# AFW ASSOCIATES LLC X-17A-5 (2022-02-23) — Broker-dealer annual report

- Company: AFW ASSOCIATES LLC
- Form: X-17A-5
- Filed: 2022-02-23
- Period: 2021-12-31
- Accession: 0001712661-22-000001
- CIK: 1712661
- File #: 8-69992
- Type: Broker-dealer
- Material weakness: No
- Auditor: Untracht Early LLC
- Auditor location: Florham Park, NY
- Contact: Michael Chung
- Phone: 212-751-4422
- Email: mchung@dfppartners.com
- Website: dfppartners.com
- Signed by: Antonio Weiss (Managing Partner)

Original filing: https://www.sec.gov/Archives/edgar/data/1712661/000171266122000001/2021shortafw.pdf

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AFW ASSOCIATES LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021

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## **CONTENTS**

| Facing Page - Oath or Affirmation                       | 1-2 |
|---------------------------------------------------------|-----|
| Report of Independent Registered Public Accounting Firm | 3   |
| Statement of Financial Condition                        | 4   |
| Notes to Financial Statement                            | 5-9 |

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

| ANNUAL REPORTS |
|----------------|
| FORM X-17A-5   |
| PART III       |

OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response:

SEC FILE NUMBER 8-69992

FACING PAGE

Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934

| FILING FOR THE PERIOD BEGINNING  01/01/2021                                                                                         |                                | AND ENDING 12/31/2021 |                 |                        |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------|-----------------|------------------------|--|--|
|                                                                                                                                     | MM/DD/YY                       |                       |                 | MM/DD/YY               |  |  |
| A. REGISTRANT IDENTIFICATION                                                                                                        |                                |                       |                 |                        |  |  |
| NAME OF FIRM: AFW Associates LLC                                                                                                    |                                |                       |                 |                        |  |  |
| TYPE OF REGISTRANT (check all applicable boxes):<br>Z Broker-dealer<br>C Check here if respondent is also an OTC derivatives dealer |                                |                       |                 |                        |  |  |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)                                                                 |                                |                       |                 |                        |  |  |
| 152 West 57th Street, 36th Floor                                                                                                    |                                |                       |                 |                        |  |  |
|                                                                                                                                     | (No. and Street)               |                       |                 |                        |  |  |
| New York                                                                                                                            | NY                             |                       |                 | 10019                  |  |  |
| (City)                                                                                                                              | (State)                        |                       |                 | (Zip Code)             |  |  |
| PERSON TO CONTACT WITH REGARD TO THIS FILING                                                                                        |                                |                       |                 |                        |  |  |
| Michael Chung                                                                                                                       | 212-751-4422                   |                       |                 | mchung@dfppartners.com |  |  |
| (Name)                                                                                                                              | (Area Code - Telephone Number) |                       | (Email Address) |                        |  |  |
| B. ACCOUNTANT IDENTIFICATION                                                                                                        |                                |                       |                 |                        |  |  |
| INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*<br>Untracht Early LLC                                     |                                |                       |                 |                        |  |  |
| (Name - if individual, state last, first, and middle name)                                                                          |                                |                       |                 |                        |  |  |
| 325 Columbia Turnpike, Suite 202 Florham Park                                                                                       |                                |                       | NJ              | 07932                  |  |  |
| (Address)                                                                                                                           | (City)                         |                       | (State)         | (Zip Code)             |  |  |
| 03/31/2009                                                                                                                          |                                | 3412                  |                 |                        |  |  |
| (PCAOB Registration Number, if applicable)<br>(Date of Registration with PCAOB)(if applicable)                                      |                                |                       |                 |                        |  |  |
|                                                                                                                                     | FOR OFFICIAL USE ONLY          |                       |                 |                        |  |  |

\* Claims for exemption from the requirement that the annual 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 OMB control number.

