# WATCHDOG CAPITAL, LLC X-17A-5 (2021-03-01) — Broker-dealer annual report
- Company: WATCHDOG CAPITAL, LLC
- Form: X-17A-5
- Filed: 2021-03-01
- Period: 2020-12-31
- Accession: 0001660087-21-000004
- CIK: 1660087
- File #: 8-69712
- Material weakness: No
- Auditor: DAVID LUNDGREN & COMPANY
- Auditor location: OLATHE, KS
- Contact: NATALIE MILLER
- Phone: 706-429-2199
- Signed by: KYLE WEEKS (CEO)
Original filing: https://www.sec.gov/Archives/edgar/data/1660087/000166008721000004/wdc2020audit1.pdf
---
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
QMB APPROVAL QMB Number. 3235-0123 Expires: October 31, 2023 Estimated *average* burden hours oer resoonse ..... 12.00
# **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill**
| SEC FILE NUMBER | | | | | |
|-----------------|--|--|--|--|--|
| 8-69712 | | | | | |
FACING PAGE
Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17 a-5 Thereunder
| __
REPORT FOR TIIE PERIOD BEGINJNG | _ :;ANJ
;=;.U;;.ARc::
;:,=.: Y:1:z;::_, 02:::2;,;. | AND ENDING | DECEMBER 31, 2020 | | |
|-------------------------------------------------------------------------------------------|----------------------------------------------------------|----------------|---------------------------------------------|--|--|
| | MM/00/YY | | MM/DD/YY | | |
| | A. REGISTRANT IDENTIFICATION | | | | |
| WATCHDOG CAPITAL, LLC
NAME OF BROKER DEALER: | OFFICAL USE ONLY | | | | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | FIRM ID. NO. | | | | |
| | 6250 SHILOH RD SUITE 30 | | | | |
| | (No. and Street) | | | | |
| ALPHARETTA | GA | | | | |
| (City) | (State) | | 30005
(Zip Code) | | |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
NATALIE MILLER | | | 706-429-2199
(Area Code - Telephone No.) | | |
| | | | | | |
| | B. ACCOUNT ANT DESIGNATION | | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | |
| | DAVID LUNDGREN & COMPANY | | | | |
| | first
(Name - if individual, state last | , middle name) | | | |
| 505 NORTH MUR-LEN ROAD | OLATHE | KANSAS | 66062 | | |
| (Address and City) | | (State) | (Zip Code) | | |
| CHECK ONE: | | | | | |
| txl Certified Public Accountant | | | | | |
| D Public Accountant | | | | | |
| D Accountant not resident in United States or any of its possessions | | | | | |
| | FOR OFFICIAL USE ONLY | | | | |
| | | | | | |
| | | | | | |
*\*Claims for exemption from the requirement that the annual audit 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 section 240. l 7a-5(e)(2).*
> Potential persons who are to respond to the collection of information contained in this form are required to respond unless the form displays a current valid OMB control number.
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#### **OATH OR AFFIRMATION**
I, **KYLE WEEKS ,** swear ( or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm or **WATCHDOG CAPITAL LLC ,** as of **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:
**CEO** Title
This report\*\* contains (check all applicable boxes);
- {gJ (a) Facing page.
- � (b) Statement of Financial Condition.
- � (c) Statement oflncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement ofComprehensive 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 Proprietor's Capital.
- D (f) Statement of changes in Liabilities Subordinated to Claims of Creditors.
- [g] (g) Computation of Net Capital.
- [g] (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
- [g] (i) Information Relating to the Possession or control Requirements Under Rule 15c3-3.
- D G) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-l and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
- D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation.
- [g] (1) An Oath or Affirmation.
- D (m) A copy of the SIPC Supplemental Report.
