# OPENDOOR SECURITIES LLC X-17A-5 (2021-03-25) — Broker-dealer annual report - Company: OPENDOOR SECURITIES LLC - Form: X-17A-5 - Filed: 2021-03-25 - Period: 2020-12-31 - Accession: 0001640830-21-000004 - CIK: 1640830 - File #: 8-69624 - Material weakness: No - Auditor: UHY - Auditor location: New York, NY - Contact: John Ryan - Phone: 201-299-9800 - Signed by: John Ryan (Senior Managing Director) Original filing: https://www.sec.gov/Archives/edgar/data/1640830/000164083021000004/FINALODSAudit2020ShortV.pdf.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) # OPENDOOR SECURITIES, LLC (LIMITED LIABILITY CORPORATION) December 31, 2020 {1}------------------------------------------------ | Table of Contents | Page | |-----------------------------------------------------------------------|------| | Annual Audited Report Form X-17A-5 Part III (Facing Page/Affirmation) | 1-2 | | Report of Independent Registered Public Accounting Firm: | 3 | | Financial Statements: | | | Statement of Financial Condition | 4 | | Notes to Financial Statements: | | | NOTE A: Organization and nature of the business | 5 | | NOTE B: Summary of significant accounting policies | 5-6 | | NOTE C: Related party transactions | 7 | | NOTE D: Net capital requirements | 7 | | NOTE E: Retirement benefit plans | 7 | | NOTE F: Equity compensation plan | 7-8 | | NOTE G: Going concern | 8-9 | {2}------------------------------------------------ | | UNITED STATES | | OMB APPROVAL | |--------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------| | SECURITIES AND EXCHANGE COMMISSION | | OMB Number: | 3235-0123 | | | Washington, D.C. 20549 | Expires: | October 31, 2023 | | | | | Estimated average burden | | | | | hours per response. 12.00 | | | ANNUAL AUDITED REPORT | | | | | FORM X-17A-5 | | SEC FILE NUMBER | | | 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 | 1/1/20
AND ENDING | | 12/31/20 | | | MM/DD/YY | | MM/DD/YY | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | | NAME OF BROKER-DEALER:
OpenDoor Securities, LLC | | | OFFICIAL USE ONLY | | | | | _________________ | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | | | | | | | | | | 111 Town Square Place, Suite 1500 | (No. and Street) | | | | | | | | | Jersey City | New Jersey | 07310 | | | (City) | (State) | (Zip Code) | | | | | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | | | | Thomas Hopkins | | | 603-216-8933 | | | | | (Area Code - Telephone Number) | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained on this Report* | | | | | | | | | | | UHY LLP | | | | | (Name - if individual, state last, first, middle name) | | | | | | | | | 1185 Avenue of the Americas
(Address) | New York
(City) | New York
(State) | 10036
(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 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) {3}------------------------------------------------ | 1. | | swear swear (or affirm) that, to the best of
Susan M. Estes | | | |----|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--| | | | my knowledge and belief, the accompanying financial statements and supporting schedules pertaining to the firm of | | | | of | OpenDoor Securities, LLC
December 31. 2020 | | | | | | | are true and correct. I further swear (or affirm)
that neither the company nor any partner, proprietor, principal officer, or director has any proprietary interest in any account
classified solely as that of a customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature | | | | | | President & CEO | | | | | | Title | | | | | | | | | | | | WARREN S. GREEN
Notary Public, State of New York | | | | | | No. 02GR5039489
Notary Public
Qualified in New York County | | | | | | Commission Expires March 5, 2023 | | | | | | This report* contains (check all applicable boxes): | | | | V | | (a) Facing page. | | | | V | | (b) Statement of Financial Condition. | | | | > | | (c) Statement of Income (Loss). | | | | > | | (d) Statement of Cash Flows | | | | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietor's Capital. | | | | | | (f) Statement of Changes in Liabilities Subordinated to Claims of General Creditors. | | | | | | (g) Computation of net capital for brokers and dealers pursuant to Rule 15c3-1. | | | | | | (h) Computation for determination of reserve requirements pursuant to Rule 15c3-3. | | | | | | (i) Information relating to the possession or control requirements for brokers and dealers under Rule 15c3-3. | | | | | | (i) A reconcliation, including appropriate explanation, of the computation of net capital under Rule 15c3-1 and the
computation for determination of the reserve requirements under exhibit A of Rule 15c3-3. | | | | | | V (k) A reconciliation between the audited Statements of Financial Condition with respect to methods of
consolidation. | | | | VI | | (1) An oath or affirmation. | | | | | | (m) A copy of the Securities Investor Protection Corporation (SIPC) supplemental report. | | | | V | | (n) Exemption Report | | | | | | | | | {4}------------------------------------------------ #### Report of Independent Registered Public Accounting Firm: ![](_page_4_Picture_2.jpeg) {5}------------------------------------------------ Financial Statements: Statement of Financial Condition December 31, 2020 | Assets | | |---------------------------------------|---------------| | Cash & Cash Equivalents | \$
