# ASCENDANT ALTERNATIVE STRATEGIES, LLC X-17A-5 (2020-03-02) — Broker-dealer annual report
- Company: ASCENDANT ALTERNATIVE STRATEGIES, LLC
- Form: X-17A-5
- Filed: 2020-03-02
- Period: 2019-12-31
- Accession: 0001673501-20-000002
- CIK: 1673501
- File #: 8-69769
- Material weakness: No
- Auditor: Raiche Ende Malter & Co, LLP
- Auditor location: New York, NY
- Contact: Edward Cohen
- Phone: 2035576070
- Signed by: Mark Martino (Chief Executive Officer)
Original filing: https://www.sec.gov/Archives/edgar/data/1673501/000167350120000002/aaspublic.pdf
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Ascendant Alternative Strategies, LLC Ascendant Alternative Strategies, LLC
Statement of Financial Condition And Report of Independent Registered Public Accounting Firm Statement of Financial Condition And Report of Independent Registered Public Accounting Firm
> December 31, 2019 December 31, 2019
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UNITED STATES OMB APPROVAL SECURITIESANDEXCHANGECOMMISSION OMB Number: 3235-0123 Washington, D.C. 20549 Expires: August 31, 2020 UNITED STATES OMB APPROVAL SECURITIESANDEXCHANGECOMMISSION OMB Number: 3235-0123 Washington, D.C. 20549 Expires: August 31, 2020
Estimated average burden ANNUAL AUDITED REPORT hoursperresponse...... 12.00 Estimated average burden
# FO:XR)'(I:1II7IA-5 SEC FILE NUMBER ANNUAL AUDITED REPORT hours perresponse...... 12.00 FOEXR¢1II7IAII5 SEC FILE NUMBER
8- 69769 8- 69769
FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule l7a-5 Thereunder
| BEGINNING
REPORT
FOR
THE
PERIOD
BEGINNING
FOR
PERIOD
REPORT
THE | 01/01/201
9
01/01/201
9 | ENDING
AND
AND
ENDING | 2/31/201
9
1
2/31/201
1
9 | |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|----------------------------------------------------|------------------------------------------------------------------------------------------|--|
| | MM/DD/YY
MM/DD/YY | | MM/DD/YY
MM/DD/YY | |
| A.
A. | IDENTIFICATION
REGISTRANT
REGISTRANT
IDENTIFICATION | | | |
| Ascendant
or
OF
BROKER-DEALER:
Ascendant
NAME
NAME
BROKER-DEALER: | Alternative
Alternative | Strategies,
Strategies
LLC
LLC
, | OFFICIAL
ONLY
use
use
OFFICIAL
ONLY | |
| PLACE
OF
BUSINESS:
(Do
PO. Box
No.)
ADDRESS
ADDRESS
OF
OF
PRINCIPAL
PRINCIPAL
PLACE
OF
BUSINESS:
(Do
P.O.
Box
No.)
not use
not
use | | | FIRM
ID.
ID. NO.
NO.
FIRM | |
| Lexington
Avenue,
405
26th
Lexington
Avenue
26th
405
, | Floor
Floor | | | |
| | (No.
Street)
(No. and
and
Street) | | | |
| York
New
New
York | NY
NY | | 10174
10174 | |
| (City)
(City) | (State)
(State) | | (Zip
Code)
Code)
(Zip | |
| NAME
AND
NUMBER
TELEPHONE
OF
PERSON
TELEPHONE
NUMBER
OF
PERSON
NAME
AND
Mark
Martino
Mark
Martino | IN
CONTACT
TO
TO
CONTACT | REGARD
TO
THIS
THIS
IN
REGARD
TO | REPORT
REPORT
(212)
(212)
651-4822
651-4822 | |
| | | | (Area
Number)
(Area
Code
Telephone
Telephone
Number)
Code
—
— | |
| B.
B. | IDENTIFICATION
ACCOUNTANT
ACCOUNTANT
IDENTIFICATION | | | |
| INDEPENDENT
PUBLIC
ACCOUNTANT
ACCOUNTANT
INDEPENDENT
PUBLIC
whose | opinion
opinion
contained
whose
contained
is
is | in
in
this
this
Report*
Report* | | |
| Malter
Malter
Raiche
Raiche
Ende
Ende
Co.
