# TRADEMAS INC. X-17A-5 (2023-03-31) — Broker-dealer annual report

- Company: TRADEMAS INC.
- Form: X-17A-5
- Filed: 2023-03-31
- Period: 2022-12-31
- Accession: 0001273761-23-000002
- CIK: 1273761
- File #: 8-66292
- Type: Broker-dealer
- Material weakness: No
- Auditor: Raines and Fischer LLP
- Auditor location: New York, NY
- Contact: Alan Krim
- Phone: 5165261586
- Email: alan.krim@trademas.com
- Website: trademas.com
- Signed by: Frank Masiello (CEO)

Original filing: https://www.sec.gov/Archives/edgar/data/1273761/000127376123000002/trademaspublic22.pdf

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| UNITED STATES |  |                        |  |  |                                       |  |
|---------------|--|------------------------|--|--|---------------------------------------|--|
|               |  |                        |  |  | SEClJIUTil:S AND n<.CHANGE COMMISSION |  |
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8-66292

# ANNUAl REPORTS FORM l7A <sup>S</sup> PART HI

FACING PAGE

lnfonmttiun Rcqu1wd Pursuant to Rules 17a·5, 11ii·l2, Olnd ltla·7 under the S\!turitlcs Exdllltlge Act of 1934

FH,ING FOR lHE PEHIOD BEGINNING 01/01/22

MM/Otl/YY

AND ENOtNG 12/31/22 MM/DD/YY

A, REGISTRANT IDENTIFICATION

NAME OF FIRM ; TRADEMAS INC.

TYPE Of REGISTRANT (check all applkable boxes):

0 Check here if respondent is also ~n OTC derivatives d~aler

GJ Broker-dealer 0 Security-based swap dealer 0 Major security-based swap partidpan!

ADDRESS OF PR INCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no,)

| NYSE TRADING FLOOR, 11 WALL STREET                                                                                                                                                                                                                   |                                |                                                           |                 |                                              |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------------------------------------------|-----------------|----------------------------------------------|--|
|                                                                                                                                                                                                                                                      |                                | {No. ar1d Street)                                         |                 |                                              |  |
| NEW YORK                                                                                                                                                                                                                                             |                                | NY                                                        |                 | 10005                                        |  |
| (Ctty)                                                                                                                                                                                                                                               |                                | (State)                                                   |                 | (Zip Code)                                   |  |
| PERSON TO CONTACT WITH REGARD TO THIS FILING                                                                                                                                                                                                         |                                |                                                           |                 |                                              |  |
| ALAN KRJ<br>M                                                                                                                                                                                                                                        | 516-526~1586                   |                                                           |                 | alan.krim@trademas.com                       |  |
| {Name}                                                                                                                                                                                                                                               | (Area Code -'felephone Number) |                                                           | !Email Address) |                                              |  |
|                                                                                                                                                                                                                                                      |                                | B. ACCOUNTANT IDENTIFICATION                              |                 |                                              |  |
| RAINES AND FISCHER LLP                                                                                                                                                                                                                               |                                | (Name- if individual, stare last, first, and mtdd!e n~me} |                 |                                              |  |
| 555 Fifth Ave -<br>Suite 901                                                                                                                                                                                                                         |                                | NEW YORK                                                  | NY              | 10017                                        |  |
| {Address)                                                                                                                                                                                                                                            |                                | (City)                                                    | (State)         | (Zip Code)                                   |  |
| Nov 5, 2009                                                                                                                                                                                                                                          |                                |                                                           | 3760            |                                              |  |
| (!hte_of Registration with PCAOB)(if apphcable)                                                                                                                                                                                                      |                                |                                                           |                 | {PCAOB Re~•stratio n Number, if apptic.ahte) |  |
|                                                                                                                                                                                                                                                      |                                | FOR OFFICI.Al USE ONLY                                    |                 | I                                            |  |
|                                                                                                                                                                                                                                                      |                                |                                                           |                 |                                              |  |
| • C!a< m> for exemption from the requirement that the annual reports be covered by the (eports of an indeperidt!llt public<br>acwuntant must be Slipported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 |                                |                                                           |                 |                                              |  |

acwuntant must be Slipported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240,l7a·5(e)(ll(u), if applkable.

