# MILLENNIUM ADVISORS, LLC X-17A-5 (2020-03-02) — Broker-dealer annual report - Company: MILLENNIUM ADVISORS, LLC - Form: X-17A-5 - Filed: 2020-03-02 - Period: 2019-12-31 - Accession: 0001469553-20-000002 - CIK: 1469553 - File #: 8-68349 - Material weakness: No - Auditor: RSM US LLP - Auditor location: Birmingham, AL - Contact: Debbie Hickey - Phone: 980-213-2311 - Signed by: Dave Chappelle (Managing Member) Original filing: https://www.sec.gov/Archives/edgar/data/1469553/000146955320000002/mapublic192.pdf --- {0}------------------------------------------------ **Millennium** ## **MILL NNIUM ADVISORS, LLC** # STATE I ENT OF FINANCIAL CONDITION **As of Dicember 31, 2019** **And ReP,ort of Independent Registered Public Accbunting Firm** Filed as 1 *uauc* information pursuant to Rule 17a-5(d) under the Securitie Exchange Act of 1934. {1}------------------------------------------------ | | OF THE DISTRIBE
SECURITIES ANDEXCHANGE COMMISSION
Washington, D.C. 20549 | OMB APPROVAL
OMB Number:
3235-0123
August 31, 2020
Expires:
Estimated average burden | | |-----------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|--| | | ANNUAL AUDITED REPORT
FORM X-17A-5
PART III | hours per response 12.00
SEC FILE NUMBER
8-68349 | | | | 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 01/01/2019
AND ENDING
MM DD/YY | 12/31/2019
MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: Millennium Advisors LLC | | | | 11605 N Community House Rd Suite 550 | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | OFFICIAL USE ONLY
FIRM I.D. NO. | | | | (No and Street) | | | | Charlotte | NC | 28277 | | | (City)
Debbie Hickey | (State)
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | (Zip Code)
(980) 213-2311 | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | RSM US LLP | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | ( Name - if individual, state last, first middle name) | | | | | 216 Summit Boulevard Ste 300 Birmingham
AL | 35243 | | | (Address)
CHECK ONE:
Certified Public Accountant
Public Accountant | (City)
(State)
Accountant not resident in United States or any of its possessions. | (Zip Code) | | \*Claims for exemption from the requirement that the amual 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 240.17a-5(e)(2) SEC 1410 (11-05) 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 OMB control number. {2}------------------------------------------------ ## OATH OR AFFIRMATION | Dave Chappelle | swear (or affirm) that, to the best of | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Millennium Advisors LLC | my knowledge and belief the accompanying financial statement and supporting schedules perfaining to the firm of | | of December 31, | 20 19 are true and correct. I further swear (or affirm) that | | classified solely as that of a customer. except as follows: | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | CHARLENE SMITH
NOTARY PUBLIC
UNION COUNTY, NC
My Commission Expires 10-21-2023 | Signature | | | Managing Member
Title | | Notary Public
This report ** contains (check all applicable boxes):
(a) Facing Page.
(b) Statement of Financial Condition.
(g) Computation of Net Capital. | 2.0.20
(c) Statement of Income (Loss) or, if there is other comprehensive in the period(s) presented, a Statement
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(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.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15e3-3.
(t) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
(i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | consolidation.
