# FOROS SECURITIES LLC X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: FOROS SECURITIES LLC - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0001462100-22-000002 - CIK: 1462100 - File #: 8-68233 - Type: Broker-dealer - Material weakness: No - Auditor: Withum Smith & Brown - Auditor location: Whippany, NJ - Contact: Richard Daniels - Phone: 212-751-4422 - Email: rpowell@forosgroup.com - Website: forosgroup.com - Signed by: Robert Powell (COO & GC) Original filing: https://www.sec.gov/Archives/edgar/data/1462100/000146210022000002/forosfsshort2021edgar.pdf --- {0}------------------------------------------------ STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2021 {1}------------------------------------------------ #### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | OMB APPROVAL | | | | | |---------------------------|-----------|-----------------|--|--| | 3235-0123
OMB Number: | | | | | | Expires: October 31, 2023 | | | | | | Estimated average burden | | | | | | ours per response 12.00 | | | | | | | | SEC FILE NUMBER | | | | | 8 - 68233 | | | | T E F It # ANNUAL AUDITED REPORT FORM X-17A-5 PART III #### FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | MM/DD/YYYY
A. REGISTRANT IDENTIFICATION
Foros Securities LLC
NAME OF FIRM:
TYPE OF REGISTRANT (check all applicable boxes):
X Broker-dealer Security-based swap dealer Major security-based swap participant
LI Check here if respondent is also an OTC derivatives dealer
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
461 Fifth Ave - 17th Floor
(No. and Street)
NY
New York
(State)
(Zip Code)
(City)
PERSON TO CONTACT WITH REGARD TO THIS FILING
rpowell@forosgroup.com
(212) 340-7000
Robert Powell
(Email Address)
(Area Code - Telephone No.)
(Name)
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
WithumSmith + Brown
(Name- if individual, state last, first, and middle name)
NJ
Whippany
200 Jefferson Park #400
(State)
(City)
(Address)
100
10/08/2003 | MM/DD/YYYY | | | REPORT FOR THE PERIOD BEGINNING | | | | | | | | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|--|--|--------------------------------------------------|--|--|--|--|--|--|--| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 07891 | | | | | | | | | | | | | (Zip Code) | | | | | | | | | | | | | | | | | | | | | | | | | FOR OFFICIAL USE ONLY | (PCAOB Registration Number, if applicable) | | | (Date of Registration with PCAOB)(if applicable) | | | | | | | | | | | | | | | | | | | | | \* Claims for exemption from the requirement that the annual reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), 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. {2}------------------------------------------------ | | | | | Robert Powall , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to | |---------------|------------------------------------------------------------------------------------------------------------|----------------------|----------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | the firm of | | Foros Securities LLG | | December 31, 2021
3201 | | | | | as the case may be has any proprietary interest in any account classified solely as that of a customer. | is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivaled person, | | | | | | Signature | | | | | Notary Public State of Florida
aura Aldrich | COO & GC | | | | | My Commission GG 276934
Expires 12/22/2022 | Title | | Notary Public | | | | | | | This filing * contains (check all applicable boxes): | | | | | | x (a) Statement of financial condition.
x] (b) Notes to consolidated statement of financial condition. | | | | | | comprehensive income (as defined in § 210.1-02 of Requilation S-X). | | | (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of | | | (d) Statement of cash flows. | | | | | | (f) Statement of changes in liabilities subordinated to claims of creditors. | | (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | | (g) Notes to consolidated financial statements. | | | | | | | | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable | | | | (i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | (i) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.1563-3. | | | | | | (k) Computation for determination of scurity-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15cC-3 or | | | Exhibit A to 17 CFR 240.18a 4, as applicable | | (1) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. | | | | | | (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. | | | | 240. 15c3-3(p)(2) or 17 CFR 240. 18a-4, as applicable. | | (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR | | | | | | | (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net | | | | | | worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17
CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differenoss | | | exist. | | | | | | | | (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. | (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. | | | | | (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | | | | (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a 7, as applicable. | | | | | | x] (t) Independent public accountant's report based on an examination of the statement of financial condition. | | | | | | CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable | (u) Independent public accountant's report based on an examination of the financial report of financial statements under 17 | | | | | | (v) Independent public accountant's report based on an examination of cartain statements in the compliance report under 17 | | | CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | (w) I noependent public accountant s report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 | | | CFR 240.182-7, as applicable | | | (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.17a-12, | | | as applicable | | | | | | | | | [y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or | | | | | a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). | | ਨ applicable. A Comments of the Children Children Children Children Children Children Children Children Children Children Children Children Children Children Children Children Children Chi {3}------------------------------------------------ # CONTENTS December 31, 2021 | Report of Independent Registered Public Accounting Firm | | | | |---------------------------------------------------------|-------|--|--| | Financial Statement | | | | | Statement of Financial Condition | | | | | Notes to Statement of Financial Condition | 3 - 6 | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member and Those Charged With Governance of Foros Securities LLC: #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Foros Securities 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 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. February 28, 2022 {5}------------------------------------------------ # STATEMENT OF FINANCIAL CONDITION | December 31, 2021 | | |------------------------------------------------------|---------------------| | | | | ASSETS | | | Cash | ക
10,674,953 | | Other assets | 9,687,450 | | | 20,362,403
લ્ત્વ | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities
Accounts payable and accrued expenses | ക്ക
347,769 | | Contract liabilities | 333,333 | | Due to Parent | 6,155,794 | | Total liabilities | 6,836,896 | | Member's equity | 13,525,506 | | | ക
