# BANCROFT CAPITAL, LLC X-17A-5 (2022-03-31) — Broker-dealer annual report - Company: BANCROFT CAPITAL, LLC - Form: X-17A-5 - Filed: 2022-03-31 - Period: 2021-12-31 - Accession: 0001719863-22-000002 - CIK: 1719863 - File #: 8-70035 - Type: Broker-dealer - Material weakness: No - Auditor: Withum Smith Brown - Auditor location: Philadelphia, PA - Contact: Colleen M. Lindh - Phone: 4843734738 - Email: clindh@bancroft4vets.com - Website: bancroft4vets.com - Signed by: Colleen M. Lindh (CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1719863/000171986322000002/bancappub2021.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: KĐƚ͘ϯϭ͕ϮϬϮϯ Estimated average burden hours per response: SEC FILE NUMBER # **ANNUAL REPORTS FORM X-17A-5 PART III** | FILING FOR THE PERIOD BEGINNING _____________________ AND ENDING ______________________ | 01/01/21 | | L
A
12/31/21 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------| | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | Bancroft
NAME OF FIRM: _______________________________________________________________________ | Capital,
LLC | | I | | TYPE OF REGISTRANT (check all applicable boxes):
܆
܆
Broker-dealer
■
܆ Check here if respondent is also an OTC derivatives dealer | ܆
Security-based swap dealer | T
N
Major security-based swap participant | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | 501
Office
Center
_____________________________________________________________________________________ | E
Drive,
Suite
130 | | | | | (No. and Street) | | | | Fort
Washington
_____________________________________________________________________________________ | PA | | 19034 | | (City) | D
I
(State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Colleen
M.
Lindh | F
484-373-4738 | | clindh@bancroft4vets.com | | (Name) | | _____________________________________________________________________________________
(Area Code – Telephone Number)
(Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | N
O
INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
WithumSmith+Brown
_____________________________________________________________________________________ | | | | | | (Name – if individual, state last, first, and middle name) | | | | 1835
Market
Street,
Suite
_____________________________________________________________________________________ | Philadelphia
1710 | PA | 19103 | | C
(Address) | (City) | (State) | (Zip Code) | | 10/08/2003
_____________________________________________________________________________________ | | 100 | | | (Date of Registration with PCAOB)(if applicable) | FOR OFFICIAL USE ONLY | | (PCAOB Registration Number, if applicable) | 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.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** I, Colleen **M.** Lindh swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of Bancroft Capital, 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 the case may be, has any proprietary interest in any account classified solely as that of a customer. | Commonwealth of Pennsylvania - Notary Seal
KATHLEEN M BALTRA · Notary Public | | | |---------------------------------------------------------------------------------|---------------------------|--| | | Montgomery County | | | My Commission Expires Jul 23, 2022 | Commission Number 1336966 | | | | | | Title: Chief Compliance Officer #### **This filing\*\* contains (check all applicable boxes):** - X D (a) Statement of financial condition. - D (b) Notes to consolidated statement of financial condition. - X □ (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).** - X □ (d) Statement of cash flows. - X D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - X D (f) Statement of changes in liabilities subordinated to claims of creditors. - X □ (g) Notes to consolidated financial statements. - X D (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. - X □ (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. - 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. - CONFIDENTIAL D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 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. - X D (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. - D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.lBa-7, as applicable. - □ (t) Independent public accountant's report based on an examination of the statement of financial condition. - □ (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. - D (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.l 7a-12(k). D(z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_ - \*\*To request confidential treatment af certain portions of this filing, see 17 CFR 240.17a-5(e}(3} or 17 CFR 240.18a-7(d}{2}, as applicable. {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) # BANCROFT CAPITAL, LLC FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES PURSUANT TO RULE 17A-5 OF THE SECURITIES EXCHANGE ACT OF 1934 CONFIDENTIAL YEAR ENDED DECEMBER 31, 2021 CONFIDENTIAL TREATMENT REQUESTED {3}------------------------------------------------ *TABLE OF CONTENTS* | | PAGE(S) | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM | L
