# FOCUS SECURITIES LLC X-17A-5 (2019-02-25) — Broker-dealer annual report - Company: FOCUS SECURITIES LLC - Form: X-17A-5 - Filed: 2019-02-25 - Period: 2018-12-31 - Accession: 0001464835-19-000001 - CIK: 1464835 - File #: 8-68273 - Material weakness: No - Auditor: Bennett Thrasher LLP - Auditor location: Atlanta, GA - Contact: Tiffany Messenger - Phone: 770-923-9632 - Website: btcpa.net - Signed by: Jonathan Wilfong (President) Original filing: https://www.sec.gov/Archives/edgar/data/1464835/000146483519000001/Audit.pdf --- {0}------------------------------------------------ ## FOCUS SECURITIES LLC NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2018 ## Note A Summary of Significant Accounting Policies ## Nature of Operations: FOCUS SECURITIES LLC (the "Company"), was formed in Georgia as a limited liability company in March 2009. The Company is a wholly-owned subsidiary of FOCUS Holdings USA, Inc. (previously known as FOCUS, LLC) (the "Sole Member") and is a registered broker-dealer under the Securities Exchange Act of 1934, and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). The Company provides merger and acquisition advisory services to domestic and international companies and assists its clients in analyzing capitalization alternatives and arranging private placements of debt, equity and equity-related securities. The Company does not maintain customer accounts. ### Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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. #### Concentration of Credit Risk Arising From Cash Deposits in Excess of Insured Limits: The Company maintains cash balances at two financial institutions that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant risks on cash. ### Revenue Recognition: Investment banking revenues solely consist of merger and acquisition transaction success fees. Revenue is recognized upon completion of the transaction. #### Compensation and Benefits: Compensation and benefits in the statement of operations includes \$5,592,901 of commissions paid to registered representatives of the Company during the year ended December 31, 2018. {1}------------------------------------------------ ## FOCUS SECURITIES LLC NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2018 ## Note A Summary of Significant Accounting Policies (Continued) ## Income Taxes: The Company is a single member limited liability company. The Company is a disregarded entity for tax purposes and does not file tax returns or pay income taxes. All income and losses are passed through to the Sole Member to be included on the Sole Member's tax return. The Company has adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740-10, Accounting for Uncertainty in Income Taxes. Under ASC 740-10, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status, including its status as a pass-through entity, and the decision not to file a tax return. The Company has not identified any uncertain tax positions in its filed income tax returns that require disclosure in the accompanying financial statements. The Company's income tax returns for 2015 to 2017 are subject to examination by tax authorities and may change upon examination. ### New Accounting Pronouncements: In May 2014, FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. ASU 2014-09 supersedes the current revenue recognition guidance, including industryspecific guidance. The guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for annual periods beginning after December 15, 2018 utilizing either a full retrospective or modified retrospective approach. The Company will adopt this standard effective on January 1, 2019. The Company has evaluated the impact of ASU 2014-09 on its financial statements and, based on the current guidance provided by the AICPA industry task force on Broker-Dealers, the AICPA's Revenue Recognition Working Group, and the AICPA's Financial Reporting Executive Committee (FinREC), concluded there to be no impact to the Company's current revenue recognition policies and, therefore, no change to the Company's financial statements as of January 1, 2019. ## Fair Value of Financial Instruments: The Company's financial instruments, including cash, prepaid expenses, deposits, accounts payable, accrued liabilities, and due to member are carried at cost, which approximates their fair value because of the short term nature of these assets and liabilities. ## Note B Net Capital The Company, as a registered broker-dealer in securities, is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires that minimum net capital, as defined, shall not be less than the greater of 6 2/3% of aggregate indebtedness, as defined, or \$5,000, and the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2018, {2}------------------------------------------------ ## FOCUS SECURITIES LLC NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2018 the Company had net capital of \$469,239, which was \$464,239 in excess of its required net capital of \$5,000. The Company's ratio of aggregate indebtedness to net capital was 0.10 to 1. # Note C Related Party Transactions The Company pays a monthly management fee to the Sole Member equal to 90% of the Company's prior month net income, as defined in the management agreement. Management fees will be permanently reduced or waived for any month where necessary to ensure that adjusted net capital does not fall below 120% of the Company's minimum net capital requirement and/or the ratio of the Company's aggregated indebtedness to net capital does not exceed 120%. During the year ended December 31, 2018, management fees incurred were \$1,118,921, none of which was outstanding at year end. The Company has entered into an expense sharing agreement with the Sole Member. Under this agreement, the Sole Member pays all indirect expenses of the Company as defined in the expense sharing agreement. These expenses are allocated to the Company in accordance with the terms of the agreement. During the year ended December 31, 2018, allocated expenses incurred were \$51,038. At December 31, 2018, the Company owed \$2,267 to the Sole Member under the agreement. The balance is included in due to member in the accompanying statement of financial condition. ## Note D Concentrations ## Significant Transactions: A significant transaction is one from which at least 10% of annual revenue is derived. The Company had revenue from three transactions totaling \$3,523,750, which comprised approximately 47% of commission revenues for the year ended December 31, 2018. There were no receivables due from these transactions at December 31, 2018. ## Note E Contingencies In the ordinary course of business, the Company is subject to litigation. There is no pending litigation at December 31, 2018. ## Note F Subsequent Events The Company evaluated subsequent events through February 20, 2019, when these financial statements were issued. The Company is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the financial statements. {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) #### Report of Independent Registered Public Accounting Firm To the Member and Board of Directors of Focus Securities LLC #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Focus Securities LLC (a limited liability company) as of December 31, 2018, and the related statements of income, changes in member's equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of Focus Securities LLC as of December 31, 2018, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of Focus Securities LLC's management. Our responsibility is to express an opinion on Focus Securities LLC's financial statements 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 Focus Securities 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 statements are 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 statements, whether due to error or fraud, and performing procedures to 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. #### Supplemental Information The Computation of Net Capital Under Rule 15c3-1, the Computation for Determination of Reserve Requirements Under Rule 15c3-3, and Information Relating to the Possession or Control Requirements under Rule 15c3-3 as of December 31, 2018 have been subjected to audit procedures performed in conjunction with the audit of Focus Securities LLC's financial statements. The supplemental information is the responsibility of Focus Securities LLC's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing, procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the Computation of Net Capital Under Rule 15c3-1, the Computation for Determination of Reserve Requirements Under Rule 15c3-3, and Information Relating to the #### BETTER TOGETHER A Limited Liability Partnership of Certified Public Accountants & Consultants Riverwood 200 3300 Riverwood Parkway Suite 700 Atlanta, GA 30339 phone 770.396.2200 fax 770.390.0394 www.btcpa.net {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Possession or Control Requirements under Rule 15c3-3 as of December 31, 2018 are fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Focus Securities LLC's auditor since 2016. Bennett Thrasser LLP Atlanta, Georgia February 20, 2019 {5}------------------------------------------------ ## FOCUS SECURITIES LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2018 ## ASSETS | Cash | \$
513,915 | |---------------------------------|---------------| | Securities owned, at fair value | 30 | | Prepaid expenses | 26,982 | | Deposits | 13,392 | | Total assets | \$
554,319 | ## LIABILITIES AND MEMBER'S EQUITY | Liabilities | | |-----------------------------------------------------------|-----------------------| | Accounts payable and accrued liabilities
Due to member | \$
42,504
2,172 | | Total liabilities | 44,676 | | Member's equity | 509,643 | | Total liabilities and member's equity | \$
554,319 | See accompanying notes to the financial statements Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.