# FRONTEGRA STRATEGIES, LLC X-17A-5 (2020-02-25) — Broker-dealer annual report
- Company: FRONTEGRA STRATEGIES, LLC
- Form: X-17A-5
- Filed: 2020-02-25
- Period: 2019-12-31
- Accession: 0001340442-20-000001
- CIK: 1340442
- File #: 8-67094
- Material weakness: No
- Auditor: Plante & Moran, PLLC
- Auditor location: Chicago, IL
- Contact: William D. Forsyth, III
- Phone: 847-509-9860
- Signed by: William D. Forsyth, III (President)
Original filing: https://www.sec.gov/Archives/edgar/data/1340442/000134044220000001/frontegra20191.pdf
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UNITEDSTATES SECURl'fl.:SASOF.XCHANGi,:co,nnss1os Waslliogton, D.C. %0S~9
OMS APPROVAL 0MB Number: 32l5-0123 Expires: Avgu~t31, 2020 Estimated ave119e burdl!fl ~ F)erresponse .... .. 12.00
# **ANNUAL AUDITED REPORT FORM X-17A-5 PARTIU**
sec FILE NUMBER &-67094
FACING PAGl:
**lo** formation Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-S Thereunder
| | ___
Rl'PORT FOR THE PERICO RF.GINNINGQ1/01/19
AND l'NDING_1_2J_
3_ 1_/_1_9 | | ______
_ | |
|-------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|-----------------|------------------------------------------------|--|
| | MMIDOfl"I' | | | |
| | A. REGISTRANT IDENTIFfCA TION | | | |
| | NAME oF BROKF.R-DEALER: Frontegra Strategies, LLC | | OFFICIAL USE ONLY | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Bo~ No.)
400 Skokie Blvd., Suite 500 | | | FIRM 1.0. NO. | |
| | (No and Stree-1) | | | |
| Northbrook | IL | -------- | 60062 | |
| | (State) | | (Zip C-0de) | |
| NAME AND TELEPHONI:: NUMBER OF Pl::RSON TO CONTACT IN REGAR() TO THIS REPOR'f
_______
WlliM\ 0 . Fo~)'lh. HI
_ | | | 847-509-9860
(.~rta Code 'ftlephonc Numbet) | |
| | B. ACCOUNTANT IDENTIFICATION | | | |
| INDEPENDENT PURLIC ACCOUNTANT whose opinion is contained in this Report• | | | | |
| Plante & Moran, PLLC | | | | |
| | | | | |
| 10 South Riverside Plaza, 9th Floor Chicago | | ---------
IL | 60606 | |
| | | | (Zip Code) | |
| CHECK ONE: | | | | |
| !cenified Public Accountam | | | | |
| Public Accountant | | | | |
| E] | Accountam no1 resident in United States or an)' of its possessions. | | | |
| | FOR OFFICIAL USE ONLY | | | |
| | | | | |
| | | | | |
| | | | | |
*•l'luims for exemption from 1he reqmrement 1hu1 the anm111I rep<11'/ be* OOfered bf *the upinio11 cf""* iudep<.•111.lem *pnblic U(,'COtmumt must* t,~ suppaned by *u .~·ttdemcm Qjfacta und circ1mnmmces relu1,I* cm *as the basisfu1· the f:.temp1i,m. See* .W,•fr'w1 2./0, *llu-5(e){2)*
> Potential pereon• who are to ,~pond to tne eollecUon of information contained in thte form are not requir~d to respond unle&& 1he form ditplayaa cu!fentty valid **0MB** control number.
SEC 1410 (\ 1-05)
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#### **OATH OR Al•t'IRMA'J'ION**
| I. William D. Fo,syth.
111 | | __________
, swear (or artim,) that. 10 the bc___ | | _________________ |
| Frontegra Stralegies, LLC
_ | | , as |
| -------~
of December31 | · 20_19_ _ | ~
arc true and correct I further swear (or affirm) that |
| | | neither Ute ~ompany nor any partner. proprietor, principal officer or director has an~ proprielnrl' interest in anr account |
| classified solely as that of a customer, except as follows: | | |
| Staie oflllimi~
Coun1y of Cook | | |
| Sign1ne00Femwy25.2020 | | President |
| | | Title |
| | | |
| | | |
| Notary Public | | STEPHANIE MILLER
OFFICIAL SEAL |
| | • | Notary Public • State of Illinois |
| This repon •• contains (check all applicable boxes): | | • My Commission Expires Mar 20, 2023 |
| 121 (a) Facing Page.