1 | | FINANCIAL STATEMENTS | | | STATEMENT OF FINANCIAL CONDITION | A
2 | | I
STATEMENT OF OPERATIONS | 3 | | T
STATEMENT OF CHANGES IN MEMBERS' EQUITY | 4 | | STATEMENT OF CASH FLOWS | 5 | | NOTES TO FINANCIAL STATEMENTS | 6-14 | | N
SUPPLEMENTAL SCHEDULES | | | E
Schedule I –
COMPUTATION OF NET CAPITAL
UNDER RULE 15c3-1
OF THE SECURITIES AND EXCHANGE COMMISSION | 15 | | D
Schedule II & III –
COMPUTATION FOR THE DETERMINATION OF
I
RESERVE REQUIREMENTS AND INFORMATION RELATING TO
POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3
OF THE SECURITIES AND EXCHANGE COMMISSION | 16 | | F
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM OF RULE 15c3-3 | 17 | | N
MANAGEMENT STATEMENT REGARDING COMPLIANCE WITH
EXEMPTION PROVISIONS OF SEC RULE 15c3-3 | 18 | | O
C | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members and Those Charged with Governance of Bancroft Capital, LLC: #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Bancroft Capital, LLC (the "Company") as of December 31, 2021, the related statements of operations, changes in members' equity 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 as of December 31, 2021 and the results of its operations and its cash flows for the year ended December 31, 2021, 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 these 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 opinion. #### **Supplemental Information** The supplemental information, Schedule I - Computation of Net Capital under Rule 15c3-1 of the Securities and Exchange Commission and 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, has been subjected to audit procedures performed in conjunction with the audit of the Company's 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 underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. § 240.17a-5. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. CONFIDENTIAL We have served as the Company's auditor since 2017. March 30, 2022 {5}------------------------------------------------ #### *STATEMENT OF FINANCIAL CONDITION* December 31, 2021 | ASSETS | | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------------| | Cash and cash equivalents
Receivables from non-customers
Receivables from customers
Certificate of deposit
Property and equipment, net
Clearing deposit
Security deposits
T
Right-of-use asset, net
Other assets | \$
I | 3,497,269
L
978,460
9,000
A
5,002,507
58,017
250,000
11,983
135,339
106,028 | | Total assets | \$ | 10,048,603 | | N
E
LIABILITIES AND MEMBERS' EQUITY
LIABILITIES
D
Accounts payable, accrued expenses and | \$ | 1,345,782 | | other liabilities
Operating
lease liability | | 150,000 | | I
F
Total liabilities | | 1,495,782 | | MEMBERS'
EQUITY | | 8,552,821 | | N
O
Total liabilities and members'
equity | \$ | 10,048,603 | | C | | | {6}------------------------------------------------ ### *STATEMENT OF OPERATIONS* For the year ended December 31, 2021 #### **REVENUE** | Commissions | \$ | 522,497 | |-----------------------------------------|----|------------| | Principal transactions | | 1,172,646 | | Underwriting fees | | 7,288,572 | | Interest income | | 10,806 | | 401k advisory fees | | L
2,805 | | Cash management fees | | 103,324 | | Other income | | 33,288 | | | | A | | Total revenue | I | 9,133,938 | | | T | | | | | | | EXPENSES | | | | N
Salary and salary-related expenses | | 5,344,804 | | Occupancy | | 119,027 | | Professional fees | | 179,015 | | Commission and clearing | | 357,258 | | E
Trade support | | 641,099 | | Regulatory fees | | 60,837 | | Interest expense | | 1,059 | | D
Other expenses | | 500,396 | | I | | | | Total expenses | | 7,203,495 | | | | | | F
N | | | | NET INCOME | \$ | 1,930,443 | | O | | | | | | | | | | | | | | | | | | | | | | | | | | | | C | | | | | | | {7}------------------------------------------------ # *STATEMENT OF CHANGES IN MEMBERS' EQUITY* For the year ended December 31, 2021 | BALANCE, January 1, 2021 | \$ | 6,890,994 | |-----------------------------|--------|------------------------| | Distributions
Net Income | | (268,616)
1,930,443 | | BALANCE, December 31, 2021 | \$ | L
A
8,552,821 | | | I
T | | | | N | | | E | | | | D | | | | I
F | | | | N | | | | O | | | | C | | | | | | | {8}------------------------------------------------ #### *STATEMENT OF CASH FLOWS* For the year ended December 31, 2021 #### **CASH FLOWS FROM OPERATING ACTIVITIES** | Net income
