# LUMA SECURITIES LLC X-17A-5 (2018-11-20) — Broker-dealer annual report
- Company: LUMA SECURITIES LLC
- Form: X-17A-5
- Filed: 2018-11-20
- Period: 2018-09-30
- Accession: 0001519615-18-000001
- CIK: 1519615
- File #: 8-68863
- Material weakness: No
- Auditor: JANOVER LLC
- Auditor location: GARDEN CITY, NY
- Contact: RAFAEL BECK
- Phone: 212-897-1690
- Signed by: RAFAEL BECK (CHIEF FINANCIAL OFFICER)
Original filing: https://www.sec.gov/Archives/edgar/data/1519615/000151961518000001/Luma09302018sofcFINAL1.pdf
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
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#### **ANNUAL AUDITED REPORT** SEC FILE NUMBER **FORM X-17A-5** 8-68863 **PART III**
#### **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 PERIOD BEGINNING | 10/01/17
MM/DD/YY | AND ENDING | 09/30/18
MM/DD/YY | | |
|--------------------------------------------------------------------------|--------------------------------------------------------|------------|-----------------------------------------|--|--|
| A. REGISTRANT IDENTIFICATION | | | | | |
| NAME OF BROKER -
DEALER: | | | | | |
| LUMA Securities LLC | | | OFFICIAL USE ONLY
__________________ | | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM ID. NO. | | |
| | 101 Fifth Avenue, Suite 900 | | | | |
| | (No. and Street) | | | | |
| New York | NY | | 10003-1008 | | |
| (City) | (State) | | (Zip Code) | | |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | |
| Rafael Beck | | | (212) 897-1690 | | |
| | | | (Area Code -
Telephone No.) | | |
| | B. ACCOUNTANT IDENTIFICATION | | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | |
| | Janover LLC | | | | |
| | (Name - if individual, state last, first, middle name) | | | | |
| 100 Quentin Roosevelt Blvd, Suite 516 | Garden City | New York | 11530 | | |
| (Address) | (City) | (State) | (Zip Code) | | |
| CHECK ONE: | | | | | |
| X
Certified Public Accountant | | | | | |
| Public Accountant | | | | | |
| 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).*SEC 1410 (3-91)
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### **TABLE OF CONTENTS**
#### **This report \*\* contains (check all applicable boxes):**
- [x] Report of Independent Registered Public Accounting Firm.
- [x] Facing Page.
- [x] Statement of Financial Condition.
- [ ] Statement of Operations.
- [ ] Statement of Changes in Member's Equity.
- [ ] Statement of Cash Flows.
- [ ] Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable).
- [ ] Computation of Net Capital for Brokers and Dealers Pursuant to Rule 15c3-1 under the Securities Exchange Act of 1934.
- [ ] Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934.
- [ ] Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934 (not applicable).
- [ ] A Reconciliation, including appropriate explanations, of the Computation of Net Capital Pursuant to Rule 15c3-1 (included with item (g)) and the Computation for Determination of Reserve Requirements Under Rule 15c3-3 (included in item (g)).
- [ ] A Reconciliation Between the Audited and Unaudited Statements of Financial Condition With Respect to Methods of Consolidation (not applicable).
- [x] An Affirmation.
- [ ] Independent Auditors' Report on Applying Agreed-Upon Procedures Required Under SEC Rule 17a-5(e)(4)
- [ ] A copy of the SIPC Supplementary Report.
- [ ] A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit (Supplementary Report on Internal Control).
- [ ] Independent Auditors' Report on Internal Control Required by SEC Rule 17a-5(g)(1).
- [ ] Independent Auditors' Report regarding Rule 15c3-3 exemption report.
- [ ] Rule 15c3-3 exemption report.
- *\*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).*
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**Statement of Financial Condition Pursuant to Rule 17a-5 under the Securities Exchange Act of 1934**
**September 30, 2018**
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#### **Table of Contents**
| Report of Independent Registered Public Accounting Firm | | | | |
|---------------------------------------------------------|-------------|--|--|--|
| Financial Statements | Page | | | |
| Statement of Financial Condition | 1 | | | |
| Notes to Statement of Financial Condition | 2
-
5 | | | |
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#### **Report of Independent Registered Public Accounting Firm**
To the Member of LUMA Securities LLC:
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of LUMA Securities LLC as of September 30, 2018, 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 LUMA Securities LLC as of September 30, 2018 in conformity with accounting principles generally accepted in the United States of America. ties conformity w America.
#### **Basis for Opinion**
This financial statement is the responsibility of LUMA Securities LLC's management. Our responsibility is to express an opinion on LUMA Securities 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 LUMA Securities 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. t the Securities L ss LUMA Securities LLC's financia ccounting with the Compa CAOB) to be res he ru 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 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. naccordance withthe ofthe PCAOB. Th whether ment, due or includ erial whet es to incl g amounts anddisclosures the st ccounting principles used and significant estimates
We have served as LUMA Securities LLC's auditor since 2013.
