# BREX TREASURY LLC X-17A-5 (2022-03-29) — Broker-dealer annual report - Company: BREX TREASURY LLC - Form: X-17A-5 - Filed: 2022-03-29 - Period: 2021-12-31 - Accession: 0001759239-22-000004 - CIK: 1759239 - File #: 8-70251 - Type: Broker-dealer - Material weakness: Yes - Auditor: Ernst & Young LLP - Auditor location: San Francisco, CA - Contact: Erik Zhou - Phone: 1-833-228-2044 - Email: erik@brex.com - Website: brex.com - Signed by: Erik Zhou (Financial and Operations Principal) Original filing: https://www.sec.gov/Archives/edgar/data/1759239/000175923922000004/BT_SoFC_FY21.pdf --- {0}------------------------------------------------ | | UNITED STATES
SECURITIES AND EXCHANGE COMMISSION | OMB APPROVAL
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Estimated average burden | | | | | | | | Washington, D.C. 20549 | hours per response: 12 | | | | | | | SEC FILE NUMBER | | | | | | | | FORM X-17A-5 | | | | | | | | PART III | | | | | | | | | | | | | | | | FACING PAGE
Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | | | | | | | 12/31/21 | | | | | | FILING FOR THE PERIOD BEGINNING | AND ENDING
MM/DD/YY | MM/DD/YY | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | | | | | | | | NAME OF FIRM: Brex Treasury LLC | | | | | | | | | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes): | Broker-dealer | | | | | | | LJ Check here if respondent is also an OTC derivatives dealer | | | | | | | | | | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | 12832 S. Frontrunner Blvd | | | | | | | | | (No. and Street) | | | | | | | Draper | | 84020 | | | | | | (City) | (State) | (Zip Code) | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | | | | | | | | | Erik Zhou | (833) 228-2044 | erik@brex.com | | | | | | | (Area Code - Telephone Number) | (Email Address) | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | | Ernst & Young LLP | | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | | | San Francisco | CA
94105 | | | | | | 560 Mission St #1600 | (City) | (State)
(Zip Code) | | | | | | 10/20/2003 | 42 | | | | | | | (Name)
(Address)
(Date of Registration with PCAOB)(If applicable) | FOR OFFICIAL USE ONLY | (PCAOB Registration Number, if applicable) | | | | | 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. {1}------------------------------------------------ #### OATH OR AFFIRMATION I. Erik Zhou | | | | | ______________________________________________________________________________________________________________________________________________________________________________ | | | | | |-------|--|--|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|-------| | | | | | financial report pertaining to the firm of Brex Treasury LLC | | | | | | 40/24 | | | | | | | | as or | 12/31 2 021 \_\_ is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case my be, has any proprietary interest in any account classified soley, interest in any account classified soley as that of a customer. Signature: Title : FinOP Notary Public #### This filing \*\* contains (check all applicable boxes): - (a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - □ (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X). - 0 (d) Statement of cash flows. - [ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - O (f) Statement of changes in liabilities subordinated to claims of creditors. - [ (g) Notes to consolidated financial statements. - | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - □ (i) Computation of tangible net worth under 17 CFR 240.18a-2. - | |} Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - | | | | Computation for determination of security-based swap reserve requirement to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - [ (I) 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. - □ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, 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. - | | Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (t) Independent public accountant's report based on an examination of the statement of financial condition. - | | | |ndependent 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 240.15c3-1e or 17 CFR 240.17a-12, as applicable. - a 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 240.170-5(e)(3) or 17 CFR 240.18c-7(d)(2), as applicable. {2}------------------------------------------------ #### CALIFORNIA JURAT #### GOVERNMENT CODE § 8202 HOOD OO OOO OO OOO OOO OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO A notary public or other officer completing this certificate verifies only the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of \_ 00/0 Subscribed and sworn to (or affirmed) before me on this 28 day of March, 20 Year Eril ![](_page_2_Picture_7.jpeg) (and (2) Name(s) of Signer(s) proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. Signature Signature of Notary Public Place Notary Seal and/or Stamp Above | OPTIONAL | | |----------------------------------------------------------------------------------------------------------------------------------------|------------------| | Completing this information can deter alteration of the document or
fraudulent reattachment of this form to an unintended document. | | | Description of Attached Document
Title or Type of Document: AMULA Reports - Form X-17A S | | | Document Date: Jagned 3/28/22