- D (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 2 40.17 a-5 (e)(3).*
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# **WATCHDOG CAPITAL, LLC**
FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND ACCOMPANYING INFORMATION
**DECEMBER 31, 2020**
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# TABLE OF CONTENTS
| | Page |
|--------------------------------------------------------------------------------------------------------------------|------|
| Report of Independent Registered Public Accounting Firm | 2 |
| Financial Statements | |
| Statement of Financial Condition
| 3 |
| Statement
of Operations | 4 |
| Statement
of Changes in Member's
Equity | 5 |
| Statement
of Cash Flows
| 6 |
| Notes to
Financial Statements | 7-9 |
| Supplemental
Schedules | |
| Schedule I –
Computation of Net Capital under
Rule 15c3-1 of the
Securities and Exchange Commission
11 | |
Exchange Act of 1934 ..............................................................................................................12
Rule 15c3-3...............................................................................................................................13
Schedule II – Computation for Determination of Reserve Requirement for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities and
Schedule III – Information Relating to the Possession or Control Requirements under the Securities and Exchange Commission
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DAVID 8. LUNDGREN, MPA, CPA CATHERINE LUNDGREN MPA, CPA
TELE:PHONE (9 1 3) 782-9530 FACSIMILE (913) 782-9564
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Members of Watchdog Capital, LLC
### Opinion on the Financial Statements
We have audited the accompanying statement of financial condition of Watchdog Capital, LLC as of December 31, 2020, 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 Watchdog Capital, LLC as of December 31, 2020, 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 Watchdog Capital, LLC's management. Our responsibility is to express an opinion on Watchdog Capital, LLC'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 Watchdog Capital, LLC 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 statements arefree 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.
### Supplemental Information
The Schedules I, II, and Ill have been subjected to audit procedures performed in conjunction with the audit of Watchdog Capital, LLC's financial statements. The supplemental information is the responsibility of Watchdog Capital, LLC's management. Our audit procedures included determining whether the supplemental information 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 information. 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. §240.17a-5. In our opinion, the Schedules I, II, and 111 are fairly stated, in all material respects, in relation to the financial state nts as a whole.
We have served as Watchdog Capital LLC's auditor since 2017.
Olathe, Kansas February 25, 2021
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#### WATCHDOG CAPITAL, LLC
#### -----------------
### STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2020
ASSETS Current assets:
| Cash | \$
124,846 |
|---------------------------------------------------------|---------------|
| Total current assets | 124,846 |
| Other assets: | |
| Prepaid expenses
& Deposits | 18,296 |
| Total other assets | 18,296 |
| | |
| | \$
143,142 |
| LIABILITIES AND MEMBER'S EQUITY
Current liabilities: | |
| Accounts payable and accrued expenses | \$
6,385 |
| Total current liabilities | 6,385 |
| Member's equity | 136,757 |
| | \$
143,142 |
See notes to financial statements.
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#### WATCHDOG CAPITAL, LLC
#### ----------------- STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2020
| Revenues: | |
|--------------------------|------------------|
| Revenues | - |
| Total Revenue | \$
- |
| Expenses | |
| Technology | 45,887 |
| Insurance | 1040 |
| Regulatory Fees | 10,771 |
| Professional Fees | 39,670 |
| Rent or Lease | 3,850 |
| Other operating expenses | 824 |
| Total Expenses | \$
102,042 |
| Net Loss | \$
( 102,042) |
See notes to financial statements
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#### WATCHDOG CAPITAL, LLC -----------------
#### STATEMENT OF CHANGES IN MEMBER'S EQUITY Year Ended December 31, 2020
| | Contributed
Capital | Distributed
Capital | Retained
Earnings
(Accumulate
d
Deficit) | Total
Member's
Equity |
|-----------------------------|------------------------|------------------------|------------------------------------------------------|-----------------------------|
| | | | | |
| Balances, January 1, 2019 | \$
100,980 | \$
(101,081) | \$
17,045 | \$
16,944 |
| Contributed
capital | 221,855 | - | - | 221,855 |
| Distributed capital | - | ( 0) | - | ( 0) |
| Net income
(loss) | - | - | (102,042) | (102,042) |
| Balances, December 31, 2020 | \$
322,835 | (101,081) | \$
(84,997) | \$
136,757 |
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#### See notes to financial statements.
