# SDR CAPITAL MARKETS, INC. X-17A-5/A (2020-03-02) — Broker-dealer annual report - Company: SDR CAPITAL MARKETS, INC. - Form: X-17A-5/A - Filed: 2020-03-02 - Period: 2019-12-31 - Accession: 0001600819-20-000002 - CIK: 1600819 - File #: 8-69430 - Material weakness: No - Auditor: Spicer Jeffries LLP - Auditor location: Denver, CO - Contact: P. Andrew Limes - Phone: 720-221-9220 - Signed by: P. Andrew Limes (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1600819/000160081920000002/sdrpublic20193.pdf --- {0}------------------------------------------------ **l JNITEOSTATES SEClJRITI ES ANO EXCHANGE COMMISSION Wnshington, O.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response .. .... i 2.00 SEC FILE NUMBER 8-69430 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section 17 of** the **Securities Exchange Act** of **1934 and Rule** 17a-5 **Thereunder** | AND ENDING 12/31/2019 | | | |-------------------------------------------------------------------------|-----------------------------------------------------------------|--| | | MM/DD/YY | | | | | | | | OFFICIAL USE ONLY | | | | FIRM I.D. NO. | | | | | | | | | | | | 80111 | | | (Zip Cock) | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | (Arca Code - Telephone Number) | | | | | | | | | | | | | | | | | | | | 80237 | | | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Name - ((i11di1·id11a /, slate last, jirst, middle name)
co | | *\*Clai111sfi;r exe111ptio11.fro111 the req11iremc11/ that the a111111al report be co,·ered by the opi11io11 ofa11 i11depende11t public acco1111ta11t* 11111st *be supported by a state111e11t of facts and circ11111sta11ces relied 011 as the basis/or tfte exe111ptio11. 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 0MB control number.** SEC 141 0 (06-02) {1}------------------------------------------------ # **OATH OR AFFIRMATION** | L_im_ e_s ___
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SDR Capital Markets, Inc. | 111y knowledge and belief the accompanying financial state111ent and supporting sched ul es pertaining to the fir111 of
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, 20 19 | | | | neither the co111pany nor any partner, proprietor, principal office r or director has any proprietary interest in any account classified solely as that of a customer, except as follows: This report \*\* contains ( check all applicable boxes): **0** (a) Facing Page. **[Zj** (b) Statement of Financial Condition. (d) Statement of Changes in Financial Condition. Signature CEO Title **T,~.NYA** L **TUCKER** HG TJ.\RY P UBLIC ST/> T'E Ot= COL.ClHt-.00 N•~, )·;:.\_F!y ID 20o,:,,040330 MY COlvllvli0SIOJ\I EXPIRES NOV. 6, **2021** ~ (c) Statement of Income (Loss). (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors· Capital. ~ (f) State111ent of Changes in Liabilities Subordinated to Claims of Creditors. (g) Computation of Net Capital. (h) Compu tation for Determination ofRcserve Requirements Pursuant to Rule 15c3-3. (i) lnformation Relating to the Possession or Control Requirements Under Rule 15c3-3 . **0** (j) A Reconciliation , including appropriate explanation of the Computation of Net Capital Under Rule l 5c3- l and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule l 5c3-3 . **0** (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. **[2]** (1) An Oath or Affirmation. **D** (m) A copy of the SIPC Supplemental Report. **D** (n) A report describing any material inadequacies fou nd to exist or found to have existed since the date of the previous audit. *\*\*For co11ditions o.f confidential treat111e11t* <~( *certai11 portions of this filing , see section 240.170-5 (e)(3).* {2}------------------------------------------------ #### **SDR CAPITAL MARKETS, INC.** FINANCIAL STATEMENTS December 31, 2019 Report pursuant to Rule 17a-5(d) The report is filed in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of 1934 as a **PUBLIC DOCUMENT.** {3}------------------------------------------------ # SOR CAPITAL MARKETS, INC. | CONTENTS | Pagels) | |---------------------------------------------------------|---------| | Report of Independent Registered Public Accounting Firm | 2 | | Statement of Assets, Liabilities and Equity | 3 | | Notes to Financial Statements | 4-8 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 4601 DTC BOULEVARD, SUITE 700 DENVER, COLORADO 80237 TELEPHONE: (303) 75 3-1959 FAX: (303) 753-0338 **t.Y\.YW spicerjeffries cam** # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** The Board of Directors of SOR Capital Markets, Inc. # **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of SOR Capital Markets, Inc. (the "Company") as of December 31 , 2019, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statement present fairly, in all material respects, the financial position of the Company as of December 31, 2019, 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 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 statements are 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. We have served as SOR Capital Markets, Inc. 's auditor since 2015. Denver, Colorado February 21 , 2020 ![](_page_4_Picture_12.jpeg) {5}------------------------------------------------ #### SDR CAPITAL MARKETS, INC. #### STATEMENT OF ASSETS, LIABILITIES AND EQUITY #### December 31, 2019 | Cash and Cash Equivalents | \$
32,182 | |---------------------------|--------------| | Other Assets | \$
290 | | TOTAL ASSETS | \$
32.472 | | Liabilities and Equity | | |------------------------|--| | | | | Due to Parent (Note 5) | \$
20.480 | |---------------------------------------------------|-----------------| | Total Liabilities | \$
20,480 | | Commitments and Contingencies {Note 4) | | | Stockholder's Equity: | | | Common Stock, 1,000 shares issued and outstanding | \$
163,000 | | Accumulated Deficit | \$
{151,008) | | Total Stockholder's Equity | \$
11,992 | | TOTAL LIABILITIES AND EQUITY | \$
