# ARKADIOS CAPITAL, LLC X-17A-5 (2022-03-31) — Broker-dealer annual report - Company: ARKADIOS CAPITAL, LLC - Form: X-17A-5 - Filed: 2022-03-31 - Period: 2021-12-31 - Accession: 0001663996-22-000001 - CIK: 1663996 - File #: 8-69729 - Type: Broker-dealer - Material weakness: No - Auditor: David Lundgren and Company - Auditor location: Olathe, KS - Contact: Natalie Miller - Phone: 404-445-0035 - Email: nmiller1010@arkadios.com - Website: arkadios.com - Signed by: Chet Payne (President) Original filing: https://www.sec.gov/Archives/edgar/data/1663996/000166399622000001/arkadios2021audit.pdf --- {0}------------------------------------------------ | | UNITED STATES | 0MB APPROVAL | | | |--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|--|--| | | SECURITIES AND EXCHANGE COMMISSION | 0MB Number: 3235-0123 | | | | | Washington, D.C. 20549 | Expires: Oct. 31, 2023
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12 | | | | | ANNUAL REPORTS | SEC FILE NUMBER | | | | | FORM X-17A-5 | | | | | | PART Ill | | | | | | | | | | | | FACING PAGE | | | | | | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | | | | / | AND ENDING 12/31 /21 | | | | FILING FOR THE PERIOD BEGINNING 0 1 | 01 /21 | MM/DD/YY | | | | | MM/DD/YY | | | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF FIRM: Arkadios Capital | | | | | | | | | | | | [
TYPE OF REGISTRANT (check all applicable boxes): | | | | | | Broker-dealer | □ Security-based swap dealer | □ Major security-based swap participant | | | | □ Check here if respondent is also an OTC derivatives dealer | | | | | | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | 309 East Paces Ferry Road Suite | 000
1 | | | | | | (No. and Street) | | | | | Atlanta | Georgia | 30305 | | | | (City) | {State) | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Natalie Miller | 404-445-0035 | nmiller1010@arkadios.com | | | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing | | | | | David Lundgren and Company | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | 505 North Mur-Len Road | Olathe | Kansas
66062 | | | | | | | | | | (Address) | (City) | (State)
(Zip Code) | | | | | | U079 | | | | of Registration with PCAOB)(;f appUcable) | | (PCAOB Reg;ma,;oo N,
mbe,, ;f appUcable) | | | | FOR OFFICIAL USE ON LY | | | | | | T" | | | | | | | 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-5(e)(1)(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.** I {1}------------------------------------------------ | OATH OR AFFIRMATION | | | |------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------| | | | swear (or affirm) that, to the best of my knowledge and belief, the | | 1, Chet Payne
financial report pertaining to the firm of Arkadios Capital | | as of | | 12/31 | | 201,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. | | -- | | | i
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t | | | a (a) statement of financial coni6,,'OU[Yss | robin | | | i (b) Notes to consolidated statemeri6rtppsiel | | | | | | ii (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of | | ii (d) Statement of cash flows. | comprehensive income (as defined in§ 210.1-02 of Regulation S-X). | | | iii | (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | | i () Statement of changes in liabilities subordinated to claims of creditors. | | | iii
(g)Notes to consolidated financial statements. | | | | | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | | iii | (i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | | | i (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. | | | | [] (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. | | | D | | (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. | | | | | | (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net | | | | worth under 17 CFR 240.15c3-1, 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. | | | | (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. | | D | | (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. iii (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. (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **!iii (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 240.15c3-1e 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}------------------------------------------------ ARKADIOS CAPITAL LLC Statement of Financial Condition For the Year Ended December 31, 2021 With Report of Independent Registered Public Accounting Firm {3}------------------------------------------------ #### ARKADIOS CAPITAL LLC Financial Statements for the Year Ended December 31, 2021 Table of Contents | Report of
Independent
Registered
Public
Accounting
Firm | 1 | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------| | Financial
Statements | | | Statement
of
Financial
Condition | 2 | | Statement
of
Income | 3 | | Statement
of
Changes
in
Member's
Equity | 4 | | of
Cash
Flows
Statement | 5 | | Notes to Financial
Statements | 6-12 | | Schedule
I- Computation
of
Net Capital
Under
Rule
15c3-1
of
the
Securities
and
Commission
Exchange | 13 | | Schedule