Persons who ;~re 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

I, <sup>11</sup> K. MA IU~~-- \_ swenr (or afflnn) that, to the best of my kHowlcdge <md bef1ef, the fhv r.cial r~port Pertaining to th o firm of THAJ)!:MMJ 35 of

12/31 -·-··- ·----· . is true and correct. I further swear (or ttfflrrn) that neither the company nor any Mrtnor, officer, d1re tor, or equivalent on <sup>11</sup> .t);l <sup>e</sup>case may be, has any propnetary interes t in any account cl:mlfiecJ \$Ole.ly 'F 'lnt Of 'l tuS"O 10 ''"'' ... . 1111 ' ' t, \_,, ~ ( ( .\_ .1 **n ·.,r.** ,\'\~.\_.. ~\C Gty;:::';:~~.~ ,,~ .. ...,

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#### This filfng"• contains (check ali' applicable boxes):

- ~ (a) Statement of financial condition.
- :iiil (b) Notes to tonwlldated St<lternent of financial condition.
- D (c} **Staternent of incon1e (loss)** *or.* **if there ls other con1prehensive incorne in the period(.s) prese-nted,** *a* **statement of**  com prehensive income {as cJehned In§ 210.1·02 of flegulation S-X).
- 0 (d) Statement of cash flows.
- 0 (e) Statement of changes Jn stockholders' or partners' or sole proprietor's equity.

' **'''ttui;;'o :Hu""-\\\\-**

- 0 !f) Statement of t:hanges In liabilities subordinated to claims of creditors.
- 0 (g) Notes to consolidated financial statements.
- 0 (h) Computation of net capital under 17 CFR .240.1Sc3-1 or 17 CFR 240.18a·1, as applicable.
- 0 (i) Computation of tangible net worth under 17 CFR 240.18a-2.
- 0 (])Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
- 0 (k) Computation for deterrniMtion or security-based swap reserve req uirements pursuant to Exhibit ll to 17 CFR 240.1Sc3-3 or Exhibit *A* to 17 CFR 240.18a-4, as apr)licable.
- 0 (!) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3.
- 0 (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3
- 0 (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 2110.15c3-3(p)(2) or 17 CFR 240.18a·4, as applicable.
- 0 (o} Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 en~ 240.1Sc3-1, 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.
- 0 (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- ~ (q) Oath or aff1rmation in acc:ord~nce with 17 CFR 240.17a-.5, 17 CFR 240.17<1·12, or 17 CFR 240.18a-7, as appl icable.
- 0 (r) Compliance report in accordance with 17 CFR 240.l7a·S or 17 CFR 240.18a-7, as applicable.
- 0 {s] Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a·7, as applicable.
- 0 (t) Independent public accountant's report based on an examination of the statement of financial cond1Uon.
- 0 (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5. 17 CFH 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- 0 (v) Independent public acco untant'~ report based on an examination of certaln statements in the complii!nce report under 17 CFR 240.17a·S or 17 CFR 240.18a-7, as applicable.
- 0 (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-S or 17 Ct'H 240.18a· 7, as applicable.
- 0 (x) Supplemental reports on applying agreed-upon procedures, in accordance With 17 CFH 240.15c3-le or 17 CFR 240,17a-12, <JS appHcable.
- w !v) Report describing any material inadequacies found to exist orfound to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFH240.17a-12(k) .
- ...J {7) other ---------·---------- --------------~-----

·~ ro *request confidential treatment* of *certain portions of this filing, see* 17 *CFR* 240.17a·S(e)(3) or *17 CFR* 240.18o-7(dJ(2), *as*  opplicoiJie.

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# **TRADEMAS** INC.

#### STATEMENT OF FINANCIAL CONDITION

DECEMBER 31 , 2022

This report is filed as Public in formation pursuant to Rule 17a-5(d) under the Securities Exchange Act of 1934.

