# ARTIST CAPITAL LLC X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: ARTIST CAPITAL LLC - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0001491897-22-000002 - CIK: 1491897 - File #: 8-68598 - Type: Broker-dealer - Material weakness: No - Auditor: Spicer Jeffries LLP - Auditor location: Denver, CO - Contact: Denise Sadowski - Phone: 646-289-3297 - Signed by: Jonathan Sands (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1491897/000149189722000002/sofincondition.pdf --- {0}------------------------------------------------ #### STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021 This report is filed in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of 1934 as a PUBLIC DOCUMENT. {1}------------------------------------------------ #### **CONTENTS** Page(s) | Report of Independent Registered Public Accounting Firm | 3 | |---------------------------------------------------------|------| | Statement of Financial Condition | 4 | | Notes to Financial Statements | 5-10 | {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) ![](_page_2_Picture_12.jpeg) {3}------------------------------------------------ #### STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021 #### ASSETS | Cash & cash equivalents | \$
4,791,975 | |-----------------------------------------------|-------------------| | Corrnnissions receivable | 7,077,908 | | Fixed assets | 297,959 | | Prepaid expenses | 93,589 | | Other assets | 128,458 | | Right of use assets | 477,349 | | | | | | \$
12,867 ,238 | | LIABILITIES AND MEMBER'S EQUITY | | | LIABILITIES: | | | Commissions payable | \$
1,650,786 | | Lease liability (Note 3) | 549,348 | | Due to related parties (Note 5) | 157,200 | | Accrued liabilities | 111,252 | | | \$
2,468,586 | | COMMITMENTS AND CONTINGENCIES (Notes 3 and 5) | | | MEMBER'S EQUITY(Note 2) | 10,398,652 | | | \$
12,867 ,238 | The accompanying notes are an integral part of this statement. {4}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS # *NOTE 1- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES* ### *Organization and business* Artist Capital LLC (the "Company") is a limited liability company formed in the state of Delaware on March 1, 2016. The Company converted from an S Corporation that was formed in the state of Texas on June 29, 2011 to a Limited Liability Company on March 1, 2016. The Company was approved to do business as a registered broker-dealer on May 23, 2013 with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company's primary business activity is to assist managers of private alternative investment funds, including private equity, hedge funds and fund of funds, raise capital. ### *Cash and Cash Equivalents* Cash, including cash denominated in foreign currencies, represents cash deposits held at financial institutions. Cash equivalents include short-term, highly liquid investments of sufficient credit quality that are readily convertible to known amounts of cash and have original maturities of three months or less. Cash equivalents are held to meet short-term liquidity requirements, rather than for investment purposes. Cash and cash equivalents are held at major financial institutions and are subject to credit risk to the extent those balances exceed applicable Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC) limitations. ### *Revenue Recognition* The Company's primary sources of revenue are fees and commissions earned from marketing funds. These fees represent a portion of the management and performances fees charged by the managers of these entities. The Company records these fees when earned. #### *Estimates* The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ## *Income taxes* The Company is recognized as a limited liability company by the Internal Revenue Service. The Company's members are liable for federal and state income taxes on the Company's taxable income. The Company is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any tax related appeals or litigation processes, based on the technical merits of the position. The Company files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states. The Company is not subject to income tax return examinations by major taxing authorities for years before 2018. The tax {5}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENTS *(continued)* # *NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)* benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces net assets. However, the Company's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company recognizes interest accrued related to unrecognized tax benefits and penalties related to unrecognized tax benefits in income taxes payable, if assessed. No interest expense or penalties have been recognized as of and for the year ended December 31, 2021. # *NOTE2- NET CAPITAL REQUIREMENTS* Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital, as defined under such provisions. At December 31, 2021, the Company had net capital and net capital requirements of \$4,451,524 and \$132,749, respectively. The Company's net capital ratio (aggregate indebtedness to net capital) was .45 to 1. According to Rule 15c3- 1, the Company's net capital ratio shall not exceed 15 to 1. # *NOTE3- COMMITMENTS* *Leases -* The Company adopted the new guidance for leases prospectively effective January 1, 2019. The new guidance requires that the Company determine if an arrangement is a lease at inception of the transaction. Operating lease assets are included in right-of-use ("ROU") assets while the corresponding lease liabilities are included in operating lease liabilities in the statement of financial condition. Finance leases are included in property and equipment while the related liabilities are included in loans payable in the statement of financial condition. A ROU asset represents the Company's right to use an underlying asset for the lease term while the related operating lease liability represents the obligations to make future lease payments arising from the lease. A ROU asset and related operating lease liability are recognized at lease commencement date, based on the present value of lease payments over the lease term. The Company does not borrow funds and does not have a determinable incremental borrowing rate. The incremental borrowing rate used is the Treasury Bill Rate approximating the term of the operating lease. # *NOTE3- COMMITMENTS* The ROU asset also includes any lease payments made and excludes lease incentives. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company exercise that option. The lease expense for a ROU asset is recognized on a straight-line basis over the lease term. There are several elections the Company may choose to utilize, simplifying the adoption process. They are; the practical expedients, the hindsight expedient, combining lease and non-lease components and utilizing the shortterm lease option. {6}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENTS # *NOTE3- COMMITMENTS (continued)* The package of practical expedient has three components. The Company has specific elections it may utilize; (i) not to reassess historical lease classification, (ii) not to recognize short-term leases on the statement of financial position and (iii) not to separate lease and non-lease components. The practical expedient is an all or nothing election; the Company elected to use the package of practical expedients. The Company may elect the hindsight practical expedient to; (i) reassess the likelihood that a lease renewal, termination or purchase option will be exercised and (ii) reassess the impairment ofROU assets. The Company elected to use the hindsight practical expedient. The Company may elect to include both lease and non-lease components of a lease as a single component, by asset class, and account for both components as part of the lease payment. This election relieves the Company from the obligation to perform a pricing allocation. The Company elected to include both the lease and non-lease components as a single component. For short-term leases, defined as a lease term of twelve months or less, the Company can elect not to apply the recognition requirements and recognize lease payments in the statement of operations on a straight-line basis and recognize variable lease payments, if any, as they are incurred. The Company elected not to apply the recognition requirements to leases classified as short term. # *NOTE 4-LEASES* The Company has an operating lease for office space. This lease has a remaining term ranging from one year to three years and does not contain options to either extend or terminate the lease. The components of lease expense for the year ended December 31, 2021 were as follows: | Operating lease Cost: | | |-----------------------------|---------------| | Right-of: use assets | \$
99,858 | | Accumulated amortization | 15,582 | | Total operating lease costs | \$
115,439 | {7}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS ## *NOTE 4 - LEASES (continued)* Supplemental statement of financial condition at December 31, 2021, relating to leases were as follows: | Operating lease Cost: | | |-----------------------------------------------------------------------|------------------| | Right-of: use assets | \$
99,858 | | Accumulated amortization | 15,582 | | Total operating lease costs | \$
115,439 | | Operating Leases: | | | Right-of-use assets | \$
786,828 | | Accumulated amortization | 309,479 | | Right-of-use assets, net | \$
477,349 | | Operating lease Liabilities | \$
549,348 | | Weighted Average Remaining Lease Terms | | | Operating Leases | 4.5 years | | Weighted Average Discount Rate: | | | Operating Leases | 0.79 | | Maturities oflease liabilities at December 31, 2021, were as follows: | | | Year | Operating Leases | | 2022 | 127,965 | | 2023 | 130,524 | | 2024 | 133,134 | | Thereafter | 200,792 | | Total lease payments | 592,416 | | Less imputed interest | (43,068) | | Operating lease liability | \$
549,348 | | | | ## *NOTES- RELATED PARTY TRANSACTIONS* Due to related parties reported in the Statement of Financial Condition represents amounts payable to its parent company for expenses paid on behalf of the Company. {8}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENTS ## *NOTE6- FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES* The Company is engaged in various corporate financing activities in which counterparties primarily include managers of investment partnerships. In the event that counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. It is the Company's policy to review, as necessary, the credit standing of each counterparty with which it conducts business. Price risk is comprised of interest rate, market and currency risk. Interest rate risk is the risk that the value of financial instruments (mainly investments) may fluctuate as a result of changes in market interest rates. Market risk is the risk that the market values of investments change due to changes in market conditions. Investments in private investment companies are subject to market and interest rate risk. Currency risk is the risk that the value of instruments may fluctuate as a result of changes in foreign exchange rates. As of December 31, 2021, substantially all assets and liabilities of the Company were denominated in United States dollars. The Company also maintains its cash balance in a financial institution, which at times may exceed federally insured limits. As of December 31, 2021, the Company held \$4,541,975, in excess of the federally insured limit at the financial institution. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. The Company's financial instruments, including cash and cash equivalents, commission receivable, prepaid expenses, fixed assets, other assets, lease liability, due to related party, accrued liabilities, other current liabilities, and commissions payable are carried at amounts that approximate fair value due to the short-term nature of those instruments. Investments are valued as described in Note 1. ## *NOTE7- SUBSEQUENT EVENTS* The Company has performed an evaluation of subsequent events through the date the financial statements were issued. The evaluation did not result in any other subsequent events that required disclosures and/or adjustments. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.