814,596 | | Prepaid Expenses & Other | 39,283 | | | | | Total assets | \$
853,879 | | | | | Liabilities and member's equity | | | Liabilities: | | | Accrued Liabilities | \$
57,999 | | Accounts Payable | 112,618 | | Due to Parent | 477,004 | | | | | Liabilities | 647,621 | | Member's Equity | 206,258 | | | | | Total liabilities and member's equity | \$
853,879 | See accompanying Notes to the Financial Statements {6}------------------------------------------------ # Notes to Financial Statements # NOTE A: ORGANIZATION AND NATURE OF THE BUSINESS OpenDoor Securities, LLC ("OpenDoor" or "the Company") is a limited liability company incorporated in the State of Delaware. It is a wholly owned subsidiary of OpenDoor Trading, LLC ("Parent"), a limited liability company incorporated in the State of Delaware. The Company is subject to the rules and regulations of the Securities Exchange Commission ("SEC") and the Financial Industry Regulatory Authority, Inc. ("FINRA") and is a member of the Securities Investor Protection Corporation. The Company does not maintain securities accounts for customers or perform custodial functions relating to customer securities and, accordingly, claims exemption from SEC Rule 15c-3(k)(2)(ii). OpenDoor operates an all to all, session-based, fixed income trading platform focusing exclusively on Offthe-Run U.S. Treasury Securities and Treasury Inflation-Protected Securities (TIPS). OpenDoor's customers include many of the world's largest asset managers, pension funds, insurance companies, hedge funds, sovereign wealth funds, primary dealers and trading firms. The Company was incorporated in January 2015 and became a FINRA registered broker-dealer on December 6, 2016. These financial statements are as of and for the year ended December 31, 2020. # NOTE B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Use of Estimates The preparation of the financial statements, in conformity with accounting principles generally accepted in the U.S ("GAAP"), 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 statement of financial condition, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Revenue Recognition The Company earns revenue by charging a transaction fee on all trades matched on its trading platform. These orders are routed to our services provider, State Street Global Markets, LLC ("State Street"), a FINRA member firm for execution and clearance. The Company recognizes revenues and related clearing expenses on a trade date basis. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or the customer is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. Interest income is recorded on an accrual basis. ### 3. Current Expected Credit Losses ("CECL") Effective January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets measured at amortized {7}------------------------------------------------ cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to determine there are no expected credit losses in certain circumstances (e.g., based on collateral arrangements or based on the credit quality of the borrower or issuer). For certain financial assets measured at amortized cost the Company has concluded that there are de minimis expected credit losses based on the nature and contractual life or expected life of the financial assets and immaterial historic and expected losses. At December 31, 2020, an allowance for credit losses was not considered necessary. ### 4. Off Balance Sheet Risks The Company's policy is to continuously monitor its exposure to market and/or counterparty risk through its internal control procedures. In addition, the Company has a process of reviewing the creditworthiness and risk profile of each customer and/or other counterparty at the time of onboarding and periodically as part of its overall risk management policies and procedures. #### 5. Cash & Cash Equivalents Cash and cash equivalents consist of cash on deposit and money market accounts. The Company maintains its cash and cash equivalents in a high credit quality bank. Balances at times may exceed federally insured limits. The uninsured excess is \$564,596 at December 31, 2020. #### 6. Income Taxes As a limited liability company, the Company is treated as a partnership for federal and state income tax purposes. No provision has been made for income taxes in the accompanying financial statements, since all items of income or loss are required to be reported on the income tax returns of the Parent member, who is responsible for any taxes thereon. #### 7. Incentive Unit Compensation The Company's Parent awards restricted incentive units to Company employees, directors and other key individuals ("Participants") at fair value pursuant to the 2015 Restricted Unit Plan. This Plan is considered an Equity Plan. The Company accounts for the expense, associated with certain of these awards, allocated to the Company by the Parent, as compensation expense. Awards are measured based on the fair value of the unit at the date of grant and are expensed over the vesting period defined in the Restricted Incentive Unit Agreements. As of December 31, 2020, the Parent had 44,812,771 unvested units outstanding. ### 8. Subsequent Events The Company has evaluated subsequent events through March 24, 2021, the date the financial statements were available to be issued. {8}------------------------------------------------ # NOTE C: RELATED