# CANNON SECURITIES, INC. X-17A-5 (2022-02-25) — Broker-dealer annual report - Company: CANNON SECURITIES, INC. - Form: X-17A-5 - Filed: 2022-02-25 - Period: 2021-12-31 - Accession: 0001476588-22-000001 - CIK: 1476588 - File #: 8-68437 - Type: Broker-dealer - Material weakness: No - Auditor: Moore, Colson & Company, P.C. - Auditor location: Atlanta, GA - Contact: Kelly Dixon - Phone: 706-548-3422 - Email: kelly.dlxon@cannonsecurilies.com - Website: cannonsecurilies.com - Signed by: Kelly Dixon (CEO/CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1476588/000147658822000001/cannon.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, o.c. 20549 > **ANNUAL REPORTS FORM X-17** A-5 **PART** Ill | OMB APPROVAL | | |--------------------------|--| | OMB Number: 3235-0123 | | | Expires: Oct. 31, 2023 | | | Estimated average burden | | | hours per respunse; 12 | | SEC FILE NUMBER 8-68437 FACING PAGE Information Required Pursuant to Rules 17a-S, 17a-12, and 18a·7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING .. \_0\_1\_/1\_/\_2\_1 \_\_\_\_ AND ENDING 12/31 /21 -... MM/DD/VY MM/DD/VY A. REGISTRANT IDENTIFICATION ## NAMEOFFIRM: CANNON SECURITIES, INC. TYPE OF REGISTRANT (check all applicable boxes): ~Broker dealer D Security-based swap dealer D Major security-based swap participant D Check here if respondent Is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P .0. box no.) ## 649 SOUTH MILLEDGE AVE., SUITE 6 | | | (No. and Street) | | | | |--------------------------------------------------|--|------------------------------------------------------------|----------|--------------------------------------------|--| | Athens | | GA | | 30605 | | | (City) | | (State) | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Kelly Dixon | | (706) 548-3422 | | kelly.dlxon@cannonsecurilies.com | | | (Name) | | {Area Code- Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | MOORE, COLSON, & COMPANY P.C. | | (Name - If individual, state last, first, and middle name) | | | | | 600 Galleria Parkway SE, Suite 600 Atlanta | | | GA | 30339 | | | | | | | | | | (Address) | | (City) | (:State) | (Zip Code) | | | 10/11/2011 | | | 5486 | | | | (Date of Registration with PCAOB)(if applicable) | | | | (PCAOB Re~istration Number, If applicable) | | •Claims for exemption from the requirement that the annual reports be covered by the reports of an Independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a·S(e)(l)(ii), if applicable. 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 OMS control number. {1}------------------------------------------------ #### OATH OR AFFIRMATION | 1
KELLY DIXON | swear (or affirm) that, to the best of my knowledge and belief, the | |--------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | financial report pertaining to the firm of CANNON SECURITIES, INC. | as of | | December 31 | 2~ ls true and correct. I further swear (or affirm) that neither the company nor any | | as that of a customer. | ~~
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,,, | ## This filing•• contains (check all applicable boxes): ''''""'''' - !!l (a) Statement of financial condition. - D (b) Notes to consolidatedl statement of financial condition. - ii (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). - ii (d) Statement of cash flows. - !!l (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - ii (g) Notes to consolidated financial statements. - !! (h) Computation of net capital under 17 CFR 240.15c3-1or17 CFR 2:40.18a-1, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.1Sc3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - D (m) Information relating to possession or control requirements for eiustomers under 17 CFR 240.1Sc3-3. - 0 (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.1Sc3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - ~ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-l, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.1Sc3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - ii (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-S or 17 CFR 240.lSa-7, as applicable. - (s) Exemption report in accordance with 17 CFR 240.17a-S or 17 CFR 240.18a·7, as applicable. - D (t) Independent public accountant's report based on an examination of the statement of financial condition. - (u) Independent public accountant's report based on an examination of the financial report or financial statements undeir 17 CFR 240.17a-S, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-S or 17 CFR 240.18a-7, as applicable. - ii (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - !!l (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.l 7a-12(k). D (z) Other:-------------------------------------- - - uro request confidential treatment of certain portions of this filing, see 17 CFR 240.17o-5(e){3) or 17 CFR 240.18o-7(d)(2). as applicable. {2}------------------------------------------------ ## CANNON SECURITIES, INC. ## FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDED DECEMBER 31, 2021 {3}------------------------------------------------ #### CANNON SECURITIES, INC. #### Table of Contents | Report of Independent Registered Public Accounting Firm | | |------------------------------------------------------------------------------------------------------------------------|--| | Statement of Financial Condition 1 | | | Statement of Operations 2 | | | Statement of Changes in Shareholders' Equity 3 | | | Statement of Cash Flows 4 | | | Notes to Financial Statements 5-7 | | | Supplemental Information: | | | Schedule I - Computation of Net Capital Under SEC Rule 15c3-1
8 | | | Schedule II - Computation For Determination of ~eserve
Requirements Under SEC Rule 15c3-3 (exemption) 9 | | | Schedule Ill - Information Relating to the Possession or Control
