# BREAKWATER GROUP DISTRIBUTION SERVICES, LLC X-17A-5 (2021-02-25) — Broker-dealer annual report - Company: BREAKWATER GROUP DISTRIBUTION SERVICES, LLC - Form: X-17A-5 - Filed: 2021-02-25 - Period: 2020-12-31 - Accession: 0001574366-21-000001 - CIK: 1574366 - File #: 8-69269 - Material weakness: No - Auditor: RSM US LLP - Auditor location: New York, NY - Contact: Richard Sobel - Phone: 212-751-4422 - Signed by: Richard Sobel (CFO/FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1574366/000157436621000001/BreakwaterShortEdgarv2.pdf --- {0}------------------------------------------------ # Breakwater Group Distribution Services, LLC (a limited liability company) Statement of Financial Condition Pursuant to Rule 17a-5 und~r the Securities Exchange Act of 1934 December 31, 2020 Filed as Public infonnalion pursuant lo Rule 17a-S(d) under the Securities Exchange Act of 1934 {1}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 | | UMB APPRUVAL | | |--------------------------|--------------|---------------------------| | OMB Number: | | 3235-0123 | | | | Expires: October 31, 2023 | | Estimated average burden | | | | | | hours per response 12.00 | SEC FILE NUMBER 692698 # ANNUAL AUDITED REPORT FORM X-17A-5 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 | 01/01/2020 | AND ENDING | 12/31/2020 | | |-------------------------------------------------------------------------------------------|--------------------------------------------------------|------------|--------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. RECISTRANT IDENTIFICATION | | | | | Breakwater Group Distribution Services, LLC OFFICIAL USE ONLY
NAME OF BROKER-DEALER: | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | | 350 Madison Avenue - 19 Floor | | | | | | (No. and Street) | | | | | New York | NY | | 10017 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Richard Sobel | | | 212-751-4422 | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | RSM US LLP | | | | | | | (Name - if individual, state last, first, middle name) | | | | | 1185 Avenue of the Americas | New York | NY | 10036 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | 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] > 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 valid OMB control number. SEC 1410 (11-05) {2}------------------------------------------------ #### OATH OR AFFIRMATION | | Richard Sobel
swear (or affirm) that. to the best of | |----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
Breakwater Group Distribution Services, LLC
. as | | of | December 31 20 20 . are true and correct. I further swear (or affirm) that | | | neither the company nor any partner, principal officer or director has any proprietary interest in any account
classified solely as that of a customer, except as follows: | | | -XII
Signature | | | FinOp / CFO
Title
CLAUDIA TAYLOR
NOTARY PUBLIC, State of New York
No. 01TA5068172
Commission Expires 10/28/
Notary Public | | | This report " " contains (check all applicable boxes):
(a) Facing Page.
{b) Statement of Financial Condition.
(c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition. | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(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.
(j) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
[ (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of
consolidation.
(I) 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 andil.
" For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). | {3}------------------------------------------------ #### Contents | | Page(s) | |------------------------------------------------------------|---------| | Report of Independent Registered Public Accounting Firm 1 | | | Financial Statement | | | Statement of Financial Condition 2 | | | Notes to Financial Statements 3-5 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) RSMUSLLP #### Report of Independent Registered Public Accounting Firm To the Member Breakwater Group Distribution Services, LLC #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Breakwater Group Distribution Services, LLC (the Company) as of December 31 , 2020. and the related notes to the financial statement (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2020, 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 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. The Company 1s not required to have, nor were we engaged to perform, an audit of Its 1nremal control over financial reporting. A-s pc:nt of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of matenal 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, a~ well as evaluating the overall presentation of the fin9nci9I st9tement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2014. New York, New York February 25, 2021 THE POWER Of BEING UNOERSTOOO AUD - "'"AX CONSUL- NG {5}------------------------------------------------ ### Breakwater Group Distribution Services, LLC (a limited liability company) Statement of Financial Condition As of December 31, 2020 | ~ts | | | |-----------------------------------------------------------|----|-------------| | Cash | | s 1,632,087 | | Distributor fees recei\0ble | | 429,607 | | Due from affiliates | | 5,912 | | Fixed assets (net of accumulated dePfe(:iation of S6,043) | | 549 | | Prepaid expenses | | 15.873 | | Total assets | \$ | 2,084,028 | | Liabilities and Member's Equity | | | | Liabilities: | | | | Accounts payable and accrued expenses | s | 65,010 | | Total liabilities | | 65,010 | | Membe~s equity | | 2.019.018 | | Total liabilities and member's equity | | s 2,084,028 | | | | | The accompanying notes are an integral part of this financial \$tatement. {6}------------------------------------------------ # Breakwater Group Distribution Services, LLC (a limited liability