# MUTUAL SECURITIES, INC. X-17A-5 (2024-09-30) — Broker-dealer annual report - Company: MUTUAL SECURITIES, INC. - Form: X-17A-5 - Filed: 2024-09-30 - Period: 2024-06-30 - Accession: 0000710025-24-000002 - CIK: 710025 - File #: 8-28580 - Type: Broker-dealer - Material weakness: No - Auditor: Farber Hass Hurley LLP - Auditor location: Chatsworth, CA - Contact: Jared Kopp - Phone: 805-764-6740 - Email: jared.kopp@mutual.group - Website: mutual.group - Signed by: Jared Kopp (SVP Finance & FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/710025/000071002524000002/audit.pdf --- {0}------------------------------------------------ **Report on Audit of Financial Statements and Supplementary Information** > **June 30, 2024** {1}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** | 8-28580 | |--------------------------| | SEC FILE NUMBER | | hours per response: 12 | | Estimated average burden | | Expires: Oct. 31, 2023 | | 0MB Number: 3235-0123 | 0 MB APPROVAL # **ANNUAL REPORTS FORM X-17A-5 PART** Ill | FILING FOR THE PERIOD BEGINNING 07/01 /23 | | | Information Required Pursuant to Rules 17a-S, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | |-------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|-----------------------------------------|-----------------------------------------------------------------------------------------------------------| | | AND ENDING 06/30/24 | | | | | MM/DD/VY | | MM/ DD/VY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF FIRM: MUTUAL SECURITIES, INC. OF CALIFORNIA OBA MUTUAL SECURITIES, INC. | | | | | TYPE OF REGISTRANT (check all applicable boxes):
~ Broker-dealer
D Check here if respondent is also an OTC derivatives dealer | D Security-based swap dealer | D Major security-based swap participant | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | 807-A CAMARILLO SPRINGS ROAD | | | | | | {No. and Street) | | | | CAMARILLO | CA | | 93012 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | JARED KOPP | 805-764-6740 | | JARED.KOPP@MUTUAL.GROUP | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
FARBER HASS HURLEY LLP | {Name - if individual, state last, first, and middle name} | | | | 9301 OAKDALE AVE | CHATSWORTH | CA | 91311 | | (Address) | (City) | (State) | (Zip Code) | | 10/22/2003 | | 223 | | | T" | of R, g;strat;oa with PCAOBj{;f appHcablej FOR OFFICIAL USE ONLY | | (PCAOB Reg;strat;oa N"mbe,, ;f applicable I I | | | | | | | * Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public | | | | CFR 240.17a-5(e)(l ){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 0MB control number,** {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, JARED KOPP | swear (or affirm) that, to the best of my knowledge and belief, the | | | | |-------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|--|--|--| | | financial report pertaining to the firm of MUTUAL SECURITIES, INC. OF CALIFORNIA OBA MUTUAL SECURITIES, INC.
as of | | | | | ____ 2~
________
_6_/_3_0 | 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 | | | | | NEWYrnt'Kl ';I z Signature: **l** f.J( "' **~ ·~ ~ , f>** Ti : SVP FINANCE & FINOP as that of a customer. #### **This filing\*\* contains (check all applicable boxes):** - **iiiiil** (a) Statement of financial condition. - D (b) Notes to consolidated statement of financial condition. - **iiiiil** (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).** - **iiiiil** (d) Statement of cash flows. - **iiiiil** (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. - **iiiiil** (g) Notes to consolidat ed financial statements. - **iiiiil** (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.lBa-l, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.lBa-2. - **iiiiil** (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D **(k)** Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.lBa-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - **iii** (m) Information relating to possession or control requirements for customers under 17 CFR 240.15"3-3. - 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.lBa-4, as applicable. - **iiiiil** (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.lBa-1, or 17 CFR 240.lBa-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.lBa-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - **iiiiil** (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.lBa-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **iiiiil** (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.lBa-7, as applicable. - D (t) Independent public accountant's report based on an examination of the statement of financial condition. - **iiiiil** (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.lBa-7, as applicable. - **iiiiil (w)** Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.lBa-7, as applicable. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12{k). D (z) Other:------------------------------------- - \*"'To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d}(2), as applicable. {3}------------------------------------------------ #### **Contents** | As of and for the year ended June 30, 2024 | | |----------------------------------------------------------------------------------------------------------------------------------------------------|-------| | Report of Independent Registered Public Accounting Firm | 1-2 | | Financial Statements | | | Statement of Financial Condition | 3 | | Statement of Operations | 4 | | Statement of Changes in Stockholders' Equity | 5 | | Statement of Cash Flows | 6 | | Notes to Financial Statements | 7-11 | | Supplementary Information | | | Schedule I - Computation of Net Capital Under Rule 15c3-1 of
the Securities and Exchange Commission | 12 | | Schedule II - Computation for Determination of Customer Account Reserve Under Rule 15c3-3
of the Securities and Exchange Commission (Exemption) | 13 | | Report of Independent Registered Public Accounting Firm Regarding Rule 15c3-3 Exemption Report | 14 | | Exemption Report | 15-16 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # ZWKZdK&/EWEEdZ'/^dZWh>/KhEd/E'&/ZD dŽƚŚĞŽĂƌĚŽĨŝƌĞĐƚŽƌƐĂŶĚ^ƚŽĐŬŚŽůĚĞƌƐ ŽĨDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͘ # KƉŝŶŝŽŶŽŶƚŚĞ&ŝŶĂŶĐŝĂů^ƚĂƚĞŵĞŶƚƐ tĞŚĂǀĞĂƵĚŝƚĞĚƚŚĞĂĐĐŽŵƉĂŶLJŝŶŐƐƚĂƚĞŵĞŶƚŽĨĨŝŶĂŶĐŝĂůĐŽŶĚŝƚŝŽŶŽĨDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͘ĂƐŽĨ:ƵŶĞϯϬ͕ ϮϬϮϰ͕ƚŚĞƌĞůĂƚĞĚƐƚĂƚĞŵĞŶƚƐŽĨŽƉĞƌĂƚŝŽŶƐ͕ĐŚĂŶŐĞƐŝŶƐƚŽĐŬŚŽůĚĞƌƐ͛ĞƋƵŝƚLJ͕ĂŶĚĐĂƐŚĨůŽǁƐĨŽƌƚŚĞLJĞĂƌƚŚĞŶ ĞŶĚĞĚ͕ ĂŶĚ ƚŚĞ ƌĞůĂƚĞĚ ŶŽƚĞƐ ;ĐŽůůĞĐƚŝǀĞůLJ ƌĞĨĞƌƌĞĚ ƚŽ ĂƐ ƚŚĞ ĨŝŶĂŶĐŝĂů ƐƚĂƚĞŵĞŶƚƐͿ͘ /Ŷ ŽƵƌ ŽƉŝŶŝŽŶ͕ ƚŚĞ ĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐƉƌĞƐĞŶƚĨĂŝƌůLJ͕ŝŶĂůůŵĂƚĞƌŝĂůƌĞƐƉĞĐƚƐ͕ƚŚĞĨŝŶĂŶĐŝĂůƉŽƐŝƚŝŽŶŽĨDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͘ĂƐ ŽĨ :ƵŶĞϯϬ͕ϮϬϮϰ͕ĂŶĚƚŚĞƌĞƐƵůƚƐŽĨŝƚƐŽƉĞƌĂƚŝŽŶƐĂŶĚŝƚƐĐĂƐŚ ĨůŽǁƐĨŽƌ ƚŚĞLJĞĂƌƚŚĞŶĞŶĚĞĚŝŶĐŽŶĨŽƌŵŝƚLJ ǁŝƚŚĂĐĐŽƵŶƚŝŶŐƉƌŝŶĐŝƉůĞƐŐĞŶĞƌĂůůLJĂĐĐĞƉƚĞĚŝŶƚŚĞhŶŝƚĞĚ^ƚĂƚĞƐŽĨŵĞƌŝĐĂ͘ # ĂƐŝƐĨŽƌKƉŝŶŝŽŶ dŚĞƐĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐĂƌĞƚŚĞƌĞƐƉŽŶƐŝďŝůŝƚLJŽĨDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͛͘ƐŵĂŶĂŐĞŵĞŶƚ͘KƵƌƌĞƐƉŽŶƐŝďŝůŝƚLJ ŝƐƚŽĞdžƉƌĞƐƐĂŶŽƉŝŶŝŽŶŽŶDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͛͘ƐĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐďĂƐĞĚŽŶŽƵƌĂƵĚŝƚ͘tĞĂƌĞĂƉƵďůŝĐ ĂĐĐŽƵŶƚŝŶŐĨŝƌŵƌĞŐŝƐƚĞƌĞĚǁŝƚŚƚŚĞWƵďůŝĐŽŵƉĂŶLJĐĐŽƵŶƚŝŶŐKǀĞƌƐŝŐŚƚŽĂƌĚ;hŶŝƚĞĚ^ƚĂƚĞƐͿ;WKͿĂŶĚ ĂƌĞ ƌĞƋƵŝƌĞĚ ƚŽ ďĞ ŝŶĚĞƉĞŶĚĞŶƚ ǁŝƚŚ ƌĞƐƉĞĐƚ ƚŽDƵƚƵĂů ^ĞĐƵƌŝƚŝĞƐ/ŶĐ͘ ŝŶĂĐĐŽƌĚĂŶĐĞ ǁŝƚŚ ƚŚĞh͘^͘ ĨĞĚĞƌĂů ƐĞĐƵƌŝƚŝĞƐůĂǁƐĂŶĚƚŚĞĂƉƉůŝĐĂďůĞƌƵůĞƐĂŶĚƌĞŐƵůĂƚŝŽŶƐŽĨƚŚĞ^ĞĐƵƌŝƚŝĞƐĂŶĚdžĐŚĂŶŐĞŽŵŵŝƐƐŝŽŶĂŶĚƚŚĞ WK͘ tĞĐŽŶĚƵĐƚĞĚŽƵƌĂƵĚŝƚŝŶĂĐĐŽƌĚĂŶĐĞǁŝƚŚ ƚŚĞ ƐƚĂŶĚĂƌĚƐŽĨ ƚŚĞWK͘dŚŽƐĞ ƐƚĂŶĚĂƌĚƐ ƌĞƋƵŝƌĞ ƚŚĂƚǁĞ ƉůĂŶĂŶĚƉĞƌĨŽƌŵƚŚĞĂƵĚŝƚƚŽŽďƚĂŝŶƌĞĂƐŽŶĂďůĞĂƐƐƵƌĂŶĐĞĂďŽƵƚǁŚĞƚŚĞƌƚŚĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐĂƌĞĨƌĞĞ ŽĨŵĂƚĞƌŝĂůŵŝƐƐƚĂƚĞŵĞŶƚ͕ǁŚĞƚŚĞƌĚƵĞƚŽĞƌƌŽƌŽƌĨƌĂƵĚ͘KƵƌĂƵĚŝƚŝŶĐůƵĚĞĚƉĞƌĨŽƌŵŝŶŐƉƌŽĐĞĚƵƌĞƐƚŽĂƐƐĞƐƐ ƚŚĞƌŝƐŬƐŽĨŵĂƚĞƌŝĂůŵŝƐƐƚĂƚĞŵĞŶƚŽĨƚŚĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐ͕ǁŚĞƚŚĞƌĚƵĞƚŽĞƌƌŽƌŽƌĨƌĂƵĚ͕ĂŶĚƉĞƌĨŽƌŵŝŶŐ ƉƌŽĐĞĚƵƌĞƐ ƚŚĂƚ ƌĞƐƉŽŶĚ ƚŽ ƚŚŽƐĞ ƌŝƐŬƐ͘ ^ƵĐŚ ƉƌŽĐĞĚƵƌĞƐ ŝŶĐůƵĚĞĚ ĞdžĂŵŝŶŝŶŐ͕ ŽŶ Ă ƚĞƐƚ ďĂƐŝƐ͕ ĞǀŝĚĞŶĐĞ ƌĞŐĂƌĚŝŶŐ ƚŚĞ ĂŵŽƵŶƚƐ ĂŶĚ ĚŝƐĐůŽƐƵƌĞƐ ŝŶ ƚŚĞ ĨŝŶĂŶĐŝĂů ƐƚĂƚĞŵĞŶƚƐ͘KƵƌ ĂƵĚŝƚ ĂůƐŽ ŝŶĐůƵĚĞĚ ĞǀĂůƵĂƚŝŶŐ ƚŚĞ ĂĐĐŽƵŶƚŝŶŐƉƌŝŶĐŝƉůĞƐƵƐĞĚĂŶĚƐŝŐŶŝĨŝĐĂŶƚĞƐƚŝŵĂƚĞƐŵĂĚĞďLJŵĂŶĂŐĞŵĞŶƚ͕ĂƐǁĞůůĂƐĞǀĂůƵĂƚŝŶŐƚŚĞŽǀĞƌĂůů ƉƌĞƐĞŶƚĂƚŝŽŶ ŽĨ ƚŚĞ ĨŝŶĂŶĐŝĂů ƐƚĂƚĞŵĞŶƚƐ͘ tĞ ďĞůŝĞǀĞ ƚŚĂƚ ŽƵƌ ĂƵĚŝƚ ƉƌŽǀŝĚĞƐ Ă ƌĞĂƐŽŶĂďůĞ ďĂƐŝƐ ĨŽƌ ŽƵƌ ŽƉŝŶŝŽŶ͘ {5}------------------------------------------------ # ^ƵƉƉůĞŵĞŶƚĂů/ŶĨŽƌŵĂƚŝŽŶ dŚĞ ^ĐŚĞĚƵůĞ /͕ ŽŵƉƵƚĂƚŝŽŶ ŽĨ EĞƚ ĂƉŝƚĂů ZĞƋƵŝƌĞŵĞŶƚƐ WƵƌƐƵĂŶƚ ƚŽ ZƵůĞ ϭϱĐϯͲϭ͕ ĂŶĚ ^ĐŚĞĚƵůĞ //͕ ŽŵƉƵƚĂƚŝŽŶ&ŽƌĞƚĞƌŵŝŶĂƚŝŽŶKĨZĞƐĞƌǀĞZĞƋƵŝƌĞŵĞŶƚƐĂŶĚ/ŶĨŽƌŵĂƚŝŽŶZĞůĂƚŝŶŐƚŽWŽƐƐĞƐƐŝŽŶŽƌŽŶƚƌŽů ZĞƋƵŝƌĞŵĞŶƚƐ ĨŽƌ ƌŽŬĞƌƐ ĂŶĚ ĞĂůĞƌƐ WƵƌƐƵĂŶƚ ƚŽ ZƵůĞ ϭϱĐϯͲϯ͕ ŚĂǀĞ ďĞĞŶ ƐƵďũĞĐƚĞĚ ƚŽ ĂƵĚŝƚ ƉƌŽĐĞĚƵƌĞƐ ƉĞƌĨŽƌŵĞĚŝŶĐŽŶũƵŶĐƚŝŽŶǁŝƚŚ ƚŚĞĂƵĚŝƚŽĨDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͛͘Ɛ ĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐ͘dŚĞ ƐƵƉƉůĞŵĞŶƚĂů ŝŶĨŽƌŵĂƚŝŽŶ ŝƐ ƚŚĞ ƌĞƐƉŽŶƐŝďŝůŝƚLJ ŽĨ DƵƚƵĂů ^ĞĐƵƌŝƚŝĞƐ /ŶĐ͛͘Ɛ ŵĂŶĂŐĞŵĞŶƚ͘ KƵƌ ĂƵĚŝƚ ƉƌŽĐĞĚƵƌĞƐ ŝŶĐůƵĚĞĚ ĚĞƚĞƌŵŝŶŝŶŐǁŚĞƚŚĞƌƚŚĞƐƵƉƉůĞŵĞŶƚĂůŝŶĨŽƌŵĂƚŝŽŶƌĞĐŽŶĐŝůĞƐƚŽƚŚĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐŽƌƚŚĞƵŶĚĞƌůLJŝŶŐ ĂĐĐŽƵŶƚŝŶŐ ĂŶĚ ŽƚŚĞƌ ƌĞĐŽƌĚƐ͕ ĂƐ ĂƉƉůŝĐĂďůĞ͕ ĂŶĚ ƉĞƌĨŽƌŵŝŶŐ ƉƌŽĐĞĚƵƌĞƐ ƚŽ ƚĞƐƚ ƚŚĞ ĐŽŵƉůĞƚĞŶĞƐƐ ĂŶĚ ĂĐĐƵƌĂĐLJ ŽĨ ƚŚĞ ŝŶĨŽƌŵĂƚŝŽŶ ƉƌĞƐĞŶƚĞĚ ŝŶ ƚŚĞ ƐƵƉƉůĞŵĞŶƚĂů ŝŶĨŽƌŵĂƚŝŽŶ͘ /Ŷ ĨŽƌŵŝŶŐ ŽƵƌ ŽƉŝŶŝŽŶ ŽŶ ƚŚĞ ƐƵƉƉůĞŵĞŶƚĂů ŝŶĨŽƌŵĂƚŝŽŶ͕ ǁĞ ĞǀĂůƵĂƚĞĚ ǁŚĞƚŚĞƌ ƚŚĞ ƐƵƉƉůĞŵĞŶƚĂů ŝŶĨŽƌŵĂƚŝŽŶ͕ ŝŶĐůƵĚŝŶŐ ŝƚƐ ĨŽƌŵ ĂŶĚ ĐŽŶƚĞŶƚ͕ŝƐƉƌĞƐĞŶƚĞĚŝŶĐŽŶĨŽƌŵŝƚLJǁŝƚŚϭϳ͘&͘Z͘ΑϮϰϬ͘ϭϳĂͲϱ͘/ŶŽƵƌŽƉŝŶŝŽŶ͕ƚŚĞƐƵƉƉůĞŵĞŶƚĂůŝŶĨŽƌŵĂƚŝŽŶ ŝƐĨĂŝƌůLJƐƚĂƚĞĚ͕ŝŶĂůůŵĂƚĞƌŝĂůƌĞƐƉĞĐƚƐ͕ŝŶƌĞůĂƚŝŽŶƚŽƚŚĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐĂƐĂǁŚŽůĞ͘ ~J::!.-.~~u..l' &ĂƌďĞƌ,ĂƐƐ,ƵƌůĞLJ͕>>W tĞŚĂǀĞƐĞƌǀĞĚĂƐDƵƚƵĂů^ĞĐƵƌŝƚŝĞƐ/ŶĐ͛͘ƐĂƵĚŝƚŽƌƐŝŶĐĞϮϬϭϴ͘ ŚĂƚƐǁŽƌƚŚ͕ĂůŝĨŽƌŶŝĂ ^ĞƉƚĞŵďĞƌϯϬ͕ϮϬϮϰ {6}------------------------------------------------ #### Statement of Financial Condition June 30, 2024 **ASSETS** | Cash | \$
2,487,882 | |-------------------------------------------------------------------------------------------------------|-----------------| | Deposits with clearing organizations | 200,000 | | Receivables from broker-dealers and clearing organizations | 3,445,895 | | Furniture, equipment, and leasehold improvements, at cost, less accumulated depreciation of \$184,573 | 4,298 | | Other assets | 82,336 | | TOTAL ASSETS | \$
6,220,411 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | LIABILITIES | | | Accounts payable, accrued expenses, and other liabilities | \$
601,982 | | Commissions payable | 3,636,205 | | Income taxes payable | 265,027 | | TOTAL LIABILITIES | 4,503,214 | | STOCKHOLDERS' EQUITY | | | Common stock, no par value, 100,000 shares authorized, 31,308 shares issued and outstanding | 23,413 | | Additional paid-in-capital | 142,726 | | Retained earnings | 1,551,058 | | TOTAL STOCKHOLDERS' EQUITY | 1,717,197 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | \$
6,220,411 | **The accompanying notes are an integral part of these financial statements.** {7}------------------------------------------------ # Statement of Operations For the Year Ended June 30, 2024 | REVENUE: | | |-----------------------------------------------|------------------| | Commissions | \$
27,729,933 | | Interest and dividends | 919,327 | | Other income | 690,696 | | Total revenue | 29,339,956 | | OPERATING EXPENSES: | | | Compensation and benefits | 23,630,160 | | Floor brokerage, exchange, and clearance fees | 326,433 | | Technology and communications | 142,318 | | Occupancy and equipment | 166,751 | | Professional fees | 1,433,896 | | Insurance | 444,831 | | Regulatory fees | 459,318 | | Tax Expense | 221,647 | | Other expenses | 908,613 | | Total expenses | 27,733,967 | | NET INCOME | \$
1,605,989 | **The accompanying notes are an integral part of these financial statements.** {8}------------------------------------------------ Statement of Changes in Stockholders' Equity For the Year Ended June 30, 2024 | | Common Stock
Shares | Amount | Additional
Paid-In
Capital | Retained
Earnings | Total
Stockholders'
Equity | |--------------------------|------------------------|--------------|----------------------------------|----------------------|----------------------------------| | Balance - July 1, 2023 | 31,308 | \$
23,413 | \$
142,726 \$ | 1,145,069 | \$ 1,311,208 | | Distributions to Members | - | - | - | (1,200,000) | (1,200,000) | | Net income | | - | - | 1,605,989 | 1,605,989 | | Balance - June 30, 2024 | 31,308 | \$
23,413 | \$
142,726 | \$
1,551,058 | \$ 1,717,197 | Note: the previous year financial statements listed the beginning and ending balance of Common Stock shares as 31,216 in error. **The accompanying notes are an integral part of these financial statements. 5** {9}------------------------------------------------ # Statement of Cash Flows For the Year Ended June 30, 2024 | CASH FLOWS FROM OPERATING ACTIVITIES:
Net income | \$
