# INTERNATIONAL RESEARCH SECURITIES, INC. X-17A-5 (2022-03-01) — Broker-dealer annual report - Company: INTERNATIONAL RESEARCH SECURITIES, INC. - Form: X-17A-5 - Filed: 2022-03-01 - Period: 2021-12-31 - Accession: 0000814558-22-000002 - CIK: 814558 - File #: 8-37954 - Type: Broker-dealer - Material weakness: No - Auditor: McBee & Co. PC - Auditor location: Dallas, TX - Contact: Michael Holland - Phone: 972-888-6034 - Email: mholland@intlrs.com - Website: intlrs.com - Signed by: Michael Holland (President) Original filing: https://www.sec.gov/Archives/edgar/data/814558/000081455822000002/irs2021audit.pdf --- {0}------------------------------------------------ **UNITED** QMB APPROVAL **STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** # **ANNUAL REPORTS FORM X-17A-5 PART III** | OMB Number: 3235-0123 | | |--------------------------|----| | Expires: Oct. 31, 2023 | | | Estimated average burden | | | hours per response: | 12 | SEC FILE NUMBER 8-37954 **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 | 01/01/21 | AND ENDING | 12/31/21 | |-----------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|-------------------------|-------------------------------------------| | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | International
Research
NAME OF FIRM: | Securities,
Inc. | | | | TYPE OF REGISTRANT (check all applicable boxes):
[XBroker-dealer
Check here if respondent is also an OTC derivatives dealer | Security-based swap dealer | | Major security-based swap participant | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS:(Do | | not use a P.O. box no.) | | | 3010
LBJ
Freeway, Suite
1200 | | | | | | (No. and Street) | | | | Dallas | Texas | | 75234 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Michael
Holland | 972-888-6034 | mholland@intlrs.com | | | (Name) | (Area Code -Telephone Number) | | (Email Address) | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained
McBee
&
Co.,PC | | in this filing* | | | | (Name -if individual, state last,first, and middle name) | | | | 718 Paulus | Dallas | TX | 75214 | | (Address) | (City) | (State) | (Zip Code) | | 09/22/2009 | | 3631 | | | (Date of Registration with PCAQB)(if applicable) | FOR OFFICIAL USE ONLY | | (PCAOB Registration Number,if applicable) | \* 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)(l)(ii),if applicable. **Persons who are to respond to thecollection ofinformation containedinthis form are not required to respond unless the form displays a currently valid OMB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** l, Michael Holland , swear (or affirm) that, to the best of my knowledge and belief,the International Research Securities, Inc. financial report pertaining to the firm of December 31 *,* as of ,2 021 . is true and correct. I further swear (or affirm) that neither the company nor any partner,officer,director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. ![](_page_1_Picture_3.jpeg) | | President | |---------------|-----------| | yWijfrrDtiflx | | | | | NotaryPublic ### **This filing\*\* contains (check all applicable boxes):** - [X (a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - IX (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). - [X (d) Statement of cash flows. - [X (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - (f) Statement of changes in liabilities subordinated to claims of creditors. - CX (g) Notes to consolidated financial statements. - [X (h) Computation of net capital under 17 CFR 240.15c3-lor 17 CFR 240.18a-l, as applicable. - (i) Computation of tangible net worth under 17 CFR 240.18a-2. - (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4,as applicable. - (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - [X (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4,as applicable. - X (o) Reconciliations,including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l,17 CFR 240.18a-l, 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. - (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - [X (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - CX (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7,as applicable. - (t) Independent public accountant's report based on an examination of the statement of financial condition. - CX (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. - (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. - CX (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (x) Supplemental reports on applying agreed-upon procedures,in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - (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). - (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.* Signature: Title: {2}------------------------------------------------ **Financial Statements With Supplemental Information Year Ended December 31, 2021** {3}------------------------------------------------ ## CONTENTS | INDEPENDENT