II- Computation
for
Determination
of
Reserve Requirements
under
the
Securities
and
Exchange
Commission
Rule
15e3-3 | 14 | | Schedule
III - Information
Relating
to the
Possession
or Control
Requirements
under
the
Securities
and
Exchange
Commission
Rule
15c3-3 | 14 | {4}------------------------------------------------ **TELEPHONE (913) 782-9530 FACSIMILE (913) 782-9564** #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Arkadios Capital #### **Opinion on the Flnancial Statements** We have audited the accompanying statement of financial condition of Arkadios Capital as of December 31, 2021, the related statements of income, 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 Arkadios Capital as of December 31, 2021, 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 Arkadios Capital's management. Our responsibility is to express an opinion on Arkadios Capital'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 Arkadios Capital 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 are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. #### **Auditor's Report on Supplemental Information** Schedules I, 11, and Ill have been subjected to audit procedures performed In conjunction with the audit of Arkadios Capital's financial statements. The supplemental information is the responsibility of Arkadios Capital'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, Schedules I, II, and Ill are fairly stated, in all material respects, in relation to the .27 We have served as Arkadios Capital's auditor since 2017. Olathe, Kansas March 30, 2022 {5}------------------------------------------------ #### **ARKADIOS CAPITAL LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021** #### ASSETS | Cash and cash equivalents
Deposit with clearing organization | | 4,736,114
100,000 | |--------------------------------------------------------------------------------------------------------------------------|----|--------------------------------------------| | Receivables:
Clearing organizations
Other Receivables | | ,443,788
1
423,357 | | Financial instruments owned, at fair value:
Fixed Assets, net of depreciation
Prepaid expenses and other assets | | 77,792
,267,247
1 | | Total Assets | \$ | 048,298
8, | | LIABILITIES AND STOCKHOLDERS'
EQUITY | | | | LIABILITIES
Accounts payable and accrued expenses
Commissions payable
Due to Bond Group
Contingent liability | | 109,511
3,069,956
800,000
100,000 | | Total Liabilities | \$ | 4,079,467 | | STOCKHOLDERS' EQUITY | | | | Member's Equity | | 3,968,831 | | Total Liabilities and Equity | \$ | 048,298
8, | {6}------------------------------------------------ #### **ARKADIOS CAPITAL LLC STATEMENT OF INCOME Year Ended December 31, 2021** | REVENUES | | |----------------------------------------------|-----------------| | Brokerage commissions | \$ 30,561,663 | | Consulting income | 5,483,850 | | Advisory fees | 8,319,499 | | Mutual funds and insurance product
trails | 7,065,015 | | Trading, proprietary | 3,135,794 | | Other revenue | 990,723 | | Net Revenues | 55,556.544 | | GENERAL AND ADMINISTRATIVE EXPENSES | | | Commissions, compensation,
and benefits | 35,147,352 | | Advisory fees | 6,860,755 | | Clearing fees | 572,244 | | Communications, information technology | 395,620 | | Consulting fees | 5,060,158 | | Insurance | 12,014 | | Interest expense | 73,452 | | Licenses and registrations | 177,317 | | Occupancy costs | 389,915 | | Professional fees | 343,146 | | Sundry costs, other trade fees | 484,798 | | Travel and entertainment | 252,702 | | Other operating
expenses | 1,703,437 | | Total expenses | 51,472,910 | | NET OPERA TING INCOME | \$
4,083.634 | {7}------------------------------------------------ #### **ARKADIOS CAPITAL LLC STATEMENT OF CHANGES IN MEMBERS' EQUITY YEAR ENDED DECEMBER 31, 2021** | Beginning Balance, December 31, 2020 | 2,270,360 | |--------------------------------------|-------------| | Member's Draw | (2,385,163) | | Net Income | 4,083,634 | | Ending Balance, December 31, 2021 | 3,968,831 | {8}------------------------------------------------ #### **ARKADIOS CAPITAL LLC STATEMENT OF CASH FLOWS Year Ended December 31, 2021** #### CASH FLOWS FROM OPERATING ACTIVITIES: | Net income | \$
4,083,634 | |-----------------------------------------------------------------------------------------|-----------------| | Adjustments to reconcile net income to net cash provided
by operating
activities: | | | Depreciation | 55,484 | | Changes in operating
assets and liabilities: | | | (Decrease) in receivable from broker dealer | 57,620 | | (Increase) in Accounts Receivable | (183,918) | | (Increase) in Forgivable Loans | (530,563) | | (Decrease) in Rep
Commission Payable | 2,569,402 | | (Decrease) in
other assets | 140,967 | | Increase in
accounts payable & accrued expenses | 17 717 | | NET CASH (USED) BY OPERA TING ACTIVITIES | 6.210.343 | | CASH FLOWS FROM FINANCING ACTIVITIES:
Member Distributions | (2,385,163) | | NET CASH (USED) BY FINANCING ACTIVITIES | \$ (2385,163) | | NET (DECREASE) IN CASH AND CASH EQUIVALENTS | 3,825,180 | | CASH AND CASH EQUIVALENTS BALANCE:
