# FREC SECURITIES LLC X-17A-5 (2023-09-28) — Broker-dealer annual report - Company: FREC SECURITIES LLC - Form: X-17A-5 - Filed: 2023-09-28 - Period: 2023-06-30 - Accession: 0001881777-23-000005 - CIK: 1881777 - File #: 8-70797 - Type: Broker-dealer - Material weakness: No - Auditor: Ohab and Company, PA - Auditor location: Maitland, FL - Contact: Dimitri Rodrigo - Phone: 6179925031 - Signed by: Ashley Rodabaugh (President & CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1881777/000188177723000005/frecsecuritiesfinancials23.pdf --- {0}------------------------------------------------ **SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORTS 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** FILING FOR THE PERIOD BEGINNING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TYPE OF REGISTRANT (check all applicable boxes): ܆ Broker-dealer ܆ Security-based swap dealer ܆ Major security-based swap participant ܆ Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (No. and Street) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (City) (State) (Zip Code) PERSON TO CONTACT WITH REGARD TO THIS FILING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Name) (Area Code – Telephone Number) (Email Address) **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Name – if individual, state last, first, and middle name) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Address) (City) (State) (Zip Code) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Date of Registration with PCAOB)(if applicable) (PCAOB Registration Number, if applicable) **FOR OFFICIAL USE ONLY** \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: KĐƚ͘ϯϭ͕ϮϬϮϯ Estimated average burden hours per response: SEC FILE NUMBER Wh>/ ϴͲϳϬϳϵϳ ϬϱͬϬϭͬϮϬϮϮ ϬϲͬϯϬͬϮϬϮϯ &Z^hZ/d/^>> ϭϳϭϮE^dZd͕ϯZ&>KKZ ^E&ZE/^K ϵϰϭϬϱ ŝŵŝƚƌŝZŽĚƌŝŐŽ ϲϭϳͲϵϵϮͲϱϬϯϭ ŝŵŝƚƌŝΛĨƌĞĐ͘ĐŽŵ OHAB AND COMPANY, PA 100 E SYBELIA AVE, SUITE 130 MAITLAND FL 32751 JULY 28, 2004 1839 **UNITED STATES** OMB APPROVAL 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.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | ƐŚůĞLJZŽĚĂďĂƵŐŚ | I, ___________________________________________, swear (or affirm) that, to the best of my knowledge and belief, the | | |-----------------|-------------------------------------------------------------------------------------------------------------------------------|--| | | &Z^hZ/d/^>>
financial report pertaining to the firm of ____________________________________________________________, as of | | \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, 2\_\_\_\_\_, is true and correct. I further swear (or affirm) that neither the company nor any :ƵŶĞϯϬ ϬϮϯ partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. ![](_page_1_Picture_4.jpeg) | Signature: | __________________________________________
_____________________________ | | |------------|-----------------------------------------------------------------------------|--| | Title: | WƌĞƐŝĚĞŶƚΘK | | \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Notary Public \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Notarized online using audio-video communication #### **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). - ܆) d) Statement of cash flows. - ܆) 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. - ܆) 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. - ܆) 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. - ܆) l) 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 capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - ܆) p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - ܆) 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. - ܆) t) Independent public accountant's report based on an examination of the statement of financial condition. - ܆) u) Independent public accountant's report based on an examination of the financial report or 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. - ܆) y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - ܆) z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ - *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.* {2}------------------------------------------------ # **FREC SECURITIES, LLC** Statements of Financial Condition For the 14 months ended May 1, 2022 to June 30, 2023 {3}------------------------------------------------ ## FREC SECURITES, LLC Statement of Financial Condition Index For the 14 months ended May 1, 2022 to June 30, 2023 # Contents | Report of Independent Registered Public Account Firm 2 | | |--------------------------------------------------------|--| | Statement of Financial Condition 3 | | | Notes to Financial Statements 4 | | {4}------------------------------------------------ #### **Report of Independent Registered Public Account Firm** ![](_page_4_Picture_1.jpeg) {5}------------------------------------------------ #### **Frec Securities, LLC** #### **Statement of Financial Condition** #### **As of June 30, 2023** **Assets** | Current Assets: | | | |-------------------------------------|-----------------|--| | Cash & Cash Equivalents | \$
270,856 | | | Accounts Receivable | 465 | | | Clearing Deposit | 250,253 | | | Other Current Asset | 27,033 | | | Total Current Assets | \$
548,607 | | | Liabilities & Member's Equity | | | | Current Liabilities: | | | | Accounts Payable | \$
16,225 | | | Accrued Expenses | 13,569 | | | Intercompany Payable | 120,750 | | | Total Current Liabilities | \$
150,545 | | | | | | | Member's Equity | | | | Capital Contributions | \$
1,558,961 | | | Retained Earnings | (1,160,899) | | | Total Member's Equity | \$
398,063 | | | Total Liabilities & Member's Equity | \$