REPORT
OF
REGISTERED
PUBLIC
ACCOUNTING
FIRM | | 1 | |------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|-------| | STATEMENTS
FINANCIAL | | | | Statement
of
financial
condition | | 2 | | Statement
of
operations | | 3 | | stockholder's
Statement
of
changes
equity
in | | 4 | | Statement
of
cash
flows | | 5 | | financial
statements
Notes
to | | 6-10 | | Supplemental
Information | | | | Schedule
I: | 15c3-1
Computation
of
Net
Capital
Under
Rule
of
Securities
the
and
Exchange
Commission | 11-12 | | Schedule
II: | Computation
for
Determination
of
Reserve
15c3-3
Requirements
Under
of
the
Securities
Rule
Exchange
Commission
and | 13 | | REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
14
MANAGEMENT'S
ON
EXEMPTION
REPORT | | | | BROKER-DEALER
ANNUAL
EXEMPTION
REPORT | | 15 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) A Professional Corporation Certified Public Accountants ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** # **To the Stockholder of International Research Securities, Inc.** #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of International Research Securities,Inc. as of December 31, 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 International Research Securities, Inc. as of December 31, 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 International Research Securities,Inc.'s management. Our responsibility is to express an opinion on International Research Securities, Inc.'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 International Research Securities, Inc. 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. Our 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. 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. #### **Auditor's Report on Supplemental Information** The supplemental information contained in Schedule I, Computation of Net Capital Under Rule 15c3-lof the Securities and Exchange Commission ("Schedule I") and Schedule II, Computation for Determination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission ("Schedule II") has been subjected to audit procedures performed in conjunction with the audit of International Research Securities, Inc.'s financial statements. The supplemental information is the responsibility of International Research Securities, Inc.'s management. Our 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 our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the supplemental information contained in Schedule I and Schedule II is fairly stated, in all material respects, in relation to the financial statements as a whole. **McBee & Co.,PC** We have served as International Research Securities,Inc.'s auditor since 2016. Dallas,Texas February 28, 2022 Dallas Office 718 Paulus Avenue • Dallas, Texas 75214 • 214.823.3500 www.mcbeeco.com {5}------------------------------------------------ # **INTERNATIONAL RESEARCH SECURITIES, INC. STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2021** ## **ASSETS** | Cash
Commissions
receivable | \$
31,268
31,333 | |--------------------------------------------------------------------------|------------------------| | Securities
owned
at
fair
value
Other
current
assets | 395,548
6,394 | | TOTAL
ASSETS | \$
464,543 | | | | | LIABILITIES
AND
STOCKHOLDER'S
EQUITY | | | Liabilities | | | Accounts
payable | \$
12,284 | | Commissions
payable | 31,333 | | Long-Term
Loan
SBA | 151,000 | | Total
Liabilities | 194,617 | | Stockholder's
Equity | | | Stock,
100,000
shares
authorized
of
\$1.00
Common | | | 11,000
par
value,
shares
and
outstanding
issued | 11,000 | | paid-in-capital
Additional | 49,462 | | Retained
earnings | 209,464 | | Stockholder's
Total
Equity | 269,926 | | TOTAL
LIABILITIES
AND
STOCKHOLDER'S
EQUITY | \$
464,543 | {6}------------------------------------------------ # **INTERNATIONAL RESEARCH SECURITIES, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2021** | Revenues | | |-------------------------------------------------------------------------|---------------| | Mutual
Fund
commission
income | \$
491,558 | | Insurance
income
commission | 56,423 | | PPP
forgiveness
loan | 91,206 | | EIDL
advances
SBA | 15,000 | | Dividend
income | 1,551 | | Miscellaneous
income | 250 | | Revenues
Total | 655,988 | | Expenses | | | Compensation | 485,517 | | fees
and
expenses
Regulatory | 9,529 | | Occupancy | 41,467 | | fees
Professional | 41,796 | | Other
operating
expenses | 45,447 | | Total
Expenses | 623,756 | | other
taxes
Income
before
income
and
provision
for | 32,232 | | securities