PARTY TRANSACTIONS #### **OpenDoor Trading, LLC ("Parent")** OpenDoor has an expense-sharing agreement with its Parent. OpenDoor is 100% owned by its Parent which maintains separate books and records. While most invoices that relate to the Parent are billed and paid by the Parent when feasible, the Company has incurred and paid expenses related to the Parent. Since the Company employs all personnel, employees identified as having dual responsibilities have compensation and related costs allocated to the Parent. In addition, the Parent's portion of legal, tax, Board fees and other miscellaneous costs are allocated to the Parent periodically. These reimbursements due are recorded as an intercompany receivable. On January 1, 2020 the Parent entered into a Reseller Agreement with the Company appointing the Company as its exclusive reseller of the Parent's electronic platform software and its related supporting services. As of December 31, 2020, the Company had a payable to the Parent of \$477,004. The Company records Incentive Unit compensation for awards granted by the Parent as further described in Note B. ### NOTE D: NET CAPITAL REQUIRMENTS The Company is subject to the SEC's 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 15 times Net Capital. At December 31, 2020, the Company had Net Capital of \$166,975 which was \$123,800 in excess of the required Net Capital. The Company's percentage of aggregate indebtedness to net capital was 387.86% as of December 31, 2020. # NOTE E: RETIREMENT BENEFIT PLANS OpenDoor has a 401(k) Profit Sharing Plan. ## NOTE F: INCENTIVE UNIT COMPENSATION The Parent sponsors the OpenDoor Trading, LLC 2015 Restricted Unit Plan ("Plan"). Under the Plan, Incentive Units ("Units") are reserved for issuance to full-time or part-time officers, employees, directors, managers, consultants and other key persons ("Participants") who will contribute to the Parent's and Company's long-term success. The Plan is administered by the Board of the Parent ("Administrator") consistent with the Parents Operating Agreement. The terms and conditions of each grant of Units including vesting, shall be determined by the Administrator, and such terms and conditions may differ among individual awards and Participants. The Company recognizes incentive unit compensation in accordance with Participants vesting schedules and commensurate with the fair value of the Units (see NOTE B.8). {9}------------------------------------------------ As of December 31, 2020, the number of Units authorized for issuance under the Plan is 163,100,000. The number of Units outstanding is 133,736,201 and the number available for grant is 29,363,799. | December 31, 2020 | | | | |-------------------------------------------|-----------------|----|---------------------| | OpenDoor Trading (Parent) Restricted Unit | | | Weighted Avg. Grant | | Plan | Number of Units | | Fair Value | | | | | | | Non-vested outstanding units 1/1/2020 | 15,018,385 | \$ | 0.0156 | | Granted | 91,270,685 | \$ | - | | Vested | (55,432,700) | \$ | 0.0021 | | Forfeited | (6,043,599) | \$ | 0.0057 | | Non-vested outstanding units 12/31/2020 | 44,812,771 | \$ | 0.0019 | The outstanding Units are for a private company. The estimated fair value of the Units on the dates of grant during 2020 was based on the Black-Scholes options pricing model. The following assumptions were used: | Risk free interest rate | 0.85% | |-------------------------|---------| | Volatility Factor | 35% | | Unit Price | \$
- | # NOTE G: GOING CONCERN The financial statements have been prepared on a going concern basis which assumes the Company will have sufficient cash to pay its debts, as and when they become payable, for a period of at least 12 months from the date of this financial report. The Parent, who has planned its continuing support for a minimum of 12 months from the date of issuing these financial statements, and the Company have prepared a cash flow forecast which indicates that the entity does not have sufficient cash to meet its minimum expenditure commitments and support its current level of corporate overhead and therefore needs to raise additional funds to continue as a going concern. To address the future additional funding requirements the Board of Directors of the Parent have undertaken the following initiatives: - entered into discussions to secure additional equity funding from current or new shareholders; - undertaken a program to continue to monitor the ongoing working capital requirements and minimum expenditure commitments; and {10}------------------------------------------------ • continued their focus on maintaining an appropriate level of corporate overhead in line with the Company's available cash resources. Though no assurance can be given, the Parent's directors expect that they will be able to complete a capital raise in addition to continued revenue growth. This combination will provide the Company with sufficient funding to meet its minimum commitments and support its planned level of overhead expenditures. Therefore, it is appropriate to prepare the financial statements on the going concern basis. As a result, substantial doubt continues to exist about the ability of the Company to continue as a going concern within one year from March 24, 2021, the date that these 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.