# HENNEPIN PARTNERS LLC X-17A-5 (2020-03-02) — Broker-dealer annual report - Company: HENNEPIN PARTNERS LLC - Form: X-17A-5 - Filed: 2020-03-02 - Period: 2019-12-31 - Accession: 0001483462-20-000001 - CIK: 1483462 - File #: 8-68498 - Material weakness: No - Auditor: Baker Tilly Virchow Krause, LLP - Auditor location: Minneapolis, MN - Contact: Gary O'Brien - Phone: 612-259-4993 - Signed by: Gary O'Brien (Managing Director) Original filing: https://www.sec.gov/Archives/edgar/data/1483462/000148346220000001/HennepinPublic2019.pdf --- {0}------------------------------------------------ Hennepin Partners LLC Report Pursuant to Rule 17 a-5 of The Securities and Exchange Commission Including Report of Independent Registered Public Accounting Firm As of December 31, 2019 {1}------------------------------------------------ ## **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** | 0MB APPROVAL | | | | |--------------------------|-----------------|-----------|--| | 0MB Number: | | 3235-0123 | | | Expires: | August 31, 2020 | | | | Estimated average burden | | | | | Hours per response. | | 12.00 | | | | | | | SEC FILE NUMBER 8- **68498** # ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill ## **FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder** | REPORT FOR THE PERJOD BEGINNING | -----------
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A. REGISTRANT IDENTIFICATION | | | | | | NAME OF BROKER-DEALER: | | | OFFICIAL USE ONLY | | | Hennepin Partners | | | FIRM I.D. NO. | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | | 730 Second Avenue, Suite 350 | | | | | | | (No. and Street) | | | | | Minneapolis | MN | | 55402 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | Gary O'Brien | | | 612-259-4993 | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFCATION | | | | | INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report* | | | | | | Baker Tilly Virchow Krause, LLP | | | | | | (Name - if individual, state last.first, middle name) | | | | | | 225 South Sixth Street, Suite 2300 | Minneapolis | MN | 55402 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE:
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Certified Public Accountant | | | | | | D
Public Accountant | | | | | | D
Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2).* > **Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number.** {2}------------------------------------------------ # **OATH OR AFFIRMATION** I, **Gary O'Brien** , swear ( or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of ## **Hennepin Partners** , as of **December 31** , 20 **19**, are true and correct. I further swear (or affirm) that ------------------ ---- neither the company nor any partner, proprietor, principal officer or director has any proprieta1y interest in any account classified solely as that of a customer, except as follows: Melissa M Sjolander State of Minnesota Notary Public My Commission Expires 01/31/2025 Signature # **Managing Director** Title This report\*\* contains (check all applicable boxes): - ~ (a) Facing page. - ~ (b) Statement of Financial Condition. - **D** (c) Statement of Income (Loss). - **D** (d) Statement of Changes in Financial Condition. - **D** (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietor's Capital. - **D** (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. - **D** (g) Computation of Net Capital. - D (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. - D (i) Information Relating to the Possession or Control Requirements under Rule 15c3-3. - D U) 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. - **D** (k) A Reconciliation between the audited and unaudited statements of Financial Condition with respect to methods of consolidation. - ~ (1) An Oath or Affirmation. - D (m) A copy of the SIPC Supplemental Report. - D (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. *\*\*For conditions of confidential treatment of certain portions of this filing, see section 2 40.17 a-5 (e) (3).* {3}------------------------------------------------ # **Hennepin Partners LLC Table of Contents** | Report of Independent Registered Public Accounting Firm | 1 | |---------------------------------------------------------|-----| | Statement of Financial Condition | 2 | | Notes to Statement of Financial Condition | 3-5 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member and Board of Governors of Hennepin Partners LLC ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Hennepin Partners LLC (the "Company") as of December 31, 2019, and the related notes (collectively referred to as the "statement of financial condition"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of the Company as of December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. #### **Change in Accounting Principle** As discussed in Note 1 to the statement of financial condition, the Company has changed its method of accounting for operating leases as of January 1, 2019 due to the adoption of ASU 2016-02, Leases (Topic 842). ## **Basis for Opinion** The statement of financial condition is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's statement of financial condition based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of financial condition is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the statement of financial condition, 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 statement of financial condition. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement of financial condition. We believe that our audit provides a reasonable basis for our opinion. .. tJ-u *I ,JL,* u~~ *~MLU-e/* qP We have served as the Company's auditor since 2011. Minneapolis, Minnesota March 2, 2020 Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. {5}------------------------------------------------ # HENNEPIN PARTNERS LLC STATEMENT OF FINANCIAL CONDITION As of December 31, 2019 | ASSETS | | |---------------------------------------|-----------------| | Cash | \$
2,023,724 | | Accounts receivable | 273,988 | | Prepaid expenses | 36,865 | | Security deposit | 20,729 | | Right-of-use asset | 397,191 | | Property and equipment, net | 162,719 | | TOTAL ASSETS | \$
2,915,216 | | | | | LIABILITIES AND MEMBER'S EQUITY | | | Accounts payable and accrued expenses | \$
305,554 | | Lease liability | 407,029 | | Deferred revenue | 273,333 | | TOTAL LIABILITIES | 985,916 | | | | | Member's equity | 1,929,300 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$
