# SHANNON ADVISORS LLC X-17A-5 (2021-02-23) — Broker-dealer annual report - Company: SHANNON ADVISORS LLC - Form: X-17A-5 - Filed: 2021-02-23 - Period: 2020-12-31 - Accession: 0001462624-21-000002 - CIK: 1462624 - File #: 8-68243 - Material weakness: No - Auditor: FGMK, LLC - Auditor location: Bannockburn, IL - Contact: Brian T O'Gara - Phone: 312-961-2698 - Signed by: Brian Timothy O'Gara (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1462624/000146262421000002/pubauditdoc2020.pdf --- {0}------------------------------------------------ # *Shannon Advisors LLC* Financial Statement and Independent Auditor Report December 31., 2020 **Filed as a Public Document Pursuant to Rule 17a-5(d) of the Securities Exchange Act of 1934.** \*\*\* **PUBLIC DOCUMENT\*\*\*** {1}------------------------------------------------ #### **TABLE OF CONTENTS** | | Pa
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6 | {2}------------------------------------------------ **UNITED STATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response .. . . .. 12.00 **8-** SEC FILE NUMBER ## **ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill** ### **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder** | 1
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tat | | | | | | | | | | | *\*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 of facts and circumstances relied on as the basis for the exemption. See Section 240.17 a-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 0MB control number.** {3}------------------------------------------------ ### **OATH OR AFFIRMATION** I, B. Timothy O'Gara , swear ( or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Shannon Advisors LLC ------------------------ - -------------------, as of December 31 20 20 , 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: This report\*\* contains (check all applicable boxes): **0** (a) Facing Page. **[2]** (b) Statement of Financial Condition. Signature *C.c* tJ Title PAMELA D. TAYLOR OFFICIAL **SEAL** Notary Public, **State of llllnolo** My Commi ssion **Expires** July **30, 2024** D (c) Statement oflncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement of Comprehensive Income (as defined in §210.1-02 ofRegulation S-X). **D** ( d) Statement of Changes in Financial Condition. **D** ( e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. 0 (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 l 5c3-3. (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. 0 (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule l 5c3-l and the **0** (k) Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3 . A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. **0**(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 portions of this filing, see section 2 40.17 a-5 (e) (3).* {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### **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 LLC (the "Company") as of December 31, 2020, and the related notes (collectively referred to as th e"financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company 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 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. 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 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 2012. Chicago, Illinois February 16, 2021 **FGMI<, LLC** fgm k.com 333 W. Wacker Drive, 6th Floor Chicago, IL 60606 312.818.4300 2801 Lakeside Drive, 3rd Floor Bannockburn, IL 60015 *847.374 .0400* {5}------------------------------------------------ #### **ST A TEMENT OF FINANCIAL CONDITION** #### **DECEMBER 31, 2020** | A
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\$ | {6}------------------------------------------------ #### **NOTES TO THE FINANCIAL STATEMENT** #### **NOTE 1** - **DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** *Description of Business.* Shannon Advisors LLC (the "Company") was incorporated in the State of Delaware in March 2009 and is a wholly-owned subsidiary of Shannon Advisors LP (the "Parent"). The Company is registered as a Capital Acquisition Broker ("CAB") with the Securities and Exchange Commission and the Financial Industry Regulatory Authority ("FINRA") and various states, and, in this capacity, it performs brokerage and private placement advisory services to private equity companies globally. *Significant Accounting Policies.* The Company follows accounting principles generally accepted in the United States of America ("GAAP") as established by the Financial Accounting Standards Board ("F ASB") to ensure consistent repmting of fmancial condition, results of operations, and cash flows. *Management Estimates and Assumptions.* The preparation of financial statements in confonnity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Future events and their effects cannot be predicted with ce1tainty; 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 environment changes. *Cash* **mu/** *Cash Equivalents.* All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The Company regularly maintains cash balances that exceed Federal Deposit Insurance Corporation limits. *Accounts Receivable and Allowances for Uncol/ectible Accounts.* Accounts receivable are repmted net of any estimated allowances for uncollectible accounts and contractual adjustments. All receivables are uncollateralized. To provide for receivables that could become uncollectible 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, and other collection indicators. No allowance was deemed necessary by management as of December 31, 2020. *Revenue Recognition.