Requirements Under SEC Rule 15c3-3 (exemption) 10 | | | Report of Independent Registered Public Accounting Firm -
Review of the Exemption Report SEA Rule 17a-5(d)(4) 11 | | | Exemption Report SEA Rule 17a-5-(d)(4) 12 | | {4}------------------------------------------------ ## **Til[MOORE COLSON** *CPAs and Advisors* #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders of Cannon Securities, Inc. Athens, Georgia #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Cannon Securities, Inc. as of December 31, 2021 , the related statements of operations, changes in shareholders' 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 Cannon Securities, Inc. as of December 31, 2021, 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 Cannon Securities, lnc.'s management. Our responsibility is to express an opinion on Cannon Securities, lnc.'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 Cannon Securities, Inc. 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 witih 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 that 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. #### Auditor's Report on Supplemental Information The information contained in Schedule I, Computation of Net Capital Under SEC Rule 15c3-1, Schedule II, Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3 (exemption) and Schedule Ill, Information Relating to the Possession or Control Requirements Under SEC Rule 15c3-3 (exemption) has been subjected to audit procedures performed in conjunction with the audit of Cannon Securities, lnc.'s financial statements. The supplemental information is the responsibility of Cannon Securities, lnc.'s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying aocounting 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. §240.1 ?a-5. In our opinion, the information contained in Schedule I, Computation of Net Capital Under SEC Rule 15c3-1, Schedule II, Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3 (exemption) and Schedule Ill, Information Relating to the Possession or Control Requirements Under SEC Rule 15c3-3 (exemption) is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Cannon Securities, lnc.'s auditor since 2011 . *({.....\_,* ~.-~fG Atlanta, Georgia ~ February 25, 2022 600 galleria parkway se suite 600 atlanta, georgia 30339 p 770.989.0028 f 770.989.0201 {5}------------------------------------------------ ## Cannon Securities, Inc. Statement of Financial Condition December 31 , 2021 #### Assets | Currrent Assets: | | |---------------------------------------------------------|-------------------| | Cash | \$
250,394 | | Accounts receivable | 193,019 | | Other current assets | 3,133 | | TOTAL | \$
446,546 | | Liablities and Shareholders' Equity | | | | | | Current Liabilities: | | | Accounts payable | \$
4,934 | | Accounts payable - related party
Commissions payable | 140,666
22,351 | | Total current liabilities | 167,951 | | Shareholders' Equity: | | | Common stock | 50,000 | | Additional paid-in capital | 20,000 | | Treasury stock | (50,000) | | Retained earnings | 258,595 | | Total shareholders' equity | 278,595 | | Total | \$
446,546 | See accorrpanying notes to financial statements and report of independent registered public accounting firm. {6}------------------------------------------------ ## Cannon Securities, Inc. Statement of Operat ions For the Year Ended December 31, 2021 | Re1.enues | \$
1,490,313 | |-----------------------------|-----------------| | Operating Expenses: | | | Commissions | 246,779 | | Shareholders' compensation | 105,326 | | Salaries | 29,400 | | Professional seNces | 65,757 | | General and administrati1.e | 72,346 | | Occupancy | 33,056 | | Total expenses | 552,664 | | Net Income | \$
937,649 | | | | See accofTl)anying notes to financial staterrents and report of independent registered public accounting firm {7}------------------------------------------------ ## Cannon Securities, Inc. Statement of Changes in Shareholders' Equity For t he Year Ended December 31 , 2021 | | Common
Stock | Additional
Paid-In-Capital | Treasury
Stock | Retained
Earnings | Total
Shareholders'
Equity | |----------------------------------|-----------------|-------------------------------|-------------------|----------------------|----------------------------------| | Balances at December 31,
2020 | \$ 50,000 | \$
20,000 | \$ (50,000) | \$ 260,946 | \$
280,946 | | Net income | | | | 937,649 | 937,649 | | Distributions to shareholders | | | | (940,000) | (940,000) | | Balances at December 31,
2021 | \$ 50,000 | \$
20,000 | \$ (50,000) | \$ 258,595 | \$
278,595 | See accorrpanying notes to financial statements and report of independent registered public accounting f irm {8}------------------------------------------------ ## Cannon Securities, Inc. Statement of Cash Flows For the Year Ended December 31, 2021 | Cash Flows From Operating Activities: | | |----------------------------------------------------------|---------------| | Net income | \$
937,649 | | Adjustments to reconcile net income to net cash provided | | | by operating activities: | | | Accounts receivable | (22,747) | | Other current assets | (60) | | Accounts payable | 979 | | Accounts payable - related party | 10,545 | | Commissions payable | (328) | | Net Cash Provided By Operating Acti\oites | 926,038 | | Cash Flows From Financing Activities: | | | Distributions to shareholders | (940,000) | | | | | Net Decrease In Cash | (13,962) | | Cash, Beginning of Year | 264,356 | | Cash, End of Year | \$
