# STATETRUST INVESTMENTS INC. X-17A-5 (2024-03-14) — Broker-dealer annual report

- Company: STATETRUST INVESTMENTS INC.
- Form: X-17A-5
- Filed: 2024-03-14
- Period: 2023-12-31
- Accession: 0001126620-24-000002
- CIK: 1126620
- File #: 8-52954
- Type: Broker-dealer
- Material weakness: Yes
- Auditor: Assurance Dimensions
- Auditor location: margate, FL
- Contact: Jeffrey Cimbal
- Phone: 3059218100
- Email: jcimbal@statetrust.com
- Website: statetrust.com
- Signed by: Jeffrey Cimbal (President)

Original filing: https://www.sec.gov/Archives/edgar/data/1126620/000112662024000002/Public.pdf

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# StateTrust Investments, Inc.

Statement of Financial Condition

December 31, 2023

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UNITED STATES securities and exchange commission Washington, D.C. 20549

| ANNUAL REPORTS |  |  |  |  |  |
|----------------|--|--|--|--|--|
| FORM X-17A-5   |  |  |  |  |  |
| PART III       |  |  |  |  |  |

OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response:

SEC FILE NUMBER

| Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934                           | FACING PAGE                                                |                                          |                                            |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|------------------------------------------|--------------------------------------------|--|--|
| FILING FOR THE PERIOD BEGINNING 1/1/23                                                                                              |                                                            |                                          |                                            |  |  |
|                                                                                                                                     | MM/DD/YY                                                   | AND ENDING 12/31/23                      | MM/DD/YY                                   |  |  |
|                                                                                                                                     | A. REGISTRANT IDENTIFICATION                               |                                          |                                            |  |  |
| NAME OF FIRM: StateTrust Investments, Inc.                                                                                          |                                                            |                                          |                                            |  |  |
| TYPE OF REGISTRANT (check all applicable boxes):<br>E Broker-dealer<br>□ Check here if respondent is also an OTC derivatives dealer |                                                            | [] Major security-based swap participant |                                            |  |  |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)                                                                 |                                                            |                                          |                                            |  |  |
| 1750 Clint Moore Road                                                                                                               |                                                            |                                          |                                            |  |  |
|                                                                                                                                     | (No. and Street)                                           |                                          |                                            |  |  |
| Boca Raton                                                                                                                          | i                                                          |                                          | 33487                                      |  |  |
| (City)                                                                                                                              | (State)                                                    |                                          | (Zip Code)                                 |  |  |
| PERSON TO CONTACT WITH REGARD TO THIS FILING                                                                                        |                                                            |                                          |                                            |  |  |
| Jeffrey Cimbal                                                                                                                      | 305-921-8100<br>jcimbal@statetrust.com                     |                                          |                                            |  |  |
| (Name)                                                                                                                              | (Area Code - Telephone Number)                             |                                          | (Email Address)                            |  |  |
|                                                                                                                                     | B. ACCOUNTANT IDENTIFICATION                               |                                          |                                            |  |  |
| INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*                                                           |                                                            |                                          |                                            |  |  |
| Assurance Dimensions                                                                                                                |                                                            |                                          |                                            |  |  |
|                                                                                                                                     | (Name - if individual, state last, first, and middle name) |                                          |                                            |  |  |
| 2000 Banks Road, Suite 218                                                                                                          | Margate                                                    | ﯩ                                        | 33063                                      |  |  |
| (Address)                                                                                                                           | (City)                                                     | (State)                                  | (Zip Code)                                 |  |  |
| 4/13/2010                                                                                                                           |                                                            | 5036                                     |                                            |  |  |
| (Date of Registration with PCAOB)(if applicable)                                                                                    |                                                            |                                          | (PCAOB Registration Number, if applicable) |  |  |
| Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public                | FOR OFFICIAL USE ONLY                                      |                                          |                                            |  |  |

an independent public accountant must be supported by a statement of facts and riremes relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable.