#### WATCHDOG CAPITAL, LLC
-----------------
#### STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2020
#### CASH FLOWS FROM OPERATING ACTIVITIES:
| Net loss
Adjustments to reconcile net income
(loss) to net
cash provided
by operating activities:
Changes in operating assets and liabilities: | \$
( 102,042) |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
| Prepaid expenses
and deposits
Accounts payable and accrued expenses
Net cash provided
by operating activities | (
17,141)
(3005)
(
20,146) |
| CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions | 221,855 |
| Net cash used
by financing activities | 221,855 |
| NET CHANGE IN CASH
CASH, beginning of year | 99,667
25,179 |
| CASH, end of year | \$
124,846 |
See notes to financial statements.
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### **Note A - Summary of Organization, Operations, and Significant Accounting and Reporting Policies**
### **Nature of Operations**
Watchdog Capital, LLC ("WDC" or "the Company"), a Georgia limited liability company, is a registered broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). WDC primarily operates as a brokerdealer offering investment banking services. WDC does not hold cash or securities for its customers.
The Company is a wholly-owned subsidiary of Chainstone Labs, Inc (the "Parent Company") which is the sole managing member.
### **Use of Estimates in Financial Statement Preparation**
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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
#### **Cash and Cash Equivalents**
For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company's cash and cash equivalents are on deposit with a major domestic financial institution. At times, bank deposits may be in excess of federally insured limits. As of December 31, 2020, the cash on deposit did not exceed the FDIC insured limit.
#### **Recognition of Revenues**
On January 1, 2019, the Company adopted ASU 2014-09 *Revenue from Contracts with Customers* and all subsequent amendments to the ASU (collectively, "ASC 606"), which creates a single framework for recognizing revenue from contracts with customers that fall within its scope.
Revenue is measured based on a consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over goods or service to a customer. Services within the scope of ASC 606 include consulting and investment banking activities.
These services include agreements to provide advisory services to customers for which they charge the customers fees. The Company provides advisory services/corporate finance activity including mergers and acquisitions, reorganizations, tender offers, leveraged buyouts, fundraising activity and the pricing of securities to be issued.
The agreement contains nonrefundable retainer fees or success fees, which may be fixed or represent a percentage of value that the customer receives if and when the corporate finance activity is completed ("success fees"). In some cases, there is also an "announcement fee" that is calculated
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### **Note A - Summary of Organization, Operations, and Significant Accounting and Reporting Policies (Continued)**
on the date that a transaction is announced based on the price included in the underlying sale agreement. The retainer fees, announcement fee, or other milestone fees reduce any success fee subsequently invoiced and received upon the completion of the corporate finance activity. The Company has evaluated its nonrefundable retainer payments, to ensure its fee relates to the transfer of a good or service, as a distinct performance obligation, in exchange for the retainer. If a promised good or service is not distinct, the Company combines that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct. In some cases, that would result in the broker-dealer accounting for all the services promised in a contract as a single performance obligation and the retainer revenue is classified as deferred revenue on the Statement of Financial Condition.
The Company did not have any revenues during the year ended December 31, 2020.
### **Income Taxes**
The Company is formed as a single member limited liability company and as such, its operations are included in the Parent Company's tax returns. Earnings and losses of the Company are included in the Parent's income tax returns. Accordingly, the financial statements do not include a provision for income taxes.
The Company has addressed the provisions of ASC 740-10, *Accounting for Income Taxes.* In that regard, the Company has evaluated its tax positions, expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings and believes that no provision for income taxes is necessary at this time to cover any uncertain tax positions. Tax years that remain subject to examination by major tax jurisdictions are 2016 - 2020.
#### **Prepaid Expenses**
As a member of FINRA, the Company is charged annual registration fees. These fees are paid in advance and expensed on 1/1/2021.
#### **New Accounting Pronouncements**
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The standard was effective for us on
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January 1, 2020. The Company does not have any leases which meet the criteria. No impact was noted to the financial statements as of December 31, 2020.
Other accounting standards that have been issued or proposed by the FASB or other standardssetting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's financial statements upon adoption.
