# FOROS SECURITIES LLC X-17A-5 (2023-03-01) — Broker-dealer annual report - Company: FOROS SECURITIES LLC - Form: X-17A-5 - Filed: 2023-03-01 - Period: 2022-12-31 - Accession: 0001462100-23-000001 - CIK: 1462100 - File #: 8-68233 - Type: Broker-dealer - Material weakness: No - Auditor: WithumSmith and Brown - Auditor location: Whippany, NJ - Contact: Robert Powell - Phone: 212-340-7000 - Email: rpowell@forosgroup.com - Website: forosgroup.com - Signed by: Robert Powell (CEO & GC) Original filing: https://www.sec.gov/Archives/edgar/data/1462100/000146210023000001/forospublic.pdf --- {0}------------------------------------------------ STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2022 {1}------------------------------------------------ #### **UNITED STATES** OMB Number: 3235-0123 **SECURITIES AND EXCHANGE COMMISSION** Expires: October 31, 2023 **Washington, D.C. 20549** Estimated average burden | OMB APPROVAL | | | | |--------------------------|--|--|--| | | | | | | | | | | | | | | | | hours per response 12.00 | | | | | | | | | | | | | | # **ANNUAL AUDITED REPORT** SEC FILE NUMBER **FORM X-17A-5 8 - 68233 PART III** # **FACING PAGE** **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** | REPORT FOR THE PERIOD BEGINNING | 01/01/2022 | AND ENDING | 12/31/2022 | | | | | | | | |------------------------------------------------------------------------------------------------|------------------------------------------------------------|------------------------|------------|--|--|--|--|--|--|--| | | MM/DD/YYYY | | MM/DD/YYYY | | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | | | | | NAME OF FIRM: | Foros Securities LLC | | | | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes): | | | | | | | | | | | | X Broker-dealer
☐ Security-based swap dealer
☐ Major security-based swap participant | | | | | | | | | | | | ☐ 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) | | | | | | | | | | | New York | NY | | 10017 | | | | | | | | | (City) | (State) | | (Zip Code) | | | | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | | | | | Robert Powell | (212) 340-7000 | rpowell@forosgroup.com | | | | | | | | | | (Name) | (Area Code -- Telephone No.) | (Email Address) | | | | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | | | | | | | | WithumSmith + Brown | | | | | | | | | | | | (Name – if individual, state last, first, and middle name) | | | | | | | | | | | 200 Jefferson Park #400 | Whippany | NJ | 07891 | | | | | | | | | (Address) | (City) | (State) | (Zip Code) | | | | | | | | | 10/08/2003
100 | | | | | | | | | | | | (Date of Registration with PCAOB)(if applicable)
(PCAOB Registration Number, if applicable) | | | | | | | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | *\*Claims for exemption from the requirement that the annual reports be covered by the 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}------------------------------------------------ | Foros Securities LLC
the firm of
is true and corred. I further swear (or affirm) that nether the company nor any partner, officer, director, or equivalent person,
as the case may be, has any proprietary interest in any account diassified solely as that of a customer.
MARYROSE MERCADO
NOTARY PUBLIC, STATE OF NEW YORK
Signature
Registration No. 01ME6423025
Qualified in Queens County
COO & GC
Commission Expires October 4, 20 22
mue
Notary Public
This filing" contains (check all applicable boxes):
x (a) Statement of financial condition.
x] (b) Notes to consolidated statement of financial condition.
(c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of
comorehensive income (as defined in § 210.1-02 of Requiation S-X).
(d) Statement of cash flows
(e) Statement of changes in stockholders' or partners' or sole proprietor's equilty,
(f) Statement of changes in Trabilities subordinated to claims of creditors.
(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.
( ) Computation for delemination of customer reserve requirements pursuant to Exhibit A to 1 / CFR 240.1563-3.
(k) Computation for delemination of security-based swap ress ve requirements pursuant to Exhibit B to 17 CFR 240.153-3 or
Exhibit A to 17 CFR 240.18a-4, as applicable
(1) Computation for Determination of PAB Requirements under Exhibit A to \$ 240.1503-3.
(m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
(in) Intounation relains to possession or control requirements for security-based swap argumers under 1 CFR
240. 15c3-3(p)(2) or 1 / CFR 240. 18a-4, as applicable.
(o) Reconcillations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible ne
worth under 17 CFR 240.16c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a2, as applicable, and the reserve requirements under 17
CFR 240.15c2-3 or 17 CFR 240.18a4, as applicable it material differences exist, or a statement that no material differences
exist.