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

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#### OATH OR AFFIRMATION

| Jeffrey Cimbal                                                                                                                        | swear (or affirm) that, to the best of my knowledge and belief, the                                                                                                                                                                |
|---------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| financial report pertaining to the firm of StateTrust Investments,Inc.                                                                | as of                                                                                                                                                                                                                              |
| 12/31<br>as that of a customer.                                                                                                       | , 2 024 , is true and correct. I further swear (or affirm) that neither the company nor any<br>partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely |
| Recender Dorle<br>LOURDES PONTE<br>MY COMMISSION # HH 166417<br>EXPIRES: September 15, 2025<br>Bonded Thru Notary Public Underwriters | Signature:<br>Title:<br>President                                                                                                                                                                                                  |
| Notary Public                                                                                                                         |                                                                                                                                                                                                                                    |

### This filing\*\* contains (check all applicable boxes):

- (a) Statement of financial condition.
- [ (b) Notes to consolidated statement of financial condition.
- = (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X).
- O (d) Statement of cash flows.
- □ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
- □ (f) Statement of changes in liabilities subordinated to claims of creditors.
- [ (g) Notes to consolidated financial statements.
- [ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
- [i) Computation of tangible net worth under 17 CFR 240.18a-2.
- □ (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.
- □ (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.
- □ (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 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- □ {p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- = (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- □ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- = (t) Independent public accountant's report based on an examination of the statement of financial condition.
- □ (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- □ (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.
- □ (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.
- | 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.

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## Contents

| Report of Independent Registered Public Accounting Firm |      |  |
|---------------------------------------------------------|------|--|
| Consolidated Financial Statements                       |      |  |
| Consolidated Statement of Financial Condition           |      |  |
| Notes to the Consolidated Financial Statements          | 3-16 |  |

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![](_page_4_Picture_0.jpeg)

#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of StateTrust Investments, Inc.:

#### Opinion on the Financial Statement

We have audited the accompanying statement of financial condition of State Trust Investments, Inc. (the "Company") as of December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial postion of the Company as of December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

#### Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on Company's financial statement 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 Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test bass, evidence regarding the amounts and disclosures in the financial statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion.

Assurance Dimensions We have served as StateTrust Investments, Inc. auditor since 2020. Margate, Florida March 14, 2024

> ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5053 JACKSONVILLE: 4720 Salisbury Road, Suite 223 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053 ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053 SOUTH FLORIDA: 2000 Banks Road, Suite 218 | Margate, FL 33063 | Office: 754.800.3400 | Fax: 813.443.5053

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## StateTrust Investments, Inc.

Consolidated Statement of Financial Condition As of December 31, 2023

| Assets                                                                  |    |             |
|-------------------------------------------------------------------------|----|-------------|
| Current assets                                                          |    |             |
| Cash & cash equivalents (Note 1)                                        | \$ | 251,483     |
| Securities owned, at fair value (Note 3)                                |    | 8,859       |
| Receivable from clearing broker                                         |    | 431,122     |
| Due from affiliates (Note 2)                                            |    | 542,639     |
| Prepaid and other current assets                                        |    | 273,250     |
| Total current assets                                                    |    | 1,507,353   |
|                                                                         |    |             |
| Property and equipment, net (Note 4)                                    |    | 295,462     |
| Property held for sale  (Note 4)                                        |    | 11,043,231  |
| Deposit at clearing broker                                              |    | 100,000     |
| Other assets                                                            |    | 570         |
| Total assets                                                            | \$ | 12,946,616  |
| Liabilities & stockholder's equity                                      |    |             |
| Current liabilities                                                     |    |             |
| Accounts payable and accrued liabilities                                | S  | 319,099     |
| Mortgage note payable, net of discount, current portion (Note 5)        |    | 283,391     |
| Total current liabilities                                               |    | 602,490     |
|                                                                         |    |             |
| Mortgage note payable, net of discount (Note 5)                         |    | 8,758,687   |
| Total liabilities                                                       |    | 9,361,177   |
| Stockholder's equity                                                    |    |             |
| State Trust Investments, Inc. common stock \$0.001 par value: 2,000,000 |    |             |
| shares authorized, 1,033,053 shares issued and outstanding              |    | 1,036       |
| Additional paid-in capital                                              |    | 753,739     |
| Retained earnings                                                       |    | 6,640,674   |
|                                                                         |    | 7,395,449   |
| Less treasury stock 804,416 shares at cost                              |    | (4,642,067) |
| Equity of StateTrust Investments, Inc.                                  |    | 2,753,382   |
| Non-controlling interest                                                |    | 832,057     |
| Total stockholder's equity                                              |    | 3,585,439   |
| Total liabilities & stockholder's equity                                | \$ | 12,946,616  |

See accompanying notes

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#### NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

### Description of Business and Organization

StateTrust Investments, Inc. ("STI"), incorporated under the laws of the State of Delaware on April 14, 2000, is a broker of various types of equity, debt, and mutual fund securities and option contracts. STI primarily acts in an agency capacity, buying and selling securities for its customers, both foreign and domestic, and charging a commission. Approximately 85% of STI's unaffiliated customers are located in Latin America. STI earns commission income, fees, and margin interest participation from transactions with clients. 69% of the Company's revenue originated from related parties in 2023. STI also trades securities for its own account.

