# SHANNON ADVISORS LLC X-17A-5 (2019-02-20) — Broker-dealer annual report - Company: SHANNON ADVISORS LLC - Form: X-17A-5 - Filed: 2019-02-20 - Period: 2018-12-31 - Accession: 0001462624-19-000001 - CIK: 1462624 - File #: 8-68243 - Material weakness: No - Auditor: FGMK, LLC - Auditor location: Bannockburn, IL - Contact: Brian OGara - Phone: 8477393208 - Signed by: Brian T O'Gara (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1462624/000146262419000001/Public1.pdf --- {0}------------------------------------------------ # *Shannon Advisors LLC* Financial Statement and Independent Auditor's Report December 31, 2018 **Filed as a Public Document Pursuant to Rule 17a-5(d) of the Securities Exchange Act of 1934.** **\*\*\*PUBLIC DOCUMENT\*\*\*** {1}------------------------------------------------ ## SHANNON ADVISORS LLC #### TABLE OF CONTENTS ## LETTER OF OATH OR AFFIRMATION ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ## FINANCIAL STATEMENT Statement of Financial Condition Notes to the Financial Statement {2}------------------------------------------------ | UNITEDSTATES | |------------------------------------| | SECURITIES AND EXCHANGE COMMISSION | | Washington, D.C. 20549 | # ANNUAL AUDITED REPORT FORM X-17A-5 PART III | OMB APPROVAL | | |--------------------------|---------------------------| | OMB Number: | 3235-0123 | | Expires! | August 31, 2020 | | Estimated average burden | | | | hours per response 12.00 | | SEC FILE NUMBER | |-----------------| | 88243 | | | 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 U I/U V2018 | | | AND ENDING: 12/31/2018 | | |----------------------------------------------------------------------------------------------|---------------------------------------------------------------------|------------|--------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: Shannon Advisors LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | 272 E. Deerpath Road, Suite 254 | | | | | | | (No. and Street) | | | | | Lake Forest | 16 | | 60045 | | | (City) | (State) | (Zip Code) | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
B. Timothy O'Gara | | | (847)739-3208 | | | | | | (Arca Code - Telephone Number) | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | B. ACCOUNTANT IDENTIEICATION | | | | | | | | | | | FGMK, LLC
333 West Wacker Drive, 6th Floor Chicago | (Name - if individual, state last, first, middle name) | ﺘﻨ | 60806 | | | (Address) | (City) | (Stafe) | (Zip Code) | | | CHECK ONE: | | | | | | Certified Public Accountant
Public Accountant | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | \*Claims for exemption from the regulrement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of focus and circumstimes relief on the dampillers purchedenced public creating 240. Becoming > Potential persons who are to respond to the collection of information contained in this form are not required to response SEC 1410 (06-02) {3}------------------------------------------------ #### OATH OR AFFIRMATION | B. Timothy O'Gara
Shannon Advisors LLC | , swear (or affirm) that, to the best of
my knowledge and belief the accomparying financial statement and supporting schodiles pertaining to the firm of | | |-------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|---| | of December 31 | 20 18 are true and correct. I further swear (or affirm) that | * | | | neither the company nor my partner, principal office or director has any proprietary interest in any account | | | classified solely as that of a customer, except as follows: | | | | | | | | | | | Pamela d taylor Official Seal Notary Public - State of Illinois My Commission Expires Jul 30, 2020 Notary Public Signature Chief Financial Officer Title This report \*\* contains (check all applicable boxes): - (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) Statoment of Changes in Liabilities Subordinated to Claims of Creditors. - (g) Computation of Net Capital. - (h) Computation for Determination of Reserve Requirements Pursuant to Rule 1503-3. - (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. - (1) A Reconcliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 1503-3. - (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of consolidation. - (1) An Oath or Affirmation. - (m) A copy of the SIPC Supplemental Report. (1) A report describing any material inadequacies found to have existed since the date of the previous and it. \*\* For conditions of confidential treatment of certain portlons of this filing, see section 240.170-5(e)(3). {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Delivering solutions. #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Management of Shannon Advisors LLC #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Shannon Advisors LC (the "Company") as of December 31, 2018, 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, 2018, 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) ("PCADB") 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 traud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 bass, evidence regarding the amounts and disclosing in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overal presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. FGMK,LLC We have served as the Company's auditor since 2012. Chicago, Illinois February 13, 2019 12000 Parks 11 8 11 F.R. Michael Times and China 11 1 Concession Children Comments {5}------------------------------------------------ #### **SHANNON ADVISORS LLC** #### **STATEMENT OF FINANCIAL CONDITION** #### **DECEMBER 31, 2018** | ASSETS | | | |-------------------------------------------|-----------------|--| | Cash and cash equivalents | 26,687