0 (bl Statement ofFinancial Condition | | |
| | | 0 (e) Statement oflncome (Loss) or, if there is other comprehensive income in the pcriod(s) presented, a Statement |
| of Comprehensive l11come (as defined in §210.1-02 of Regulation S-X). | | |
| D (d) Statement ofChan1?,cs in Financial Condition. | | |
| 121 (e) Statement of Changes in Stocltholdcr' Equity or Partners' or Sole Proprietors· Capital. | | |
| 0 (f) S1atemen1 of Changes in Liabilities Subordina1ed 10 Claims of Creditors. | | |
| (g) Computahon of Ne1 Capital. | | |
| (h) Compu1a1ion for Determination of Reserve Requirements Putsuant to Rule l 5c3-3. | | |
| (i} Information Relating to tile Possession or Conlrol Requirements Under Rule tSc3 -3.
~ | | |
| | | 121 (j) A Reconciliation. including appropriate explanation of lhe Computation of Net Capital Under Rule I 5c3-1 and the |
| Computation for Determination of the Reserve Requirements Under Exhibit A ofR11le 1\$c3-3. | | |
| | | 0 (k) A Reconciliation between the audiled and unaudited Statements of Financial Condition with rcspccl to methods of |
| consolidation. | | |
| ✓ (1) An Oath or Affirmatio,1. | | |
| 0 (m) A copy of the SIPC Supplemental Report. | | |
| 0 (n) A repondescribingany | | material inadequacies foundtoexistorfoundtohaveexistcd since thedateofthepreviousaudit. |
| | | |
| ••For ctt11ditim1s of co11/idet111ul 1reu11mm1 ,,f cerium pnmon., of 1his fl/mg. ·"" sec1i1111 240. I 1u-5(e)fJJ. | | |
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# **Frontegra Strategies, LLC**
**Financial Report with Supplementary Information Year Ended December 31, 2019**
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### **Contents**
| Report Letter | 1 |
|-----------------------------------------------------------------------------|-----|
| Financial Statements | |
| Statement of Financial Condition | 2 |
| Statement
of Income and Member's Equity | 3 |
| Statement of Cash Flows | 4 |
| Notes to Financial Statements | 5-8 |
| Supplementary Information | 9 |
| Information Pursuant to Rule 17a-5 of the Securities Exchange Act of 193410 | |
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### **Report of Independent Registered Public Accounting Firm**
To the Member Frontegra Strategies, LLC
#### **Opinion on the Financial Statements**
We have audited the accompanying statement of financial condition of Frontegra Strategies, LLC as of December 31, 2019 and the related statements of income and member's equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Frontegra Strategies, LLC as of December 31, 2019 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
#### **Basis for Opinion**
These financial statements are the responsibility of Frontegra Strategies, LLC's management. Our responsibility is to express an opinion on Frontegra Strategies, LLC's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Frontegra Strategies, 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 statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
#### **Supplemental Information**
The accompanying supplemental information Pursuant to Rule 17a-5 of the Securities Exchange Act of 1934 has been subjected to audit procedures performed in conjunction with the audit of Frontegra Strategies, LLC's financial statements. The supplemental information is the responsibility of Frontegra Strategies, LLC's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
We have served as Frontegra Strategies, LLC's auditor since 2006. Chicago, Illinois February 25, 2020
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# **Statement of Financial Condition December 31, 2019**
| Current Assets
Cash
Customer receivables
Prepaid expenses | \$
1,756,449
208,079
37,438 |
|-------------------------------------------------------------------------------------------|--------------------------------------|
| Total Assets | \$
2,001,966 |
| Liabilities and Member's Equity
Accrued expenses
Due to member
Total Liabilities | \$
14,473
25,190
39,663 |
| Member's Equity | 1,962,303 |
| Total Liabilities & Member's Equity | \$
2,001,966 |
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# **Statement of Income and Member's Equity Year Ended December 31, 2019**
| Revenue - Fees | \$
1,149,499 |
|-------------------------------------|-----------------|
| Expenses | |
| Professional fees | 39,705 |
| Insurance | 1,562 |
| State registration and filing fees | 46,152 |
| Office | 257,196 |
| Salaries and payroll taxes | 33,331 |
| | |
| Total expenses | 377,946 |
| Net Income | 771,553 |
| Member's Equity - Beginning of year | 1,190,750 |
| Member's Equity - End of year | \$
1,962,303 |
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# **Statement of Cash Flows Year Ended December 31, 2019**
| Cash Flows from Operating Activities | |
|-------------------------------------------------------------|-----------------|
| Net income | \$
771,553 |
| Adjustments to reconcile net income to net cash provided by | |
| operating activities: | |
| Change in: | |