1,605,989 | |-----------------------------------------------------------------------------------|-----------------| | Adjustments to reconcile net income to net cash provided by operating activities: | | | Depreciation and amortization | 3,750 | | Changes in operating assets and liabilities: | | | Increase in receivables from broker-dealers and clearing organizations | (964,326) | | Return of security deposit | 50,000 | | Decrease in operating lease right-of-use assets | 374,402 | | Decrease in other assets | 64,773 | | Increase in payables to broker-dealers and clearing organizations | 1,093,734 | | Increase in accounts payable, accrued expenses, and other liabilities | 22,076 | | Decrease in operating lease liability | (374,402) | | NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,875,996 | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | Parent company working capital loan provided | 600,000 | | Parent company working capital loan repayment | (600,000) | | Distributions to members | (1,200,000) | | Related party payable | 265,027 | | NET CASH USED BY FINANCING ACTIVITIES | (934,973) | | NET INCREASE IN CASH | 941,023 | | CASH AT BEGINNING OF YEAR | 1,546,859 | | CASH AT END OF YEAR | \$
2,487,882 | **The accompanying notes are an integral part of these financial statements.** #### **6** {10}------------------------------------------------ Notes to Financial Statements June 30, 2024 #### **1. Nature of Business** Mutual Securities, Inc. of California dba Mutual Securities, lnc. (the "Company") was incorporated in the State of California on February 4, 1982 under the name Brokers Office Management-Encino, Inc. and subsequently changed its name to Mutual Securities, Inc. of California on November 9, 1998. The Company is a registered broker-dealer in securities under the Securities and Exchange Act of 1934, a member of the Financial Industry Regulatory Authority ("FINRA"), and the Securities Investor Protection Corporation ("SIPC"). The Company provides several services. Most of its income is earned from the sale of variable life insurance policies and annuities. Income is also earned from agency commissions and equity transactions which include the sale of corporate debt, equity securities, options, U.S. Government and municipal securities to institutional and retail customers. Under its membership agreement with FINRA and pursuant to SEC Rule 15c3-3 (k)(2)(ii), the Company conducts business on a fully disclosed basis and does not execute or clear securities transactions for customers. The Company also relies on Footnote 74 of SEC Release 34-70073. Accordingly, the Company is exempt from the requirement of Rule 15c3-3 under the Securities Exchange Act of 1934 pertaining to the possession or control of customer assets and reserve requirement. On October 1, 2023, the Company was acquired by Mutual Group, Inc. Mutual Group, Inc. wholly owns the Company and serves as its parent in a holding company structure. #### **2. Summary of Significant Accounting Policies** #### **Basis of Presentation** These financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. #### **Cash and Cash Equivalents** Cash consists of deposits with banks and highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes. #### **Receivables** The balances shown as receivable represent amounts due in connection with the Company's normal transactions involving trading of securities. Management considers all receivables to be collectible, therefore no allowance for doubtful accounts has been recorded. #### **Furniture, Equipment, and Leasehold Improvements** Furniture, equipment, and leasehold improvements are recorded at cost and are depreciated over the estimated useful lives of the related assets, which range from five to fifteen years. Repair and maintenance costs are expensed as incurred. Leasehold improvements are depreciated over the shorter of the lease term or estimated useful life. Improvements which increase the productive value of assets are capitalized and depreciated over the remaining useful life of the related asset. #### **Right-of-Use Assets-Operating Leases** The Company follows the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. The Company does not recognize right of use assets and liabilities for leases with a term of 12 months or less. {11}------------------------------------------------ Notes to Financial Statements June 30, 2024 #### **2. Summary of Significant Accounting Policies (continued)** #### **Revenue Recognition** In accordance with FASB ASC 606, Revenue from Contracts with Customers, the Company follows 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 the performance obligation. #### **Use of Estimates** The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ materially from those estimates. #### **Income Taxes** From the