# ZANBATO SECURITIES LLC X-17A-5 (2022-11-22) — Broker-dealer annual report - Company: ZANBATO SECURITIES LLC - Form: X-17A-5 - Filed: 2022-11-22 - Period: 2022-09-30 - Accession: 0001648813-22-000002 - CIK: 1648813 - File #: 8-69654 - Type: Broker-dealer - Material weakness: No - Auditor: EisnerAmper LLP - Auditor location: San Francisco, CA - Contact: Yuen Na Chun - Phone: 9176017066 - Email: greg@zanbato.com - Website: zanbato.com - Signed by: Knut Nicolai Sand (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1648813/000164881322000002/zasesofc2.pdf --- {0}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 # **ANNUAL REPORTS FORM X-17A-5 PART Ill** | SEC FILE NUMBER | | | | |-----------------|--|--|--| ## 8-69654 **FACING PAGE** | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | |-----------------------------------------------------------------------------------------------------------|--|--| |-----------------------------------------------------------------------------------------------------------|--|--| | FILING FOR THE PERIOD BEGINNING 10/01 f21 | --------- | | AND ENDING 09f30f22 | ---------- | | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|-----|---------------------|------------------|--| | | MM/DD/ Y Y | | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME OF FIRM: Zanbato Securities LLC | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
D Security-based swap dealer
D Major security-based swap participant
C!J Broker-dealer
□ Check here if respondent is also an OTC derivatives dealer | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | 711/715 North Shoreline Blvd. | | | | | | | | (No. and Street) | | | | | | Mountain View | CA | | | 94043 | | | (City) | (State) | | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Gregory L. Wright | (201 )747-6223 | | | greg@zanbato.com | | | (Name) | (Area Code -Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | | EisnerAmper LLP | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | | One California, Suite 1700 | San Francisco | | CA | 94111 | | | (Address) | (City) | | (State) | (Zip Code) | | | September 29, 2003 | | 274 | | | | | | | | | | | | | FOR OFFICIAL USE ONLY | | | | | \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption . See 17 CFR 240.17a-S(e)(l)(ii), if applicable. **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.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | 1, Knut Nicolai Sand | swear (or affirm) that, to the best of my knowledge and belief, the | |-------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | financial report pertaining to the firm of Zanbato Securities LLC | as of | | September 30 | 2~,
is true and correct. I further swear (or affirm) that neither the company nor any | | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | as that of a customer. | µ;J | | 1 ;: ~.'.
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Signature:
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Notary ~ublic · California
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Santa Clara County
Title:
Commission # 2383432
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CEO
Y Comm , Expirl!s Jan 16, 2026 | #### **This filing"'" contains (check all applicable boxes):** - !!! (a) Statement of financial condition. - Iii (b) Notes to eooselidftted-statement of financial condition. - D (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in§ 210.1-02 of Regulation S-X). - D (d) Statement of cash flows. - D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - D (g) Notes to consolidated financia l statements. - D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - □ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - Iii (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **iii** (t) Independent public accountant's report based on an examination of the statement of financial condition. - D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - D (v) Independent publ ic accountant's report based on an examination of certain statements in t he compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.1Sc3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). D(z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_ - - \*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3} or 17 CFR 240.18a-7(d)(2}, as applicable. {2}------------------------------------------------ Statement of Financial Condition Pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 and Regulation 1.10 under the Commodity Exchange Act September 30, 2022 {3}------------------------------------------------ # **EISNERAMPER EisnerAmper LLP** One California Street, Suite 1700 San Francisco, CA 94111 **T** 415.974.6000 **F** 415.974.5488 www.eisneramper.com #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of Zanbato Securities LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Zanbato Securities LLC (the "Company") as of September 30, 2022, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of September 30, 2022, 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. We have served as the Company's auditor since 2015. EISNERAMPER LLP San Francisco, California November 19, 2022 ![](_page_3_Picture_12.jpeg) -- "EisnerAmper" is the brand name under which EisnerAmper LLP and Eisner Advisory Group LLC provide professional services . EisnerAmper LLP and Eisner Advisory Group LLC are independently owned firms that practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. EisnerAmper LLP is a licensed CPA firm that provides attest services, and Eisner Advisory Group LLC and its subsidiary entities provide tax and business consulting services. Eisner Advisory Group LLC and its subsidiary entities are not licensed CPA firms. {4}------------------------------------------------ ## **Statement of Financial Condition September 30, 2022** | Assets | | |------------------------------------------------|-------------------| | Cash | 991
,539
\$ | | Accounts receivable, net | 1,867,112 | | Due from affiliates | 30,389 | | Prepaid expenses and other assets | 17,264 | | Total assets | \$ 2,906,304 | | Liabilities and Member's Equity
