December 31, 2020, all fees recognized were for financial and banking advisory services provided. {4}------------------------------------------------ ## **2. SUMl\lARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** ### Accounts Receivable Accounts receivable are stated at the amount's management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. As of December 31, 2020, the Company had nothing recorded as an allowance for any potential non-collection. ## Concentrations of Credit Risk The Company places its cash with a high credit quality financial institution. The Company's account at this institution is insured by the Federal Deposit Insurance Corporation ("FDIC") up to \$250,000. From time to time, the Company may have bank balances that exceed the FDIC insurance limit on interest bearing accounts. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. The Company does not believe that the concentration of credit risk of bank deposits represents a material risk of loss with respect to its financial condition as of December 31, 2020. ## Fair Values of Financial Instruments Financial Accounting Standards Board Accounting Standards Codification ("ASC'') 82S, "Financial Instruments," requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company's financial instruments: The carrying amount of cash, accounts receivable, prepaid and other cUITent assets, accounts payable and accrued expenses, and accounts payable to related parties, approximate fair value because of the short maturity of those instruments. ## Foreign CUITency Transactions The Company's functional currency and its reporting currency is the United States dollar. Transactions denominated in any cUITency other than the functional currency are converted into United States dollars using the exchange rate in effect at the date of the transaction or the average rate for the period in the case of revenue and expense transactions. Monetary assets and liabilities are revalued into the reporting cUITency at each balance sheet date using the exchange rate in effect at the balance sheet date, with any resulting exchange gains or losses being credited or charged to accumulated other comprehensive Income (loss). Non-monetary assets and liabilities are recorded in the reporting currency using the historical exchange rate. The Company does not engage in hedging activities to offset the risk of exchange rate fluctuations on financial transactions denominated in a foreign cUITency. The transactions are translated into U.S. dollars on the Company's financial statements. Any unrealized gain or loss due to spot rate fluctuations in included in Accumulated Other Comprehensive Income (loss). {5}------------------------------------------------ ### 2. SUMl\lARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ## Fixed Assets Acquisitions of furniture and equipment are recorded! at cost. Improvements and replacements of furniture and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of furniture and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the statements of income and retained earnings. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method over the following useful lives: | Computer and office equipment | 3 years | |-------------------------------|---------| | Furniture and fixtures | 7 years | Depreciation expense for the period ended December 31, 2020, was \$5,594. On July 1, 2020, the Company wrote off fixed assets in the amount of \$5,275. ## 3. **NET CAPITAL** The Company is subject to the SEC Uniform Net Capital Rule (Rule 15c3-l), which requires the maintenance of minimum net capital of \$5,000, and requires that the ratio of aggregate indebtedness to net capital, both as defined, not exceed 15 to 1. The rule also provides that equity capital may not be withdrawn, cash dividends paid or the Company's operations expanded, if the resulting net capital ratio would exceed 10 to 1. At December 31, 2020, the Company had net capital of\$896,839 which was \$891,839 in excess of the FINRA minimum net capital requirement of\$5,000. ## *4.* **CONCENTRATION OF CUSTOMER REVENUES** For the period ended December 31, 2020, two customers accounted for45 .8% of the Company's revenues. Major customers are those that account for more than 10% of revenue. ## S. **COMJ\IIITMENTS AND CONTINGENCIES** #### Litigation The Company may be involved in legal proceedings in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Currently, the Company is not involved in any legal proceedings which are not in the ordinary course of business. #### Operating Leases In June 2018, the Company signed a lease agreement for office space located at 47 Maple Street, Summit, New Jersey. The lease agreement was under a month-to-month arrangement. In June 2019, the Company signed a twelve- month lease agreement for office space located at 601 Heritage Drive, Jupiter, Florida, commencing July 1, 2019 and terminating on June 30, 2020. The Company terminated the lease on February 25, 2020. For the period ended December 31, 2020 rent expense was \$7,084. {6}------------------------------------------------ ## **6. RELATED PARTY AND EXPENSE SHARING AGREEME1''T** The Company had an Expense Sharing Agreement (the "Agreement") in place with the Parent and JCRA Canada, Inc. whereby one party pays certain administrative expenses, such as insurance, on behalf of its affiliates for which the party paying the expense is reimbursed Additionally, the Company and its affiliate may, from time to time, work collaboratively whereby the Parent or the Company provides pricing and consultancy support to its affiliates, and will charge the Company for chargeable and recoverable hours worked, in accordance with the terms of the Agreement. The Company or its affiliates reimburses the Parent or the Company as the case may be for these expenses. As of December 31, 2020, amounts not yet reimbursed to the Company have been included in Accounts Receivable from Related Party on the accompanying statement of financial condition, in the amount of \$219,455. In addition, the Company has a Shared Service Agreement with affiliate Chatham Financial Corp. ("Chatham"), whereby Chatham provides certain administrative and managerial services to the Company. As of December 31, 2020, amounts not yet reimbursed have been included in Accounts Payable to Related Parties on the accompanying statement of financial condition, in the amount of\$52,500. ## 7. **SIPC RECONCILIATION REQUIREME1''T** Securities Exchange Act ("SEA") Rule 17a-5( e)( 4) requires a registered broker-dealer to file a supplemental report which includes procedures related to broker-dealers SIPC annual general assessment reconciliation or exclusion from membership forms. In circumstances where the broker-dealer reports \$500,000 or less in gross revenue they are not required to file supplemental SIPC report. The Company is exempt from filing the supplemental report under SEA Rule 17a-5(e)(4) because it is reporting less than \$500,000 in gross revenue. ## **8. COVID-19** During the year of 2020, Coronavirus Disease (COVID-19) has begun causing major disruptions to the economy. The financial impacts to the Company will likely result in significantly reduced revenues for at least the first quarter of 202 1, and possibly beyond. Management is monitoring the situation closely and expects to make needed changes to its operations should circumstances warrant in order to mitigate any negative long-term financial impacts on the Company. ## **9. ANNUAL REPORT ON FORM X-17 A-5** The annual report to the Securities and Exchange Commission on Form 17 A-5 is available for examination and copying at the Company's office and at the regional office of the Securities and Exchange Commission. #### **10. SUBSQUENT EVENTS** The Company evaluated events occurring between the end of its fiscal year, December 31, 2020, and March 1, 2021, when the financial statements were issued. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.