Adjustments to reconcile net income to net cash provided by
operating
activities | \$ | 1,930,443 | |------------------------------------------------------------------------------------------------------|----|--------------| | | | L | | (Increase) decrease in
Receivable from customers | | A
(4,000) | | Receivable from non-customers | | (547,081) | | Other assets | | 1,106 | | Increase (decrease)
in | I | | | Accounts payable, accrued expenses and other liabilities | | 561,095 | | Operating lease liability | | (82,984) | | Depreciation on property, plant and equipment | | 37,060 | | Right-of-use asset | | 75,652 | | T
Net cash provided by
operating activities | | 1,971,291 | | N
E
CASH FLOWS FROM INVESTING ACTIVITIES | | | | Purchase of certificate of deposit | | (5,002,507) | | Purchase of property and equipment | | (29,447) | | D
Net cash used in investing activities | | (5,031,954) | | I
CASH FLOWS FROM FINANCING ACTIVITIES | | | | F
Distributions | | (268,616) | | N
Net cash used
in
financing activities | | (268,616) | | Net decrease
in cash, cash equivalents, and
restricted cash | | (3,329,279) | | CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH | | | | Beginning of year | | 6,838,531 | | O
C
End of year | \$ | 3,509,252 | | Non-cash transactions: | | | | Right-of-use asset:
\$135,339 | | | | Operating lease liability:
\$150,000 | | | {9}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* December 31, 2021 # **1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### *Nature of Business* Bancroft Capital, LLC (the "Company"), a Pennsylvania limited liability company ("LLC"), is a broker-dealer registered with the Securities and Exchange Commission (the "SEC") and licensed by the Financial Industry Regulatory Authority ("FINRA"). The Company is owned by Cauldon D. Quinn (51%) and Bancroft Holdings, LLC (49%), (the "Members"). The Company is registered as a securities broker-dealer and Pennsylvania investment adviser. The Company clears all transactions through its clearing organization on a fully-disclosed basis. CONFIDENTIAL ### *Accounting Estimates* The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that 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. ### *Concentrations of Credit Risk* Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, certificates of deposit ("CD") and investment in money market funds. The Company places its cash, CD and money market funds with high credit quality financial institutions. At times, such amounts may exceed federally insured limits. The Company does not require collateral or other security from its customers. ### *Measurement of Credit Losses* The Company follows guidance of ASU No. 2016-13, "Measurement of Credit Losses on Financial Instruments", which recognizes credit losses on financial instruments. The guidance of ASU No. 2016-13 states the Company applies a credit reserving model known as the Current Expected Credit Loss ("CECL") model, which is based on expected losses over the life of an asset, and applies to financial assets carried at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. The allowance must reflect management's estimate of credit losses over the life of the assets taking future economic changes into consideration. {10}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* # December 31, 2021 The Company's expectation is that credit risk associated with receivables from customers is not significant until they are 90 days past due on the contractual arrangement and expectation of collection. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. The Company generally does not charge interest. ### *Cash, Cash Equivalents, and Restricted Cash* #### **CASH, CASH EQUIVALENTS, AND RESTRICTED CASH** | | reasonable collection efforts are written off through a charge to the valuation allowance
and a credit to trade accounts receivable. The Company generally does not charge interest. | | L | |-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|---------------------| | | The Company evaluated the impact of this guidance and determined there are no credit loss
allowances necessary as of December 31, 2021. | | A | | | Cash, Cash Equivalents,
and Restricted Cash | I | | | | The Company considers
cash and
short-term securities purchased with original maturities
of three months or less as cash equivalents. The following table provides a reconciliation
of cash, cash equivalents, and restricted cash reported within the statement of financial
condition with the total
of the same such amounts presented in the statement of cash flows.