Liabilities | | | Commission payable | \$ 1,585,298 | | Accrued expenses | 133,037 | | Total liabilities | 1,718,335 | | Member's equity | 1,187,969 | | Total liabilities and member's equity | \$ 2,906,304 | {5}------------------------------------------------ ### **Notes to Statement of Financial Condition September 30, 2022** #### **1. Organization and Business** Zanbato Securities LLC (the "Company"), is a limited liability company organized under the laws of the state of Delaware. The Company is a wholly owned subsidiary of Zanbato Holding Company LLC and an indirect subsidiary of Zanbato Inc. (the "Ultimate Parent"). The Company is a broker-dealer registered with the Securities and Exchange Commission (the "SEC") and an introducing broker registered with the Commodity Futures Trading Commission ("CFTC") and is a member of the Financial Industry Regulatory Authority ("FINRA") and the National Futures Association ("NF A"). The Company's operations include acting as an agent to match buyers and sellers of privately-held securities through an alternative trading system maintained by the Ultimate Parent and referral of investors into hedge funds. #### **2. Summary of Significant Accounting Policies** #### **Basis of Presentation and Use of Estimates** This financial statement was prepared in conformity with accounting principles generally accepted in the United States of America ("US 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 statement. Actual results could differ from these estimates. #### **Revenue Recognition from Contracts with Customers** The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company follows 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 the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the Company satisfies a performance obligation. In determining the transaction price, the Company 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 uncertainty associated with the variable consideration is resolved. #### **Cash** All cash deposits are held by multiple financial institutions and therefore are subject to the credit risks at those financial institutions. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits. #### **Current Expected Credit Losses ("CECL")** In accordance with Accounting Standards Codification ("ASC") Topic 326, Financial Instruments-Credit Losses ("ASC 326"), the Company measures all current expected credit losses ("CECL") for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is deducted from the amortized cost of the financial asset to present the net amount expected to be collected. {6}------------------------------------------------ ### **Notes to Statement of Financial Condition September 30, 2022** #### **2. Summary of Significant Accounting Policies (continued)** #### **Accounts Receivable** The Company's accounts receivable, which primarily consist of balances due from customers for commission and fee income, are carried at amortized cost less the allowance for credit losses. The credit risk associated with receivables is that any customers with which it conducts business is unable to fulfill contractual obligations. The allowance for credit losses is based on the Company's expectation of the collectability of such receivables utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with receivables is not significant until it is past due based on the arrangement and expectation of collection in accordance with industry standards. The Company records an estimated allowance for credit loss for any balances that are deemed to be uncollectible. Management monitors the credit risk of customers, including historical experience, current conditions, reasonable assurance, and supportable forecasts to determine expected credit loss. At October 1, 2021 , the accounts receivable balance was \$2,628,384. As of September 30, 2022, the accounts receivable balance of \$1,867,112 in the statement of financial condition is stated net of an allowance for credit losses of \$501 ,436. #### Income Taxes The Company is a single member limited liability company and is treated as a disregarded entity for income tax reporting purposes. The Internal Revenue Code ("IRC") provides that any income or loss is passed through to the ultimate beneficial individual member for federal, state and certain local income taxes. Accordingly, the Company has not provided for federal and state income taxes. At September 30, 2022, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. #### **3. Transactions with related parties** The Company has entered into an Expense Sharing Agreement ("ESA") with its Ultimate Parent whereby the Ultimate Parent provides office support services, information and marketing support services, employee compensation, payroll taxes and benefits, general consulting services and others at no charge to the Company. The ESA has a term of one year and is automatically renewed annually, unless terminated or modified by written notice. The terms of these arrangements may not be the same as those that would otherwise exist or result from agreements and transactions among unrelated parties. The value of such services provided by the Ultimate Parent was approximately \$3,601 ,000. The Ultimate Parent does not charge these expenses to the Company and does not intend to seek reimbursement of such expenses. As of September 30, 2022, included in due from affiliates was \$30,389 receivable from the Ultimate Parent for legal fees that were paid by the Company on the Ultimate Parent's behalf. {7}------------------------------------------------ ### **Notes to Statement of Financial Condition September 30, 2022** #### **4. Regulatory Requirements** The Company is subject to the SEC Uniform Net Capital Rule 15c3-l under the Securities Exchange Act of 1934, 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 and is also subject to the net capital requirements of the CFTC Regulation 1.17 and the requirements of the NF A. At September 30, 2022, the Company had net capital of \$482,840 which was \$368,284 in excess of its required net capital of \$114,556. The Company's net capital ratio was 3.6 to 1. #### **5. Indemnifications** In the normal course of its business, the Company enters into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not occurred. The Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statement for these indemnifications. #### **6. Contingencies** The Company is subject to litigation in the normal course of business. The Company has received a demand letter from a customer in connection with failed acquisition of shares during the fiscal year ended September 30, 2022. The Company believes the claims against them are without merit and intend to defend themselves rigorously. No provision for damages has been made in the accompanying statement of financial condition. #### **7. Subsequent Events** The Company had evaluated events or transactions that may have occurred since October 1, 2022 through November 19, 2022. In October and November of 2022, the Company made total capital distributions of \$466,001 to its Ultimate Parent. There were no other material subsequent events that would require disclosure in the Company's financial statement. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.