#### **Subsequent Events**
The Company has evaluated subsequent events through February 25, 2021, the date the financial statements were issued. There were no events or transactions occurring during this period that required recognition or disclosure in the financial statements.
#### **Note B - Related Party Transactions**
There were no related party transactions in 2020.
#### **Note C - Net Capital Requirements**
The Company is subject to the SEC's Uniform Net Capital Rule (SEC Rule 15c3-1) of the Securities Exchange Act of 1934, which requires maintenance of minimum Net Capital. Under the Rule, the Company is required to maintain minimum Net Capital, as defined, equal to the greater of \$5,000 or 6 2/3% of aggregate indebtedness and the ratio of aggregate indebtedness to Net Capital cannot exceed 15 to 1.
At December 31, 2020, the Company had Net Capital of \$118,461 which was \$113,461 in excess of its required Net Capital of \$5,000. The Company's ratio of aggregate indebtedness to Net Capital was 5.39% at December 31, 2020.
The Company is exempt from the provisions of SEC Rule 15c3-3 under the Securities Exchange Act of 1934, in that the Company's activities are limited to those set forth in the conditions for exemption appearing in paragraph (k)(2)(i) of the Rule.
#### **Note D - Commitments and Contingencies**
The Company does not have any commitments, guarantees, or contingencies, including arbitration or other litigation claims that may result in a loss or a future obligation.
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**Supplemental Schedules**
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**December 31, 2020**
# **Schedule I - Computation of Net Capital under Rule 15c3-1 of the Securities and Exchange Commission**
| COMPUTATION OF NET CAPITAL
Total member's
equity
Deductions:
Non-allowable assets: | \$
136,757 |
|------------------------------------------------------------------------------------------------|---------------|
| | |
| Prepaid
assets
and deposits | 18,296 |
| Net capital before haircuts | 118,461 |
| Haircuts: | |
| Total haircuts | - |
| NET CAPITAL | \$ 118,461 |
| COMPUTATION OF AGGREGATE INDEBTEDNESS | |
| Items included in the statement of financial condition: | |
| Accounts payable, accrued expenses, and other liabilities | 6,385 |
| Total aggregate
indebtedness | \$
6,385 |
| COMPUTATION OF BASIC NET CAPITAL
REQUIREMENT | |
| Minimum net capital required | \$
5,000 |
| Excess net capital | \$
113,461 |
| Ratio
of
aggregate indebtedness to net capital | 5.39% |
There were no material differences between the preceding computation and the Company's corresponding net capital as reported in the Company's Part IIA (unaudited) Form X-17A-5 FOCUS report as of December 31, 2020.
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# **Schedule II – Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities and Exchange Act of 1934**
## **December 31, 2020**
The Company is not claiming exemption from SEC Rule 15c3-3, in reliance on footnote 74 to SEC Release 34-70073, dated July 30, 2013, and as discussed in Q&A 8 of the related FAQ issued by SEC staff on April 4, 2014. In order to avail itself of this option, the Company has not, does not, and will not, hold customer funds or securities, and that its business activities are, and will remain, limited to private placements of securities.
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# **Schedule III – Information Relating to the Possession or Control Requirements under the Securities and Exchange Commission Rule 15c3-3**
# **December 31, 2020**
The Company is not claiming exemption from SEC Rule 15c3-3, in reliance on footnote 74 to SEC Release 34-70073, dated July 30, 2013, and as discussed in Q&A 8 of the related FAQ issued by SEC staff on April 4, 2014. In order to avail itself of this option, the Company has not, does not, and will not, hold customer funds or securities, and that its business activities are, and will remain, limited to private placements of securities.
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DAVID B. LUNDGREN, MBA, CPA CATHERINE LUNDGREN MBA, CPA
TE:l.EPHONE (913) 782-9530 FACSlMll.E (913) 782-9564
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Members of Watchdog Capital, LLC
We have reviewed management's statements, included in the accompanying Exemption Report for year ended December 31, 2020, in which Watchdog Capital, LLC met the exemption provisions throughout the most recent fiscal year without exception, by relying on Footnote 7 4 of the SEC Release 34-70073, adopting amendments to 17 C.F. R §240.17a-5. Watchdog Capital, LLC's management is responsible for compliance with the exemption provisions and its statements.