(p) Summary of financial data for subsidiated 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 1/ CFR 240.18a7, as applicable.
(s) Exemption report in accordance with 1/ CFR 240.1/a-5 or 1/ CFR 240.18a7, as applicable.
(t) Independent public accountant's report based on an examination of the statement of financial condition.
(u) Independent public accountant's report based on an examination of the financial statements under 17
CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
(v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17
CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable
(w) Independent 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.
[ (v) Report describing any material inatequacies 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).
(z) Other: | Robert Powell
And Children | , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to
as of December 31, 2022 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|---------------------------------------------------------------------------------------------------------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | {3}------------------------------------------------ # **CONTENTS** **December 31, 2022** | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-------| | Financial Statement | | | Statement of Financial Condition | 2 | | Notes to Statement of Financial Condition | 3 - 5 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Managing 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, 2022, 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, 2022, 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. Whippany, New Jersey February 28, 2023 {5}------------------------------------------------ # **STATEMENT OF FINANCIAL CONDITION** | December 31, 2022 | | |---------------------------------------|-----------------| | | | | ASSETS | | | Cash | \$
1,161,127 | | Treasury bills | 3,974,679 | | Accounts receivable | 1,485,718 | | Other assets | 159,170 | | | \$
6,780,694 | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities | | | Accounts payable and accrued expenses | \$
59,011 | | Due to Parent | 2,674,890 | | Total liabilities | 2,733,901 | | Member's equity | 4,046,793 | | | \$
6,780,694 | {6}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION** **December 31, 2022** ### **1. Nature of business** Foros Securities LLC (the "Company") is an entity organized under the laws of the state of Delaware on April 6, 2009. The firm primarily provides consulting services on mergers, acquisitions, divestitures, 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 statements are presented in U.S. Dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). #### *Cash* Cash aggregating approximately \$1,161,000 consists of checking and money market accounts which are held by financial institutions. #### *Other Assets* Included in other assets on the Statement of Financial Condition are contract assets of \$62,370 which are carried at the amount expected to be received, prepaid UBT tax of 92,000, and miscellaneous other assets of \$4,800. #### *Treasury bills* Treasury bills are purchased at a discount, which is the difference between the amount paid and the face value. The difference between the face value and the purchase price is recorded to interest income. The interest income is added to the principle and carried to the next period's beginning balance. This process is continued for every period until maturity. At maturity, the discount will be fully amortized and the book value will equal the face value. Treasury bills are held to maturity. During the year, the Company purchased treasury bills for \$3,957,800, at a discount, with a par value of \$4 million. The discounted amount paid and accrued interest are shown in Treasury bills on the Statement of Financial Condition at December 31, 2022. #### *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 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. In determining the transaction price, an entity may include variable 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. {7}------------------------------------------------ ### **NOTES TO STATEMENT OF FINANCIAL CONDITION** **December 31, 2022** ### **2. Summary of significant accounting policies (continued)** Our principal sources of revenue are derived from three segments: M&A advisory fees, transaction success fees and opinion fees, as more fully described below. ASC Topic 606 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. *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 \$9,635,534 and \$1,485,718 as of January 1, 2022 and December 31, 2022, respectively, which are included in Other Assets on the statement of financial condition. The Company had contract assets totaling \$47,135 and \$62,370 as of January 1, 2022 and December 31, 2022, respectively, which are included in Other Assets on the statement of financial condition. As of January 1, 2022 and December 31, 2022, the Company had contract liabilities of \$333,333 and \$0, respectively. #### *Disaggregated Revenue* Disaggregation of revenue is presented on the face of the Statement of Operations by type of revenue streams the Company earns. ### *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 operations 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 Codification. 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, 2022, UBT tax accrual was \$92,000 and is included in other assets. {8}------------------------------------------------ ### **NOTES TO STATEMENT OF FINANCIAL CONDITION** **December 31, 2022** #### **2. Summary of significant accounting policies (continued)** At December 31, 2022, 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 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. #### **3. Related party transactions** Pursuant to an administrative services agreement with its Parent, the Company recognizes rent and other general and administrative expenses based on the terms and conditions stipulated in the agreement. As of December 31, 2022, the balance due to the Parent under these arrangements was approximately \$2,675,000. #### **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, 2022, the Company's net capital was approximately \$2,402,000 which was approximately \$2,219,000 in excess of its minimum net capital requirement of approximately \$182,000. ### **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. #### **7. Subsequent events** The Company has evaluated subsequent events. There are no subsequent events which require disclosure in the notes to the financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.