(I) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of
(n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous addit | | | ** For conditions of confidential treatment of certuin portions of this filing, see section 240.17a-5(e)(3). | {3}------------------------------------------------ # Millennium MILLENNIUM ADVISORS, LLC TABLE OF CONTENTS Report of Independent Registered Public Accounting Firm ...................................................................................................................... FINANCIAL STATEMENT ITVANCIAL OTHE OTHER CONSULTION - MARKERS - MARKER - MARKER - PRODUCTION - Programment - Programment - Programment - Programment - Programment - Programment - P Notes to Financial Statement ................................................................................................................................................. {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) RSMUSL P #### eport of Independent Registered Public Accounting Firm To the Managing Mem er of Millennium Advisors, LLC #### **Opinion on the Financial Statements** We have audited the abcompanying statement of financial condition of Millennium Advisors, LLC (the Company) as of Oecef ber 31, 2019, and the related notes to the financial statement (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of thJ Company as of December 31 , 2019, in conformity with accounting principles generally accepted in!!he United States of America. #### **Basis for Opinion** This financial stateme t 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 th Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be indepe~dent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our auJit in accordance with the standards of the PCAOB. Those standards require that we plan and perform t~e 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 ~rform, an audit of its internal control over financial reporting. As part of our audit we are required to obt in 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 pe arming procedures to assess the risks of material misstatement of the financial statement, whether d e to error or fraud, and performing procedures that respond to those risks. Such procedures included Jxamining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. oLr audit also included evaluating the accounting principles used and significant estimates made by mknagement, as well as evaluating the overall presentation of the financial statement. We believe that our af dit provides a reasonable basis for our opinion. *~SN 11.S* **aP** We have served as tt Company's auditor since 2016 Birmingham, Alabam February 14, 2020, e cept for Note 12, as to which the date is February 28, 2020 THE POWER OF BEING U DERSTOOD AUDIT I TAX I CONSULTIN 3 , ,r11h V •I 11 I 1 •I {5}------------------------------------------------ ## **MILLENNIUM ADVISORS,** LLC STATEMENT OF FINI NCIAL CONDITION DECEMBER 31, 2019 | ASSETS | 1,665,361 | |---------------------------------------------------|-----------------------| | Cash and cash equivalen s | \$
1 , 722,762,348 | | Securities owned, at fair r3tue | | | Receivable from clearing prganizations | 144,394,082 | | Interest receivable fi'om c earing organization | 1,048,517 | | Right of use asset, net | 2,858,325 | | Other assets | 1,273,116 | | Total Assets | 1,874,001,749
\$ | | LIABILITIES AND M EMB R'S CAPITAL | | | Securities sold, not yet ~urchased, at fair value | 1,680,397,324
\$ | | Interest payable on suboI inated borrowings | 3,455,625 | | Lease liability | 3,174,696 | | Accounts pay able | 2,351 ,869 | | Accrued expenses | 17,683,315 | | Payable to affiliate | 6,093,986 | | Total Liabilities | 1,713,156,815 | | | | | Subordinated borrowings | 35,000,000 | | Member's Capital | 125,844,934 | | Total Liabilities nd Member's Capital | 1,874,001 ,749
\$ | | | | | | | The accompanying not s to the financial statement are an integral part of this statement. {6}------------------------------------------------ ## **MILLENNIUM ADVI 10RS, LLC NOTES TO FINANCl,,L STATEMENT** DECEMBER 31, 2019 #### **Note 1-0rganization and nature of operations** Millennium Advisors, LLl {the "Company") is a broker-dealer registered with the Securities and Exchang ~Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The Company trades on a princip! I basis in fixed income !securities with other broker dealers and institutional accounts. The Companyjs transactions are execute~ and cleared through another registered broker-dealer on a fully disclosed basis, ~~ ::csu~~~e~~e Company do~es not car,y accounts for customers or pertorm custod;al functions relating to customr ' The Company was orga ized on April 28, 2009, and began trading operations in February, 2010. The Compa~y is a wholly-owned subsi iary of Millennium Consolidated Holdings, LLC ("MCH" or "Member"). The Company s a North Carolina limited iability company. The Member is not ultimately liable for debts, liabilities, or obligatio~s of the Company; losses f capital; or profits solely for acting as an equity owner and not beyond its respecti..J capital contributions. #### **Note 2-Summary of significant accounting policies** Basis of presentation f The accompanying financial statement has been prepared in accordance wit accounting principles gemerally accepted in the United States of America ("GAAP"). I Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and as umptions that affect the reported amounts of assets and liabilities and disclosure f contingent assets and li1bilities at the date of the financial statements and reported amounts of revenues a d expenses during the rept rting period. Actual results could differ from those estimates. Cash and cash equivalents - The Company considers all highly liquid debt instruments purchased with maturity of three months! or **less** to be cash equivalents. The Company places its cash and cash equivalents n deposit with financial in~titutions in the United States. The Federal Deposit Insurance Corporation providJs insurance coverage for lup to \$250,000 for substantially all depository accounts. The Company, from time to time, may have amounts! on deposit in excess of the insured limits. Receivable from c/earinr:, organizations - Receivables f.rom clearing organizations primarily represent princi al transactions which have not yet settled. Also included is cash deposited with various clearing broker-dealers ~o conduct ongoing trading activities. The Company may obtain financing from its clearing organization from who~ it can borrow against itsiroprietary inventory positions, subject to collateral maintenance requirements. I Securities owned - Se urities owned consist of fixed income securities and are valued at quoted fair markirt values. If a quoted fair r.iarket value is not available, fair value is determined .using quoted market prices ~?r similar securities. Security transactions and any related gains or losses are recognized on the trade date baJ;s and are recorded net fs trading revenue. Cost is determined by the specific identification method for t~e purpose of computing rpalized gains or losses on investment securities. Changes in the fair value from o! e reporting period to the n xt (unrealized gains and losses) are recorded net as trading profit. Securities sold, not ye purchased - Securities sold, not yet purchased consist of debt securities that t e Company has sold sh} In order to facmtate a short sale, the Company's clearing broker borrows the securm s from another party and ielivers the securities to the buyer. The Company will be required to cover its short si le in the future through the purchase of the security in the market at the prevailing market price. The Company is exposed to a loss to thJ extent that the security price increases before the Company purchases the security \n the market to cover the hart sale. Prevailing market prices may be in excess of recorded liability. {7}------------------------------------------------ ## **MILLENNIUM ADVISORS, LLC** NOTES TO FINANCI , **L** STATEMENT DECEMBER 31, 2019 #### **Note 2-Summary of ignificant accounting policies (continued)** Derivatives - Derivative financial instruments are used for economic hedges of trading instruments, and a,le recorded at fair value. C~anges in the fair value of derivative instruments are recorded as unrealized gains a1d losses. The Company generally records a realized gain or loss on the expiration, termination or settlement Cjf derivative contracts. I The Company does not designate any derivative contracts as hedges for accounting purposes. GMP requir s that an entity recogniz~ all derivative contracts as either assets or liabilities in the statement of financi I condition and measure tlilose instruments at fair value. The fair value of all derivative contracts is recorded on a net-by-counterparty bas s where a legal right to offset exists under enforceable netting agreement. T~e derivative contracts are recorded as part of securities owned and securities sold, not yet purchased in t e Company's statement of inancial condition. The notional principal or contractual amounts of derivative financial instruments exceed the probable loss th t could arise from counte party default or market-related risks. The fair value of derivative financial instruments represents principally thJ estimated unrealized gain (asset) or loss (liability) and is recorded in securities ownJd I or securities sold, not ye~ purchased. At December 31, 2019, the notional value of credit default swap contrac s held was \$75 million. T~e fair value of such derivative instruments at December 31, 2019 was approximatey \$1.1 million. The average monthly notional amount traded in 2019 was approximately \$160 million. Income taxes - The col pany is organized as a limited liability company and is treated as a disregarded enti for federal and state tax ~urposes. It does not file any tax returns, but its taxable income is reported as part of ~ MCH's tax returns. Accordingly, no provision or benefit for federal or state income taxes has been made in t e Company's financial statement. For the year ended December 31 , 2019, management has determined th t there are no material u~certain tax positions for the Company. Neither MCH nor the Company are subject lb examination by U.S. federal and state tax authorities for tax years before 2016. I Fair value measurement~ - The carrying amounts of total current assets and total liabilities, other than securiti~s owned and securities so/d, not yet purchased which are discussed in more detail below, approximate fair valu~ because of the short-terr nature of these instruments or because the contractual interest rates associated wi h these assets or