2,915,216 | See accompanying notes to this financial statement. {6}------------------------------------------------ ## HENNEPIN PARTNERS LLC NOTES TO FINANCIAL STATEMENT As of and for the Year Ended December 31, 2019 ## (1) **Nature of business and significant accounting policies** **Nature of business** - Hennepin Partners LLC (the Company), formerly known as Quetico Partners LLC, provides investment banking and financial advisory services to corporate clients. The member experiences limited liability to the extent of its capital balance. A summary of the Company's significant accounting policies follows: **Cash** - The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has not experienced any losses on such accounts. The Company believes it is not exposed to any significant credit risk on cash. **Accounts receivable** -Accounts receivable are customer obligations due under normal trade terms requiring payment within 30 days of the invoice date. Unpaid accounts receivable which are past due are not charged a monthly service fee. Accounts receivable are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days old are considered delinquent. The Company's accounts receivable are generally unsecured. No allowance for doubtful accounts was considered necessary as of December 31, 2019. If accounts receivable are determined uncollectible, they are charged to expense in the year that determination is made. Management reviews all accounts receivable balances and determines the appropriate course of action on a delinquent account. **Revenue recognition** - The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Revenue from contracts with customers includes fees from investment banking and financial advisory services. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Revenue from investment banking success fees are generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction). Revenue from financial advisory retainer fees are generally recognized over time in which the performance obligations are simultaneously provided by the Company and consumed by the customer. Revenue from financial advisory valuation fees are generally recognized at the point in time that performance under the arrangement is completed. Retainers and other fees received from customers prior to recognizing revenue are reflected as deferred revenues. As of December 31, 2019, deferred revenues were \$273,333. Disaggregation can be found on the statement of operations for the year ended December 31, 2019. {7}------------------------------------------------ # HENNEPIN PARTNERS LLC NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2019 **Depreciation and amortization** - Depreciation and amortization are computed by using straight-line methods over estimated useful lives of five to seven years. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life. **Income taxes** - The Company is a disregarded entity for federal and state income tax purposes. The Company's taxable income or loss is taxed on the member's income tax returns. No provision or liability for federal or state income taxes has been included in the financial statements. **Use of estimates** - The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 financial statements, and the reported amounts of revenues during the reporting period. Actual results could differ from those estimates. **Change in accounting principle** - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which amends the accounting for leases by lessees and lessors. The primary change as a result of the new standard is the recognition of right-of-use assets and lease liabilities by lessees for leases classified as operating leases in addition to expanded disclosures. The Company adopted ASU 2016-02 on January 1, 2019, using a modified retrospective transition. The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for its existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease under ASC Topic 842, (b) whether classification of the operating leases would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2019 (a) a lease liability of \$453,705 which represents the present value of the remaining lease payments, discounted using the Company's incremental borrowing rate of 4%, and (b) a right-of-use asset of approximately \$455,181. This standard had no impact on the Company's operating results. The most significant impact was the recognition of right-of-use assets and lease obligations for operating leases. See Note 4 for further details. ## (2) **Property and equipment** Property and equipment consisted of the following as of December 31, 2019: | Computers and equipment | \$
228,158 | |-----------------------------|---------------| | Leasehold improvements | 55,621 | | Total cost | 283,779 | | | | | Accumulated depreciation | (121,060) | | Property and equipment, net | \$
162,719 | Depreciation expense charged to operations for the year ended December 31, 2019 was \$36,177. ## (3) **Concentrations** The Company had one contract with a client that generated 17% of total annual revenues for the year ended December 31, 2019. {8}------------------------------------------------ # HENNEPIN PARTNERS LLC NOTES TO FINANCIAL STATEMENT As of and for the Year Ended December 31, 2019 ## (4) **Lease commitments** In accordance with ASC 842, Leases, the Company's leases with terms longer than twelve months are recorded on the statement of financial condition. The Company leases office space and copiers which are all classified as operating leases. The lease for office space provides for increases in future minimum rental payments. The lease also includes real estate taxes and maintenance charges, which are excluded from the minimum lease payments. The Company had \$397,191 of operating lease right-of-use assets as of December 31, 2019. The Company had \$407,029 in lease liabilities as of December 31, 2019. Future minimum lease payments as of December 31, 2019 are as follows: | Years Ending December 31, | | |--------------------------------|-----------| | 2020 | \$71,328 | | 2021 | 74,279 | | 2022 | 77,231 | | 2023 | 80,182 | | Thereafter | 154.462 | | Total future lease payments | 457.482 | | Imputed interest | (50,453) | | Net liability as of 12/31/2019 | \$407,029 | Total rental expense was \$132,976 for the year ended December 31, 2019. ## (5) **Net Capital requirements** The Company is required to maintain a minimum net capital, as defined in Rule 15c3-1 under the Securities Exchange Act of 1934 (as amended), equivalent to the greater of \$5,000 or 1/15 of aggregate indebtedness. Net capital and aggregate indebtedness may vary from day to day. As of December 31, 2019, the Company had net capital of \$1,434,999 which was \$1,395,751 in excess of its required net capital of \$39,248. The Company's net capital ratio was .41 to 1 as of December 31, 2019. ## (6) **Subsequent events** The Company has evaluated subsequent events occurring through March 2, 2020, the date that the financial statements were available to be issued, for events requiring recording or disclosure in the Company's financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.