# FOCUS SECURITIES LLC X-17A-5 (2021-02-10) — Broker-dealer annual report - Company: FOCUS SECURITIES LLC - Form: X-17A-5 - Filed: 2021-02-10 - Period: 2020-12-31 - Accession: 0001464835-21-000001 - CIK: 1464835 - File #: 8-68273 - Material weakness: No - Auditor: Bennett Thrasher LLP - Auditor location: Atlanta, GA - Contact: Richard Thompson - Phone: 202-470-1963 - Website: focusbankers.com - Signed by: Jonathan Wilfong (Chief Compliance Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1464835/000146483521000001/audit.pdf --- {0}------------------------------------------------ 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: | October 31, 2023 | | Estimated average burden
hours per response 12.00 | | ![](_page_0_Picture_3.jpeg) # 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 January 1, 2020 | MM/DD/YY | AND ENDING December 31, 2020 | | |----------------------------------------------------------------------------------------------------------|--------------------------------------------------------|------------------------------|--------------------------------| | | A. REGISTRANT IDENTIFICATION | | MM/DD/YY | | NAME OF BROKER-DEALER: FOCUS SECURITIES LLC | | | | | | | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | 3353 Peachtree Road, NE, Suite 1160 | | | | | | (No. and Street) | | | | Atlanta | GA | 30326 | | | (City) | (State) | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Richard Thompson 202-470-1963 | | | | | | | | (Area Code - Telephone Number) | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | Bennett Thrasher LLP | | | | | | (Namo - if individual, state last, first, middle name) | | | | 3300 Riverwood Parkway, #700 | Atlanta | GA | 30339 | | (Address) | (City) | (State) | (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 reguirement that the camul report be copinion of the independent public accountant must be supported by a statement of facts and the unitial report be covered by the exemption. See Section 240. Tax September 1 > Potential persons who are to respond to the collection of Information contained in this form are not required to respond undermation obinamed in this form are not required to respond > unless the form displays a currently valid OMB control number. SEC 1410 (11-05) {1}------------------------------------------------ # OATH OR AFFIRMATION # ı, Jonathan Wilfong | | _, swear (or affirm) that, to the best of | | |----------------------|------------------------------------------------------------------------------------------------------------------|--| | FOCUS SECURITIES LLC | ily knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | | of December 31 | | | t, proprietor, principal offical and correct. I further swear (or affirm); as a neither the company nor any partner, principal officer or director has any proprietary interest in any account classified solely as that of a customer, except as follows: | | Signature
Chief Compliance Officer
Title
Notary Public | |------|-----------------------------------------------------------------------------------------------------------------------------------| | | | | 1877 | This report ** contains (check all applicable boxes'):
(a) Facing Page. | | 11 | | | | (b) Statement of Financial Condition. | | | (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | | of Comprehensive Income (as defined in \$210.1-02 of Regulation S-X). | | 国际 | (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. | | ारार | (g) Computation of Net Capital. | | | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | | (j) A Reconciliation, 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 15c3-3. | | | (k) A Reconcillation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | | | | (1) An Oath or Affirmation. | | | (m) A copy of the SIPC Supplemental Report. | | | (11) A report describing any material inadequacies found to exist or found to have existed since the date of the previous andit. | | | | | | ** For conditions of anotident' 3 | \*For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e){3). {2}------------------------------------------------ # FOCUS SECURITIES LLC FINANCIAL STATEMENTS DECEMBER 31, 2020 {3}------------------------------------------------ # FOCUS SECURITIES LLC # TABLE OF CONTENTS | | PAGE | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------|------| | Report of independent registered public accounting firm 1 - 2 | | | Financial statements: | | | Statement of financial condition 3 | | | Statement of income 4 | | | Statement of changes in member's equity 5 | | | Statement of cash flows 6 | | | Notes to financial statements 7 - 10 | | | Supplementary information: | | | Computation of net capital under Rule 15c3-1……………………………………………………12 | | | Computation for determination of reserve requirements under Rule 15c3-3 and information
relating to the possession or control requirements under Rule 15c3-3 13 | | | Report of independent registered public accounting firm on exemption
required by SEC Rule 17a-5(g) 14 | | | Exemption report 15 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### Opinion on the Financial Statements #### Basis for Opinion #### Supplemental Information #### BETTER TOGETHER A Limited Liability Partnership of Certified Public Accountants & Consultants {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) Possession or Control Requirements under Rule 15c3-3 as of December 31, 2020 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 HP Atlanta, Georgia February 8, 2021 {6}------------------------------------------------ #### FOCUS SECURITIES LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020 #### ASSETS | | FOCUS SECURITIES LLC
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2020 | | | | |------------------------------------------------------|-------------------------------------------------------------------------------|----------|-------------------------------------------|--| | | ASSETS | | | | | Cash
Prepaid expenses
Deposits
Total assets | | \$
\$ | 1,699,764