StateTrust Investments, Inc. is a wholly owned subsidiary of StateTrust Group LLC (the "Parent").

Boca 1750, LLC ("Boca 1750"), is a wholly owned subsidiary of the Parent. Boca 1750 is a company affiliated via common ownership with StateTrust Investments, Inc., was organized in 2018 and is the lessor of real property occupied by StateTrust Investments, Inc.

### Basis of Consolidation

The consolidated financial statements include the accounts of StateTrust Investments, Inc. and Boca 1750, LLC, collectively referred to as the "Company". Boca 1750 is a variable interest entity in which StateTrust Investments, Inc. has the power to direct its significant activities, has guaranteed the mortgage note payable for the property, which represents the maximum exposure to loss, and is the primary beneficiary. All material intercompany accounts and transactions have been eliminated in consolidation.

Consolidation of the variable interest entity's assets amounted to approximately \$11.3 million comprised principally of cash and real estate property and liabilities of approximately \$10.5 million comprised principally of a mortgage note payable and a related party note payable to STI of which approximately \$1.3 million eliminates in consolidation. The equity interests of Boca 1750 are reflected as non-controlling interest in the accompanying consolidated financial statements.

### Government and Other Regulation

The Company's business is subject to significant regulation by various governmental agencies and self-regulatory organizations. Such regulation includes, among other things, periodic examinations by these regulatory bodies to determine whether the Company is conducting and reporting its operations in accordance with the applicable requirements of these organizations.

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#### NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Valuation of Investments in Securities at Fair Value - Definition and Hierarchy (continued)

#### Sovereign Government Bonds

The fair value of sovereign government bonds is generally based on quoted prices in active markets. When quoted prices are not available, fair value is determined based on a valuation model that uses inputs that include interest rate yield curves, cross currency basis index spreads, and country credit spreads similar to the bond in terms of issuer, maturity, and seniority. These items are typically categorized in Level 2 of the fair value hierarchy.

#### Corporate Bonds

The fair value of corporate bonds is estimated using recently executed transactions, market price quotations (where observable), bond spreads or credit default swap spreads. The spread data used are for the same maturity as the bond. If the spread data does not reference the issuer, then data that references a comparable issuer is used. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond, or single name credit default swap spreads and recovery rates based on collateral values as key inputs. Corporate bonds are typically categorized in Level 2 of the fair value hierarchy.

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#### NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

### Revenue Recognition

In May 2014, the FASB issued comprehensive new revenue recognition guidance, ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance requires a company to recognize revenue when it transfers promised services to clients in an amount that reflects the consideration to which the company expects to be entitled in exchange for those services and requires enhanced disclosures. The guidance also changes the accounting for certain contract costs, including whether they may be offset against revenue in the statement of operations. The guidance requires an entity to follow 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 a performance obligation.

### Brokerage Commissions

STI buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, STI charges a commissions and related clearing expenses are recorded on the trade date (the date that STI 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/from the customer.

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{11}------------------------------------------------

#### NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

expected credit loss (CECL) methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. The Company has the ability to determine there are no expected credit losses in certain circumstances. The Company identified accounts receivable, prepaid expenses and other assets which are carried at amortized cost as in scope for consideration under ASC Topic 326. The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including other assets utilizing the CECL framework.

### Due from Affiliates

Amounts due from affiliates and related parties are stated at the outstanding balance of funds due for repayment of advances and charges for services rendered. The carrying amount may be reduced by an allowance that reflects management's best estimate of the amounts that will not be collected. As management believes that the amounts are fully collectible and are therefore stated at net realizable value, management has not recorded an allowance for doubtful accounts.

### Property Held for Sale

Property held for sale consisting of a land and building are measured at the lower of their carrying amount or fair value less cost to sell.

### Property and Equipment

Property and equipment are recorded at cost. The Company provides for depreciation over the estimated useful lives of the assets using the straight-line method. The estimated useful lives of these assets range from five to twenty-seven and a half years. Maintenance and repairs are charged to expenses as incurred. Renewals and betterments that extend the useful lives of assets are capitalized.

### Income Taxes

StateTrust Investments, Inc. accounts for income taxes under the liability method whereby deferred tax assets and liabilities are provided for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Boca 1750 is treated as a disregarded entity for federal income tax purposes. Consequently, federal income taxes are not payable by Boca 1750. Members are taxed individually on their share of the Boca 1750's earnings. Boca 1750's net income or loss is allocated among the members in accordance with the operating agreement of Boca 1750. 