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#### **DECEMBER 31,** 2022

#### TABLE OF CONTENTS

| Independent Auditors' Report     |      |
|----------------------------------|------|
| Statement of Financial Condition | 2    |
| Notes to Financial Statements    | 3-11 |

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;,55 FIFTH AVEI,IUE TEL . 212 953 9200 **ll**  9TH FLOOR FAX. 212 953 9366 i'IEW VORl< , f\IY 10017

### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Stockholder ofTradeMas Inc.:

#### **Opinion on the Financial Statement**

We have audited the accompanying statement offmancial condition ofTradeMas Inc. (the "Company"), as ofDecember 31 , 2022, and the related notes (collectively referred to as the "fmancial statement"). In our opinion, the fmancial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

#### **Basis for Opinion**

This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the 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 the 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 statement is 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 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. We have se;ved as the Company's auditor since~~ <sup>f</sup>*u\_* LL{J

New York, New York March 29, 2023

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# **TradeMas Inc STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2022**

| ASSETS<br>Cash and cash equivalents<br>Commissions and rebates receivable<br>Due from clearing broker<br>Security deposit<br>Prepaid expenses<br>Total assets | \$<br>864,047<br>2,277,283<br>146,824<br>13,500<br>15,926<br>\$ 3,317,580 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                                                                                                               |                                                                           |
| LIABILITIES AND STOCKHOLDERS' EQUITY<br>Liabilities:                                                                                                          |                                                                           |
| Accounts payable and accrued expenses                                                                                                                         | \$ 1,490,201                                                              |
| Total liabilities                                                                                                                                             | 1,490,201                                                                 |
| Commitments & Contingencies                                                                                                                                   |                                                                           |
| Stockholder's Equity                                                                                                                                          |                                                                           |
| Common stock, no par value, 200 shares                                                                                                                        |                                                                           |
| authorized, 10 shares issued                                                                                                                                  | 25,000                                                                    |
| Paid in capital                                                                                                                                               | 1,704,485                                                                 |
| Retained earnings                                                                                                                                             | 97,894                                                                    |
| Total stockholder's equity                                                                                                                                    | 1,827,379                                                                 |
| Total liabilities and stockholder's equity                                                                                                                    | \$ 3,317,580                                                              |

The accompanying notes are an integral part of these financial statements

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#### Note **!-Organization and Nature of Business**

TradeMas Inc. (The "Company") operates under the provisions of Paragraph (k)(2)(ii) of Rule !5c3-3 of the Securities and Exchange Commission and, accordingly, is exempt from the remaining provisions ofthat rule. Essentially, the requirements of Paragraph (k)(2)(ii) provide that the Company clears all transactions on behalf of customers on a fully disclosed basis with a clearing broker/dealer, and promptly transmits all customer funds and securities to the clearing broker/dealer. The clearing broker/dealer carries all of the accounts of the customers and maintains and preserves all related books and records as are customarily kept by a clearing broker/dealer

The Company is a New York corporation, formed on March 21 , 2018, for the purpose of conducting business on the floor of the New York Stock Exchange ("NYSE"). The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Securities Investors Protection Corporation ("SIPC").

The Company earns commissions as an introducing broker of securities transactions.

#### **Note 2- Summary of Significant Accounting Policies**

#### New Accounting pronouncements

ASC 606, Revenue from Contracts with Customers. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The Company adopted this new standard using the modified retrospective approach as of January I, 2018. This adoption did not have a material effect on the financial statements.

ASU 2016-02, Leases (Topic 842). In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new ASU, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. The liability will be equal to the present value of lease payments. The asset, referred to as a "right-of-use asset" will be based on the liability, subject to adjustment, such as for initial direct costs. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. This standard is effective for fiscal years beginning after December 15, 2018. This adoption did not have a material effect on the financial statements.

#### Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP").

#### Use of Esti mates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabi lities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

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#### Note 2- **Summary of Significant Accounting Policies (Continued)**

#### Accounts Receivabl e Reserve

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of past write-offs and collections and current conditions. No allowance for doubtful accounts was required at December 3 1, 2022.

#### Revenue Recognition

Securities transactions (and the recognition of related income and expenses) are recorded on a trade date basis.

Effecti ve January **l,** 2018, the Company adopted the new revenue recogmt10n standard established by the Financial Accounting Standards Board ("FASB"): ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). The new revenue recognition gu idance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to whi ch the entity expects to be entitled in exchange for those goods or services. The gu idance requ ires an entity to follow a fiv e 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 .. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recogni zed would not occur when the unce1iainty associated with the variable consideration is resolved. The Company applied the modified retrospective method of adoption which resulted in no adjustment as of January I, 2018. The new revenue recognition guidance does not apply to revenue associated with fin ancial instruments, interest income and expense, leasing and insurance contracts. The company has assessed the effect that Topic 606 (as amended) has had on its results of operations, financial position and cash flows and has determined that all revenues have been fully earned as of December 31, 2022. The Company's execution transactions generally settle T +2, upon which no performance obligations remain to fulfill the Company's obligations to its customers.