Beginning of year | 910,934 | | End of year | \$
4,736,114 | {9}------------------------------------------------ # NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Description of Business: Arkadios Capital LLC (the "Company"), a Georgia Limited Liability Company organized in November 2018, is a securities broker-dealer registered with the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA") approved on October 17, 2016. The Company was previously known as MSY Securities, LLC, a Georgia limited liability company. The Company adopted the new name of Arkadios Capital LLC effective November 21, 2016. The Company is wholly-owned by Arkadios Holdings, Inc. (the "Parent"). The Company operates as a "general securities" broker-dealer executing trades for institutional and retail customers. The Company does not carry customer accounts or perform custodial functions relating to customer securities. Customers of the Company are introduced to a carrying broker-dealer (the "clearing broker") on a fully disclosed basis. The Company's customer are located throughout the United States. A summary of the Company's significant accounting policies are as follows: Accounting policies: The Company follows generally accepted accounting principles (GAAP), as established by the Financial Accounting Standards Board (the FASB) to ensure consistent reporting of financial condition, results of operations, and cash flows. Cash and Cash Equivalents: The Company considers all cash and money market instruments with a maturity of ninety days or less to be cash and cash equivalents. The Company maintains its demand deposits in a high credit quality financial institution. Balances at times may exceed federally insured limits. Property and Equipment: Property and equipment are recorded at cost. Depreciation is provided by use of straight-line methods over the estimated useful lives of the respective assets. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations. Depreciation expense for 2021 was \$55,484. **Income Taxes:** The Company is taxed as a sole proprietorship. Therefore the income or losses of the Company flow through to its member and no income taxes are recorded in the accompanying financial statements. {10}------------------------------------------------ #### NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes {Continued): The Company has adopted the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under ASC 740-10, the Company isrequired to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respectiveposition. A tax position includes an entity's status, including its status as apass-through entity, and the decision not to file atax return. The Company has evaluated each of its tax positions and has determined that no provision or liability for income taxes is necessary. Estimates: Management uses estimates and assumptions inpreparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and thereported amounts of revenue and expense during the reporting period. Actual results could vary from the estimates that were assumed in preparing the financial statements. Revenue Recognition: The Company earns Investment Advisory Fees from its contracts with brokerage customers to manage assets for investment, and/or to transact on their accounts. The Investment Advisory Fees areprimarily earned over time as the Company provides the contracted monthly services and aregenerally assessed based on a tiered scale of the market value of assets under management(AUM) at month-end. The Company earns brokerage fees from its contracts with brokerage customers to transact on their account. Fees are transaction based, including trade execution services, are recognized at thepoint in time that the transaction is executed, i.e., the trade date. This includes riskless principal (government and corporate bonds) transactions inwhich the company receives a buy order from a customer and the Company purchases the security from anotherperson or entity to offset the sale to the customer. Company buys the bond at a lower price than it sells it. The riskless principal revenue is earned at the time the transaction is executed. Other related servicesprovided include financial planning services and the fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. The Company elected the modified retrospective approach of adoption. Mutual Funds: Mutual Funds or pooled investment vehicles (collectively, "funds") have entered into agreements with the Company to distribute/sell its shares to investors. Fees arepaid up front and over time (12b-1 fees) on the basis of a contractual rate applied to themonthly orquarterly market value of the fund (that is, net asset value, the fund may also pay, upon investor exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. Revenue is recognized monthly as services areprovided. {11}------------------------------------------------ #### NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Principal Trading Revenue: Principal