# SHERMAN & COMPANY LLC X-17A-5/A (2023-03-31) — Broker-dealer annual report - Company: SHERMAN & COMPANY LLC - Form: X-17A-5/A - Filed: 2023-03-31 - Period: 2022-12-31 - Accession: 0001504259-23-000002 - 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/1504259/000150425923000002/shermanaudit22.pdf --- {0}------------------------------------------------ | SE | UN
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ico | | | | {2}------------------------------------------------ # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Sherman & Company, LLC To the Member of ## Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Sherman & Company, LLC as or ± December 3 ¹ , 2022, and the related notes (collectively refe rred 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 statements. Our audit also included evaluating the accounting principles used and significant estim ates 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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0,0 | 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 tLC (the Company")ts a broker dealer registered with the Secunities and Exchange Com mission ("SEC") and the Financial Industry Regulatory Authority ("FINRA") effective June 14, 2011. The Company is a limited habihity company organized under the laws of the Stat e of North Carolina and a wholly owned subsidiary of Sherman & Company Holdings LtC (the "Parent" and sole member) [he Company provides investment banking services including merger and acquisition advisory, capital raising, strategic advisory, fairness opimions/valuations, and regulatory advisory Since the Company rs a limited habity 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 pf 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 and FINRA #### Estimates The presentation of financial statements in conformity wnth u.5. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and habihties 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 Recogmition On January I, 2018, the Company adopted A5U 2014-09 Revenue from Contracts with Customers an all subsequent amendments to the ASU (collectively, "ASC 606"), which creates a single framework for recogmzing revenue from contracts with customers that fall within its scope. Revenue ts measured based on a consideration specified in a contract wth a customer Ihe Company recognizes revenue when tt satisfies a performance obligation by transferring control over goods or service to a custom er Services wth 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.* The Company provides advisory services/corporate finance activity including mergers and acquisitions, reorganizations, valuations, leveraged buyouts, and fundrasing actrvrty The agreement contains nonrefundable retainer fees or success fees, which may be fixed or represent a percentage of value that the customer receives f an 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 actrwity Ihe Company has evaluated 1ts nonrefundable retainer 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 with other promised goods or services until it dentfres 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 as a single performance obhgat on and the retainer revenue rs 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 Taxes The Company elected S corporation status effective January 1, 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 FASB Accounting Standards Codification740-10, Accounting for Uncertainty in Income Taxes. Under FAS8 ASC 740-10, the Company is required to evaluate each of its tax positions 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 it has no uncertain tax positions for which a provision or liability for income taxes is necessary. ### Advertising Costs Advertising costs, if any, are charged to expenses as incurred. The Company incurred \$6,270 in 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 limits. The Company has not experienced any losses insuch accounts and believes it is not exposed to any significant credit risk for cash. ### Accounts Receivable The company evaluated the collectibility of accounts receivable and has determined no valuation allowance is necessa ry. The terms are due upon providing se rvices. 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 ea rned from five customers. These are included in advisory 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. The Company paid \$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 of its parent for its Charlotte and New York offices. The total amount paid for rent was \$118,243. ### 4. NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 1Sc3- 1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2022, the Company had net capital of \$ 518,224 which was \$ 503,556 in excess of its required net capital of \$ 14,668. The 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 its financial statements. ## 6. CASH & CASH EQUIVALENTS The Company considers highly liquid 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 2021. 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 fixed assets at cost and depreciate over a 5-7 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.