Garden City, New York November 20, 2018
NEW YORK CITY Ɣ 485 Madison Avenue, 9th Floor, New York, New York 10022 Ɣ Tel: 212.792.6300 LONG ISLAND Ɣ 100 Quentin Roosevelt Blvd., Suite 516, Garden City, New York 11530 Ɣ Tel: 516.542.6300
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### **Statement of Financial Condition**
*September 30, 2018*
#### **Assets**
| Cash
Fees receivable
Prepaid expense | \$
10,901,199
265,128
7,178 |
|--------------------------------------------|--------------------------------------|
| | \$
11,173,505 |
| Liabilities and Member's Equity | |
| Liabilities: | |
| Deferred income | \$
79,167 |
| Due to Parent | 55,333 |
| Accrued expenses | 18,004 |
| | 152,504 |
| Commitments and contingencies | |
| Member's equity | 11,021,001 |
| | \$
11,173,505 |
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### **Notes to Statement of Financial Condition**
*September 30, 2018*
#### **1. Business Organization**
LUMA Securities LLC (the "Company"), a wholly-owned subsidiary of LUMA Partners LLC (the "Parent"), is a limited liability company formed under the laws of the State of Delaware. The Company is registered as a broker-dealer with the Securities and Exchange Commission (the "SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company provides unique strategic counseling and investment banking services to companies in the technology industry.
The Company shall continue until the earlier of (i) the written consent by the Parent that the Company should be dissolved, or (ii) the sale, transfer or other disposition of all assets of the Company.
The liability of the member or Parent is limited to the capital held by the Company.
#### **2. Summary of Significant Accounting Policies**
The following summary of the Company's major accounting policies is presented to assist in the interpretation of the financial statements.
*Basis of preparation* - The financial statements were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").
*Revenue recognition -* Advisory fees from investment banking, financial and advisory services include retainer fees and success fees. Retainer fees are recorded on a pro rata basis as the services related to the underlying transaction are earned under the terms of the engagement. Success fees are recorded when the underlying transactions are consummated or when specified services have been rendered or milestones reached. Other income includes expense reimbursement billed to a customer. Interest income is recorded as earned. Unearned retainer fees are included in deferred income on the statement of financial condition.
*Income taxes* - Since the Company is a single member limited liability company, it is disregarded for income tax purposes and, therefore, no federal, state or local income taxes are provided or considered for the purpose of the financial statements. The results of the Company are included in the tax return of its Parent.
In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
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### **Notes to Statement of Financial Condition**
*September 30, 2018*
#### **2. Summary of Significant Accounting Policies** *(continued)*
*Income taxes (continued)* - The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce member's capital. This policy also provides guidance on thresholds, measurement, derecognition, classification, interest and penalties, disclosure, and transition that is intended to provide better financial statement comparability among different entities. Based on its analysis, the Company has determined that the governing accounting standards do not have a material effect on the Company. Generally, taxing authorities may examine the Company's tax returns for three years from the date of filing and the current and prior three years remain subject to examination as of September 30, 2018.
*Fees receivable* - Fees receivable represent amounts management expects to collect based on private placement advisory contracts or agreements. On a periodic basis, the Company evaluates its fees receivable and makes a determination for the need of establishing an allowance for doubtful accounts based on past history collections and current credit conditions. Receivables are written off as uncollectible once the Company has exhausted its collection means. As of September 30, 2018, there was no allowance for doubtful accounts.
*Use of 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 amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
*New Accounting Pronouncements* - In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers, which creates a new Topic, Accounting Standards Codification (Topic 606). The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2017 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is not allowed. Management is currently evaluating the impact of the adoption of Topic 606 will have on the Company's financial statements.
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### **Notes to Statement of Financial Condition**
*September 30, 2018*
#### **3. Transactions with Related Parties**
The Company maintains a services agreement with the Parent. Pursuant to the agreement, the Parent provides accounting, administration, information technology, compliance services, office space, employee services and other services at a cost of \$44,900 per month. Generally, the Company settles the amount owed to the Parent on a monthly basis. As of September 30, 2018, the amount due to Parent is \$55,333, which is comprised of \$44,900 for September 2018 expenses and \$10,433 for other expense reimbursements. The services agreement may be terminated upon the mutual agreement of the Company and the Parent.
All transactions with related parties are settled in the normal course of business. The terms of any of these arrangements may not be the same as those that would otherwise exist or result from agreements and transactions among unrelated parties.
#### **4**. **Regulatory Requirements**
The Company is subject to SEC Uniform Net Capital Rule (Rule 15c3-1), 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 September 30, 2018, the Company had net capital of \$10,811,195 which was \$10,711,195 in excess of its minimum requirement of \$100,000.
The Company does not hold customers' cash or securities. As such, it is not affected by SEC Rule 15c3-3.
#### **5. Concentrations**
All cash deposits are held by one custodian bank and therefore are subject to the credit risk at that financial institution. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits.
Five customers accounted for 100% of the fees receivable balance as of September 30, 2018.
#### **6. Contingencies**
In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including a class action complaint arising from an initial public offering in March 2017. The Company was a member of the underwriting syndicate for the offering, and all the members of the syndicate have been named as defendants. The lead underwriter, Morgan Stanley & Co. LLC, is defending the other underwriters, including the Company. The complaint alleges that the underwriters, including the Company, violated Section 11 of the Securities Act of 1933. The underwriters are vigorously defending the action. In August 2017, a separate action was filed, alleging that the underwriting syndicate,
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### **Notes to Statement of Financial Condition**
*September 30, 2018*
which includes the Company, violated Section 11 of the Securities Act of 1933. In November 2017, the case was remanded to the San Mateo Superior Court. On April 17, 2018, the plaintiff stipulated to the dismissal of the unserved underwriter defendants in the case, including the Company. Thus, the cases coordinated action continues, but the Company is no longer a party. The Company does not believe, based on current knowledge and after consultation with counsel, that any losses related to these complaints will have a material adverse effect on the Company's financial statements.
#### **7. Subsequent Events**
Management of the Company has evaluated events or transactions that may have occurred since September 30, 2018 and determined that there are no material events that would require 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.