Co.
&
& | LLP
LLP | | | |
| (Name
(Name | ifindividual,
ifindividual,
last, first,
state
state
last,
—
— | first.
middle
middle
name)
name) | | |
| 1375
Broadway
15th
Floor
1375
Broadway
15th
Floor
,
, | New
York
New
York | NY
NY | 10018
10018 | |
| (Address)
(Address) | (City)
(City) | (State)
(State) | (Zip
(Zip
Code)
Code) | |
| CHECK
CHECK
ONE:
ONE: | | | | |
| .Certified
.Certified
Public
Public
Accountant
Accountant | | | | |
| Public
Public
Accountant
Accountant | | | | |
| Accountant
not
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United | of
of
orany
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| Accountant
not
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resident | or any
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| /
FOR
./
FOR | USE
OFFICIAL
USE
OFFICIAL | ONLY
ONLY | | |
| | | | | |
| | | | | |
\*Claimsfor exemptionfrom the requirement that the annual report be covered by the opinion ofan independent public accountant must be supported by a statement offacts and circumstances relied on as the basisfor the exemption. See Section 240.1 7a-5(e) (2) \*Claimsfor exemptionfrom the requirement that the annual report be covered by the opinion ofan independentpublic accountant must be supported by a statement offacts and circumstances relied on as the basisfor the exemption. See Section 240.1 7a-5(e)(2)
Potential persons who are to respond to the collection of information contained in this form arenot required to respond SEC 1410 (1 1'05) unless the form displays a currently valid OMB control number. Potential persons who are to respond to the collection of Information contained in this form are not required to respond SEC 1410 (1 1'05) unless the form displays a currently valid OMB control number.
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#### OATH OR AFFIRMATION OATH OR AFFIRMATION
| Mark
Martino
best of
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Martino
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, | | |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
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\*\*For conditions ofconfidential treatment ofcertain portions ofthisfiling, see section 240.1 7a-5(e) (3). \*\*For conditions ofconfidential treatment ofcertain portions ofthisfiling, see section 240.17a-5(e)(3).
{3}------------------------------------------------
Index December 31, 2019 Index December 31, 2019
| | Page(s)
Page(s) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
| of
of
Accounting
Accounting
Report
Report
Independent
Independent
Registered
Registered
Public
Public
Firm
Firm
| 1
1 |
| Financial
Statement
Statement
Financial | |
| Statement
of
of
Statement
Financial
Financial
Condition
Condition
| 2
2 |
| Statement
Notes
Notes
to
the
theFinancial
Financial
Statement
to | 3—9
3—9 |
{4}------------------------------------------------
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CERTIFIED PUBLIC ACCOUNTANTS E ADVISDRS min New York cu; Lung Hand 5. NamJefig EERTI FIED PUBLIC MCOUNTANTS 5: ADVISOIIS am; in Newe City, Long Island aNewJersey
## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members of Ascendant Alternative Strategies, LLC New York, New York To the Members of Ascendant Alternative Strategies, LLC New York, New York
#### Opinion on the Financial Statement Opinion on the Financial Statement
We have audited the accompanying statement of financial condition of Ascendant Alternative Strategies, LLC as of December 31, 2019 and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Ascendant Alternative Strategies, LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. We have audited the accompanying statement of financial condition of Ascendant Alternative Strategies, LLC as of December 31, 2019 and the related notes (collectively referred to as the"financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Ascendant Alternative Strategies, LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
#### Basis for Opinion Basis for Opinion
This financial statement is the responsibility ofAscendant Alternative Strategies, LLC's management. Our responsibility is to express an opinion on Ascendant Alternative Strategies, LLC's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Ascendant Alternative Strategies, LLC in accordance with the US. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. This financial statement is the responsibility of Ascendant Alternative Strategies, LLC's management. Our responsibility is to express an opinion on Ascendant Alternative Strategies, LLC's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Ascendant Alternative Strategies, LLC in accordance with the US. 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 theaudit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We 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 orfraud, 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 theoverall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion.
M MI/Mrtzz a? MMi/u/erézo a?
