# CAPE SECURITIES INC. X-17A-5 (2021-12-29) — Broker-dealer annual report - Company: CAPE SECURITIES INC. - Form: X-17A-5 - Filed: 2021-12-29 - Period: 2021-09-30 - Accession: 0000217550-21-000016 - CIK: 17071 - File #: 8-20747 - Type: Broker-dealer - Material weakness: No - Auditor: Rubio CPA, PC - Auditor location: Atlanta, GA - Contact: Jim R. Webb - Phone: 4143525050 - Email: jrwebb@capesecurities.com - Website: capesecurities.com - Signed by: Jim R. Webb (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/17071/000021755021000016/capesecuritiesaudit2021final.pdf --- {0}------------------------------------------------ ## UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | ANNUAL REPORTS | |----------------| | FORM X-17A-5 | | PART III | omb approval OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden kours per response: 12 > SEC FILE NUMBER 8 - 20747 ## 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 | | | 09/30/21 | | | |------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|---------------------------|--------------------------------------------|--|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | | | NAME OF FIRM: Cape Securities, Inc. | | | | | | | TYPE OF REGISTRANT (check all applicable boxes): | | | | | | | മ Broker-dealer
Check here if respondent is also an OTC derivatives dealer | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | 1600 Pennsylvania Avenue | | | | | | | (No. and Street) | | | | | | | McDonough | GA | | 3074-3 | | | | (City) | (State) | | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Jim R. Webb | (414) 352-5050 | jrwebb@capesecurities.com | | | | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing *
Rubio CPA, PC | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | 2727 Paces Ferry Rd SE, STE 2-1680 | Atlanta | Georgia | 30年に | | | | (Address) | (City) | (State) | (Zip Code) | | | | 05/05/2009 | | 3514 | | | | | (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 this form are not required to respond unless the form displays a currently valid OMB control number. {1}------------------------------------------------ ## OATH OR AFFIRMATION | | Jim R. Webb swear (or affirm) that, to the best of my knowledge and belief, the | |-----------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | financial report percaining to the firm of Cape Securities, Inc. Cape Securities, Inc. as of | | | September 30 _________________________________________________________________________________________________________________________________________________________________ | | | !!! your get yofficer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | as that of a customer. | | | | | | | Signatur | | | | | | Title: | | | | | | | | | | | "This filing ** contains (check all applicable boxes): | | | (a) Statement of financial condition. | | | O (b) Notes to consolidated statement of financial condition. | | | | @ (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) Statement of cash flows.
Q (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | [1] Statement of changes in liabilities subordinated to claims of creditors. | | | 2 (g) Notes to consolidated financial statements. | | | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | | [i] Computation of tangible net worth under 17 CFR 240.18a-2. | | | | [] Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR240.15c3-3. | | | L (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit 8 to 17 CFR 240.15c3-3 or | | Exhibit A to.17 CFR 240.18a-4, as applicable. | | | O (1) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. | | | | (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. | | 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. | O (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR | | | (o) Reconcillations, including appropriate explanations, of the FOCUS Report with computation of net capital of 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. | | | | O (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. | | | @ (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. | | | O (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
(s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. | | | O (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 statements under 17 | | CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. | | | | C (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. | | | CFR 240.18a-7, as applicable. | @ {w} Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 | | as applicable. | O (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-12, | | | O (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). | | | D (z) Other: | | | | ** To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(2), os | applicable. {2}------------------------------------------------ **Financial Statements** **For the Year Ended September 30, 2021** **With** **Report of Independent Registered Public Accounting Firm** {3}------------------------------------------------ #### **Contents** As of and for Year Ended September 30, 2021 Report of Independent Registered Public Accounting Firm #### **Financial Statements** Statement of Financial Condition Statement of Operations Statement of Changes in Stockholder's Equity Statement of Cash Flows Notes to Financial Statements #### **Supplementary Information** Schedule I - Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission Schedule II - Computation for Determination of Reserve Requirements under Rule 15c3-3 of the Securities and Exchange Commission Schedule III - Information Relating to Possession or Control Requirements under Rule 15c3-3 of the Securities and Exchange Commission Report of Independent Registered Public Accounting Firm on Exemption Report Exemption Report {4}------------------------------------------------ **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Stockholder of Cape Securities, Inc. Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Cape Securities, Inc. (the "Company") as of September 30, 2021, the related statements of operations, changes in stockholder's 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 September 30, 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 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. 