32.472 | The Accompanying Notes are an integral part of this statement. 3 {6}------------------------------------------------ # SOR CAPITAL MARKETS, INC. December 31, 2019 NOTES TO FINANCIAL STATEMENTS # **NOTE 1- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** ## Description of Business: SOR Capital Markets, Inc. (the **"Company")** is a Colorado corporation that was incorporated on January 13, 2014. The Company is a wholly owned subsidiary of SOR Ventures, Inc., a Colorado corporation that was incorporated on January 2, 2002 (the **"Parent").** Accordingly, this affiliation should be taken into consideration in reviewing the accompanying financial statements. The Company is a securities broker dealer registered as such with the United States Securities and Exchange Commission **("SEC"),** and is a member of the Financial Industry Regulatory Authority **("FINRA").** The Company was authorized to commence business as a securities broker dealer effective on January 15, 2015. The Company is a niche investment banking firm that, in accordance with its FINRA Membership Agreement, provides to and for its entity clients: mergers and acquisitions advisory services (sell side and buy side); private capital raising services; and various investment banking professional advisory services related thereto. The Company does not, for example and in relevant part: hold or maintain custody of any securities and/or any funds of and/or for any customers or clients; open, hold, maintain and/or provide any advice regarding any customer securities accounts; engage in any "retail" securities business with and/or for any "retail" securities customers; engage in any proprietary securities trading; engage in any securities market making; engage in any securities brokerage activities; engage in any securities trading activities; and/or engage in, and/or provide any advice regarding, the underwriting and/or sale of any publicly traded securities. In accordance with its FINRA Membership Agreement, the Company conducts securities and/or securities-related business for which the involvement of a duly registered securities broker dealer is required by applicable laws, rules and regulations. In contrast, the Company's Parent conducts business for which the involvement of a duly registered securities broker dealer is not required by applicable laws, rules and regulations, for example providing business consulting services. Summary of Significant Accounting Principles: ### • Basis of Presentation The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States **("US GAAP"),** as established by the Financial Accounting Standards Board. {7}------------------------------------------------ # SDR CAPITAL MARKETS, INC. December 31, 2019 NOTES TO FINANCIAL STATEMENTS # • Revenue Recognition On January 1, 2018, the Company adopted ASU 2014-09 *Revenue from Contracts with Customers* and all subsequent amendments to the ASU (collectively, "ASC 606" ), which creates a single framework for recognizing revenue from contracts with customers that fall within its scope. Revenue is measured based on a consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over goods or service to a customer. Services within the scope of ASC 606 include Investment banking M&A Advisory fees. Refer to Revenue Recognition Note: *Revenue from Contracts with Customers* for further discussion on the Company's accounting policies for revenue sources within the scope of ASC 606. # *Revenue from Contracts with Customers:* # Investment Banking, Merger and Acquisition (M&A) Services: These services include agreements to provide advisory services to customers for which they charge the customers fees . The Company provides advisory services/corporate finance activity including mergers and acquisitions, reorganizations, tender offers, leveraged buyouts, fundraising activity and the pricing of securities to be issued. The agreement contains nonrefundable retainer fees or success fees, which may be fixed or represent a percentage of value that the customer receives if and when the corporate finance activity is completed ("success fees"). In some cases, there is also an "announcement fee" that is calculated on the date that a transaction is announced based on the price included in the underlying sale agreement. The retainer fees, announcement fee, or other milestone fees reduce any success fee subsequently invoiced and received upon the completion of the corporate finance activity. The Company has evaluated its 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 identifies a bundle of goods or services that is distinct. In some cases, that would result in the broker-dealer accounting for all the services promised in a contract as a single performance obligation and the retainer revenue is classified as deferred revenue on the Statement of Financial Condition. ### • Cash and Cash Equivalents The Company maintains only cash on its statement of Assets, Liabilities and Equity. The Company maintains its cash balances in financial institutions located in the United States. The Company maintains deposits with financial institutions in amounts that could potentially, at times, be in excess of federally insured limits. However, the Company does not believe that it is exposed to any material credit risk. {8}------------------------------------------------ # SDR CAPITAL MARKETS, INC. December 31, 2019 NOTES TO FINANCIAL STATEMENTS # • Accounts Receivable Accounts receivable are stated at the amount billed to the Company's investment banking clients pursuant to the applicable written engagement or other agreement(s) between the Company and each such client. The Company provides an allowance for doubtful accounts, which is based on a review of outstanding receivables, historical collection information and existing economic conditions. At December 31, 