# PROOF SERVICES LLC X-17A-5 (2023-03-01) — Broker-dealer annual report - Company: PROOF SERVICES LLC - Form: X-17A-5 - Filed: 2023-03-01 - Period: 2022-12-31 - Accession: 0001794627-23-000003 - CIK: 1794627 - File #: 8-70450 - Type: Broker-dealer - Material weakness: No - Auditor: Assurance Dimensions - Auditor location: Tampa, FL - Contact: Dan Aisen - Phone: 240-418-2486 - Email: dan@prooftrading.com - Website: prooftrading.com - Signed by: Dan Aisen (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1794627/000179462723000003/1PSAnnual2022FINAL.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) NEW YORK, NEW YORK FINANCIAL STATEMENTS, FORM X-17A-5, PART III, SUPPLEMENTAL INFORMATION, AND REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2022 {1}------------------------------------------------ #### NEW YORK, NEW YORK ## FINANCIAL STATEMENTS, FORM X-17A-5, PART III, SUPPLEMENTAL INFORMATION, AND REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM #### DECEMBER 31, 2022 #### CONTENTS PAGE | FORM X-17A-5, PART III | | |------------------------------------------------------------------------------------------------------------|---| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | FINANCIAL STATEMENTS | | | Statement of Financial Condition | | | Statement of Operations | | | Statement of Changes in Member's Equity | 7 | | Statement of Cash Flows | | | Notes to Financial Statements | | | SUPPLEMENTAL INFORMATION-
COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 | | | EXEMPTION REPORTS | | | Statement on Exemption from the Computation for Determination of
Reserve Requirements Under Rule 15c3-3 | | | Statement on Exemption Relating to Possession or Control Requirements
Under Rule 15c3-3 | | | Exemption Report Pursuant to Rule 17a-5 -
of the Securities and Exchange Commission | | | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM-
EXEMPTION REPORT REVIEW | | {2}------------------------------------------------ #### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORTS FORM X-17A-5 OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 sec file number 8-70450 # PART III 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 \_\_\_01/01/2022\_\_\_\_\_\_\_\_\_ AND ENDING \_\_\_\_12/31/2022 MM/DD/YY MM/DD/YY A. REGISTRANT IDENTIFICATION Proof Services, LLC NAME OF FIRM: TYPE OF REGISTRANT (check all applicable boxes): ത്തി Security-based swap dealer 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.) 176 Broadway #15D, (No. and Street) New York 10038 NY (Zip Code) (City) (State) PERSON TO CONTACT WITH REGARD TO THIS FILING dan@prooftrading.com Dan Aisen 240-418-2486 (Name) (Area Code - Telephone Number) (Email Address) B. ACCOUNTANT IDENTIFICATION INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* Assurance Dimensions (Name – if individual, state last, first, and middle name) FL 33607 4920 West Cypress Street, Suite 102 Tampa (Address) (City) (State) (Zip Code) 4/13/2010 5036 (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 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. {3}------------------------------------------------ #### OATH OR AFFIRMATION I, \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ financial report pertaining to the firm of Proof Services, LLC\_ as a manager and the master as of December 31 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. Title: EO Notary Public #### This filing \*\* contains (check all applicable boxes): - Z (a) Statement of financial condition. - Z (b) Notes to consolidated statement of financial condition. - 2 (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). - 2 (d) Statement of cash flows. - 2 (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - □ (f) Statement of changes in liabilities subordinated to claims of creditors. - [ (g) Notes to consolidated financial statements. - 2 (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. - 2 (j) 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. - [ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - 2 (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. - 2 (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-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. - 2 (q) 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. - 2 (t) Independent public accountant's report based on an examination of the statement of financial condition. - 2 (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. - 2 (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 240.17a-12, as applicable. - □ (y) Report describing any material inadequacies found to 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 240.170-5(e)(3) or 17 CFR 240.180-7(d)(2), as applicable. {4}------------------------------------------------ #### CALIFORNIA JURAT #### GOVERNMENT CODE § 8202 .com/appear/accom/accom/ar/armana/ar/a/mail/ar/amana/a/maga/a/maga/a/maga/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/a/ 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 _ San Dieg | | | | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--| | | Subscribed and sworn to (or affirmed) before me on | | | | | | Smarl 2023
this _ L day of _ He
Date
Month
Year | | | | | J. CONRAD
Notary Public - California | (1) | | | | | San Diego County
Commission # 2371659
My Comm. Expires Aug 20, 2025 | (and (2) _____________________________________________________________________________________________________________________________________________________________________
Name(s) of Signer(s) | | | | | Place Notary Seal and/or Stamp Above | proved to me on the basis of satisfactory evidence to
be the person(s) who appeared before me.
