# ECONOMY SECURITIES, INCORPORATED X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: ECONOMY SECURITIES, INCORPORATED - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0000356432-21-000002 - CIK: 356432 - File #: 8-26775 - Material weakness: No - Auditor: Faust, Thomas CPA - Auditor location: Lafayette, IN - Contact: Larry G. Weinzapfel, CPA, CFP - Phone: 812-474-1015 - Signed by: Larry G. Weinzapfel (President) Original filing: https://www.sec.gov/Archives/edgar/data/356432/000035643221000002/2020-Annual-Audit-Report.pdf --- {0}------------------------------------------------ UNITED ST ATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 0MB APPROVAL 0MB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours oer resoonse ...... 12.00 ## **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** | SEC FILE NUMBER | |-----------------| | B-26775 | **FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule l 7a-5 Thereunder** | REPORT FOR THE PERIOD BEGINNING | ____
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12_/_3_1/_2_0 | | |----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|-------------------------|---------------------------------|--| | | MM/DD/YY | | MMl[)D/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | Economy Securities, Incorporated
~AME OF BROKER-DEALER: | | OFFICIAL USE ONLY | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM 1.D. NO. | | | | 1301 Mortensen Lane | | | | | | (No. and Street) | | | | | Evansville | Indiana | | 47715 | | | (City) | (State) | | (Zip Code) | | | '.'JA~1E AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Larry We,nzapfel | | | 812 474-1016 | | | | | | (Arca Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Thomas Faust, CPA, LLC | | d/b/a Thomas Faust, CPA | | | | | (Name - if 1111/11•111,wl. s111re 111st. first. middle 11<1111<·) | | | | | 17 4 Coldbrook Ct. | Lafayette | Indiana | 47909 | | | ( :\ddrcss) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | I/ | | | | | | lcerti ficd Public Accountant
Public Accountant | | | | | | | | | | | | B
Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | *Claims for exemption from the req11ireme111 that the a111111al report be co\'ered by the opinion of an independent public accou11tm1t | | | | | *must h<' supported by a statement of/acts and circumstances relied 011 as the basis/or the exemption. See Section 240. I 7a-5(e)(2)* **Potential 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 valld 0MB control number.** {1}------------------------------------------------ ### **OATH OR AFFIRMATION** | 1, Larry Weinzapfel | , swear (or affirm) that, to the best of | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | ---·
Economy Securities. Incorporated | my knowledge and b!!lid the accompanying financial statement and supporting sch!!dules pertaining to the firm of
. as | | of December 31 | 20 20
art! true and corrl!ct. I furthl!r swear (or affirm) that | | class1 fic'-
Not.lry Public • Seal | | | Vanderburgh County • State of lndi,in,1
Commission Number NP0628947
My Commission Expires Aug 24. 2027 | Title | | I report '"* contains (check all applicable boxes):
(a) Fal.'.ing Page.
1b) S1,1temcnt of Financial Condition.
of Comprchcnsm: Income (as defined in ~210.1-02 of Regulation S-X).
( ( t) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
l
(g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Ruh! I 5c3-3. | | | (i)
Information Relating to the Possession or Control Requirements Under Rule I 5c3-3. | D (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule I 5c3-
l and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Ruic I 5c3-3. | | consolidation.
(I) An Oath or Affirmation.
(ml A copy of the SIPC Supplemental Report. | D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | ( n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | *•\*Fur nmdiri,m.1· of co11/ide11tial lreatmelll of certain portions of this filing, see section 240.* / *7a-5(e)( 3).* {2}------------------------------------------------ {3}------------------------------------------------ #### FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION DECEMBER 31, 2020 {4}------------------------------------------------ ### **CONTENTS** | | Page | |----------------------------------------------------------------------|------| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 | | FINANCIAL STATEMENTS | | | Statement of Financial Condition | 2 | | Statement of Income | 3 | | Statement of Changes in Stockholder's Equity | 4 | | Statement of Cash Flows | 5 | | Notes to Financial Statements | 6 | | SUPPLEMENTARY INFORMATION | | | Schedule I - Computation of Net Capital Under Rule 1Sc3-1 of the | | | Securities and Exchange Commission | 10 | | Schedule II - Computation for Determination of Reserve Requirements | | | Under Rule 1Sc3-3 of the Securities and Exchange Commission | 11 | | Schedule Ill - Information Relating to Possession or Control | | | Requirements Pursuant to Rule 1Sc3-3 | 11 | | Exemption Report | 12 | | Report of Independent Registered Public Accounting Firm on Review of | | | Exemption Report | 13 | | | | {5}------------------------------------------------ # **THOMAS FAUST, CPA** Certified Public Accountant 17 4 Coldbrook Ct. Lafayette, IN 47909 765-237-9185 thomasfaustcpa2@gmall.com #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Stockholders of Economy Securities, Incorporated #### **Opinion on the Financial Statements** I have audited the accompanying statement of financial