# DRAKE STAR SECURITIES LLC X-17A-5 (2022-04-11) — Broker-dealer annual report - Company: DRAKE STAR SECURITIES LLC - Form: X-17A-5 - Filed: 2022-04-11 - Period: 2021-12-31 - Accession: 0001286439-22-000002 - CIK: 1286439 - File #: 8-66448 - Type: Broker-dealer - Material weakness: No - Auditor: Adeptus Partners, LLC - Auditor location: Ocean, NJ - Contact: Lawrence Quartaro - Phone: 212-508-7106 - Email: gregory.bedrosian@drakestar.com - Website: drakestar.com - Signed by: Gregory Bedrosian (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1286439/000128643922000002/nonconfidential-b.pdf --- {0}------------------------------------------------ ## **Drake Star Securities LLC STATEMENT OF FINANCIAL CONDITION** DECEMBER 31, 2021 {1}------------------------------------------------ ### 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: 12 | | | SEC FILE NUMER 8- 66448 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 01701721 ------------------------------------------------------------------------------------------------------------------------------------- MM/DD/Y Y # A. REGISTRANT IDENTIFICATION # NAME OF FIRM: Drake Star Securities LLC TYPE OF REGISTRANT (check all applicable boxes): മ Broker-dealer □ Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 950 Third Avenue, 20th Floor | | (No. and Street) | | | | |----------------------------------------------|---------------------------------------------------------------------------|---------------------------------|------------|--| | New York | New York | | 10022 | | | (City) | (State) | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Gregory Bedrosian | (212) 508-7111 | gregory.bedrosian@drakestar.com | | | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | Adeptus Partners, LLC | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | (Name - if individual, state last, first, and middle name) | | | | | 733 State Route 35 | Ocean | NJ | 07712 | | | (Address) | (City) | (State) | (Zip Code) | | | 1/10/2010 | 3686 | | | | (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 be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(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. {2}------------------------------------------------ #### AFFIRMATION I. Gregory Bedrosian , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to Drake Star Securities LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. Signature Marging Partier + CEO Title Notary Public MIKE MCGOVERN NOTARY PUBLIC-STATE OF NEW YORK No. 01MC6140778 Qualified in Westchester County My Commission Expires February 13, 2021 {3}------------------------------------------------ # This filing\*\* contains (check all applicable boxes): - 区 (a) Statement of financial condition. - 🇿 (b) Notes to unconsolidated or consolidated statement of financial condition, as applicable. - O (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, as applicable. - □ (f) Statement of changes in liabilities subordinated to claims of creditors. - □ (g) Notes to unconsolidated or consolidated financial statements,, as applicable. - □ (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. - Q (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. - 四 (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. - 四 (t) Independent public accountant's report based on an examination 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. - = (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - = (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - (z) Other: \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(0)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {4}------------------------------------------------ # **Drake Star Securities LLC** # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021 | ASSETS | | |---------------------------------------|-----------------| | Cash | \$ 12,088,181 | | Accounts receivable | 1,895,513 | | Loan to parent (Note 5) | 240,870 | | Total assets | \$ 14,224,564 | | | | | LIABILITIES AND MEMBER'S CAPITAL | | | Liabilities: | | | Accounts payable and accrued expenses | \$
7,995,328 | | Deferred revenue | 193,475 | | Total liabilities | 8,188,803 | | | | | Member's Equity (Note 4) | 6,035,761 | | Total liabilities and Member's Equity | \$ 14,224,564 | *The accompanying notes are an integral part of these financial statements.* {5}------------------------------------------------ # **Drake Star Securities LLC** NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2021 ## **Note 1- Nature of Business** Drake Star Securities LLC (The "Company"), a Limited Liability Company, a wholly owned subsidiary of Drake Star Holding LLC (the "Parent") is a broker/dealer registered with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority ("FINRA"). The Company provides strategic advisory services to technology, communications and media companies. Its primary services are private placement offerings and mergers and acquisitions. 