# CAPELLA SECURITIES LLC X-17A-5 (2020-03-02) — Broker-dealer annual report - Company: CAPELLA SECURITIES LLC - Form: X-17A-5 - Filed: 2020-03-02 - Period: 2019-12-31 - Accession: 0001627419-20-000001 - CIK: 1627419 - File #: 8-69567 - Material weakness: Yes - Auditor: YSL & Associates LLC - Auditor location: New York, NY - Contact: Kathy Efrem - Phone: 212-897-1686 - Signed by: Kathy Efrem (FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1627419/000162741920000001/Cap19s.pdf --- {0}------------------------------------------------ # CAPELLA SECURITIES LLC # FINANCIAL STATEMENTS # For the year ended December 31, 2019 {1}------------------------------------------------ | | | | OMB APPROVAL | | |--------------------------------------------------------------------------|---------------------------------------------------------------------------|------------|-------------------------------|--| | | UNITED STATES | | OMB Number:
3235-0123 | | | | SECURITIES AND EXCHANGE COMMISSION | | Expires: August 30, 2020 | | | | Washington, D.C. 20549 | | Estimated average burden | | | | | | hours per response 12.00 | | | ANNUAL AUDITED REPORT | | | SEC FILE NUMBER | | | | FORM X-17A-5 | | 69526
8 - | | | | 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 | 1/1/2019 | AND ENDING | 12/31/2019 | | | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | | | | NAME OF BROKER-DEALER: | | | OFFICIAL USE ONLY | | | Capella Securities LLC | | | | | | | | | FIRMID, NO. | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | | | 39 Broadway, Suite 3300
(No. and Street) | | | | | New York | NY | | 10006 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | | | | | | | Kathy Efrem | | | 212-897-1686 | | | | | | (Area Code -- 1 ciepnone No.) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | YSL & Associates | | | | | | (Name -- if individual, state last, first, middle name } | | | | | 11 Broadway, Suite 700 | New York | NY | 10004 | | | (Address) | (City) | (State) | (Zip Code) | | | | | | | | | x Certified Public Accountant | | | | | | Public Accountant | | | | | | | Accountant not resident in United States or any of its possessions | | | | | CHECK ONE: | | | | | | | FOR UFFICIAL USE UNLY | | | | | | | | | | 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). SEC 1410 (06-02) contained in this form are not required to respond unless the form displays a currently valid OMB control number. {2}------------------------------------------------ ## AFFIRMATION I, Kathy Efrem, affirm that, to the best of my knowledge and belief, the accompanying financial statements and supplemental schedules pertaining to Capella Securities. LLC for year ended December 31, 2019, are true and correct. I further affirm that neither the Company nor any officer or director has any proprietary interest in any account classified solely as that of a customer. Signature FNOP Title ATATE OF NEW YORK: 25. County of Kassau Course of the Mark M Apples - K A Frisemarini, C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C P H A C A C A Notary Public JEANNE M. LETTIERI NOTARY PUBLIC - STATE OF NEW YORK NO, 021 E6171548 QUALIFIED In NASSAU COUNTY MY COMMISSION EXPIRES JULY 30, 20 2 3 {3}------------------------------------------------ ## **This report\*\* contains (check all applicable boxes):** - [x] Report of Independent Registered Public Accounting Firm. - [x] Facing Page. - f xl Statement of Financial Condition. - [x] Statement of Operations. - [x] Statement of Changes in Member's Equity. - [x] Statement of Cash Flows. - [ ] Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable). - [ x] Computation of Net Capital for Brokers and Dealers Pursuant to Rule l 5c3-1 under the Securities Exchange Act of 1934. - [x] Computation for Detennination of Reserve Requirements for Brokers and Dealers Pursuant to Rule **l** 5c3-3 under the Securities Exchange Act of 1934. - [ ] Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934 (not applicable). - [x] A Reconciliation, including appropriate explanations, of the Computation of Net Capital Pursuant to Rule l 5c3-l and the Computation for Determination of Reserve Requirements Under Rule 15c3-3. - [ ] A Reconciliation Between the Audited and Unaudited Statements of Financial Condition With Kespect to Memoos or 1..,onsouoauon ~not app11cao1eJ. - [x] An Oath or Affirmation. - [ ] A copy of the SIPC Supplemental Report. - [ ] A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit (Supplemental Report on Internal Control). - [ ] Independent Auditors' Report on Internal Control Required by SEC Rule 17a-5(g)(1 ). - [x] Independent Auditors' Report Regarding Rule 15c3-3 Exemption. - [x] Rule 15c3-3 Exemption Report \*\* For *conditions of confidential treatment of certain portions of this filina, see section 240.17a-5(e) (3) .* {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 11 Broadway, Suite 700, New York, NY 10004 Tel: (212) 232-0122 Fax: (646) 218-4682 # **Rli'.PORT Oli' TNTlli'.Pli'.NnF.NT Rli'.r.TSTF.RF.O Plffil .re: AC'C'OJTNTJNr. li'mM** To the Member of Capella Securities LLC # **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Capella Securities LLC (the "Company") as of December 31, 2019, the related statements of operations. changes in member's equity, and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 3 l. 20 l 9, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. ## **Basis for Opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements 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 Com.mission 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 statements. 