# HEADLANDS TECHNOLOGIES SECURITIES, LLC X-17A-5 (2022-03-29) — Broker-dealer annual report - Company: HEADLANDS TECHNOLOGIES SECURITIES, LLC - Form: X-17A-5 - Filed: 2022-03-29 - Period: 2021-12-31 - Accession: 0001708825-22-000003 - CIK: 1708825 - File #: 8-69969 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: Chicago, IL - Contact: John Vander Laan - Phone: 312-601-8793 - Email: neil@headlandstech.com - Website: headlandstech.com - Signed by: Neil M. Fitzpatrick (CFO/COO/Co-Owner) Original filing: https://www.sec.gov/Archives/edgar/data/1708825/000170882522000003/Public2.pdf --- {0}------------------------------------------------ # **Headlandsl®cc[h** FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION Headlands Technologies Securities, LLC Year Ended December 31, 2021 With Report of Independent Registered Public Accounting Firm {1}------------------------------------------------ | | UNITED STATES | | | 0MB APPROVAL | |-------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|------------------------|-----------------------------------------------------------------------------------------------------------| | | SECURITIES AND EXCHANGE COMMISSION
Washington, o.c. 20549 | | | 0MB Number: 3235-0123
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12 | | | | | | | | | ANNUAL REPORTS | | | SEC filE NUMBER | | | FORM X-17A-5 | | | 8-69969 | | | PART Ill | | | | | | | | | | | | FACING PAGE
Information Req1Jir'ed Pursuant to Rules 17a-5, 17a-12, and isa-7 under;the Securities Exchange Act of 1934 | | ~, | | | | | ····-· ··.--.,, • , | | ., , · "'' ·., •.• ' "" | | FILING FOR THE PERIOD BEGINNING 01/01 /21 | MM/DD/YY | .AND ENDl~G 12 31/21 | | MM/DD/YY | | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME.oFFIRM: Headlands Technologies Securities, LLG | | | | | TYPE OF REGISTRANT (check all applicable boxes);
0 Broker-dealer
□ Check here.if respondent is also an OTC derivatives dealer | D Security-based swap dealer | □ Major security-based swap participant | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.0- | | box no.} | | | | 444 W Lake Street, Suite 4650 | | | | | | | (No. and Street) | | | | | Chicago | Illinois | | | 60606 | | (City) | (State) | | | (Zip Code) | | | | | | | | PERSON TO .CONTACT vVITH REGARD TO THIS FILING | | | | | | Neil M Fitzpatrick | 312-601-8643 | | neil@headlandstech.com | | | (Name) | (Area Code - Telephone Number) | | (Email Ad~ress) | | | | 8. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | Ernst & Young LLP | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | 155 North Wacker Drive | Chicago | | Illinois | 60606 | | (Address) | (City) | (~tate) | | (Zip Code) | | October 20, 2003 | | 42 | | | | T" | | | | (PCAOB ,,,;w,uo, Numbe,, If appncable) I | | of Reg;,t,adoa with PCAOB)(;f appHcable) | | | | | | | FOR OFFICIAL USE ONLY | | | | **Perspns who are to ~espond to the collection ofinformation c.ontained in thi~ for.mare not. required to respond unless·the form** displays a currently valid 0MB control 11umber. {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | | | Neil M Fitzpatrick | | |--|--|--------------------|--| | | | | | I, Neil MFitzpatrick swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to .the firm. of Headlands Technologies Securities, LLC" as of 12/31 2~ is true and correct. I further swear (or affirm)that neither the company nor any partner, officer, director, or equivalent person, as t\_he case may be, has any proprietary interest in any account classified solely as that of a customer. ![](_page_2_Picture_4.jpeg) ~gnatu,e,4~~ Title.. - Chief Financial Officer Notary Public #### This filing\*\* contains (check all applicable boxes): - ~ (a) Statement of finc!ncial condition. - 0 (b) Notes to consolidated statement of financial condition. - ~ (c) Statement of income (loss) or! if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined ih § 210.1-02 of Regulation S-X). - ~ (d) Statement of cash flows. - ii!! (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - □ (f) Statement of changes in liabHities\_ s1,1bordinated to claims of creditors. - ii!! (g) Notes to consolidated financial statements. - ii!! (h) Computation of net capital under 17 CFR240.15c3-1 or 17 CFR 240.18a-1, as applicable. - D (i) Computation of tangil:Jle net v,.,orth under 17 CFR 240.18a-2. - ii (j) Computation for determination ofcustorner reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (kl Computation for determination ofsecurity-based swap reserve requirements pursuantto Exhibit B to 17 CFR 2\_40.15c3-3 or ExhibitA to 17 CFR 240.18a-4, as applicable. - - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - □ (m) Information relating to .possession orcont.rol requirements for customers under 17 CFR 240.1Sc3-3. - D (n) Information relating to possession or control requirem!:!nts for security-based swap customers under 17 CFR 240.15c3-3(p}(2) or 17 CFR 240.18a-4, as applicable. - ii!! (o) Reconciliations; including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth und\_er l.7 CFR 240;15c3-i, 17 CFR 240.l.Sa-·1, or 17 CFR 240.18a -2, as applicable, and the reserve re9uirements under 17 C\_FR 240.15c3-3 or 17 CFR 240.18a-4, as appljcable, ifmaterial differences exist, or a statement that no material differences exist. - D .