# STRATOS WEALTH SECURITIES, LLC X-17A-5 (2022-03-01) — Broker-dealer annual report - Company: STRATOS WEALTH SECURITIES, LLC - Form: X-17A-5 - Filed: 2022-03-01 - Period: 2021-12-31 - Accession: 0001717776-22-000002 - CIK: 1717776 - File #: 8-70019 - Type: Broker-dealer - Material weakness: No - Auditor: Sanville & Company - Auditor location: Abington, PA - Contact: Mark T Manzo - Phone: 201 519-1905 - Email: mmanzo@moppartners.com - Website: moppartners.com - Signed by: Barbara J.D. Simons (CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1717776/000171777622000002/swsannualreportconfed3.pdf --- {0}------------------------------------------------ **Stratos Wealth Securities, LLC** **Financial Statements and Supplementary Information For the Year Ended December 31, 2021 (Confidential Pursuant to Rule 17a‐5(e)(3))** {1}------------------------------------------------ | UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 | | | | 0MB APPROVAL
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12 | | | |-----------------------------------------------------------------------------------------------------------------------------------------|------------------------|----------------------------------------------------------------|-------------------------------------|--------------------------------------------------------------------------------------------------------------------------|--|--| | | ANNUAL | REPORTS | | SEC FILE NUMBER | | | | | FORM
X-17A-5 | | | 8-70019 | | | | ;ii | | | | | | | | I
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I | | A. REGISTRANT IDENTIFICATION | | | | | | ,I
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~r~ATOS | WEALTH | SECURITIES | LLC
, | | | | | D Check here if respondent is also an OTC derivatives dealer
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not
3750
Park
East | | use a P.O. box no.) | | swap participant | | | | Drive | Suite
, | 200 | | | | | | | | (No. and Street) | | | | | | 1 | Beachwood | OH | | 44122 | | | | (City) | | (State) | | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | Mark
T
Manzo | (201
( | 519-1905 | mmanzo@moppartners.com | | | | | | | (Area Code -Telephone Number) | (Email Address) | | | | | | | | | | | | | | | 8. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports
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q ~~pany
1
1
1 | | are contained in this filing* | | | | | | Old
York
151:4
'
Road | | (Name-if individual, state last, first, and middle name) | PA | | | | | I
I
I | | Abington
(City) | (State) | 19001
(Zip Code) | | | | | | | 169 | | | | | (Address)
Q/18{2~03
(D~te q~ Regis~ratipn w1 h PUAOB)(if applicable) | | | | (PCAOB Registration Number, if applicable) | | | **Person~ who)~re to res~ond1 to the collection of information contained in this form are not required to respond unless the form di, plays a cu~rently valid OiylB control number.** I . I {2}------------------------------------------------ ### **OATH OR AFFIRMATION** I, Barbara J.D. Simons swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of STRATOS WEALTH SERCURITIES, LLC as of December 31, 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. ![](_page_2_Picture_4.jpeg) cco ### **This filing\*\* contains (check all applicable boxes):** - ii (a) Statement of financial condition. - D (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). - ii (d) Statement of cash flows. - ii (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - □ (f) Statement of changes in liabilities subordinated to claims of creditors. - □ (g) Notes to consolidated financial statements. - Iii (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-l, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - ii (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (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. - ii (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. - ii (o) Req >nciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth ~nder 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 I CFR 24©.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. - 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 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (t) Independent public accountant's report based on an examination of the statement of financial condition. - ii (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.lSa-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.lSa-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. - ii (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e 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.