Signature
Signature of Notary Public | | | | | 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: _ fraviurel Reports POIM V-17 | | | | | | Document Date: | Number of Pages: | | | | | Signer(s) Other Than Named Above: ____________________________________________________________________________________________________________________________________________ | | | | | | | | | | | 800000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000 ©2018 National Notary Association {5}------------------------------------------------ ## TUVWTXWYZ[\UVU[\U[XTU]Z^XUTU\V\_`aZbcbbW\_[XZ[]YZTd Xefgh`eijkel\mjhnfejoipkdhqrhj elstuuvwxtyz{x|}~~ ## zzuuxz{zwxx| hgihikmfhkfghinneqipmpofifhqhpfellmpipnminepkmfmepelstuuvwxtyz{x|}~~ioel\hnhqrhjfghjhifhk ofifhqhpfoelehjifmepongiphompqhqrhjohmfipkniogleolejfghhijfghphpkhkipkfghjhifhkpefhonehnfmh jhlhjjhkfeiofghlmpipnmiofifhqhpfoZpejempmepfghlmpipnmiofifhqhpfojhohpflimjmpiqifhjmijhohnfofghlmpipnmi eomfmepelstuuvwxtyz{x|}~~ioel\hnhqrhjipkfghjhofoelmfoehjifmepoipkmfoniogleolejfghhijfghp hpkhkmpneplejqmfmfginnepfmpjmpnmhohphjiinnhfhkmpfgh\_pmfhk^fifhoelcqhjmni #### |z|vutzzu Xghohlmpipnmiofifhqhpfoijhfghjhoepomrmmfelstuuvwxtyz{x|}~~|qipihqhpfWjjhoepomrmmfmofeh jhooip empmepepstuuvwxtyz{x|}~~|lmpipnmiofifhqhpforiohkepejikmfhijhirmninnepfmplmjqjhmofhjhkmfgfgh VrmnbeqipcnnepfmpWhjomgf`eijk\_pmfhk^fifhoVbcW`ipkijhjhmjhkferhmpkhhpkhpfmfgjhohnffestuuv wxtyz{x|}~~mpinnejkipnhmfgfgh\_^lhkhjiohnjmfmhoioipkfghimnirhjhoipkjhifmepoelfgh^hnjmfmhoipk U ngiphbeqqmoomepipkfghVbcW` hnepknfhkejikmfmpinnejkipnhmfgfghofipkijkoelfghVbcW`Xgeohofipkijkojhmjhfgifhipipkhjlejqfgh ikmffeerfimpjhioepirhioojipnhirefghfghjfghlmpipnmiofifhqhpfoijhljhhelqifhjmiqmoofifhqhpfghfghjkhfehjjej ejljikWjikmfmpnkhkhjlejqmpjenhkjhofeioohoofghjmo¡oelqifhjmiqmoofifhqhpfelfghlmpipnmiofifhqhpfoghfghj khfehjjejejljikipkhjlejqmpjenhkjhofgifjhoepkfefgeohjmo¡o^ngjenhkjhompnkhkh iqmpmpepifhofriomo hmkhpnhjhijkmpfghiqepfoipkkmoneojhompfghlmpipnmiofifhqhpfoWjikmfioempnkhkhiifmpfghinnepfmp jmpnmhoohkipkompmlmnipfhofmqifhoqikhrqipihqhpfiohiohiifmpfghehjijhohpfifmepelfghlmpipnmi ofifhqhpfohrhmhhfgifejikmfjemkhoijhioepirhriomolejejempmep #### ¢£¤zut|¥xutuw£xx¦vutzu Xgh^nghkhZbeqfifmepel[hfbimfipkhjTh§n¨elfgh^hnjmfmhoipkU ngiphbeqqmoomep^nghkhZZ^fifhqhpf elU hqfmepljeqfghbeqfifmeplej\hfhjqmpifmepelThohjhThmjhqhpfopkhjTh§n¨elfgh^hnjmfmhoipkU ngiph beqqmoomepioel\hnhqrhjipk^nghkhZZZ^fifhqhpfepU hqfmepThifmpfeVeoohoomepejbepfjeThmjhqhpfo \_pkhjTh§n¨elfgh^hnjmfmhoipkU ngiphbeqqmoomepioel\hnhqrhjohqhpfionghkhogihrhhp or©hnfhkfeikmfjenhkjhohjlejqhkmpnep©pnfmepmfgfghikmfelstuuvwxtyz{x|}~~|lmpipnmiofifhqhpfoXgh ohqhpfimplejqifmepmofghjhoepomrmmfelstuuvwxtyz{x|}~~|qipihqhpfWjikmfjenhkjhompnkhk khfhjqmpmpghfghjfghohqhpfimplejqifmepjhnepnmhofefghlmpipnmiofifhqhpfoejfghpkhjmpinnepfmpipkefghj jhnejkoioimnirhipkhjlejqmpjenhkjhofefhoffghneqhfhphooipkinnjinelfghmplejqifmepjhohpfhkmpfgh ohqhpfimplejqifmepZplejqmpejempmepepfghohqhpfimplejqifmephhiifhkghfghjfghohqhpfi mplejqifmepmpnkmpmfolejqipknepfhpfmojhohpfhkmpneplejqmfmfgªbYT«¬ªi¨§Zpejempmepfghohqhpfi onghkhopefhkirehioel\hnhqrhjijhlimjofifhkmpiqifhjmijhohnfompjhifmepfefghlmpipnmiofifhqhpfoio igeh hgihohjhkiostuuvwxtyz{x|}~~|ikmfejompnh coojipnh\mqhpomepo dijifhYejmki dijng -- - - --- - -- - !"#\$%&'())\*+'((+,\*-.+(/"!0123&2,45667"809::.;("<042?">6 @A- B 8!"\*2C.)D-'%EF2G,\*-.+(!!60H2;I)FJK.CC(,456!!>709::.;(<<<=/"=!6!6042?">6 L/<""M(3D'FFIN'.K(,\*-.+(6""09'C2JGF,456!">6 - O !"""P2JI)EF2G,\*-.+(!/<0Q2'R2+(,4566"7609::.;(8>=<""=6""042?">6 SSS=2))-'2J;(G.3(J).FJ)=;F3 {6}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION ## DECEMBER 31, 2022 #### ASSETS | Cash | S
505,290 | |---------------------------------------|--------------------| | Deposits with clearing brokers | 500,000 | | Receivable from brokers and dealers | 47,133 | | Commissions receivable | 1,419 | | Prepaid expenses and other assets | 40,433 | | TOTAL ASSETS | સ્ત્ર
