# INX Securities, LLC X-17A-5 (2024-02-23) — Broker-dealer annual report - Company: INX Securities, LLC - Form: X-17A-5 - Filed: 2024-02-23 - Period: 2023-12-31 - Accession: 0001543192-24-000001 - CIK: 1543192 - File #: 8-69058 - Type: Broker-dealer - Material weakness: No - Auditor: Michael T. Remus CPA - Auditor location: Hamilton, NJ - Contact: Vlad Uchenik - Phone: 215-806-9031 - Email: vlad.uchenik@inx.co - Website: inx.co - Signed by: Vlad Uchenik (CEO/CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1543192/000154319224000001/2023inxauditpc.pdf --- {0}------------------------------------------------ | | UNITED STATES | | 0MB APPROVAL | | | |---------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|---------------------|----------------------------------------------------|--|--| | | SECURITIES AND EXCHANGE COMMISSION | | 0MB Number: 3235-0123 | | | | | Washington, D.C. 20549 | | Expires: Nov. 30, 2026
Estimated average burden | | | | Public | | | hours per response: 12 | | | | Document | ANNUAL REPORTS | | | | | | | FORM X-17A-S | | SEC FILE NUMBER | | | | | | | 8-69058 | | | | | PART Ill | | | | | | | 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 01/01f2023
AND ENDING 1213112023 | | | | | | | MM/DD/VY | | | ----------
MM/DD/ Y Y | | | | | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME OF FIRM: INX SECURITIES LLC | | | | | | | | | | | | | | ■
TYPE OF REGISTRANT (check all applicable boxes): | | | | | | | Broker-dealer | D Security-based swap dealer | | D Major security-based swap participant | | | | | D Check here if respondent is also an OTC derivatives dealer | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | 252 BRADLEY COURT | | | | | | | | (No. and Street) | | | | | | | | | | | | | HOLLAND | PA | | 18966 | | | | (City) | (State) | | (Zip Code) | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | VLAD UCHENIK | 215-806-9031 | vlad.uchenik@inx.co | | | | | (Name) | (Area Code - Telephone Number) | | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | Michael T Remus CPA | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | PO Box 2555 | Hamilton Square | NJ | 08690 | | | | (Address) | (City) | (State) | (Zip Code) | | | | 02/23/2010 | | 3598 | | | | | of Reglstcatioo with PCAOB)llf applicable) | | | (PCAOB Reglstcatioo Nombec, If appHcable) | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | "
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* | 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-S(e)(l)(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 0MB control number.** {1}------------------------------------------------ - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ **INX Securities, LLC (SEC I.D. No. 8-69058)** # **Report Pursuant to Rule 17a-5 of** **The Securities and Exchange Commission** *Statement of Financial Condition* **As of and for the Year Ended December 31, 2023** **(Including Report of Independent Registered Public Accounting Firm)** **This report is filed as a Public Document in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of 1934.** {3}------------------------------------------------ #### **INX SECURITIES, LLC** #### STATEMENT OF FINANCIAL CONDITION December 31, 2023 #### **ASSETS** | Current Assets | | | |-------------------------|----|---------| | Cash | | 735,381 | | Cash held as collateral | | 70,176 | | Acounts receivable | | 2,290 | | Prepaid Expenses | | 27,836 | | | | | | Total current assets | | 835,683 | | | | | | Other Asset | | | | Right of use asset | | 120,238 | | | | | | Total Assets | \$ | 955,921 | #### **LIABILITIES AND MEMBER CAPITAL** #### Current Liabilities | Accounts payable & accrued expenses
Security deposit payable | \$
11,909
18,040 | |-----------------------------------------------------------------|------------------------| | Deferred revenue | 85,000 | | Total current liabilities | 114,949 | | Lease payable | 120,238 | | Total Liabilities | 235,187 | | Commitments and Contingencies (Note 7) | | | Member Capital | 720,734 | | Total Liabilities & Member Equity | \$
955,921 | The accompanying notes are an integral part of these financial statements. {4}------------------------------------------------ #### NOTE 1. ORGANIZATION AND NATURE OF BUSINESS INX Securities, LLC (formerly called Openfinance Securities, LLC, the "Company"), a Pennsylvania limited liability company, is a securities broker-dealer, registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority Inc. ("FINRA").The Company is wholly owned by INX Limited ("Parent"). The Company operates SEC regulated Alternative Trading System ("ATS") that provides a secondary market trading platform for digital securities called INX.One (previously INX Securities Trading Platform). The trading platform functions as a centralized matching engine and a trading order book providing customers with anonymous order matching functionality. Transactions in the secondary market are executed on an agency basis and may include securities under SEC Regulations A+, D, Crowdfunding, or SEC registration statements S-1 and F-1, private non-listed real estate investment trusts ("REITs"), and other private securities transactions. The Company also provides administrative, compliance