* {3}------------------------------------------------ ROBERT F. SANVILLE, CPA MICHAEL T. BARANOWSKY, CPA JOHN P. TOWNSEND, CPA NATHANIEL S. HARTGRAVES, CPA CERTIFIED PUBLIC ACCOUNTANTS *Sanville & Company* 1514 OLD YORK ROAD ABINGTON, PA 19001 (215) 884‐8460 (215) 884‐8686 FAX GOVERNANCE OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS > 100 WALL STREET 8th FLOOR NEW YORK, NY 10005 (212) 709‐9512 ### **Report of Independent Registered Public Accounting Firm** To the Member of Stratos Wealth Securities, LLC ### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Stratos Wealth Securities, LLC (the Company) as of December 31, 2021, and the related statements of income, changes in member's equity and cash flows for the year then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements presents fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. ### **Basis for Opinion** These financial statements are the responsibility of 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 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 from material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ### **Supplemental Information** The supplementary information contained in Schedule I, Computation of Net Capital Under Rule 15c3-1, Schedule II, Computation of Requirements Under Rule 15c3-3 (exemption) and Schedule III Information Relating to the Possession or Control Requirements Under Rule 15c3-3, all under the Rules of the Securities and Exchange Commission have been subjected to audit procedures performed in conjunction with the audit of the Company's {4}------------------------------------------------ financial statements. The Supplemental Information is the responsibility of the Company's management. Our audit procedures included determining whether the Supplemental Information reconciles to the financial statements or the conformity with 17 C.F.R. § 240.17a-5. In our opinion, Information, we evaluated whether the Supplemental Information, including its form and content, is presented in accuracy of the information presented in the Supplemental Information. In forming our opinion on the Supplemental underlying accounting and other records, as applicable, and performing procedures to test the completeness and the supplementary information contained in Schedule I, Computation of Net Capital Under Rule 15c3-1, Schedule II, Computation of Requirements Under Rule 15c3-3 (exemption) and Schedule III Information Relating to the Possession or Control Requirements Under Rule 15c3-3, all the financial statements as a whole. under the Rules of the Securities and Exchange Commission are fairly stated, in all material respects, in relation to t ... f We have served as the Company's auditor since 2019. February 23, 2022 Dallas, Texas {5}------------------------------------------------ # **STRATOS WEALTH SECURITIES LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021** ### **ASSETS** | Cash
and
cash
equivalents | \$
68,212 | |------------------------------------|-------------------| | Commissions
receivable | 125,579 | | Bonus
receivable | 1,470,487 | | Prepaid
expenses | 12,488 | | | | | TOTAL
ASSETS | \$ 1,676,766 | ### **LIABILITY AND MEMBER'S EQUITY** LIABILITIES | Accounts
payable
and
accrued
expenses | \$
18,617 | |---------------------------------------------------|-----------------| | | | | MEMBER'S
EQUITY | \$
1,658,149 | | TOTAL
LIABILITIES
AND
MEMBER'S
EQUITY | \$
1,676,766 | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ ## **STRATOS WEALTH SECURITIES LLC STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2021** ### **REVENUE** | Commission
Income | \$ 3,802,876 | |----------------------|-------------------| | Bonus
Income | 1,946,156 | | Interest
Income | 168 | | | | | TOTAL
REVENUES | \$
5,749,200 | ### **EXPENSES** | Bank
Fees | 262 | | |--------------------------------------------|-----------------|--| | Regulatory
and
Membership
Expense | 33,904 | | | Shared
Services
Expense | 60,000 | | | TOTAL
EXPENSES | \$
94,166 | | | NET
INCOME | \$
5,655,034 | | The accompanying notes are an integral part of these financial statements. {7}------------------------------------------------ ## **STRATOS WEALTH SECURITIES LLC STATEMENT OF CHANGE IN MEMBER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2021** | BALANCE ‐ JANUARY
1,
2020 | \$
1,754,285 | |-----------------------------------|-------------------| | NET