250,394 | See accorrpanying notes to financial statements and report of independent registered public accounting firm {9}------------------------------------------------ ## CANNON SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 #### 1. NATURE OF BUSllNESS AND SIGNIFICANT ACCOUNT! NG POLICIES #### A. Nature of Business Cannon Securities, Inc. ("the Company") was incorporated in the state of Georgia in 2009. The Company is a broker-dealer registered with the Securities Exchange Commission (the "SEC") and has been a member of the Financial Industry Regulatory Authority ("FINRA") since May 2010. The Company operates as an introducing broker, does not hold funds or securities for customers, and does not carry customer accounts. #### B. Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and reported revenues and expenses. Actual results could vary from the estimates that were used. C. Cash The Company considers deposits in banks and highly liquid investments with original maturities of 90 days or less to be cash. The Company maintains balances in financial institutions that at times may exceed the amounts that are insured by the Federal Deposit Insurance Corporation. #### D. Accounts Receivable The Company uses the allowance method to account for uncollectible accounts receivable. Management continually monitors the collectability of its customer accounts; when indications arrise that an amount is not likely to be collected, it is charged to the allowance for doubtful accournts. Accounts are considered past due when they are 30 days old. As of December 31, 2021 , management has reviewed the status of accounts receivable and determined that an allowance for doubtful accounts is not necessary. #### E. Revenue Recognition The Company's revenue consists of commissions earned on customer balances and investments made. Related commissions expense to registered representatives is recognized in the same period in which commissions revenue is recognized. The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers, together with subsequent amendments and updates (collectively "ASC 606"). The standard's core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exch~mge for those goods or services. ASC 606 prescribes a five-step process to accomplish this core principle, including: - · Identification of the contract with the customer; - · Identification of the performance obligation(s) under the contract; - · Determination of transaction price; - · Allocation of the transaction price to the identified performance obligation(s); and - · Recognition of revenue as (or when) an entity satisfies the identified performance obligation(s). {10}------------------------------------------------ ## CANNON SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 #### 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) #### E. Revenue Recognition (Continued) The Company receives commission revenues under contracts with investment and insurance companies. Commissions are primarily based on customer assets under management as well as certain customer deposits into variable annuity products and are received based on contractual terms. The performance obligation for commissions received based on customer assets under management is generally satisfied at the end of the contractual measurement period when the commissions are calculated, typically monthly or quarterly. The performance obligation for commissions received on customer deposits into variable annuity products is generally satisfied when the deposit is received by the insurance company from the customer. Commissions represent variable consideration as they are based on values which fluctuate due to deposits, withdrawals, and market performance. Accounts receivable related to commissions revenues totaled \$193,019 at December 31 , 2021. F. Income Taxes The Company has elected to be taxed as an S corporation whereby the income or losses of the Company flow through to its shareholders. Therefore, no income tax provision has been recorded in the accompanying financial statements. The Company has not identified any unsubstantiated tax positions that would require provision of a liability under Accounting Standards Codification Topic 740, Income Taxes. #### G. Subsequent Events Subsequent events have lbeen evaluated through February 25, 2022, which is the date the financial statements were available to be issued. #### 2. RELATED PARTY TRANSACTIONS The Company is affiliated with Cannon Financial Strategists, Inc. ("CFS") through common ownership. The Company has an expense sharing agreement with CFS. Expenses related to this agreement totaled \$125,957 for the year ended December 31 , 2021 and are included in shareholders' compensation, general and administrative and occupancy expenses in the accompanying statement of operations. At December 31 , 2021 , \$35,820 was due to CFS for expenses incurred on behalf of the Company and is included in accounts payable-related party. The Company entered into a management agreement with a shareholder in 2011. The shareholder is compensated based upon the aggregate net income of the Company and CFS. Expenses related to this agreement totaled \$104,846 for the year ended December 31 , 2021 and are included in shareholders' compensation in the accompanying statement of operations. Management fees payable to the shareholder of \$104,846 are included in accounts payable - related party at December 31 , 2021. {11}------------------------------------------------ ## CANNON SECURITIES, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 #### 3. CONCENTRATIOINS For the year ended December 31 , 2021 , substantially all revenues were derived from commissions earned on customer accounts held at two financial institutions. Almost all accounts receivable as of December 31, 2021 were due from these two financial institutions. For the year ended December 31 , 2021, revenues