E
Of the Company's total cash and cash equivalents, \$1,000,470 is held in money market
accounts and mutual funds and \$881,823 is held with our clearing broker. | T
N | | | | CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH | | | | | D
Beginning of period:
Cash and cash equivalents
Security Deposits | \$ | 6,827,578
10,953 | | Total | I
F | \$ | 6,838,531 | | End of period: | N
Cash and cash equivalents
Security Deposits | \$ | 3,497,269
11,983 | | Total | O | \$ | 3,509,252 | | | | | | | C
Accounting | Revenue Recognition
Standards Codification ("ASC") Topic 606,
Customers ("ASC 606") requires that an entity recognize revenue to depict the transfer of | Revenue from Contracts with | | # *Revenue Recognition* Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606") 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 with a customer (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price and (e) recognize revenue when or as *These financial statements and schedules are deemed confidential pursuant to subparagraph (e)(3) of Rule 17a-5 of the Securities and Exchange Commission.* {11}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* December 31, 2021 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. See Note 2 for further information on the accounting standard and the Company's revenue from contracts with customers. # *Property and Equipment* Property and equipment are recorded at cost. The Company depreciates its property and equipment using the straight-line method over their estimated useful lives as follows: Computer equipment 3 years Furniture and fixtures 5 years Maintenance and repairs are charged to operations. Major renewals and improvements are capitalized. At the time an item of physical property is retired, sold, or otherwise disposed of, the cost of the asset and the related accumulated depreciation applicable to such item is relieved. Gains or losses resulting from retirements or sales are charged or credited to income. CONFIDENTIAL The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the carrying amount of the asset exceeds the undiscounted future cash flows expected to be generated by the asset, an impairment charge is recognized. # *Income Taxes* The Company is an LLC. For both federal and state tax purposes, LLCs are taxed as partnerships. All income taxes on net earnings are payable by the members of the LLC and accordingly, no provision for income taxes is required. As of December 31, 2021, the Company had no uncertain tax positions that would require recognition or disclosure in the financial statements. Any tax benefit that the members may receive is not remitted to the Company. # *Guaranteed Payment to Members* Guaranteed payment to members that are intended as compensation for services rendered are accounted for as Company expenses rather than allocations of membership net income. {12}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* December 31, 2021 # **2. REVENUE** The Company's principal sources of revenue are derived from brokerage commissions, underwriting fees, riskless principal transactions, and interest income. The revenue recognition guidance under ASC 606 does not apply to revenue associated with realized and unrealized gains and losses related to riskless principal trading as well as interest income from financial instruments owned. Principal transaction revenue is derived from the mark-up or mark-down on securities purchased and sold by the Company. All principal transactions are recorded on a trade-date basis. The following is a description of activities within the scope of ASC 606 from which the Company generates its revenue: ### *Commissions* *Brokerage commissions.* The Company buys and sells equity securities on an agency basis on behalf of its institutional customers. The customer pays the Company a commission as a percentage of shares purchased or sold. Commissions and related clearing expenses are recorded on a trade date (the date the Company fills the order by executing with one of more counterparties and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on a trade date because that is when the underlying financial instrument is identified, the pricing agreed upon and the risks and rewards of ownership have been transferred to/from the customer. CONFIDENTIAL # *Principal Transactions* *Profit from principal transactions.* The Company buys and sells fixed income securities on a riskless principal basis. The customer pays/receives the difference between the purchase price and sale price. Profits are recorded on a trade date (the date the Company completes the transaction with the customer). The Company believes that the performance obligation is satisfied on a trade date because that is when the underlying financial instrument is identified, the pricing agreed upon and the risks and rewards of ownership have been transferred to/from the customer. # *Investment Banking* *Underwriting fees.