RAICH ENDE MALTER & CO. LLP We have served as Ascendant Alternative Strategies, LLC's auditor since 2019. New York, New York March 1, 2020 RAICH ENDE MALTER & CO. LLP We have served as Ascendant Alternative Strategies, LLC's auditor since 2019. New York, New York March 1, 2020
{5}------------------------------------------------
## Statement of Financial Condition December 31, 2019 Statement of Financial Condition December 31, 2019
| Assets
Assets | | |
|----------------------------------------------------------------------------------------------------------------------|----------|----------------------------|
| Cash
Cash | \$
\$ | 289,309
289,309 |
| receivable
Commission
Commission
receivable | | 75,515
75,515 |
| other
other
Prepaid
Prepaid
expenses
expenses
and
assets
assets
and | | 78,360
78,360 |
| Total
Assets
Assets
Total | \$
\$ | 443,1
443,1
84
84 |
| Liabilities
Liabilities
Equity
and
Members'
Members'
Equity
and | | |
| Liabilities
Liabilities | | |
| Payout
Payout
payable
payable
to
to
registered
registered
representatives
representatives | \$
\$ | 172,018
172,018 |
| other
Accrued
Accrued
expenses
expenses
and
other
liabilities
liabilities
and | | 95,758
95,758 |
| Liabilities
Liabilities
Total
Total | | 267,776
267,776 |
| Members'
equity
Members' equity | | 175,408
175,408 |
| Liabilities
Liabilities
Total
Total
Members'
Members'
Equity
Equity
and
and | \$
\$ | 443,184
443,184 |
The accompanying notes are an integral part of this financial statement. The accompanying notes arean integral part of this financial statement.
{6}------------------------------------------------
# Notes to the Financial Statement December 31, 2018 Notes to the Financial Statement December 31, 2018
# 1. Organization and Business Description 1. Organization and Business Description
# Organization Organization
Ascendant Alternative Strategies, LLC (the "Company") a Delaware limited liability company, was formed on April 11, 2016. Effective March 13,2017, the Company commenced operations as a registered broker-dealer under the Securities Exchange Act of 1934 subject to certain regulations of the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority, Inc. ("FINRA"). Ascendant Alternative Strategies, LLC (the "Company") a Delaware limited liability company, was formed on April 11, 2016. Effective March 13, 2017, the Company commenced operations as a registered broker-dealer under the Securities Exchange Act of1934 subject to certain regulations of the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority, Inc. ("FINRA").
The members of the Company are MR Ranger LLC and DJ Partners, LLC each a Delaware limited liability company formed in accordance with the Delaware Limited Liability Company Act on April 11th and 12th 2016, respectively. Mark D. Martino is the sole member of MR Ranger LLC and David Gentile and Jeffrey Schneider are the members of DJ Partners, LLC. The profit and loss sharing percentages between MR Ranger LLC and DJ Partners, LLC is 33.33% and 66.67%, respectively. The members of the Company areMR Ranger LLC and DJ Partners, LLC each a Delaware limited liability company formed in accordance with the Delaware Limited Liability Company Act on April 11th and 12th 2016, respectively. Mark D. Martino is the sole member of MR Ranger LLC and David Gentile andJeffrey Schneider are the members of DJ Partners, LLC. The profit and losssharing percentages between MR Ranger LLC and DJ Partners, LLC is 33.33% and 66.67%, respectively.
# Business Description Business Description
The Company was formed to act as a wholesaling broker-dealer, selling interests in various types of direct investment products, including, without limitation, private real estate investment programs and operating businesses. The Company may also act in the capacity of placement agent or finder in private placements of equity orfixed income securities and in the sale of limited partnership interests in real estate or private operating companies to other broker-dealers or to institutional or accredited investors. The Company was formed to act as a wholesaling broker-dealer, selling interests in various types of direct investment products, including, without limitation, private real estate investment programs and operating businesses. The Company may also act in the capacity of placement agent or finder in private placements of equity or fixed income securities and in the saleof limited partnership interests in real estate or private operating companies to other broker-dealers or to institutional or accredited investors.
# Accounting Policies Accounting Policies
# Basis of Presentation Basis of Presentation
The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The financial statements areprepared in accordance withaccounting principles generally accepted in the United States of America ("US GAAP").