2018, no accounts were deemed doubtful and thus no allowance is provided. Accounts receivable normally are due upon receipt of the Company's issuance of an invoice to the Company's client. Delinquent receivables may be written off based on specific circumstances of the individual client. Recoveries of previously charged off accounts receivable are recorded when received. # • Concentration of Credit Risk The Company does not extend credit in the normal course of its business. # • Fair Value of Securities The Company does not hold or maintain on its balance sheet any securities. # • Income Taxes The Company's results are consolidated with its Parent. The Company' s Parent has elected to be taxed as an S corporation for income tax purposes. # • Use of Estimates The preparation of financial statements in conformity with US GAAP requires the Company's management to make certain estimates and assumptions that may affect, as of the date of the financial statements : reported amounts of assets and liabilities; disclosure of contingent assets and liabilities, if any; and reported amounts of revenue and expenses. Actual results could differ from any such estimates and assumptions. {9}------------------------------------------------ # SDR CAPITAL MARKETS, INC. December 31, 2019 NOTES TO FINANCIAL STATEMENTS # • Regulation, Litigation and Regulatory or Self-Regulatory Enforcement Action(s) As a securities broker dealer registered with the SEC, Colorado and certain other states, and as member of FINRA, the Company is subject to a wide variety of: federal and state securities and other laws; securities-related rules and regulations issued by various legal authorities; SEC regulation; FINRA selfregulation; and certain State Securities Commissioner or other state securities authorities' regulation. The Company is subject to comprehensive review and examinations by various governmental and selfregulatory authorities, most notably: the SEC; FINRA; and the Colorado Division of Securities. The Company is not at present a party to any: litigation; regulatory (e.g., SEC and/or any State securities authorities) enforcement action(s); and/or self-regulatory (e.g., FINRA) enforcement action(s). Moreover, the Company is not currently aware of any reasonable likelihood of being named in any such litigation and/or enforcement action(s). #### **NOTE 2 - NET CAPITAL REQUIREMENT** The Company is subject to the SEC's Uniform Net Capital Rule, SEC Rule 15c3-l, which requires the Company to maintain minimum net capital as required by that Rule. Currently the Company is required to maintain minimum net capital of the greater of \$5,000 or 6 2/3% of aggregate indebtedness. Further, the ratio of aggregate indebtedness to net capital, both as defined in the Rule, shall not exceed 15 to 1. The Company's net capital at December 31, 2019, was \$11,702, which exceeded the Company's minimum net capital requirement. The Company's net capital may fluctuate on a daily basis. The Company's ratio of aggregate indebtedness to Net Capital at December 31, 2019, was 1.75 to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash dividends be paid if the resulting net capital ratio would exceed 10 to 1. The Company claims the SEC Rule 15c3-3(k)(2)(i) exemption and, therefore, is exempt from the remaining provisions of Rule 15c3-3. The Company does not have any customers as defined by Rule 15c3-3(a)(l). As such, the Company is exempt from the requirements of Rule 15c3-3(e) (the **"Customer Protection Rule")** and is not required to maintain any **"Special Account for Exclusive Benefit of Customers."** The Company's senior management has instituted a policy prohibiting the Company and its associated persons from receiving and/or holding any customer or client funds and/or securities. {10}------------------------------------------------ # SOR CAPITAL MARKETS, INC. December 31, 2019 NOTES TO FINANCIAL STATEMENTS # **NOTE 3 - PROPERTY AND EQUIPMENT** In February 2016, the FASB issued new guidance (ASC 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASC 842, a lessee will recognize in the statement of financial condition a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. ASC 842 retains a distinction between finance leases (i.e. capital leases) and operating leases. For public business entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The company adopted ASC 842 as of January 1, 2019 and it did not have a material impact to the Company's net capital, aggregate indebtedness or operations. The Company's Parent owns all of the property and equipment used by the Company in its business operations. # **NOTE 4 - COMMITMENTS AND CONTINGENCIES** The Company operates and conducts business from one commercial office location in Greenwood Village, CO that is leased by the Company's Parent. # **NOTE 5 - RELATED PARTY TRANSACTIONS** The Company and its Parent are parties to a written Expense Sharing Agreement **("Agreement").** In accordance with the terms of the Agreement, certain expenses of the Company are paid for by the Parent. These expenses are reimbursed to the Parent by the Company and are reflected on the books and records of the Company pursuant to a reasonable allocation that is reviewed on a periodic basis. # **NOTE 6 - SUBORDINATED LIABILITIES** In 2018, the Company had no subordinated liabilities as described in Appendix D to the SEC's Uniform Net Capital Rule (Rule 15c3-1). # **NOTE 7-SUBSEQUENT EVENTS** In preparing these financial statements, the Company evaluated events and transactions for potential recognition or disclosure through the auditors' report date, which is the date that the financial statements were available for issuance. Based upon such evaluation, there were no material subsequent events requiring recognition or disclosure in the financial statements. 8 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.