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 to 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 information contained in Schedules I, II and III 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 information in Schedules I, II and III 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 accompanying schedules. In forming our opinion on the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented {5}------------------------------------------------ in conformity with 17 C.F.R. §240. I 7a-5. In our opinion, the aforementioned supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2008. December 27, 2021 Atlanta, Georgia � CPI\. Rub to CPA, A:. PC {6}------------------------------------------------ #### Statement of Financial Condition September 30, 2021 #### **ASSETS** | Cash
Clearing deposit
Commissions receivable
Property and equipment, net of accumulated depreciation of \$86,982
Due from clearing broker
Due from related party
Prepaid expenses | 197,296
100,000
177,042
912
35,227
16,078
1,440 | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|-----------| | TOTAL ASSETS | \$ | 527,994 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | | LIABILITIES | | | | Accounts payable and accrued expenses | \$ | 16,489 | | Commissions payable | | 184,588 | | Reserved for Litigation | | 40,000 | | Due to related party | | 67,896 | | Deferred Revenue | | 10,773 | | TOTAL LIABILITIES | | 319,746 | | Stockholder's Equity | | | | Common stock, \$1 par value, 1,500,000 shares authorized | | | | 230,000 shares issued and outstanding | | 230,000 | | Additional paid in capital | | 335,360 | | Retained earnings (deficit) | | (357,112) | | TOTAL STOCKHOLDER'S EQUITY | | 208,248 | **TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY** \$ 527,994 {7}------------------------------------------------ #### Statement of Operations For the Year Ended September 30, 2021 | REVENUES: | | |-------------------------------|-----------------| | Commissions | \$
4,922,188 | | Mutual fund fees | 747,856 | | Private placements | 408,104 | | Registered rep fee income | 88,716 | | Interest income | 56,618 | | Principal transactions | 7,560 | | Other | 87,719 | | | | | Total revenues | 6,318,761 | | EXPENSES: | | | Compensation and benefits | 5,377,522 | | Clearance fees | 107,003 | | Technology and communications | 142,927 | | Occupancy and equipment | 83,124 | | Other | 540,966 | | | | | Total expenses | 6,251,542 | | | | | NET INCOME | \$
67,219 | | | | 4 {8}------------------------------------------------ Statement of Changes in Stockholder's Equity For the Year Ended September 30, 2021 | | Common
Stock | Additional Paid
in Capital | Retained
Earnings
(Deficit) | Stockholder's
Equity | |----------------------------------|-----------------|-------------------------------|-----------------------------------|-------------------------| | Balance at October 1, 2020 | \$230,000 | \$335,360 | \$(424,331) | \$141,029 | | Net Income | - | - | \$67,219 | \$67,219 | | Balance at September 30,
2021 | \$230,000 | \$335,360 | \$(357,112) | \$208,248 | | | | | | | {9}------------------------------------------------ ### Statement of Cash Flows For the Year Ended September 30, 2021 | OPERATING ACTIVITIES: | | |---------------------------------------------------------|---------------| | Net Income | \$
67,219 | | Items which do not affect cash: | | | Depreciation expense | 1,853 | | Adjustments to reconcile net income to net cash used by | | | Operating Activities | | | Changes in operating assets and liabilities | | | Increase in commissions receivable | (81,018) | | Decrease in due from clearing broker | 26,226 | | Increase in due from related party | (16,078) | | Increase in Prepaid expenses | (284) | | Increase in accounts payable and accrued expenses | 7 ,149 | | Increase in commissions Payable | 16,130 | | Decrease in due to related party | (63,399) | | Increase in deferred revenue | 828 | | Increase in reserve for litigation | 13,103 | | Net cash used by operating activities | (28,27
1) | | NET DECREASE IN CASH | (28,271) | | CASH AT BEGINNING OF YEAR | 225,567 | | CASH AT END OF YEAR | \$
197,296 | {10}------------------------------------------------ Notes to Financial Statements September 30, 2021 #### **NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** Organization and Description of Business: Cape Securities, Inc. (the "Company") is a registered broker dealer organized under the laws of the state of North Carolina in 1985. The Company is registered with the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the securities commissions of appropriate states. The Company's primary business is brokerage of investment securities. Cash: The Company maintains its bank accounts in a high credit quality institution. Balances at times may exceed federally insured limits Property and Equipment: Property and equipment are recorded at cost. Depreciation is provided by use of straight-line methods over the estimated useful lives of the respective assets. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations. Income Taxes: The Company has elected S corporation status whereby the income or losses of the Company flow through to and are taxable to its stockholder. The Company has adopted the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under FASB ASC 740-10, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status and the decision not to file a return. The Company has evaluated each of its tax positions and has determined that it has no uncertain tax positions for which a provision or liability for income taxes is necessary. Estimates: Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements. Commissions Receivable: The carrying amount of commissions receivable is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. The Company regularly reviews its commissions receivable for any uncollectible amounts. The review for uncollectible amounts is based on an analysis of the Company's collection experience, customer credit worthiness, and current economic trends. Based on management's review, no allowance for credit losses is considered necessary. In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost. The model replaces the probable, incurred loss model for those assets and broadens the information an entity must consider in developing its expected credit loss estimate for assets measured at amortized cost. The Company adopted ASU No. 2016-13 on October 1, 2020 using the modified retrospective approach with no material impact to its financial position, results of operations or cash flows. {11}------------------------------------------------ Notes to Financial Statements September 30, 2021 Revenue Recognition: Revenue from contracts with customers includes commission income, private placement revenue, and fees from customers. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events. 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 of the securities have been transferred to/from the customer. Mutual Funds or pooled investment vehicles (collectively, "funds") have entered into agreements with the Company to distribute/sell its shares to investors. Marketing or distribution fees are paid over time (12B·1 fees) on the basis of a contractual rate applied to the monthly or quarterly market value of the fund. Revenue is recognized as these fees are earned in accordance with the underlying agreements. Private placement revenue primarily consists of selling commissions and marketing allowance fees for the sale of interests in offerings. The Company recognizes private placement revenue upon the sale of each interest as this satisfies the only performance obligation identified in accordance with this standard. Date of Management's Review: Subsequent events were evaluated through the date the financial statements were issued. #### **NOTE B - NET CAPITAL** The Company, as a registered broker dealer is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At September 30, 2021, the Company had net capital of \$155,226 which was \$133,910 more than its required net capital of \$21,316 and the percentage of aggregate indebtedness to net capital was 206%. {12}------------------------------------------------ Notes to Financial Statements September 30, 2021 #### **NOTE C - RELATED PARTIES** The Company leases office premises from a related party for monthly rent payments that were equal to a total of approximately \$76,800 under an administrative services agreement. The Company has elected for all underlying classes of assets to not recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement and do not include an option to purchase the underlying assets that the Company is reasonably certain to exercise. The Company recognizes lease costs associated with its short-term lease with a related party on a straight - line basis over the lease term. Separately, the related party paid approximately \$648,000 of payroll costs and approximately \$101,400 of other costs incurred by the Company for which the related party was partially reimbursed by the Company pursuant to the administrative services agreement. The due to related party at September 30, 2021 of \$67,896 arises from an underpayment under the administrative services agreement with this entity. The Company entered into a separate administrative services agreement with another related party effective January 1, 2021. The related party paid approximately \$77,300 of compensation costs and \$17,200 of other costs incurred by the Company for which the related party was reimbursed by the Company pursuant to the administrative services agreement. The due from related party at September 30, 2021 of \$16,078 arises from an overpayment under the administrative services agreement with this entity. The Company shares its errors and omissions insurance with other related entities pursuant to an informal arrangement. An affiliated Registered Investment Advisor pays all fees due under the policy for which it subsequently seeks reimbursement. The Company's allocated share of fees under this arrangement was equal to approximately \$64,400 for the year ended September 30, 2021. There are no amounts due under this informal arrangement at September 30, 2021. Financial position and results of operations could differ from the amounts in the accompanying financial statements if these related party transactions did not exist. #### **NOTE D – FINANCIAL INSTRUMENTS** Financial Instruments with Off-Balance-Sheet Risk: In the normal course of business, the Company's customer activities involve the execution and settlement of various customer securities transactions. These activities may expose the Company to off-balance-sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company must purchase or sell the financial instrument underlying the contract at a loss. Credit Risk: The Company is engaged in various trading and brokerage activities in which counterparties include broker-dealers and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty. {13}------------------------------------------------ Notes to Financial Statements September 30, 2021 ### **NOTE E – CLEARING BROKER & CLEARING AGREEMENTS** The Company has an agreement with a clearing broker to execute and clear, on a fully disclosed basis, customer accounts of the Company. In accordance with this agreement, the Company is required to maintain a deposit in cash or securities, which is refundable to the company should it discontinue its arrangement. Amounts receivable from its clearing organization consist of commissions receivable and funds on deposit in various accounts. ### **NOTE F – CONTINGENCIES** At September 30, 2021, the Company is engaged in four arbitrations with customers incurred in the normal course of business. The Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, the Company records the amount considered to be the best estimate within a range of potential losses that are both probable and estimable; however, if the Company cannot determine a best estimate, then the low end of the range of those