20,362,403 | {6}------------------------------------------------ # NOTES TO STATEMENT OF FINANCIAL CONDITION December 31, 2021 #### Nature of business 1. Foros Securities LLC (the "Company") is an entity organized under the state of Delaware on May 5, 2009. The firm primarily provides consulting services on mergers, acquisitions, joint ventures, restructurings, reorganizations, capital raising activities, private placements, defensive strategies and similar transactions. The Company is a wholly-owned subsidiary of Foros Advisors LLC (the "Parent"). 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"). # 2. Summary of significant accounting policies ### Basis of Presentation The accompanying financial statement is presented in U.S. Dollars and has been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). #### Cash Cash aggregating approximately \$10,675,000 consists of cash, money market accounts and certificate of deposits which are held by financial institutions. ### Other Assets Included in other assets on the Statement of Financial Condition are fees receivable of \$9,635,535 and contract assets of \$47,135 which are carried at the amount expected to be received, and miscellaneous other assets of \$4,780. ### Revenue Recognition The company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606") which requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflection 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 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. In determining the transaction price, an entity may include consideration only to the extent that it is probably that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Our principal sources of revenue are derived from two segments: M&A advisory fees and opinion fees, as more fully described below. The new revenue recognition guidance does not apply to revenue associated with financial instruments, interest income and expense, leasing and insurance contracts. The following is a description of principal activities, separated by reportable segments, from which the Company generates its revenue. {7}------------------------------------------------ # NOTES TO STATEMENT OF FINANCIAL CONDITION December 31, 2021 # 2. Summary of significant accounting policies (continued) M&A advisory fees. The Company provides advisory services on mergers and acquisitions (M&A). Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgment is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities. Opinion fees. The Company earns fees for related advisory work by providing fairness opinions. The Company records opinion fee revenues at the point in time, gross of related expenses, when the performance obligation for the services are completed or the contract is canceled under the terms of each assignment or engagement. Transaction success fees: The Company provides merger and acquisition advisory services whereby the fees for such services are dependent on the success of the transaction. Therefore, revenue for these arrangements is generally recognized at the point in time that performance under the arrangement is completed and the transaction has closed. ### Receivables and Contract Balances The Company had outstanding fees receivables related to revenue from contracts with customers totaling \$1,507,921 and \$9,635,534 as of January 1, 2021 and December 31, 2021, respectively. The Company had contract assess totaling \$25,965 and \$47,135 as of January 1, 2021, respectively. As of January 1, 2021 and December 31, 2021, the Company had contract liabilities of \$239,583 and \$33,333, respectively. ### Disaggregated Revenue Disaggregation of revenue is presented on the face of the Statement of Operations by type of revenue streams the Company earns. ### Risks and Uncertainties The outbreak of the novel coronavirus ("COVID-19") in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The World Health Organization has declared COVID-19 a "Public Health Emergency of International Concern." The Global impact of the outbreak continues to evolve, and as cases of the virus have continued to be identified, many countries have reacted by instituting quarantines and restrictions on travel. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 could have a material impact on the Company's financial statements. {8}------------------------------------------------ # NOTES TO STATEMENT OF FINANCIAL CONDITION December 31, 2021 # 2. Summary of significant accounting policies (continued) ### Income Taxes The Company is a single member limited liability company. Accordingly, it is a disregarded entity for tax purposes and is not subject to taxes on its income. The Company's Sole Member is subject to the New York City Unincorporated Business Tax ("UBT"). As the liability associated with the UBT is principally the result of the Company, the UBT, which is calculated using currently enacted tax laws and rates, is reflected on the books of the Company, in accordance with the provisions of the Income Taxes Topic of the Financial Accounting Standards Board Accounting Standards Codfication. This Topic requires the consolidated current and deferred tax expense (benefit) for a group that files a consolidated tax return to be allocated among the members of the group when those members issue separate financial statements. For the year ended December 31, 2021, UBT tax accrual was \$209,000 and is included in accrued expenses. At December 31, 2021, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. ### Use of Estimates The preparation of financial statements 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. ### 3. Related party transactions Pursuant to an administrative services agreement with its Parent, the Company recognizes rent and administrative expenses based on the terms and conditions stipulated in the agreement. As of December 31, 2021, the balance due to the Parent under these arrangements was approximately \$6,156,000. ### 4. 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 as defined to net capital, shall not exceed 15 to 1. The rule also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2021, the Company's net capital was approximately \$3,758,000 which was approximately \$3,324,000 in excess of its minimum net capital requirement of approximately \$434,000. {9}------------------------------------------------ # NOTES TO STATEMENT OF FINANCIAL CONDITION December 31, 2021 # 5. Exemption from Rule 15c3-3 The Company limits its business activities pursuant to footnote 74 to SEC Release 34-70073, and as discussed in Q & A 8 of the related FAQ issued by SEC staff. Accordingly, there are no items to report under the requirements of this Rule. # 6. Concentrations of credit risk The Company maintains its cash balances in bank accounts at financial institutions, and at times the balance may exceed the federally insured limit. 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. Due to the predominantly transactional nature of the Company's business, the revenues were attributable to a limited number of customers. During the year ended December 31, 2021, the Company received approximately 78% of its total revenue from five clients. As of December 31, 2021, a receivable from one of these clients was still outstanding. # 7. Subsequent events The Company has evaluated subsequent events. There are no subsequent events which require in the notes to the financial statements. 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