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. ## **Auditor's Report on Supplemental Information** The supplemental information contained in Schedule I and Schedule II has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included detennining whether the supplemental infonnation reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental infonnation. In forming our opinion on the supplemental information. we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240. I 7a-5. ln our opinion, the supplemental information contained in Schedule I and Schedule II is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as Capella Securities LLC's auditor since 2016. New York. NY February 25, 2020 {5}------------------------------------------------ # CALLELLA SECURITIES LIL # STATEMENT OF FINANCIAL CONDITION # DECEMBER 31, 2019 | ASSELL | | | |---------------------------------------|----|--------| | Cash | ಕಿ | 14,721 | | Accounts receivable | | 40,000 | | Prepaid expenses | | 2,835 | | lotal assets | D | 0,000 | | LIABILITIES AND MEMBER'S EQUITY | | | | Accounts payable | S | 60 | | Due to affiliate | | 2,900 | | Total liabilities | | 2,960 | | Member's Equity | | 54,596 | | Total liabilities and member's equity | S | 57,556 | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ # **\.,Ar tLLA ~t\., U Kl 1 lt~ LL\.,** # **STATEMENT OF OPERATIONS** # **FOR THE YEAR ENDED DECEMBER 31. 2019** # **Revenues:** | Advisory fees | 87,849
\$ | |----------------------|--------------| | Expenses: | | | Compensation expense | 8,115 | | Regulatory expenses | 6,174 | | Administrative fees | 1200 | | Bank charges | 145 | | Other expenses | 128 | | Total expenses | 15,762 | | Net income | 72,087
\$ | **The accompanvin2 notes are an inte2ral part of these financial statements.** {7}------------------------------------------------ # **LAr .l!JLLA .::,J!;L U Kl .l .11!,.::, LLL** # **STATEMENT OF CHANGES IN MEMBER'S EQUITY** # **FOR THE YEAR ENDED DECEMBER 31, 2019** | beginning of year
Balance - | \$
16,509 | |--------------------------------|--------------| | Capital contributions | 1,000 | | Capital withdrawals | (35,000) | | Net income | 72,087 | | end of year
Balance - | \$
54,596 | **The accomoanvin!! notes are an inte2ral oart of these financial statements.** {8}------------------------------------------------ # **STATEMENT OF CASH FLOWS** # **FOR THE YEAR ENDED DECEMBER 31, 2019** | cash tlows tram operatmg act1v1.ties | | |-----------------------------------------------|--------------| | Net income | \$
72,087 | | Adjustments to reconcile net income | | | to net cash provided by operating activities: | | | Non-cash expenses forgiven by parent | 1,000 | | Changes in assets and liabilities | | | Account receivable | (40,000) | | Prepaid expenses | (799) | | Accounts payable | 60 | | Due to affiliate | 1,200 | | Net cash provided by operating activities | 33,548 | | Cash flows from fmancing activities | | | Capital withdrawals | (35,000) | | Net decrease in cash | (1,452) | | beginning of year
Cash - | 16,173 | | end of year
Cash - | \$
14,721 | | | | | | | ## **Non-cash financing activities:** | Non-cash capital contributions from conversion of debts | \$ | 1,000 | |---------------------------------------------------------|----|-------| |---------------------------------------------------------|----|-------| **The accomoanvine notes are an inteeral oart of these financial statements.** {9}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS** # **DECEMBER 31, 2019** ### NU le l. lJl:.:SC.Kll' l lUN Ur UKUANI.L.AJ lUN ANU tsU:SINc:S:S Capella Securities LLC (the "Company") is a broker dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA") formed for the purpose of providing broker dealer services including financial advisory services, mergers and acquisition services and to engage in private placement of securities and similar services. The Company's current parent is Capella Partners, LLC. ### NOTE2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES # Basis of Presentation These financial statements were prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") which 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 amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. ## lncome Taxes The Company is a limited liability company, treated as a disregarded entity for federal, state and city income tax purposes; it therefore does not incur income taxes at the Company level. Instead its earnings and losses are passed through to the member and included in the calculation of the member's tax liability. Accordingly, no provision for income taxes has been made in the accompanying financial statements. Management has analyzed the Company's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded as ofDecember 31, 2019. ## Revenue Recognition The Company recognizes revenue to depict the transter ot promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate tbe transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. rn determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertaintv associated with the variable consideration is resolved. {10}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS** # **DECEMBER 31, 2019** l'IVlt L.. .:)UlVllVlAK.I vr ;:,1ut'ILrl\.,.t\l'I I A.