liabilities are considered to be at market rates. Compensation arrangerrients - The Company provides certain incentive compensation awards to its employe .s in the form of grant units in the parent company, MCH ("grant units"). The Company accounts for the grant un s in accordance with the ~revisions of the Accounting Standards Codificatior') Topic (ASC) 718, whereby the c9st of such awards are measured based on the fair value of the equity or liability in~trument issued. The Compar,Y records compensation Jxpense reflecting the number of awards that are expected to vest. Such expense is adjusted to reflect the ~wards that do ultimately vest. The fair value of the compensation arrangements 1s recognized over the e~1 ployees' requisite service period. The Company initially classifies the grant units ~s liabilities due to repurc ase features included in the terms of the grant units. When the risk and rewar~s normally associated wit equity ownership are achieved, the Company reclassifies the award to equity at its f~ir value. The liability rem~ining at each reporting period end is then remeasured at its fair value. The liability at December 31 , 2019 related to the grant units is approximately \$7.7 million and included in accrued expenses n the accompanying stateJ.,ent of financial condition. {8}------------------------------------------------ ## **MILLENNIUM ADVI ORS, LLC** NOTES TO FINANCI L STATEMENT DECEMBER 31, 2019 ## **Note 2-Summary of ignificant accounting policies (continued)** Recently adopted accou ting pronouncements - In February 2016, the Financial Accounting Standards Boa ci (FASB) issued Account[img Standards Update (ASU) 2016-02, Leases (Topic 842), which requires lessees-~o establish a right-of-use a set and a lease liability on the statement of financial condition for all leases with ter~f longer than 12 months. The new standard also requires disclosures that pro"ide additional information 01:1 recorded lease arrange ents. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted lmprovementfi, which provides an optio al transition method. The Company adopted the provisions of this guidance, including the optional transition m thod, on January 1, 2019. The implementation of this guidance did not have a materi~I impact on the Company' results of operations or cash flows. See Note 9 for lease details. . I In June 2018, the FASB issued ASU 2018-07, Stock Compensations (Topic 718): Improvements to No • employee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-basJd payments to non-employres. Consistent with the requirement for employee share-based payment awards, noj~ employee share-based payment awards will be measured at grant-date fair value. The implementation of th s guidance did not have a t aterial impact on the Company's results of operations. Recently issued accoun[ing pronouncements - In August 2018, the FASB issued ASU 2018-13, Fair Val e Measurement (Topic apo): Disclosure Framework-Changes to Disclosure Requirements for Fair Va!Je Measurement. The guid~nce in this ASU removes, modifies or adds certain disclosure requirements for f4ir value measurements; a~d is intended to provide more relevant information regarding valuation techniques a~d inputs used to arrive at rpeasures of fair value, uncertainty in the fair value measurements and how changes IP fair value measurements impact an entity's performance and cash flows. This ASU is effective for fiscal yearf,, and interim periods witrlin those fiscal years, beginning after December 15, 2019. Tt,e Company expects to adopt the provisions of !this guidance on January 1, 2020. The adoption is not expected to have a materi I impact on the notes to t~·nancial statement. I In June 2016, the FAS issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measureme t of Credit Losses on Fi, ancial Instruments, which requires entities to measure all expected credit losses ; r financial assets held at t~e reporting date based on historical experience, current conditions and reasonable ai d supportable forecasts. 1su 2016-13 also requires additional disclosures regarding significant estimates a d judgements used in estip,ating credit losses, as well as the credit quality of an entity's portfolio. The Campa y expects to adopt the pr@visions of this guidance on January 1, 2020. The adoption is not expected to have a material impact on the nt tes to financial statement.. Subsequent events - T~e Company has evaluated subsequent events through the date the financial stateme ts were issued. See Note r for discussion of subsequent event noted. ## **Note 3- Receivable from clearing organizations** The Company clears itsl principal transactions through other broker-dealers on a fully disclosed basis pursuairt to which such brokers carry the proprietary accounts of the Company and provide all processing and servici,:g of the Company's acco1 1 nts. The amount receivable from clearing organizations relates to the aforementioned t.ransactions. Under the terms of the clearing agreements, the Company is required to maintain cash deposi s, \$250,000 of which is inc uded in other assets on the accompanying statement of•financial condition. The accounts maintaine with the Company's clearing broker-dealers are composed of funds to settle securitir,s traded, not yet settled, nd proceeds from all trading activity, including interest