# CDS1 SECURITIES LLC X-17A-5 (2024-08-26) — Broker-dealer annual report - Company: CDS1 SECURITIES LLC - Form: X-17A-5 - Filed: 2024-08-26 - Period: 2024-06-30 - Accession: 0001714419-24-000005 - CIK: 1714419 - File #: 8-70002 - Type: Broker-dealer - Material weakness: No - Auditor: Tuttle & Bond, PLLC - Auditor location: Fredericksburg, TX - Contact: Richard Brewster - Phone: 646-389-4240 - Email: rbrewster@cdsecurities.co - Website: cdsecurities.co - Signed by: Richard Brewster (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1714419/000171441924000005/CDS1Public24.pdf --- {0}------------------------------------------------ ### **Report Pursuant to Rule 17a-5 of** ### **The Securities and Exchange Commission** ### **Including Report of Independent Registered Public Accounting Firm** **June 30, 2024** {1}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** # **ANNUAL REPORTS FORM X-17A-S PART Ill** | 0MB APPROVAL | | |--------------------------|--| | 0MB Number: 3235-0123 | | | Expires: Nov. 30, 2026 | | | Estimated average burden | | | hours per response: 12 | | | SEC FILE NUMBER | | | 8-70002 | | #### **FACING PAGE** **Information Required Pursuanto Rules 17a-S, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** | | 1t
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MM/DD/ Y Y | | ---------- | MM/DD/VY | | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME OF FIRM: CDS1 Securities LLC | | | | | | | 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.O. box no.) | | | | | | | 260 Madison Avenue, 8th Floor | | | | | | | | (No. and Street) | | | | | | New York | | NY | | 10016 | | | (City) | | (State) | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Richard Brewster | 646-389-4240 | | | rbrewster@cdsecurities.co | | | (Name) | (Area Code - Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | | Tuttle & Bond, PLLC | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | 2954 Goehmann Lane | Fredericksburg | | TX | 78624 | | | (Address) | (City) | | (State) | (Zip Code) | | | 03/19/2019 | | | 6543 | | | | (Date of Registration with PCAOB)(if applicable) | | | | (PCAOB Registration Number, if applicable) | | | | FOR OFFICIAL USE ONLY | | | | | | * Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public | | | | | | accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-S(e)(l)(ii), if applicable. **Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number.** {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Richard Brewster | | swear (or affirm) that, to the best of my knowledge and belief, the | |----------------------------------------------------------------|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------| | financial report pertaining to the firm of CDS1 Securities LLC | | as of | | June 30
2~ | | is true and correct. I further swear (or affirm) that neither the company nor any | | | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | as that of a customer. | | | | | R'.JS:,,,,\iiJA SA\ TAM | f2 a-;;:;;zl
Signature: | Not2,; "ub11~-~ S~':e ! :\_ew York ,\JO ,\_\_, ,::-~.c..)7·,,( ~,j Ou2l1tec ,n \Jew Ycrk County My (;omrrnss,cr Ex;;ires Feb 20. 202' Title: CEO #### **~GQDtaift{(check all applicable boxes):** - (a) Statement of financial condition. - **ii** (b) Notes to consolidated statement of financial condition. - 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 (d) Statement of cash flows. - D (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. - D (g) Notes to consolidated financial statements. - D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - □ (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D 0) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - □ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - D (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - D (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. - □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - **ii** (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. - □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **iii** (t) Independent public accountant's report based on an examination of the statement of financial condition. - D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - □ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (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. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - □ (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. {3}------------------------------------------------ ### **Table of Contents** | Report of Independent Registered Public Accounting Firm | 1 | |---------------------------------------------------------|-----| | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3-5 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To Directors and Shareholders of &'66HFXULWLHV//& ### **Opinion on The Financial Statements** We have audited the accompanying statement of financial condition of &'66HFXULWLHV//& (the "Company") as of -XQH 3, 202, and the related QRWHV (collectively referred to as WKH "financial statement"). In our opinion, the financial FRQGLWLRQ presentV fairly, in all material respects, the financial position of the Company as of -XQH 3, 202, in conformity with accounting principles generally accepted in the United States of America. ### **Basis for Opinion** 7KLV financial statement LV the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 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 WKHstandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement LV free RI 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 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 RXU audit provides a reasonable basis for our opinion. #### **(PSKDVLVRI0DWWHU** 7KH DFFRPSDQ\LQJ ILQDQFLDO VWDWHPHQWV KDYH EHHQ SUHSDUHG DVVXPLQJ WKDW WKH &RPSDQ\ ZLOO FRQWLQXH DV D JRLQJ FRQFHUQ 7KH &RPSDQ\ KDV H[SHULHQFHG UHFXUULQJ RSHUDWLQJ ORVVHV DQG QHJDWLYH FDVK IORZ DQG KDV ILQDQFHG LWV ZRUNLQJ FDSLWDO UHTXLUHPHQWV WKURXJK UHODWHGSDUW\FRQWULEXWLRQV7KHVHFRQGLWLRQV UDLVHGRXEWDERXWWKH&RPSDQ\¶VDELOLW\WRFRQWLQXHDVDJRLQJFRQFHUQ2XU RSLQLRQLVQRWPRGLILHGLQUHVSHFWWRWKLVPDWWHU )UHGHULFNVEXUJ, Texas **\$XJXVW , 202** We have served as the &'66HFXULWLHV//& s auditor since 202. {5}------------------------------------------------ # **CDS1 SECURITIES LLC Statement of Financial Condition June 30, 2024** #### **Assets** | Cash and equivalents | \$
26,488 | |---------------------------------------|--------------| | Prepaid expenses | 4,216 | | Total assets | \$
30,704 | | | | | | | | Liabilities and Member's Equity | | | Accounts payable | \$