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 liability of the member is limited to its capital account. # **Note 2- Summary of Significant Accounting Policies** ### *a)* **Revenue Recognition** The Company provides advisory services on mergers and acquisitions. Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgment is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities (deferred revenue in the accompanying statement of financial condition). Payment is due when services are performed. ## E) **Accounts Receivable** Amounts due from customers arising from professional services are recorded at the outstanding amount, less allowance for losses. We regularly monitor the recoverability of our receivables. {6}------------------------------------------------ # **Drake Star Securities LLC** NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2021 # **Note 2a- Summary of Significant Accounting Policies (continued)** ### *F) Cash and Cash Equivalents* The Company considers money market funds to be cash equivalents. The Company maintains cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. For money market funds, no insurance is provided. Uninsured cash as of December 31st, 2021 was \$11,838,181. ## *G) Income Taxes* Income taxes are not payable by, or provided for, the Company, since the Company is a Single Member Limited Liability Company. The accompanying financial statements have been adjusted to provide for unincorporated business tax based upon Company income, if applicable. #### *H) Use of Estimates* Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. #### *I) Subsequent Events* The Company has evaluated subsequent events through April th, 2022, which is the date the financial statements were issued. #### **Note 3- Related Party** The Company shares employee, office space, administrative and occupancy expenses with the Parent. The Company recognizes its shares of expenses by a formula determined by the Parent. For the year ended December 31, 2021, the Parent allocated approximately \$30,237,959 of such expenses to the Company. Parent allocated approximately \$19,065,427 of employee compensation, \$592,311 for rent, \$334,332 for travel and entertainment, \$9,375,693 for professional fees, \$638,954 for insurance, office supplies for \$114,797 and marketing for \$116,445. These amounts are included in the statement of income. Included in our Accounts Payable and Accrued Expenses balance is a \$202,500 invoice owed to a related entity located in Germany. {7}------------------------------------------------ # **Drake Star Securities LLC** NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2021 #### **Note 4- Net Capital Requirement** The Company is subject to the Securities and Exchange Commission's Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 1500%. At December 31, 2021, the Company's net capital of \$3,899,377 was \$3,353,456 in excess of its required net capital of \$545,920. The Company's net capital ratio was 210%. #### **Note 5- Loans to/from Parent** As of December 31st, 2021, the Company has a non-interesting bearing loan of \$206,322 to its Parent which was used to secure a lease on office space at 950 Third Avenue. The Parent used the funds to provide the landlord a security deposit on such lease. The loan is to be repaid in full upon the expiration of the lease in 2026. In addition, the Parent owes the Company \$34,548 as of December 31st, 2021. These amounts are shown net on the statement of financial condition. #### **Note 6- 401(k) Plan** The Company offers a defined contribution 401(k)-benefit plan which allows employee contributions up to 15% of their pre-tax compensation. The Company matches 100% of the employees' contributions up to 3% of their compensation and then 50% of an employee's additional contributions, up to 5% of compensation. The employer matching contribution expense was \$117,064 for the year ending December 31st, 2021. This expense was included as a component of employee compensation, benefits, and related payroll taxes in our statement of income for the year ending December 31st, 2021. {8}------------------------------------------------ ![](_page_8_Picture_0.jpeg) Adeptus Partners, LLC Accountants | Advisors 200 Mamaroneck Avenue, Suite 502 White Plains, NY 10601 Phone: 212.758.8050 Fax: 212.826.5037 www.AdeptusCPAs.com ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Sole Member of Drake Star Securities, LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Drake Star Securities LLC as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of Drake Star Securities LLC as of December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. ### **Basis for Opinion** This financial statement is the responsibility of Drake Star Securities' management. Our responsibility is to express an opinion on Drake Star Securities' 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 Drake Star Securities , LLC 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 served as Company's auditor since 2021. Ocean, NJ April 7, 2022 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.