# MAINLINE SECURITIES LLC X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: MAINLINE SECURITIES LLC - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0001622967-21-000002 - CIK: 1622967 - File #: 8-69544 - Material weakness: No - Auditor: Marcum LLP - Auditor location: Deerfield, IL - Contact: John Adams - Phone: 610-896-3057 - Signed by: John Adams (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1622967/000162296721000002/public.pdf --- {0}------------------------------------------------ ## **Mainline Securities, LLC** **(A wholly-owned limited liability company of Mainline Investment Partners, LLC)** Statement of Financial Condition and Report of Independent Registered Public Accounting Firm December 31, 2020 {1}------------------------------------------------ # **Mainline Securities, LLC** **(A wholly-owned limited liability company of Mainline Investment Partners, LLC)** Statement of Financial Condition and Report of Independent Registered Public Accounting Firm December 31, 2020 {2}------------------------------------------------ #### **Contents** | Facing Page to Form X-17A-5 | | |---------------------------------------------------------|-------| | Oath and Affirmation of Officer | 3 - 4 | | Report of Independent Registered Public Accounting Firm | 5 | | Financial Statement | | | Statement of Financial Condition | 6 | | Notes to Financial Statements | 7 - 9 | {3}------------------------------------------------ UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response .. . . . . . . 12.00 ### ANNUAL AUDITED REPORT FORM X-17A-5 PART III SEC FILE NUMBER 8-69544 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 01/01/20 | | AND ENDING 12/31/20 | | | | | |---------------------------------------------------------------------------------------|--------------------------------------------------------|---------------------|--------------------------------|--|--|--| | | MM/DD/YY | | MM/DD/YY | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | NAME OF BROKER-DEALER: Mainline Securities, LLC | | OFFICIAL USE ONLY | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | | | 308 East Lancaster Avenue, Suite 302 | | | | | | | | | (No. and Street) | | | | | | | Wynnewood | | Pennsylvania | 19096 | | | | | (City) | (State) | | (Zip Code) | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
John Adams | | | (610) 896-3057 | | | | | | | | (Area Code - Telephone Number) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | | Marcum LLP | | | | | | | | | (Name - if individual, state last, first, middle name) | | | | | | | Nine Parkway North, Suite 200 Deerfield | | - | 60015 | | | | | (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 are countant 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 mormation of oon displays a currently valid OMB control number. SEC 1410 (11-05) {4}------------------------------------------------ #### OATH OR AFFIRMATION #### I. John Adams swear (or affirm) swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Mainline Securities, LLC \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ of December 31 a career and connect of the and correct. If 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: | | Signature | | | | |---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|--|--|--| | | ncial Officer | | | | | | Commonwealth of Pennsylvania - Notary Seat | | | | | | Title
DONNA M. RITTERSHAUSEN, Notary Public | | | | | | Montgomery County
My Commission Expires December 24, 2021 | | | | | | Commission Number 1008985
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 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. | | | | | | (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). {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Member of **Mainline Securities** ### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Mainline Securities**,** LLC (the "Company") as of December 31, 2020 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 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 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part 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 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 the Company's auditor since 2020. Deerfield, Illinois March 1, 2021 ![](_page_5_Picture_12.jpeg) {6}------------------------------------------------ **Financial Statement** {7}------------------------------------------------ #### **Statement of Financial Condition** | December 31, | 2020 | |-----------------------------------------|---------------| | Assets | | | Assets | | | Cash | \$
145,064 | | Prepaid expenses | 23,202 | | Operating lease right-of-use asset, net | 5,968 | | Total Assets | \$
174,234 | | | | | Liabilities and Member's Capital | | | Liabilities | | | Accounts payable and accrued expenses | \$
1,820 | | Due to affiliated entities | 27,695 | | Operating lease liability | 6,075 | | | | | Total Liabilities | 35,590 | | | | | Member's Capital | 138,644 | | Total Liabilities and Member's Capital | \$
174,234 | {8}------------------------------------------------ ### **Notes to Financial Statement** #### **1. Organization** Mainline Securities, LLC ("Company") was established on August 18, 2014 and is organized under the laws of the state of Delaware. Effective March 28, 2016 the Company registered as a brokerdealer under the Securities Exchange Act of 1934, as amended. The Company is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company is wholly-owned by Mainline Investment Partners LLC ("MLIP" or "Member"). The primary business of the Company is to provide assistance in capital raises for private placement offerings and with selling of various financial insurance products. ### **2. Summary of Significant Accounting Policies** The following is a summary of the significant accounting policies applied by management in the preparation of the accompanying financial statements. #### *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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. #### *Income Taxes* The Company is a