company) Notes to the Financial Statement #### Note 1. Organization Breakwater Group Distribution Services, LLC (the "Company') was formed under the laws of the State of Delaware on March 20, 2013. The Company is registered as a broker-dealer m securities with the Securities and Exchange Commission (the "SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). The Company earns its revenue from distribution fees. The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3, and the Company is filing this Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a·5. The Company limits its business activities exclusively to market shares of registered open-end and registered interval-type closed-end investment companies (RICs}. The Company updated its Membership agreement with FINRA to reflect this in February 2021. #### Note 2. Significant Accounting Policies Accounting Policies: The Company follows generally accepted accounting principles ("GAAP"), as established by the Financial Accounting Standards Board (the •FASB•), to ensure consistent reporting of financial condition, results of operations and cash flows Cash: Cash consists of cash in banks, primarily held at one financial institution. Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets, liabilities and drsclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Accounting for Income Taxes: The FASB provides guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the financial statements. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are more likely than not of bemg sustained when challenged or when examined by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense and liability in the current year. For the year ended December 31 , 2020, management has determined that there are no uncertain tax positions. All tax years since inception generally remain subject to examination by U.S., Federal and respective state and local tax authorities. As a limited liability company. the Company is not subject to federal income taxes. The Company's member separately accounts for its share of the Company's items of income, deductions, losses and credits. Thererore, the:;e financial stC1lement:; do not include any p1ovision for rederal income taxes. In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard's main goal 1s to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. The Company has assets included in accounts receivable on the statements of financial condition that are In scope of Topic 326, however due to the short-term exposure, the expt:!Ch:!U credit loss 1s not material. The Company's adoption of this new standard, on January 1, 2020, did not have a material impact on its financial statements {7}------------------------------------------------ # Breakwater Group Distribution Services, LLC (a limited liability company) Notes to the Financial Statement #### Note 3. Equipment | Network equipment | s | 6,592 | |-------------------------------|---|-------| | Less accumulated depreciation | | 6,043 | | | s | 549 | #### Note 4. Related Party Transactions The Company paid a related entity under an administrative services agreement. The amount paid represents the Company's allocable share of rent, utilities and employee benefits as defined in the agreement As of December 31 , 2020, \$5,912 included in due from affiliates on the statement of financial condition, represents reimbursable payments made by the Company on behalf of a related entity. All of the Company's revenue is derived from accounts that are managed by the managing member. The accounts receivable from this revenue at December 31 , 2020 was \$429,607. #### Note 5. Off-Balance Sheet Risk and Concentration of Risk The Company, at times. ma1nta1ns its cash balances in bank deposit accounts In excess of federally Insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on cash. #### Note 6. Regulatory Requirements The Company is subject to the SEC's Uniform Net Capital Rule ("Rule 15c3-1"). The Company computes its net capital requirements under the basic method provided for in Rule 15c3-1, which requires the Company to maintain net capital equal to the greater of SS,000 or 6-2/3% of aggregate indebtedness. Net capital and aggregate indebtedness fluctuate on a daily basis; however, at December 31 , 2019. the Company had net capital, as defined, of \$1 ,865,606, which was 51 ,860,606 in excess of the required net capital of 55,000. The Company's net capital ratio was 0.04 to 1. #### Note 7. Indemnifications In the normal course of business. the Company enters into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company expects risk of loss to be remote. #### Note 8. Novel Coronavirus The outbreak of the novel coronavirus r coVID-19") in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial ma~ets. The World Health Organization has declared COVID-19 a "Public Health Emergency of International Concern: The Global imp9c;:t of the outbreak continues to evolve, and as cases of the virus have continued to be identified, many countries have reacted by instituting quarantines and restrictions on travel. Such actions are creating disruption in global supply chains. and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and ma~et conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 could have a material impact on the Company's financial statements. {8}------------------------------------------------ # Breakwater Group Distribution Services, LLC (a limited liability company) Notes to the Financial Statement #### Note 9. Subsequent Events The Company has evaluated subsequent events through the date these financial statements were available to be issued There are no other subsequent events which requ1re disclosure in the notes to the financial statements Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.