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 Watchdog Capital, LLC's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion.
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 the provisions set forth in Footnote 74 of the S Release 34-70073, adopting amendments to 17 C.F.R §240.17a-5.
Olathe, Kansas February 25, 2021
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### EXEMPTION REPORT YEAR ENDED DECEMBER 31, 2020
Watchdog Capital LLC (the "Company") is a registered broker-dealer subiect to Rule 17a-5 promulgated by the Securities and Exchange Commission (17C.F.R. 240.17a-5, "Reports to be made by certain brokers and dealers"). This Report was prepared as required by 17C.F.R 240.17a-5(d)(l) and (4). To the best of its knowledge and belief the Company states the following:
The Company is not claiming exemption from SEC Rule l 5c3-3, in reliance on footnote 74 to SEC Release 34-70073, dated July 30, 2013, and as discussed in Q&A 8 of the related FAQ issued by SEC staff on April 4, 2014. In order to avail itself of this option, the Company has not, does not, and will not, hold customer funds or securities, and that its business activities are, and will remain, limited to private placements of securities. �
I, Kyle Weeks, affirm that, to the best ofmy knowledge and belief this report is true and correct.
B y :
Ti tl e : CEO
Date: February 25, 2021
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| SIPC-7 | |
|----------------|--|
| (36-REV 12/18) | |
**SIPC-7 SIPC-7** SECURITIES INVESTOR PROTECTION CORPORATION P.O. Box 92185 Washington, D.C. 20090-2185
202-371-8300
#### (36-REV 12/18) (36-REV 12/18) **General Assessment Reconciliation**
12/31/2020
For the fiscal year ended **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_** (Read carefully the instructions in your Working Copy before completing this Form)
#### **TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS**
1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for purposes of the audit requirement of SEC Rule 17a-5:
Date Paid \$ ( ) ( ) \$ \$ \$( ) 2. A. General Assessment (item 2e from page 2) B. Less payment made with SIPC-6 filed (**exclude interest**) C. Less prior overpayment applied D. Assessment balance due or (overpayment) E. Interest computed on late payment (see instruction E) for\_\_\_\_\_\_days at 20% per annum F. Total assessment balance and interest due (or overpayment carried forward) G. **PAYMENT: √ the box Check mailed to P.O. Box** q **Funds Wired** q **ACH** q **Total (must be same as F above)** H. Overpayment carried forward Note: If any of the information shown on the mailing label requires correction, please e-mail any corrections to form@sipc.org and so indicate on the form filed. Name and telephone number of person to contact respecting this form. 69712 FINRA DEC WATCHDOG CAPITL LLC WATCHDOG CAPITAL LLC 6250 SHILOH RD STE 30 RM2 ALPHARETTA, GA 30005-8389 Natalie Miller 706-429-2199 0 0 0 0 0 0 0
3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registration number):
| The SIPC member submitting this form and the
person by whom it is executed represent thereby
that all information contained herein is true, correct | Watchdog Capital LLC |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
| and complete. | (Name of Corporation, Partnership or other organization) |
| 6th
January
20
Dated the
day of
, 20 | (Authorized Signature)
FINOP |
| | (Title) |
| for a period of not less than 6 years, the latest 2 years in an easily accessible place. | This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form |
| WER | Dates: | Postmarked | Received | Reviewed | |
|------------|--------------|----------------------------|----------|---------------|--------------|
| SIPC REVIE | Calculations | | | Documentation | Forward Copy |
| | Exceptions: | | | | |
| | | Disposition of exceptions: | | | |
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### **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT**
Amounts for the fiscal period beginning and ending 01/01/2020 12/31/2020
| Item No.