# Use of Estimates in the Preparation of Financial Statements Use of Estimates in the Preparation of Financial Statements
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities, the disclosure of contingencies at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from the estimates included in the financial statements. The preparation of the financial statements in conformity with US. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities, the disclosure of contingencies at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from the estimates included in the financial statements.
# Income Taxes Income Taxes
The Company has elected to be treated as a limited liability company under the applicable provisions of income tax laws. Since the Company is a limited liability company, no income taxes are incurred by the Company as all earnings and losses flow directly to the Members. However, the Company is subject to Texas Franchise Tax and the New York City Unincorporated Business Tax. The Company haselected to be treated as a limited liability company under the applicable provisions of income tax laws.Since the Company is a limited liability company, no income taxes areincurred by the Company as all earnings and losses flow directly to the Members. However, the Company is subject to Texas Franchise Tax and the New York City Unincorporated Business Tax.
The Company complies with U.S. GAAP which requires an asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed fordifferences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The Company complies with US. GAAP which requires an asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
{7}------------------------------------------------
The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significantjudgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more-Iike-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component of income tax expense, if assessed. The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws.Significantjudgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more-likely—than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records anychanges in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component of income tax expense, if assessed.
In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce members' equity. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities. Management's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. In accordance with US. GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as thelargest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce members' equity. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities. Management's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof.
The Company files its income tax returns in the U.S. federal and various state and local jurisdictions. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state and local tax laws. The Company's management does not expect that the totalamount of unrecognized tax benefits will materially change over the next twelve months. The Company files its income tax returns in the US. federal and various state and local jurisdictions. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various taxjurisdictions and compliance with U.S. federal, state and local tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
# Cash Cash
Cash consists of cash deposits held in an account at a major financial institution and therefore are subject to credit risk at the financial institution. The amount on deposit at this institution exceeds the maximum balance insured by the Federal Deposit Insurance Corporation ("FDIC"). However, the Company has not experienced any losses in such account and does not believe there to be any significant credit risk with respect to these deposits. At December 31, 2019, the Company's cash deposits exceed the FDIC limit by \$39,309. Cash consists of cash deposits held in an account at a major financial institution and therefore are subject to credit risk at the financial institution. The amount on deposit at this institution exceeds the maximum balanceinsured by theFederal Deposit Insurance Corporation ("FDIC"). However, the Company has not experienced any losses in such account and does not believe there to be any significant credit risk with respect to these deposits. At December 31, 2019, the Company's cash deposits exceed the FDIC limit by\$39,309.
# Revenue Recognition Revenue Recognition
In accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC Topic 606"), revenue is recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods orservices. ASC Topic 606 requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (0) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that is probable that a significant reversal in the amount of the cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The revenue recognition guidance does not apply to revenue associated with financial instruments, interest income and expense, leasing and insurance contracts. In accordance withASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)("A80 Topic 606"), revenue is recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC Topic 606requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration onlyto the extent that is probable that a significant reversal in the amount of the cumulative revenue recognized would not occur when the uncertainty associated withthe variable consideration is resolved. The revenue recognition guidance does not apply to revenue associated with financial instruments, interest income and expense, leasing and insurance contracts.
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Notes to the Financial Statement December 31, 2019 Notes to the Financial Statement December 31, 2019
#### Significant Judgement Significant Judgement
Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time; how toallocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints onvariable consideration should be applied due to uncertain future events.
### Commission Revenue Commission Revenue
The Company enters into agreements with Hedge Funds ("funds") to distribute shares to investors. The Company may receive commission revenue paid by the fund up front, over time, upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. The Company believes that its performance obligation is the sale of shares to investors and as such this is fulfilled on the closing date. Any fixed amounts are recognized on the closing date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Commission revenue recognized in the current period could result from performance obligations that have been satisfied in prior periods. The Company did not receive commission revenue from performance obligations that were satisfied in prior periods for the year ended December 31, 2019. The Company enters into agreements with Hedge Funds ("funds") to distribute shares to investors. The Company may receive commission revenue paid by the fund up front, over time, upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. The Company believes that its performance obligation is the sale of shares to investors and as such this is fulfilled on the closing date. Any fixed amounts are recognized on the closing date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Commission revenue recognized in the current period could result from performance obligations that have been satisfied in prior periods. The Company did not receive commission revenue from performance obligations that were satisfied in prior periods for the year ended December 31, 2019.
