# KELSON CAPITAL LLC X-17A-5 (2019-08-29) — Broker-dealer annual report - Company: KELSON CAPITAL LLC - Form: X-17A-5 - Filed: 2019-08-29 - Period: 2019-06-30 - Accession: 0001454936-19-000001 - CIK: 1454936 - File #: 8-68147 - Material weakness: No - Auditor: DeMarco Sciaccotta Wilkens & Dunleavy, LLP - Auditor location: Frankfort, IL - Contact: Dan Ledva - Phone: 212-616-0169 - Signed by: Dan Ledva (Managing Member) Original filing: https://www.sec.gov/Archives/edgar/data/1454936/000145493619000001/KelsonPublic.pdf --- {0}------------------------------------------------ # Kelson Capital, LLC Statement of Financial Condition Including Report of Independent Registered Public Accounting Firm As of June 30, 2019 {1}------------------------------------------------ . . UNITED~TAJ'ES . . . **SECURITIESANDEXCHANGECOMMISSION ,vashington, D.c; 26549** # **ANNUAL AUDITED REPORT FORM X-17 A-5 PARTIH** 0MB APPROVAL ()MB.Number:. .3235·0123 Expires: August 31, 20·20 Estilllated averageburden. hours per. response .. . ... 12.00 | SEC FILE NUMBER | | |-----------------|--| | 8- 68147 | | **fACINGPAG.E liiformatioit Required of Brokers and Dealers Pursu~nt to Section 17 ofthe Securities. Exchange Act of 1934 and Rule l 7.a-5 Thereunder** | REPORT FOR THE PEiuoD BEGINNJNG | ____ 0
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_ | | |----------------------------------------------------------------------------|----------------------------------------------------------------|--------------|------------------------------------|--| | | MM/DDIYY | | MM/0D/YY | | | | A. REGISTRANTIDENTIFICATION | | | | | NAME OF BROKER-DEALER: | Kelson Capital LLC | | OFFICIAL USEONLY | | | ADDRESS OF PRiNClPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I. □. NO, | | | 230 Park Avenue, 33rd Floor | | | | | | | | | | | | | | | lQi69 | | | (Cily:) | (Sthtc) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | Doil Lcdva
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· | | | _212,6_16-0!69 | | | | | | (l\.rcii ,Codt - Te!<;phoMNumber') | | | | B, ACCOUNTANT IDENTIFICATION | | | | | TNDBPENDENT PUBLIC ACC:OUNJANT whose opinion is contained in this R~port* | | | | | | DeMarco Sciacc.atta Wilkens.& Duri1¢avy, LLP | | | | | | | (Nam,::- i/ imfiv{dita/. stiite Inst, Ji isl, mid(i/e-,(aiue.) | | | | | 9645 W. LincolnWilY Lane,.Suite;!14A | Frankfort | IL | .60423 | | | (Addres~) | (City) | (Sfalc) | (Zip C::ode} | | | CHECK ONE: | | | | | | I I I
certified PuhiicAccountant | | | | | | P.ublic Accountant | | | | | | | | | | | | B
Account.ant not resident.in. Un_ited Stat~s or a,ny of1ts possessions | | | | | | | FOR OFFICIAL USE O.NLY | | | | | | | | | | | | | | | | *\*Claih1sforexemplionfi'om 1herequi(emenf that the. aimual report be ·co1•ered by the opinion of an indepe11dt:ntp11blic accouniani 11111st be.s11ppoi'ted bj• a stqtemenr oj/acts a\_nd cil\_'.C1/msta,:,ceJ relied on as /he. bqsis /or the exemption. See Section 240. l 7ti-5(e)r2)* > Poten.t\_ial persons. who are to respond to· the collection of information contained In this form are.riot required to respond unless the·form displays a currently valid OM B control number., .SE9 1410 (06-02} {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | 1, Dan Ledva | , swear (or affirm) that, to the best of | |----------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | my knowledge and belief the accompanying financia l statement and supporting schedules pertaining to the firm of | | Kelson Capital LLC | | | -----------------
June 30
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are true and correct. I further swear (or affirm) that
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- | | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | classified solely as that ofa customer, except as follows: | | | | | | | | | None | | | | | | | | | di | | | | | | | Signature | | / | SMD, CCO, Managing Member | | I | Title | | | KENNETH MERLO | | W
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_ | NOTARY PUBLIC, STATE OF NfWYORK | | -
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u IC | NO. 02ME6337552
OUALIAED IN NEW YORK COUNlY | | | COMMISSION EXPIRES FEB. 29, 2020 | | This report ** contains (check all app licable box~·~"'·, | ~------------' | | Ii] (a) Facing Page. | | | (b) Statement of Financial Condition. | | | (c) Statement of Income (Loss). | | | (d) Statement of Changes in Financial Condition. | | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | (g) Computation of Net Capital. | | | | {h) Computation for Determination of Reserve Requirements Pursuant to Rule I 5c3-3. | | (i) | Information Relating to the Possession or Control Requirements Under Rule I Sc3-3 .
O (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule 15c3-1 and the | | | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule l 5c3-3.
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | | | consolidation. | | | hl! (I) An Oath or Affirmation.