transactions include revenues from customers' purchases and sales of financial instruments, including fixed income and municipal securities, in which we transact on a principal basis. To facilitate such transactions, we carry inventories of financial instruments. The gains and losses on such inventories, both realized and unrealized, are reported as principal trading revenues. Securities Transactions: Principal transactions and related revenues and expenses are recorded at fair value on a trade-date basis ( as if they had settled). Profit and loss arising from all securities transactions entered into for the account and risk of the Company are recorded in trading revenue in the statement of operations. Amounts receivable and payable for securities transactions that have not reached their contractual settlement date are recorded net as receivable from clearing broker on the statement of financial condition. Date of Management's Review: Subsequent events were evaluated through March 30, 2022, the date which the financial statements were available to be issued. Accounting Standards: The Company is evaluating new accounting standards and will implement as required. #### NOTE BLEASES The Company leases its office facilities under a related party expense sharing agreement Rent expense for the year ended December 31, 2021 was approximately \$389,915. The Company had no lease commitments extending beyond one year. #### NOTE C-NET CAPITAL The Company, as a registered broker dealer is subject to the Securities and Exchange Commission 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. At December 31, 2021, the Company had net capital of\$2,200,435, which was \$1,935,137 in excess of its required net capital of \$265,298 and its ratio of aggregate indebtedness to net capital was 0.10 to 1.0. #### NOTE D - OFF BALANCE SHEET RISK In the normal course of business, the Company's customers execute securities transactions through the Company. These activities may expose the Company to off balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss. {12}------------------------------------------------ NOTE E -FAIR VALUE F ASB ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by F ASB ASC 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company has the ability to access. - Level 2 inputs are inputs ( other than quoted prices included within level 1) that are observable for the asset or liability, either directly or indirectly. - Level 3 are unobservable inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2021. | | Fair Value
Measurements | Level 1 | Level 2 | Leve 3 | |------------------------------|----------------------------|---------------|-----------|---------------| | Securities | 2021 | Valuation | Valuation | Valuation | | owned,
municipal
bonds | \$
0 | -
\$ - 0 | \$0 | -
\$ - 0 | | Total | 0
\$ | -
0-
\$ | \$0 | -
0-
\$ | {13}------------------------------------------------ ## NOTE E -FAIR VALUE (CONTINUED) The fair value of these Level 2 securities is based on a market approach with prices obtained from third party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes. There were no transfers between Level 1 and Level 2 during the year. The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the instrument. Fair value of investments securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities. State and municipal government obligations which include U.S. Government securities and Government-sponsored enterprises are stated at fair value based on third-party dealer quotes. These financial instruments are classified in Level 2 of the fair value hierarchy. ## NOTE F - CLEARING BROKER AND CLEARANCE AGREEMENT The Company has an agreement with a clearing broker to execute and clear, on a fully disclosed basis, customer accounts of the Company. In accordance with this agreement, the Company is required to maintain a deposit in cash or securities. The deposit with its clearing broker is refundable but, subject to offsets, if and when the Company ceases doing business with the clearing broker. {14}------------------------------------------------ #### NOTE F --CLEARING BROKER AND CLEARANCE AGREEMENT (CONTINUED) The Company's clearing agreement requires that a minimum balance of \$100,000 be maintained on deposit with the clearing broker and that minimum net capital of \$250,000 be maintained. The Company was incompliance with respect to thisagreement as of December 31, 2021. #### NOTE G- RELATED PARTY TRANSACTIONS The Company has an expense sharing agreement with the Parent. Under theagreement the Company pays the Parent monthly fees foruse of office facilities. The amount expensed in the financial statements for 2021 isapproximately \$389,915. The Company receives reimbursed expenses from a related party. The amount recorded as income in the financial statements for 2021 isapproximately \$66,000. #### NOTE H-PROPERTY AND EQUIPMENT A summary of the cost and accumulated depreciation of premises and equipment follows: | December