6,835 | | Member's equity | 23,869 | | Total liabilities and member's equity | \$
30,704 | **See report of independent registered public accounting firm and notes to financial statement.** {6}------------------------------------------------ Notes to the Financial Statement June 30, 2024 #### (1) **Organization and Nature of Business** CDS1 Securities LLC (the "Company") is a limited liability company formed under the laws of New York and formally known as Komodo Securities LLC, Token Foundry Securities LLC and Consensys Digital Securities LLC. The Company offers private placement services in accordance with the membership agreement with the Financial Industry Regulatory Authority ("FINRA"). The Company is a registered broker dealer under the Securities Exchange Act of 1934 and is a member of FINRA and the Securities Investor Protection Corporation ("SIPC"). On April 4, 2022 the Company's sole equity interest holder entered a Unit Purchase Agreement with U+1FA99 LLC to sell all of the equity interest of the Company to U+1FA99 LLC. The transaction received FINRA approval under Rule 1017 application on October 24, 2022. #### (2) **Summary of Significant Accounting Policies** #### **Significant Credit Risk and Estimates** The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to use estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. There were no liabilities subordinated to claims of general creditors during the year ended June 30, 2024. #### **Cash and Cash Equivalents** The Company has defined cash and cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business. Cash and cash equivalents include money market accounts. Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents and amounts due from broker dealers. The Company maintains cash and money market balances with commercial banks and other major institutions. At times, such amounts may exceed Federal Deposit Insurance Corporation limits. #### **Use of Estimates** Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, and the reported amounts of revenues and expenses. #### **Income Taxes** The Company is a single member limited liability company and is treated as a disregarded entity for income tax reporting purposes. The Internal Revenue Code provides that any income or loss is passed through to the members for federal and state income tax purposes. Accordingly, the Company has not provided a tax provision for federal, state and local income taxes. As of June 30, 2024, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will be subject to ongoing reevaluation as facts and circumstances may require. Interest and penalties assessed, if any, are recorded as income tax expense. #### **Fair Value of Financial Instruments** The Company's financial instruments, including cash, prepaid expenses and accounts payable and accrued expenses, are carried at cost, which approximates their fair value because of the short-term nature of these assets and liabilities. {7}------------------------------------------------ Notes to the Financial Statement June 30, 2024 ### (2) **Summary of Significant Accounting Policies (Continued)** #### **Revenue Recognition** Revenue is recognized in accordance with FASB Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers." 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. 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. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The Company earns revenue by way of fees for retainers and transaction success fees. Revenue from advisory arrangements is generally recognized at the point in time that the performance obligation under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. In some circumstances, significant judgment is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Additionally, revenue is recognized once the fee is determinable and collection of the related receivable is reasonably assured. Expenses directly associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded. Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities on the accompanying Statement of Financial Condition. At July 1, 2023 and June 30, 2024, the ending balances of receivables, contract assets and contract liabilities were zero. ### (3) **Related Party Transactions** The Company has an Expense Sharing Agreement with its Parent, as amended from time to time. Pursuant to the current agreement, the Company shares the salary of the CEO/CCO and shared rent/office expenses until February 2024 when the Company incurred rent/office expenses directly. For the year ended June 30, 2024, expenses allocated for these services provided to the Company totaled \$78,806. #### (4) **Commitments and Contingencies** The Company does not have any commitments, guarantees or contingencies including arbitration or other litigation claims that may result in a loss or future obligation. The Company is not aware of any threats or other circumstances that may lead to the assertion of a claim at a future date. ### (5) **Net Capital Requirements** The Company is subject to the SEC Uniform Net Capital Rule (Rule 15c-3-1), 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 (and that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1). At June 30, 2024 the Company had net capital of \$19,653 which was \$14,653 in excess of its required net capital of \$5,000. The Company had a percentage of aggregate indebtedness to net capital of 34.78% as of June 30, 2024. {8}------------------------------------------------ Notes to the Financial Statement June 30, 2024 #### (6) **Going Concern** The Company incurred a net loss for the year ended June 30, 2024 of \$140,374 and had negative cash flows from operations of \$151,594. The Company's operating deficit during this period was funded by member capital contributions totaling \$136,065. The Company expects that it will require additional capital contributions from members to support its operations for the fiscal year end June 30, 2025. The Company's reliance on capital contributions from members give rise to substantial doubt about the Company's ability to continue as a going concern. #### (7) **Subsequent Events** In accordance with FASB Accounting Standards Codification 855, Subsequent Events, the Company has evaluated subsequent events to the Statement of Financial Position date of June 30, 2024 through August 20, 2024, which is the date the financial statements were issued. Management has determined that there are no subsequent events that require disclosure. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.