(p) Summary offinancial data for subsidiaries not consolidated in the statement offinancial conditi\_on. - ii] (q) Oath or affirmation in accordance with 17 CFR 240.17a-5,.17 CFR 240.17a-12, or 17 CFR 240.18aa7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ii (s) Exemption report in accordance with .17 CFR 24d.17a-5 or 17 CFR 240.18a-7, as applicable. - 0 (t) lridependentpublic accountant's report based on an examination of the statement of financial condition. - ~l (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR.240.18a-7, or 17 CFR 240.17a-12, as applicable. · - D (v) Independent publicaccoUritant's report based oh an examination ofcertain -statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ii (w) Independent public accountant'sreport based on a revie.w df th\_e exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - i!!!1 (x) Supplemental reports on applying agreed-upon procedures, in accordance witt:117 CfR 240,1Sc3-1e or 17 CFR 240.·17a-12, as applicable. - D (y) Report describing any mater(al inadequacies found to exist or found to have existed since the date of the previous audit, or <'! statement that no material inadequacies exist under 17 CFR 240.17a0 12(k). P (z) Other:--------------------------------------- - - *\*\*To. request confidential treatment of certain portions of this Jiiing, see 17 CFR240.17a-5(e}(3) or 17 CFR 240.18ac7(d){2), as applicable.* {3}------------------------------------------------ # Financial Statements and Supplemental Information Year Ended December 31, 2021 # **Contents** | Report oflndependent Registered Public Accounting Firm .1 | | |---------------------------------------------------------------------------------|--| | Financial Statements | | | Statement of Financial Condition 2 | | | Statement of Operations
3 | | | Statement of Changes in Member's Capital .4 | | | Statement of Cash Flows



5 | | | Notes to Financial Statements 6 | | | Supplemental Information | | | Schedule I-Computation of Net Capital Pursuant to SEC Rule 15c3-1 12 | | | Computation for Determination of Reserve Requirements and
Schedule II - | | | Information Relating to Possession or Control Requirements Under Rule 15c3-3 of | | | the Securities and Exchange Act of 1934 13 | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Ernst & Young LLP Tel: +1 312 879 2000 155 North Wacker Drive Fax: +1 312 879 4000 Chicago, IL 60606-1787 ey.com #### **Report of Independent Registered Public Accounting Firm** To the Member and Officers of Headlands Technologies Securities, LLC #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Headlands Technologies Securities, LLC (the "Company") as of December 31, 2021, the related statements of operations, changes in member's capital, and cash flows for the year then ended, and the related notes ( collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. #### **Basis for Opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 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 opm1on. #### **Supplemental Information** The accompanying information contained in Schedules I and II has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. Such information is the responsibility of the Company's management. Our audit procedures included determining whether the 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. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with Rule 17a-5 under the Securities Exchange Act of 1934. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2018. March 23, 2022 {5}------------------------------------------------ ## Statement of Financial Condition December 31, 2021 | Assets | | |----------------------------------------|---------------| | Cash | \$
183,868 | | Other assets | 4,041 | | Total assets | \$
187 909 | | | | | Liabilities and member's capital | | | Liabilities: | | | Payable to affiliate | \$
6,840 | | Payable to Parent | 1,120 | | Accrued expenses | 18,400 | | Total liabilities | 26,360 | | Member's capital | ,549
161 | | Total liabilities and member's capital | \$
1872909 | {6}------------------------------------------------ ## Statement of Operations #### Year Ended December 31, 2021 | Expenses | | |------------------------------------|----------------| | Regulatory fees | \$
32,880 | | Professional fees | 17,769 | | Employee compensation and benefits | 6,840 | | General and administrative | 300 | | Total expenses | 57,789 | | | | | Net loss | \$
