# GLENDALE SECURITIES, INC. X-17A-5 (2023-03-30) — Broker-dealer annual report - Company: GLENDALE SECURITIES, INC. - Form: X-17A-5 - Filed: 2023-03-30 - Period: 2022-12-31 - Accession: 0001198404-23-000001 - CIK: 1198404 - File #: 8-65604 - Type: Broker-dealer - Material weakness: No - Auditor: DCPA - Auditor location: Century City, CA - Contact: Eric Flesche - Phone: 818-907-1505 - Email: eflesche@glendalesecurities.com - Website: glendalesecurities.com - Signed by: Paul Eric Flesche (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1198404/000119840423000001/annual_report2.pdf --- {0}------------------------------------------------ **Glendale Securities, Inc. Report Pursuant to Rule 17a-5 (d) Financial Statements For the Year Ended December 31, 2022** {1}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 # ANNUAL REPORTS FORM X-17A-5 PART III | SEC FILE NUMBER | | |-----------------|--| | 8-65604 | | 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 01/01/22 | | | AND ENDING 12/31/22 | | | | | | MM/DD/YY | | | MM/DD/YY | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME OF FIRM: Glendale Securities, Inc. | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
Broker-dealer
O Check here if respondent is also an OTC derivatives dealer | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | | 15233 Ventura Blvd., Suite 712 | | | | | | | | | (No. and Street) | | | | | | | Sherman Oaks | | CA | | 91403 | | | | (City) | | (State) | | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | Eric P. Flesche 818-907-1505 | | | | eflesche@glendalesecurities.com | | | (Name) | | | (Area Code - Telephone Number) | (Email Address) | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | DCPA | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filling* | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | | | 1999 Avenue of the Stars #1100 Century City | | | California 90067 | | | | (Address) | | (City) | | (State) | (Zip Code) | | | 9/15/2020 | | | | 6567 | | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | | | | | FOR OFFICIAL USE ONLY | | | | | | * Claims for exemption from the requirement that the annual reports 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 | | | | | | 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. CFR 240.17a-5(e)(1)(ii), if applicable. {2}------------------------------------------------ #### OATH OR AFFIRMATION | Eric P. Flesche | swear (or affirm) that, to the best of my knowledge and belief, the | |----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------| | tinancial report pertaining to the firm of Glendale Securities, Inc. | as of | | December 31 | 2 022 is true and correct. I further swear (or affirm) that neither the company nor any | | as that of a customer. | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely
Signature: | # SEE ATTACHED JURAT Title: 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). - (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. - @ (i) 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. - (1) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - [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. - | | | Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible 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 affrmation 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. - (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. - 1 (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 240.17a-12, as applicable. - | (y) Report describing any material inadequacies 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: SIPC Report - \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18c-7(d)(2), as applicable. {3}------------------------------------------------ #### CALIFORNIA JURAT #### GOVERNMENT CODE § 8202 \_, 20 23 by Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A notary public or other officer completing this certifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. this \_ (and (2) = Date (1) - ExIC P FLES State of California County of \_ los Angeles Subscribed and sworn to (or affirmed) before me on Month Namels) of Signer(s) 29 day of Marcel M. SANTANA COMMISSION # 2291015 ਹੈ। LOS ANGELES COUNTY My Comm. Exp. June 9, 2023 Place Notary Seal and/or Stamp Above proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. Signature Signature of Notary Public OPTIONAL Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document | Title or Type of Document: _ OAAN OR AFF RMAAION | | | | | |--------------------------------------------------|--|--|------------------|--| | Document Date: MARCH 29 2023 | | | Number of Pages: | | | Signer(s) Other Than Named Above: | | | | | 1998 1998 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 100 1000 1000 1000 1000 1000 1000 1000 1000 100000000000000000000000000000000000000000000000000000000000 ©2019 National Notary Association {4}------------------------------------------------ #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** DCPA 7R7KRVH&KDUJHGZLWK\*RYHUQDQFHDQGWKH6WRFNKROGHUV RI \*OHQGDOH6HFXULWLHV,QF #### **Opinion on the Financial Statements** :H KDYH DXGLWHG WKH DFFRPSDQ\LQJ VWDWHPHQW RI ILQDQFLDO FRQGLWLRQ RI \*OHQGDOH 6HFXULWLHV ,QF WKH &RPSDQ\ DVRI'HFHPEHUWKHUHODWHGVWDWHPHQWVRIRSHUDWLRQVFKDQJHVLQVWRFNKROGHUV¶ HTXLW\ DQG FDVK IORZV IRU WKH \HDU WKHQ HQGHG DQG WKH UHODWHG QRWHV FROOHFWLYHO\ UHIHUUHG WR DV WKH ILQDQFLDO VWDWHPHQWV ,Q RXU RSLQLRQ WKH ILQDQFLDO VWDWHPHQWV SUHVHQW IDLUO\ LQ DOO PDWHULDO UHVSHFWV WKH ILQDQFLDO SRVLWLRQRIWKH&RPSDQ\DVRI'HFHPEHUDQGWKHUHVXOWVRILWVRSHUDWLRQVDQGLWVFDVK IORZVIRU WKH \HDUWKHQ HQGHGLQ FRQIRUPLW\ZLWKDFFRXQWLQJSULQFLSOHVJHQHUDOO\DFFHSWHGLQWKH8QLWHG6WDWHV #### **Basis for Opinion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upplemental Information** 7KHLQIRUPDWLRQFRQWDLQHGLQ6FKHGXOHV ,,, DQG,,, ³6XSSOHPHQWDO,QIRUPDWLRQ´ KDVEHHQVXEMHFWHGWRDXGLW SURFHGXUHVSHUIRUPHGLQFRQMXQFWLRQZLWKWKHDXGLWRIWKH &RPSDQ\¶VILQDQFLDOVWDWHPHQWV7KH6XSSOHPHQWDO ,QIRUPDWLRQLVWKHUHVSRQVLELOLW\RIWKH &RPSDQ\¶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{5}------------------------------------------------ # **Glendale Securities, Inc. Statement of Financial Condition December 31, 2022** | Assets | | |---------------------------------------------|--------------| | Cash | \$ 833,220 | | Clearing Broker Deposit (Related Party) | 100,000 | | Inventory Deposit (Related Party) | 156 | | Inventory Deposit | 3,250 | | Marketable Securities, at Fair Market Value | 1,045,272 | | Investments, at Cost | 202,000 | | Notes Receivable (Related Party) | 95,000 | | Accounts Receivable | 673,562 | | Due From Clearing Firm (Related Party) | 880 | | Lease Right of Use | 355,831 | | Rental Deposit | 9,195 | | Total Assets | \$ 3,318,366 | # **Liabilities and Stockholders' Equity** | Liabilities | | | |------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|--------------| | Accounts Payable | | \$
3,580 | | Short Trading Payable | | 22 | | Commission Payable | | 81,434 | | Referral Fees Payable | | 2,421 | | Accrued Expenses | | 83,432 | | Management Fee Accrual | | 84,908 | | Lease Liability | | 391,311 | | | | | | Total Liabilities | | \$ 647,108 | | Stockholders' Equity
Common Stock (\$0 par value, 100,000 shares authorized,
18,012 shares issued and outstanding)
Paid-in Capital
Retained Earnings | \$
-
210,073
2,461,185 | 2,671,258 | | Total Liabilities and Stockholders' Equity | | \$ 3,318,366 | {6}------------------------------------------------ # **Glendale Securities, Inc. Statement of Operations For the Year Ended December 31, 2022** | Revenues | | |------------------------------------|--------------| | Commissions | \$ 2,221,698 | | Trading Income (Loss) | (402,871) | | Mutual Funds | 708 | | Services | 2,331,488 | | Interest Income | 143 | | Tax Refund | 349,090 | | PPP Loan Forgiveness | 174,960 | | Total Revenues | 4,675,216 | | Expenses | | | Payroll & Related Expenses | 991,493 | | Rent | 112,445 | | Access Charges | 439,070 | | Commissions Expenses & Payouts | 979,749 | | Referral Fees | 43,586 | | Professional fees | 214,101 | | Telephone | 19,999 | | Computer Fees | 31,535 | | DTC Charges | 885,200 | | Certificate Deposit Charges | 43,850 | | Other | 78,185 | | Ticket Charges | 508,323 | | Insurance | 117,156 | | Regulatory costs | 172,412 | | Management Fees | 157,124 | | Travel and Entertainment | 54,716 | | Total Expenses | 4,848,944 | | Income (Loss) Before Tax Provision | (173,728) | | Provision for Income Tax | (46,809) | | Net Income/(Loss) | \$ (220,537) | {7}------------------------------------------------ # **Glendale Securities, Inc. Statement of Changes in Stockholders' Equity For the Year Ended December 31, 2022** | | Common
Stock
Shares | Common
Stock | | Paid In
Capital | Retained
