# BLUE OCEAN ATS, LLC X-17A-5 (2024-03-15) — Broker-dealer annual report
- Company: BLUE OCEAN ATS, LLC
- Form: X-17A-5
- Filed: 2024-03-15
- Period: 2023-12-31
- Accession: 0001795131-24-000004
- CIK: 1795131
- File #: 8-70452
- Type: Broker-dealer
- Material weakness: No
- Auditor: Rolleri & Sheppard CPAS, LLP
- Auditor location: Fairfield, CT
- Contact: Edward Wishik
- Phone: 332-970-5070
- Email: edward.wlshlk@blueocean-tech.io
- Website: blueocean-tech.io
- Signed by: Brian Hyndman (CEO & President)
Original filing: https://www.sec.gov/Archives/edgar/data/1795131/000179513124000004/BOATSPublic23.pdf
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# **STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERERED PUBLIC ACCOUNTING FIRM**
**Pursuant to Rule 17a-5(d) of the Securities and Exchange Commission**
**For the Year Ended December 31, 2023**
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**UNITED STATES SECURmES AND EXCHANGE COMMISSION Washington, D.C. 20549**
# **ANNUAL REPORTS FORM X-17A-5 PART Ill**
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> SEC FILE NUMBER 8-70452
**FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchanee Act of 1934** FILING FOR THE PERIOD BEGINNING \_o\_1 \_to\_1 \_ 12\_3 \_\_\_\_\_ AND ENDING \_ 1 \_ 2 \_ 13 \_ 1 \_ 1 \_ 23 \_\_\_\_ \_ MM/DD/VY MM/DD/VY **A. REGISTRANT IDENTIFICATION** NAME OF FIRM: Blue Ocean ATS, LLC TYPE OF REGISTRANT (check all applicable boxes): 0 Broker-dealer D Security-based swap dealer D Major security-based swap participant D Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) 515 N. Flagler Dr. Suite P-300, 515 (No. and Street) West Palm Beach FL (Oty) (State) PERSON TO CONTACT WITH REGARD TO THIS FILING 33401 (Zip Code) Edward Wishik 332-910-5070 Edward.Wlshlk@blueocean-tech.io (Name) (Area Code - Telephone Number) (Email Address) **8. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing• Rolleri & Sheppard CPAS, LLP (Name - If individual, state last, first, and middle name) 2150 Post Road, 5th Floor (Address) 03/04/2009 Fairfield (Oty) CT (State} 3437 06824 (Zip Code) **(Date** of ation with PCA0B If a llcable PCA0B Re lstration Number, If a llcable **FOR OFFICIAL USE ONLY**
• Oalms for exemptlon 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.
p.,\_., **who are** to reapond to the collectlon of Information contained In this form **are** not required to respond unlus the form **clsplays a cwr.ntty valJd** 0MB control number.
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#### **OATH OR AFFIRMATION**
| 1, Brian Hyndman | | | | • swear {or affirm) that, to the best of my knowledge and belief. the |
|------------------------|----------------------------------|---------------------|-------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|
| financial | report pertaining to the firm of | Blue Ocean ATS, 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. | | | | |
| | | | | |
| | | | S--L.ig~~u. :_____£_~4?_.,,~-~--==c------ | |
| | | | Titie: | |
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Chief Executive Officer & President
#### This filing•• contains {check all applicable boxes):
- ~ (a) Statement of financial condition.
- ~ (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.
- D (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- D U) 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.
- 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.
- D (p) Summary of financial data for subsidiaries not consolidated In the statement offinanclal 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.
- 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 240.18a-7, as applicable.
- ii (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.
- 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 appllcable.
- 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 240.15c3-1e 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).
- 0 (z)Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_
- ••ro requ•st conftdentlal treatment of certain portions of this filing, see J.7 CFR 240.J.7a-S(e){3) or 17 CFR 240.J.8a-7{d)(2), as appl/coble.
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# **TABLE OF CONTENTS**
| | Page No. |
|---------------------------------------------------------|-------------|
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 |
| FINANCIAL STATEMENT | |
| Statement of Financial Condition | 2 |
| Notes to Financial Statement | 3
-
6 |
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# Rolleri & Sheppard CPAS, LLP
Ryan C. Sheppard, CPA, CfF, Managing Partner John i\1. Rollcri, CP \, CF[, Senior Partner }a) me L. \'\ hitc, CPA, Partner
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES
To the Member of of Blue Ocean ATS, LLC
We have performed the procedures included in Ruic l7a-5(c)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which arc enumerated below on the accompanying General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2023. Management of Blue Ocean ATS. LLC (the Company) is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7.
Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the applicable instrnctions on Form SIPC-7 for the year ended December 31. 2023. Additionally, SIPC has agreed to and acknowledged that the procedures perfonned are appropriate for their intended purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and. as such, users are responsible for detem1ining whether the procedures performed arc appropriate for their purposes. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our associated findings are as follows:
- I) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences;
- 2) Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17 A-5 Part 111 for the year ended December 31, 2023 with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2023, noting no differences:
- 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no dilTerences;
- 4) Recalculated the arithmetical accuracy of the calculations renected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and
- 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed. noting no differences.
We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to and did not conduct an examination or a review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company·s Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2023. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We arc required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the Company and SIPC and is not intended to be and should not be used by anyone other than these specified parties.