(57,789) | | | | *See accompanying notes.* {7}------------------------------------------------ ## Statement of Changes in Member's Capital #### Year Ended December 31, 2021 | \$
219,338 | |---------------| | (57,789) | | \$
161,549 | | | *See accompanying notes.* {8}------------------------------------------------ ## Statement of Cash Flows Year Ended December 31, 2021 | Operating activities | | |-----------------------------------------------------------------------------|----------------| | Net loss | \$
(57,789) | | Adjustments to reconcile net loss to net cash used in operating activities: | | | Changes in operating assets and liabilities: | | | Other assets | 580 | | Payable to affiliate | 5,452 | | Payable to Parent | 1,120 | | Accrued expenses | 5,000 | | Net cash used in operating activities | (45,637) | | Net decrease in cash | (45,637) | | Cash at beginning of period | 229,505 | | Cash at end of period | \$
18\868 | | | | *See accompanying notes.* {9}------------------------------------------------ ## Notes to Financial Statements December 31, 2021 #### **1. Organization and Nature of Operations** Headlands Technologies Securities, LLC (the Company) is a wholly owned subsidiary of Headlands Tech Holdings, LLC (the Parent). The Company was formed in May 2017 in order to operate as a proprietary trading firm in the securities business. Effective August 2, 2018, the Company became a registered securities broker-dealer under the Securities Exchange Act of 1934 and a member of NYSE Chicago (formerly Chicago Stock Exchange, Inc.). NYSE Chicago acts as the Company's designated examining authority. The Company is currently not conducting any securities business. #### **2. Significant Accounting Policies** #### **Use of Estimates** The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from those estimates. #### **Cash** Cash includes amounts due from banks in a non-interest bearing account. At December 31, 2021, all cash amounts are held at a major financial institution. {10}------------------------------------------------ Notes to Financial Statements ( continued) #### **2. Significant Accounting Policies ( continued)** #### **Income Taxes** The Company is a limited liability company and is treated as a disregarded entity pursuant to Treasury Regulation Section 301.7701-3 for federal income tax purposes. Generally, disregarded entities are not subject to entity-level federal or state income taxation and, as such, the Company is not required to provide for income taxes under Accounting Standards Codification (ASC) Topic 740-10, *Income Taxes.* The Company's taxable income or loss becomes reportable to the respective members of the Parent due to the treatment of the Parent as a non-taxable flow-through partnership entity for federal income tax purposes. Accordingly, no provision has been made for federal, state or local income taxes of the Company. The Company has evaluated tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are more likely than not to be sustained by the applicable tax authority. Based upon this analysis, there were no tax positions not deemed to meet a more-likely-than-not threshold. Therefore, no tax expense, including any interest and penalties, was recorded in the current period and no adjustments were made to prior periods. Further, the Company does not believe any material tax positions exist and therefore will not be recorded within the next 12 months. To the extent the Company recognizes interest and penalties related to unrecognized tax benefits, they are recorded as income tax expense in the statement of operations. {11}------------------------------------------------ Notes to Financial Statements ( continued) #### **3. Related-Party Transactions** The Company receives administrative support from the Parent and an affiliate, Headlands Technologies, LLC, including office, facilities and personnel support. The Parent ( or affiliate) pays certain of the Company's expenses and the Company reimburses the Parent ( or affiliate) in accordance with an expense agreement between the Company and the Parent (or affiliate). For the year ended December 31, 2021, the Company incurred \$8,260 of expenses related to administrative support paid or to be paid on behalf of the Company by the Parent ( or affiliate). At December 31, 2021, the Company owes the Parent \$1,120 and the affiliate \$6,840 for these expenses. | | Expenses | | |------------------------------------|-------------|--| | Employee compensation and benefits | \$
6,840 | | | Professional fees | 1,120 | | | General and administrative | 300 | | | Total | \$