{12}------------------------------------------------

No provision for income taxes for Boca 1750 is included in the accompanying financial statements.

The Company assesses its tax positions in accordance with "Accounting for Uncertainties in Income Taxes" as prescribed by the Accounting Standards Codification, which provides guidance for financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return for open tax years (generally a period of three years from the later of each return's due date filed) that remain subject to examination by the Company's major tax jurisdictions.

The Company assesses its tax positions and determines whether it has any material unrecognized liabilities for uncertain tax positions. The Company records these liabilities to the extent it deems them more likely than not to be incurred. Interest and penalties related to uncertain tax positions, if any, would be classified as a component of income tax expense.

The Company believes that it does not have any significant uncertain tax positions requiring recognition or measurement in the accompanying financial statements.

### Use of Estimates

The preparation of the consolidated 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 include allowance for doubtful accounts, deferred tax assets and liabilities, and valuation allowances.

#### NOTE 2. RELATED PARTY TRANSACTIONS

#### Management Agreement

The Company has entered into a management agreement with an affiliate that is related to the Company by virtue of common ownership.

This affiliate pays a management fee in consideration of referral agent expenses, utilities, salaries, telephone, equipment, furniture and fixtures, postage, office supplies, and other general administrative and office expenses paid on behalf of the Company. For the year ended December 31, 2023, the Company incurred and paid \$3,601,798 in management fees which are comprised of the following:

{13}------------------------------------------------

### Distribution Agreement

Pursuant to a distribution agreement dated July 17, 2003, the Company is the exclusive agent for the distribution of shares to certain offshore funds ("Funds"). The Company is related to the Funds as it has common management. These Funds operate as diversified open-end management investment companies. The Company is due \$22,182 from the Funds as of December 31, 2023, which is reflected in due from affiliates in the accompanying consolidated statement of financial condition.

### Insurance and Annuity Company

The Company is related to an insurance company by virtue of common ownership.

#### NOTE 3. FAIR VALUE MEASUREMENT

The following table presents information about the Company's assets and liabilities measured at fair value as of December 31, 2023:

|                               |   | Quoted Prices in |                   |   |                  |       |
|-------------------------------|---|------------------|-------------------|---|------------------|-------|
|                               |   | Active Markets   | Significant Other |   | Significant      |       |
|                               |   | for Identical    | Observable        |   | Unobservable     |       |
| Assets, at fair value         |   |                  | Assets (Level 1)  |   | Inputs (Level 3) | Total |
| Securities owned:             |   |                  |                   |   |                  |       |
| Sovereign and corporate bonds | S |                  | 8,859             | S |                  | 8,859 |
| TOTALS                        | S |                  | 8,859             | > |                  | 8,859 |

The Company did not transfer any securities between levels during the year ended December 31, 2023.

{14}------------------------------------------------

#### NOTE 4. PROPERTY AND EQUIPMENT, NET

Property and equipment at December 31, 2023, consisted of the following:

| Leasehold Improvement                           | S | 827,126     |
|-------------------------------------------------|---|-------------|
| Office Equipment                                |   | 343,745     |
| Computers                                       |   | 274,170     |
| Furniture & Fixture                             |   | 226,193     |
| Computer Software                               |   | 117,974     |
|                                                 | S | 1,789,208   |
| Less: accumulated depreciation and amortization |   | (1,493,746) |
|                                                 |   | 295,462     |

On December 31, 2023, the Company reclassified a land and building property owned by Boca 1750 as held for sale. Accordingly, the carrying amount of \$11,043,321 was reclassified from property and equipment account to property held for sale.

#### NOTE 5. MORTGAGE NOTE PAYABLE

In connection with Boca 1750's acquisition of land and building utilized by the Company for its headquarters, in June 2018, it entered into a Mortgage and Security Agreement (the "Mortgage") with a financial institution in the amount of \$10,400,000. The Mortgage calls for monthly interest and principal payments of \$60,321 beginning July 15, 2018, until June 15, 2025, at which time all outstanding principal, plus all accrued and unpaid interest is due. The Mortgage bears interest at 4.85% per annum and is collateralized by certain assets of Boca 1750. The Mortgage is guaranteed by STG, STI, and other related entities. The Mortgage requires the Company to comply with certain financial covenants. A loan commitment fee of \$78,000 was paid in connection to the Mortgage and was recorded as a discount to the mortgage note payable. Interest expense for the note payable amounted to approximately \$452,528 for the year ended December 31, 2023, which is included as part of interest expense on the accompanying consolidated statement of operations.