2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030)
2b. Additions:
(1) Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not included above. | Eliminate cents
0
\$ |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|
| | |
| | |
| (2) Net loss from principal transactions in securities in trading accounts. | |
| (3) Net loss from principal transactions in commodities in trading accounts. | |
| (4) Interest and dividend expense deducted in determining item 2a. | |
| (5) Net loss from management of or participation in the underwriting or distribution of securities. | |
| (6) Expenses other than advertising, printing, registration fees and legal fees deducted in determining net
profit from management of or participation in underwriting or distribution of securities. | |
| (7) Net loss from securities in investment accounts. | |
| Total additions | 0 |
| 2c. Deductions:
(1) Revenues from the distribution of shares of a registered open end investment company or unit
investment trust, from the sale of variable annuities, from the business of insurance, from investment
advisory services rendered to registered investment companies or insurance company separate
accounts, and from transactions in security futures products. | |
| (2) Revenues from commodity transactions. | |
| (3) Commissions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | |
| (4) Reimbursements for postage in connection with proxy solicitation. | |
| (5) Net gain from securities in investment accounts. | |
| (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and
(ii) Treasury bills, bankers acceptances or commercial paper that mature nine months or less
from issuance date. | |
| (7) Direct expenses of printing advertising and legal fees incurred in connection with other revenue
related to the securities business (revenue defined by Section 16(9)(L) of the Act). | |
| (8) Other revenue not related either directly or indirectly to the securities business.
(See Instruction C): | |
| (Deductions in excess of \$100,000 require documentation) | |
| (9) (i) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
Code 4075 plus line 2b(4) above) but not in excess
\$
of total interest and dividend income. | |
| (ii) 40% of margin interest earned on customers securities
\$
accounts (40% of FOCUS line 5, Code 3960). | |
| Enter the greater of line (i) or (ii) | 0 |
| Total deductions | 0 |
| 2d. SIPC Net Operating Revenues | 0
\$ |
| 2e. General Assessment @ .0015 | 0
\$ |
{20}------------------------------------------------
# **SIPC-7 Instructions**
This form is to be filed by all members of the Securities Investor Protection Corporation whose fiscal years end in 2011 and annually thereafter. The form together with the payment is due no later than 60 days after the end of the fiscal year, or after membership termination. Amounts reported herein must be readily reconcilable with the member's records and the Securities and Exchange Commission Rule 17a-5 report filed. Questions pertaining to this form should be directed to SIPC via e-mail at form@sipc.org or by telephoning 202-371-8300.
A . For the pur poses of this form, the term " SIPC Net O perating Revenues" shall mean gross revenues from the securities business as defined in or pursuant to the ap plic able sec tions of the Securities Investor Protec tion Ac t of 1970 ("Ac t ") and Ar ticle 6 of SIPC's bylaws (see page 4), less item 2c(9) on page 2.
B. Gross revenues of subsidiaries, exc ept foreign subsidiaries, are required to be included in SIPC Net O perating Revenues on a c onsolidated basis exc ept for a subsidiary filing separately as explained hereinafter.
If a subsidiar y was required to file a Rule 17a-5 annual audited statement of inc ome separately and is also a SIPC member, then such subsidiar y must itself file SIPC-7, pay the assessment, and should not be consolidated in your SIPC-7.
SIPC Net O perating Revenues of a predec essor member which are not included in item 2a, were not repor ted separately and the SIPC assessments were not paid thereon by such predecessor, shall be included in item 2b(1).
- C. Your General Assessment should be computed as follows:
- (1) Line 2a For the ap plic able period enter total revenue based upon amounts repor ted in your Rule 17a-5 Annual Audited Statement of Inc ome prepared in c onformit y with generally ac c epted ac c ounting principles ap plic able to securities brokers and dealers. or if exempted from that rule, use X-17A-5 (FOCUS Report) Line 12, Code 4030.
- (2) Adjustments The pur pose of the adjustments on page 2 is to determine SIPC Net Operating Revenues.