#### Acquisition Fees Revenue Acquisition Fees Revenue
The Company is engaged and earns acquisition fees on transactions in which Company brokers the sale of a controlling interest in an operating business for various funds. The Company recognizes this revenue on the successful closing of an acquisition because that is the point in time the performance obligation is completed under the arrangement. The Company is engaged and earns acquisition feeson transactions in which Company brokers the sale of acontrolling interest in an operating business for various funds. The Company recognizes this revenue on the successful closing of an acquisition because that is the point in time the performance obligation is completed under the arrangement.
#### Profit Participation Fee Revenue Profit Participation FeeRevenue
As additional consideration for the services related to the commission revenue noted above, the Company receives fees that vary based on specified performance measures, for example, when a fund or separate account exceeds a specified benchmark or contractual hurdle over a contractual performance period or the life of a fund. These fees are earned once account returns have exceeded these specified performance measures and are calculated as a percentage of account returns. These performance fees are considered variable consideration as the uncertainty is dependent on the value of the assets at future points in time as well as meeting a specified compound hurdle rate, both of which are highly susceptible to factors outside the Company's influence. Revenues are recognized evenly over the contract period once it is probable that a significant reversal will not occur. As additional consideration for the services related to the commission revenue noted above, the Company receives fees that vary based on specified performance measures, for example, when a fund or separate account exceeds a specified benchmark or contractual hurdle over a contractual performance period or the life of a fund. These fees areearned once account returns have exceeded these specified performance measures and are calculated as a percentage of account returns. These performance fees are considered variable consideration as the uncertainty is dependent on the value of the assets at future points in time as well as meeting a specified compound hurdle rate, both of which are highly susceptible to factors outside the Company's influence. Revenues are recognized evenly over the contract period once it is probable that a significant reversal will not occur.
The Company believes that ratable recognition over the service period is the appropriate approach for recognizing this revenue because the services are substantially the same each day and have the same pattern of transfer. Profit participation fee income recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods. The Company believes that ratable recognition over the service period is the appropriate approach for recognizing this revenue because the services are substantially the same each day and have the same pattern of transfer. Profit participation fee income recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods.
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#### Commissions Receivable & Profit Participation Fees Receivable Commissions Receivable & Profit Participation Fees Receivable
The Company carries its commissions receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its receivables and establishes an allowance fordoubtful accounts based on history ofpast write-offs, collections and current credit conditions. As of December 31, 2019, no allowance for doubtful accounts was deemed necessary. At December 31, 2019, the Company had receivables of \$75,515. The Company carries its commissions receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its receivables and establishes an allowance for doubtful accounts based on history of past write-offs, collections and current credit conditions. As of December 31, 2019, no allowance for doubtful accounts was deemed necessary. At December 31, 2019, the Company had receivables of \$75,515.
#### Fair Value of Financial Assets and Liabilities Fair Value of Financial Assets and Liabilities
Under ASC Topic 820, Fair Value Measurement, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. Under ASC Topic 820, Fair Value Measurement, fair value is defined as the price that would be received to sellan asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are to be used when available. The fair value hierarchy is categorized into three levels based on the inputs as follows: In determining fair value, the Company uses various valuation approaches. A fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are to be used when available. The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has theability to access. Valuation adjustments and block discounts arenot applied to Level 1 securities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree ofjudgment.
Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 2 -Valuations based on quoted prices in markets that are not active or forwhich all significant inputs areobservable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. 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. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities 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, the level in the fair value hierarchy which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement. The availability of valuation techniques and observable inputs can varyfrom security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. 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. Those estimated values do not necessarily represent the amounts that may be ultimately realized dueto the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used hada ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value mayfall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The Company values equity securities that are traded on national exchanges at their last reported sales price. The Company generally values equity securities traded in the OTC markets and listed securities for which no sale was reported on that date their last reported bid price if held long, and last reported ask price if sold short. To the extent that equity securities are actively traded, and valuation adjustments are notapplied, they are categorized in Level 1 of the fair value hierarchy. The Company values equity securities that are traded on national exchanges at their last reported sales price. The Company generally values equity securities traded in the OTC markets and listed securities for which no sale was reported on that date their last reported bid price if held long, and last reported ask price if sold short.To the extent that equity securities are actively traded, and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
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Equity securities traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 of the fair value hierarchy. The Company did not have any equity securities measured at fair value as of December 31, 2019 Equity securities traded on inactive markets or valued by reference to similar instruments are generally categorized in Level 2 of the fair value hierarchy. The Company didnot have any equity securities measured at fair value as of December 31, 2019
The Company values warrants that are traded on an exchange at their last reported sales price. The Company values OTC warrants using the Black-Scholes options pricing model, which takes into account the contract terms (including strike price and contract maturity) and multiple inputs (including time value, volatility, equity prices, interest rates and currency rates). Warrants that are traded on an exchange in an active market are generally classified in Level 1 of the fair value hierarchy. Warrants that are traded on the OTC market are generally classified in Level 2 or 3 of the fair value hierarchy. The Company did not have any warrants that are traded on exchanges. At December 31, 2019, the Company had warrants receivable of \$75,515. The warrants were valued using the Black-Scholes options pricing model. The Company values warrants that are traded on an exchange at their last reported sales price. The Company values OTC warrants using the Black-Scholes options pricing model, which takes into account the contract terms (including strike price and contract maturity) and multiple inputs (including time value, volatility, equity prices, interest rates and currency rates). Warrants that are traded on an exchange in an active market are generally classified in Level 1 of the fair value hierarchy. Warrants that are traded on the OTC market are generally classified in Level 2 or 3 of the fair value hierarchy. The Company did not have any warrants that are traded on exchanges. At December 31, 2019, the Company had warrants receivable of \$75,515. The warrants were valued using the Black-Scholes options pricing model.
The majority ofthe Company's financial assets and liabilities are recorded at amounts that approximate fair value. Such assets and liabilities include cash, fees receivable, and accrued expenses. During the year ended December 31, 2019, the Company received warrants as compensation for various deals. These warrants were paid outto registered representatives. The stocks and warrants were received and paid out on the same date. The warrants were valued using the Black-Scholes options pricing model. The majority of the Company's financial assets and liabilities are recorded at amounts that approximate fair value. Such assets and liabilities include cash, fees receivable, and accrued expenses. During the year ended December 31, 2019, the Company received warrants as compensation for various deals. These warrants were paid out to registered representatives. The stocks and warrants were received and paidout on the same date. The warrants were valued using the Black-Scholes options pricing model.
## Lease Accounting and Adoption of New Accounting Standard Lease Accounting andAdoption of New Accounting Standard
Effective January 1, 2019, the Company adopted the new lease accounting guidance in Accounting Standards Update No.2016-02, Leases (Topic 842) ("ASC Topic 842"). The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for its existing operating lease as an operating lease under the new guidance, without reassessing (a) whether the contract contains a lease under ASC Topic 842, (b) whether classification of the operating lease would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments (as of December 31, 2019) would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. The Company defines a short-term lease as a lease that, at the commencement date, has a lease term of 12 months or less and does not contain an option to purchase the underlying asset that the lease is reasonably certain to exercise. The Company elected to recognize short-term lease payments as an expense on a straight-line basis over the lease term. Related variable lease payments are recognized in the period in which the obligation is incurred. The Company's lease obligations are deemed to be short term. As such, there was no impact on the financial statements upon adoption. Effective January 1, 2019, the Company adopted the new lease accounting guidance in Accounting Standards Update No. 2016-02, Leases (Topic 842)("ASC Topic 842"). The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for its existing operating lease as an operating lease under the new guidance, without reassessing (a) whether the contract contains a lease under ASC Topic 842, (b) whether classification of the operating lease would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments (as of December 31, 2019) would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. The Company defines a short-term lease asa lease that, at the commencement date, has a lease term of 12 months or less and does not contain an option to purchase the underlying asset that the lease is reasonably certain to exercise. The Company elected to recognize short-term lease payments as an expense on a straight-line basis over the lease term. Related variable lease payments are recognized in the period in which the obligation is incurred. The Company's lease obligations are deemed to be short term. As such, there was no impact on the financial statements upon adoption.