Earnings | Total | |-------------------|---------------------------|-----------------|---|--------------------|----------------------|-------------| | December 31, 2021 | 18,012 | \$ | - | \$ 210,073 | \$2,681,722 | \$2,891,795 | | Net Income/(Loss) | | | | | (220,537) | (220,537) | | December 31, 2022 | 18,012 | \$ | - | \$ 210,073 | \$2,461,185 | \$2,671,258 | *The accompanying notes are an integral part of these financial statements.* {8}------------------------------------------------ # **Glendale Securities, Inc. Statement of Cash Flows For the Year Ended December 31, 2022** ### **Cash Flows from Operating Activities:** | Net Income | \$ (220,537) | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------| | Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
PPP Loan Forgiveness
Amortization of right of use asset | (174,960)
89,323 | | Changes in operating assets and liabilities: | | | Accounts Receivable | (284,248) | | Marketable Securities | 361,961 | | Accounts Payable | 12,181 | | Accrued Expenses | (16,251) | | Referral Fees Payable | (1,748) | | Commissions Payable | (64,565) | | Due From Clearing Firm (Related Party) | 194,133 | | Accrued Taxes | (440,268) | | Repayment of Lease Liability | (82,187) | | Short Trading Payable | 22 | | Management Fee Accrual | 4,525 | | Inventory Deposit (Related Party) | (132) | | Inventory Deposit | (3,250) | | Net cash used in operating activities | (626,001) | | Net Cash Used by Investing Activities | - | | Net Cash Provided by Financing Activities | - | | Net decrease in cash | (626,001) | | Cash at the beginning of year | 1,459,221 | | Cash at end of year | \$833,220 | | | | # **Supplemental Disclosure of Cash Flow Information** | Cash Paid For: | | |------------------|-------------| | Income Taxes | \$
800 | | Interest Expense | \$
2,900 | Supplemental disclosures of non-cash transactions: During prior year, the Company received a PPP loan, which was then fully forgiven in the amount of \$174,960. *The accompanying notes are an integral part of these financial statements.* {9}------------------------------------------------ #### **Note 1 – Organization and Nature of Business** Glendale Securities, Inc. (the "Company") was incorporated in the State of California on August 19, 2002. The Company is a registered broker-dealer with the Securities Exchange Commission ("SEC"), the Financial Industry Regulatory Authority ("FINRA"), the Municipal Securities Rulemaking Board ("MSRB"), and the Securities Investor Protection Corporation ("SIPC"). The Company has three locations: one in Sherman Oaks, California, one in New York, New York and one in Coeur d'Alene, Idaho. # **Note 2 – Significant Accounting Policies** **Basis of Presentation** – The Company is an introducing broker-dealer that clears all transactions with and for customers on a fully disclosed basis with a registered securities clearing broker and promptly transmits all customer funds and securities to the clearing broker, which carries all of the accounts of such customers and maintains and preserves such books and records pertaining thereto pursuant to the requirements of the SEC Rule 17a-3 and 17a-4, as are customarily made and kept by a clearing broker or dealer. **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. **Commissions** - The Company earns commissions by referring client transactions in mutual funds, and equities. Commissions revenue is recognized in the period earned when the performance obligation is satisfied. Customers' securities transactions and related commission income and expenses are recorded on a trade-date basis. **Securities Inventory –** Proprietary securities transactions in regular-way trades are recorded on trade date. Profit and loss arising from all securities and commodities transactions entered into for the account and risk of the Company are recorded on a trade date basis. Securities inventory positions are marked to market at the end of each reporting period. **Services –** The Company provides Depository Trust Company (DTC) Eligibility services to issuers of securities. Services and related income and expenses are recorded when the services are performed under the terms of the underlying engagements. **Accounts Receivable –** The Company uses the direct write off method when recording its Accounts Receivable and other balances receivable at net collection value. **Clearing Broker Deposit** - The Company has a clearing agreement with Wilson-Davis & Co., Inc. which requires a minimum deposit