earned from four customers' accounts totaled \$950,697 or 64% of the Company's total revenues. Accounts receivable related to these customers totaled \$165,670 or 86% of total accounts receivable at December 31 , 2021. #### 4. COMMON STOCK At December 31, 2021 , the Company has 100,000 shares of \$1 par value common stock authorized, with 50,000 shares issued and 50,000 outstanding. #### 5. NET CAPITAL REQUIREMENT As a registered broker-dealer under the SEC and member of FINRA, the Company is subject to the SE C's Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934. The Rule requires the Company to maintain minimum net capital of the greater of \$5,000 or 6.67% of total aggregate indebtedness and requires that the ratio of aggregate indebtedness to net capital shall not exceed 15 to 1. Net capital and aggregate indebtedness change from day to day, but as of December 31 , 2021, the Company had net capital of \$104, 794 which exceeded the minimum net capital requirement of \$1 1, 197 by \$93,597. At December 31 , 2021, the Company's ratio of aggregate indebtedness to net capital was 1.60 to 1. #### 6. RISKS AND UNCERTAINTIES During the year ended December 31 , 2021 , global financial markets have experienced and may continue to experience significant volatility resulting from the spread of a novel coronavirus known as COVID-19. The outbreak of COVllD-19 has resulted in travel and border restrictions, quarantines, and general mairket uncertainty. The extent of the future impact of COVID-19 on the Company's operatiional and financial performance will depend on certain developments, including the duration and spread of the outbreak, and the impact on the Company's customers and vendors, which cannot be determined at this time. {12}------------------------------------------------ SUPPLEMENTAL INFORMATION {13}------------------------------------------------ ### CANNON SECURITIES, INC. SCHEDULE I COMPUTATION OF NET CAPITAL UNDER SEC RULE 15c3-1 DECEMBER 31, 2021 | Computation of Net Capital:
Total shareholders' equity | \$ 278,595 | |-------------------------------------------------------------|------------| | Deduct non-allowable assets: | | | Accounts receivable | 170,668 | | Other current assets | 3,133 | | Net capital | \$ 104,794 | | Computation of Aggregate Indebtedness: | | | Accounts payable | 4,934 | | Accounts payable - related party | 140,666 | | Commissions payable | 22,351 | | Total aggregate indebtedness | \$ 167,951 | | Computation of Minimum Net Capital Requirement: | | | Net capital | \$ 104,794 | | Minimum net capital to be maintained | | | (greater of \$5,000 or 6%% of total aggregate indebtedness) | 11, 197 | | Net capital in excess of requirement | \$ 93,597 | #### Schedule of Reconciliation of Net Capital per unaudited FOCUS Report with Audit Report: Pursuant to Rule 17a-5(d)(2), there are no material differences between net capital as reported in Form X-17 A-5 and net capital as computed above; therefore, a reconciliation is not considered necessary. See accompanying notes to financial statements and report of independent registered public accounting firm. {14}------------------------------------------------ #### CANNON SECURITIES, INC. SCHEDULE II COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER SEC RULE 15c3-3 (Exemption) AS OF DECEMBER 31 , 2021 The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(1) of the rule. See accompanying report of independent registered public accounting firm. {15}------------------------------------------------ #### CANNON SECURITIES, INC. SCHEDULE Ill INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER SEC RULE 15c3-3 (Exemption) AS OF DECEMBER 31 , 2021 The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(1) of the rule. See accompanying report of independent registered public accounting firm. {16}------------------------------------------------ ## **Til[MOORE COLSON** energy . insight . growth *CPAs and Advisors* #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Shareholders of Cannon Securities, Inc. Athens, Georgia We have reviewed management's statements, included in the accompanying Exemption Report SEA Rule 17a-5(d)(4), in which (1) Cannon Securities, Inc. identified the following provisions of 17 C.F.R. §15c3-3(k) under which Cannon Securities, Inc. claimed an exemption from 17 C.F.R. §240.15c3-3: (1) (the "exemption provision") and (2) Cannon Securities, Inc. stated that Cannon Securities, Inc. met the identified exemption provisions throughout the most recent fiscal year without exception. Cannon Securities, lnc.'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 Cannon Securities, lnc.'s compliance with the exemption provisions. 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 paragraph (k)(1) of Rule 15c3-3 under the Securities Exchange Act of 1934. ft{ *uv=,* ~ ,\_ C-r~ *f.* G Atlanta, Georgia February 25, 2022 {17}------------------------------------------------ ## **Cannon Securities, Inc.** EXEMPTION REPORT SEA RULE 17a-5(d)(4) February 25, 2022 Moore Colson 600 Galleria Parkway Suite 600 Atlanta, GA 30339 To Whom It May Concern: The below information is designed to meet the Exemption Report criteria pursuant to SEA Rule 17a-5(d)(4): Cannon Securities, Inc. is a broker/dealer registered with the SEC and FINRA. Pursuant to paragraph (k)(1) of SEA Rule 15c3-3, the Company is claiming an exemption from SEA Rule 15c3-3 for the fiscal year ended December 31 , 2021 . The Company has met the identified exemption provisions throughout the most recent fiscal year without exception. The above statement is true and correct to the best of my and the Company's knowledge. Name: Kelly Dixon Title: Chief Executive Officer {18}------------------------------------------------ #### CANNON SECURITIES, INC. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AGREED-UPON PROCEDURES REPORT ON GENERAL ASSESSMENT RECONCILIATION (FORM SIPC-7) FOR T HE YEAR ENDED DECEMBER 31 , 2021 {19}------------------------------------------------ ![](_page_19_Picture_1.jpeg) #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES** To the Shareholders of Cannon Securities, Inc. Athens, Georgia We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below and were agreed to by Cannon Securities, Inc. and the SIPC, solely to assist you and SIPC in evaluating Cannon Securities, lnc.'s compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31 , 2021 . Cannon Securities, lnc.'s management is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with standards established by the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings are as follows: - 1. Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; there were no payments during the year ended December 31, 2021 (See 5 below); - 2. Compared the Total Revenue amount reported on the Annual Audited Report Form X-17A-5 Part Ill for the year ended December 31, 2021 with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2021 , noting the following: - o The Total Revenue amount reported on the Annual Audited Report Form X-17A-5 Part Ill for the year ended December 31, 2021 totaled \$1,490,313; and - o The amount reported in Form SIPC-7 for the year ended December 31 , 2021 totaled \$1,490,315; - 3. Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; there were no adjustments for the year ended December 31, 2021 ; - 4. Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5. Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences. We were not engaged to and did not conduct an examination or review, the objective of wihich would be the expression of an opinion or conclusion, respectively, on Cannon Securities, lnc.'s compliance with the applicable instructions of the Form S IPC-7 for the year ended December 31, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. 600 galleria parkway se suite 600 atlanta, georgia 30339 p 770.989.0028 f 770.989.0201 ~ooreColson com mem00ror ~ PrimeGlobal {20}------------------------------------------------ This report is intended solely for the information and use of Cannon Securities, Inc. and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. 11{\_.\_, ~ ,\_ ~ f G . Atlanta, Georgia ~ February 2:5, 2022 {21}------------------------------------------------ | | | SECURITIES INVESTOR PROTECTION CORPORATION | | | | |------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|----------------|--| | | SIPC-7 | Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001 | | SIPC-7 | | | | (36-REV 12/18) | General Assessment Reconciliation | | (36·REV 12/18) | | | | | For the liscal year ended _!?131/21 ____ _ | | | | | | | (Read carefully the instructions In your Working Copy before complf:lllng this Form)
' | | | | | | TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS
1. Name of Member, address, Designated Examining Authority. 1934 Acl registration no. and month In which fiscal year ends !or | | | | | | | purposes of the audit requirement of SEC Rule 17a-5: | | | | | | | | | Note: If any of the information shown on the | | | | | loss437
CANNON SECURITIES, INC. | | mailing label requires correction, please e·mail
any corrections lo form@sipc.org and so | | | | | 649 SOUTH MILLEDGE AVE. | | indicate on the form filed. | | | | | SUITE6 | | Name and telephone number of person to | | | | | I
ATHENS. GA 30605 | _J | contact respecting this lorm. | | | | | | | Rick Alvarez 770.407 .3459 | | | | | | | | | | | | | | | | | | | 2. A. General Assessment (item 2e lrom page 2) | | sO | | | | | 6. Less payment made with SIPC-6 filed (exclude Interest) | | | | | | | | | | | | | | Date Paid | | | | | | | C. Less prior overpayment applied | | (150} | | | | | D. Assessment balance due or (overpayment) | | | | | | | E. Interest computed on late payment (see instruction E) lor ____ days at 20% per annum | | 0 | | | | | F. Total assessment balance and in I er est due (or overpayment carried lorward) | | s(150) | | | | | D
D
i/ the box
G. PAYMENT: | q | | | | | | Check malled to P.O. Box
Funds Wired
Total (must be same as F above) | ----------
O
AC | | | | | | H. Overpayment carried lorward | \$(;(_15_0---'-) | ______
_ | | | | | 3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registralion number): | | | | | | | | | | | | | | | | | | | | | | | | | | | | The SIPC member submilling this form and the | | | | | | | person by whom it is executed represent thereby
that all information contained herein is true, correct | CANNON SECURITIES, INC. | | | | | and complete. | | | | | | | | | | ( u1horized Sign11ure) | | | | Dated the 3 m~+- | day ol__~-
=a---· 20 "2."L. . | | | | | | | This form and the assessment payment Is due 60 days after the end of the fiscal year. Retain the Working Copy ol this form | | (Tille) | | | | | for a period of not less than 6 years, the latest 2 years In an easily accessible place. | | | | | | | | | | | | | ffi Dates: | | | | | | | ;:: | Postmarked
Received | Reviewed | | | | | w | > Calculations __
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Documentation
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u | Exceplions: | | | | | | a | | | | | | Cii Disposi1ion ol exceptions: {22}------------------------------------------------ ### DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT | | ____
Amounts I or !he fiscal period
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beginning _1_1112_1
_ | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------| | | and ending_"-''"'-'
- | | llem No.