period of June 1, 2023 and September 30, 2023, the Company elected to be treated as an "S" Corporation under the provisions of the Internal Revenue Code and California state tax regulations. Under the provisions, the Company did not pay federal or state corporate income taxes on its taxable income. Instead, the stockholder was liable for individual income taxes on his or her respective share of the Company's taxable income. During the year ended June 30, 2024, the Company did not pay a Pass-Through Entity PTET for its members pursuant to the California Pass-Through Entity Tax guidelines. On October 1, 2023, the Company was wholly owned by parent company Mutual Group, Inc. Mutual Group, Inc. elected to be treated as a "C" Corporation under the provisions of the Internal Revenue Code and files a tax return on a consolidated basis including the results of the Company. Accordingly, the Company estimates taxes for its operations and reflects an amount owed as a liability to Mutual Group, Inc. The current federal income tax provision for October 1, 2023 through June 30, 2024 was \$230,054. The current state income tax expense for the fiscal year was \$1,036, which included interest and penalties of \$206. Additionally, there were state refunds of \$(9,443). The Company recognizes and measures any unrecognized tax benefits in accordance with FASB ASC 740, Income Taxes. Under this guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based upon the facts, circumstances, and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information becomes available, or when an event occurs that requires a change. The Company did not have material unrecognized tax benefits as of June 30, 2024, and does not expect this to change significantly over the next twelve months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of June 30, 2024, the Company has no accrued interest or penalties associated with uncertain tax positions. #### **Subsequent Events** Management has evaluated events and transactions that occurred between June 30, 2024 and the date these financial statements were issued, for possible disclosure and recognition in the financial statements. After the reporting period, there were no material items to note. #### **3. Deposit with Clearing Organization** The Company has a brokerage agreement with National Financial Services LLC ("Clearing Broker") to carry its account and the accounts of its clients as customers of the Clearing Broker. The Clearing Broker has custody of the Company's cash balances which serve as collateral for any amount due to the Clearing Broker as well as collateral for securities sold short or securities purchased on margin. Interest is paid monthly on these cash deposits at the average overnight repurchase rate. The balance at June 30, 2024 was \$200,000. {12}------------------------------------------------ Notes to Financial Statements June 30, 2024 #### **4. Equipment, and Leasehold Improvements** As of June 30, 2024, equipment and leasehold improvements, net, consisted of the following: | Furniture and fixtures | | \$ 67,986 | |----------------------------------------------------|----|-----------| | Machinery and equipment | | 59,729 | | Leasehold improvements | | 61,156 | | Total cost of equipment and leasehold improvements | | 188,871 | | Less: accumulated depreciation | | (184,573) | | Equipment and leasehold improvements, net | \$ | 4,298 | #### **5. Revenue From Contracts With Customers** #### *Commissions* The Company buys and sells insurance and annuity products, mutual funds, and other equity and financial instruments on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. The Company also charges fees relating to the transactions executed on behalf of its customers. Commissions, fees, 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 or from the customer. Sales of annuities, insurance products, and mutual funds include initial up-front (first year) commissions where the performance obligation is satisfied on the trade date as well as annual trailing commission payments for each product renewal and continued investment. Commissions on annuity, insurance products and mutual funds are considered variable consideration. ASC Topic 606 requires that, at the time of the initial sale or investment, the Company must estimate the variable consideration (future renewal commissions) and determine the transaction price as