1,094,275 | | LIABILITIES AND MEMBER'S EQUITY | | | LIABILITIES | | | Accounts payable | S
40,182 | | Accrued expenses | 8,911 | | TOTAL LIABILITIES | 49,093 | | MEMBER'S EQUITY | | | Additional paid-in capital | 3,440,000 | | Accumulated Deficit | (2,394,818) | | TOTAL MEMBER'S EQUITY | 1,045,182 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | ಕೊ
1,094,275 | {7}------------------------------------------------ ## STATEMENT OF OPERATIONS ## FOR THE YEAR ENDED DECEMBER 31, 2022 | REVENUES | | | |------------------------------------------|-------|-----------| | Commissions | સ્ત્ર | 142,387 | | Other revenue | | 68 | | TOTAL REVENUES | | 142,455 | | EXPENSES | | | | Technology, data and communication costs | | 467,917 | | Salaries, bonuses and benefits | | 391,187 | | Brokerage, exchange and clearance fees | | 155,141 | | Professional fees | | 71,613 | | Other | | 18,811 | | Occupancy | | 18,222 | | Regulatory fees | | 14,594 | | Travel and entertainment | | 2,409 | | TOTAL EXPENSES | | 1,139,894 | | NET LOSS | સ્ત્ર | (997,439) | {8}------------------------------------------------ # STATEMENT OF CHANGES IN MEMBER'S EQUITY ## FOR THE YEAR ENDED DECEMBER 31, 2022 | | Additional
Paid-In | Accumulated | | |--------------------------------------------------------------------------|-----------------------|------------------------------------------|-----------| | | Capital | Deficit | Total | | BALANCE - BEGINNING OF YEAR \$ 2,440,000 \$ (1,397,379) \$ 1,042,621 | | | | | Capital contribution by member | 1,000,000 | | 1,000,000 | | Net loss | | (997.439) | (997,439) | | BALANCE - END OF YEAR | | \$ 3,440,000 \$ (2,394,818) \$ 1,045,182 | | {9}------------------------------------------------ ## STATEMENT OF CASH FLOWS ## FOR THE YEAR ENDED DECEMBER 31, 2022 | OPERATING ACTIVITIES | | |-----------------------------------------------------------------------------|------------------| | Net loss | ર્તિ
(991.439 | | Adjustments to reconcile net loss to net cash used in operating activities: | | | (Increase) decrease in operating assets: | | | Receivable from brokers and dealers | (36,147) | | Commissions receivable | (883) | | Prepaid expenses and other assets | 494 | | Increase (decrease) in operating liabilities: | | | Accounts payable | 21,806 | | Accrued expenses | 1,252 | | Due to Parent | 3,358 | | TOTAL ADJUSTMENTS | (10,120) | | NET CASH USED IN OPERATING ACTIVITIES | (1,007,559) | | FINANCING ACTIVITIES | | | Capital contributions from member | 1,000,000 | | NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,000,000 | | NET DECREASE IN CASH | (7,559) | | CASH - BEGINNING OF YEAR | 512,849 | | CASH - END OF YEAR | 505,290
ಲ್ಲಿ | | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | Cash paid during the year for: | | | Interest | ಕಾ | | Taxes | ക | | | | {10}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENTS #### DECEMBER 31, 2022 #### NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS Proof Services, LLC (the "Company") is registered as an introducing broker with the Financial Industry Regulatory Authority ("FINRA") and the Securities and Exchange Commission ("SEC"). The Company has a contractual agreement with one clearing broker. The clearing broker carries the accounts of the Company's customers on their books. The Company receives commissions or per share fees for transactions conducted by other broker dealers/institutions whose users employ the technologies/software offered by its parent. The Company is exempt from Rule 15c3-3 of the SEC under paragraph (k)(2)(ii) of that rule. The Company commenced operations on October 16, 2019 and is a partially-owned subsidiary of Proof Trading, Inc. (the "Parent"). #### NOTE 