548,607 | | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ ## **Frec Securities, LLC** ## **Notes to Financial Statements** ## **For the 14 months ended May 1, 2022 to June 30, 2023** ## Note 1 – Summary of Significant Accounting Policies ### Organization and Nature of Operations Frec Securities LLC (the "Firm") is a Delaware Limited Liability Company registered as an introducing broker- dealer with the Securities and Exchange Commission (SEC) and is a member of Financial Industry Regulatory Authority (FINRA). The Firm is a wholly owned subsidiary of Frec Markets Inc. (the "Parent"). The firm was approved as a member of FINRA and commenced operations on May 5th, 2022. This is the firm's first annual financial statements, and as such, they cover the period of May 2022 to June 2023. The firm maintains an online platform allowing customers to purchase and sell most publicly traded stocks and ETFs available on the major US stock exchanges commission free, and certain money market funds within margin accounts. The firm also offers its customers access to margin loans collateralized by their securities. Customer funds and securities are held by a third-party custodian and clearing firm, Apex Clearing Corporation ("Apex"). Apex is responsible for servicing customer accounts by executing, clearing, and settling trades; preparing and distributing account statements and trade confirmations; and extending credit to margin accounts. #### Financial Statement Presentation The accounting policies and reporting practices of the Firm conform to the practices in the broker-dealer industry and are in accordance with the standards of the Public Company Accounting Oversight Board (United States). #### Government and Other Regulation The Firm's business is subject to significant regulation by various governmental agencies and self-regulatory organizations, including the SEC and FINRA. Such regulation includes, among other things, periodic examinations by these regulatory bodies to determine whether the Firm is conducting and reporting its operations in accordance with the applicable requirements of these organizations. As a registered broker-dealer, the Firm is subject to the SEC's net capital rules (Rule 15c3-1) which require that the Firm maintain a minimum net capital, as defined. ### Use of Estimates The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at June 30, 2023, and revenues and expenses during the year then ended. The actual outcome of the estimates could differ from the estimates made in the preparation of the financial statements. ### Cash and Cash Equivalents {7}------------------------------------------------ For purposes of the Statement of Cash Flows, the Firm considers short-term investments, which may be withdrawn at any time without penalty, which will become available within ninety days from the date of the Financial Statements, to be cash equivalent. The Firm maintains its operating cash in a bank checking account insured by the Federal Deposit Insurance Corporation up to \$250,000. The Firm also maintains two brokerage accounts with clearing broker Apex Clearing Corporation. ## Income Taxes No provisions have been made for income taxes since the Firm is a single member limited liability company and is considered a disregarded entity for income tax purposes. The sole member, Frec Markets Inc., is liable for income taxes based on the Firm's taxable income. ## Revenue Recognition: Interest income rebate is interest earned on cash held in customer accounts with the Clearing Broker. The Firm recognizes the income monthly, which is when the Firm believes its performance obligation has been contractually satisfied in all material respects. # Note 2 — Concentration of Risk The Firm is engaged in brokerage activities in which counterparties primarily include other financial institutions. In the event counterparties do not fulfill their obligations, the Firm may be exposed to risk. The type of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Firm's policy to review, as necessary, the credit standing of each counterparty. For the year ended June 30, 2023, APEX was the only major counterparty that the Firm engaged in brokerage activities. # Note 3 — Net Capital Requirements The Firm is subject to the SEC Uniform Net Capital Rule("SECRule15c3-1"), under which the Firm is required to maintain a minimum net capital, as defined, of the greater of \$5,000 or 6.67% of aggregate indebtedness and requires that the percentage of aggregate indebtedness to net capital, as defined, shall not exceed 15 to 1 or 6.67%. At June 30, 2023, the Firm had net capital of \$371,029, which was \$360,993 in excess of its required net capital. The Firm's ratio of aggregated indebtedness to net capital was 0.4 to 1 at June 30, 2023. # Note 4 — Related Party Transactions The Firm has an expense agreement with its Parent, whereby the Firm makes use of a portion of the Parent's office, personnel, insurance coverage, and accounting and H&R services. The {8}------------------------------------------------ Firm incurred \$468,418 in shared expenses which are recorded on the Statement of Operations of the firm along with a related payable to the Parent. At June 30, 2023, the Firm has an outstanding payable of \$120,750 to the Parent. The Parent has contributed \$1,122,667, which is in capital contributions. # Note 5 - Commitments and Contingencies The Firm does not have any commitments or contingencies as of June 30, 2023. # Note 6 - Concentration of Credit Risk The Firm maintains its cash and savings accounts at one financial institution. Cash balances are insured by the Federal Deposit Insurance Corporation up to \$250,000 per insured bank account. The Firm carried balances that exceed this limit. # Note 7 - Going Concerns The accompanying financial statements have been prepared assuming the Firm will continue as a going concern. Due to significant losses since inception, it may be necessary to obtain additional capital. Management has received assurances from the Parent that they have the wherewithal to, and will, infuse additional capital in the future should the Firm need it to fund its operations. ## Note 8 – Subsequent Events The Firm's management has evaluated subsequent events through the date the financial statements were available to be issued, and has concluded that there are no significant subsequent events that would require adjustment to or disclosure in the financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.