Realized
net
gains
on
owned | 62,925 | | net
on
securities
owned
Unrealized
gains | (24,392) | | Income
before
for
taxes
provision | 70,765 | | state
Provision
for
income
taxes | | | Net
Income | \$
70,765 | {7}------------------------------------------------ # **INTERNATIONAL RESEARCH SECURITIES, INC. STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2021** | | Common
Stock | Additional
Paid-in-Capital | Retained
Earnings | Total | |-------------------------------------|-----------------|-------------------------------|----------------------|---------------| | Balance,
31,
December
2020 | \$11,000 | 49,462
\$ | 165,699
\$ | \$226,161 | | Distributions | | | (27,000) | (27,000) | | Net
Income | | | 70,765 | 70,765 | | Balance,
31,
December
2021 | \$11,000 | \$49,462 | 209,464
\$ | \$
269,926 | {8}------------------------------------------------ # **INTERNATIONAL RESEARCH SECURITIES, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2021** | CASH
FLOWS
PROVIDED
(USED)
ACTIVITIES
BY
OPERATING | | |----------------------------------------------------------------------------------|--------------| | Net
income | \$
70,765 | | Adjustments
to
reconcile
to
net
cash
net
income
provided | | | activities:
operating
(used)
by | | | Realized
gains
on
securities
sold | (62,925) | | Unrealized
losses
on
securities
owned | 24,392 | | Changes
assets
and
liabilities
in | | | Increase
commission
receivable
in | (4,070) | | Decrease
other
current
assets
in | 1,120 | | PPP
forgiveness
loan | (91,206) | | accrued
Increase
SBA
loan
interest
in | 1,000 | | accounts
Increase
payable
in | 115 | | Decrease
payable
commissions
in | (56,705) | | cash
provided
(used)
operating
activities
Net
by | (117,514) | | FROM
CASH
FLOWS
INVESTING
ACTIVITIES | | | Proceeds
from
sales
of
securities
owned | 134,577 | | Purchases
of
securities
owned | (200,000) | | Dividends
re-invested
securities
owned
in | ,551)
(1 | | activities
Net
cash
provided
by
investing | (66,974) | | FLOWS
FROM
CASH
FINANCING
ACTIVITIES | | | proceeds
SBA
loan | 150,000 | | PPP
proceeds
loan | 35,259 | | to
Distributions
stockholder | (27,000) | | Net
cash
provided
by
financing
activities | 158,259 | | (decrease)
Net
increase
cash
in | (26,229) | | Cash
at
of
year
beginning | 57,497 | | Cash
at
of
year
end | \$
31,268 | {9}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS** ### **DECEMBER 31, 2021** # **NOTE 1 -Summary of Significant Accounting Policies** #### **Nature of Operations and Basis of Presentation:** International Research Securities, Inc. (the "Company") is a broker-dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA") and is a member of the Securities Investor Protection Corporation ("SIPC"). The Company is considered "Non-Covered Finn" exempt from 17 C.F.R. § 240.15c3-3 and is filing an Exemption Report relying on footnote 74 to SEC Release 34-70073, and as discussed in Q&A 8 of the related FAQ issued by the SEC staff. The Company limits its business activities exclusively to municipal securities broker, including 529 plans, mutual fund retailer-application way only and broker selling variable life insurance or annuities. The Company does not hold customer funds or securities. The Company's customers are located throughout the United States. The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles and to general practices within the securities industry. These financial statements were approved by management and available for issuance on February 28, 2022. Subsequent events have been evaluated through this date. ### **Cash and Cash Equivalents:** For purposes of reporting cash flows, the Company has defined cash equivalents as highly liquid investments, with original maturities of less than ninety days, which are not held for sale in the ordinary course of business. ### **Commissions Receivable:** Commissions receivable are generally collected in full in the month following their accrual. As such, management has not recorded an allowance for doubtful accounts on these receivables. Management records an allowance for bad debts based on a collectability review of specific accounts. Any receivables deemed uncollectible are written off against the allowance. #### **Revenue Recognition:** The Company earns revenue for selling unaffiliated mutual funds and variable annuity products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage to, amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund or annuity contract. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company's control including market volatility and client behavior (such as how long client holds their investment or annuity contract). The revenue will not be recognized until it is probable that a significant reversal will not occur. {10}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS** ### **DECEMBER 31, 2021** # **NOTE 1 -Summary of Significant Accounting Policies (Continued)** ### **Income Taxes:** The Company files as an "S" corporation for Federal income tax purposes. The Company's net income is taxed at the shareholder level rather than at the coiporate level for Federal income tax purposes, and thus, no provision for Federal income taxes has been made in the accompanying financial statements. The Company is liable for income taxes in the State of Texas, subject to certain exemptions. Any potential interest and penalty associated with a tax contingency, should one arise, would be included as a component of income tax expense in the period in which the assessment arises. The Company's federal and state income tax returns are subject to examination over various statutes of limitations generally ranging from three to five years. ### **Use of Estimates:** The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reporting period. Actual results could differ from those estimates. #### **Fair Value of Financial Instruments:** Securities owned are held for investment purposes and are recorded at fair value in accordance with FASB ASC 820, *Fair Value Measurements and Disclosures*, as described in Note 4. The increase or decrease in fair value is credited or charged to operations. The Company's other financial asset and liability amounts reported in the statement of financial condition are shortterm in nature and approximate fair value. # **NOTE 2 -Net Capital Requirements** The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-l ), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, should not exceed 15 to 1 (and the rule of the "applicable" exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1 ). At December 31, 2021, the Company had net capital of \$204,200 and net capital requirements of \$12,974. The Company's ratio of aggregate indebtedness to net capital was .95 to 1. {11}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS** ## **DECEMBER 31, 2021** # **NOTE 3 -Exemption from Rule 15c3-3** The Company is considered "Non-Covered Firm" exempt from 17 C.F.R. § 240.15c3-3 and is filing an Exemption Report relying on footnote 74 to SEC Release 34-70073, and as discussed in Q&A 8 of the related FAQ issued by the SEC staff. The Company limits its business activities exclusively to municipal securities broker, including 529 plans, mutual fund retailer-application way only and broker selling variable life insurance or annuities. # **NOTE 4 -Contingencies** There are currently no asserted claims or legal proceedings against the Company; however, the nature of the Company's business subjects it to various claims, regulatory examinations, and other proceedings in the ordinary course of business. The ultimate outcome of any such future action against the Company could have adverse impact on the financial condition, results of operations, or cash flows of the Company. The Company had no commitments or contingencies that were required to be accrued or disclosed. # **NOTE 5 -Concentration of Credit Risk** The Company is engaged in brokerage activities in which counter-parties primarily include mutual funds, 529 plans, and variable annuity companies throughout the United States. In the event the 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 counter-party. The Company's financial instruments that are subject to concentrations of credit risk primarily consist of cash. The Company places its cash with one high credit quality institution. At times, such cash may be in excess of the FDIC insurance limits. The Company believes that it is not exposed to any significant risk related to cash. # **NOTE 6 -Related Party Transactions** The sole stockholder of the Company, a registered securities representative, generates most of the Company's revenues and related compensation expense. The Company is economically dependent upon the sole stockholder due to the concentration of services he provides. The Company and various entities are under common control and the existence of that control creates operating results and financial position significantly different than if the companies were autonomous. {12}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS** ## **DECEMBER 31, 2021** # **NOTE 7 -Securities Owned** FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB ASC 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. - Level 2 inputs (other than quoted prices included within level 1 ) that are observable for the asset or liability, either directly or indirectly. - Level 3 are unobservable inputs for