Signer(s) Other Than Named Above: | Number of Pages: | | ©2019 National Notary Association | | {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) # BREX TREASURY LLC Statement of Financial Condition As of December 31, 2021 With Report of Independent Registered Public Accounting Firm {4}------------------------------------------------ # Table of Contents | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-------| | Statement of Financial Condition | | | Notes to Statement of Financial Condition | 3 - 5 | {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ## Report of Independent Registered Public Accounting Firm To the Member and Board of Directors of Brex Treasury LLC ## Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Brex Treasury LLC (the Company) as of December 31, 2021 statement presents fairly, in all material respects, the financial position of the Company at December 31, 2021, in conformity with U.S. generally accepted accounting principles. ## Basis for Opinion 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 statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 9. March 28, 2022 {6}------------------------------------------------ # BREX TREASURY LLC Statement of Financial Condition | As of December 31, | | 2021 | |-----------------------------------------------------|-------|------------| | | | | | ASSETS | | | | Cash and cash equivalents | ಲ್ಲಿ | 32.640.420 | | Cash segregated under federal and other regulations | | 52,877,234 | | Receivables from customers | | 10,099,581 | | Due from affiliate, net | | 417,595 | | Other assets | | 427.786 | | Total assets | శ | 96,462,616 | | | | | | LIA BILITIES | | | | Intercompany borrowings | ಲ್ಲಾ | 57,872,194 | | Payable to customers | | 5,226,181 | | Payable to non-customers | | 6,493,415 | | Accounts payable and accrued expenses | | 825,029 | | Other liabilities | | 75.811 | | Total liabilities | | 70,492,630 | | | | | | EQUITY | | | | Member's equity | | 25,969,986 | | Total equity | | 25,969,986 | | Total liabilities and equity | ક્ષ્મ | 96,462,616 | The accompanying footnotes are an integral part of this statement. {7}------------------------------------------------ #### Notes to Financial Statements #### 1. ORGANIZATION & OPERATIONS #### Nature of Business Brex Treasury LLC (the "Company") is a broker-dealer registered with the Securities and Exchange Commission ("SEC") pursuant to section 15(b) of the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory ("FINRA"). The Company was organized as a Delaware limited liability company on November 1, 2018 and commenced operations as a broker dealer on August 16, 2019. The Company is 100% owned by Brex Inc. (the "Parent"). The Company currently operates in one reportable operating segment and offers customers a business cash management account known as Brex Cash where customer deposits can be swept into a money market mutual fund or bank sweep account. The Company has a bank sweep program pursuant to SEC Rule 15c3-3 that allows customers to transfer Brex Cash funds to a program bank, thus providing Federal Deposit Insurance Corporation ("FDIC") protection on amounts up to \$250,000. Brex Cash also provides customers same-day liquidity for their deposits, allowing them to send and receive payments with no transaction fees while also earning yield on their money market mutual fund investments. #### 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Basis of Presentation The Statement of Financial Condition has been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). The significant accounting policies described below, together with other notes that follow, are an integral part of the Statement of Financial Condition. #### Use of Estimates The preparation of the Statement of Financial Condition and the related disclosures in conformity with GAAP require the Company to make judgments, assumptions, and estimates that affect the amounts reported in the Statement of Financial Condition and accompanying notes. The Company bases their estimates on historical experience and on various other factors they believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of certain assets and liabilities. These judgments, estimates, and assumptions are inherently subjective in nature; actual results may differ from these estimates and assumptions, and the differences could be material. #### Cash and Cash Equivalents The Company considers all liquid investments with original maturities of three months or less that are not segregated and on deposit for regulatory purposes to be cash equivalents. Cash and cash equivalents include money market mutual funds and deposits with banks. The Company had \$11,077,813 in money market mutual funds as of December 31, 2021. #### Cash Segregated Under Federal and Other Regulations Cash segregated under federal and other regulations consists of cash holdings in a segregated reserve account set aside to satisfy requirements under Rule 15c3-3 of the SEC. The cash is held within a special reserve bank account for the exclusive benefit of customers. #### Fair Values Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. Fair value measurement accounting guidance establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumption about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three levels: · Level 1: Quoted prices (unadjusted) in active markets for liabilities that the Company has the ability to access at the measurement date. {8}------------------------------------------------ - · Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices. - · Level 3: Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Investments are transferred into or out of any level at their beginning period values. As of December 31, 2021, the Company held securities consisting of money market mutual funds, which are valued at the closing price reported by the fund sponsor from an actively traded exchange and are categorized as Level 1 in the fair value hierarchy. #### Payable to and Receivable from Customers and Non-Customers In the normal course of business, customer deposits are swept to and from either a money market mutual fund or program bank. When customer deposits are received by the Company and have not been swept into the money market mutual fund or the program bank, those deposits are payable to customers