# REDTAIL CAPITAL MARKETS, LLC X-17A-5 (2021-03-31) — Broker-dealer annual report
- Company: REDTAIL CAPITAL MARKETS, LLC
- Form: X-17A-5
- Filed: 2021-03-31
- Period: 2020-12-31
- Accession: 0001591941-21-000002
- CIK: 1591941
- File #: 8-69389
- Material weakness: No
- Auditor: Holland & Company
- Auditor location: Cedar Grove, NJ
- Contact: Anthony L. Caudle
- Phone: 212-859-5002
- Signed by: Anthony Caudle (CEO)
Original filing: https://www.sec.gov/Archives/edgar/data/1591941/000159194121000002/RedTailPublic2020.pdf
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# **REDTAIL CAPITAL MARKETS, LLC**
**Financial Statement With**
**Report of Independent Registered Public Accounting Firm**
**For the Year Ended December 31, 2020**
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# UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
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SEC FILE NUMBER
69389
# 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
MM/DD/YY | AND ENDING | 12/31/2020
MM/DD/YY | | |
|--------------------------------------------------------------------------|---------------------------------------------------------------------|------------|--------------------------------|--|--|
| A. REGISTRANT IDENTIFICATION | | | | | |
| NAME OF BROKER-DEALER: | | | OFFICIAL USE ONLY | | |
| RedTail Capital Markets, LLC | | | FIRM I.D. NO. | | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | |
| 30 Wall St., 8th Floor | | | | | |
| | (No. and Street) | | | | |
| New York | NY | | 10005 | | |
| (City) | (State) | | (Zip Code) | | |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | |
| Anthony L. Caudle | | | 212-859-5002 | | |
| | | | (Area Code - Telephone Number) | | |
| | B. ACCOUNTANT IDENTIFCATION | | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | |
| Holland & Company | | | | | |
| (Name - if individual, state last, first, middle name) | | | | | |
| 411 Pompton Avenue | Cedar Grove | N.J | 07009 | | |
| (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).
> 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 (06-02)
CONFIDENTIAL TREATMENT REQUESTED
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OATH OR AFFIRMATION , swear (or affirm) that, to the best of I. my knowledge and belief the accompanying financial statement, and supporting schedules pertaining to the firm of CA () 1 Tul of , are true and correct. I further swear (or affirm) that ,20 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: None ignature Title TIFFANY J. JOHNSON lary Public, State of Michigan County of Wayne My Commission Expires Desig This report\*\* contains (check all applicable boxes): (a) Facing page. (b) Statement of Financial Condition, (c) Statement of Income (Loss). (d) Statement of Changes in Financial Condition. [] (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietor's 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 and unaudited statements of Financial Condition with respect to methods of consolidation. O (1) 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 audit.
\*\* For conditions of confidential treatment of cartain portions of this filing, see section 240.17a-5(e)(3).
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#### **REDTAIL CAPITAL MARKETS, LLC**
#### **TABLE OF CONTENTS**
| | Page |
|---------------------------------------------------------|------|
| Report of Independent Registered Public Accounting Firm | |
| Financial Statement | |
| Statement of Financial Condition | 2 |
| Notes to Financial Statement | 3-6 |
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# REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Redtail Capital Markets, LLC.
# Opinion on the Financial Statements
We have audited the accompanying statement of financial condition of Redtail Capital Markets, LLC. (the "Company") as of December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion. the financial statements present fairly, in all material respects, the financial position of the Redual Capital Markets LLC 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 Redtail Capital Markets, LLC's management. Our responsibility is to express an opinion on this 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 Redtail Capital Markets, 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion.
We have served as Redtail Capital Markets, LLC.'s auditor since 2019.
Cedar Grove, New Jersey March 30, 2021
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# **REDTAIL CAPITAL MARKETS, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020**
| ASSETS | |
|----------------------------------------------|--------------|
| Cash | \$
12,088 |
| Accounts receivable | 5,500 |
| Prepaid expenses | 43 |
| Securities owned, at market | 23,036 |
| TOTAL ASSETS | \$
40,667 |
| LIABILITIES AND MEMBER'S EQUITY LIABILITIES: | |
| Accounts payable and accrued expenses | \$
12,079 |
| TOTAL LIABILITIES | 12,079 |
| COMMITMENTS AND CONTINGENCIES | |
| MEMBER'S EQUITY | 28,588 |
| TOTAL LIABILITIES AND MEMBER'S EQUITY | \$
40,667 |
The accompanying notes are an integral part of this financial statement.
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#### **NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS:**
RedTail Capital Markets, LLC (the "Company"), was formed on October 25, 2013, under the laws of the State of New York, and commenced operations on August 19, 2014. The Company is a broker-dealer registered with the U.S. Securities and Exchange Commission ("SEC"). The Company is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). The Company's FINRA membership agreement was amended on October 11, 2017, authorizing the firm to complete best efforts underwriting services, private placements and mergers and acquisitions ("M&A") related services. The Company operates out of one office in New York City.
# **NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:**
#### **Basis of Presentation**
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP").
#### **Use of Estimates**
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Accordingly, actual results could differ from those estimates and such differences could be material.
#### **Cash and Cash Equivalents**
The Company considers all highly liquid instruments with maturities of three months of less to be cash equivalents.
#### **Accounts Receivable**
The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs and collections and current credit conditions. During the year ended December 31, 2020, the Company write off \$14,500 in receivables and had no allowance for doubtful accounts at December 31, 2020.
#### **Marketable Securities**
Marketable securities represent the Company's investment in equity securities and mutual fund positions and are recorded on a trade date basis. Marketable securities are carried at fair value and based upon their last sale price at the close of business on December 31, 2020. Unrealized and realized gains and losses are reflected in other income in the statement of income.