and technology services to issuers raising capital in the primary market using private placements or foreign regulatory exemptions and/or registrations. The Company does not hold customer funds or securities and does not participate in the underwriting of securities. The Company claimed an exemption from 17 C.F.R §240.15c3-3 pursuant to 17 C.F.R §240.17a5, footnote 74 for its traditional business. The Company mets the identified exemption 17 C.F.R §240.17a5, footnote 74 throughout the most recent fiscal year without exception for its traditional business. The Company also meets the terms of the "Three-Step Process" as described in the SEC Division of Trading and Markets no-action letter to FINRA dated September 25, 2020 and captioned as "ATS Role in the Settlement of Digital Asset Security Trades" from its date of issuance without exception. #### NOTE 2. SIGNIFICANT ACCOUNTING POLICIES #### *(a) Basis of Presentation* The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") unless otherwise disclosed. *(b) Use of Estimates* The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. {5}------------------------------------------------ #### *(c) Statement of Cash Flows* For purposes of the statement of cash flows the Company has defined cash equivalents as highly liquid investments, with original maturities of less than three months, that are not held for sale in the ordinary course of business. The company has adopted the indirect method of presenting the statement of cash flows in accordance with current authoritative pronouncements. There were no cash equivalents at December 31, 2023. Cash is held at financial institutions that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2023. #### (*d) Revenue Recognition* Revenue from contracts with customers includes commission income and fees from providing broker/dealer of record services. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied in a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain events. The Company received commissions from the secondary market trading, which are recorded on the trade date as securities transactions occur. The Company also provides services to clients issuing securities in primary offerings, and charges a service fee and is entitled to success fees based on the aggregate amount of capital raised by the client from investors. Service fees and success fees are recognized on the date the security is listed on the trading platform in the primary offering, which is when the performance obligation is satisfied under the contract with the client. #### *(e) Income Tax* The Company elected to be treated as a partnership under the applicable sections of the Internal Revenue Service Code ("Code") and Pennsylvania corporate tax law. Therefore, no provision or liability for federal or state income taxes has been included in the financial statements. The Company's tax returns and the amount of income or loss allocable to the member are subject to examination by federal and state taxing authorities. In the event of an examination of the Company's tax return, the tax liability of the member could be changed if an adjustment in the Company's income or loss is ultimately determined by the taxing authorities. Certain transactions may be subject to accounting methods for federal and state income tax purposes which differ from the accounting methods used in preparing the financial statements. Accordingly, the net income or loss of the member and the resulting balances in the member's capital accounts reported for federal and state income tax purposes may differ from the balances reported for those same items in these financial statements. {6}------------------------------------------------ #### *(e) Income Tax – continued* The Company recognizes and measures its unrecognized tax benefits in accordance with ASC Topic 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 the financial reporting period. The measurement of unrecognized tax benefits is adjusted when new information is available, or when an event occurs that requires a change. Management has determined that the Company has no uncertain tax positions that would require financial statement recognition at December 31, 2023. This determination will always be subject to ongoing evaluation as facts and circumstances may require. The Company remains subject to U.S. federal and state income tax audits for all years subsequent to 2019. In addition, no income tax related penalties or interest have been recorded for the year ended December 31, 2023. #### *(f) Fair Value Hierarchy* 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: - *Level 1.* Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. - *Level 2.* Inputs other than quoted prices included in level 1 that are observable for the assets or liability either directly or indirectly. - *Level 3.* Inputs are unobservable for the assets or liability. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining the fair value is greatest for instruments categorized in level 3. {7}------------------------------------------------ #### *(f) Fair Value Hierarchy – continued* The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. #### *(g) Advertising and Marketing* Advertising and marketing costs (if any) are expensed as incurred. ## *(h) General and Administrative Expenses* General and administrative costs are expensed as incurred. #### *(i) Operating Lease* The Company entered into an office space lease agreement on September 20, 2021, which expires on May 31, 2024. The rent expense for the year ended December 31, 2023 was \$294,171. The future rent obligation under the lease agreement during 2024 is \$120,238. The Company maintains a letter of credit required under the lease agreement in the amount of \$70,176. In February 2016 the FASB issued ASU 2016-02, Leases – (Topic 842). ASU 2016-02 requiring the recognition of lease assets and lease liabilities on the balance sheet to the rights and obligations created by lease agreements, including for those leases classified as operating leases under the previous GAAP, along with disclosure of key information about leasing arrangements. As a result of the change in the accounting policy, the Company recorded a lease liability as of October 1, 2021 in the amount of \$697,353 and a right-of-use asset in the same amount. The right-of-use asset is amortized in a manner that will cause the total lease payments due under the lease to be charged to expense on a straight-line basis over the lease term. The change in accounting policy had no effect on stockholder's equity. On June 19, 2023, the Company entered into a sublease agreement with a third-party subtenant for the entire office space. The sublease agreement expires on May 30, 2024. Under the sublease agreement, during the year ended December 31, 2023, the Company received rental income of \$116,490. {8}------------------------------------------------ ## NOTE 3. NET CAPITAL REQUIREMENT As a registered broker-dealer, the Company is subject to the SEC's Uniform Net Capital for Broker-Dealers Rule (SEC Rule 15c3-1). SEC Rule 15c3-1 requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed fifteen to one. At December 31, 2023, the Company had net capital of \$620,432, which exceeded the required net capital of \$250,000 by \$370,432. At December 31, 2023, the Company's aggregate indebtedness to net capital ratio was 0.1853 to 1. Advances to affiliates, contributions, distributions and other withdrawals are subject to certain notification and requirements of Rule 15c3-1 and other regulatory rules. #### NOTE 4. CONCENTRATIONS The Company's revenues (as discussed in Note 2 above) and profitability are affected by many conditions, including changes in economic conditions, inflation, political events, investor sentiment, and the changing security laws. These factors are unpredictable and beyond the Company's control, and may cause earnings to fluctuate significantly from year to year. #### NOTE 5. RELATED PARTY TRANSACTIONS The Company provides broker-dealer services using certain technology of its Parent to process secondary market securities transactions. Additionally, under an expense sharing agreement with the Company, the Parent directly pays for certain operating expenses of the Company such as compensation, legal, technology and professional fees. Expenses incurred by the Company and paid by the Parent under the expense sharing agreement are forgiven and totaled to \$455,00 in 2023. Expenses not covered by the expense sharing agreement are paid directly by the Company. #### NOTE 6. COMMITMENTS AND CONTINGENCIES Pursuant to Securities and Exchange Commission Rule 15c3-1(e)(2) the Company may not authorize distributions to its member if such distributions cause the Company's net capital to fall below 120% of the Company's minimum net capital requirement. As of December 31, 2023, the Company was not in violation of this requirement. The Company had no lease or equipment rental commitments (other than as disclosed in Note 2 above), no underwriting commitments, no contingent liabilities, and had not been named as a defendant in any lawsuit at December 31, 2023 or during the year then ended. {9}------------------------------------------------ #### NOTE 6. COMMITMENTS AND CONTINGENCIES *- continued* From time to time the Company is subject to regulatory inquiries requiring disclosure of certain information related to security tokens listed for investment on INX.One. The Company follows its policies to respond to such regulatory inquiries and provides the requested information. ## NOTE 7. COMPANY CONDITION The Company has a loss of \$154,331 for the year ended December 31, 2023. The Parent has agreed to provide capital contributions to the Company as necessary for it to continue operations and to maintain compliance with minimum net capital requirements. Management expects the Company to continue as a going concern and the accompanied financial statements have been prepared on a going-concern basis without adjustment for realization in the event the Company ceases to continue as a going concern. #### NOTE 8. SUBSEQUENT EVENTS Management has assessed subsequent events through the date the financial statements were available to be issued and determined that no subsequent events or transactions occurred during that period which require recognition or disclosure. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.