of \$100,000. The clearing broker deposit at December 31, 2022 was \$100,000. The Clearing Broker has custody of the Company's cash balances which serve as collateral for any amounts due to the Clearing Broker as well as collateral for securities sold short or securities purchased on margin. {10}------------------------------------------------ #### **Note 2 – Significant Accounting Policies (continued)** **Income Taxes** – The amount of current taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. The Company recognizes and measures its unrecognized tax benefits in accordance with FASB ASC 740*, Income Taxes*. Under that guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances, and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available, or when an event occurs that requires a change. The accounting principles generally accepted in the United States of America provide accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain. Management has considered its tax positions and believes that all of the positions taken by the Company in its Federal and State organization tax returns are more likely than not to be sustained upon examination. The Company is subject to examinations by U.S. Federal and State tax authorities generally for three years after they are filed. ### **Note 3 - Fair Value** 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: - x Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company has the ability to access. - x Level 2 inputs are inputs (other than quoted prices included within level 1) that are observable for the asset or liability, either directly or indirectly. - x Level 3 inputs 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. (The unobservable inputs should be developed based on the best information available in the circumstances and may include the Company's own data.) {11}------------------------------------------------ ### **Note 3 - Fair Value (continued)** The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2022. # **Fair Value Measurements As of December 31, 2022** | | Level 1 | Level 2 | Level 3 | Total | |--------------------------|------------|------------|------------|---------------| | Assets | | | | | | Securities Owned: | | | | | | Investments at Cost | | | \$ 202,000 | \$
202,000 | | Notes Receivable at Cost | | | 95,000 | 95,000 | | Listed Securities | \$ 269,100 | | | 269,100 | | Penny Stocks | | \$ 776,172 | | 776,172 | | | | | | | | Total | \$ 269,100 | \$ 776,172 | \$ 297,000 | \$ 1,342,272 | ### **Fair Value Measurement of Level 3 Investments** | Beginning Balance at December 31, 2021 | \$ 297,000 | |----------------------------------------|------------| | Purchases | | | Cash Disbursement | | | Unrealized Gain/Loss | - | | | | | Ending Balance at December 31, 2022 | \$ 297,000 | | | | Investment represents an equity investment in another entity with minimal operations to date, therefore the investment is currently held at cost. [See Note 5] Penny Stocks are valued using the last trade on December 31, 2022, or the best bid price if there were no trades on December 31, 2022. #### **Note 4** – **Commissions and Fees Payable** As of December 31, 2022, the Company had Commissions payable of \$81,434 and Referral fees payable of \$2,421, representing balances due to broker-dealers and registered representatives. {12}------------------------------------------------ #### **Note 5 – Related Party** Investments, at cost in the amount of \$202,000 as of December 31, 2022 represent an investment in GLEN Holdings Corp. ("GHC"), which is owned by the Company, certain shareholders, and officers of the Company. GHC is a holding company principally for the purchase of a controlling interest in the Company's clearing firm, Wilson-Davis & Co., Inc. ("WDCO"). Effective January 2018, WDCO is the Company's clearing broker for customer and proprietary transactions, as set forth in Footnote 2. In addition to GHC's current and pending interests in WDCO noted above, a Company officer and shareholder is a member of WDCO's Board of Directors. As of December 31, 2022, Due from clearing firm (related party), or WDCO, amounted to \$880 consisting of clearing transactions receivable. The clearing transactions receivable is recorded net of associated amounts payable on the Statement of Financial Condition. It is possible that the terms of certain related party transactions are not the same as those that