* The Company participates in underwriting activities, wherein business and governmental entities wish to raise funds through the sale of its securities. Gross revenues are earned from fees arising from securities offerings in which the Company acts as an underwriter. Gross revenue is recognized on the trade date for the portion the {13}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* # December 31, 2021 Company is contracted to buy. The Company believes that the trade date is the appropriate point in time to recognize revenue for securities underwriting transactions as there are no significant actions which the Company needs to take subsequent to this date. The Company records commissions to registered representatives when a new contract is obtained. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the performance obligation is satisfied and the related revenue is recognized. Commissions paid prior to delivery of the offering memorandum are considered contract assets. As of January 1, 2021 and December 31, 2021, there were no contract assets or liabilities. Accounts receivable were \$436,370 and \$978,460 as of January 1, 2021 and December 31, 2021, respectively. CONFIDENTIAL ### *Asset Management* *401k advisory fees.* The Company provides 401k advisory services on a periodic basis. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consumes the benefits as they are provided by the Company. Fee arrangements are based on a percentage applied to the customer's assets under management. 401k advisory fees are received and recognized on a quarterly basis. *Cash management fees.* The Company offers a cash management portal powered by State Street Global Markets. The Company believes the performance obligation for providing cash management services is satisfied over time because the customer is receiving and consumes the benefits as they are provided by the Company. Fee arrangements are based on a percentage applied to the customer's assets under management. Cash management fees are received and recognized as revenue on a monthly basis. The Company offers deposit products provided by TriState Capital Bank. The Company believes the performance obligation for providing this service is satisfied over time because the customer is receiving and consumes the benefit as they are provided by the Company. Fee arrangements are based on a flat listing fee as well as a percentage of customer's assets deposited. Deposit product fees are received and recognized as revenue on a quarterly basis. ### *Disaggregation of Revenue* Disaggregation of revenue can be found on the statement of operations for the year ended December 31, 2021 by type of revenue stream. {14}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* December 31, 2021 # *Significant Judgments* Revenue from contracts with customers includes commission income and fees from investment banking and asset management services. 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 performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. # **3. FAIR VALUE MEASUREMENTS** The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The best evidence of fair value is a quoted price in an active market. If quoted prices in active markets are not available, fair value is determined by reference to prices for similar instruments, quoted prices or recent transactions in less active markets, or internally developed models that primarily use market-based or independently sourced inputs, including, but not limited to, interest rates, volatilities, equity or debt prices, foreign exchange rates, commodity prices, credit spreads and funding spreads (i.e., the spread or difference between the interest rate at which a borrower could finance a given financial instrument relative to a benchmark interest rate). CONFIDENTIAL U.S. GAAP has a three-level hierarchy for disclosure of fair value measurements. This hierarchy prioritizes inputs to the valuation techniques used to measure fair value, giving the highest priority to level 1 inputs and the lowest priority to level 3 inputs. A financial instrument's level in this hierarchy is based on the lowest level of input that is significant to its fair value measurement. In evaluating the significance of a valuation input, the firm considers, among other factors, a portfolio's net risk exposure to that input. The fair value hierarchy is as follows: *Level 1.* Inputs are unadjusted quoted prices in active markets to which the Company has access at the measurement date for identical, unrestricted assets or liabilities. *Level 2.* Inputs to valuation techniques are observable, either directly or indirectly. *Level 3.* One or more inputs to valuation techniques are significant and unobservable. {15}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* # December 31, 2021 The Company does not own any debt or equity securities as of December 31, 2021. # *Certificate of Deposit* On April 21, 2021, the Company purchased a \$5 million certificate of deposit ("CD") with a maturity of April 21, 2024. The fair value of the CD was \$5,002,507 at December 31, 2021 and is a Level 1 asset in the fair value hierarchy. # **4. PROPERTY AND EQUIPMENT** Property and equipment consisted of the following at December 31, 2021: | Property and equipment | \$ | 168,179 | |-------------------------------------------------|----|-----------| | Less: accumulated depreciation and amortization | | (110,162) | | Property and equipment, net | \$ | 58,017 | Depreciation expenses