# **Revenue Recognition**
# **Adoption of ASU 2014-09 – Revenue from Contracts with Customers**
In May 2014, the FASB issued ASU 2014-09, Revenue Recognition from Contracts with Customers Topic 606). The ASU modifies the guidance used to recognize revenue from contracts with customers and transfers of nonfinancial assets , unless those contracts are within the scope of other guidance. The ASU eliminates all transaction and industry specific accounting principles and replaces them with a unified, five step approach. The Company adopted Topic 606 as of January 1, 2018 under the full retrospective transition method. The adoption of Topic 606 did not have a material impact on the Company's financial statements and there were no adjustments recorded to previously reported mounts.
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#### **Revenue Recognition (continued)**
Underwriting Income: The Company participates in underwritings on a best efforts basis. Revenue is recognized on the trade date (the date the securities are issued by the issuer) for the portion the Company is allocated to sell on a best efforts basis. The Company believes the trade date is the appropriate point in time to recognize revenue for securities underwriting activities as there are no significant actions which the Company needs to take subsequent to this date and the issuer obtains control and benefit of the capital markets offering at that point.
Service Income: The Company provides advisory services on mergers and acquisitions. Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances significant judgement is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to revenue recognition are reflected as deferred revenue. As of December 31, 2020 the Company had no deferred revenue.
Accounts receivable from customers were \$5,500 and \$20,000 at December 31, 2020 and 2019, respectively.
#### **Income Taxes**
The Company is a limited liability company and is treated as a sole proprietorship for income tax purposes. As a result, no Federal, New York State, or New York City income taxes (if applicable) are provided, as they are the responsibility of the Managing Member.
The open tax years under potential examination vary by jurisdiction, but are mainly 2017, 2018 and 2019. At December 31, 2020, the Company has reviewed its positions taken on its tax returns and believes that there are no uncertain tax positions taken that would require recognition in the financial statements.
#### **NOTE 3 - FAIR VALUE MEASUREMENT**
The Company values all investments at fair value. U.S. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the investment based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in pricing the investment based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 -Valuations based on quoted prices in active markets for identical investments.
Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuation based on inputs that are unobservable, supported by little or no market activity, and significant to overall fair value measurement.
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#### **NOTE 3 - FAIR VALUE MEASUREMENT (Continued)**
The availability of observable inputs can vary from investment to investment and is affected by wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the market place, the liquidity of the markets, and other characteristics particular to the transaction. To the extent the valuations are based on models or inputs that are less observable or unobservable in the market, the determination of fair market value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.
All of the Company's investments are categorized in Level 1 of the fair value hierarchy at December 31, 2020.
| | Level 1 | Level 2 | Level 3 | Total |
|------------------|----------|---------|---------|--------------|
| Other Securities | \$23,036 | \$
- | \$
- | \$ 23,036 |
| | \$23,036 | \$ - | \$
- | \$
23,036 |
#### **NOTE 4 – CONCENTRATIONS OF CREDIT RISK:**
#### **Cash**
The Company maintains principally all cash balances in one financial institution which, at times may exceed the amount insured by the Federal Deposit insurance Corporation. The exposure to the Company is solely dependent upon daily bank balances and the respective strength of the financial institution. The Company has not incurred any losses on this account. At December 31, 2020, the amount in excess of insured limits of \$250,000 was \$0.
#### **Revenue**
One customer accounted for approximately 83% of total revenue for the year ended December 31, 2020.
#### **NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK**
The Company's securities positions were held at T. Rowe Price. at December 31, 2020. In January 2019, the Company transferred its brokerage account to T Rowe Price (the "broker"). The Company is subject to credit risk should the broker be unable to meet its obligations either to repay amounts owed or to return the Company securities. This risk is mitigated by the fact that the Company's account is carried by T. Rowe Price as a proprietary account of a broker dealer, as defined, and is therefore afforded certain protections under Securities and Exchange Commission Rules with regard thereto.
The Company's financial instruments are subject to the following risks:
#### *Market Risk*
Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument.
#### *Liquidity Risk*
Liquidity risk represents the possibility that the Company may not be able to rapidly adjust the size of its positions in times of high volatility and financial stress at a reasonable price.
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#### **NOTE 6 - RELATED-PARTY TRANSACTIONS**
The Company has an expense sharing agreement with a related entity under common control. Under this agreement, the related party provides rent, utilities and administrative services on behalf of the Company and these expenses are not required to be paid back to the affiliate.
# **NOTE 8 – NET CAPITAL REQUIREMENTS**
The Company is subject to the Securities and Exchange Commission Uniform Net Capital 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. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash distributions paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2020, the Company had net capital of \$19,529, which was \$14,529 more than its required minimum net capital of \$5,000. The Company's ratio of aggregate indebtedness to net capital was 61.85 to 1 as of December 31, 2020.
# **NOTE 9 – PAYCHECK PROTECTION PROGRAM LOAN**
The Company received a loan under the Small Business Administration's (SBA) Paycheck Protection Program (PPP) for \$3,800 on April 22, 2020. On December 11, 2020, the Company received notification from the SBA that the loan was forgiven in full.
# **NOTE 10 – RISKS AND UNCERTAINTIES**
In March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. This pandemic event has resulted in significant business disruption and uncertainty in both global and U.S. markets. While management believes the Company is in an appropriate position to weather the potential short-term effects of these world-wide events, the direct and long-term impact to the Company and its financial statements is undetermined at this time. No adjustments have been made to these financial statements as a result of this uncertainty.
# **NOTE 11 – SUBSEQUENT EVENTS**
Management has evaluated subsequent events that have occurred as of March 30, 2021, the date the financial statements were available to be issued.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.