# BROOKLANDS CAPITAL STRATEGIES BD, LP X-17A-5 (2024-02-21) — Broker-dealer annual report

- Company: BROOKLANDS CAPITAL STRATEGIES BD, LP
- Form: X-17A-5
- Filed: 2024-02-21
- Period: 2023-12-31
- Accession: 0001657003-24-000001
- CIK: 1657003
- File #: 8-69696
- Type: Broker-dealer
- Material weakness: No
- Auditor: Crowe LLP
- Auditor location: New York, CA
- Contact: Molly Underwood
- Phone: 4154381216
- Signed by: Jeff Ekberg (Financial Operations Principal)

Original filing: https://www.sec.gov/Archives/edgar/data/1657003/000165700324000001/Filed_2023_Public_SEC.pdf

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# **Brooklands Capital Strategies BD, LP**

**Statement of Financial Condition**

**With Report of Independent Registered Public Accounting Firm**

**December 31, 2023**

![](_page_2_Picture_4.jpeg)

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## **Table of Contents**

| Report of Independent Registered<br>Public Accounting Firm | Page 1 |  |
|------------------------------------------------------------|--------|--|
| Statement of Financial Condition                           | Page 2 |  |
| Notes to Financial Statement                               | Page 3 |  |

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![](_page_4_Picture_0.jpeg)

## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The General Partner and Limited Partner of Brooklands Capital Strategies BD, LP San Francisco, California

### **Opinion on the Financial Statement**

We have audited the accompanying statement of financial condition of Brooklands Capital Strategies BD, LP (the "Company") as of December 31, 2023, 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 December 31, 2023, 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 this 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 of the financial statement provides a reasonable basis for our opinion.

Crowe LLP

We have served as Company's auditor since 2022.

New York, New York February 15, 202

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|                            |                                         | December 31, 2023 |           |  |
|----------------------------|-----------------------------------------|-------------------|-----------|--|
| ASSETS                     |                                         |                   |           |  |
| Cash                       |                                         | \$                | 667,267   |  |
| Accounts Receivable        |                                         |                   | 2,437,685 |  |
| Investments, at Fair Value |                                         |                   | 14,000    |  |
| Other Assets               |                                         |                   | 22,069    |  |
|                            | TOTAL ASSETS                            | \$                | 3,141,021 |  |
|                            |                                         |                   |           |  |
|                            | LIABILITIES AND PARTNERS' CAPITAL       |                   |           |  |
| Liabilities                |                                         |                   |           |  |
| Due to Affiliate           |                                         | \$                | 172,823   |  |
| Other Liabilities          |                                         |                   | 244,173   |  |
|                            | TOTAL LIABILITIES                       |                   | 416,996   |  |
|                            | PARTNERS' CAPITAL                       |                   | 2,724,025 |  |
|                            | TOTAL LIABILITIES AND PARTNERS' CAPITAL | \$                | 3,141,021 |  |

See accompanying notes to financial statements

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### **1. Organization and Business Description**

Brooklands Capital Strategies BD, LP (the "Company") is a Delaware limited partnership organized on January 12, 2016 and is 100% owned by Brooklands Capital Strategies Management, LP ("Parent"). The general partner of the Company is Brooklands Capital Strategies (GP), LLC. The Company is a broker-dealer registered with the U.S. Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority ("FINRA").

The Company is a limited scope broker-dealer that primarily engages in the private placement of securities issued by certain third-party funds not affiliated with the Company's Parent. The Company also offers advisory services in connection with such investment fund security offerings.

The Company does not claim an exemption under paragraph (k) of Rule 15c3-3.

#### **2. Significant Accounting Policies**

#### *Basis of Accounting*

The accompanying financial statement has been presented on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Amounts reflected in this financial statement are in U.S. dollars.

#### *Use of Estimates*

The preparation of the financial statement in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statement. Actual results could differ from those estimates.

