# AERIS PARTNERS LLC X-17A-5 (2020-02-28) — Broker-dealer annual report
- Company: AERIS PARTNERS LLC
- Form: X-17A-5
- Filed: 2020-02-28
- Period: 2019-12-31
- Accession: 0001490968-20-000001
- CIK: 1490968
- File #: 8-68579
- Material weakness: No
- Auditor: Moody Famiglietti & Andronico, LLP
- Auditor location: Tewksbury, MA
- Contact: Jon Nixon
- Phone: 9177031704
- Signed by: Stephen J. O'Leary (Managing Director)
Original filing: https://www.sec.gov/Archives/edgar/data/1490968/000149096820000001/aerisp1.pdf
---
{0}------------------------------------------------
**UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C. 20549**
# **ANNUAL AUDITED REPORT FORM X-17A-5 PARTIII**
| OMBAPPROVAL | |
|---------------------------|-----------------|
| 0MB Number: | 3235-0123 |
| Expires: | August 31, 2020 |
| Estimated average burden | |
| hours oer response 12.00 | |
SEC FILE NUMBER s-68579
#### **FACING PAGE Information Required of Brokers and Dealers Pursuant** to **Section 17 of the Securities Exchange A,ct of 1934 and Rule 17a-5 Thereunder**
| REPORT FOR THE PERIOD BEGTNNTNGJartLJary 1, 2019 | | AND ENDING December 31, 2019 | | |
|-----------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|------------------------------|--------------------------------|--|
| | MM/DD/YY. | | MM/DD/YY | |
| | A. REGISTRANT IDENTIFICATION. | | | |
| NAME OF BROKER-DEALER: Aeris Partners LLC | | | OFFICIAL USE ONLY | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P .0. Box No.) | | | FIRM I.D. NO. | |
| 200 State Street, 11th floor | | | | |
| | (No. and Street) | | | |
| Bosttum | MA | 02109 | | |
| (City) | (State) | (Zip Code) | | |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Stephen J. O'Leary | | | 617-751-4023 | |
| | | | (Area Code :-Telephone Number) | |
| | B. ACCOUNTANT IDENTIFICATION | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
Moody, Famiglietti & Andronico, LLP | (Name-if individual, state last,jirst, middle name) | | | |
| 1 Highland Drive | Tewksbury | MA | 01876 | |
| (Address) | . (City) | (State) | (Zip Code) | |
| CHECK ONE:
i;zf certified Public Accountant
QPublic Accountant | Accountant not resident in United States or any of its possessions. | | | |
| | FOR OFFICIAL USE ONLY | | | |
| | | | | |
| | | | I | |
*\*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 valld 0MB control number.**
SEC 1410 (11-05)
{1}------------------------------------------------
#### **OATH OR AFFIRMATION**
| I, Step~en J. O'Leary | , swear (or affirm) that, to the best of |
|--------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| _A_e_ns_P_a_rt_n_e_r_s_L_L_c | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
__________________________ ='------------'
as |
| of December 31 | 2019
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, proprietor, principal officer or director has any proprietary interest in any account |
| | |
| | |
| | Managing Director |
| | Title |
| This report ** contains (check all applicable boxes): | |
| 0 (a) Facing Page
0 (b) Statement of Financial Condition. | |
| (
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X). | O (c) Statement oflncome (Loss) or, ifthere is other comprehensive income in the period(s) presented, a Statement |
| B
d) Statement of Changes in Financial Condition. | |
| D (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. |
| § (g) Computation of Net Capital. | |
| | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. |
| | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
D G) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-l and the |
| | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule l 5c3-3.
D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of |
| consolidation. | |
| | |
| § (1) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | |
| | (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 240.17a-5(e)(3).*
{2}------------------------------------------------
AERIS PARTNERS LLC FINANCIAL STATEMENTS DECEMBER 31, 2019
{3}------------------------------------------------
To the Member Aeris Partners LLC Boston, Massachusetts
#### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Aeris Partners LLC (the Company), as of December 31, 2019, and the related notes (collectively referred to as the "financial statement"). 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.