\$ | | | Accounts receivable | 4,472,865 | | | Contract asset | 60,000 | | | | 4,559,552
\$ | | | LIABILITIES AND MEMBER'S EQUITY | | | | LIABILITIES | | | | Accoti:11ts. payable and accrued expenses | 5,611
\$ | | | MEl\fBER'SEQUITY | 4,553,941 | | | | \$ 4,559,552 | | The accompanying notes ate an lrttegral part of this statement. {6}------------------------------------------------ #### **SHANNON All VISORS LLC** #### **TABLE OF CONTENTS** # **NOTE 1-DESCRIPTION OF BUSINESS AND SU)\1.MARY OFSIGNIFICANT ACCOUNTING POLICIES** *Descriptwn ofBMiness.* Shannon Advisors LLC (the "Comp,my'") was mcorporated m the State of Delaware ln March 2009 md is a wholly-owned subsidiary of Sb,mnon Advisors LP (the "Parent"). The Compamy is registered as a broker/dealer with the. Securities and Exchange Commission and the Financial Industry Regulatory Authority ("FlNRA") and various states, and, mthis capacity, it performs brokerage and private placement advisory services to private equity companies globally. *Significant Accounting Polkies.* The Company follows accoll!lting principles generally accepted in the United States of America ("GAAP") as established by the Fmamcial Accounting Stancmrds Board ("F AS!l") 'to ensure consistent reporting of **financj~J conditiOn. "results nf'opetations\_; and\_ Cash flows.** *Management* **Estil/iates** *and Assumption.,.* The. preparation of fmancial statements jn conformity with GAAP requires m,magemertt to make estimates amd assumptions that affect the amounts ,reported **in** the .timmcial statements and accompanying notes. Actual results co.uld differ from those estimates. Future .events and their effeets cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these :financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating enviromnent changes. *Cash and Casi, Equivalents.* All highly liquid investments purchased With an original inatu:tify of thtee months or less are considered to be cash equivalents. The Company regularly maintains cash balances that exceed Federal Depository Insurmce Corporation limits. *Accounts Receivalile and Allowa1lct!\$ for Uni:ollectlhle Accounts.* Accounts receivabl<> are reported net of :my estimated allowances for uncollectible, accounts and. contractual ap.justmems. All receivables are uncollateralized. To provide for receivables that could become uncollectibie in the future, the Company may establish an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The allowance for uncollectible accounts is based .upon management's assessment of historical and expected net collections, business and economic conditions, amd other collection indicators. No allowance was deemed necessary by m,mageinent as of December :n, 2018. *Reveuue &cognition.* Effective January i, 2018, the. Company adopted ASC Topic *606 RINr/1'/ue from Contract,f with Cust,;>mers* (''ASC Topic 606"). The new revenue recognition guldamce requires that an entify recognize revem1e to depict the transfer of promised goods or services .to customers in an amount thatreflects the consider,,tion to which the entity ClJlS in the contract, ( c) determine the tramsaction price, (d)allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) !he entify satisfies a performance obligati011. rn detennining the transaction price, an entity may include variable consideratiqn only to th¢ extent that it is probable that a. signi:ficant reversal in the. amount of cumulative revenue recognized wwld not occur when the µncertainty associated with the variable consideration is resolved. The Comp,my applied the modified retrosMctive method of adoption which resulted in no cumulative adjustment to member's equity as of January I, 20l8. Reported fmalicial results for historic. periods were not restated amd are reported under The Accounting Stamdards in effect during the hlstoric period. Refur to the Compmy's audited financial statements for the year ended December 31, 2017 for discussions related to the Company's previous revenue recognition policies, {7}------------------------------------------------ #### **SHANNON ADVISORS LLC** #### **TABLE OF CONTENTS** Revenue from contracts: with customers includ~ success fees and. retainer fees from placement agent and advisoty services. The recognition and measurement of revenue is based 011 the assessment of illdividual contraet tenns. Significantjudgment is r,;quired to determine whether performance obJigations are satisfied at a point iu time or overtime; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's pn;,gress under ihe contract; and whether constraints on variable consideration should he applied due to lm):ertajn: future events-. OUr- principal sources of revenue are derived'.fi'om-two segments: a success fee and a retainer fee, as ni()re fully described below. *Success Fee.