# 3. Related Party Transactions 3. Related Party Transactions
GBP Capital Holdings LLC ("GPB") is an alternative asset management company that is an affiliate of the Company by common ownership. Ascendant Capital ("ACL") distributes alternative investment strategies to investors for advisers and alternative asset managers. ACL is also an affiliate of the Company by common ownership. The CEO's of GPB and ACL are the managing members of DJ Partners, LLC. David Gentile is the CEO and owner of 100% of GPB and through DJ Partners, LLC is an indirect owner of the Company. David Gentile has no operational authority with respect to the Company. Jeffry Schneider is the sole owner of ACL and through DJ Partners, LLC is an indirect owner of the Company. Jeffry Schneider is also a managing member of the Company. GBP Capital Holdings LLC ("GPB") is an alternative asset management company that is an affiliate of the Company by common ownership. Ascendant Capital ("ACL") distributes alternative investment strategies to investors for advisers and alternative asset managers. ACL is also an affiliate of the Company by common ownership. The CEO's of GPB and ACL are the managing members of DJ Partners, LLC. David Gentile is the CEO and owner of 100% of GPB and through DJ Partners, LLC is an indirect owner of the Company. David Gentile has no operational authority with respect to the Company. Jeffry Schneider isthe sole owner of ACL and through DJ Partners, LLC is an indirect owner of the Company. Jeffry Schneider is also a managing member of the Company.
The Company had an agreement with GPB as the exclusive dealer manager for GPB's funds. The Company earns commissions from this agreement. The Company had an agreement with GPB as theexclusive dealer manager for GPB's funds. The Company earns commissions from this agreement.
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At times, ACL provides services to GPB for marketing, event planning, administration, client services and other support services. The Company, as agent for ACL, receives payment from GPB for the services ACL provides to GBP and passes 100% of these payments, upon receipt, to ACL. For the year ended December 31, 2019, the Company did not receive payments from GPB and pay ACL for these services. At times, ACL provides services to GPB for marketing, event planning, administration, client services and othersupport services. The Company, as agent for ACL, receives payment from GPB for the services ACL provides to GBP and passes 100% of these payments, upon receipt, to ACL. For the year ended December 31, 2019, the Company did not receive payments from GPB and pay AOL for these services.
Effective March 15, 2018 the Company amended its expense sharing agreement with GPB, dated June 3, 2016. In accordance with the terms ofthe amended expense sharing agreement the Company pays GPB \$1,500 a month for facilities and services including rent, shared spaces, maintenance, utility usage and internet connectivity through May 31 , 2019, at which time the expense sharing agreement ended. Effective March 15, 2018 the Company amended its expense sharing agreement with GPB, dated June 3, 2016. In accordance with theterms of the amended expense sharing agreement the Company pays GPB \$1,500 a month for facilities and services including rent, shared spaces, maintenance, utility usage and internet connectivity through May31,2019, at which time the expense sharing agreement ended.
The SEC is currently conducting an investigation of GPB. The Company is not a target of this investigation however, they received subpoenas from the SEC to provide information and documents in connection with this investigation. The Company has complied with the subpoenas' requests and through March 1, 2020, the date the financial statements were available to be issued, the Company has not received any further requests from the SEC. Effective June 30, 2018 the Company halted new capital raising forGPB. The SEC is currently conducting an investigation of GPB. The Company is not a target of this investigation however, they received subpoenas from the SEC to provide information and documents in connection withthis investigation. The Company hascomplied withthe subpoenas' requests and through March 1, 2020, the date the financial statements were available to be issued, the Company has not received any further requests from the SEC. Effective June 30, 2018 the Company halted new capital raising for GPB.
# 4. Regulatory Requirements 4. Regulatory Requirements
As a registered broker-dealer, the Company is subject to the Uniform Net Capital Rule (Rule 1503- 1) under the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital, as defined, equal to the greater of \$5,000 or 6 and 2/3 of aggregate indebtedness, as defined. At December 31, 2019, the Company had netcapital of \$97,048 that was \$79,196 in excess of its required net capital of \$17,852. The Company's percentage of aggregate indebtedness to net capital is 276% at December 31, 2019. As a registered broker-dealer, the Company is subject to the Uniform Net Capital Rule (Rule 1503- 1) under the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital, as defined, equal to the greater of \$5,000 or 6 and 2/3 of aggregate indebtedness, as defined. At December 31, 2019, the Company had net capital of \$97,048 that was \$79,196 in excess of its required net capital of \$17,852. The Company's percentage of aggregate indebtedness to net capital is 276% at December 31, 2019.
