# PALMETTO ADVISORY GROUP X-17A-5 (2021-02-26) — Broker-dealer annual report - Company: PALMETTO ADVISORY GROUP - Form: X-17A-5 - Filed: 2021-02-26 - Period: 2020-12-31 - Accession: 0001462329-21-000001 - CIK: 1462329 - File #: 8-68240 - Material weakness: No - Auditor: Glaser and Company - Auditor location: Charleston, SC - Contact: Derrick M Grava - Phone: 8437682535 - Signed by: Derrick M Grava (President, CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1462329/000146232921000001/pagpublicannualaudit2020.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: October 31 , 2023 Estimated average burden hours per response ...... 12.00 # **ANNUAL AUDITED REPORT FORM X-17A-5** PART III | SEC RLE NUMBER | |----------------| | 8- 68240 | FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING | ___
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12-,1_3_1-'-.!2_0_2_0 | | |--------------------------------------------------------------------------|--------------------------------------------------------|-------------------|-----------------------------------------|--| | | MMlDDIYY | | MM/DDIYY | | | | A. REGISTRANT IDENTIFICATION | | | | | PALMETIO ADVISORY GROUP
NAME OF BROKER-DEALER: | | OFFICIAL USE ONLY | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | | 210 YELLOWTHROAT LANE | | | | | | (No. and Street) | | | | | KIAWAH ISLAND | SC | | 29455 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | DERRICK GRAVA | | | 843768-2535 | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | GLASER AND COMPANY | | | | | | (Name - if individual. state last. first. middle name) | | | | | 149 EAST BAY STREET, SUITE 200 | CHARLESTON | SC | 29401 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | I V' I
Certified Public Accountant | | | | | | B
PUbliC Accountant | | | | | | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement offacts 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 OM B control number. SEC 1410 (11-05) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, | DERRICK GRAVA | , swear (or affirm) that, to the best of | |-------|---------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | | PALMETTO ADVISORY GROUP | | | | of _______
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---', 20_2_0_--" are true and correct. I further swear (or affirm) that | | | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | classified solely as that of a customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signat e | | | | | | | | PRESIDENT, CEO | | | | Title | | | (YIIt-:z-- | | | | Notary Public | MAn'HEW A. FOREMAN | | | | Notary Public - State of South Carolina | | | This report ** contains (check all applicable boxes): | My Commission Expires October 1, 2028 | | | 0' (a) Facing Page.
g (b) Statement of Financial Condition. | | | o | | (c) Statement ofIncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | | of Comprehensive Income (as defined in §210.l-02 of Regulation SoX). | | | § | (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 15c3-3. | | | o | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the | | o | | | | | consolidation. | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | An Oath or Affirmation. | | | ~ (1) | (m) A copy of the SIPC Supplemental Report. | | | | | (n) A report describing any material inadequacies found to exist or found to have existed since the date ofthe previous audit. | | | | | \*\* *For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).* {2}------------------------------------------------ ## **PALMETTO ADVISORY GROUP, LLC** KIAWAH ISLAND, SOUTH CAROLINA **AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020** ![](_page_2_Picture_2.jpeg) {3}------------------------------------------------ ## **PALMETTO ADVISORY GROUP, LLC FOR THE YEAR ENDED DECEMBER 31,2020** | TABLE OF CONTENTS | | | |--------------------------------------------------------|-----|--| | Report ofIndependent Registered Public Accounting Firm | 1 | | | Statement of Financial Condition | 2 | | | Notes to the Financial Statements | 3-5 | | {4}------------------------------------------------ # **GLASER;+), Cotv1PANY** certified pUblic accountants American Institute of CP As I Public Company Accounting Oversight Board I SC Association of CP As ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of Palmetto Advisory Group, LLC Kiawah Island, South Carolina #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Palmetto Advisory Group, LLC as of December 31, 2020, 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 Palmetto Advisory Group, LLC as of December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. ### Basis for Opinion This financial statement is the responsibility of Palmetto Advisory Group, LLC's management. Our responsibility is to express an opinion on Palmetto Advisory Group, 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 Palmetto Advisory Group, 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. We have served as Palmetto Advisory Group, LLC's auditor since 2018. Charleston, South Carolina February 23,2021 > Glaser and Company, LLC 149 East Bay Street, Suite 200, Charleston, South Carolina 29401 www.glascrcompany .com I P 843.849.0655 I F 843.R72 0533 I {5}------------------------------------------------ ## **PALMETTO ADVISORY GROUP, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31,2020** #### **ASSETS** | CURRENT ASSETS: | | |---------------------------|--------------| | Cash and cash equivalents | \$
29,319 | | Commissions receivable | 10,362 | | Due from member | 34,986 | | Other assets | 1,013 | | Total Current Assets | 75,680 | | TOTAL ASSETS | \$
75,680 | | | | #### **LIABILITIES AND MEMBERS' EOUITY** | CURRENT LIABILITIES: | | |---------------------------------------|--------------| | Accrued expenses | \$
7,217 | | Note payable, current portion | 170 | | Total Current Liabilities | 7,387 | | NONCURRENT LIABILITIES: | | | Note payable, net of current portion | 51:330 | | Total Noncurrent Liabilities | 51,330 | | TOTAL LIABILITIES | 58,717 | | MEMBERS' EQUITY: | | | Membership interest | 16,963 | | Total Liabilities and Members' Equity | \$