2 - PROFIT INTERESTS The Company has entered into a profit interest agreement on December 8, 2022 and granted 5,100 units of the Company to the president of Proof Services LLC. The units are intended to constitute profits interests and will participate in future distributions by the Company to the extent that such distributions represent distributions of profit from operations of the Company realized after the grant of such units as determined by the Board of Directors and all outstanding capital contributions have first been paid back to the Parent Company. Fair value at grant date is determined to be zero based on the Company's analysis. #### NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES #### Basis of Financial Statement Presentation The financial statements are presented on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### Use of estimates in the preparation of financial statements 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 at the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### Cash and Cash Equivalents The Company considers all liquid investments with a maturity of three months or less to be cash equivalents. The Company maintains cash in a commercial checking account in a high credit quality financial institution. Balances have exceeded federally insured limits of \$250,000. 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. As of {11}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## DECEMBER 31, 2022 ## NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) December 31, 2022, the Company has \$25,290 in excess of federally insured limits. #### Deposits with clearing brokers On October 20, 2020, the Company executed a fully disclosed clearing agreement with APEX Clearing Corporations ("APEX"). The Company has agreed to maintain a deposit account with APEX in the amount of \$500,000 in accordance with the clearing agreement, which is held in cash in a Special Reserve account exclusively for the benefit of the Company (in accordance with the requirements of Securities Exchange Act Rule 15c3-3). #### Revenue Recognition The Company recognizes revenue in accordance with ASC-606, Revenue from Contracts with Customers. The standard provides a comprehensive, industry-neutral revenue recognition model intended to increase financial statement comparability across various companies, aiming at recognizing revenue when the entity satisfied a certain performance obligation. In relation to financial broker dealers, trading commission revenue is deemed to be recognized as an ongoing obligation as of the trade date, which is the single performance obligation for both, trade execution and clearing services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligation in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligation in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. The Company provides equity trade execution services and earns brokerage fees (commissions or per share fees) from its contracts with U.S. institutional asset managers such as mutual funds, hedge funds and pension funds. Fees are transaction based and are recognized at the point in time that the transaction is executed. Commission revenues and related clearing expenses are recorded on a trade-date basis as securities transactions occur. The trade date is the date the trade transaction is executed and processed by the Company. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or investor is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer #### Operating Expenses Operating expenses such as professional services fees, regulatory fees and broker-dealer fidelity bond insurance premiums are related to operating activities of the Company. These are expensed in the period to which they relate. {12}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## DECEMBER 31, 2022 #### NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### Taxes Income taxes are not payable by, or provided for, the Company, since the Company is a Single Member Limited Liability Company and is treated as a disregarded entity. Accordingly, in lieu of Federal and state income taxes, the member is taxed on their proportionate share of the Company's taxable income. Therefore, no provision or liability for Federal or state taxes has been included in these financial statement. The Company's sole member's tax return remains subject to examination by the appropriate taxing jurisdiction for tax years ending after December 31, 2020. In accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. At December 31, 2022. the management has determined that the Company had no uncertain tax positions that would require financial statement recognition. The determination will always be subject to ongoing reevaluations as facts and circumstances may require. #### Accounting for Incentive Units The Company accounts for profit interest awards in accordance with ASC 718, Stock Compensation ("ASC 718"), and classifies them as equity instruments based on terms and conditions of the agreement. Since the president of the Company has the rights of ownership, these incentive units are to be measured at fair value and considered vested on grant date of December 8, 2022. Furthermore, it should be noted that due to the conditions listed in the profit interest agreement, president would only be entitled to distributions of profit if all of the capital contributions by the Parent entity has been received first. As of February 28, 2023 that amount equals to \$3,440,000. In accordance with ASC 718, the Company used an appropriate valuation method to account for these incentive units. Furthermore, if the fair value is greater than Additional Paid In Capital of the Parent, then recognition of equity would take place at grant date. This approach finds conceptual support in the basic assumption that the value of an enterprise is represented by the aggregate expectations of future income and cash flows. The fair value measurement is estimated on the basis of the value indicated by current market expectations about future cash flow amounts. In constructing the valuation model, the Company utilized historical financials and the following key assumptions: selected a 5 year term into the future; the rate of return was assumed to be 8% based on the current prime rate: cash flows were determined as net profits. As of the grant date. Proof Services LLC. has received \$3,440,000 million in capital contributions. Due to the contributed capital and the fair value of these units, the fair value was assumed to be zero at grant date since the value was below additional paid in capital by the Parent. {13}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENTS ## DECEMBER 31, 2022 #### NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### Relevant Accounting Pronouncements The Company adopts all applicable, new accounting pronouncements as of the specified effective dates. Other accounting standards that have been issued or proposed by FASB or other standards setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption. #### Subsequent Events The Company has evaluated events and transactions that occurred between December 31, 2022 and March 1, 2023, the date the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. There were no subsequent events that occurred during the period that would require disclosure in this report or would be required to be recognized in the financial statements as of December 31, 2022. ## NOTE 4-RELATED PARTY TRANSACTIONS The Company has an Expense Sharing Agreement (ESA) in place with