32,281
5,601
1,737,646 | | | | LIABILITIES AND MEMBER'S EQUITY | | | | | | | | | | #### LIABILITIES AND MEMBER'S EQUITY | ASSETS | | |----------------------------------------------------------------|-------------------------| | Prepaid expenses | 32,281 | | | | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities | | | Accounts payable and accrued liabilities
Due to sole member | \$
10,763
503,237 | | Total liabilities | 514,000 | | Member's equity | 1,223,646 | | Total liabilities and member's equity | \$
1,737,646 | | | | | | | {7}------------------------------------------------ #### FOCUS SECURITIES LLC STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2020 | FOCUS SECURITIES LLC
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2020 | | |-------------------------------------------------------------------------------------|-----------------| | | | | Revenue | | | Commissions | \$
7,839,282 | | Total revenue | 7,839,282 | | Expenses | | | Compensation and benefits | 5,521,734 | | Commissions paid to other broker dealers | 253,183 | | Commissions paid to nonregistered foreign finders | 75,600 | | Management fees | 772,831 | | Regulatory fees and expenses | 41,566 | | Other | 217,765 | | Total expenses | 6,882,679 | | Net income | \$
956,603 | {8}------------------------------------------------ #### FOCUS SECURITIES LLC STATEMENT OF CHANGES IN MEMBER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2020 | | FOR THE YEAR ENDED DECEMBER 31, 2020 | | | | | |----------------------------|--------------------------------------|---------------|-------------------|-------|---------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Contributed Capital | | Retained Earnings | Total | | | Balance, December 31, 2019 | \$ | 148,300
\$ | 118,743 | \$ | 267,043 | | Net income | | - | 956,603 | | 956,603 | {9}------------------------------------------------ #### FOCUS SECURITIES LLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2020 | FOCUS SECURITIES LLC | | |--------------------------------------------------------------------------------------|-----------------| | STATEMENT OF CASH FLOWS | | | FOR THE YEAR ENDED DECEMBER 31, 2020 | | | | | | Cash flows from operating activities: | | | Net income | \$
956,603 | | Adjustments to reconcile net income to net cash provided by operating
activities: | | | Changes in operating assets and liabilities: | | | Accounts receivable | 165,000 | | Prepaid expenses | (197) | | Deposits | 1,077 | | Accounts payable and accrued liabilities | 4,178 | | Due to sole member | 343,726 | | Total adjustments | 513,784 | | Net cash provided by operating activities | 1,470,387 | | Net increase in cash | 1,470,387 | | Cash, beginning of year | 229,377 | | Cash, end of year | \$
1,699,764 | | | | {10}------------------------------------------------ #### 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. #### Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable are due from clients for assisting companies with mergers and acquisitions, and are stated at the amount the Company expects to collect and do not bear interest. The collectability of accounts receivable balances is regularly evaluated and, if it is determined that a client will be unable to fully meet its financial obligation, a specific reserve for bad debt is recorded to reduce the related receivable to the amount expected to be recovered. As of December 31, 2020, the Company had no accounts receivable due from clients. {11}------------------------------------------------ ## Note A Summary of Significant Accounting Policies (Continued) #### Revenue Recognition: The Company recognizes revenue from contracts with customers when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to the customers. Investment banking commission revenues solely consist of merger and acquisition transaction success fees. Success fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. The amount of revenue recognized reflects the consideration ("transaction price") the Company expects to be entitled to in exchange for the transfer of the goods or services to the customer services. In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of influence, such as market volatility or the judgment and actions of third parties. A portion of the fees the Company receives for advisory services are considered variable as they are contingent upon a future event and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for success fees is generally due promptly upon completion of a specified milestone, the closing of the transaction. The Company recognizes a receivable for fees where completion of the milestone has occurred, but payment by the customer has not. #### Compensation and Benefits: Compensation and benefits in the statement of income includes \$5,353,194 of commissions during the year ended December 31, 2020. #### 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. {12}------------------------------------------------ ## Note A Summary of Significant Accounting Policies (Continued) #### 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. #### Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The guidance was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company has adopted the standard on January 1, 2020 and has concluded that the new standard resulted in no material change to the Company's financial statements. #### 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, 2020, the Company had net capital of \$1,185,764, which was \$1,151,497 in excess of its required net capital of \$34,267. The Company's ratio of aggregate indebtedness to net capital was 0.43 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, 2020, management fees incurred were \$772,831, 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, 2020, allocated expenses incurred under this agreement were \$92,042, and are included in other expenses in the accompanying statement of income. {13}------------------------------------------------ #### Note C Related Party Transactions (Continued) At December 31, 2020, the Company owed \$5,030 to the Sole Member under the agreement. The balance is included in due to Sole Member in the accompanying statement of financial condition. Representatives of the Company are employees of the Sole Member. Commissions earned by the representatives from the Company are remitted to the Sole Member and subsequently paid to the respective representatives. At December 31, 2020, the Company owed \$498,207 to the Sole Member for commissions earned by the representatives. #### 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 \$3,846,875, which comprised approximately 49% of commission revenues for the year ended December 31, 2020. There were no receivables due from these transactions at December 31, 2020. #### Note E Contingencies In the ordinary course of business, the Company is subject to litigation. There is no pending litigation at December 31, 2020. #### Note F Subsequent Events The Company evaluated subsequent events through February 8, 2021, 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. {14}------------------------------------------------ #### SUPPLEMENTARY INFORMATION {15}------------------------------------------------ #### FOCUS SECURITIES LLC COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 DECEMBER 31, 2020 | FOCUS SECURITIES LLC
COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1
DECEMBER 31, 2020 | | |----------------------------------------------------------------------------------------------|-------------------------| | | | | NET CAPITAL:
Total member's equity | \$
1,223,646 | | Nonallowable assets | | | Prepaid expenses
Deposits | 32,281
5,601 | | Total nonallowable assets | 37,882 | | NET CAPITAL | \$
1,185,764 | | COMPUTATION OF NET CAPITAL REQUIREMENT:
Aggregate indebtedness | | | Accrued payable and accrued liabilities
Due to sole member | \$
10,763
503,237 | | Total aggregate indebtedness | \$
514,000 | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENT: | | | Minimum net capital required (the greater of \$5,000 or 6 2/3% of
aggregate indebtedness) | \$
34,267 | | Capital in excess of minimum requirements | \$
1,151,497 | | Ratio of aggregate indebtedness to net capital | 0.43 | See report of independent registered public accounting firm and notes to the financial statements {16}------------------------------------------------ ## FOCUS SECURITIES LLC #### COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER RULE 15c3-3 AS OF DECEMBER 31, 2020 The Company is filing an Exemption Report for fiscal year ended December 31, 2020 relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its business activities exclusively to receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients, or referring securities to other broker dealers. The Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b) (2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the year ended December 31, 2020 without exception. #### INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 AS OF DECEMBER 31, 2020 The Company is filing an Exemption Report for fiscal year ended December 31, 2020 relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its business activities exclusively to receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients, or referring securities to other broker dealers. The Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b) (2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the year ended December 31, 2020 without exception. See report of independent registered public accounting firm and notes to the financial statements {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) ### Report of Independent Registered Public Accounting Firm To the Member and Board of Directors of Focus Securities LLC We have reviewed management's statements, included in the accompanying Exemption Report, in which Focus Securities LLC (the Company) identified that it is considered a "Non-Covered Firm" exempt from provisions of 17 C.F.R. §15c3-3 and is filing its Exemption Report relying on footnote 74 to SEC Release 34-70073 adopting amendments to 17 C.F.R. §240.17a-5 because the Company limits its business activities exclusively to receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients, or referring securities to other broker dealers. The Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the year ended December 31, 2020, without exception. The Company's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Focus Securities LLC's compliance with the exemption provision. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in Rule 15c3-3 under the Securities Exchange Act 0f 1934. Bennett Thrasper LLP Atlanta, Georgia February 8, 2021 #### BETTER TOGFTHFR 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 {18}------------------------------------------------ ![](_page_18_Picture_0.jpeg) 8065 Leesburg Pike (202) 785-9404 Suite 750 (202) 785-9413 fax Vienna, VA 22182 www.focusbankers.com ## EXEMPTION REPORT Focus Securities LLC (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. § 240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by Rule 17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: - (1) The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3, and - (2) The Company is filing this Exemption Report relying on Footnote 74 of the SEC Release No. 34- 70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its business activities exclusively to receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients, or referring securities to other broker dealers. The Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the year ended December 31, 2020 without exception. Focus Securities LLC I affirm that to my best knowledge and belief, this Exemption Report is true and correct. ![](_page_18_Picture_9.jpeg) Jonathan E. Wilfong President February 8, 2021 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Richard F. Thompson Jr. Chief Financial Officer February 8, 2021 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.