75,680 | See accompanying notes to financial statements. {6}------------------------------------------------ ## **PALMETTO ADVISORY GROUP, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2020** #### **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** This summary of significant accounting policies of Palmetto Advisory Group, LLC (the "Company") is presented to assist in understanding the Company's financial statements. The financial statements and notes are the representation of the Company's management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. #### **Organization and Nature of Business** Palmetto Advisory Group, LLC (the "Company") is a South Carolina limited liability company and operates as a registered, non-carrying broker-dealer registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority, Inc. (FINRA). The Company's primarily solicits the registered representatives of larger broker dealers on behalf of independent mutual fund companies, and is typically compensated through a portion of the mutual fund's management fee and sometimes also on a retainer basis. The Company operates under the provisions of Paragraphs (k)(2)(i) of Rule 15c3-3 of the Securities and Exchange Commission and, accordingly, is exempt from the remaining provisions of that rule. The Company does not hold customer accounts and promptly transmits all customer funds and securities received in connection with its activities as a broker-dealer. The Company does not hold any funds or securities for or owe money or securities to customers. #### 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 certain reported amounts and disclosures. Significant estimates are primarily the collectability of commissions receivable. It is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of circumstances that existed at the date of the financial statements will change in the near term due to one or more future confirming events. The effect ofthis change could be material to the financial statements. #### **Cash and Cash Equivalents** Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits and may, at times, be in excess ofthose limits. The Company had no cash balances in excess of FDIC coverage at December 31, 2020. 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. #### **Commissions Receivable** Commissions receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. If the financial condition of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management's assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. {7}------------------------------------------------ ## PALMETTO ADVISORY GROUP, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2020 ### 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED #### Revenue Recognition In May 2014, the Financial Accounting Standards Board ("F ASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU and all subsequently issued clarifying ASUs replaced most existing revenue recognition guidance in U.S. GAAP. The ASU also required expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The majority of the Company's revenue arrangements generally consist of a single performance obligation. The Company has contracts under which it receives non-refundable retainers from investment managers. Retainers are typically due and recognized on the first day of each month. The Company receives commission income when referred clients purchase funds of a mutual fund client and on a periodic basis as referred clients maintain balances in the mutual fund. #### Income Taxes The Company has elected to be taxed as a subchapter "s" corporation. Under this election the Company's taxable income and tax credits are passed through to its members for inclusion in their individual income tax returns. The Company recognizes and measures its unrecognized tax positions in accordance with FASB ASC 740, Income Taxes. Under that guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax position is adjusted when new information is available, or when an event occurs that requires a change. Management has considered this guidance and there was no impact to these financial statements associated with this consideration. As of December 31, 2020, the tax years ended December 31, 2017 through 2020 were open for potential examination by taxing authorities. No liabilities for uncertain income tax positions were recorded at December 31, 2020. #### 2. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES #### Industry and Regulatory Requirements The Company is subject to complex legal and regulatory requirements that continue to evolve. The Company might be subject to a variety of legal proceedings including FINRA arbitrations, as well as civil lawsuits, class actions and other regulatory examinations, reviews, investigations (both formal and informal), audits and requests for information by various governmental regulatory agencies and self-regulatory organizations in jurisdictions where the Company does business. #### Concentrations During the year ended December 31, 2020, the Company generated all of its revenues under marketing agreements with six investment managers. #### 3. NET CAPITAL REQUIREMENTS The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital, and limits the ratio of aggregate indebtedness to net capital, as defined, shall not exceed 15 to 1. At December 31, 2020, the Company had a net capital deficit of\$19,556 which was \$24,556 less than the required net capital balance of \$5,000. As of December 31,2020, the Company's ratio of aggregate indebtedness to adjusted net capital was (3.0) to 1. {8}------------------------------------------------ ## **PALMETTO ADVISORY GROUP, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2020** The deficiency was the result of an error in the accounting treatment of an Economic Injury Disaster Loan received in October. The error was discovered on January 5, 2021 and was promptly reported to FINRA and the SEC. The deficiency was corrected the following day. #### **4. NOTE PAYABLE** On October 15,2020, the Company signed a \$51,500 Economic Injury Disaster Loan with the U.S. Small Business Administration. The note has a 30-year term and bears interest at 3.75%. The note requires principal and interest payments of \$251 per month starting in October 2021. The note is secured by the assets of the Company. Future required minimum principal payments due at December 31, 2020: | 2021 | \$
170 | |------------|--------------| | 2022 | 1,040 | | 2023 | 1,080 | | 2024 | 1,121 | | 2025 | 1,164 | | Thereafter | 46,925 | | | \$
51,500 | #### **5. OPERATING AGREEMENT** The Members of Palmetto Advisory Group, LLC are subject to an operating agreement which specifies the rights and obligations of its members. Among other things, the agreement stipulates the allocation of profits, losses and distributions to its members, as well as the terms and conditions under which ownership interest can be sold or transferred. #### **6. SUBSEQUENT EVENTS** Management has evaluated the effect subsequent events would have on the fmancial statements of the Company at December 31, 2020, through February 23, 2021, which is the date the financial statements were available to issue. There were no material subsequent events requiring recognition or additional disclosure in these financial statements outside those presented below: At the time of issuance of these fmancial statements, the global, national and local impact of the health risks of the coronavirus disease 2019 (COVID-19) is continuing to evolve. The Center for Disease Control and Prevention continues to work with the broad scientific community to develop and widely distribute a vaccine. As global efforts currently focus on containing COVID-19 and eradicating through vaccine distribution, the impacts on United States citizens and businesses continue to be significant. With a continued long-term horizon for containment and distribution of a vaccine, it is reasonably likely that COVID-19 may cause the Company to experience reductions in revenues, delays in vendor delivery of supplies and services as well as staffing interruptions. See Report of Independent Registered Public Accounting Firm. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.