* Success fees are due iu accordance with the terms oflhe executed agreement, typically either a percentage of the capital raised-or committed or a fixed dollar amount. Perfonnance obligations are satisfied as these even\\$ are completed, *Re\_tainer Fee.* Retaillet-fees tire due·in\_accordance with the tenns of the executed engagement agreement, which:·often includes an. immediate up front payment and sometimes involves monthly or quarterly payments 1hereafter for a set period. Perfonnance obligations in 1hese arrangements. vary depending on 1he contract, out are typically satisfied over time underlhe arrangement. - - · *lnc(J,ne Taxes.* The Company is organized as a single member limited liability company, which is a disregarded entity for income lax purposes; Accordingly, the Parent's partners are personally responsible for the federaland state mcome taxes on the Company's taxable irtcorne, a11d iherefore no provision for federal and stale income ta>,es has been made in these financial statements. The Company may make distributions to its member iu 20 I 9 in coanection with such member's respective .income tax Iiabilify \_incurred for2018.asaresult of the Company's partnership income tax status. *R~ce11tAcco1mling Pro1101111cements.* In Felmmry 2016, FASB issued ASU 2017-02, *Leases (Topic 842).* FASB issued A;;U 2017-02 ld .increiµ;e transparency and comparability among organizations by recognizing lease ljSsets and lease liabilities on ih\_e balance sheet and disclosing key infonnation about Jeasillg arrangements. Certaill qualitative and quantitative disclosures are requjred, as well as a retrospective recognition and measurement of impacted leases. The new guidance *is* effective \_for fiscal years and interim periods within those years beginning after December 15, 2019, wiih early adoption permitted. Management is currentlyevaluating this standard. #### **NOTE 2 -RELATED PARTY TRANSACTIONS** The Company has an expense sharing agreement wiih the Parent, whereby the Parent assumes responsibili!J:' for, and pays certain overhead and operating expenses and liabilities of 1he Company, includlng but not limited to administrative expenses, Suen expenses will not be allocated to or reimb\lfSt)(J by the Company, and accordingly, ihere will be no expense allocation formulated by ihe Parent. #### **NOTE 3 -.NET CAPITAL REQUIREMENTS** The Company is subject to the Securities and Exchange Commission's U!!ifonn Net C'\l'ital Rule (Rule 15c3-l). Underthis nile, the Company is required to mailltain "minimum net capita]" equivalent to \$5,000 or ~ 2/3% of "aggregate indebtedness," whichever is greater, and a ratio of"aggregate indebtedness" to "net capital" less than 15 to J, as these terms are defined. Rule 15c3-l also provides that equity capital may not be withdrawn if the resulting net capital ratio would exceed 10 to I. At December 3 I, 2018, the Company had net capital of \$20,542 which was \$15,542 in excess of its required net C'\l'ital of :1,5,000. The Company's aggregate lndebtedness to net capital was .2731 to I. {8}------------------------------------------------ #### **SHANNON ADVISORSLLC** #### **TABLE OF CONTENTS** Management anticipates making capital distributiorur totaling at least \$500,000 during the .six months after December 31, 2018. #### **NOTE 4-CONCENTRATIONS** For the year ended December 31, 2018, the Company had two clients that accounted for 86% of revenues, As of December 31, 2018, the Company llad three clients that accounted for 89% of accotmts receivable, The ong<,Jng operation of the Company is economically dependent on its ability to enter into contracts with other parties. # **NOTJ': 5- COMMITMENTS, CONTINGENCIES AND INDEMNIFICATIONS** In the norma!course of business, the Company enters into contrl\Ctsthat co11tain a variety of representations and warranties that provide indemrrlficatio11 under certain circumstances, The Company's maximum exposure under these arrangements is unknown, as this- would involve future claims that may be made against the Company that have not yet occurred. The Company expects the risk of future obligations under these indemnifications to be remote. #### **NOTE 6 - SUBSEQUENT EVENTS** The Company's management has evaluated all known subsequent events from December 31s~ 2018 t)lrough Febru!fi'Y 13, 2019, the date the ac~ompauylng financial statemen.ts were available to be issued, and is. not aware of auy ma\erial subsequent events occurring during this period. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.