* Revenue from contracts with customers includes success fees and retainer fees from placement agent and advisory services. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. The Company's principal sources of revenue are derived from success fees and retainer fees, as more fully described below, as well as reimbursed expenses from customers. *Success Fee.* Success fees are due in accordance with the tenns of the executed agreement, typically either a percentage of the capital raised or committed or a fixed dollar amount. Performance obligations are satisfied as these events are completed. *Retainer Fee.* Retainer fees are due in accordance with the terms of the executed engagement agreement, which often includes an immediate up front payment and sometimes involves monthly or quarterly payments thereafter for a set period. Performance obligations in these anangements vary depending on the contract, but are typically satisfied over time under the arrangement. *Interest Income.* Interest income is recorded on the accrual basis. {7}------------------------------------------------ #### **NOTES TO THE FINANCIAL STATEMENT** *Income Taxes.* The Company is organized as a single member limited liability company, which is a disregarded entity for income tax purposes. Accordingly, the Parent's partners are personally responsible for the federal and state income taxes on the Company's taxable income, and therefore no provision for federal and state income taxes has been made in these financial statements. The Company may make distributions to its member in 2021 in connection with such member's respective income tax liability incurred for 2020 as a result of the Company's paiinership income tax status. *Leases.* The Company recognizes and measures its leases in accordance with F ASB Accounting Standards Codification 842, *Leases.* The Company is a lessee in a non-cancelable operating lease. The Company determines if an anangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right-of-use ("ROU") asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments. Variable payments are included in the future lease payments when those variable payments depend on an index or a rate. The discount rate is the implicit rate if it is readily determinable or otherwise the Company uses its incremental borrowing rate. The implicit rates of our leases are not readily determinable and accordingly, we use our incremental borrowing rate based on the information available at the commencement date for all leases. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar tenns and in a similar economic environment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unam011ized balance of lease incentives received, and any impairment recognized. Lease cost for lease payments is recognized on a straight-line basis over the lease tenn. The Company has elected, for all underlying classes of assets, to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the asset that the Company is reasonably certain to exercise. The Company recognizes lease costs associated with our short-term leases on a straight-line basis over the lease term. #### **NOTE 2** - **RELATED PARTY TRANSACTIONS** The Company has an expense sharing agreement with the Parent, whereby the Parent assumes responsibility for, and pays ce11ain overhead and operating expenses and liabilities of the Company, including but not limited to administrative expenses. Such expenses will not be allocated to or reimbursed by the Company, and accordingly, there will be no expense allocation formulated by the Parent. #### **NOTE 3** - **NET CAPITAL REQUIREMENTS** The Company is subject to the Securities and Exchange Commission's Unifonn Net Capital Rule (Rule 15c3-1). Under this rule, the Company is required to maintain "minimum net capital" equivalent to \$5,000 or 6 2/3% of "aggregate indebtedness," whichever is greater, and a ratio of "aggregate indebtedness" to "net capital" less than 15 to 1, 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 1. At December 31, 2020, the Company had net capital of \$101,216 which was \$96,216 in excess of its required net capital of \$5,000. The Company's aggregate indebtedness to net capital was .1465 to 1. Management anticipates making capital distributions totaling at least \$500,000 during the six months after December 31, 2020. {8}------------------------------------------------ #### **NOTES TO THE FINANCIAL STATEMENT** #### **NOTE 4- CONCENTRATIONS** As of December 31, 2020, the Company had three clients that accounted for 90% of accounts receivable. The ongoing operation of the Company is economically dependent on its ability to enter into contracts with other parties. #### **NOTE 5 - LEASES** The Company had a lease for office space with initial non-cancelable terms in excess of one year. The Company classified its lease as an operating lease. The lease contained a renewal option. The Company's lease does not include termination options for either party to the lease or restrictive financial or other covenants. Payments due under the lease contract include fixed payments plus variable payments. During 2020, the lease matured and the Company renewed its lease for a term less than twelve months. | Th
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