accrued on securities positio s. The funds in these acco nts are available for the daily trading transactions initiated by the Company {9}------------------------------------------------ ## **MILLENNIUM ADVISORS, LLC** NOTES TO FINANCIAL STATEMENT DECEMBER 31, 2019 ## **Note 3- Receivable f** lorn **clearing organizations (continued)** that are cleared and se~tled through the respective clearing broker-dealers. The accounts with the clearing broker-dealers are alsoJ. sed by the Company to transfer funds to its bank accounts for the administratiJ.e operations of the Compa y. #### **Note 4-Securities o ned and securities sold, not yet purchased** **1** The Company records securities owned and securities sold, not yet purchased at fair value. Fair value is **a** market-based measure ent and is defined as the price that would be received to sell an asset or paid o transfer a liability in an ~rderly transaction between market participants at the measurement date. A fair val e hierarchy for disclosure of fair value measurements is used to maximize the use of observable inputs, that is, inputs that reflect the as~ umption market participants would use in pricing an asset or liability based on markgt data obtained from sources independent of the reporting entity. The valuation hierarchy is based upon ttl~ transparency of inputs Ito the valuation of an asset or liability as of the measurement date. A financi~I instruments categorization within the valuation hierarchy is based upon the lowest level of input that 1 s significant to the fair val e measurement. The Company groups assets and liabilities at fair value in three levels, based on the markets in which the asse1 s and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are **s** follows: - Level 1 Valuations f , r assets and liabilities traded in active exchange markets, such as the New York Sto k Exchange. ~he Company has no Level 1 assets or liabilities as of December 31 , 2019. - Level 2 Valuations ~f e obtained from readily available pricing sources via independent providers for market transactions~ involving similar assets or liabilities. The Company's principal market for theJe securities is the secondary institutional markets, and valuations are based on observable mark~t data in tho e markets. Level 2 securities include corporate, government and agency, munici~ I bonds and ±edit default swaps as outlined below. - Level 3 Valuations f r assets and liabilities that are derived from other vah.lation methodologies, includi~.g option prici g models, discounted cash flow models, and similar techniques, and not based d>n market exc~ange, dealer, or broker-traded transactions. Level 3 valuations incorporate cert~n assumptions and projections in determining the fair value assigned to such assets or liabilities. Tlile Company ht s no Level 3 assets or liabilities as of December 31 , 2019. Securities owned and sFcurities sold, not yet purchased consist of fixed income securities and credit defa It swap index derivatives. f he following describes the valuation methodology used by the Company to measure jts financial instruments a~ fair value. All of the Company's financial assets and liabilities are traded in tt e secondary market. Theriefore, fair value of all fixed income securities is determined using unadjusted marl1 h securities, the Com pan~ generally relies on prices obtained from third-party pricing services or broker-deal ~r quotations or **a** combina.i on thereof, and accordingly classifies these instruments as Level 2. Securities owned and selcurities sold, not yet purchased, at December 31, 2019, consist of the following: Securities owned at fair 1c:1lue: | | December 31, 2019 | | | | | | |----------------------------|-------------------|----------|------------------|----|----------|------------------| | | | Le1.el 1 | Le'I.EI 2 | | Le1.el 3 | Total Fair Value | | Corporate Bonds | \$ | | \$ 1,552,305,225 | \$ | | \$ 1,552,305,225 | | Gowmment and Ag, ncy Bonds | | | 39,996,875 | | | 39,996,875 | | Municipal Bonds | | | 130,460,248 | | | 130,460,248 | | | \$ | | \$ 1,722,762,348 | | | \$ 1,722,762,348 | Securities sold, not yet iurchased, at fair value: | December 31, 2019 | | | | | |-------------------|---------------------|----|---|--------------------------| | | Le1.el 2 | | | Total Fair Value | | | \$1
,573,644,811 | \$ | | \$ 1,573,644,81 1 | | | 105,647,813 | | - | 105,647,813 | | | 1,104,700 | | | 1,104,700 | | - | \$ 1,680,397,324 | \$ | | \$ 1,680,397,324 | | | Le-.el 1 | | | Le'I.EI 3
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-
- | The Company assesse~ the levels of the investments at each measurement date, and transfers between levE Is are recognized on the I actual date of the event or change in circumstances that caused the transfer 1n accordance with the Co,-npany's accounting policy regarding the recognition of transfers between levels of he fair value hierarchy. There were no transfers among Levels 1, 2, and 3 during the year. The Company actively trades fixed income securities. Positions in these securities are subject to varyi g degrees of market and credit risk. Market prices are subject to fluctuation and, as such, the Company 'is exposed to market risk. 1 The fair value of the Company's investments will fluctuate in response to changes )n market interest rates. lrncreases and decreases in prevailing interest rates generally translate into decreases and increases in fair val ;ies of those instruments. Additionally, fair values of interest-rate sensitive instruments may be affected by the credit worthiness of t , e issuer, prepayment ~ptions, relative\_ val\_ues\_ of alternative investments, ~he liquidity ~f-th~ instrument, a~d ott\_,~r general market cond1tiops. Market nsk 1s directly impacted by the volatility and l1quid1ty in the markets 1n wh1t h finandal instruments **"'l** t,adeGrant Fair Value | |--------------------------------|---------|---------------------------------------| | Un1.ested at December 3 , 2018 | 1,975.7 | 5,604