| Customer receivables | 140,746 |
| Prepaid expenses | (3,805) |
| Accrued expenses | (88) |
| Accrued bonus | 288 |
| Net cash provided by operating activities | 908,694 |
| Cash Flows from Financing Activities - Due to member | 4,834 |
| Net Increase in Cash | 913,528 |
| Cash - Beginning of year | 842,921 |
| Cash - End of year | \$
1,756,449 |
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# **Note 1 - Industry Operations**
Frontegra Strategies, LLC (formerly known as Frontegra Alternative Strategies, LLC) (the "Company") was formed on March 15, 2005 as a Delaware limited liability company. On February 5, 2018, the Company entered into a purchase agreement with Frontier North America Holdings, Inc. ("Frontier"), whereby Frontier North America Holdings, Inc. purchased a 100% of the sole member's interest in the Company for \$3 million.
The Company filed its continuing membership application with FINRA and the sale was completed April 2, 2018. The Company is a registered securities broker-dealer engaged in the business of selling mutual funds and promoting interests in limited partnerships, limited liability companies, and other similar private equity products. The Company also acts as the principal distributor of mutual fund shares. The Company is exempt from the reporting requirements under Rule 15c3- 3(k)(2)(i).
## **Note 2 - Summary of Significant Accounting Policies**
Aspects of the Limited Liability Company - As a limited liability company, the member's liability is limited to capital invested. Under its operating agreement, the Company has one class of member interest, and the member's interest is proportional to the number of equity units acquired by the member to the total number of units issued by the Company. Allocation of profits, losses, and distributions is in accordance with the terms as defined in the operating agreement. The Company shall remain in perpetuity unless sooner terminated, as provided in the operating agreement.
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### **Note 2 - Summary of Significant Accounting Policies (Continued)**
Cash - The Company maintains its cash in a bank account, which at times may exceed federally insured limits. The Company has not experienced any losses in such account and believes it is not exposed to any significant credit risk on cash.
Customer Receivables - Receivables are carried at original invoice amount less any estimates made for doubtful receivables. Management determines the allowances for doubtful accounts by reviewing and identifying troubled accounts on a monthly basis and by using historical experience applied to an aging of accounts. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.
Revenue Recognition – Revenue from contracts with customers includes success-based transaction fees. The Company recognizes revenue when it earns fees on assets raised for investment in mutual funds, limited partnerships, limited liability companies and other similar private equity products. These fees are primarily earned over time and are generally assessed based on a percentage of the average market value of raised assets under management during the period.
Income Taxes – As a single member LLC, the Company is a disregarded entity for federal income tax purposes. Consequently, federal income taxes are not payable by, or provided for, the Company. The Company's earnings are included on the member's tax return.
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**Note 2 - Summary of Significant Accounting Policies (Continued)**
Accordingly, the financial statements do not reflect a provision for income taxes.
Management Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Subsequent Events - The Company has evaluated subsequent events through February 25, 2020, the date the financial statements are issued.
### **Note 3 – Related Party Transactions**
The Company has an expense sharing agreement with an affiliated company, Frontier Partners, Inc. ("FP"), which is also owned by Frontier. The affiliated company provides the Company with administrative staff, office space and related operating expenses. The Company does not reimburse all of the affiliated expenses included in the expense sharing agreement. Financial position and results of operations would differ from the amounts in the accompanying financial statements if these related party transactions did not exist. Amounts owed to FP totaled \$0 as of December 31, 2019.
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# **Note 4 - Uniform Net Capital Rule**
The Company is subject to the Securities and Exchange Commission Uniform 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 15 to 1. The rule also provides that equity capital may not be withdrawn if the resulting capital ratio would exceed 10 to 1. As of December 31, 2019, the Company had net capital of \$1,716,786, of which \$1,691,786 was in excess of its required net capital. The Company's ratio of aggregate indebtedness to net capital was 0.02 to 1.