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#### Note 2- Summary of Significant Accounting Policies (Continued)

#### Income Taxes

The Company has elected to be treated as an "S" Corporation under the provisions of the Internal Revenue Code and New York State tax regulations. Under the provisions, the Company does not pay federal or state corporate income taxes on its taxable income. Instead the stockholders are liable for individual income taxes on their respective shares of the Company's taxable income. The Company continues to pay New York City general corporation taxes.

In accordance with ASC 740-10-50, "Income Taxes," the Company is required to disclose unrecognized tax benefits or liabilities resulting from unce11ain tax positions. As of December 31 , 2022, the Company did not have any unrecognized tax benefits or liabilities. The Company operates in the United States and the State and City of New York, and the previous three years of tax returns (i.e., 2019, 2020, and 2021) remain subject to examination by tax authorities. There are presently no ongoing income tax examinations.

#### Fair Value Measurements

In accordance with ASC 820, Fair Value Measurements and Disclosures, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). This guidance provides three levels of the fair value hierarchy as follows:

Level I - Inputs that reflect unadjusted quoted prices in active markets for identica l assets or liabilities that the Company has the ability to access at the measurement date;

Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, at the measurement date, including inputs in markets that are not considered to be active;

Level 3 - P.rices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Options Contracts: The Company va lues options that are listed on a national securities exchange at their last rep011ed price. The Company values options traded in the over the counter ("OTC") markets usi ng the midpoint between the last reported bid and ask prices. Options are generally categorized in Level I or 2 of the fair value hierarchy. At December 31 , 2022, the Company had a liability for options short in the amount of \$0 which are classified as Level 1.

A tinancial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated; reliable and verifiable, not proprietary, and provided by independent sources that are acti vely involved in the relevant market.

#### Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist primarily of trade accounts \_ \_ \_\_\_\_\_\_ \_\_\_c ec:..:::. :::. ab:..:::. e\_. The Company maintains cash balances with commercial banks and other major institutions. At times, such amounts may exceed Federal Deposit Insurance Corporation limits

> The responsibility for processing customer activity rests with the Company's clearing firm, RBC Capital Markets, LLC. The Company's clearing and execution agreement provides that the clearing firm 's credit losses relating to unsecured margin accounts receivable ofthe Company's customers are charged back to the Company in the event of customer non- performance.

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#### Note 2- Summary of Significant Accounting Policies (Continued)

Jn accordance with industry practice, the clearing firm records customer transactions on a settlement date basis, which is generally three business days after the trade date. The clearing firm is therefore exposed to risk of loss on these transactions in the event ofthe customer's inability to meet the terms of its contracts, in which case the clearing firm may have to purchase or sell the underlying financial instruments at prevailing market prices in order to satisfy its customer-related obligations. Any loss incurred by the clearing firm is charged back to the Company.

The Company, in conjunction with the clearing firm, controls off-balance sheet risk by monitoring the market value and marking securities to market on a daily basis and by requiring adjustments of collateral levels. The clearing finn estab lished margin requirements and overall credit limits for such activities and monitors compliance with the applicable limits and industry regulations on a daily basis.

#### Note 3 -40l(k) Savings Plan

The Company is a sponsor of a 401 (k) savings plan for its eligible employees. Contributions to the plan, if any, are determined by the employer and come out of its current profits. The employer's contribution for any year shall not exceed the maximum allowable as a deduction to the employer under the provisions of Internal Revenue Code Section 404, as amended, or replaced from time to time. The Company's contributions to the plan for the years 2021 and 2022 were \$ 121 ,386 and \$126,529, respectively.

# Note 4- Commitments and Co ntingencies

During the fiscal year ended December 31, 2022, a matter was settled before the arbitration facilities of the Financial Industry Regulatory Authority ("FINRA" ) entitled Kirk Katzburg v. Thea D 'Adamo aka Thea DePaola, TradeMas, Inc. and Frank Masiello, FlNRA Case No. 20-01821.