its Parent. Under the terms of the ESA, the Parent provides the Company with human capital, technology, communication and data product services. Costs that are included are allocated to the broker dealer in a fair and reasonable manner. These shared expenses include management salaries, benefits, general operational and infrastructure costs related to technology, applications. virtual mail, electronic storage, website and use of computing equipment. Data product costs are associated with data providers and linked to proprietary research platform and trading algorithm development. All these expenses are calculated monthly and allocated to the Company based on agreed upon percentages, and the Company's total reimbursements for the year amounted to \$764,905 as reflected on the Statement of Operations for the period ended December 31, 2022. #### NOTE 5-CONCENTRATIONS OF CREDIT RISK One customer's revenue comprised at 95% of the Company's revenue for the year ended December 31, 2022. Moreover, account receivable balance was comprised of 97% from one customer as reported on Statement of Financial Condition as of December 31, 2022. #### NOTE 6 - NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC 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. At December 31, 2022, the Company had regulatory net capital of \$1,003,329 which was \$903,329 in excess of its required minimum of \$100,000. The Company's percent of aggregate indebtedness to net capital ratio was 4.89%. {14}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ## DECEMBER 31, 2022 #### NOTE 7-SOFT DOLLAR ARRANGEMENTS The Company has entered into a commission sharing agreement with Westminster Research Associates LLC in September of 2021 and Virtu Financial LLC in March 2022. Both entities charge a commission percentage and provides brokerage and research products and services to authorized clients of the Company. These services might constitute eligible brokerage or research services under section 28(e) of the Securities Exchange Act of 1934, as amended ("Section 28(e)"). The Company purports that it is acting in an agent capacity in these soft dollar arrangements, since it does not control the research services before they are transferred to the authorized client. ASC 606-10-55-38 states "an entity is an agent if the entity's performance obligation is to arrange for the provision of the specified goods or services by another party. An entity that is an agent does not control the specified goods or services provided by another party before the goods or service is transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the other party to provide it the specified goods or service to be provided by the other party." The Company recognizes revenue and expense on a net basis and is included in commission income. The Company recognized \$72,855 of soft dollar expense for the year ended December 31, 2022. #### NOTE 8-RISK AND UNCERTAINTIES This is the second year the Company generated revenue since commencing operations on October 16, 2019. Capital contributions were provided by the Parent during the year ended 2022 accounted to \$1,000,000. While the Company is optimistic that it will generate sufficient revenue to fund operations, it will continue to be supported by Proof Trading Inc. through capital contributions until such time as it can independently sustain its existence. The Company continues to monitor the impact of the COVID-19 (coronavirus) outbreak closely as new developments take place. {15}------------------------------------------------ ## SUPPLEMENTAL INFORMATION COMPUTATION OF NET CAPITAL UNDER RULE 15C3-1 #### DECEMBER 31, 2022 | Net Capital | | |------------------------------------------------------------------------------------|----------------| | Total member's equity from the Statement of Financial Condition | A
