# SARNA FINANCE LLC X-17A-5 (2024-02-22) — Broker-dealer annual report - Company: SARNA FINANCE LLC - Form: X-17A-5 - Filed: 2024-02-22 - Period: 2023-12-31 - Accession: 0001847188-24-000001 - CIK: 1847188 - File #: 8-70670 - Type: Broker-dealer - Material weakness: No - Auditor: Michael Coglianese CPA, P.C. - Auditor location: Bloomingdale, IL - Contact: Ron Wetzel - Phone: 8473631374 - Email: ron@sarnafinance.com - Website: sarnafinance.com - Signed by: Ronald L Wetzel (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1847188/000184718824000001/financialcondition.pdf --- {0}------------------------------------------------ # **Sarna Finance LLC Statement of Financial Condition December 31, 2023** **Public** {1}------------------------------------------------ # **Sarna Finance LLC Table of Contents** | Section | Page | |---------------------------------------------------------------|------| | Facing Page ʹ
Annual Audited Report Form X-17A-5, Part III | 1 | | Oath or
Affirmation | 2 | | Report of Independent Registered Public Accounting Firm | 3 | | Statement of Financial Condition | 4 | | Notes to the Financial Statements | 5-8 | {2}------------------------------------------------ | UNITED | STATES | OMB APPROVAL | |------------------------------------------------------------------------------------------------------------|---------------------------------|-----------------------------------------------------------------------------------------------------------| | SECURITIES AND | EXCHANGE
COMMISSION | OMB Number: 3235-0123 | | | Washington, D.C. 20549 | Expires: Nov. 30, 2026
Estimated average burden | | | | hours per response: 12 | | ANNUAL REPORTS | | SEC FILE NUMBER | | FORM | X-17A-5 PART
III | 8-70670 | | | | | | | | | | | FACING PAGE | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | FILING FOR THE PERIOD BEGINNING | 1/1/2023 | AND ENDING
12/31/2023 | | | MM/DD/YY | MM/DD/YYYY | | | | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF FIRM:
Sarna Finance LLC | | | | TYPE OF REGISTRANT (check all applicable boxes): | | | | ܈
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Broker-dealer | տ
Security-based swap dealer | Major security-based swap participant | | տ
Check here if respondent is also an OTC derivatives dealer | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | 141 W Jackson Blvd, Suite 1710A | | | | (No. and Street) | | | | | | | | Chicago | IL | 60604 | | (City) | (State) | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | Ronald L. Wetzel | 847-363-1374 | ron@sarnafinance.com | | (Name) | (Area Code ʹ Telephone Number) | (Email Address) | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | Michael Coglianese CPA PC | | | | (Name ʹ if individual, state last, first, and middle name) | | | | 125 East Lake Street, Suite 303 | Bloomingdale | IL
60108 | | (Address) | (City) | (State)
(Zip Code) | | | | | | October 20, 2009 | 3874 | | | (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-5(e)(1)(ii), if applicable. **Persons who are to respond to the collection of information contained in thisform are not required to respond unlessthe form displays a currently valid OMB control number.** {3}------------------------------------------------ - - - - - - - - - - - - - - - - - - - - - - - {4}------------------------------------------------ ## **Report of Independent Registered Public Accounting Firm** ![](_page_4_Picture_1.jpeg) #### **Report of Independent Registered Public Accounting Firm** To the Sole Member and Management of Sarna Finance LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Sarna Finance LLC as of December 31, 2023, and the related notes (collectively referred to as the financial statement). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Sarna Finance LLC as of December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** 7KLVILQDQFLDOVWDWHPHQWLVWKHUHVSRQVLELOLW\RI6DUQD)LQDQFH//&¶VPDQDJHPHQW2XUUHVSRQVLELOLW\LVWRH[SUHVV DQRSLQLRQRQ6DUQD)LQDQFH//&¶VILQDQFLDOVWDWHPHQWEDVHGRQRXUDXGLW:HDUHDSXEOLFDFFRXQWLQJILUP registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Sarna Finance LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial 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. :HKDYHVHUYHGDV6DUQD)LQDQFH//&¶VDXGLWRUVLQFH Bloomingdale, IL February 12, 2024 {5}------------------------------------------------ # **Sarna Finance LLC Statement of Financial Condition December 31, 2023** | Assets | | |-----------------------------------|---------------| | Cash | \$
99,270 | | Short-term Investment | 74,166 | | Receivable from broker | 40,472 | | Other assets | 7,275 | | Total Assets | \$
221,183 | | >ŝĂďŝůŝƚŝĞƐĂŶĚDĞŵďĞƌ͛ƐƋƵŝƚLJ | | | Accrued liabilities | \$
5,127 | | Affiliate liabilities | 3,338 | | Total Liabilities | 8,465 | | DĞŵďĞƌ͛ƐƋƵŝƚLJ | 212,718 | | dŽƚĂů>ŝĂďŝůŝƚŝĞƐĂŶĚDĞŵďĞƌ͛ƐƋƵŝƚLJ | \$
221,183 | **The accompanying notes are an integral part of these financial statements.** {6}------------------------------------------------ # **Sarna Finance LLC Notes to the Financial Statements Year Ended December 31, 2023** #### **1) Organization and Nature of Business** Sarna Finance LLC, a limited liability company registered in the State of Delaware on January 22, 2021 (the ͞ŽŵƉĂŶLJ͟ Žƌ ͞&ŝƌŵ͟Ϳ ŝƐ Ă ǁŚŽůůLJ ŽǁŶĞĚ ƐƵďƐŝĚŝĂƌLJ ŽĨ ^ĂƌŶĂ ,ŽůĚŝŶŐƐ /ŶĐ͘ ;͞WĂƌĞŶƚ͟Ϳ͘ dŚĞ ŽŵƉĂŶLJ provides internet-based brokerage services to retail customers throughout the United States. The Firm is registered as an introducing broker dealer ǁŝƚŚ ƚŚĞ ^ĞĐƵƌŝƚŝĞƐ ĂŶĚdžĐŚĂŶŐĞ ŽŵŵŝƐƐŝŽŶ ;͞^͟Ϳ, is a ŵĞŵďĞƌŽĨƚŚĞ&ŝŶĂŶĐŝĂů/ŶĚƵƐƚƌLJZĞŐƵůĂƚŽƌLJƵƚŚŽƌŝƚLJ;͞&/EZ͟Ϳsince March 1, 2022 and the Securities /ŶǀĞƐƚŽƌWƌŽƚĞĐƚŝŽŶŽƌƉŽƌĂƚŝŽŶ;͞^/W͟Ϳ͘/ŶĂĚĚŝƚŝŽŶ͕ƚŚĞ&ŝƌŵŝƐƌĞŐŝƐƚĞƌĞĚĂƐĂŶŝŶƚƌŽĚƵĐŝŶŐďƌŽŬĞƌǁŝƚh ƚŚĞ ŽŵŵŽĚŝƚŝĞƐ &ƵƚƵƌĞƐ dƌĂĚŝŶŐ ŽŵŵŝƐƐŝŽŶ ;͞&d͟Ϳ ĂŶĚ is a member of the National Futures ƐƐŽĐŝĂƚŝŽŶ;͞E&͟Ϳ since December 30, 2022. The Firm custodies its customer accounts on a fully disclosed basis with a clearing brokerage firm ;͞ůĞĂƌŝŶŐ&ŝƌŵ͟Ϳ͘hŶĚĞƌƐƵĐŚĂƌƌĂŶŐĞŵĞŶƚƐ͕ƚŚĞŽŵƉĂŶLJĚŽĞƐŶŽƚŚŽůĚĂŶLJŽĨŝƚƐĐƵƐƚŽŵĞƌƐ͛ƐĞĐƵƌŝƚŝĞƐ or funds and does not handle any of the clearing operaƚŝŽŶƐĨŽƌƚƌĂŶƐĂĐƚŝŽŶƐĐŽŵŵĞŶĐĞĚďLJƚŚĞ&ŝƌŵ͛Ɛ ĐƵƐƚŽŵĞƌƐ͘dŚĞŽŵƉĂŶLJ͛ƐĐƵƐƚŽŵĞƌĂĐĐŽƵŶƚƐĂƌĞƐĞůĨ-directed which means the Firm does not offer and advise or recommendations on which investments each customer holds in their respective account. #### **2) Summary of Significant Accounting Policies** ### *Basis of Presentation* The ŽŵƉĂŶLJ͛Ɛ financial statements have been prepared in conformity with United States Generally ĐĐĞƉƚĞĚ ĐĐŽƵŶƚŝŶŐ WƌŝŶĐŝƉůĞƐ ;͞'W͟Ϳ ǁŚŝĐŚ ƌĞƋƵŝƌĞ ŵĂŶĂŐĞŵĞŶƚ ƚŽ ŵĂŬĞ ĐĞƌƚĂŝŶ ĞƐƚŝŵĂƚĞƐ ĂŶĚ assumptions that affect the amounts presented in the accompanying financial statements. Actual results may differ from those estimates. #### *Use of Estimates* The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the reported asset and liability balances on December 31, 2023, disclosure of contingent assets and liabilities as of the date of the financial statements, and the revenues and expenses for the year ended December 31, 2023. The actual outcome of these results could differ from the estimates included in these financial statements. #### *Income Taxes* The Company has not calculated a provision for income tax purposes since the Company is a limited liability company that is solely owned by its Parent and, therefore, is considered a disregarded entity. dŚƵƐ͕ƚŚĞ&ŝƌŵ͛ƐĂŶŶƵĂůŶĞƚŝŶĐŽŵĞ;ůŽƐƐͿŝƐƌĞƉŽƌƚĞĚ͕ĨŽƌŝŶĐŽŵĞƚĂdžƉƵƌƉŽƐĞƐ͕ďLJŝƚƐWĂƌĞŶƚ͕ĂŶĚƚŚĞLJĂƌĞ responsible for any respective income tax liability. {7}------------------------------------------------ The Company follows the requirements to recognize uncertain income tax positions as required by ASC 740. Under these requirements, an income tax benefit is recognized only when the