the unconstrained net present value of expected future renewal commissions. Therefore, the transaction price for annuities, insurance products and mutual funds includes first year fixed commissions recognized for new sales as well as trailing commissions. The performance obligation of trailing commissions is satisfied at product renewal and continued investment, which are estimated using the average value of trailing commissions received in the first month of the two previous quarters. The receivables on June 30, 2023, were \$2,481,569. In accordance with ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), the Company estimates its expected credit losses and allowance using a method based on the aging of its current commissions receivable. The Company does not expect to incur any credit losses. #### **Disaggregated Revenue From Contracts With Customers** The following table presents revenue by major source: | Variable annuities | \$ 20,932,580 | |-------------------------------|---------------| | 12b-1 fees | 5,082,100 | | Brokerage commissions | 872,954 | | Direct mutual funds | 703,035 | | Administrative and other fees | 1,749,287 | | Total Revenue | \$29,339,956 | #### **6. Related Party Transactions** On October 1, 2009, the Company entered into a lease agreement for office space with KCMA Investments, LLC ("KCMA") with which the Company has common ownership. For the year ended June 30, 2024, the Company recognized \$116,577 in occupancy expense to KCMA. See Note 12 for further information on the lease agreement. {13}------------------------------------------------ Notes to Financial Statements June 30, 2024 ## **6. Related Party Transaction (continued)** Effective May 1, 2024 the Company's lease agreement with KCMA terminated. Beginning May 1, 2024 the Company is on a month to month lease agreement with parent Mutual Group, Inc. in the amount of \$11,658 per month. The Company reflects the amounts owed to its parent Mutual Group, Inc. for income taxes, rent, and other items as a liability. For the year ended June 30, 2024, this liability was \$265,027. Mutual Advisors, LLC ("Mutual Advisors"), is affiliated with the Company through common control as both entities are wholly owned by Mutual Group, Inc. The Company offers brokerage services to certain clients of Mutual Advisors, and either the clients or their investment adviser representatives are charged for such brokerage services. Effective May 1, 2022, the Company and Mutual Advisors, LLC, entered into an agreement whereby Mutual Advisors, LLC, reimburses salary expenses and benefits paid by the Company that pertain to Mutual Advisors, LLC. For the year ended June 30, 2024, this reimbursement amount was \$3,125,904 and was presented within net compensation expenses. On June 30, 2024, no receivable balance existed between Mutual Advisors, LLC and the Company. On December 7, 2023, the Company was provided a \$600,000 working capital loan from its parent, Mutual Group, Inc. The principal of the loan was repaid in full on March 26, 2024 along with an interest payment of \$9,511 per the loan agreement interest rate of 5.26%. #### **7. 401(k) Plan** The Company has a qualified 401(k) Plan (the "Plan") under IRC section 401(a) covering substantially all of its employees. Employees are required to have attained the age of 21 and to have completed one year of service in order to be eligible to participate in the Plan. The Plan provides that the employer may make matching contributions and/or annual discretionary contributions. For the year ended June 30, 2024, the Company recorded expenses of \$173,780 in matching contributions. #### **8. Financial Instruments** The Company maintains several bank accounts at financial institutions. These accounts are insured either by the Federal Deposit Insurance Commission ("FDIC") up to \$250,000 or the Securities Investor Protection Corporation ("SIPC") up to \$500,000. At times during the year ended June 30, 2024, cash balances held in financial institutions were in excess of the FDIC and SIPC's insured limits. The Company has not experienced any losses in these accounts and management believes that it has placed its cash on deposit with financial institutions which are financially stable. The Company is engaged in various trading and brokerage activities in which counter-parties primarily include brokerdealers, banks, 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 