- (a) Additions Lines 2b(1) through 2b(7) assure that assessable inc ome and gain items of SIPC Net O perating Revenues are totaled, unreduc ed by any losses (e.g., if a net loss was incurred for the period from all transac tions in trading ac c ount securities, that net loss does not reduc e other assessable revenues). Thus, line 2b(4) would include all shor t dividend and interest payments including those incurred in reverse c onversion ac c ounts, rebates on stoc k loan positions and repo interest which have been net ted in determining line 2(a).
- (b) Deductions Line 2c(1) through line 2c(9) are either provided for in the statue, as in deduc tion 2c(1), or are allowed to arrive at an assessment base c onsisting of net operating revenues from the securities business. For example, line 2c(9) allows for a deduc tion of either the total of interest and dividend expense (not to exc eed interest and dividend inc ome), as repor ted on FOCUS line 22 /PART IIA line 13 (Code 4075), plus line 2b(4) or 40% of interest earned on customers' securities ac c ounts (40% of FOCUS Line 5 Code 3960). Be c er tain to c omplete both line (i) and (ii), entering the greater of the t wo in the far right c olumn. Dividends paid to shareholders are not c onsidered "Expense" and thus are not to be included in the deduc tion. Likewise, interest and dividends paid to par tners pursuant to the par tnership agreements would also not be deducted.
If the amount repor ted on line 2c (8) aggregates to \$100,000 or greater, suppor ting documentation must ac company the form that identifies these deductions. Examples of suppor t information include; contractual agreements, prospectuses, and limited partnership documentation.
- (i) Determine your SIPC Net O perating Revenues, item 2d, by ad ding to item 2a, the total of item 2b, and deducting the total of item 2c.
- (ii) Multiply SIPC Net O perating Revenues by the ap plic able rate. Enter the resulting amount in item 2e and on line 2A of page 1.
- (iii) Enter on line 2B the assessment due as reflec ted on the SIPC-6 previously filed.
- (iv) Subtrac t line 2B and 2C from line 2A and enter the dif ferenc e on line 2D. This is the balanc e due for the period.
- (v) Enter interest c omputed on late payment (if applicable) on line 2E.
- (vi) Enter the total due on line 2F and the payment of the amount due on line 2G.
- (vii) Enter overpayment carried forward (if any) on line 2H.
D. Any SIPC member which is also a bank (as defined in the Securities Exchange Ac t of 1934) may exclude from SIPC Net O perating Revenues dividends and interest rec eived on securities in its investment ac c ounts to the ex tent that it c an demonstrate to SIPC's satisfac tion that such securities are held, and such dividends and interest are rec eived, solely in c onnec tion with its operations as a bank and not in c onnec tion with its operations as a broker, dealer or member of a national securities exchange. Any member who excludes from SIPC Net O perating Revenues any dividends or interest pursuant to the prec eding sentenc e shall file with this form a sup plementar y statement set ting for th the amount so excluded and proof of its entitlement to such exclusion.
E. Interest on Assessments. If all or any par t of assessment paya ble under Se c tion 4 of the Ac t has not b een p ostmar ke d within 15 days af ter the due date thereof, the member shall pay, in addition to the amount of the assessment, interest at the rate of 20% per annum on the unpaid por tion of the assessment for each day it has been overdue.
F. Se curities and Exchange Commission Rule 17a-5(e) (4) requires those who are not exempted from the audit requirement of the rule and whose gross revenues are in exc ess of \$500,000 to file a sup plemental independent public ac c ountants repor t c overing this SIPC-7 no later than 60 days after their fiscal year ends.