would result from transactions among wholly unrelated parties. ### **Note 6 – Provision For Income Taxes** The Company files its tax returns on an accrual basis. The current income tax expense included in the statements of income as determined in accordance with FASB ASC 740 is as follows: | | Federal | | State | | Local | | Total | | |----------------|---------|-----------|--------|-------------|-------|--------|-------|-----------| | Current | \$ | 0 | \$ | 448 | \$ | 46,360 | | \$ 46,808 | | Deferred | \$ | (182,665) | | \$ (63,460) | | | | | | Allowance 100% | \$ | 182,665 | 63,460 | | | | | | | Total | \$ | 0 | \$ | 448 | \$ | 46,360 | | \$ 46,808 | The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended section 172(b)(1) to provide for a carryback of any net operating loss (NOL) arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, to each of the five taxable years preceding the taxable year in which the loss arises (carryback period). The Company utilized the prior NOL pursuant to the CARES Act. As required by the Income Taxes Topic of Financial Accounting Standards Board Accounting Standards Codification, deferred taxes are accounted for using an asset and liability approach in recognizing timing differences. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax of such timing differences. A 100% valuation allowance has been applied against the deferred tax asset since management cannot determine if it is more likely than not that the entire asset will be realized. The total NOL for the year ended December 31, 2022 is \$257,176, which makes up most of this asset. #### **Note 7 – Litigation** On September 9, 2022 the Company, without admitting or denying the findings, consented to the sanctions and to the entry of findings that it failed to develop and implement an anti-money laundering compliance program reasonably designed to detect certain suspicious transactions. {13}------------------------------------------------ #### **Note 7 – Litigation (continued)** The Company was censured, fined \$50,000, and required to retain an independent consultant to conduct a comprehensive review of the reasonableness of the firms policies, systems, procedures and training related to compliance with FINRA rule 3310 and the requirements of the Bank Secrecy Act for monitoring, identifying, investigating, documenting, and responding to red flags of suspicious trading activity and potential market manipulation. The fine was paid in full on September 21, 2022. In the normal course of business, the Company has possible exposure or may be a defendant in legal actions, claims and disputes arising out of its activities as a registered broker-dealer. While predicting the resolution of such matters is inherently difficult, the Company believes that there are no other actions or possible actions that would have a material impact on the financial statements. ### **Note 8 – Net Capital Requirements** The Company is subject to the SEC Uniform Net Capital Rule (SEC 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. Rule 15c3-1 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, 2022, the Company had net capital of \$910,690 which was \$760,690 in excess of its required net capital of \$150,000. The Company's ratio of aggregate indebtedness to net capital was .71 to 1. #### **Note 9 – Pension Plan** During 2010, the Company adopted a 401 (k) plan covering eligible employees of the Company. All employees are eligible to contribute immediately upon employment. The Company did not make any contributions to the plan for the year ended December 31, 2022. #### **Note 10 – Operating Lease** The Company entered into a six-year lease for office space under a non-cancellable operating lease, commencing September 1, 2020 and expiring November 30, 2026. The components of lease cost for the year ended December 31, 2022 are as follows: Operating lease cost \$112,445 The Company recognized a Right of Asset of \$355,831 for this lease as of December 31, 2022, and Lease Liability for \$391,311. At December 31, 2022 future minimum lease payments under this agreement were as follows: | 2023 | \$