Company determines that the position is more likely than not that it will be sustained upon by the appropriate tax authorities. The Company has analyzed its income tax positions and has concluded that all of its income tax positions will be sustained upon examination. ### *Credit Losses on Financial Instruments* The Company is engaged in various brokerage activities in which counterparties include broker-dealers, banks and other financial institutions. The risk of default depends on the creditworthiness of the counterparty. In the event counterparties do not fulfill their obligations, the Company may be exposed to credit risk. The CompanLJ͛Ɛ ƉŽůŝĐLJŝƐ ƚŽĂƐƐĞƐƐ ƚŚĞ ĐƌĞĚŝƚǁŽƌƚŚŝŶĞƐƐ ŽĨeach counterparty that the Firm conducts business. #### *Fair Value of Assets and Liabilities* Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement accounting guidance contained in ASC 820 describes the fair value hierarchy for disclosing assets and liabilities measured at fair value based on the inputs used to value them. The fair value hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are based on the market pricing data obtained from sources independent of the Company. A quoted price in an active market provides the most reliable evidence of fair value and is generally used to measure the fair value whenever available. hŶŽďƐĞƌǀĂďůĞŝŶƉƵƚƐƌĞĨůĞĐƚƚŚĞŽŵƉĂŶLJ͛ƐũƵĚŐŵĞŶƚĂďŽƵƚƚŚĞassumptions market participants would use in pricing an asset or liability. Where inputs are used to measure fair value of an asset or liability are from different levels of the hierarchy, the asset or liability is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input requires judgement. The fair value hierarchy includes three levels based on the objectivity of the inputs as follows: - x Level 1 ʹ Inputs are quoted prices in active markets as of the measurement date for identical assets or liabilities that the Company has the ability to assess. - x Level 2 ʹ Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability. Such as interest rates, benchmark yields, issue spreads, new issue data and collateral performance. - x Level 3 ʹ Inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. A finanĐŝĂůŝŶƐƚƌƵŵĞŶƚ͛ƐůĞǀĞůǁŝƚŚŝŶƚŚĞĨĂŝƌǀĂůƵĞŚŝĞƌĂƌĐŚLJŝƐďĂƐĞĚŽŶƚŚĞůŽǁĞƐƚlevel of any input that is significant to the fair value measurement. The carrying amount approximates their fair value due to the short-term nature of the respective financial instruments. {8}------------------------------------------------ #### **3) New Accounting Standards** The Company did not adopt any new accounting standards during the year ended December 31, 2023. The Company has also reviewed the new accounting standards that have a future implementation date. ĂƐĞĚŽŶƚŚĞŽŵƉĂŶLJ͛ƐĂŶĂůLJƐŝƐ͕ƚŚĞƌĞĂƌĞŶŽŶĞǁĂĐĐŽƵŶƚŝŶŐƐƚĂŶĚĂƌĚƐLJĞƚƚŽďĞĂĚŽƉƚĞĚƚŚĂƚǁŽƵůĚ have a material affect on the ŽŵƉĂŶLJ͛s financial statements. ### **4) Receivable from Broker** The Company is required to retain a deposit with its clearing broker as part of its clearing arrangment. The receivable from broker represents cash deposits of \$40,472 as of December 31, 2023. #### **5) Other Assets** Other assets consisted of the following on December 31, 2023: | Prepaid assets | 4,960 | |---------------------|-------| | Regulatory deposits | 2,315 | | Total other assets | 7,275 | #### **6) Guarantee and Concentration of Credit Risk** The Company clears its security transactions through an introducing broker arrangement with a thirdparty clearing broker. According to the terms of this arrangement, the Company has agreed to indemnify its third-party clearing broker. dŚĞŽŵƉĂŶLJ͛ƐƉŽƚĞŶƚŝĂůůŝĂďŝůŝƚLJƵŶĚĞƌƚŚŝƐarrangement is not quantifiable and may exceed the deposit posted as collateral. However, the Company believes that it is unlikely that it will have to make any material payments under this arrangement, and no liabilities related