1,045,182 | | Nonallowable assets from the Statement of Financial Condition | (41,852) | | Net capital before haircuts | 1,003,330 | | Net capital | 1,003,330
A | | Total aggregate indebtedness | S
49,093 | | Computation of basic net capital requirement | | | Net capital requirement (greater of \$100,000 or 6-2/3% of aggregate indebtedness) | \$ 100,000 | | Excess net capital | S
903,330 | | Percentage of aggregate indebtedness to net capital | 0/0
4 89 | The net capital computed above and the Company's computation of net capital on its December 31, 2022 FOCUS Report - Part IIA agree. As a result, no reconciliation is necessary. {16}------------------------------------------------ ## STATEMENT ON EXEMPTION FROM THE COMPUTATION FOR DETERMINATION OF RESERVE REQUIRMENTS UNDER RULE 15c3-3 #### DECEMBER 31, 2022 The Company is exempt from the requirement of Rule 15c3-3 under the exemption provided in Section k(2)(ii) of the Rule. The Company has met the exemption provision in paragraph k(2)(ii) of Rule 15c3-3 throughout the year ended December 31, 2022 without exception. {17}------------------------------------------------ ## STATEMENT ON EXEMPTION RELATING TO POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 #### DECEMBER 31, 2022 The Company is exempt from the requirements of Rule 15 c3-3 under the exemption provided in paragraph k(2)(ii) of Rule. The Company has met the exemption provision in paragraph k(2)(ii) of Rule 15c3-3 throughout the year ended December 31, 2022 without exemption. {18}------------------------------------------------ ## EXEMPTION REPORT PURSUANT TO RULE 17A-5 OF THE SECURITIES AND EXCHANGE COMMISSION ## DECEMBER 31, 2022 Proof Services, LLC is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: (1) The Company claimed an exemption from 17 C.F.R. §240.15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3 (k)(2)(ii) (2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3(k)(2)(ii) throughout the most recent fiscal year without exception. Proof Services, LLC I, Dan Aisen, affirm that, to my best knowledge and belief, this exemption report is true and correct. Dank Cliser By: Title: Chief Compliance Officer {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) # TUVWTXWYZ[\UVU[\U[XTU]Z^XUTU\V\_`aZbcbbW\_[XZ[]YZTd Xefgh`eijkel\mjhnfejoipkdhqrhj elstuuvwxtyz{x|}~~ hgihjhmhhkqipihqhpfoofifhqhpfompnkhkmpfghinneqipmpUhqfmepThejfVjoipffeThc elfgh^hnjmfmhoipkUngiphbeqqmoomepmpgmngstuuvwxtyz{x|}~~mkhpfmlmhkfghleempjemomepel bYTnpkhjgmngstuuvwxtyz{x|}~~nimqhkfghleemphhqfmepljeqbYTn mmhhqfmepjemomepipkstuuvwxtyz{x|}~~ofifhkfgifstuuvwxtyz{x|}~~qhffghmkhpfmlmhk hhqfmepjemomepfgjegeffghqeofjhnhpflmonihijmfgefhnhfmepstuuvwxtyz{x|}~~|qipihqhpfmo jhoepomrhlejneqmipnhmfgfghhhqfmepjemomepipkmfoofifhqhpfo WjjhmhionepknfhkmpinnejkipnhmfgfghofipkijkoelfghVrmnbeqipcnnepfmpWhjomgf`eijk \_pmfhk^fifhoipkinnejkmpmpnkhkmpmjmhoipkefghjjhmjhkjenhkjhofeerfimphmkhpnhirefstuuv wxtyz{x|}~~|neqmipnhmfgfghhhqfmepjemomepcjhmhmoorofipfmihoomponehfgipiphiqmpifmep fgherhnfmhelgmngmofghhjhoomepelipempmepepqipihqhpfoofifhqhpfocnnejkmphkepefhjhoo ongipempmep `iohkepejjhmhhijhpefiijhelipqifhjmiqekmlmnifmepofgifogekrhqikhfeqipihqhpfoofifhqhpfo jhlhjjhkfeirehlejfghqferhlimjofifhkmpiqifhjmijhohnforiohkepfghjemomepohflejfgmpijijig mmelThnpkhjfgh^hnjmfmhoUngiphcnfel coojipnh\mqhpomepo hgihohjhkiostuuvwxtyz{x|}~~|ikmfejompnh dijifhYejmki dijng -- - -- - ---- - --- !"#\$%&'())\*+'((+,\*-.+(/"!0123&2,45667"809::.;("<042?">6 @-A B 8!"\*2C.)D-'%EF2G,\*-.+(!!60H2;I)FJK.CC(,456!!>709::.;(<<<=/"=!6!6042?">6 - L/<""M(3D'FFIN'.K(,\*-.+(6""09'C2JGF,456!">6 O -!"""P2JI)EF2G,\*-.+(!/<0Q2'R2+(,4566"7609::.;(8>=<""=6""042?">6 SSS=2))-'2J;(G.3(J).FJ)=;F3 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.