\...\...VUL'l 111'1\.J t'VL1\...lt.:) ~conunut:UJ Significant Judgements: Revenue from contracts with customers includes corporate advisory services, mergers and acqu1s1t1ons and reterraJ tees. 1 ne recognmon and measurement ot revenue 1s basea on tne assessment of individual contract terms. Significant judgment is required to determine whether perfonnance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. ## Advisory Revenue for advisory arrangements is generally recognized at the point in time that perfonnance 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. Retainers and other fees received from customers prior to recognizing revenue would be reflected as contract liabilities (deferred revenue in the statement of financial condition). ### l\[(')TP 1 T?l=T ATPn PARTY TR ANSArTJ()l\TS In accordance with a services agreement, the Company's affiliate pays for various specified expenses for which the Company compensates the affiliate in the form of a management fee and for various other expenses, such as sundry professional services, for which the Company does not reimburse the affiliate. During the year ended December 31,2019, the Company incurred \$1,200 for management fees. The affiliate agreed to pay other expenses on behalf of the Company without seeking reimbursement. Management estimates that such expenses amount to \$66,502. ### NOTE4. NET CAPITAL REQUIREMENTS I he company 1s subJect to me ~ecunues and Exchange comm1ss1on u mronn Net capital Rule **l** 5c3-l This Rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital both as defined shall not exceed 15 to 1 and that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. AtDecember3J, 2019 the Company's net capital was \$11,761 which was ~o,, o 1 m excess 01 1tS mmunum requ1remem or ~:,,vvv. ### NOTES. COMPLIANCE WITH RULE 15C3-3 The Company does not handle cash or securities on behalf of customers and accordingly has no obliization under SEC Rule l5c3-3. {11}------------------------------------------------ # SUPPLEMENTARY INFORMATION {12}------------------------------------------------ # **CAPELLA SECURITIES LLC** # **COMPUTATION OF NET CAPITAL UNDER RULE 15C3-1 OF THE SECURITIES AND EXCHANGE COMMISSION** # **AS OF DECEMBER 31, 2019** | Members' equity | \$ | 54,596 | |------------------------------------------------|------|---------| | Deductions and/or charges | | | | Accounts receivable | | 40,000 | | Prepaid expenses | | 2,835 | | Total deductions | | 42,835 | | Net Capital | | ll ,761 | | Less: Minimum net capital requirements | | | | Greater of 6-2/3% of aggregate indebtedness | | | | or \$5,000 | | 5,000 | | Excess net capital | \$ | 6,761 | | | | | | Aggregate indebtedness: | \$ | 2,960 | | Ratio of Aggregate Indebtedness to Net Capital | 0.25 | | | | | | There are no material differences between the computation of net capital presented above and the computation of net capital reported in the Company's unaudited Form X-17A-5, Part IIA filing as of December 3 l, 2019. See reoort of indeoendent ref!istered oublic accountinf! firm. {13}------------------------------------------------ # **CAPELLASECURITJESLLC** # **INFORMATION RF,GAROTNG APPLTC:ARTI .fTV OF RHLF, 15<:J-J** # **FOR YEAR ENDED DECEMBER 31, 2019** The Company does not hold customers' cash or securities. Accordingly, it had no obligations under SEC Rule i 5c3-3 throughout the year. See reoort of indeoendent reeistered oublic accountine firm. {14}------------------------------------------------ ![](_page_14_Picture_0.jpeg) Member of Parker Randall International 11 Rm~rlw.::w ~, ,itP 7n0 l\lew Y Nk I\IY 1000.d. TPI· (?1?) ?~?-01?? F::nc (n.d.R) ?18...d.f;A? To the Member of r::inPll::i Set'11rities Ll.C We have reviewed management's statements, included in the accompanying Rule 15c3-3 Exemption Report, in which (I) Capella Securities LLC (the "Company") may file an exemption report because it had no ohli!?ations under 17 C.F.R.&240. 15c3-1 and (2) the romr)anv stated that it had no excePtiom: under SEC Rule l 5c3-3 throughout the most recent fiscal year. The Company's management is resnonsihle for comnliance with 17 C.F.R.&240.15c3-J and itc; statementc;. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Comnanv's comnliance with the exemntion nrovisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on mana!?ement's statementc;. Accordin!?lv. we do not exnress such an ooinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on Rule I 5c3-3 under the Securities Excharnze Act of 1934. New York, NY Februarv 25. 2020 {15}------------------------------------------------ # CAPELLA SECURITIES LLC # RULE 15c3-3 EXEMPTION REPORT EOR THE VEAR ENDED DECEMBED 31, 2019 Capella Securities LLC does not handle cash or securities on behalf of customers. Therefore it had no obligation under SEC Rule 15c3-3 throughout the year ended December 31, 2019 without exception and thus may file an Exemption Report. Excenter by 1 cison wire maus une vau vi animation Under SEC Rule 17a-5(e)(2) Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.