Kirk Katzburg ("Katzburg" ) had been an associated person of TradeMas, Inc., executing orders in the Company's Options Division. On the evening of May 7, 2020, the Head of TradeMas's Options Division discovered that Katzburg had been disclosing confidential customer information to unauthorized third parties. The Company's CEO and the Head of its Options Division confronted Katzburg the following morning, May 8, 2020. Katzburg agreed to resign.

Immediately following his resignation, as required to prevent Katzburg from causing furthe r harm, a representative of the Company informed the customers of Katzburg's misconduct. The Company also notified regulatory authorities. In his arbitration claim, Katz burg alleged that the Head of the Options Division had no right to review his business-related communications, and that upon finding evidence of his wrongdoing had no right to warn customers about his actions. As a result of these warnings, Katz burg claimed, he sustained a loss of customer business and revenues. On that basis, he sought recovery for alleged " tortious interference with customer rel ations" and other alleged causes of action. His claims were against Trade Mas, Inc. ; Thea DePaola (Head of TradeMas's Options Division); and Frank Masiello (TradeMas's CEO) (coll ectively, the "Respondents"). He sought damages of \$1 ,655,000, plus punitive damages of \$4,965,000.

Brunelle & 1-ladijikow represented TradeMas, Inc. and Frank Marsiello in the arbitration. The hearings in the arbitration concluded in July 2022 and the arbitrators rendered an arbitration award on October 25, 2022. All claims against the Respondents were dismissed. The Panel assed 50% of FINRA's forum fees (\$ 17,475) to Claimant and 50% (\$17,4 75) jointly and severally to the Respondents.

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# **Note 5- Cash**

Cash and cash equivalents are defined as short-term, highly liquid money-market mutual fund s with original maturities of less than 90 days.

At December 31 , 2022, cash of \$864,047 was held in interest-bearing accounts at Signature Bank. The Securities Investor Protection Corporation (SIPC) insures the brokerage accounts with RBC Capital Markets LLC. to the extent of \$500,000 (including up to \$250,000 for cash). The Company 's cash accounts at times exceeds amounts covered by insurance provided by the FDIC and SIPC

# **Note-s-= Due From BrokP'r-----------**

At December 3 I, 2022, all of the investments in securities owned and securities sold were maintained with a clearing broker and the Company had the majority of its individual counterparty concentration with the clearing broker. Due from broker includes cash balances held at the clearing broker, proceeds received from securities sold, but not yet purchased, and the net amount receivable or payable for securities transactions that had not settled at December 3 I, 2022. At December 3 I, 2022, the Company held cash of \$146,823 at RBC Capital Markets, LLC.

## **Note 7- Employee Retention Credit and Covid-19**

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020 amended and extended the employee retention credit (and the availabi lity of certain advance payment of the credits) under section 230 I of the The Coronavirus Aid, Relief and Economic Security Act ("Cares Act") until June 30, 2021. The American Rescue Plan Act, enacted March II , 2021, added section 3134 to the Internal Revenue Code to amend and extend the employee retention credit (and the availabi lity of certain advance payments of the tax credits) through the end of2022. The Company received the credit and recorded it as revenue for the year ended December 3 I, 2022.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-1 9) as a pandemic which continues to spread throughout the United States and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The impact of the continu ing Coronavirus (Covid-1 9) cou ld have a conti nued material adverse impact on economic and market conditions and continue to trigger periods of global economic slowdown. The outbreak continues to present ongoing uncertainty and risk with respect to the Company, its performance, and its financial results

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# **Note 8 - Financial Instruments and Risk**

In the normal course of business, the Company trades various financial instruments and enters into various financial transactions where the risk of potential loss due to market risk, currency risk, and other risks can equal or exceed the related amounts recorded. The success of any investment activity is influenced by general economic conditions that may affect the level and volatility of equity prices, interest rates and the extent and timing of investor participation in the markets for both equity and interest rate sensitive instruments. Unexpected volatility or illiquidity in the markets in which the Company directly or indirectly holds positions could impact its ability to conduct its business and could cause losses to be incurred. The Company does not anticipate nonperformance by customers or financial institutions; however, the Company 's policy is to monitor its market exposure and counterparty risk.