INCOME | \$
5,655,034 | | MEMBER
DISTRIBUTIONS | \$
(5,751,170) | | BALANCE ‐ DECEMBER
31,
2021 | \$
1,658,149 | {8}------------------------------------------------ # **STRATOS WEALTH SECURITIES LLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2021** | Cash
flows
from
operating
activities | | |-----------------------------------------------------------------------|-----------------| | Net
Income | \$
5,655,034 | | Adjustments
to
reconcile
net | | | income
to
net
cash
used
in | | | operating
activities | | | Decrease
in
commissions
receivable | 6,827 | | Increase
in
bonus
receivable | (196,877) | | Decrease
in
prepaid
expenses | 698 | | Increase
in
accounts
payable
and
accrued
expenses | 2,530 | | NET
CASH
PROVIDED
BY
OPERATIONS | 5,468,212 | | Cash
flows
from
investing
activities | ‐ | | Cash
flows
from
Financing
activities | | | Member
distributions | (5,751,170) | | Net
Increase
in
Cash
and
cash
equivalents | (282,958) | | Cash
and
cash
equivalents,
beginning
of
the
year | 351,170 | | Cash
and
cash
equivalents,
end
of
the
year | \$
68,212 | {9}------------------------------------------------ ### STRATOS WEALTH SECURITIES LLC ### NOTES TO THE FINANCIAL STATEMENTS ### December 31, 2021 1 – Summary of Significant Accounting Policies Organization – Stratos Wealth Securities, LLC (the Company) wasformed for the purpose of doing business as a broker‐dealer. The Company was granted membership to FINRA on April 04, 2018. It is a registered broker‐dealer with the Securities and Exchange Commission ("SEC"), and is a member of the Securities Investor Protection Corporation ("SIPC"). Basis of Presentation – The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") and the rules and regulations of the Unites States Securities and Exchange Commission. It is management's opinion, that all material adjustments have been made which are necessary for a fair financial statement presentation. Revenue Recognition – Commission revenue consists of overrides earned on brokerage transactions. Commission revenue is recognized based on the posting date of the transactions. Bonus revenue is recognized when earned. As of December 31, 2021, \$1,470,487 was receivable based on 2021 earned bonus revenue. Income Taxes ‐ The Company is a single‐member limited liability company, treated as a disregarded entity for federal and state income tax purposes. The Company's results of operations are included in the consolidated federal and applicable state income tax returns filed by the parent; thus, no federal income tax expense has been recorded in the financial statements. Taxable income of the Company is passed through to the members and reported on their individual tax returns. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities, and disclosure 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. Receivables – The Company considers receivables to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectable, they will be expensed when that determination is made. Related Party Transactions – The Company has an Expense Sharing Agreement (the "Agreement") in place with the Parent whereby the Parent pays certain administrative expenses, such as salaries and rent, on behalf of the Company for which the Parent is reimbursed. For the period ended December 31, 2021 the parent charged the company \$60,000 in accordance with the Agreement. ### 2 – Net Capital Requirements Net Capital – The Company is subject to the SEC Uniform Net Capital Rule (Rule 15c3‐1), which requires the maintenance of minimum net capital of \$5,000, and requires that the ratio of aggregate {10}------------------------------------------------ ### STRATOS WEALTH SECURITIES LLC ### NOTES TO THE FINANCIAL STATEMENTS ### December 31, 2021 2 – Net Capital Requirements, continued indebtedness to net capital, both as defined, not exceed 15 to 1. The rule also provides that equity capital may not be withdrawn, cash dividends paid or the Company's operations expanded, if the resulting net capital ratio would exceed 10 to 1. At December 31, 2021, the Company had net capital of \$49,595, which was \$44,595 in excess of the FINRA minimum net capital requirement of \$5,000. {11}------------------------------------------------ # **STRATOS WEALTH SECURITIES LLC DECEMBER 31, 2021 COMPUTATION OF NET CAPITAL UNDER RULE 15c3‐1 OF THE SECURITIES AND EXCHANGE COMMISSION Schedule I** | Net
Capital | | |---------------------------------------------------------------------------------------|------------------| | Total