the asset or liability and rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. Following is the description of the valuation methodologies used for the Company's assets measured at fair value. There have been no changes in the methodologies used at December 31, 2021. Mutual Funds-Mutual funds are generally priced at the ending net asset value ("NAV") provided by the service agent of the mutual funds and are categorized in Level 1 of the fair value hierarchy. # **NOTE 8 -Liabilities Subordinated to Claims of General Creditors** During the year ended December 31, 2021, there were no subordinated liabilities to the claims of general creditors. Accordingly, a statement of changes in liabilities subordinated to claims of general creditors has not been included in these financial statements. # **NOTE 9 -Recently Issued Accounting Pronouncements** Recently issued accounting standards that have been issued or proposed by the Financial Accounting Standards Board ("FASB") or other standards-setting bodies are not expected to have a material impact on the Company's financial position or results of operations. The Company plans to adopt any new standards in line with prospective timelines. # **NOTE 10 -Paycheck Protection Program established by the CARES Act** On May 6, 2020, the Company received loan proceeds of \$55,947 under the Paycheck Protection Program (PPP). The Company received forgiveness of the loan in May 2021. On April 9, 2021, the Company received second draw loan proceeds of \$35,259 under the Paycheck Protection Program (PPP). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), provides for loans to qualifying businesses for eligible expenses. The Company received forgiveness of the second draw loan in December 2021. {13}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS** ## **DECEMBER 31, 2021** # **NOTE 11 -COVID-19 Economic Injury Disaster Loan (EIDL) Program** In December 2021, the Company received advance proceeds of \$15,000 under the Targeted and Supplemental Economic Injury Disaster Loan Program. Under the COVID-19 Economic Injury Disaster Loan (EIDL) Program qualifying businesses became eligible to receive up to \$15,000 in funding from SBA that does not need to be repaid. These "advances" are similar to a grant, but without the typical requirements that come with a U.S. government grant. # **NOTE 12 -Long-Term SBA Loan** In April 2021, the Company received a \$150,000 low-interest Economic Injury Disaster Loan (EIDL) loan from the Small Business Administration (SBA) that helps businesses overcome the effects of the pandemic by providing working capital to meet operating expenses. The loan is a 30-year loan where monthly payments of \$731 are deferred for one year after receiving the loan; however, interest continues to accrue during the one-year delay. The Company has accrued interest on the loan of \$1,000 for 2021. The loan is secured by the Company's tangible and intangible property. The deferment on the loan ends on April 2, 2022. Maturities of the loan payable are as follows: | Year
Ending | | |-----------------|---------------| | December
31, | Amount | | 2022 | 3,068
\$ | | 2023 | 3,185 | | 2024 | 3,307 | | 2025 | 3,433 | | 2026 | 3,564 | | Thereafter | 137,511 | | | \$
151.000 | {14}------------------------------------------------ **Supplemental Information Pursuant to Rule 17a-5 of the Securities Exchange Act of 1934 as of** **December 31, 2021** {15}------------------------------------------------ ## **Schedule I** ## **INTERNATIONAL RESEARCH SECURITIES, INC. Computation of Net Capital Under Rule 15c3-l of the Securities and Exchange Commission As of December 31, 2021** # **COMPUTATION OF NET CAPITAL** Total stockholder's equity qualified for net capital \$ 269,926 Deductions and/or charges Non-allowable assets: Other assets Other deductions or charges Net capital before haircuts on securities positions (37,727) 31,333 263,532 Haircuts on securities (computed, where applicable, pursuant pursuant to Rule 15c3-1 (f)) (59,332) Net Capital \$ 204,200 **AGGREGATE INDEBTEDNESS** Items included in statement of financial condition: Acccounts payable Commissions payable Long-Term SBA Loan \$ 12,284 31,333 151,000 Total aggregate indebtedness \$ 194,617 See accompanying report of independent registered public accounting firm. {16}------------------------------------------------ ## **Schedule I (continued)** # **INTERNATIONAL RESEARCH SECURITIES, INC. Computation of Net Capital Under Rule 15c3-l of the Securities and Exchange Commission As of December 31, 2021** ## **COMPUTATION OF BASIC NET CAPITAL REQUIREMENT** | capital
Minimum
net