until they are swept. When the Company receives redemption instructions from customers, the redemption amount prior to settlement of the redemption from the money market mutual fund or program bank. These prepayments are receivables from customer until the redemption is settled with the money market mutual fund or the program bank. Payable and receivable activity for customers that are affiliates of the Company are reflected as noncustomers in the Statement of Financial Condition. The Company utilizes an impairment model, known as the current expected credit loss ("CECL") model, in order to assess these credit losses that may exist within our receivables from customers. The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. Receivables from customers are written off when there are insufficient funds in the money market mutual fund or bank sweep balances of the customer. These instances occur due to fraudulent transactions conducted by bad actors and the Company is unable to collect on the receivables as a result. As of December 31, 2021, the Company did not carry a reserve for losses for receivables from customers. #### 3. RELATED-PARTY TRANSACTIONS The amount of revenue earned from affiliates may not be reflective of revenues that could have been earned on similar levels of activity with unaffiliated third parties. The amount of expenses allocated to us may not be reflective of expenses that would have been incurred by us if we used third party service providers. Pursuant to an expense sharing agreement, the Company reimburses the Parent for employee compensation, benefits, and share-based payments as well as certain general administrative, operational, and occupancy services performed by the Parent on behalf of the Company. Under the same expense sharing agreement, the Parent pays certain direct expenses on behalf of the Company through a cost-plus intercompany agreement and in addition, reimburses the Company for indirect expenses. Net cash is settled with allocated expenses in accordance with the agreement. The reimbursement from the Parent is reflected as service revenue from affiliate on the Statement of Operations. As of December 31, 2021, the Parent owed the Company \$417,595 which is included in the due from affiliate, net balance in the Statement of Financial Condition. The Parent issues equity-based awards under its Stock Incentive Plan for the benefit of its employees, including those that perform services on behalf of the Company. These employees were granted stock options to purchase shares of the Parent's common stock at an exercise price equal to the fair value per common share at the time of issuance. The stock options vest over a four-year period. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period based on the fair value of the award on the date of grant. The Company also borrows from the Parent to finance its operating activities from time a \$75,000,000 line of credit at an interest rate of 5% per annum. As of December 31, 2021, the outstanding balance owed by the Company was \$57,872,194 with accrued interest payable of \$204,456. These amounts are included in intercompany borrowings and due from affiliate, net, respectively, in the Statement of Financial Condition. {9}------------------------------------------------ The Parent has business cash management accounts through Brex Cash. As of December 31, 2021, the Company had \$6,493,415 in payable to non-customers in the Statement of Financial Condition. #### 4. NET CAPITAL REQUIREMENT The Company is authorized to use the alternative standard for computing net capital under SEA Rule 15c3-1(a)(1)(i). Under the alternative standard, the Company must maintain a minimum net capital equal to the greater of \$250,000 or 2% of aggregate debit items computed in accordance with the Formula for Determination of Reserve Requirements for Brokers. As of December 31, 2021, the Company's net capital was \$25,643,756 which was \$25,393,756 in excess of its required minimum net capital. #### 5. RISKS AND UNCERTAINTIES The ongoing global COVID-19 pandemic adversely impacted the global economy and caused significant volatility in the financial markets. The Company will continue to actively monitor the COVID-19 pandemic and evaluate its impact on the Company business and financial position. The impact of the pandemic has not had a material impact on the Company. Any future potential impact will depend on a number of evolving factors and cannot currently be reasonably estimated. #### 6. COMMITMENTS & CONTINGENCIES #### Guarantees Guarantees are defined as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying factor (such as an interest or foreign exchange rate, security or commodity price, an index, or the occurrence of a specified event) related to an asset, liability or equity of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of others. The Company had no obligations under guarantee arrangements as of December 31, 2021. #### Indemnifications In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations, warranties, and covenants that provide for indemnifications under certain circumstances. These include contracts with certain service providers, such as depository institutions. The Company's maximum exposure under these arrangements cannot be estimated. However, the Company believes that it is not probable it will have to make material payments under these arrangements and has not recorded any contingent liability in the Statement of Financial Condition for these indemnifications. #### 7. SUBSEQUENT EVENTS The Company has evaluated events through March 28, 2022, the date that the Statement of Financial Condition was available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the Statement of Financial Condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.