totaled \$37,060 for the year ended December 31, 2021. # **5. OFF-BALANCE SHEET RISK** Pursuant to a clearing agreement the Company introduces all its securities transactions to its clearing broker on a fully-disclosed basis. All of the customers' money balances and long and short securities positions are carried on the books of the clearing broker. In accordance with the clearing agreement, the Company has agreed to indemnify the clearing broker for losses, if any, which the clearing broker may sustain from carry securities transactions introduced by the Company. As of December 31, 2021, the Company has total cash deposits with the clearing organization in the amount of \$250,000. CONFIDENTIAL # **6. COMMITMENTS AND CONTINGENCIES** # *Line of Credit* The Company has a \$250,000 bank line of credit, which is due on demand. This line of credit is renewed annually and is secured by other accounts held with the bank. This line of credit bears interest, payable monthly, at the bank's prime rate. There was no outstanding balance on this line of credit as of December 31, 2021. # *Leases* The Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. All other leases are categorized as operating leases. Leases with contractual terms of 12 months or less, short- {16}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* December 31, 2021 term leases, are not recorded on the statement of financial condition. The Company had no finance leases as of December 31, 2021. The Company has two long-term operating leases: - 1. Office space in Fort Washington, PA - 2. Canon copier located at the office in Fort Washington, PA The Company recognized Right-of-Use ("ROU") assets and lease liabilities related to fixed payments for these long-term operating leases in its statement of financial condition as of December 31, 2021. The Company also has short-term leases, which include office spaces in California, Illinois, and New York. Certain lease contracts include obligations to pay for other services, such as operations, property taxes, and maintenance. These services are accounted for separately and we allocate payments to the lease and other services components based on estimated standalone prices. On December 15, 2017, the Company entered into an operating lease agreement under which it leases approximately 3,338 rentable square feet of office space for its headquarters at 501 Office Center Drive, Fort Washington, PA. The lease term expiration is July 31, 2023. The lease may be terminated early by the Company or the landlord under certain circumstances. CONFIDENTIAL On January 2, 2020, the Company entered into an operating lease agreement under which it leases a Canon C5550i III copy machine. The machine is located at its headquarters at 501 Office Center Drive, Fort Washington, PA. The lease term expiration is February 1, 2025. Options to extend lease terms, terminate leases before the contractual expiration date, or purchase the leased assets, are evaluated for their likelihood of exercise. If it is reasonably certain that the option will be exercised, the option is considered in determining the classification and measurement of the lease. Costs associated with operating lease assets are recognized on a straight-line basis within the operating expenses over the term of the lease. Further, the Company elected to implement the package of practical expedients, whereby the Company did not (i) reassess existing contracts for embedded leases, (ii) reassess existing lease agreements for finance or operating classification, or (iii) reassess existing {17}------------------------------------------------ # *NOTES TO FINANCIAL STATEMENTS* December 31, 2021 lease agreements in consideration of initial direct costs. The implementation of this standard did not have a material impact to the statements of operations or cash flows and our debt-covenants calculations under our current agreements. | Lease liabilities under operating leases as of December 31, 2021
are as follows: | | | | | | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|--|--|--|--| | 2022
2023
2024
2025
Total undiscounted lease payments
Less: Imputed interest
Total lease liabilities | L
A
\$
94,425
58,542
6,386
I
532
T
159,885
(9,885)
\$
150,000 | | | | | | 7.
EXEMPTION FROM RULE 15c3-3 | | | | | | | N
E
The Company is exempt from SEC Rule 15c3-3 pursuant to the exemptive provisions of
sub-paragraph (k)(2)(ii) and, therefore, is not required to maintain a "Special Reserve Bank
Account for the Exclusive Benefit of Customers."
D
customer cash or securities, it does not have any obligation with respect to Possession or
Control requirements of SEC Rule 15c3-3. | As the Company does not handle | | | | | | 8.
NET CAPITAL REQUIREMENTS | | | | | | | I
F
The Company is subject to the SEC's Uniform Net Capital Rule (SEC Rule 15c3-1), which
requires the maintenance of a minimum net capital equal to the greater of \$100,000 or
N
6.667% of aggregate indebtedness, and that the ratio of aggregate indebtedness to net
capital, both as defined, shall not exceed 15
net capital of \$7,157,868, which was \$7,057,868
O
\$100,000. | to 1. At December 31, 2021, the Company had
in excess of its required net capital of | | | | | | 9.