single-member Limited Liability Company and is treated as a disregarded entity pursuant to Treasury Regulation 301.7701-3 for federal income tax purposes. Generally, disregarded entities are not subject to entity-level federal or state income taxation and, as such, the Company does not provide for income taxes under FASB ASC 740, "Income Taxes". The Company's taxable income is reported in the tax return of its single member, MLIP. Based upon its evaluation, the Company has concluded that there are no significant uncertain income tax positions relevant in the jurisdictions where it is required to file income tax returns requiring recognition in the statement of financial condition. Management monitors proposed and issued tax law, regulations and cases to determine the potential impact to uncertain income tax positions. At December 31, 2020, management had not identified any potential subsequent events that would have a material impact on unrecognized income tax benefits. The Company believes its tax status as a pass through entity would be sustained under Federal, state, or local income tax examination. The Company is subject to examination by taxing authorities in various jurisdictions. The open tax years subject to examination vary by jurisdiction but in general are the preceding three years. The Company is not currently under examination by any taxing authority. #### **Leases** The Company will not record an operating lease right-of-use ("ROU") asset and corresponding lease liability for leases with an initial term of twelve months or less and recognizes lease expense for these leases as incurred over the lease term. The Company does not have a public credit rating and {9}------------------------------------------------ #### **Notes to Financial Statement** as such used a corporate yield consistent with tenant underwriting for a commensurate company and term of its lease as its incremental borrowing rate in determining the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. The Company's lease arrangement does not have lease and non-lease components which are accounted for separately. ### 3**. Concentrations** #### *Cash Balances* The Company maintains its cash in a bank account which, at times, may exceed federally insured limits. The Company mitigates this risk by only depositing funds with a major institution and has not experienced any losses from maintaining cash account balances in excess of federally insured limits. #### **4. Related Party Transactions** #### *Office Sublease* The Company has entered into an office sublease agreement with its Member. Under the terms of the agreement, the annual sublease commenced on December 9, 2016 and will renew automatically for five successive one year periods unless either party gives written notice of termination. The Company assumed that all renewal options will be exercised. The following table summarizes the Company's operating lease information including future minimum lease payments under the lease as of December 31, 2020: | For the Year Ended December 31, 2020 | | |-------------------------------------------------------------------|-------------| | Operating lease cost | \$
6,649 | | Operating lease - operating cash flows | \$
6,651 | | Remaining lease term | < 1 year | | Discount rate | 10 % | | Future minimum lease payments under the lease as were as follows: | | | As of December 31, 2020 | | | 2021 | \$
6,337 | | Total future minimum lease payments | 6,337 | | Less imputed interest | (262 ) | | Total liability | \$
6,075 | | Reported as of December 31, 2020 | | | Current operating lease liability | 6,075 | | Total | \$
6,075 | #### *Expense Sharing and Administrative Services Agreement* The Company has an expense sharing and administrative services agreement with its sole member, MLIP, Mainline Investment Advisers, LLC ("MLIA"), Merion Realty Advisers, LLC ("Merion"), and Mainline Private Wealth, LLC ("MLPW"). MLIP, MLIA, Merion, and MLPW are collectively referred to as "Mainline Provider Affiliates." Under the terms of the agreement, the Mainline Provider Affiliates {10}------------------------------------------------ #### **Notes to Financial Statement** employ personnel who provide services to the Company, including management oversight, back office, and similar support, or from time to time may fund certain other expenses related to the other operation of the Company such as facility rental costs, computer and IT costs, among other, to the Company. As of December 31, 2020, \$27,694 was payable to the Mainline Provider Affiliates and \$18,146 remains in prepaid related to broker dealer insurance. The Due to affiliated entity and Prepaid are detailed in the accompanying statement of financial condition. #### **5. Uncertainty** Beginning in January 2020, global financial markets have experienced and may continue to experience significant volatility resulting from the spread of a novel coronavirus known as COVID-19. The outbreak of COVID-19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty. The effects of COVID-19 have and may continue to adversely affect the global economy, the economies of certain nations and individual users, all of which may materially affect the Company's performance. The extent of the impact of the COVID-19 outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. Due to the uncertainty in how the financial markets and the overall economy will be impacted, the overall impact the outbreak will have on the results of the Company is unknown. The Company did experience a decrease in its placement fee revenues during the fiscal year with the market activity increasing as the year drew to a close. #### **6. Net Capital Requirements** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC 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 1500%. At December 31, 2020, the ratio was 25.66%. At December 31, 2020, the Company had net capital, as defined, of \$115,442, which was \$110,442 in excess of is required net capital of \$5,000. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.