The Company does not hold funds or securities for, or owe money or securities to,customers and operates pursuant to the exemptive provision of SEC Rule 15c3-3(k)(2)(i). 17 C.F.R.§240.15c3- 3(k)(2)(i). The Company is,accordingly, exempt from the remaining provisions ofRule 1503-3, including the requirements to reduce securities to possession or control and to make reserve bank account computations. The Company does not hold funds or securities for, or owe money or securities to, customers and operates pursuant to the exemptive provision of SEC Rule 15c3-3(k)(2)(i). 17 C.F.R.§240.15c3- 3(k)(2)(i). The Company is, accordingly, exempt from the remaining provisions of Rule 15c3-3, including the requirements to reduce securities to possession or control and to make reserve bank account computations.
# 5. Contingencies and Commitments 5. Contingencies andCommitments
The Company has entered into a one-year lease agreement for office space until November 30, 2020. The Company has entered intoa one-year lease agreement for office space until November 30, 2020.
The Company makes guaranteed payments to one Managing Member. The Company makes guaranteed payments to one Managing Member.
In the ordinary course of business, the Company has been named in lawsuits and class actions. The Company believes it has affirmative defenses and is vigorously defending these claims. The ultimate outcome of the foregoing claims cannot be predicted with any certainty in the opinion of outside counsel and the Managing Member given that no discovery has taken place on any these actions. In the ordinary course of business, the Company hasbeen named in lawsuits and class actions. The Company believes it has affirmative defenses and is vigorously defending these claims. The ultimate outcome of the foregoing claims cannot be predicted with any certainty in the opinion of outside counsel and the Managing Member given that no discovery hastaken place on any these actions.
# 6. Derivative Instruments 6. Derivative Instruments
The Company received warrants in the equity of certain companies relating to their commissions revenue activities. A warrant is a security that entitles the holder to buy stock of the company that The Company received warrants in the equity of certain companies relating to their commissions revenue activities. A warrant is a security that entitles theholder to buy stock of the company that
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issued it at a specified price with a pre-determined time period. A warrant has exposure and potential gain based upon the company's share price. The Company mitigates its exposure by assigning these warrants, simultaneous with their receipt by the Company to registered representatives as registered representative payouts. issued it ata specified price with a pre-determined time period. A warranthas exposure and potential gain based upon the company's share price. The Company mitigates its exposure by assigning these warrants, simultaneous with their receipt by the Company to registered representatives as registered representative payouts.
The value of a warrant has two components: time value and intrinsic value. A warrant has a limited life and expires on a certain date. As the expiration date of a warrant approaches, the time value of a warrant will decline. In addition, if the stock underlying the warrant declines in price, the intrinsic value of an in-the-money warrant will decline. Further, if the price of the stock underlying the warrant does not exceed the strike price of the warrant on the expiration date, the warrant will expire worthless. The value of a warrant has two components: time value and intrinsic value. A warrant has a limited life and expires on a certain date. As the expiration date of a warrant approaches, the time value of a warrant will decline. In addition, ifthe stock underlying the warrant declines in price,the intrinsic value of an in-the-money warrant will decline. Further, if the price of the stock underlying the warrant does not exceed the strike price of the warrant on the expiration date, the warrant will expire worthless.
The Company could be exposed to counterparty risk from the potential failure of an issuer of warrants to settle its exercised warrants. The maximum risk of loss from counterparty risk is the fair value of the contracts. The Company considers risk of loss from counterparty risk when determining the fair value of the warrants. The Company could be exposed to counterparty risk from the potential failure of an issuer of warrants to settle its exercised warrants. The maximum risk of loss from counterparty riskis thefair value of the contracts. The Company considers risk of loss from counterparty risk when determining the fair value of the warrants.
# 7. Subsequent Events 7. Subsequent Events
The Company has evaluated subsequent events through March 1, 2020, the date which the financial statements were available to be issued. No events were noted which would require disclosure in the footnotes to the financial statement. The Company has evaluated subsequent events through March 1, 2020, the date which the financial statements were available to be issued. No events were noted which would require disclosure in the footnotes to the financial statement.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.