counter-party or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counter-party. #### **9. Concentration Risk** Commissions earned by the top five financial advisors represented approximately 14% of the Company's revenues. #### **10. Commitments and Contingencies** #### *Leases* These assets and liabilities for operating leases are recognized on the commencement date based on the present value of remaining lease payments over the lease terms using the implicit rate as the discount rate if it is readily determinable, otherwise the Company will use its incremental borrowing rate as the discount rate. Short-term operating leases, which represents those leases having an initial term of 12 months or less, are not recorded on the Statement of Financial Condition. {14}------------------------------------------------ Notes to Financial Statements June 30, 2024 #### **10. Commitments and Contingencies (Continued)** #### *Leases* **(continued)** The Company was obligated under a lease for a twelve-month term beginning September 1, 2020 with five (5) consecutive one year options to renew the lease for its office space in Camarillo, CA. Management compared the renewal rents with expected fair market rents for equivalent property under similar terms and conditions and determined it is reasonably certain the Company will exercise the renewal options and have included the five consecutive renewal options in the lease commitment. The discount rate used to compute the lease liability and right of use asset at the commencement date of the lease is 10.69%, which is the implicit rate. The implicit rate was computed using estimated market value data readily available to determine the asset value, lease costs, and estimates the Company made of the residual asset value, based on historical average market value data readily available. Lease expense for its office space in Camarillo, CA was \$116,577 for the year ended June 30, 2024 and is included on the Statement of lncome under occupancy and equipment. Effective May 1, 2024 the Company's lease agreement with KCMA terminated. At the time of termination, the outstanding commitment for lease through 2027 was \$287,762. #### **11. Litigation and Claims** The Company is involved in various litigation, judicial, regulatory, and arbitration proceedings concerning matters arising in connection with the conduct of its business. Management believes, based on currently available information, that the results of such proceedings in the aggregate will not have a material, adverse effect on the Company's financial condition. #### **12. Subordinated Borrowings** The Company did not have subordinated borrowings during the year ending June 30, 2024. #### **13. Recurring Commission Expense Deductions** The Company charges recurring monthly fees to registered representatives that are included in the commission statements and payments to the registered representatives for technology, administrative, and insurance costs. These recurring registered representative charges are recorded as a reduction to commission expense. These charges were in total approximately \$1,648,000 for the year ended June 30, 2024. #### **14. Guarantees** FASB ASC 460, Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460 effectively describes guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of the indebtedness of others. The Company issued no guarantees as of June 30, 2024, or during the year then ended. #### **15. Current Expected Credit Losses** The FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) in June of 2016 to update guidance on impairment models for financial instruments. A Current Expected Credit Loss (CECL) model was added to U.S. GAAP; the CECL model requires firms to recognize credit losses on an expected basis rather than on an incurred basis previously. Firms are also required to recognize an allowance of lifetime expected credit losses. Financial assets measured at amortized cost (cash and cash equivalents and receivables) have been deemed by the Company to have de minimis expected credit losses per a historical lack of material losses and future expectations of the same. #### **16. Net Capital Requirements** The Company 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 June 30, 2024, the Company had net capital of \$1,612,692 which was \$1,312,478 in excess of its required net capital of \$300,214. The Company's ratio of aggregate indebtedness to net capital was 2.79 to 1. {15}------------------------------------------------ #### Schedule I - Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of June 30, 2024 #### **SCHEDULE I** | 1,717,013