condition of Economy Securities, Incorporated, as of December 31, 2020, the related statements of income, changes in stockholder's equity, and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the financial statements). In my opinion, the financial statements present fairly, in all material aspects, the financial position of Economy Securities, Incorporated as of December 31, 2020 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 Economy Securities, lncorporated's management. My responsibility is to express an opinion on Economy Securities, lncorporated's financial statements based on my audit. I am a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and am required to be independent with respect to Economy Securities, Incorporated, in accordance with the U.S. federal securities laws and the applicable rules and the regulations of the Securities and Exchange Commission and the PCAOB. I conducted my audit in accordance with the standards of the PCAOB. Those standards require that I 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. My 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. My 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. I believe that my audit provides a reasonable basis for my opinion. #### **Supplemental Information** Schedule I, Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission, Schedule 11, Computation for Determination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission and Schedule Ill, Information For Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission have been subjected to audit procedures performed in conjunction with the audit of Economy Securities, lncorporated's financial statements. The supplemental information is the responsibility of Economy Securities, lncorporated's management. My 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 my opinion on the supplemental information, I evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In my opinion, Schedule I, Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission, Schedule 11, Computation for Determination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission and Schedule 111, Information For Possession or Control Requirements Under ![](_page_5_Picture_13.jpeg) {6}------------------------------------------------ Rule 15c3-3 of the Securities and Exchange Commission are fairly stated, in all material respects, in relation to the financial statements as a whole. Thomas Faust, CPA, LLC d/b/a/ Thomas Faust, CPA I have served as the Company's auditor since 2018. Lafayette, Indiana February 25, 2021 {7}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020 | ASSETS | | |----------------------------------------------------------|---------------| | Cash | \$
99,850 | | Deposit with clearing organization | 20,261 | | Receivable from broker-dealers and clearing organization | 7,276 | | Other assets | 5,395 | | Total Assets | \$
132,782 | | | | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | LIABILITIES | | | Accounts payable | \$
5,600 | | STOCKHOLDER'S EQUITY | | | Common stock | 70,000 | | Paid-in capital | 35,000 | | Retained earnings | 22,182 | | Total stockholder's equity | 127,182 | | Total Liabilities and Stockholder's Equity | \$
132,782 | {8}------------------------------------------------ ## **STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 2020** | | Amount | Percent of
total
revenues | |--------------------------------------------|--------------|---------------------------------| | REVENUES | | | | Other securities commissions | \$
35,126 | 40.0 | | Sale of Investment company shares | 48,169 | 54.8 | | Other Revenue | 4,508 | 5.1 | | Interest income | 77 | 0.1 | | | | | | Total revenues | \$
87,880 | 100.0 | | EXPENSES | | | | Employee compensation, taxes, and benefits | 34,000 | 38.7 | | Legal & professonal fees | 6,224 | 7.1 | | Clearance and regulatory fees | 11,897 | 13.5 | | Occupancy | 3,000 | 3.4 | | Communications and data processing | 2,280 | 2.6 | | Total expenses | 57,401 | 65.3 | | Net Income | \$
30,479 | 34.7 | {9}------------------------------------------------ ## **STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY YEAR ENDED DECEMBER 31, 2020** | | Common Stock | | Paid-in | | Retained
Earnings | | | | | |-----------------------------|--------------|----|---------|----|----------------------|----|---------|----|---------| | | Shares | | Amount | | Capital
(Deficit) | | Total | | | | Balances, December 31, 2019 | 700 | \$ | 70,000 | \$ | 35,000 | \$ | (8,297) | \$ | 96,703 | | Net Income | | | | | | | 30,479 | | 30,479 | | Distributions | | | | | | | | | | | Balances, December 31, 2020 | 700 | \$ | 70,000 | \$ | 35,000 | \$ | 22,182 | \$ | 127,182 | {10}------------------------------------------------ ## **STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2020** | CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from clearing organization and others
Interest received
Cash paid to suppliers and employees | | 80,962
77
(92,240) | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|------------------------------------------| | Net cash used by operating activities | | (11,201) | | CASH FLOWS FROM INVESTING ACTIVITIES
Deposit with clearing organization | | (13) | | Net Decrease in Cash | | (11,214) | | Beginning Cash | | 111,064 | | Ending Cash | s | 99,850 | | RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Net Income
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in receivable from broker-dealers and clearing organization