#### **Basis for Opinion**
This financial statement 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 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 financial statement 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 financial statement, 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion.
Moody, Famiglietti, & Andronico, LLP We have served as the Company's auditor since 2011. Tewksbury, Massachusetts February 28, 2020
{4}------------------------------------------------
Statement of Financial Condition Aeris Partners LLC
| December31 | 2019 |
|---------------------------------------------------------|-----------------|
| Assets | |
| Current Assets: | |
| Cash | \$
6,422,997 |
| Accounts Receivable | 25,000 |
| Due from Related Party | 12,700 |
| Prepaid Expenses and Other Current Assets | 8,582 |
| Operating Lease -
Right of Use Asset | 142,439 |
| Total Current Assets | 6,611,718 |
| | |
| Security Deposits | 65,861 |
| Property and Equipment; Net of Accumulated Depreciation | 52,349 |
| Total Assets | \$
6,729,928 |
| Liabilities and Member's Equity | |
| Current Liabilities: | |
| Accounts Payable and Accrued Expenses | \$
1,118,338 |
| Operating Lease -
Liability | 157,224 |
| Total Current Liabilities | 1,275,562 |
| Member's Equity | 5,454,366 |
| Total Liabilities and Member's Equity | \$
6,729,928 |
{5}------------------------------------------------
### **1. Organization and Significant Accounting Policies:**
*Re-porting Entity:* Aeris Partners LLC (the "LLC") was formed on November 30, 2009, as a Delaware limited liability company. The LLC is primarily engaged in merger and acquisition advisory and capital raising activities, and is registered under the Securities Exchange Act of 1934 as a broker/ dealer as of November 17, 2010. The LLC is a wholly-owned subsidiary of Aeris International LLC (the "Sole Member").
*Revenue Recognition:* The LLC recognizes its revenue in accordance with Accounting Standards Update (" ASU") No. 2014-09, *Revenue from Contracts with Customers* (" ASU 2014-09") and all related amendments. The various types of services provided by the LLC are as follow:
The LLC provides services under contracts with customers which include merger and acquisition advisory and capital raising activities noted above, as well as fairness-opinion services when requested by a client. Each of these services typically represents a separate performance obligation in contracts that contain more than one type of service. As indicated below, each performance obligation meets the criteria for either over-time or point-in-time revenue recognition. In addition, the LLC is typically reimbursed for certain professional fees and other expenses incurred, that are necessary in order to provide services to the customer.
Merger and acquisition advisory and capital raising activities include, but are not limited to, providing financial advice and assistance in analyzing, structuring, planning, negotiating, and effecting a transaction, identifying potential investors or mergerand-acquisition counterparties and providing financial forecasting for potential transactions. Typically, the LLC provides such advisory services to its customers to assist with corporate finance activities such as mergers and acquisition and recapitalizations. Generally, the LLC considers the nature of its promises in its advisory contracts to comprise a single performance obligation of providing advisory services to its customers. Although there may be many individual services provided in a typical contract, the individual services are not distinct within the context of the contract; rather the performance of these individual services helps to fulfill one overall performance obligation to deliver advisory services to the customer.
The LLC recognizes revenue from providing advisory services when or as its performance obligations are fulfilled. The majority of the LLC' s advisory revenue is recognized at a point in time when a performance obligation represents a singular objective, generally the successful completion of a merger and acquisition or recapitalization transaction. Fixed fees specified in the LLC' s contracts, which may include upfront fees or monthly retainers, are recognized on a systematic basis, as invoiced, over the period in which the related services are performed.
The LLC may, on occasion and upon request of a client, provide fairness opinion services in conjunction with and in the same contract as other transaction-related services. Fairness opinions are considered to be a separate performance obligation in such contracts because they could be obtained separately and the LLC is able to fulfill its obligation to provide transactionrelated advisory services independent from its promise to provide fairness opinion services. The LLC typically charges a separate, fixed fee for such fairness opinions that represents a standalone price for such opinion, and payments for such fees are due upon delivery of the opinion.
*Cash:* The LLC maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits.