96,274 | |-----------------------------------|--------------| | 2024 | 99,643 | | 2025 | 103,131 | | 2026 | 97,640 | | Total undiscounted lease payments | 396,688 | | Less imputed interest | (5,377) | | Total lease liability | \$ 391,311 | {14}------------------------------------------------ # **Note 11 - Concentrations** Amounts held in financial institutions occasionally are in excess of the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation limits. The Company deposits its cash in creditworthy financial institutions, and the Company believes it is not exposed to significant credit risk on those amounts. The Company is engaged in various trading and brokerage activities in which counter-parties primarily include broker-dealers, banks, and other financial institutions. In the event counter-parties 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. ### **Note 12 – PPP Loan Payable** On February 8, 2021 the Company received loan proceeds in the amount of \$174,960 under the Paycheck Protection Program ("PPP"). The Company used the proceeds for purposes consistent with the PPP and the loan was forgiven on August 8, 2022. ### **Note 13 – Subsequent Events** The Company has reviewed transactions and events from its year-end December 31, 2022 through the date the financial statements were available to be issued for matters which require recording and/or disclosure in the financial statements. # **Note 14 – Recently Issued Accounting Pronouncements** The Financial Accounting Standards Board (the "FASB") has established the Accounting Standards Codification ("Codification" or "ASC") as the authoritative source of generally accepted accounting principles ("GAAP") recognized by the FASB. The principles embodied in the Codification are to be applied by nongovernmental entities in the preparation of financials statements in accordance with GAAP in the United States. New accounting pronouncements are incorporated into the ASC through the issuance of Accounting Standards Updates ("ASUs"). For the year ending December 31, 2022, various ASU's issued by the FASB were either newly issued or had effective implementation dates that would require their provisions to be reflected in the financial statements for the year then ended. The Company has either evaluated or is currently evaluating the implications, if any, of each of these pronouncements and the possible impact they may have on the Company's financial statements. In most cases, management has determined that the pronouncement has either limited or no application to the Company and, in all cases, implementation would not have a material impact on the financial statements taken as a whole. {15}------------------------------------------------ # **Glendale Securities, Inc. Schedule I Computation of Net Capital Pursuant to SEA Rule 15c3-1 December 31, 2022** #### Computation of Net Capital | Total Stockholders' Equity | \$ 2,671,258 | |--------------------------------------------------------------|---------------| | Non Allowable Assets: | | | Accounts Receivable | (673,562) | | Rental Deposit | (9,195) | | Investments | (202,000) | | Notes Receivable | (95,000) | | Haircuts: | | | Other Securities | (49,533) | | No Market | (13,662) | | Limited Market | (224) | | Undue Concentration | (17,473) | | Blockage | (699,919) | | | | | Net Capital | \$
910,690 | | Computation of Net Capital Requirements: | | | Minimum net aggregate indebtedness – 6-2/3% of net aggregate | | | indebtedness | \$
43,141 | | | | | | | | Minimum dollar net capital required | \$
150,000 | | | | | Net Capital required (greater of above amounts) | \$
150,000 | | Excess Capital | \$
760,690 | | | | | Total liabilities | 647,108 | | | | | | | | Ratio of Aggregate indebtedness to net capital | 0.71:1 | There was no material difference between net capital computation shown here and the net capital computation shown on the Company's most recently filed Form X-17A-5 Part IIA report dated December 31, 2022. {16}------------------------------------------------ # **Glendale Securities, Inc. Schedule II – Computation for Determination of Reserve Requirements Pursuant to SEA Rule 15c3-3 As of December 31, 2022** The Company is exempt from the computation of reserve requirements under paragraph (k)(2)(ii) of Rule 15c3-3 under the U.S. Securities Exchange Act of 1934. In addition, the Company conducts advisory services for DTC eligibility and direct sale of mutual funds whereby the Company does not take possession of customer funds or securities and therefore its direct business is not subject to the custody provisions of Rule 15c3-3. {17}------------------------------------------------ # **Glendale Securities, Inc. Schedule