Increase in other assets
Decrease in accounts payable | s | 30,479
(6,841)
(1,885)
(32,954) | | Net cash used by operating activities | s | (11,201) | | SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid During the Year for:
Interest
Income Taxes | \$
\$ | | {11}------------------------------------------------ #### **NOTE 1** ## **NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES** #### **Nature of operations:** Economy Securities, Incorporated (the Company) operates as a fully-disclosed introducing broker in trading and investment securities. The Company's customer base is primarily individual investors located in Indiana, Illinois and Kentucky. The Company is a wholly owned subsidiary of Economy Acquisition Corp. #### **A summary of the Company's significant accounting policies follows:** #### **Use of estimates:** Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. #### **Cash:** For purposes of the statement of cash flows, the Company considers all cash on hand, bank checking accounts, and money market accounts to be cash. #### **Allowance for doubtful accounts:** The receivable from broker-dealers and clearing organization consists of fees and commissions due from broker-dealers and Hilltop Securities, Inc. (Clearing Organization) and is considered fully collectible by management. Therefore, no allowance for doubtful accounts has been provided. {12}------------------------------------------------ ## NOTE 1 (Continued) **NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES** #### **Revenue Recognition:** Commissions are recorded on a settlement-date basis. There were no significant transactions at December 31, 2020 that would require reconciliation with trade-date basis accounting. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 to which supersedes nearly all existing revenue recognition guidance under generally accepted accounting principles. The Company's revenue recognition policy conforms with the pronouncement by recognizing revenue in accordance with the five components of the pronouncement. - Identify the contract with the customer - Identify the performance obligation - Determine the transaction price - Allocate the transaction price to the performance obligation - Recognize the revenue when the performance obligation is met #### **Income taxes:** The Company is a qualified subchapter S subsidiary and is not treated as a separate corporation for income tax purposes. The Company's assets, liabilities and income are treated as assets, liabilities, and income of its parent company, which has elected to be classified as an S corporation for income tax purposes. Therefore, no provision or liability of income taxes has been recorded in the accompanying financial statements. The Company is subject to potential examination by U.S. Federal and state taxing authorities. However, the Company is not currently under audit nor has the Company been contacted by any of these jurisdictions. Management believes the Company is no longer subject to tax examinations for years prior to 2017. The Company has evaluated its tax positions for all open tax years and management believes all tax positions taken would be upheld under an examination. Therefore, no provision for the effects of uncertain tax positions has been recorded for the year ended December 31, 2020. If assessed, the Company classifies any interest and penalties recognized with a tax position as other expenses in the statement of income. {13}------------------------------------------------ #### **NOTE 2** #### **CASH DEPOSIT WITH CLEARING ORGANIZATION** The Company had an interest-bearing deposit of \$20,261 with the Clearing Organization at December 31, 2020. #### **NOTE 3 COMMON STOCK** The authorized capital of the Company consisted of 10,000 shares of no par value common stock and 700 shares were issued and outstanding at a stated value of \$100 per share at December 31, 2020. **NOTE4 RELATED PARTY TRANSACTIONS** The Company pays its share of employee compensation, taxes, and benefits and occupancy costs to Weinzapfel Wealth Advisors, Inc., a related entity under common control. Employee compensation, taxes, benefits, and occupancy costs paid totaled \$37,000 for the year ended December 31, 2020. #### **NOTE 5 NET CAPITAL REQUIREMENTS** The Company is subject to the Securities and Exchange Commission's (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. The Company had net capital of \$119,303, which was \$114,303 in excess of its required net capital of \$5,000 at December 31, 2020. In addition, the Company's net capital ratio was 0.047 to 1 at December 31, 2020. {14}------------------------------------------------ ## **NOTE 6 STATEMENT OF CHANGES IN LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS** For the year ended December 31, 2020 the Company did not have any subordinated liabilities subject to claims of general creditors. Therefore, no statement has been prepared. > **NOTE 7 COMMITMENTS AND CONTINGENCIES** Management has evaluated possible commitments and contingencies at December 31, 2020. They concluded that there were no commitment or contingencies that would require recognition in the financial statements or disclosure in the related notes to the financial statements. ## **NOTE 8 SUBSEQUENT EVENTS** The Firm has evaluated subsequent events through the date which the report of the independent registered accounting firm on the financial statements which is the date they were available to be issued. Subsequent to year end, but before the issuance of these financial statements, the Company was in the process of discontinuing all operations and anticipates the close of the company to be completed within calendar year 2021. {15}------------------------------------------------ SUPPLEMENTARY INFORMATION {16}------------------------------------------------ ## **SCHEDULE** I - **COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION DECEMBER 31, 2020** | NET CAPITAL | | |-----------------------------------------------------------------------|---------------| | Stockholder's equity qualified for net capital | \$
