# AXOS INVEST LLC X-17A-5 (2021-02-26) — Broker-dealer annual report
- Company: AXOS INVEST LLC
- Form: X-17A-5
- Filed: 2021-02-26
- Period: 2020-12-31
- Accession: 0001613950-21-000002
- CIK: 1613950
- File #: 8-69507
- Material weakness: No
- Auditor: Raphael Goldberg Nikpour Cohen & Sullivan CPA's PLLC
- Auditor location: Woodbury, NY
- Contact: Derrick Walsh
- Phone: 8586492165
- Signed by: Derrick K. Walsh (Chief Financial Officer)
Original filing: https://www.sec.gov/Archives/edgar/data/1613950/000161395021000002/2021publicfinal.pdf
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# **Axos Invest LLC**
Statement of Financial Condition December 31, 2020
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**UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549**
OMB APPROVAL OMB Number: 3235-0123 Expires: 0DUPCFS Estimated average burden
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SEC FILE NUMBER
69507
# hours per response.. . . . . 12.00 **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**
| 12/31/2020
AND ENDING______________________________
MM/DD/YY
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89117
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(Zip Code)
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
858-649-2165 | OFFICIAL USE ONLY
FIRM I.D. NO.
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NY
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*\*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** SEC 1410 () **unless the form displays a currently valid OMB control number.**
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# **OATH OR AFFIRMATION**
| I, _D_e_r_ri_ck_
K_._W_a_ls_h _
_
_
_ | ___________
_________ ,
swear (or affirm) that, to the best of |
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| -----------------------
Axos Invest LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
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| of December 31 | -
-
-
-
, as
2020
, are true and correct. I further swear (or affirm) that |
| classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account |
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| NNA 1 | ROBIN K. TRIEU
Notary Public - California
San Diego County
Commission # 2246170
My Comm. Expires Jun 16, 2022 |
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| Tre 1 1 . | |
Signature
Chief Financial Officer
Title
This report\*\* contains (check all applicable boxes):
- **0** (a) Facing Page.
- **0** (b) Statement of Financial Condition.
- D (c) Statement oflncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement of Comprehensive Income (as defined in §210.1-02 ofRegulation **S-X).**
- B (d) Statement of Changes in Financial Condition.
- (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
- D (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
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- § (g) Computation of Net Capital. (h) Computation for Determination of Reserve Requirements Pursuant to Rule l 5c3-3.
- (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
- **D** (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule l 5c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
- **0** (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation.
- (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 certain portions of this filing, see section 240.17a-5(e)(3).*
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# **Table of Contents December 31, 2020**
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Mark C. Goldberg, CPA Mark Raphael, CPA Floria Samii-Nikpour, CPA Allon B. Cohen, CPA Michael R. Sullivan, CPA
Anita C. Jacobsen, CPA
Founding Partner: Melvin Goldberg, CPA
# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Member of Axos Invest LLC
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Axos Invest LLC (the "Company") (a limited liability company), as of December 31, 2020, and the related notes to the financial statement. In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Axos Invest 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 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 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.
Raphael Goldberg Nikpour Cohen & Sullivan Certified Public Accountants PLLC
We have served as the Company's auditors since 2019.
Woodbury, New York February 26, 2021
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**Axos Invest LLC Statement of Financial Condition December 31, 2020**
#### **Assets**
| Cash | 61 ,484
\$ |
|---------------------------------------|---------------|
| Due from clearing broker, net | 494,753 |
| Prepaid expenses | 20,417 |
| Securities owned, at fair value | 48,995 |
| Miscellaneous receivable | 25,000 |
| Tax benefit receivable from Parent | 260,846 |
| Total assets | \$
911,495 |
| Liabilities and Member's Equity | |
| Liabilities | |
| Accounts payable and accrued expenses | \$
28,728 |
| Due to affiliated companies | 74,536 |
| Total liabilities | 103,264 |
| Member's Equity | 808,231 |
| Total liabilities and member's equity | \$
911 495 |
| | |
The accompanying notes are an integral part of this financial statement.
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#### **1. Organization and Nature of Business Activity**
Axos Invest LLC ( the "Company") is a limited liability company established in the state of Delaware. On June 3, 2015, the Financial Industry Regulatory Authority ("FINRA") approved the registration of the Company. The Company is registered as a securities broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of FINRA. The Company is a wholly owned subsidiary of Axos Securities LLC (the "Parent"). The Company executes trades for Axos Invest, Inc. ("Affiliate"), a registered investment advisor.
The Company does not carry securities accounts for customers or perform custodial services and, accordingly, claims exemption from Rule 15c3-3 of the Securities Exchange Act of 1934.
#### **2. Summary of Significant Accounting Policies**
#### **Basis of Presentation**
The Company's fmancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
#### **Use of Estimates**
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from these estimates.
#### **Cash**
Cash consists of cash, held at an affiliated financial institution which at times may exceed federally insured limits.