Short selling, or the sale of securities not owned by the Company, and options written, both expose the Company to the risk of loss in an amount greater than the initial investment, and such losses can increase rapidly, and in the case of equities, without effective limit. There is the risk that the securities borrowed by the Company in connection with a short sale wou ld need to be returned to the securities lender on short notice. If such request for return of securities occurs at a time when other short sellers of the subject security are receiving similar requests, a "Short Squeeze" can occur, wherein the Company might be compelled, at the most disadvantageous time, to repl ace borrowed securities previously sold short with purchases on the open market, possi bly with prices significantly in excess of the proceeds received earlier.

The clearing and depository operations for the Company's investment transactions are provided by one broker. At December 3 I, 2022, all of the investments owned and sold short reflected in the statement of financial condition were held by this broker. Investments owned and investments sold short are subj ect to margin requirements.

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#### Note 9- Net Capital Requirement

The Company is subject to the Securities and Exchange Commission Uniform Net Capital 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, shall not exceed 15 to 1. Rule 15c3-l also provides that equity capital may not be withdrawn or cash distributions paid if the resulting net capital ratio would exceed 10 to 1. At December 31 , 2022, the Company had net capital of \$604,262, which was \$504,915 in excess of its required minimum net capital of \$99,347. The Company's ratio of aggregate indebtedness to net capital was 246.62% as of December 31, 2022 .

#### Note 10- Financial Statements with Off-Balance Sheet Credit Risk

As a securities broker, the Company is engaged in buying and selling securities for a diverse group of institutional and individual investors. The Company introduces these transactions for clearance to another broker-dealer on a fully disclosed basis.

The Company's exposure to credit risk associated with non-performance of customers in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair customers' ability to their obligations to the Company and the Company's ability to liquidate the collateral at an amount equal to the original contracted amount. The agreement between the Company and its clearing broker provides that the Company is obligated to assume any exposure related to such non-performance by its customers.

The Company seeks to control the aforementioned risks by requiring customers to maintain margin collateral in compliance with various regulatory requirements and the clearing broker's internal guidelines. The Company monitors its customer activity by reviewing information it receives from its clearing broker on a daily basis, and requiring customers to deposit additional collateral, or reduce positions, when necessary.

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#### Note 11 - Fixed Assets

#### Automobile

The Company has an automobile which is depreciated under a straight-line method over 5 years.

#### Note 12- Notes Payable

#### Auto loan

On November I 0, 2019, the Company received a loan under the stockholder's name from Wells Fargo in the amount of \$85,000 for the purchase of a Company's vehicle. The loan bears interest at a rate of 4% and is payable in monthly installments of principal and interest over 72 months beginning I month from the date of the note. As of December 31 , 2022 and the year then ended, the loan had a principal balance and interest expense of \$52,407 and \$2,413, respectively. Principal payments on this loan vary from month to month, however, they will total approximately \$13,000 per year over the next three years.

#### Note 13- Commitments

Office Space

The Company entered into a new twelve month term occupancy agreement commencing January 15, 2023 through January 31 , 2024. Minimum aggregate annual future rentals for office space at December 31 , 2022 are approximately as follows:

> For the Year ending December 31 : 2023

Amount \$103.935

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#### **Note 14- Recently Issued Accounting Pronouncements:**

The Financial Accounting Standards Board (the "FASB") has established the Accounting Standards Codification (''Codification~r "ASC"-) as· the -authoritative.source-of generally. accep.te.d.acco.untingprinc iples . \_\_ ("GAAP") recognized by the FASB. The principles embodied in the Codification are to be applied by nongovernmental entities in the preparation of financial 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 A SUs issued by the FASB were either newly issued or had effective impl ementation 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 eval uating 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 wou ld not have a material impact on the financial statements taken as a whole.

#### **Note IS -Commissions and Rebates Receivable**

The Company has outstanding receivables consisting of commissions and rebates earned for performing execution services for customer broker-dealers. The Company considers the amounts due from its customers to be fu lly receivable, and accord ingly, no allowance for doubtful accounts has been established. As of December 3 1, 2022, the Company held \$2,277,283 in commissions and rebate receivables.

#### **Note 16- Subsequent Events**

The Company has evaluated subsequent events through March 29, 2023, the date these financial statements were avai lable to be issued, and has determined there are no subsequent events to be reported.


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