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#### **OATH OR AFFIRMATION**

| I, Antonio Weiss                                                             |                                                                                                                                                  |                                     |                      | swear (or affirm) that, to the best of my knowledge and belief, the                                                                 |
|------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|----------------------|-------------------------------------------------------------------------------------------------------------------------------------|
| financial report pertaining to the firm of AFW Associates LLC<br>December 31 |                                                                                                                                                  |                                     |                      | as of<br>2� is true and correct. I further swear (or affirm) that neither the company nor any                                       |
| as that of a customer.                                                       |                                                                                                                                                  |                                     |                      | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely |
|                                                                              | LORJALESSI<br>NOTARY<br>R<br>e<br>g<br>l<br>l<br>l<br>r<br>d<br>o<br>nNo.01ALM25811<br>Qullltled In Queena County<br>Commlaalon Expires November | PUBLIC, STATE OF NEW YORI(<br>21, � | Signature:<br>Title: |                                                                                                                                     |

Managing Partner

# clrviA OA.<X}1 *sl-* \S-JJ.

#### Notary Public

#### **This filing\*\* contains (check all applicable boxes):**

- X (a) Statement of financial condition.
- □ (b) Notes to consolidated statement of financial condition. x
- D (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in§ 210.1-02 of Regulation S-X).
- □ (d) Statement of cash flows.
- □ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- D (f) Statement of changes in liabilities subordinated to claims of creditors.
- □ (g) Notes to consolidated financial statements.
- □ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-l, as applicable.
- □ (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- □ (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.
- □ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
- □ (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. x
- 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.
- □ (t) Independent public accountant's report based on an examination of the statement of financial condition. x
- □ (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 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.
- □ (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-le or 17 CFR 240.17a-12, as applicable.
- □ (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).
- □ (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.*

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Untracht Early LLC 325 Columbia Turnpike, Suite 202 Florham Park, NJ 07932

#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Member of AFW Associates LLC

#### Opinion on the Financial Statement

We have audited the accompanying statement of financial condition of AFW Associates LLC as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of AFW Associates LLC as of December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

#### Basis for Opinion

This financial statement is the responsibility of AFW Associates LLC's management. Our responsibility is to express an opinion on AFW Associates 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 AFW Associates LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 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 have served as AFW Associates LLC's auditor since 2018.

Florham Park, New Jersey February 23, 2022

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# AFW ASSOCIATES LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021

| Cash and cash equivalents<br>Accounts receivable | 2.484.213<br>23,576 |
|--------------------------------------------------|---------------------|
| Prepaid expenses                                 | 1,873               |
| Total assets                                     | S<br>2,509,662      |
| ABILITIES AND MEMBER'S EQUITY                    |                     |
| Liabilities:                                     |                     |
| Due to parent                                    | S<br>63,825         |
| Deferred income                                  | 2,133,333           |
| Accounts payable and accrued expenses            | 40,386              |
| Total liabilities                                | 2,237,544           |
| Member's equity                                  | 272,118             |
| Total liabilities and member's equity            | 2,509,662           |

The accompanying notes are an integral part of this financial statement.

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#### NOTE 1. ORGANIZATION AND BUSINESS ACTIVITY

AFW Associates LLC (the "Company"), a wholly owned subsidiary of AFWco LP ("AFWco"), is a Delaware limited liability company organized on June 19, 2017. On March 28, 2018, the Company became a registered broker-dealer with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA").

The Company provides financial advisory services including, but not limited to, mergers and acquisition advice and capital structure and restructuring advice.

The accompanying financial statements have been prepared from the separate records maintained by the Company and, due to certain transactions and agreements with AFWco, such financial statements may not necessarily be indicative of the financial condition that would have existed, or the results that would have been obtained from operations, had the Company operated as an unaffiliated entity.

#### NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

*Basis of Presentation –* These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").

*Revenue Recognition* – The Company derives revenues from financial advisory services including mergers and acquisition advice and capital structure and restructuring advice. The Company typically receives fixed, nonrefundable retainer payments for contracts with customers for these advisory services. Such fees are recognized monthly over the term of the agreement as the Company satisfies its performance obligations under the contracts. The Company's contracts may also include success fees and other discretionary fees which may be fixed or variable amounts which are typically recognized upon completion of a transaction or a deal as specified in the contract. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgment 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 in a contract, 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. The Company accounts for revenue under ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). The revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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#### NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

*Revenue Recognition (continued)* - The guidance 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, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation.