potential losses is recorded. The actual costs of resolving legal actions may be substantially higher than the amounts accrued for those actions. Based on information currently available, the Company has accrued \$40,000 for the low-end range of the expected cost to settle the matters. #### **NOTE G - ECONOMIC RISKS** In March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. This pandemic event has resulted in significant business disruption and uncertainty in both global and U.S. markets. While the Company believes that it is in an appropriate position to sustain the potential shortterm effects of these world-wide events, the direct and long-term impact to the Company and its financial statements is undetermined at this time. #### **NOTE H - CONCENTRATIONS** Approximately 21% of commission revenues earned during the year were from one customer. {14}------------------------------------------------ Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission Act of 1934 As of September 30, 2021 | SCHEDULE I | | |-----------------------------------------------------------|---------------------| | TOTAL STOCKHOLDER'S EQUITY QUALIFIED FOR NET CAPITAL | \$
208,248 | | DEDUCTIONS AND/OR CHARGES: | | | Non-allowable assets: | | | Property and equipment, net | (912) | | Commissions receivable, net | (34,592) | | Prepaid expenses
Due from related party | (1,440)
(16,078) | | NET CAPITAL | \$
155,226 | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENT | | | Minimum net capital required | \$
21,316 | | Excess net capital | \$
133,910 | | Net Capital less greater of 10% of aggregate indebtedness | | | or 120% of the minimum dollar amount required | \$
101,935 | | AGGREGATE INDEBTEDNESS: | | | | \$
319,746 | | Percentage of aggregate indebtedness to net capital | 205.99% | Reconciliation with Company's computation of Net Capital included in Part 11A of Form X-17A-5 as of September 30, 2021. There is no significant difference between the net capital reported in Part 11A of Form X-17A-5, as amended, as of September 30, 2021 and net capital as reported above. {15}------------------------------------------------ Supplemental Schedules As of September 30, 2021 ## **SCHEDULE II - Computation for Determination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission** The Company is exempt from the provisions of Rule 15c3-3 under the Securities and Exchange Act of 1934, in that the Company's activities are limited to those set forth in the condition for exemption appearing in paragraphs (k)(2)(i) and (k)(2)(ii). ## **SCHEDULE III - Information Relating to the Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission** The Company is exempt from the provisions of Rule 15c3-3 under the Securities and Exchange Act of 1934, in that the Company's activities are limited to those set forth in the condition for exemption appearing in paragraphs (k)(2)(i) and (k)(2)(ii). {16}------------------------------------------------ **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Stockholder of Cape Securities, Inc. We have reviewed management's statements included in the accompanying Broker Dealers Annual Exemption Report in which (1) Cape Securities, Inc. identified the following provisions of 17 C.F.R. § l 5c3-3(k) under which Cape Securities, Inc. claimed an exemption from 17 C.F.R. § 240. l 5c3-3: (k)(2)(i) and (k)(2)(ii) (the "exemption provisions"); and, (2) Cape Securities, Inc. stated that Cape Securities, Inc. met the identified exemption provisions throughout the most recent fiscal year without exception. Cape Securities, Inc.'s management is responsible for compliance with the exemption provisions and its statements. 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 Cape Securities, Inc.'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 paragraphs (k)(2)(i) and (k)(2)(ii), of Rule 15c3-3 under the Securities Exchange Act of 1934. December 27, 2021 Atlanta, GA --0.J.ir, **<.PA** � fuiliio CPA,' PC {17}------------------------------------------------ ## CAPE SECURITIES, INC.'S EXEMPTION REPORT Cape Securities, Inc. (the "Company") is a registered broker-dealer subject to Rule 1 7a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R §240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: The Company claimed an exemption from the provisions of Rule 15c3-3 under the Securities and Exchange Act of 1934, pursuant to paragraphs (k)(2)(i) and (ii) of the Rule. The Company met the identified exemption provisions throughout the most recent fiscal year ended September 30, 2021 without exception. Jim R. Webb. CEO November / 2021 {18}------------------------------------------------ **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES** To the Stockholder of Cape Securities, Inc. We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of I 934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below and were agreed to by Cape Securities, Inc. and the SIPC, solely to assist you and SIPC in evaluating Cape Securities, lnc.'s compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended September 30, 2021. Cape Securities, lnc.'s management is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with standards established by the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. 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 findings are as follows: - 1) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amount reported on the Annual Audited Report Form X-17 A-5 Part III for the year ended September 30, 2021 with the Total Revenue amount reported in Form SIPC-7 for the year ended September 30, 2021, noting no differences; - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on Cape Securities, Inc. 's compliance with the applicable instructions of the Form SIPC-7 for the year ended September 30, 2021. 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. Th is report is intended solely for the information and use of Cape Securities, Inc. and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. December 27, 2021 Atlanta, GA **12.J,;,,CP,l,�c.** Rubio CPA, PC Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.