The financial covenant requirements on the Mortgage include a minimum debt service coverage ratio, minimum fixed charge coverage ratio, and a maximum debt to tangible net worth ratio. During 2022, the fixed charge ratio was based on Company ratios that the failed to meet. The agreement was subsequently amended in March 2023 to base the covenant at the consolidated parent level and this amended covenant is in compliance.

Aggregate maturities of long-term debt subsequent to December 31, 2023, are as follows:

| 2024                  |   | 283,391   |
|-----------------------|---|-----------|
| 2025                  |   | 8,758,687 |
|                       | S | 9,042,078 |
| Less: current portion |   | (283,391) |
|                       | S | 8,758,687 |
|                       |   |           |

{15}------------------------------------------------

## STATETRUST INVESTMENTS, INC. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2023

#### NOTE 6. INCOME TAXES

At December 31, 2023 the Company had total federal net operating loss carry-forwards of approximately \$2,938,555 that have no expiration date but are subject to the Internal Revenue Code under the Tax Cuts and Jobs Act (TCJA). Under the TCJA, the NOL deduction for a tax year is equal to the lesser of (1) the aggregate of the NOL carryovers to such year, plus the NOL carry-backs to such year, or (2) 80% of taxable income (determined without regard to the deduction) (Sec. 172(a)). Generally, NOLs can no longer be carried back but are allowed to be carried forward indefinitely (Sec. 172(b)(()(A)). The special extended carryback provisions are generally repealed, except for certain farming and insurance company losses.

The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes "ASC 740". ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial losses and the tax basis of assets and liabilities for both the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Internal Revenue Code Section 382 "IRC 382" places a limitation on the amount of taxable income that can be offset by carry forwards after a change in control (generally greater than a 50% change in ownership). In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The table below summarizes the differences between the Company's effective tax rate and the statutory federal rate as follows for the period ended December 31, 2023:

| 2023                      |        |
|---------------------------|--------|
| Statutory federal rate    | 21.00% |
| State tax, net of federal | 4.35%  |
| Effective tax rate        | 25.35% |

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. The components of the net deferred tax liability for the year ended December 31, 2023 is a NOL of was as follows:

{16}------------------------------------------------

### STATETRUST INVESTMENTS, INC. NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2023

| Other     | ക<br>(47,876) |
|-----------|---------------|
| NOL       | 788,552       |
| Allowance | (740,676)     |
| Total     | ಳು            |
|           |               |

#### NOTE 7. OTHER FINANCING

### Paycheck Protection Program

In 2021, the Company received a \$97,111 Paycheck Protection Program loan authorized by the CARES Act. The loan and accrued interest were forgiven during 2023.

#### NOTE 8. CAPITAL REQUIREMENTS

As a registered broker-dealer, the Company is subject to the Uniform Net Capital Rule of the Securities and Exchange Commission, which requires that "Net Capital", as defined, shall be at least the greater of \$100,000 or 6 2/3% of "Aggregate Indebtedness", as defined. However, during 2022 the Company elected to use the "Alternate Net Capital Requirement" which requires a flat \$250,000 minimum dollar net capital. At December 31, 2023, the Company's Net Capital was \$555,898 which exceeded requirements by \$305,898. The Company calculates its Net Capital on an unconsolidated basis for STI in line with the Uniform Net Capital Rule of the Securities and Exchange Commission and AICPA guidance 6.27 auditing guide.

#### NOTE 9. RISK CONCENTRATIONS

#### Clearing and Depository Concentrations

The Company has its clearing and depository operations for the Company's securities transactions with Axos Clearing LLC (Axos), whose main office is located in Nebraska. The underlying agreement with Axos renews annually and provides for early termination fees based on average clearing charges. At December 31, 2023, the receivable from broker and deposit at clearing broker are with this brokerage firm.

### Other Risk Concentrations

In the normal course of business, the Company's customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose the Company to off-balance-sheet risk in the event the customer or 

{17}------------------------------------------------

other broker is unable to fulfill its contracted obligations and the Company must purchase or sell the financial instrument underlying the contract at a loss.

The Company's customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company through its clearing broker extends credit to its customers, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the customers' accounts. In addition to these activities, the Company may execute customer transactions involving the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations. Such transactions may expose the Company to significant off-balance-sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event the customer fails to satisfy its obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligations. The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. The Company monitors required margin levels daily, and pursuant to such guidelines, requires the customer to deposit additional collateral or to reduce positions when necessary.

#### NOTE 10. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through March 14, 2024, which is the date the consolidated financial statements were available to be issued.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.