# SHERMAN & COMPANY LLC X-17A-5 (2023-03-30) — Broker-dealer annual report - Company: SHERMAN & COMPANY LLC - Form: X-17A-5 - Filed: 2023-03-30 - Period: 2022-12-31 - Accession: 0001504259-23-000001 - CIK: 1504259 - File #: 8-68725 - Type: Broker-dealer - Material weakness: No - Auditor: GOLDMAN & COMPANY C.P.A.S - Auditor location: MARIETTA, GA - Contact: PAMELA CARICO - Phone: 704-943-2671 - Signed by: PAMELA B. CARICO (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1504259/000150425923000001/shermanaudit22.pdf --- {0}------------------------------------------------ | | UN
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as | | | | *applicable.* {2}------------------------------------------------ #### REPORT OF INDE PENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of Sherman & Company, LLC # Opinion on the Financial Statement E >- ^z We have audited the accompanying statement of financial condition of Sherman & Company, LLC as of *"* December 3 ¹ , 2022, and the related notes (collectively referred to as the financial statement). In our opinion, u : the statement of financial condition presents fairly, in all material respects, the financial position of Sherman & Company, LLC as of December 3 1, 2022 in conformity with accounting principles generally accepted in the United States of America. # Basis for Opinion This financial statement is the responsibility of Sherman & Company, LLCs management. Our responsibility is to express an opinion on Sherman & Company, LLC'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 Sherman & Company, LLC 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 statem ents. 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. We have served as the Company's auditor since 2015. Goldman & Company, CPA's,P.C. Marietta, Georgia March 25, 2023 {3}------------------------------------------------ ### SHERMAN & COMPANY LLC (A LIMITED LIABILITY COMPANY) # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2022 ASSETS | CU
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63 | The accompanying notes *are* an integral part of these financial statements {4}------------------------------------------------ # SHERMAN & COMPANY LLC # (A LIMITED LIABILITY COMPANY) # NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2022 ### 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Organization and Nature of Business Sherman & Company LLC (the Company")is a broker dealer registered with the Securities and Exchange Commission ("SEC") and the Financial industry Regulatory Authority ("FINRA") effective June 14, 201L. The Company is a limited hiability company organized under the laws of the State of North Carolina and a wholly owned subsidiary of Sherman & Company Holdings ttC (the "Parent" and sole member) The Company provides investment banking services including merger and acquisition advisory, capital raising, strategic advisory, fairness opimions/valuations, and regulatory advisory. Since the Company is a limited liability company, the member is not hable for the debts, obligations, or liabilities of the Company, whether arising in contract, tort or otherwise, unless the member has signed a specific guarantee #### Basis of\_Accounting The Company's financial statements are on an accrual basis of accounting as required by US generally accepted accounting principles and as requred by the SEC ant FINRA #### Estimates The presentation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and hiathties 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. #### Revenue Recogmuon On January I, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers ant all subsequent amendments to the ASU (collectively. "ASC 606"), which creates a single framework *for* recogmag revenue from contracts with customers that fall wthin its scope. Revenue 1s measured based on a consideration specified in a contract wnth a customer. Ihe Company recogmes revenue when tt satisfies a performance obligation by transferring control over goods or seruce to acustomer Services wthin the scope of A5C 606 include investment banking M&A advisory fees. These services include agreements to provide advisory services to customers for which the Company charges the customers fees. Ihe Company provides advisory services/corporate finance activity including mergers and acquisitions, reorganizations, valuations, leveraged buyouts, and fundrarsing activity The agreement contams nonrefundable retainer fees or success fees, which may be fixed or represent a percentage of value that the customer receives tf and when the corporate finance activity is completed ("success fees") The retainer fees or other milestone fees may reduce any success fee subsequently invoiced and received upon the completion of the corporate finance activity Ihe Company has evaluated its nonrefundable retamer payments, to ensure its fee