2a. To1al revenue (FOCUS Line 12/Part llA Line 9, Code 4030) | Ellmlnate cents
\$1,490,315 | | 2b. Addlllons:
(1) To1al revenues from 1he securities business of subsidiaries (excepr foreign subsidiaries) and
predecessors no1 Included above. | | | (2) Ne1 loss from principal uansactlons In securllies in trading accounts. | | | (3) Net loss tram principal uansacllons In commodilles In uadlng accounts. | | | (4) ln1eres1 and dividend expense deducted In determining Hem 2a. | | | (5) Ne1 loss from management of or par1lclpa1ion In 1he underwrlllng or dlsulbutlon ol securl1Jes. | | | (6) Expenses olher lhan advertising, printing, registration lees end legal fees deduc1ed In determining ne1
prolll lrom managemenl ol or panlclpalion in underwrillng or dlstrlbullon of securities. | | | (7) Net loss trom securities In lnves1ment accoun1s. | | | Total addlllons | 0 | | 2c. Deductions:
(1} Revenues from the disllibulion of shares of a registered opon end investment company or unil
investment uust, lrom the sale ol variable annuities. from !he business of Insurance, lrom lnves1ment
advisory services rendered 10 registered investment companies or insurance company separate
accounts, and trom rrensacllons In security futures products. | 1,490,315 | | (2) Revenues from commodily uansactions. | | | (3) Commissions. floor brokerage and clearance paid to other SIPC members In connec1lon wllh
securllles transactions. | | | (4) Relmbursemenls lor postage In connection with proxy sollcllation. | | | (5) Net gain trom securllles ln lnves1ment accounts. | | | (6) 100% ol commissions and markups earned from transactions In (i} certllicalos of deposit and
(II) Treasury bllls, bankers acceptances or commercial paper 1ha1 ma1ure nlno months or less
from Issuance date. | | | (7) Dlrec1 expenses of printing adverllsing and legal fees Incurred In connec1lon wllh other revenue
relalod to lhc socurl1ies business (revenue defined by Section 16(9}(L) ol lhe Acl). | | | (8) Other revenue not related either directly or indirectly 10 the securities business.
(See Instruction C): | | | (Deduc1lons In excess of \$100,000 require documentation) | | | (9) (I) Tolal lnlerest and dividend expense (FOCU.S Line 22/PART llA Line 13,
_________
Code 4075 plus line 2b(4) above) bul not In excess
of 101a1 Interest and dividend Income.
_
\$. | | | {II) 40% of margin Interest earned on cus1omers securilles
accounts (400/o ol FOCUS llne 5, Code 3960). | | | Enter the greater ol line (i) or (II) | 0 | | T 01al deduclions | 1,490,315 | | 2d. SIPC Net Operating Revenues | | | 2e. General Assessment @ .0015 | | | | (to page 1, line 2.A.) | {23}------------------------------------------------ ## SIPC-7 Instructions This form is lo be liled by all members of the Securities lnveslor Proteclion Corporation whose fi ~cal years end in 201 t and a~nually thereafter. The form together with lhe paymenl is due no later than 60 days alter lhe end ol the fiscal year, or alter membership termination. Amounts reported herein must be readily reconcilable with the member's records and the Securities and Exchange Commission Rule 17a·5 report filed. Questions.pertaining to this lorm should be directed lo SIPC via e·mail al form@sipc.org or by telephoning 202·371·8300. A. For the purposes of this form, the term "SIPC Nel Operating Revenu es~ shall mean gross revenues from the securities business as defined in or pursuant to the applicable sections of the Securities Investor Protectior1 Act of 1970 ("Act") and Article 6 of SIPC's bylaws (see page 4), less item 2c(9) on page 2. B. Gross revenues of subsidiaries, except foreign subsidiaries, are required to be included in SIPC Net Operating Revenues on a consolidated basis except for a subsidiary tiling separately as explained hereinafter. If a subsidiary was required to file a Rule 17a·5 annual audited statement of income separately and is also a SIPC member, then such subsidiary must itself tile SIPC-7, pay the assessment, and should not be consolidated in your SIPC-7. SIPC Net Operating Revenues of a predecessor member which are not in eluded In Item 2a, were not reported separately and the SIPC assessments were not paid thereon by such predecessor, shall be included in item 2b(1). - C. Your General Assessment should be compuled as lollows: - ( 1) *line 2a* For the applicable period enter tolal revenue based upon amounts reported in your Rule 17a·5 Annual Audited Statement of Income prepared in conformity with generally accepted accounting principles applicable to securities brokers and dealers. or if exempted from thal rule, use X· 17A·5 (FOCUS Report) Line 12, Code 4030. - (2) Adjustments The purpose of the adjustments on page 2 is to determine SIPC Nel Operating Revenues. - (a) *Additians* Lines 2b( 1) through 2b(7) assure that assessable income and gain items of SIPC Net Operating Revenues are totaled, unreduced by any losses (e.g., if a net loss was incurred for the period from all transactions in trading account securities, that