Accounting Standards Codification ("ASC") Topic 460, "Guarantees", requires the disclosure of representations and warranties which the Company enters into 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 this would involve future claims that may be against the Company that have not yet occurred. However, based on its experience, the Company expects the risk of loss to be remote.

#### *Cash*

Cash includes cash on deposit with a bank. The Company maintains its cash accounts with a highly rated commercial bank. At times, cash balances may exceed the Federal Deposit Insurance Corporation coverage limit of \$250,000.

#### *Fair Value of Financial Assets and Liabilities*

The Company's financial assets and liabilities are carried at fair value or amounts approximating fair value. The Company's financial assets and liabilities include Cash, Accounts Receivable, Investments, Other Assets, Due to Affiliate and Other Liabilities.

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U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified based upon the observability of inputs used in the determination of fair value as follows:

 Level I – Quoted prices are available in markets for identical financial instruments at the reporting date

 Level II – Pricing inputs are other than quoted market prices in active markets, which are either directly or indirectly observable at the reporting date

Level III – Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any market activity for the financial instrument

#### *Accounts Receivable*

Accounts Receivable includes Private Placement Fee receivables. Certain long-term receivables related to Private Placement Fees are paid in installments over a period of two to four years. The carrying value of such long-term receivables approximates fair value and are considered to be Level II instruments within the fair value hierarchy.

The Company is reimbursed by certain customers for reasonable travel, professional and other out-of-pocket expenses incurred in relation to services provided. Reimbursable expenses that are outstanding are reported in Accounts Receivable in the Statement of Financial Condition.

The need for an allowance for credit losses is assessed by estimating the probability of loss based on the Company's analysis of historical credit loss experience of its client receivables and taking into consideration current market conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company updates its average credit loss rates periodically and maintains an allowance review process to consider current factors that would require an adjustment to the credit loss allowance. In addition, the Company periodically performs a qualitative assessment to monitor risks associated with current and forecasted conditions that may require an adjustment to the expected credit loss rates. The Company did not carry an allowance for credit losses as of December 31, 2023.

#### *Investments*

Investments held by the Company include options and warrants received as payment for Private Placement Fees. As of December 31, 2023, all investments were classified as Level III instruments within the fair value hierarchy. The underlying securities represented by the options or warrants granted to the Company are shares in private companies with no observable pricing inputs or market activity. The determination of fair value requires significant management judgement and estimation that includes an analysis of market risk, company performance and the probability of exercise which is often constrained or limited to exit by the private company.

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The following table represents quantitative disclosure about significant unobservable inputs for Level III fair value measurements:

| Investment                            | Fair Value at<br>December 31, 2023 | Valuation<br>Technique       | Significant<br>Unobservable Inputs                                                                                                          | Range        | Weighted<br>Average |
|---------------------------------------|------------------------------------|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|--------------|---------------------|
| Investments<br>in Private<br>Warrants | \$14,000                           | Black Sholes<br>Option Model | Underlying share price<br>volatility:                                                                                                       | 40% -<br>50% | 40%                 |
| and Options                           |                                    |                              | Underlying share price<br>discounts related to<br>management<br>assessment of company<br>performance and risks<br>related to market factors | 25% -<br>30% | 25%                 |

#### *Contracts with Customers*

The timing of revenue recognition for contracts with customers may differ from the timing of payment. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. The opening balance of Accounts Receivable as of January 1, 2023 was \$3,264,778 and the ending balance is included in the Statement of Financial Condition.

The Company may receive payment of certain retainer or milestone fees before the performance obligation has been fully satisfied. Such fees give rise to a contract liability and are recorded in Other Liabilities in the Statement of Financial Condition. As of December 31, 2023 the Company recorded \$235,000 of contract liabilities in Other Liabilities on the Statement of Financial Condition. During the year ended December 31, 2023, the Company did not reclassify any beginning contract liabilities for the satisfaction of performance obligations.