;?. *(j* j*C(A-..>, L* '- *f)*
Rolleri & Sheppard CPAS, LLP
Fairfield, Connecticut March 14, 2024
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# **STATEMENT OF FINANCIAL CONDITION December 31, 2023**
# **ASSETS**
| Cash | \$ | 646,932 |
|--------------------------------------------|----|-----------|
| Accounts receivable | | 326,826 |
| Deposit with clearing broker | | 100,000 |
| Prepaid expenses | | 30,526 |
| Due from affiliate | | 3,335 |
| Property and equipment, net of accumulated | | |
| depreciation of \$16,815 | | 1,362 |
| | \$ | 1,108,981 |
| LIABILITIES AND MEMBER'S EQUITY | | |
| Accounts payable and accrued expenses | | 201,462 |
| Commission payable | | 72,482 |
| | | 273,944 |
| | | 835,037 |
| Member's equity | | |
| | \$ | 1,108,981 |
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# **NOTES TO FINANCIAL STATEMENT December 31, 2023 (See Report of Independent Registered Public Accounting Firm)**
### Note 1 **Organization and nature of business**
Blue Ocean ATS, LLC (the "Company") was formed in 2019 and is a Delaware limited liability company. The Company is a wholly-owned subsidiary of Blue Ocean Technologies, LLC ("Parent"). The Company operates an Alternative Trading System ("ATS") for matching orders in US NMS stocks from 8:00 pm to 4:00 am, eastern standard time, Sunday through Thursday in accordance with its 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"). The Company is exempt from Rule 15c3-3 of the SEC under paragraph (k)(2)(ii), clearing all transactions on a fully-disclosed basis through its clearing firm.
#### Note 2 **Summary of significant accounting policies**
#### **Allowance for credit losses**
In June 2016, the FASB issued guidance (FASB ASC 326) which significantly changed how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity's exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in FASB ASC 326 were trade accounts.
We adopted the standard effective January 1, 2023. The impact of the adoption was not considered material to the financial statements and primarily resulted in new/enhanced disclosures only.
#### **Basis of presentation**
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").
#### **Accounts receivable**
The Company carries its accounts receivable at costs less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its receivables and establishes an allowance for doubtful accounts based on history of past write-offs, collections and current credit conditions. As of December 31, 2023, no allowance for credit losses was necessary.
#### **Advertising**
The Company expenses the cost of advertising as it is incurred. Advertising expense amounted to \$0 for the year ended December 31, 2023.
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# **NOTES TO FINANCIAL STATEMENT (CONTINUED) December 31, 2023 (See Report of Independent Registered Public Accounting Firm)**
## Note 2 **Summary of significant accounting policies (continued)**
#### **Revenue recognition**
The Company adopted 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. 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. The Company provides a trading platform under an ATS. The Company recognizes revenue from transactions on a trade date basis.
Account receivable at December 31, 2023 are \$326,826.
There are no contract assets or liabilities as of December 31, 2023. Disaggregation can be found on statement of operations for the year ended December 31, 2023.
The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer.
### **Income taxes**
The Company is a limited liability company treated as a disregarded entity. Accordingly, in lieu of Federal and state income taxes, the member is taxed on their proportionate share of the Company's taxable income. Therefore, no provision or liability for Federal or state taxes has been included in these financial statements. The Company's sole member's tax return remains subject to examination by the appropriate taxing jurisdiction for tax years ending after December 31, 2020.
### **Fair value of financial instruments**
The carrying amounts of financial instruments, including cash, prepaid expenses, deposits, and accounts payable and accrued expenses, approximates fair value due to the short term maturities of these assets and liabilities.
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# **NOTES TO FINANCIAL STATEMENT (CONTINUED) December 31, 2023 (See Report of Independent Registered Public Accounting Firm)**
# Note 2 **Summary of significant accounting policies (continued)**
### **Property and equipment**
Property and equipment is stated at cost. Depreciation is calculated on the straight-line method over the estimated useful life of the related asset.
| Description | Estimated
Useful Life | |
|---------------------------|--------------------------|--|
| Property
and equipment | 3 years | |
Depreciation expense for the year ended December 31, 2023 was \$6,059.
# **Use of estimates**
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
### Note 3 **Net capital requirements**
The Company is subject to the Securities and Exchange Commission's Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of a minimum net capital balance and requires that the Company's aggregate indebtedness to net capital, as defined, shall not exceed 15 to 1. At December 31, 2023 the Company's net capital was \$793,431 which was \$775,168 in excess of its required net capital of \$18,263. The Company's aggregate indebtedness to net capital was 0.35 to 1.
### Note 4 **Concentrations**
### **Customers**
For the year ended December 31, 2023, two customers represented 73% of the Company's revenues.
# **Cash**
The Company maintains its cash at financial institutions in bank deposits, which may exceed federally-insured limits. The Company has not experienced any losses in such accounts and the Company believes it is not exposed to any significant risk with respect to cash. Bank balances in excess of FDIC limits is \$396,932.
### Note 5 **Clearing arrangements**
The Company has an agreement with RQD\* Clearing, LLC ("RQD") to provide execution and clearing services on behalf of its customers on a fully disclosed basis. Deposits with clearing broker include the Company's clearing deposit with RQD.
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# **NOTES TO FINANCIAL STATEMENT (CONTINUED) December 31, 2023 (See Report of Independent Registered Public Accounting Firm)**
#### Note 6 **Related party transactions**
The Company shares employees, contractors and technology services with Blue Ocean Technologies, LLC under an expense sharing agreement. For the year ended December 31, 2023, the Company incurred expenses of \$745,836 related to this agreement. At December 31, 2023, the Company was due from Blue Ocean Technologies, LLC \$3,335, as shown on the Statement of financial condition as due from affiliate.
### Note 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 December 31, 2023 through March 14, 2024, which is the date the financial statements were issued. Management has determined that there are no subsequent events that require disclosure.
#### Note 8 **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.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.