0 (m) A copy of the SIPC Supplemental Report. | | | | 0 (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | \*\* *For conditions of confidential treatment of certain p ortions of this filing, see section 240. 17a-5(e)(3).* {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Member of Kelson Capital, LLC # **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Kelson Capital, LLC, (the "Company") as of June 30, 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 Kelson Capital, LLC as of June 30, 2019 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 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. We have served as Kelson Capital, LLC's auditor since 2011. Frankfort, Illinois August 27, 2019 {4}------------------------------------------------ # STATEMENT OF FINANCIAL CONDITION ### JUNE 30, 2019 #### **ASSETS** | Cash | \$
199,220 | |---------------------|---------------| | Accounts receivable | 880,461 | | Other assets | 5,980 | | | | **TOTAL ASSETS** # \$ **1,085,661** #### **LIABILITIES AND MEMBER'S CAPITAL** | LIABILITIES
Accounts payable and accrued expenses | 54,991
\$ | |------------------------------------------------------|--------------| | MEMBER'S CAPITAL | \$1,030,670 | | TOTAL LIABILITIES AND MEMBER'S CAPITAL | \$1,085,661 | The accompanying notes are an integral part of these financial statements. {5}------------------------------------------------ # NOTES TO FINANCIAL ST A TEMENTS # YEAR ENDED JUNE 30, 2019 ### NOTE I -ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization - Kelson Capital, LLC (the "Company"), a limited liability company, was organized in the state of New Jersey on November 18, 2008. The duration of the Company is perpetual. The Company is registered as a broker/dealer with the Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority (FINRA). The Company acts as a placement agent for institutional investment money managers. The Company markets the specialized investment management strategies for institutional investors. Basis of presentation - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Concentrations of Credit Risk - The Company is engaged in various brokerage activities in which the counterparties primarily include broker/dealers, banks, other financial institutions and the Company's own customers. In the event the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty. In addition, the Company's cash is on deposit at one financial institution and the balance at times may exceed the federally insured limit. The Company believes it is not exposed to any significant credit risk to cash. Cash Equivalents - For purposes of the Statement of Cash Flows, the Company has defined cash equivalents as highly liquid investments, with original maturities of less than three months that are not held for sale in the ordinary course of business. Accounts Receivable - Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon management's assessment of the collectability of accounts receivable, which considers historical write-off experience and any specific risks identified in customer collection matters. Bad debts are written off against the allowance when identified. As of June 30, 2019, management believes no allowance for uncollectible accounts receivable is necessary. {6}------------------------------------------------ #### NOTES TO FINANCIAL ST A TEMENTS #### YEAR ENDED JUNE 30, 2019 #### NOTE I -ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates - The preparation of financial statements in conformity with GAAP 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. #### NOTE 2 - REVENUE RECOGNITION Effective July 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). The new revenue recognition guidance requires that an entity recognize revenue due to depict the transfer of promised goods or services 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 (or as) the entity satisfies a performance obligation. 1n determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The Company applied the modified retrospective method of adoption which resulted in no adjustment to retained earnings as of July 1, 2018. The Company enters into arrangements with investment managers to market specialized investment strategies to institutional investors. Revenue for capital raising fees are generally recognized at the point in time that performance under the arrangement is completed (quarter end net asset value). For certain contracts, the Company must evaluate the likelihood of significant reversal of revenue due to matters outside company control and only recognize revenue up to the amount that a significant revenue reversal is not probable. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. {7}------------------------------------------------ ### NOTES TO FINANCIAL ST A TEMENTS # YEAR ENDED JUNE 30, 2019 #### NOTE 3 - NET CAP IT AL REQUIREMENTS As a registered broker/dealer and member of the Financial Industry Regulatory Authority, the Company is subject to the Uniform Net Capital Rule, which requires the maintenance of minimum net capital and requires that the ratio of aggregated indebtedness to net capital, both as defined, shall not exceed 1500%. At June 30, 2019, the Company's net capital and required net capital were \$144,229 and \$5,000 respectively. The ratio of aggregate indebtedness to net capital was 38.13%. #### NOTE 4 - RELATED PARTIES The Company is wholly owned by Kelson Group I LLC (the "sole member"). The Company rents office space from its sole member on a month to month basis. The amount per month is \$7,000, per the September 2, 2014 Expense Sharing Agreement, amended February 1, 2019. #### NOTE 5 - INCOME TAXES The Company is considered a disregarded entity for federal income tax purposes. Income taxes are therefore the responsibility of the sole member of the Company. The Company accounts for any potential interest or penalties related to possible future liabilities for unrecognized income tax benefits as interest/other expense. The Parent is no longer subject to examination by tax authorities for federal, state or local income taxes for periods before 2016. #### NOTE 6 - CONCENTRATION There were two major customers of the Company that represented 43% and 22% of fee revenue for the year ended June 30, 2019. The respective accounts receivable balances were \$275,000 and \$411,738 as of June 30, 2019. #### NOTE 8 - SUBSEQUENT EVENT On July 25, 2019, August 12, 2019 and August 23, 2019, the Company made capital distributions of \$120,000, \$120,000 and \$75,000, respectively. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.