(86,934)
Non-allowable assets:
1,630,079
Other Securities
(17,387)
Total
(17,387)
1,612,692
4,503,314
Minimum net capital required, based on 6 2/3% of aggregate indebtedness
300,214
Minimum dollar net capital requirement
100,000
Excess Net Capital
1,312,478 | TOTAL STOCKHOLDERS' EQUITY QUALIFIED FOR NET CAPITAL | \$ 1,717,013 | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|--------------| | 279.24% | TOTAL CAPITAL AND ALLOWABLE SUBORDINATED BORROWINGS | | | | DEDUCTIONS AND NON-ALLOWABLE ASSETS: | | | | NET CAPITAL BEFORE HAIRCUTS | | | | HAIRCUTS | | | | NET CAPITAL | | | | AGGREGATE INDEBTEDNESS: | | | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENT | | | | | | | | | | | | Percentage of aggregate indebtedness to net capital
There are no material differences between the audited computation of | | net capital computed above and the corresponding schedule included in the Company's amended June 30, 2024 Part IIA FOCUS filing {16}------------------------------------------------ #### (Supplemental Information) Computation for Determination of the Reserve Requirements and Information Relating to Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 For the Year Ended June 30, 2024 #### **SCHEDULE II** The company is exempt from the provisions of Rule J 5c3-3 under the Securities Exchange Act of 1934 as of June 30, 2023 in accordance with Rule 15c3-3(k)(2)(ii). 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Exemption Report pursuant to SEC Rule 17a-5(d) For the fiscal year ending June 30, 2024** We, as members of management of Mutual Securities, lnc. (the "Company"), are responsible for compliance with the annual reporting requirements under Rule l 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"). Those requirements compel a broker or dealer to file annual reports with the Securities Exchange Commission ("SEC") and the broker or dealer's designated examining authority ("DEA). Pursuant to that requirement, this Exemption Report was prepared as required by 17 C.F.R. § 240.l 7a-5(d)(l) and (4). To the best of its knowledge and belief, the Company states the following: (1) The Company claims exemption from 17 C.F.R. § 240.15c3-3 under the provision of 17 C.F.R. §240. l 5c3-3 (k)(2)(ii). (2) The Company has met the identified exemption provisions in paragraph (k)(2)(ii) of Rule 15c3-3 throughout the most recent fiscal year ended June 30, 2024, with the exceptions below: | Check Amount | Received Date | Deposit Date | Note | |--------------|---------------|--------------|------------| | \$618,340 | 7/31/2023 | 8/2;2023 | Mail delay | | \$698 | 8/2/2023 | 8/1012023 | Mail delay | | \$700,000 | 8/2/2023 | 8/4 2023 | Mail delay | | \$51,784 | 9/5/2023 | 917.2023 | Mail delay | | \$75,000 | 9/ 13/2023 | 9/18:2023 | Mail delay | | \$7,500 | 1 Oil 0/2023 | 10/16/2023 | Mail delay | | \$5,732 | 11/7/2023 | 11/13/2023 | Mail delay | | \$29.189 | 11/7/2023 | 11/13/2023 | Mail delay | | \$3 | 11/14/2023 | 11/16/2023 | Mail delay | | \$22 | 11/14/2023 | 11 /16/2023 | Mail delay | | \$5,081 | 11 /14/2023 | 11/16/2023 | Mail delay | | \$7,500 | 11/28/2023 | 12/4/2023 | Mail delay | | \$10,500 | 1/11/2024 | 1/16/2024 | Mail delay | | \$290,000 | 1/ 11/2024 | 1/16/2024 | Mail delay | | \$300 | 1/19/2024 | 1/23/2024 | Mail delay | | \$300 | 1/19/2024 | 1/23/2024 | Mail delay | | \$300 | 1/19/202,4 | 1/23/2024 | Mail delay | | \$300 | 1/19/2024 | 1/23/2024 | Mail delay | | \$1,000 | 4/20/2024 | 5/9/2024 | Mail delay | | \$5,845 | 5/13/2024 | 5/16/2024 | Mail delay | P.O. Box 2864, Camarillo, CA 93011-2864 (805) 764-6740 • FAX: (805) 987-4300 \ {19}------------------------------------------------ (3) The Company is also filing this Exemption Report because the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 are limited to effecting securities transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company. and the Company (I) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule I 5c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. SVP Finance & FINOP P.O. Box 2864, Camarillo. CA 93011-2864 (805) 764-6740 • FAX: (805) 987-4300 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.