31, 2021 | | |------------------------------------|--------------| | Website,
at cost | \$
15,754 | | Computer equipment,
at cost | 88,024 | | Furniture
equipment,
at cost | 165,520 | | Accumulated
depreciation | (91,506) | | Property and
equipment,
net | \$77,792 | The Company uses the straight-line depreciation method over theuseful life of the asset. Depreciation expense for theyear ended December 31, 2021 amounted to \$55,484. #### NOTE I- CONTINGENCIES AND CLAIMS The Company carries a contingent liability in the amount of \$100,000 for the deductible on its E&O policy. #### NOTE J-NOTE PAY ABLE The Company entered into a Promissory Note in 2019. The notegives the Company theoption to borrow up to \$1,500,000. The outstanding principal amount shall bear interest at the rate of 5% peryear. As of December 31, 2021, the Company had a balance borrowed of \$0 on the note. {15}------------------------------------------------ # NOTE KNEW ACCOUNTING PRONOUNCEMENT In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as retrospective recognition and measurement of impacted leases. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2021, with early adoption permitted. Management is currently evaluating this standard. # NOTE L- ACCOUNTS RECEIVABLE Accounts receivable consist of commission receivable from clearing broker and other trade receivables. The Company regularly reviews its accounts receivable for any bad debts. The review for bad debts is based on an analysis of the Company's collection experience, customer worthiness, and current economic trends. The Company believes all receivables are collectible and no allowance is needed. {16}------------------------------------------------ SUPPLEMENT AL INFORMATION {17}------------------------------------------------ #### **SCHEDULE I ARKADIOS CAPITAL LLC** #### **COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934 AS OF DECEMBER 31, 2021** #### NET CAPITAL: | Total members' equity | \$3,968,831 | |-------------------------------------------------------------------------------------------------------------|------------------------| | Less nonallowable assets:
Other assets | ,768,396)
(1 | | Net capital before haircuts | 2,200,435 | | Less haircuts | (0) | | Net capital
Minimum net capital required | 2,200,435
(265,298) | | Excess net capital | \$1,935,137 | | Aggregate indebtedness total liabilities, less securities bought,
And securities sold, not yet purchased | \$3,979,467 | | Net capital based on aggregate indebtedness | 935,
137
\$1 | | Ratio of aggregate indebtedness to net capital | 0.10 to 1.0 | RECONCILIATION WITH COMPANY'S COMPUTATION OF NET CAPITAL INCLUDED IN PART IIA OF FORM X-17A-5 AS OF DECEMBER 31, 2021. There was no significant difference between the net capital in Part IIA of Form X-17A-5 and net capital above. {18}------------------------------------------------ #### **ARKADIOS CAPITAL LLC** #### SCHEDULE II COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER RULE l 5c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2021 The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(ii) of the Rule, and was in compliance with the conditions of the exemption at December 31, 2021. #### SCHEDULE III #### INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2021 The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(ii) of the Rule, and was in compliance with the conditions of the exemption at December 31, 2021. {19}------------------------------------------------ DAVID B. LUNDGREN, **MBA,** CPA CATHERINE LUNDGREN MBA, CPA **TELEPHONE (913) 782-9530 FACSIMILE (913) 782-9564** #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Directors and Shareholders of Arkadios Capital We have reviewed management's statements, included in the accompanying Exemption Report, in which ( 1 ) Arkadios Capital identified the following provisions of17C. F. R. \$15c3-3(k) under which Arkadios Capital claimed an exemption from 17 C.F.R. §240.15c3-3: (k)(2)(ii) (the Customer Protection Rule) and (2) Arkadios Capital stated that Arkadios Capital met the identified exemption provisions throughout the most recent fiscal year without exception. Arkadios Capital'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 Arkadios Capital'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 p**�**h (k)(2)(i" ule 157 zder the Securities Exchange Act of 1934.** Olathe, Kansas March 30, 2022 {20}------------------------------------------------ **ARKADI OS** C A **P T** A L 309 E Paces Ferry Rd.] Suite 1000] Atlanta GA 30305 Office [404.445.0035 March 17. 2022 David Lundgren & *Co.