*Accounts Receivable (Contract Asset) and Allowance for Credit Losses –* Accounts receivable is stated at the amount management expects to collect from the outstanding balances from contracts with customers. The Company accounts for estimated credit losses on financial instruments, such as trade receivables, in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The Company's management periodically estimates the allowance for doubtful accounts. Losses from uncollectible receivables shall be accrued when both of the following conditions are met: (a) information available before the financial statements are issued indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. Those conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. The Company reviews each trade receivable for collectability and performs on-going credit evaluations of its customers and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client's ability to pay. Management does not believe that an allowance is required as of December 31, 2021. As of December 31, 2021, accounts receivable from contracts with customers totaled \$23,576.

*Deferred Income (Contract Liability) –* Deferred income represents amounts received from customers in advance of the Company's performance obligations under its contracts with customers. As of December 31, 2021, there was \$2,133,333 in deferred income for contracts with customers. During the year ended December 31, 2021, the Company recognized all amounts related to deferred income from contracts with customers as of December 31, 2020, totaling \$233,333.

*Income Taxes* - The Company is a limited liability company and accordingly, no provision has been made in the accompanying financial statements for any federal or state income taxes. All revenue and expenses retain their character and pass directly to AFWco's income tax returns. The Company is subject to New York City Unincorporated Business Tax ("UBT"). Given the Company is treated as a disregarded entity for tax purposes, AFWco assumes all tax liabilities.

The Company recognizes and measures its unrecognized tax benefits in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740, Income Taxes. Under that guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances, and information

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#### NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

*Income Taxes (continued)* - available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available, or when an event occurs that requires a change. The Company believes that it has no material uncertain income tax positions and accordingly, no liability has been recorded. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings.

*Use of Estimates*- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

*Cash and Cash Equivalents*- The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

#### NOTE 3. RELATED PARTY TRANSACTIONS

The Company has entered into an Expense Sharing Agreement with AFWco. Expenses, including but not limited to, rent, utilities, communications, market data, insurance, and payroll are allocated between the companies. At December 31, 2021, the Company owed \$63,825 to AFWco in connection with such agreement.

#### NOTE 4. NET CAPITAL REQUIREMENT

The Company is subject to the SEC Uniform Net Capital Rule ("Rule 15c3-1"), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash dividends paid if the ratio exceeds 10 to 1. At December 31, 2021, the Company had net capital of \$234,777, which was \$85,607 in excess of its required net capital of \$149,170. The Company's ratio of aggregate indebtedness to net capital was 9.53 to 1.

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#### NOTE 5. CONCENTRATIONS

Cash held by financial institutions which exceed the Federal Deposit Insurance Corporation ("FDIC") limits of \$250,000 expose the Company to concentrations of credit risk. Balances throughout the year usually exceed the maximum coverage provided by the FDIC on insured depositor accounts. Two advisory deals accounted for 100% of the Company's revenue for the year ended December 31, 2021. At December 31, 2021, 100% of accounts receivable was from one of those client.

#### NOTE 6. INDEMNIFICATION

In the normal course of business, the Company may be subject to various claims, litigation, regulatory and arbitration matters. As of December 31, 2021, there were no such matters brought by or against the Company. The Company also enters into contracts that contain a variety of representations and warranties that provide indemnifications 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.

#### NOTE 7. GUARANTEES

FASB ASC 460, Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460 defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying factor (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an assets, liability or equity security of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of the indebtedness to others. The Company has issued no guarantees at December 31, 2021 or during the year then ended.

#### NOTE 8. COMMITMENTS AND CONTINGENCIES

The Parent of the Company is the named lessor of the Company's office space, therefore there are no commitments to the Company for the office lease. As of December 31, 2021, the Company had no other commitments or contingencies.

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#### NOTE 9. COVID-19

During 2020, the World Health Organization declared COVID-19 to constitute a "Public Health Emergency of International Concern". This pandemic has disrupted economic markets and the economic impact, duration and spread of the COVID-19 virus is uncertain at this time. The impact on financial markets and the overall economy, all of which are highly uncertain, cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period the Company's results may be affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

#### NOTE 10. EXEMPTION FROM RULE 15c3-3

The Company limits its business activities pursuant to footnote 74 to SEC Release 34-70073, and as discussed in Q & A 8 of the related FAQ issued by SEC staff. Accordingly, there are no items to report under the requirements of Rule 15c3-3.

#### NOTE 11. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through February 23, 2022, the date the financial statements were available to be issued. No material subsequent events were identified that would require recognition or disclosure in the financial statements.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.