127,182 | | | | | Total nonallowable assets: | | | FINRA CRD Deposit | (1,935) | | Non-allowable receivables | {2,484) | | Prepaid expenses | (3,460) | | Total nonallowable assets | (7,879) | | Net capital | \$
119,303 | | AGGREGATE INDEBTEDNESS | | | Items included in statement of financial condition: | | | Accounts payable | \$
5,600 | | | | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENT | | | Minimum net capital required | \$
373 | | | | | Minimum dollar net capital requirement of reporting broker or dealer | \$
5,000 | | | | | Net capital requirement | \$
5,000 | | | | | Excess net capital | \$
114,303 | | Excess net capital at 1000% | \$
118,743 | | | | | Ratio of aggregate indebtedness to net capital | 0.047 to 1 | | | | | RECONCILIATION WITH COMPANY'S COMPUTATION OF NET CAPITAL | | | PURSUANT TO RULE 17a-S(d)(4) | | | Net capital as reported in Company's Part II (unaudited) FOCUS Report | \$
119,303 | | Net capital per above computation | \$
119,303 | | | | There are no material differences between the above computation and the computation included in the the most recently filed Part IIA FOCUS Report. {17}------------------------------------------------ ## **SCHEDULE** II - **COMPUTATION FOR DETERMINATION** OF **RESERVE REQUIREMENTS UNDER RULE 15c3-3 OF** THE **SECURITIES AND EXCHANGE COMMISSION DECEMBER 31, 2020** Broker-dealer is exempt from Rule 15c3-3 under the provisions of 15c3-3 (k)(2)(ii) and Non-Covered Provision. ## **SCHEDULE** Ill - **INFORMATION RELATING TO POSSESSION OR CONTROL REQUIREMENTS PERSUANT TO RULE 15c3-3 DECEMBER 31, 2020** Broker-dealer is exempt from Rule 15c3-3 under the provisions of 15c3-3 (k)(2)(ii) and Non-Covered Provision. {18}------------------------------------------------ Economy Securities, Incorporated Serving Investors since 1981 D/B/A Welnzap/el Wealth Management Group 1301 Mortensen Lane Evansville, Indiana 47715 **812•474•1016** **Mtmber FINRA, SIPC** #### **EXEMPTION REPORT** FOR THE **YEAR ENDED DECEMBER 31, 2020** Economy Securities, Incorporated, **is a** registered broker-dealer subject to Rule 17a -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){4). To the best of its knowledge and belief, Economy Securities, Incorporated. states the following: 1. Economy Securities, Incorporated claimed an exemption from 17 C.F.R. § 240. 15c3-3 under the provision of 17 C.F.R. § 240. 15c3-3 (k){2){ii) for our revenue from our clearing-broker for the year ended December 31, 2020. Economy Securities, Incorporated also has no possession or control obligations under SEA Rule 15c3 - 3(b) or reserve deposit obligations under SEA Rule 15c3 • 3(e) for our direct revenue not covered under the above provision, as this revenue is limited to purchases and sales of mutual funds and annuity contracts, and during the most recent fiscal year. Economy Securities. Incorporated (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customer, other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b) {2) of Rule 15c2-4; {2) did not carry accounts of or for customers; and {3) did not carry PAB accounts (as defined in Rule 15c3- 3). (Non-Covered Firm Provision). 2. Economy Securities, Incorporated has met the identified above exemption provisions in 17 C.F .R. § 240. 15c3-3 throughout the most recent fiscal year ended December 31 , 2020 without exception. Economy Securities, Inc. ?~( Larry G. ~pfel, Presi February 1, 2021 {19}------------------------------------------------ # **THOMAS FAUST, CPA** Certified Public Accountant 17 4 Coldbrook Ct. Lafayette, IN 47909 765-237-9185 thomasfaustcpa2@gmail.com #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** The Board of Directors and Stockholders of Economy Securities, Incorporated I have reviewed management's statements, included in the accompanying Exemption report of Broker and Dealers, in which (1) Economy Securities, Incorporated, identified the following provisions 17 C.F.R. § 15c3-3{k) under which the Firm claimed an exemption from 17 C.F .R. §2 4 0.15c3-3:(2)(ii) and Non-Covered Firm Provision, and (2) Economy Securities, Incorporated stated that Economy Securities, Incorporated met the identified exemption provisions mentioned throughout the past fiscal year ended December 31, 2020 without exception. Economy Securities, lncorporated's management is responsible for compliance with the exception provisions and its statements. My 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 Firm'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, I do not express such an opinion. Based on my review, I am 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 paragraph (k){2){ii) and as a Non-Covered Firm of Rule 15c3-3 under the Securities Exchange Act of 1934 . .... Thomas Faust, **CPA,** LLC d/b/a Thomas Faust, CPA Lafayette, Indiana February 25, 2021 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.