this indemnification arrangement have been recognized in the accompanying financial statement. The Company maintains its cash balances with a financial institution that provides FDIC insurance up to a maximum \$250,000 balance. #### **7) Commitments and Contingencies** The Company is exposed to certain commitments and contingencies during the normal course of business. As of December 31, 2023, the Company only has an \$18,000 commitment for an office lease. The Company accounts for this lease in accordance with ASC 842 and has elected not to recognize capitalized assets and lease liabilities for short-term leases that have a term of 12 months or less on the lease commencement date. The Company does not have any legal contingencies resulting from any litigation activities. #### **8) Expected Credit Losses** In June 2016, ASU 2016-13, Financial Instruments, Credit Losses (Topic 326) was issued to amend several aspects of the measurement of credit losses on financial instruments. According to this guidance, expected credit losses on receivables need to be measured based on historical experience, current conditions and forecasts that affect the collectability of any financial assets on the Statement of Financial {9}------------------------------------------------ Condition. The Company has completed its analysis, as of December 31, 2023, of its financial assets and did not identify any material credit losses to be recognized in these financial statements. #### **9) Fair Value Measurements** dŚĞŽŵƉĂŶLJ͛Ɛsole financial asset is a short-term treasury bill that is valued using Level 1 fair value inputs and does not have any liability that is subject to fair value measurements. As of December 31, 2023, the Company valued its short-term treasury bill at \$74,166 in the Statement of Financial Condition. #### **10) Related Party Transactions** #### *Expense Sharing Agreement* The Company has entered into an expense sharing agreement with its Parent that permits them to share certain costs with its Parent. The terms of this agreement allow for the sharing of certain expenses between the Company and its Parent. As of December 31, 2023, the Company owed \$3,338 to its Parent for these shared services which is included in affiliate liabilities on the Statement of Financial Condition. ### *Affiliate Licensing Agreement* The Company has entered into a technology licensing agreement with an affiliate through common ownership. According to the terms of this agreement, the Company agreed to a licensing fee in exchange for access to and usage of certain technology needed to operate and support its platform. This agreement was terminated effective September 30, 2023. #### **11) Regulatory Requirements** The Company is subject to Rule 15c3-ϭ ƵŶĚĞƌ ƚŚĞ ^ĞĐƵƌŝƚŝĞƐ džĐŚĂŶŐĞ Đƚ ŽĨ ϭϵϯϰ ;͞EĞƚ ĂƉŝƚĂů͟Ϳ͘ According to this Rule, the Firm must maintain a minimum net capital of \$5,000 and maintain an aggregate indebtedness to net capital ratio that does not exceed 15 to 1. The Company is also subject to CFTC Regulation 1.17 under the Commodity Exchange Act. According to this Rule, the Firm must maintain minimum net capital that is the greater of its minimum net capital requirements with FINRA (\$5,000) or the NFA (\$45,000). As of December 31, 2023, the Company had a net capital of \$205,443 which was \$160,443 ŝŶĞdžĐĞƐƐŽĨƚŚĞƌĞƋƵŝƌĞĚŶĞƚĐĂƉŝƚĂůŽĨΨϰϱ͕ϬϬϬ͘dŚĞŽŵƉĂŶLJ͛ƐĂŐŐƌĞŐĂƚĞŝŶĚĞďƚĞĚŶĞƐƐƚŽŶĞƚ capital ratio was 0.04 to 1 ratio as of December 31, 2023. #### **12) Subsequent Events** The Company has evaluated the events that have occurred for the period of time from its year end, December 31, 2023, through the date of these financial statements was available to be issued. Based on this evaluation, the Company has determined there are no subsequent events required to be recognized or disclosed. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.