net loss does not reduce other assessable revenues). Thus, line 2b(4) would include all short dividend and interest payments including those incurred In reverse 1conversion accounts, rebates on stock loan positions and repo interest which have been netted in determining line 2(a). - (b) *Ocd11clions* Line 2c(1) through line 2c(g) are either provided for in the statue, as in deduction 2c(1), or are allowed lo arrive al an assessment base consisting ol nel operating revenues from the securities business. For example, line 2c(9) allows lor a deduction ol either the total ol interest and dividend expense (not lo exceed interest and dividend income), as reported on FOCUS line 22/PART llA line 13 (Code 4075), plus line 2b(4) or 40% of interest earned on customers' securities accounts (40% ol FOCUS line 5 Code 3960). Be certain to complete both line (i) and (ii), enlering the grealer ol lhe two in the far right column. Dividends paid lo shareholders are not considered "Expense" and thus are not lo be included in the deduction. likewise, interest and dividends paid lo partners pursuant to the partnership agreements would also not be deducted. If the amount reported on line 2c (8) aggregates to \$100,000 or greater, supporting documentation must accompany the form that identifies these deductions. Examp./es of support information include; contractual agreements, prospectuses, and limited partnership documentation. - (i) Determine your SIPC Net Operating Revenues, item 2d, by adding to item 2a, the total of item 2b, and deducting the total of item 2c. - (ii) Multiply SIPC Net Operating Revenues by the applicable rate. Enter the resulting amount in item 2e and on line 2A of page 1. - {iii) Enter on line 28 the assessment due as reflected on the SIPC·G previously filed. - (iv) Subtract lfne 26 and 2C from line 2A and enter the difference on line 20. This is the balance due for the period. - (v) Enter interest computed on late payment (if applicable) on line 2E. - (vi) Enter the total due on line 2F and the payment oi the amou11t due on line 2G. - (vii) Enter overpayment carried lorward (if any) on line 2H. D. Any SIPC member which is also a bank (as defined in the Securities Exchange Act of 1934) may exclude from SIPC Net Operating Revenues dividends and interest received on securities in its investment accounts to the extent that it can demonstrate to SIPC's satisfaction that such securities are held, and such dividends and interest are received, solely in connection with its operations as a bank an d not in connection with its operations as a broker, dealer or member of a national securities exchange. Any member who excludes from SIPC· Net Operating Revenues any dividends or interest pursuant to the preceding sentence shall file with this form a supplementary statement setting forth the amount so excluded and proof of its entitlement lo such exclusion. E. Interest on A.ssessments. JI all 01r any part of assessment payable under Section 4 of the Act has not been postmarked within 15 days alter the due date thiereof, the member shall pay, In addition to the amount of the assessment, interest at the rate of 20% per annum on the unpaid portion of the assessment for each day II has been overdue. F. Securities and Exchange Commission Rule 17a-5(e) (4) requires those wh o are not exempted from the ·audit requirement of the rule and whose gross revenues are in excess of \$500,000 to file a supplemental independent public accountants report covering this SIPC-7 no later than 60 days after their fiscal year ends. Mall this completed form lo SIPC together with a check for the amount due, made payable to SIPC1 using the enclosed return PO BOX envelope, pay via ACH Tiebit Authorization through SIPC's ACH system at www.slpc.org/for-members/assessments or wire the payment to: On the wire Identify the name of the firm and its SEC Registration 8-# and label II as "for assessment." Please fax a copy of the assessment form to (202)-223·1679 or e-mall a copy lo form@sipc.org on the same day as the wire. {24}------------------------------------------------ ## **From Section 16(9) of the Act:** The term •gross revenues from the securities business· means the sum of (but without duplication)- - --------,.