*505 N. Mur-Len Road Olathe. KS 66062 (913) 782-9530 Attention David Lundgren Arkadios Capital LLC (the " Company") is a registered broker-dealer subject to Rule I7a-5 promulgated by the Securities and Exchange Commission (I7CF.R. 240.17a-5. " Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by I7CE.R. 240.17a-5(d(I) and (4). To the best of its knowledge and belief. the Company states the following: - (1) The Company claimed an exemption from I7CE.R 8240.15c3-3 under the following provisionsof I7CE.R. \$240.15c3-3(k)02(ii): - (2) The Company met the identified exemption provisions in I7CF R \$240.15c3-3(k)02)(ii) from January I, 2021 through December 31 2021 without exception. David Millican affirm that to the best of my knowledge and belief, this Exemption report is true and correct *I* *J·=gs* Title: CEO Date: March 17,2022 {21}------------------------------------------------ #### DAVID LUNDGREN & COMPANY CERTIFIED **PUBLIC ACCOUNTANTS, CHARTERED 5OE NORTH MUR-LEN ROAD OLATHE, KANSAS 66062** **DAVID B. LUNDGREN, MBA, CPA CATHERINE LUNDGREN MBA, CPA** **TELEPHONE (913) 782-9530 FACSIMILE (913) 782-9564** #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES #### Board of Directors of Arkadios Capital We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below on the accompanying General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2021. Management of Arkadios Capital (Company) is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2021. Additionally, SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings are as follows: - 1) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17A-5 Part Ill for the year ended December 31, 2021 with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2021, noting no differences; - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences. We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to and did not conduct an examination or a review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Company and SIPC and is not intended to be and should not be used jnyone other than these specified parties. *2.-=* H Olathe, Kansas March 30, 2022 {22}------------------------------------------------ | SIPC-7 | | |----------------|--| | (36-REV 12/18) | | SECURITIES INVESTOR PROTECTION CORPORATION Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001 **General Assessment Reconciliation** ![](_page_22_Picture_3.jpeg) For the fiscal year ended **12/31/2021** (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: | 7
]Arkadios
t
Capi
al
l
309 East Paces Ferry Road
Ste 1000
Atlanta, GA 30305
SEC 8-69729 FINRA
_J | 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. | | | Natalie Miller 404-445-0035 | | | | | General Assessment (item 2e from page 2)
2. A. | .41,322 | | Less payment made with SIPC-6 filed (exclude interest)
B.
7/21/202
1 | 13,424 | | Date Paid
C. Less prior overpayment applied | _
( | | d
D. Assessment balance due or (overpayment) | 27,898 | | Interest computed on late payment (see instruction E) for_
E.
ays at 20% per annum | | | Total assessment balance and interest due (or overpayment carried forward)
F. | 27,898 | | [
e
za.
e
,m.
S
e@
Check mailed to P.O. Box
Funds Wired
AC
27,898
Total (must be same as F above
) | _ | | H. Overpayment carried forward
\$( | _ | | 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
Arkadios Capital
that all information contained herein is true, correct | 4 | | ta
and complete.
la | (Name of Corporation, Partnership or other organization) | | 2
day of February
22
Dated the 24
FINOP | (Authorized Signature)
(Title) | | | P | | | •
This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form
for a period of not less than 6 years, the latest 2 years in an easily accessible place. | | |---------------------|----------------|----------------------------|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------| | =
LA | EE Dates: | ostmarked | Received | Reviewed | | | LAI
cr
e
a | E Calculations | | | Documentation | _
Forward Copy | | | Exceptions: | | | | | | | | Disposition of exceptions: | | | | {23}------------------------------------------------ ### **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** Amounts for the fiscal period | beginning Z7 | | |--------------|--| | | | (to page 1, line 2.A.) | | | and endin
g | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|----------------| | Item No.
2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) | Eliminate cents
\$55,556,544 | | | | | | | 2b. Additions:
(1) Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not included above. | | | | (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 | | | | 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. | | 16,028,434 | | (2) Revenues from commodity transactions. | | | | (3) Commissions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | 572,244 | | | (4) Reimbursements for postage in connection with proxy solicitation. | | | | (5) Net gain from securities in investment accounts. | 3,135,794 | | | (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. | 2,715,066 | | | (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): | | | | non securities
consulting | | 5,483,850 | | (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. | 73
452
\$
__ ,
_ | | | (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) | | 73,452 | | Total deductions | | 28,008,839 | | 2d. SIPC Net Operating Revenues | ,27,547,705 | | | 2e. General Assessment @ .0015 | 41,322 | | | | | | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.