#### *Income Taxes*

The Company is a disregarded entity for federal income tax purposes that is not treated as separate from the Parent, which is treated as a Partnership for U.S. income tax purposes. As such, no federal income taxes have been provided for by the Company in the accompanying financial statement as the Parent is individually responsible for reporting income or loss based upon its share of the Company's income and expenses as reported for income tax purposes.

The Company applies the provisions of ASC 740, "Income Taxes", which clarifies the accounting and disclosure for uncertainty in tax positions. The Company analyzed its tax filing positions in the federal, state, and foreign tax jurisdictions where it is required to file income tax returns for all open tax years. Based on this review, no liabilities for uncertain income tax positions were required to be recorded pursuant to ASC 740.

As of December 31, 2023, the Company did not have a liability recorded for payment of interest and penalties associated with uncertain tax positions.

The Company's income and expense has been included in the tax returns of the Parent as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Parent is subject to examination by federal and certain state and local tax regulators for open tax years, 2019-2023. The Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record significant amounts of unrecognized tax benefits within the next twelve months.

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#### **3. Significant Risk Factors**

#### *Credit Risk*

Credit risk represents the potential loss that the Company would incur if customers failed to perform pursuant to the terms of their obligations to the Company. The Company minimizes its exposure to credit risk by conducting appropriate due diligence on customers prior to engaging and ongoing diligence on customer performance during and after transaction execution.

#### *Concentration Risk*

Balances in Accounts Receivable are with a limited number of customers. As of December 31, 2023 the Company had 5 customers that accounted for 90% of Accounts Receivable on the Statement of Financial Condition.

### **4. Net Capital Requirements**

As a registered broker-dealer, the Company is subject to the SEC Uniform Net Capital Rule (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 to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 12 to 1.

The Company has elected to use the alternative method, permitted by Rule 15c3-1, which requires that the Company maintain minimum net capital, as defined, equal to the greater of \$50,000 or 6 2/3% of aggregate debit balances, as defined. As of December 31, 2023, the Company had net capital of \$250,271 which was \$200,271 in excess of its required net capital of \$50,000. As of December 31, 2023, the Company's ratio of aggregate indebtedness to net capital was 1.67 to 1.

The Company does not claim an exemption under paragraph (k) of Rule 15c3-3 as the Company limits its business activities to private placement and advisory services, relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5.

#### **5. Related Party Transactions**

The Company has an Administrative Services Agreement (the "Agreement") with the Parent. The Parent provides personnel, transaction support, referrals, accounting, legal, tax, compliance and related services to the Company, as needed. Where possible, the Agreement allows for expenses to be allocated on a specific identification basis and, in other cases, expenses are allocated by the Parent on a pro rata basis of headcount, usage or some other basis depending on the nature of the allocated cost. Both the Company and the Parent consider the basis on which the expenses are allocated to be a reasonable reflection of the utilization of services provided to the Company during the year. The allocations may not, however reflect the expense the Company would have incurred if the Company was independent of the Parent.

Receivables from and payables to the Parent are offset and the net amount receivable from and/or due to Parent is reported in the Statement of Financial Condition as there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Due to Affiliate as of December 31, 2023 includes amounts due to the Parent under the Agreement.

{10}------------------------------------------------

#### **6. Commitments and Contingencies**

In the normal course of business, the Company is subject to litigation, examinations, inquiries and investigations by various regulatory agencies. The Company is also subject to examinations by Federal and various State and local tax authorities. Such legal actions, examinations, inquiries and investigations may result in the commencement of civil or criminal lawsuits against the Company or its personnel. As of December 31, 2023, there are no actions or investigations pending, other than in the normal course of business, that are expected to have a material impact on the Company's condition or financial statement.

#### **7. Subsequent Events**

Management has evaluated subsequent events through February 15,2024, the date the financial statement was available to be issued and has determined there were no subsequent events that would require recognition or 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.