ownership
equity | \$
1,658,149 | | Deduct
ownership
equity
not
allowable
for
net
capital | ‐ | | Total
ownership
equity
qualified
for
net
capital | \$
1,658,149 | | Deduction
and/or
charges: | | | Prepaid
expenses | 12,488 | | Commissions
receivable | 125,579 | | Bonus
receivable | 1,470,487 | | | | | Total
non‐allowable
assets
from
Statement
of
Financial
Condition | \$
1,608,554 | | | | | Net
Capital | \$
49,595 | | | | | Net
Capital
Requirement | \$
5,000 | | | | | Excess
Net
Capital | \$
44,595 | | | | | Total
Aggregate
Indebtedness | \$
18,617 | | | | | Ratio:
Aggregate
indebtedness
to
net
capital | .3754
to
1 | {12}------------------------------------------------ ### STRATOS WEALTH SECURITIES LLC # Schedule II & III # Computation For Determination Of Reserve Requirements And Information Relating To Possession Or Control Requirements Under Rule 15c3‐3 of the Securities and Exchange Commission December 31, 2021 The Company is considered a "Non‐Covered Firm" exempt from 15c3‐3 by relying on footnote 74 to SEC Release 34‐70073 and therefore, is not required to maintain a "Special reserve bank account for the Exclusive benefit of customers." {13}------------------------------------------------ *Sanville & Company* CERTIFIED PUBLIC ACCOUNTANTSROBERT F. SANVILLE, CPA MICHAEL T. BARANOWSKY, CPA JOHN P. TOWNSEND, CPA NATHANIEL S. HARTGRAVES, CPA 1514 OLD YORK ROAD ABINGTON, PA 19001 (215) 884‐8460 (215) 884‐8686 FAX GOVERNANCE OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET 8th FLOOR NEW YORK, NY 10005 (212) 709‐9512 # **Report of Independent Registered Public Accounting Firm** Stratos Wealth Securities, LLC To the Board of Directors We have reviewed management's statements, included in the accompanying Exemption Report in which (1) Stratos Wealth Securities, LLC (the "Company") identified that it is considered a "Non-Covered Firm" exempt from provisions of 17 C.F.R. §15c3-3 and is filing its Exemption Report relying on footnote 74 to SEC Release 34-70073, and as discussed in Q&A 8 of the related FAQ issued by the SEC staff. The Company limits its business activities to the receive, hold, or otherwise owe funds or securities for collection of commission overrides from member broker-dealer(s). The Company (1) did not directly or indirectly or to customers, other than money or other consideration accounts of or for customers; and (3 received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4; (2) did not carry ) did not carry PAB accounts (as defined in Rule 15c3-3), throughout the most recent fiscal year without exception. examination, the objective of which is Wealth Securities, LLC's compliance with the exemption provisions. A review is substantially less in scope than an (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Stratos Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board the expression of an opinion on management's statements. Accordingly, we do Rule 15c3-3 under the Securities Exchange Act of 1934. statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in Based on our review, we are not aware of any material modifications that should be made to management's not express such an opinion. t ... f February 23, 2022 Dallas, Texas {14}------------------------------------------------ # **STRATOS WEALTH SECURITIES, LLC** # **EXEMPTION REPORT** December 31, 2021 About Corporate Finance Corporation (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.l 7a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.l 7a-5(d)(l) and (4). To the best of its knowledge and belief, the Company states the following: - The Company does not claim an exemption under paragraph (k) of 17 C.F .R. § 240. 15c3-3. - The Company is filing this Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.l 7a-5 because the Company's Other business activity is limited to collecting commission overrides from member broker-dealers. - The Company did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers. - The Company did not carry accounts of or for customers throughout the most recent fiscal year without exception. - The Company had no exceptions under SEC Rule 15c3-3 throughout the year ended December 31, 2021. Stratos Wealth Securities, LLC I, Barbara Simons, affirm that, to my best knowledge and belief, this Exemption Report is true and correct. **By:** I~ *~>\J* ' Title: Chief Compliance Officer February 10, 2022 I [[ I! I! ' • I i I II Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.