required | | |---------------------------------------------------------------------------------------------------------------------------------------------------|----------------| | (6
2/3%
of
indebtedness)
aggregate | \$
12,974 | | dollar
Capital
of
Minimum
Net
Requirement
Reporting
or
Dealer
Broker | \$
5,000 | | Capital
Minimum
Net
Requirement | \$
12,974 | | Capital
Excess
of
Net
Minimum
Required
in | \$
191,226 | | Capital
less
greater
of
10%
of
aggregate
indebtedness
or
Net
120%
of
capital
minimum
net
requirement | \$
184,738 | | OF
AGGREGATE
INDEBTEDNESS
TO
NET
CAPITAL
RATIO | .95
to
1 | ## **RECONCILIATION WITH COMPANY'S COMPUTATION** No material differences existed between the audited computation of net capital pursuant to Rule 15c3-1 as of December 31, 2021 and the corresponding unaudited filing of part I1A of the FOCUS Report/Fonn X-17a-5 filed by International Research Securities, Inc. Accordingly, no reconciliation is necessary. See accompanying report of independent registered public accounting firm. {17}------------------------------------------------ ### **Schedule II** ### **INTERNATIONAL RESEARCH SECURITIES, INC. Computation for Determination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission As of December 31, 2021** #### **EXEMPTIVE PROVISIONS** The Company is considered "Non-Covered Firm" exempt from 17 C.F.R. § 240.15c3-3 and is filing an Exemption Report relying on footnote 74 to SEC Release 34-70073, and as discussed in Q&A 8 of the related FAQ issued by the SEC staff. The Company limits its business activities exclusively to municipal securities broker, including 529 plans, mutual fund retailer-application way only and broker selling variable life insurance or annuities. See accompanying report of independent registered public accounting firm. {18}------------------------------------------------ **Report of Independent Registered Public** **Accounting Firm on Management's** **Exemption Report** {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) A Professional Corporation **Certified Public Accountants** ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** # **To the Stockholder of International Research Securities, Inc.** We have reviewed management's statements, included in the accompanying Rule 15c3-3 Exemption Report pursuant to SEC Rule 17a-5, in which (1) International Research Securities, Inc. ("the Company") did not claim an exemption under paragraph (k) of 17 C.F.R. §240.15c3-3, and (2) the Company is filing the Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its business activities exclusively to municipal securities broker, including 529 plans, mutual fund retailer on application way only basis where the funds are payable to the issuer or its agent and not the company, and broker selling variable life insurance or annuities. In addition, the Company 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 15c2-4 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; did not carry accounts of or for customers; and did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year, December 31, 2021, without exception. International Research 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 International Research Securities, Inc/s compliance with the exemption provision. 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 Company's business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, and related SEC Staff Frequently Asked Questions. **McBee & Co., PC** Dallas, Texas February 28, 2022 {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) #### **BROKER-DEALER ANNUAL EXEMPTION REPORT** #### **DECEMBER 31, 2021** International Research Securities, Inc. (the "Company") 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)(1) and (4). To the best of its knowledge and belief the Company states the following: - (1) The Company does not claim an exemption under paragraph (k) of 17 C.F.R. §240.15c3-3, and - (2) The Company is filing this Exemption report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. §240.17a-5 because the company limits its business activities exclusively to municipal securities broker, including 529 plans, mutual fund retailer on application way only basis where the funds are payable to the issuer or its agent and not the company, and broker selling variable life insurance or annuities, and the Company (1) 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 15c2-4; (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. ### **INTERNATIONAL RESEARCH SECURITIES, INC.** I, Michael Holland, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. By: Michael Holland CEO a-a? 2022 3010 LBJ Suite 1200\* Dallas,TX \* 75234 \* *p* 972-888-6030\* Member FINRA, S1PC Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.