SUBSEQUENT EVENTS | | | | | | | C
Subsequent events have been evaluated through the date the financial statements were
issued. No material subsequent events have occurred since December 31,
required recognition or disclosure in
the
current period financial statements. | 2021 that | | | | | # **7. EXEMPTION FROM RULE 15c3-3** # **8. NET CAPITAL REQUIREMENTS** ### **9. SUBSEQUENT EVENTS** {18}------------------------------------------------ # *Schedule I – COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION* December 31, 2021 | Members'
equity | \$ | 8,552,821 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|------------------------| | Non-allowable assets | | L | | Property and
equipment, net | | 58,017 | | Security deposits | | 11,983 | | Other assets | | 256,054 | | Receivable from customers | | 2,000 | | Receivable from non-customers | | 904,136 | | Total non-allowable assets | I | A
1,232,190 | | Less: Haircuts on securities positions | T | 162,763 | | N
Net capital | \$ | 7,157,868 | | E
Aggregate Indebtedness
D
Items included in Statement of Financial Condition:
Accounts payable, accrued expenses and other liabilities
Total Aggregate Indebtedness
I
F | \$
\$ | 1,360,442
1,360,442 | | Computation of Basic Net Capital Requirements | | | | Minimum Net Capital Requirement | \$ | 100,000 | | Excess Net Capital | \$ | 7,057,868 | | Ratio: Aggregate Indebtedness to Net Capital | | 0.19
to 1 | | N
O
C | | | Note: There are no material differences between the audited and unaudited computation of net capital pursuant to Rule 15c3-1. *These financial statements and schedules are deemed confidential pursuant to subparagraph (e)(3) of Rule 17a-5 of the Securities and Exchange Commission. See Report of Independent Registered Public Accounting Firm.* {19}------------------------------------------------ *Schedule II & III – COMPUTATION FOR THE DETERMINATION OF RESERVE REQUIREMENTS AND INFORMATION RELATING TO POSSESSION OR CONTROL REQUIRMENTS UNDER SEC RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION* December 31, 2021 The Company is exempt from SEC Rule 15c3-3 pursuant to the exemptive provisions of sub-paragraph (k)(2)(ii) and, therefore is not required to maintain a "Special Reserve Bank Account for the Exclusive Benefit of Customers." As the Company does not handle customer cash or securities, it does not have any obligation with respect to Possession and Control requirements of SEC Rule 15c3-3. CONFIDENTIAL *These financial statements and schedules are deemed confidential pursuant to subparagraph (e)(3) of Rule 17a-5 of the Securities and Exchange Commission. See Report of Independent Registered Public Accounting Firm.* {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members and Those Charged with Governance of Bancroft Capital, LLC: We have reviewed management's statements, included in the accompanying Management Statement Regarding Compliance with Exemption Provisions of SEC Rule 15c3-3, in which Bancroft Capital, LLC (the "Company") identified the following provisions of 17 C.F.R. §15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. §240.15c3-3: (2)(ii) (the "exemption provisions") and (2) the Company stated that it met the identified exemption provisions throughout the most recent fiscal year without exception. The Company's management is responsible for compliance with the exemption provisions and its statements. CONFIDENTIAL Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in Rule 15c3-3 under the Securities Exchange Act of 1934. March 30, 2022 {21}------------------------------------------------ # *MANAGEMENT STATEMENT REGARDING COMPLIANCE WITH EXPEMPTION PROVISIONS OF SEC RULE 15c3-3* We as the management of Bancroft Capital, LLC (the "Company"), are responsible for the Company's compliance with the exemption provisions of Rule 15c3-3 under the Securities and Exchange Act of 1934 ("SEC Rule 15c3-3"). The following statements are made to the best of our knowledge and belief: - The Company claims exemption from the provisions of SEC Rule 15c3-3 under sub-paragraph (k)(2)(ii). - For the year ended December 31, 2021, the Company has met the identified exemption provision without exception. CONFIDENTIAL Chief Compliance Officer Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.