------------------ -----------------·-·-·--... (A) commissions earned in connection with transactions in securities eflected for customers as agent {net ol commissions paid to other brokers and dealers in connection wilh such transactions) and markups with respect lo purchases or sales ol securities as principal; (B) charges for executing or clearing transactions in securities for 01her brokers and dealers; (C) the net realized gain, ii *any,* lrom principal transactions In securities in trading accounts; (0) the net profit, ii *any,* from the management ol or participation In the underwriting or distribution of securities; (E) interest earned on customers' securities accounts; (f) fees for investment advisory services (except when rendered to one or more registered investment companies or insurance company separale accounts) or account supervision with respect lo securities; (G) lees for the solicllalion ol proxies with respect lo, or tenders or exchanges of, securities: (H) income from service charges or other surcharges with respect to securities; (I) except as otherwise provided by rule of the Commission, dividends and interest received on securities in investment ac· counts of the broker or dealer; (J) lees in connection with put, call, and other options transactions in securilies: (K) commissions earned for transaclions in (i) certificates ol deposit, and (ii) Treasury bills, bankers acceplances, or commercial paper which have a maturily al the time of issuance of not exceeding nine months, exclusive of days of grace, or any r enewal thereof, lhe maturity of which ls likewise limited, except that SIPC shall by bylaw include in the aggregate of gross revenues only an appropriate percentage of such commissions based on SIPC's loss experience with respect to such instrumenls over at leasl lhe preceding live years; and (l) fees and other income from such olher categories **ol** lho securities business as SllPC shall provide by bylaw. Such lerm includes revenues earned by a broker or dealer in connection with a transaction in the porllolio margining account of a cuslomer carried as securities accounls pursuant lo a portfolio margining program approved by lhe Commission. Such term does not include revenues received by a broker or dealer in connection with the distribution of shares of a registered open end investment company or unit investment trust or revenues derived by a broker or dealer from the sales of variable annuities, the busl· ness of insurance, or transactions in security futures products. #### **From Section 16(14) of the Act:** The term "Security" means any note, stock, treasury stock. bond, debenture, evidence of indebtedness, any collateral lrust cerlilicate, preorganizalion cerlilicate or subscription, transferable share, voting trust certilicale, certificate of deposil, certificate of deposit for a security, or *any* securily future as th al lerm is defined in section 78c(a)(55)(A) of this title, any investment contract or cert ill cate of interest or participation in *any* profit-sharing agreement or in any oil, gas or mineral royalty or lease (ii such investment contract or interest is lhe subj eel of a registration statement with lhe Commission pursuant to the provisions ol the Securities Act of 1933 [ 15 U.S.C. 77a et seq.I), *any* put, call, sir addle, option, or privilege on *any* security, or group or index of securities (including any"interest therein or based on the value thereof), or *any* put, call, straddle. option, or privilege entered lnlo on a national securities exchange relating to foreign currency, any certificate al interest or participation in, temporary or interim certificate lor, receipt lor. guarantee of, or warrant or right to subscribe to or purchase or sell any or the foregoing, and *any* other instrument commonly known as a secu· rity. Except as specifically provided above, the term ·security• does not Include any currency, or *any* commodity or related conlracl or futures contract, or any warrant or right to subscribe lo or purchase or sell any of the foregoing. # **From SIPC Bylaw Article 6 {Assessments): Section 1** (f): The lerm "gross revenues lrom the securities business· includes the revenues in lhe definition of gross revenues from lhe securities business set forth in !he applicable sections of lh e Act. #### **Section 3:** For purpose of this arlicle: (a) The term ·securilies in trading accounts• shall mean securities held for sale in the ordinary course of business and not idenlilied as having been held for investment. (b) The term "securities in investment accounts• shall mean securities that are clearly identified as having been acquired for investment in accordance with provisions of the Internal Revenue Code applicabl e to dealers in securities. (c) The term •fees and other income from such olher categories of the securilies business• shall mean all revenue related either directly or indirectly to lhe securities business except revenue included in Section 16(9){AHL) and revenue specifically excepted in Section 4(c)(3)(C)[ltem 2c(1), page 2). Noie: II the amounr ol aueument enrered on lino 2e of SfPC·7 is gr~ter th.tn *112* of 1% of :gross rov1nuu lr<1m the '""urlliH buslneu' u dellned aoove, you ruy submit that calcula!lon ng with the SIPC·l forrn to SIPC and pay \he smaller amount, subje<:t 10 review by your Eninlnlng Authority and by SIPC. **StpC framlmlng AirJbntj!lea·** - ASE American Stock Exchange, llC FtNRA Fln.tr.elal lnduolry Regulatory Authority - CBOE Chicago Board Option5 exchange, Incorporated CHX Chicago Stock Exch.tngt, •~corporaled **4** NYSE Arca. Inc. NASDAQ OMX PHLX SIPC Securilies lnnstor Protection Corporation Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.