*Accounts Receivable:* Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon management's assessment of the collectability of accounts receivable, which considers historical writeoff experience and any specific risks identified in customer collection matters. Bad debts are written off against the allowance when identified. As of December 31, 2019, management believes no allowance for uncollectible accounts receivable is necessary.
*Concentrations of Credit Risk:* Financial instruments that potentially subject the LLC to concentration of credit risk consist primarily of cash and accounts receivable. The LLC maintains its cash with high-credit quality financial institutions. Accounts receivable are stated at the amount management expects to collect from
{6}------------------------------------------------
outstanding balances. The LLC performs ongoing credit evaluations of its customers and generally requires no collateral to secure accounts receivable. The LLC maintains an allowance for potentially uncollectible accounts receivable. Consequently, the LLC believes that its exposure to losses due to credit risk on cash and accounts receivable is limited.
*Income Taxes:* No provision for federal or state income taxes is presented in these financial statements as the LLC is a single-member limited liability company under the provisions of the Internal Revenue Code, which provide that the LLC be treated as a disregarded entity of the Sole Member and, accordingly, its taxable income is allocated to the Sole Member for federal and state income tax reporting purposes. However, in certain circumstances, the LLC may be required to pay income taxes to a state or foreign country. During the year ended December 31, 2019, the LLC did not incur any federal or state income tax.
The LLC assesses the recording of uncertain tax positions by evaluating the minimum recognition threshold and measurement requirements a tax position must meet before being recognized as a benefit in the financial statements. The LLC s policy is to recognize interest and penalties accrued on any uncertain tax positions as a component of income tax expense, if any, in its statements of operations.
The LLC has not recognized a liability for any uncertain tax benefits as of December 31, 2019. The LLC does not expect any material change in uncertain tax benefits within the next twelve months.
*Property and Equipment:* Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, as follows:
| Furniture and Fixtures | 7Years |
|------------------------|---------------|
| Leasehold Improvements | Life of Lease |
| Computer Equipment | 3 Years |
*Lease Accounting:* In February 2016, the FASB issued ASC 842, Leases *( 11*ASC 84211 ), which requires substantially all leases (with the exception of leases with a term of one year or less) to be recorded on the balance sheet using a method referred to as the rightof-use *( 11ROU11 )* asset approach. The LLC adopted the new standard on January 1, 2019 using the modified retrospective method described within ASC 842. The adoption did not have a material effect on the LLC s beginning retained earnings but did have a material impact on the way leases are recorded, presented and disclosed on the LLC s financial statements.
The new standard introduces two lease accounting models, which result in a lease being classified as either a II finance" or II operating" lease on the basis of whether the lessee effectively obtains control of the underlying asset during the lease term. A lease is classified as a finance lease if it meets one of five classification criteria, four of which are generally consistent with current lease accounting guidance. By default, a lease that does not meet the criteria to be classified as a finance lease will be deemed an operating lease. Regardless of classification, the initial measurement of both lease types will result in the balance sheet recognition of a ROU asset representing the LLC s right to use the underlying asset for a specified period of time and a corresponding lease liability. The lease liability is recognized at the present value of the future lease payments, and the ROU asset equals the lease liability adjusted for any prepaid rent, lease incentives provided by the lessor, and any indirect costs.
Leases classified as a finance lease will be accounted for using the effective interest method. The lessee will amortize the ROU asset (generally on a straight-line basis in a manner similar to depreciation) and the discount on the lease liability (as a component of interest expense). Leases classified as an operating lease will result in the recognition of a single lease expense amount that is recorded on a straight-line basis (or another systematic basis, if more appropriate).
*Use of Estimates:* Management has used estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities in its preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America. Actual results experienced by the LLC may differ from those estimates.
*Subsequent Events:* Management has evaluated subsequent events spanning the period from December 31, 2019 through February 28, 2020, the latter representing the issuance date of these financial statements.