relates to the transfer of a good or service, as a distinct performance obligation, in exchange for the retainer. If a promised good or service is not distinct, the Company combines that good or service wnth other promised goods or services until it identifies *a* bundle of goods or services that rs distinct. In some cases, that would result in the broker-dealer accounting for all the services promised in a contract a a single performance obligation and the retainer revenue is classified as deferred revenue on the Statement of Financial Condition. Total deferred revenue was \$48,667 at December 31, 2022 {5}------------------------------------------------ ### 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ### Income Iaxes The Company elected Scorporation status effective January I, 2014. Accordingly. no provision for income taxes is provided in the financial statements as they are the responsibility of the member. The Company has adopted the provisions of FAS8 Accounting Standards Codification740 10, Accounting *for* Uncertainty in Income Taxes Under FAS8 ASC 740-10, the Company rs required to evaluate each of its tax positrons to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. The Company has evaluated its tax positions and has determined that t has no uncertain tax positions for which a provision or habihity for income taxes is necessary #### Advertising Costs Advertising costs, if any, are charged to expenses as incurred The Company incurred \$6,270 advertising costs for the year ended December 31, 2022. Such amount is included in marketing on the accompanying Statement of Operations. #### Concentration of Credit Risk The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured himits Ihe Company has not experienced any losses insuch accounts and believes it is not exposed to any significant credit risk for cash #### Accounts Receivable [he company evaluated the collectibhity of accounts recewable and has determined no valuation allowance is necessary. The terms are due upon providing services. Accounts Receivable at December 31, 2021 was \$89,000 The Company is evaluating new accounting standards and will implement as required #### 2. CONCENTRATIONS For the year ended December 31, 2022, 89% of revenue was earned from five customers These are included in adrsory fees on the accompanying Statement of Operations #### 3. RELATED PARTY TRANSACTIONS Per the terms of the expense sharing agreement, the Company reimburses the Parent for certain expenses including payroll and general office expenses, and these expenses were classified accordingly on the accompanying Statement of Operations. Ihe Company pad \$4,002,565 to the Parent for such expenses for the year ended December 31, 2022 At December 31, 2022 the Company had \$106,920 due to the Parent, and such amount is reflected on the accompanying Statement of Financial Condition In 2016, the Company entered into a rental agreement with a related party of the Company to rent an apartment in New York City when Company employees travel there for business The total amount paid to the related party for apartment rental was \$4,090 for the year ended December 31 2022. The Company also pays rent and office equipment leases on behalf oaf its parent for its Charlotte and New York offices The total amount pad for rent was \$118,243 #### 4. NET CAPITAL REQUIREMENTS The Company ts subject to the Secunities and Exchange Commission Umiform Net Capital Rule [SEC Rule 15a3 I), which requres the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to ret capital, both as defined, shall not exceed 15 to I At December 31, 2022, the Company had net capital of \$ 518,225 which was \$503,557 in excess of its required net capital of \$ 14,668 Ihe company's percentage of aggregate indebtedness to net capital was 42.46% #### 5. SUBSEQUENT EVENTS The Company has evaluated subsequent events through March 25, 2023, the date that its financial statements were issued, and determined that there are no material subsequent events requiring adjustment to, or disclosure in it s financial statements #### 6. CASH & CASH EQUIVALENTS The Company considers highly hiqud investments with maturity dates of three months or less to be cash equivalents #### 7. DEFERRED RENT BENEFIT The Parent entered into an amendment to its office *lease* for the Company's Charlotte office in May 202I The lease includes an abatement period of five [5) months The Deferred Rent Benefit is the unamortized portion of the abated rent {6}------------------------------------------------ # 8. FIXED ASSETS The company records fed assets at cost and depreciate over a S-*7* year estimated useful life using the straight line method Maintenance and repairs *are* charged to income and purchases over \$2,500 are capitalized Depreciation expense is \$2,960 for 2022 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.