**Mail this completed form to SIPC together with a check for the amount due, made payable to SIPC, using the enclosed return PO BOX envelope, pay via ACH Debit Authorization through SIPC's ACH system at www.sipc.org/for-members/assessments or wire the payment to:**
**On the wire identify the name of the firm and its SEC Registration 8-# and label it as "for assessment." Please fax a copy of the assessment form to (202)-223-1679 or e-mail a copy to form@sipc.org on the same day as the wire.**
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## **From Section 16(9) of the Act:**
The term "gross revenues from the securities business" means the sum of (but without duplication)—
(A) commissions earned in connection with transactions in securities effected for customers as agent (net of commissions paid to other brokers and dealers in connection with such transactions) and markups with respect to purchases or sales of securities as principal;
(B) charges for executing or clearing transactions in securities for other brokers and dealers;
(C) the net realized gain, if any, from principal transactions in securities in trading accounts;
(D) the net profit, if any, from the management of or participation in the underwriting or distribution of securities;
(E) interest earned on customers' securities accounts;
(F) fees for investment advisory services (except when rendered to one or more registered investment companies or insurance company separate accounts) or account supervision with respect to securities;
(G) fees for the solicitation of proxies with respect to, or tenders or exchanges of, securities;
(H) income from service charges or other surcharges with respect to securities;
(I) except as otherwise provided by rule of the Commission, dividends and interest received on securities in investment accounts of the broker or dealer;
(J) fees in connection with put, call, and other options transactions in securities;
(K) commissions earned for transactions in (i) certificates of deposit, and (ii) Treasury bills, bankers acceptances, or commercial paper which have a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof, the maturity of which is likewise limited, except that SIPC shall by bylaw include in the aggregate of gross revenues only an appropriate percentage of such commissions based on SIPC's loss experience with respect to such instruments over at least the preceding five years; and
(L) fees and other income from such other categories of the securities business as SIPC shall provide by bylaw.
Such term includes revenues earned by a broker or dealer in connection with a transaction in the portfolio margining account of a customer carried as securities accounts pursuant to a portfolio margining program approved by the Commission. Such term does not include revenues received by a broker or dealer in connection with the distribution of shares of a registered open end investment company or unit investment trust or revenues derived by a broker or dealer from the sales of variable annuities, the business of insurance, or transactions in security futures products.
#### **From Section 16(14) of the Act:**
The term "Security" means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, any collateral trust certificate, preorganization certificate or subscription, transferable share, voting trust certificate, certificate of deposit, certificate of deposit for a security, or any security future as that term is defined in section 78c(a)(55)(A) of this title, any investment contract or certificate of interest or participation in any profit-sharing agreement or in any oil, gas or mineral royalty or lease (if such investment contract or interest is the subject of a registration statement with the Commission pursuant to the provisions of the Securities Act of 1933 [15 U.S.C. 77a et seq.]), any put, call, straddle, option, or privilege on any security, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase or sell any of the foregoing, and any other instrument commonly known as a security. Except as specifically provided above, the term "security" does not include any currency, or any commodity or related contract or futures contract, or any warrant or right to subscribe to or purchase or sell any of the foregoing.
#### **From SIPC Bylaw Article 6 (Assessments): Section 1(f):**
The term "gross revenues from the securities business" includes the revenues in the definition of gross revenues from the securities business set forth in the applicable sections of the Act.
#### **Section 3:**
For purpose of this article:
(a) The term "securities in trading accounts" shall mean securities held for sale in the ordinary course of business and not identified as having been held for investment.
(b) The term "securities in investment accounts" shall mean securities that are clearly identified as having been acquired for investment in accordance with provisions of the Internal Revenue Code applicable to dealers in securities.
(c) The term "fees and other income from such other categories of the securities business" shall mean all revenue related either directly or indirectly to the securities business except revenue included in Section 16(9)(A)-(L) and revenue specifically excepted in Section 4(c)(3)(C)[Item 2c(1), page 2].
Note: If the amount of assessment entered on line 2e of SIPC-7 is greater than 1/2 of 1% of "gross revenues from the securities business" as defined above, you may submit that calculation along with the SIPC-7 form to SIPC and pay the smaller amount, subject to review by your Examining Authority and by SIPC.
SIPC Examining Authorities:
| ASE | American Stock Exchange, LLC | |
|------|----------------------------------------------|---|
| CBOE | Chicago Board Options Exchange, Incorporated | |
| CHX | Chicago Stock Exchange, Incorporated | 4 |
| | | |
FINRA Financial Industry Regulatory Authority NYSE Arca, Inc. NASDAQ OMX PHLX SIPC Securities Investor Protection Corporation
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.