{7}------------------------------------------------
#### **2. Property and Equipment:**
Property and equipment as of December 31, 2019 consists of the following:
| | 2019 |
|-----------------------------------|--------------|
| Furniture and Fixtures | \$
96,969 |
| Leasehold Improvements | 35,867 |
| Computer Equipment | 31,770 |
| | \$ 164,606 |
| Less: Accumulated
Depreciation | \$ 112,257 |
| | \$
52,349 |
# **3. Net Capital:**
The LLC is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital of not less than the greater of 6.67% of aggregate indebtedness or \$5,000. As of December 31, 2019, the LLC s net capital amounted to \$5,289,874.
Rule 15c3-1 also requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. The LLC' s aggregate indebtedness to net capital ratio amounted to 0.21 to 1 as of December 31, 2019.
The LLC does not hold customer funds or securities and is exempt from SEC Rule 15c3-3 pursuant to exemptive provision (k)(2)(i).
# 4. **Related Party Transactions:**
The Sole Member of the LLC provides the use of certain proprietary database systems to the LLC. As of December 31, 2019, amounts due to the Sole Member for these services amounted to \$586 and are included in accounts payable within the accompanying statements of financial condition.
Due from Related Party is comprised of certain costs related to benefits, including medical, dental and long term disability, paid on behalf of the Sole Member. As of December 31, 2019, amounts due from the Sole Member for these fees amounted to \$12,700.
# **5. Operating Lease:**
Upon adoption of ASC 842 on January 1, 2019, the LLC recognized a ROU asset and a corresponding lease liability based on the present value of then existing operating lease obligation of \$343,593 on the LLC' s statement of financial condition for its main office space.
ROU assets represent the LLC' s right to use an underlying asset for the lease term and lease liabilities represent the LLC' s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. For determining the present value of lease payments, we use the discount rate implicit in the lease when readily determinable. As the LLC' s lease does not provide an implicit rate, we use an incremental borrowing rate in determining the present value of lease payments that approximates the rate of interest we would have to pay to borrow on a collateralized basis over a similar term.
The ROU measurement was calculated using the fixed scheduled rent payments (annual increase of 2%) up to the maturity date of September 2020. The agreement does contain variable rent payments composed of common area maintenance ("CAM"), insurance and utilities. The LLC did not elect the practical expedient under ASC 842-10-15-37 and therefore, was able to separate CAM fees as non-lease component. CAM fees are adjusted annually based on the LLC' s pro-rata share of the lessor's expenses to maintain the building. Because the adjustment is not based on an index or market rate, the LLC did not include the CAM expenses in its ROU calculation.
The lease agreement does not contain any material residual value guarantees, renewal options or material restrictive covenants.
# *Other Information*
The following table presents supplemental cash flow information and the weighted average rate and term for the operating lease:
{8}------------------------------------------------
Cash paid for amounts included in measurement of the lease liability:
| Operating cash flows from
the operating lease | \$209,700. |
|--------------------------------------------------|------------|
| Weighted-average remaining
lease term (year) | .75 |
| Weighted-average discount rate | 7.5% |
## *Maturities*
The maturity of the lease liability on an undiscounted cash flow basis and a reconciliation to the operating lease liability recognized on the statement of financial condition as of December 31, 2019:
| Remaining lease payments | \$159,372 |
|--------------------------------------|-----------|
| Less: Interest | (16,933) |
| Present value of the lease liability | \$142,439 |
| Deferred Rent | 14,785 |
| Total operating lease liability | \$157,224 |
# **6. Retirement Plan:**
The LLC has a defined contribution plan covering substantially all employees. The plan provides that employees who have attained age 21 and completed one year of service can voluntarily contribute to the plan. Employer contributions are discretionary and are determined and authorized by the LLC each plan year.
#### 7. **Indemnifications:**
In the ordinary course of business, the LLC enters into various agreements containing standard indemnifycation proV1S10ns. The LLC's indemnification obligations under such provisions are typically in effect from the date of execution of the applicable agreement through the end of the applicable statute of limitations. The aggregate maximum potential future liability of the LLC under such indemnification provisions is uncertain. As of December 31, 2019, no amounts have been accrued related to such indemnification provisions.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.