III – Information Relating to Possession or Control Requirements under SEA Rule 15c3-3 As of December 31, 2022** The Company is exempt from the possession and control requirements under paragraph (k)(2)(ii) of Rule 15c3-3 under the U.S. Securities Exchange Act of 1934. In addition, the Company conducts advisory services for DTC eligibility and direct sale of mutual funds whereby the Company does not take possession of customer funds or securities and therefore its direct business is not subject to the custody provisions of Rule 15c3-3. {18}------------------------------------------------ **Glendale Securities, Inc. Report on Exemption Provisions Pursuant to Provisions of 17 C.F.R. § 15c3-3(k) For the Year Ended December 31, 2022** {19}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¶VRWKHUEXVLQHVVDFWLYLWLHVFRQWHPSODWHGE\)RRWQRWHRIWKH6(& 5HOHDVH1RDGRSWLQJDPHQGPHQWVWR&)5D ³1RQ&RYHUHG)LUP´ GLGQRW VXEMHFWLWWRWKHFXVWRPHUSURWHFWLRQUXOHVDQGWKDWWKH&RPSDQ\GLGQRWLGHQWLI\DQ\H[FHSWLRQVWR WKLVDVVHUWLRQWKURXJKRXWWKH\HDUHQGHG'HFHPEHU\*OHQGDOH6HFXULWLHV,QF¶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{20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) 15233 Ventura Blvd. > Suite 712 > Sherman Oaks > California > 91403 Phone: 818-907-1505 > Fax: 818-907-1506 > glendalesecurities.com ## Glendale Securities, Inc. Exemption Report For the Year Ended December 31, 2022 Glendale 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. Section 240.17a -5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. Section 240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: - 1) The Company claimed an exemption from 17 C.F.R. § 240.15c3-3 under the following provisions of 17 C.F.R. § 240.15c3-3 (k) (2)(ii) - 2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3 (k) throughout the most recent fiscal year without exception. - 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 (1) advisory services for DTC Eligibility; and (2) direct sales of mutual funds. 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. Glendale Securities, Inc. I, Paul E. Flesche, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. By: Title: CFO 1 {21}------------------------------------------------ **Glendale Securities, Inc. Report on the SIPC Annual Assessment Pursuant to Rule 17a-5(e)4 For the Year Ended December 31, 2022** {22}------------------------------------------------ # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPLYING AGREED-UPON PROCEDURES To Those Charged with Governance and the Stockholders of Glendale Securities, Inc .: We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection (SIPC) Series 600 Rules, which are enumerated below and were agreed to by Glendale Securities, Inc. and the SIPC, solely to assist you and SIPC in evaluating Glendale Securities, Inc.'s compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2022. Glendale Securities, Inc.'s management is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with standards established by the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed, and our findings are as follows: - 1) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amount reported on the Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2022 with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2022, noting the Company netted the PPP loan forgiveness of \$174,960 against total revenues; - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on Glendale Securities, Inc.'s compliance with the applicable instructions of the Form SIPC-7 for the year ended December 31, 2022. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures; other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of Glendale Securities, Inc. and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. DCPA Century City, California March 29, 2023 {23}------------------------------------------------ # **Glendale Securities, Inc. Schedule of Securities Investor Protection Corporation Assessments and Payments For the Year Ended December 31, 2022** | | Amount | | | |-------------------------------|--------|--|--| | Total assessment | | | | | 6,3&JHQHUDODVVHVVPHQW | | | | | 3D\PHQWPDGHRQ1RYHPEHU | | | | | 6,3&JHQHUDODVVHVVPHQW | | | | | 3D\PHQWPDGHRQ0DUFK | | | | | 6,3&JHQHUDODVVHVVPHQW | | | | | 3D\PHQWPDGHRQ0DUFK | | | | | Total assessment balance | | | | | (overpayment carried forward) | | | | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.