8,260 | | #### **4. General Contingencies** In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties that provide indemnifications to the counterparties under certain circumstances. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company expects the risk of loss to be remote. #### **5. Legal and Regulatory Risk** The financial services industry faces legal and regulatory risks. The Company is subject to claims and lawsuits brought against the Company in the ordinary course of business. The Company is also subject to inquiries, investigations and proceedings by regulatory and other governmental agencies. Actions brought against the Company may result in settlements, awards, injunctions, fines, penalties and other results adverse to us. {12}------------------------------------------------ Notes to Financial Statements ( continued) #### **6. Recent Accounting Pronouncements** In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, *Leases* (Topic 842) which supersedes the leasing guidance in ASC 840, *Leases.* Under ASU 2016-02, lessees are required to recognize the lease assets and lease liabilities for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification determining the pattern of expense recognition in the statement of income. This guidance is effective for fiscal periods beginning after December 15, 2020 and requires a modified retrospective approach to adoption for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. This standard is not applicable to the Company. #### **7. Net Capital Requirements** The Company is subject to the Uniform Net Capital (Rule 15c3-1) of the Securities and Exchange Commission (SEC). The Company is required to maintain minimum net capital equal to the greater of\$100,000 or 6-2/3% of aggregate indebtedness, as defined. Net capital changes from day to day, but at December 31, 2021, the Company had net capital of \$157,508, and required net capital of \$100,000. At December 31, 2021, the Company's percentage of aggregate indebtedness to net capital was 16.74%. Capital withdrawals are subject to certain notification and other provisions of Rule **l** 5c3-1 or other regulatory bodies. #### **8. Current Events** On March 11, 2020, the World Health Organization designated the spread of coronavirus (COVID-19) as a pandemic. COVID-19 has had a significant impact on global and U.S. financial markets, and the Company continues to monitor its effects on the overall economy and its operations. In response to the COVID-19 pandemic, the Company has enhanced its polices, procedures and operations to protect the integrity and continuity of its business and the health and safety of employees. Management believes that the Company is well positioned to successfully manage its business risks despite any uncertain economic outlook. Management is continuously monitoring the situation. {13}------------------------------------------------ Notes to Financial Statements ( continued) #### **9. Subsequent Events** No subsequent events or transactions have occurred through the date the financial statements were available to be issued, that would have materially affected the financial statements as presented herein. {14}------------------------------------------------ Supplemental Information {15}------------------------------------------------ | Headlands Technologies Securities, LLC | Schedule I | |-------------------------------------------------------------------------|---------------| | Computation ofNet Capital
Pursuant to SEC Rule 15c3-1 | | | December 31, 2021 | | | Net capital | | | Total member's capital
Less nonallowable assets: | \$
161,549 | | Other assets | 4,041 | | Net capital | \$
157,508 | | Required net capital | | | Net capital requirement (greater of 6 2/3% of aggregate indebtedness or | | | minimum dollar net capital requirement of \$100,000) | \$
100,000 | | Excess net capital | \$
57 508 | | Aggregate indebtedness: | | | Payable to affiliate | \$
6,840 | | Payable to Parent | 1,120 | | Accrued expenses | 18,400 | | Total aggregate indebtedness | \$
26,360 | | Percentage of aggregate indebtedness to net capital | 16.74% | There are no material differences between the amounts presented above and the amounts presented in the Company's December 31 , 2021 , unaudited FOCUS Part IIA report filed on January 25, 2022. {16}------------------------------------------------ # Computation for Determination of Reserve Requirements and Information Relating to Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Act of 1934 #### December 31, 2021 The Company is not exempt from Rule 15c3-3 of the Securities and Exchange Commission. The Company does not transact a business in securities with, or for any person, defined as a "customer" pursuant to Rule 17a-5(c)(4) and does not carry margin accounts, credit balances, or securities for any person defined as a "customer" pursuant to Rule 17a-5(c)(4). Accordingly, there are no amounts reportable under these sections. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.