#### **Securities Transactions and Revenue Recognition**
Transactions in securities and related revenue and expenses are recorded on a trade date basis. During 2020, the Company's revenues were derived primarily from interest income.
#### **Fair Value of Financial Assets**
As of December 31, 2020, the Company owned long equity positions in the amount of \$48,995, which are held at the clearing broker. Net realized and unrealized gains or losses on securities owned are reflected on the statement of operations. Securities are carried at fair value.
Generally accepted accounting principles define fair value, establish a framework for measuring fair value, and, establish a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset of liability or, in the absence of principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by generally accepted accounting principles, are used to measure fair value.
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:
Level 1 inputs to the valuation hierarchy are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
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# **Fair Value of Financial Assets (continued)**
Level 2 inputs are inputs ( other than quoted prices included within Level I) that are observable for the asset or liability, either directly or indirectly.
Level 3 are unobservable inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs should be developed based on the best information available in the circumstances and many include the Company's own data.
The Company's investments at December 31, 2020 comprise publicly traded electronic traded funds (ETFs) with Level I inputs. The fair value is determined through quoted prices of identical assets on public stock exchanges (e.g., NYSE, NASDAQ).
Carrying amount is the estimated fair value for cash, receivables, due to affiliated companies and accounts payable.
## **Income Taxes**
The Company is a single-member limited liability company and is treated as a disregarded entity for federal and state tax purposes, not subject to income taxes. The income and losses of the Company pass through to the Parent who incurs the tax obligation or receives the tax benefit. Consolidated tax results are distributed from the Parent as if the Company files on a separate return basis and are calculated utilizing the Parent's tax rate. The Company recorded an income tax benefit receivable from parent of \$260,846 at December 31, 2020.
#### **Guarantees**
ASC Topic 460, "Guarantees" requires the disclosure of the Company's representations and warranties which may provide general indemnifications to others. The Company in its normal course of business may enter into other legal contracts that contain a variety of these representations and warranties that provide general indemnifications. The Company's maximum exposure under these arrangements is unknown, as claims may be unasserted. However, based on its experience, the Company expects the risk of loss to be remote.
#### **3. Expense Sharing Agreements**
The Company and its affiliates entered into agreements to share administrative services (the "Expense Sharing Agreements"). In accordance with the Expense Sharing Agreements, the Company reimburses the affiliates, on a monthly basis, for a proportional share of salaries and related expenses of personnel employed by the affiliates who provide services to the Company, rent expense, and general and administrative expense. As of December 31, 2020, the Company had a payable due to the affiliated companies of \$74,536, largely comprised of a payable to the Affiliate for wealth management revenue pass-through.
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# **4. Commitments and Contingencies**
The Company's customers' securities transactions are introduced on a fully-disclosed basis to its clearing broker. The clearing broker carries all of the customer accounts and is responsible for collection and payment of funds and receipt and delivery of securities relative to customer transactions. These transactions may expose the Company to off-balance-sheet risk, wherein the clearing broker may charge the Company for any losses it incurs in the event that customers may be unable to fulfill their contractual commitments and margin requirements are not sufficient to fully cover losses. As the right to charge the Company has no maximum amount and applies to all trades executed through the clearing broker, the Company believes there is no maximum amount assignable to this right.
The Company has the right to pursue collection or performance from the counterparties who do not perform under their contractual obligations.
The Company seeks to minimize this risk through procedures designed to monitor the creditworthiness of its customers and to ensure that customer transactions are executed properly by the clearing broker, subject to the credit risk of the clearing broker. The Company maintains a minimum deposit of \$250,000 with its clearing broker.
The Company had no office leases, no underwriting commitments, no equipment leases, and had not been named as defendant in any lawsuit at December 3 1, 2020 or during the year then ended.
The Company is closely monitoring the rapid developments of an uncertainties caused by the COVID-19 Pandemic. In response to the changes in economic and business conditions as a result of the COVID-19 pandemic, the Company has taken -the following actions to support customers, employees, partners and shareholders: ·
- Actively communicating with customers and partners to assess individual needs;
- Provided Secure and efficient remote work options for our team members;
- Reallocated personnel to increase resources for customer service and portfolio management; and
- Limiting business travel.
#### **4. Net Capital Requirements**
The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-l), 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, 2020, the Company had net capital of \$496,716, which was \$396,716 in excess of its required net capital of \$100,000. The Company's net capital ratio was 0.21 to 1.
The Company does not handle cash or securities on behalf of customers. Therefore, the Company is exempt from SEC rule 15C3-3.
#### **5. Financial Support**
The Parent company continues to fund the operations of the broker dealer. This allowed the Company to continue its operations. Had additional capitalization not been acquired the Company would not have been able to carry on as a going concern.
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## **6. Subsequent Events**
Subsequent events have been reviewed through February 26, 2021, the date the financial statements were filed.
In January of 2021, the Company changed from a non-affiliated clearing broker, to Axos Clearing, an affiliated clearing broker.
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Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.