### **Note 5 - Major Customer**
In 2019, revenues from one customer amounted to 99.57 percent of the Company's fee revenue. The receivable balance for this customer was \$206,854 as of December 31, 2019.
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**Supplementary Information**
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| Supplementary Information Pursuant to Rule 17a-5 of the
Securities Exchange Act of 1934
December 31, 2019 | | |
|-----------------------------------------------------------------------------------------------------------------|-------------|-------------------|
| Total member's equity | \$ | 1,962,303 |
| Deductions and/or Charges
Nonallowable assets/liabilities:
Accounts receivable
Prepaid expenses | | 208,079
37,438 |
| Net capital | | 1,716,786 |
| Net Capital Requirement | | 25,000 |
| Excess net capital | | 1,691,786 |
| Aggregate Indebtedness | \$ | 39,663 |
| Ratio of Aggregate Indebtedness to Net Capital | 0.0234 to 1 | |
There are no material differences between the above computation and the Company's corresponding unaudited Form X-17A-5 as of December 31, 2019.
The Company claimed an exemption from Rule 15c3-3 under paragraph (k)(2)(i). Therefore, the Company has omitted the schedules of "Computation for Determination of Reserve Requirements Under Rule 15c3-3" and "Information for Possession or Control Requirements Under Rule 15c3-3."
The Company has no liabilities subordinated to the claims of general creditors, therefore a statement of changes in liabilities subordinated to the claims of general creditors is not presented.
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#### **Report of Independent Registered Public Accounting Firm**
To the Member Frontegra Strategies, LLC
We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Frontegra Strategies, LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Frontegra Strategies, LLC claimed an exemption from 17 C.F.R. §240.15c3-3: (k)(2)(i) (the "exemption provisions") and (2) Frontegra Strategies, LLC stated that Frontegra Strategies, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. Frontegra Strategies, LLC's management is responsible for compliance with the exemption provisions and its statements.
Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Frontegra Strategies, LLC's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(i) of Rule 15c3-3 under the Securities Exchange Act of 1934.
Chicago, Illinois February 25, 2020
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**FRONTEGRASTRATEGIES,LLC**
# **FRONTEGRA STRATEGIES, LLC**
EXEMPTION REPORT YEAR ENDED DECEMBER 31, 2019
We, as members of management of Frontegra Strategies, LLC (the Company) are responsible for complying with 17 C.F.R §240.17a-5, "Reports to be made by certain brokers and dealers". We have performed an evaluation of the Company's compliance with the requirements of 17 C.F.R §240.17a-5 and the exemption provisions in 17 C.F.R §240.15c3-3(k) (the "exemption provisions"). Based on this evaluation we make the following statements to the best knowledge and belief of the Company:
- 1. We identified the following provisions of 17 C.F.R §15c3-3(k) under which the Company claimed an exemption from 17 C.F.R §240.15c3-3: (k)(2)(i).
- 2. We met the identified exemption provisions throughout the most recent fiscal year ended December 31, 2019, without exception.
The Company is exempt from the provisions of 17 C.F.R §240.15c3-3 of the Securities Exchange Act of 1934 (pursuant to paragraph (k)(2)(i) of such Rule) as the Company carries no margin accounts, promptly transmits all customer funds and delivers all securities received in connection with its activities as a broker or dealer, does not otherwise hold funds or securities for, or owe money or securities to, customers and effectuates all financial transactions between the broker or dealer and its customers through one or more bank accounts, each to be designated as "Special Account for the Exclusive Benefit of Customers of (name of the broker or dealer)".
Frontegra Strategies, LLC
W~ h Ill, **President**
400 Skokie Boulevard - Suite 500 - Northbrook, IL 60062-7905 *phone* 847-509-9860 *fax* 847-509-9845 - www.frontierpartncrs.com Our investment professionals are registered representatives with FronTegra Strategies, LLC, a registered securities broker-dealer and a member of the FINRA and SIPC. Any investment product offered by FronTegra Strategies, LLC is: Not FDIC I Insured Not Bank Guaranteed I May Lose Value
**FronTegra Strategies, LLC**
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.