\$ | | Units granted | 231.2 | 6,300 | | Vested units | (537.0) | 4.464 | | Un-.ested at December 3 , 2019 | 1,669.9 | 6,067 | {12}------------------------------------------------ ## **MILLENNIUM ADVI, ORS,** LLC NOTES TO FINANCI L STATEMENT DECEMBER 31, 2019 ## **Note 7-Capital** requirj ments As a registered broker-df aler, the Company is subject to the SEC's Uniform Net Capital Rule ("Rule 15c3-1 1 ) which requires the Comprny to maintain minimum "net capital" equal to the greater of \$100,000 or 6-2/3 perce t of "aggregate indebtedner.s", as defined, and a ratio of aggregate indebtedness to net capital not to exceed 15 1 ro 1. At December 31, 201j9, the Company had net capital and net capital requirements of approximately \$i ~ million and \$584,149, respectively, and its net capital ratio was 0.12 to 1. Rule 15c3-1 further requires that equif y capital may not be withd' awn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. n addition, certain advance , payment of dividends, and other equity withdrawals are subject to certain notificatialri provisions of Rule 15c3-1. The Company claims e ,emption from SEC Rule 15c3-3 of the Securities and Exchange Commission unde paragraph **(k)(2)(ii)** of the Rule. #### **Note 8-401(k) Safe** h **rbor plan** The Company sponsors a 401 (k) safe harbor plan, which covers substantially all of its employees. Th Company matches 100% of employee contributions up to 4% of annual income, which vests immediately. ## **Note 9-Leases** The Company currently leases office space in Charlotte, North Carolina under a ten-year operating leas . Operating lease assets a d lease liabilities are recognized based on the present value of future lease payment over the lease term. The Joffice lease provided for an implicit interest rate of 10% which was used in determinin~ the present value of futurr payments at January 1, 2019, the date the Company adopted ASC Topic 842. Lease expense for net prr sent value of payments is recognized on a straight-line basis over the lease term. Maturities of lease liabilit at December 31, 2019 are as follows: | 2020 | \$
504,930 | | |----------------------------------|-----------------|--| | 2021 | 520,078 | | | 2022 | 535,681 | | | 2023 | 551 ,751 | | | 2024 | 568,305 | | | Thereafter | 2,128,302 | | | Tot I lease payments | 4,809,047 | | | Lesf : imputed interest | 1,634,351 | | | Present val e of lease liability | \$
3,174,696 | | | | | | {13}------------------------------------------------ ## **MILLENNIUM ADVISORS, LLC** NOTES TO FINANCIAL STATEMENT DECEMBER 31, 2019 I ## **Note 10-Commitmen~s and contingencies** In the ordinary course ofj business, the Company could be subject to various claims, litigation, regulatory an arbitration matters. In the opinion of management, there is no pending or threatened proceeding in which ar, adverse decision could result in a material adverse change in the Company's financial condition or results of operations. The Compan~ also enters into contracts that contain a variety of representations and warranties that provide indemnifications I under certain circumstances. The Company's maximum exposure under thes~ arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company e>epects the risk of loss to be remote. ## **Note ll- Subordinate1 borrowings** In July 2018, the Compar,y entered into a subordinated debt agreement with its parent, MCH, consisting of \$35,000,000 subordinatecl loan that matures on April 30, 2023. The subordinated borrowing bears interest **at** 10.75% per annum. Approval was obtained from the Company's principal regulator, FINRA, and is available foJ computing regulatory netlcapital under the SEC's Rule 15c3-1. With the prior written approval of FINRA, th1 Company may make a p~yment of all or any portion of the principal outstanding prior to the scheduled maturity date any time subsequent to one year after the effective date of the subordinated debt agreement. MCH has agreed to subo cjinate its right of collection of principal and claims to all creditors of the Company prior to expiration of its note. To the extent such borrowings are required for the Company's continued compliance with minimum net capital equirements, they may not be repaid. See Note 5 for other related party transactior, detail. I #### **Note 12-Subsequent Event** On February 26, 2020, the Company filed an amendment to its existing subordinated debt agreement with it~ parent, MCH, amending t~e interest rate to 5. 75% per annum effective March 1, 1 2020. Approval was obtaine~ from the Company's princ pal regulator, FINRA, on February 28, 2020. No other terms of the agreement were changed. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.