# FREC SECURITIES LLC X-17A-5 (2025-09-29) — Broker-dealer annual report - Company: FREC SECURITIES LLC - Form: X-17A-5 - Filed: 2025-09-29 - Period: 2025-06-30 - Accession: 0001881777-25-000002 - CIK: 1881777 - File #: 8-70797 - Type: Broker-dealer - Material weakness: No - Auditor: Ohab and Company, PA - Auditor location: Maitland, FL - Contact: Dimitri Rodrigo - Phone: 617-992-5031 - Email: dimitri@frec.com - Website: frec.com - Signed by: Dimitri Rodrigo (Head of Brokerage Operations) Original filing: https://www.sec.gov/Archives/edgar/data/1881777/000188177725000002/FY2025FrecSECPUBLIC1.pdf --- {0}------------------------------------------------ 16#-\*\$ 8-70797 07/01/2024 06/30/2025 # FREC SECURITIES LLC ■ | | 171 2ND STREET, 3RD FLOOR | | |--|---------------------------|--| | | | | | SAN FRANCISCO | CA | 94105 | | |---------------------|--------------|------------------|--| | | | | | | | | | | | Dimitri Rodrigo | 617-992-5031 | dimitri@frec.com | | | | | | | | | | | | | | | | | | OHAB AND COMPANY,PA | | | | | 100 E Sybelia Ave # 130 | Maitland | FL | 32751 | |-------------------------|----------|------|-------| | | | | | | JULY 28, 2004 | | 1839 | | | | | | | | | | | | | | | | | {1}------------------------------------------------ #### OATH OR AFFIRMATION | | Ashley Rodabaugh | |--|------------------| | | | , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of FREC SECURITIES LLC as of the consisted on the country of the county of as fof 6/30 2 025 , is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may proprietary interest in any account classified solely as that of a customer. State of Texas County of Harris Sworn to and subscribed before me on 09/29/2025 by Ashley Elizabeth Rodabaugh. Toppy 2017 Notary Public, State of Texas #### 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 the leisto the interior ento of more in the presented for 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. - [1) 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. - | | 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 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. - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - O (z) Other: - \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.180-7(d)(2), as applicable. Electronically signed and notarized online using the Proof platform. Signature: Ashley Elizabeth Rodabaugh Title: President & CCO > Tony Mitchell id number ![](_page_1_Picture_41.jpeg) {2}------------------------------------------------ # **FREC SECURITIES, LLC** Statement of Financial Condition As of June 30, 2025 {3}------------------------------------------------ ### FREC SECURITES, LLC #### Annual Financial Statements Index #### As of June 30, 2025 # 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) 100 E. Sybelia Ave. Suite 130 Maitland, FL 32751 Certified Public Accountants Email: pam@ohabco.com Telephone 407-740-7311 Fax 407-740-6441 #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of Frec Securities, LLC #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Frec Securities, LLC as of June 30, 2025 and the related notes (collectively refered to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of Frec Securities, LLC as of June 30, 2025 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of Frec Securities, LLC's management. Our responsibility is to express an opinion on Frec Securities, LLC's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Frec Securities, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 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 statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Ohal and Company, on We have served as Frec Securities, LLC's auditor since 2023. Maitland, Florida September 29, 2025 {5}------------------------------------------------ #### **Frec Securities, LLC** #### **Statement of Financial Condition** #### **As of June 30, 2025** #### **Assets** | Current Assets: | | |----------------------------------------|---------------| | Cash & Cash Equivalents | \$
180,163 | | Accounts Receivable | 57,291 | | Clearing Deposit | 524,173 | | Intercompany Receivable from Affiliate | 170,492 | | Other Current Asset | 32,006 | | Total Current Assets | \$
964,125 | #### **Liabilities & Member's Equity** | Current Liabilities: | | | |-------------------------------------|-----------------|--| | Accounts Payable | \$
62,808 | | | Accrued Expenses | 25,389 | | | Intercompany due to Parent | 74,040 | | | Intercompany due to Affiliate | 121,551 | | | Total Current Liabilities | \$
283,788 | | | | | | | Member's Equity | | | | Capital Contributions | \$
3,508,961 | | | Retained Earnings | (2,828,624) | | | Total Member's Equity | \$
680,337 | | | | | | | Total Liabilities & Member's Equity | \$
964,125 | | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ ### **Frec Securities, LLC** ### **Notes to Financial Statements** ### **As of June 30, 2025** ### 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") and is affiliated with Frec Advisors LLC (the "Affiliate"), another subsidiary of the Parent. The Firm was approved as a member of FINRA and commenced operations on May 5th, 2022. 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. The Affiliate receives full or limited discretionary authority from customers to trade within opened brokerage accounts with the Firm to provide managed direct indexing investment and treasury management services to its clients. 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 accompanying financial statements are prepared in accordance with the U.S generally accepted accounting principles ("GAAP"). The Firm's revenues are derived primarily from margin interest on customer debit balances, agency transactions, and related brokerage services. #### 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, 2025, 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. {7}------------------------------------------------ #### Cash and Cash Equivalents For purposes of the Statement of Cash Flows, the Firm considers all highly liquid investments with original maturities of three months or less to be cash equivalents. 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. #### Payment for Order Flow The firm generates revenue through a payment for order flow (PFOF) agreement with Apex. In this structure, the firm routes all customer orders to Apex. Apex, in turn, directs those orders to market makers based on its own routing strategy. Apex receives compensation from the market makers for executing these orders and shares 50% of this revenue with the firm. The firm has no influence over where the orders are executed or the specific amount of compensation received. #### Investments As of June 30, 2025, the Firm held \$527,000 in U.S. Treasury bills classified as held-to-maturity. These securities are carried at amortized cost, which totaled \$523,991 at period end. The estimated fair value was \$523,906. The difference between amortized cost and fair value represents an unrealized gain. However, because the Firm intends to hold these securities to maturity, the gain is not recognized in the financial statements in accordance with ASC 320. The firm purchases T-bills with maturities of less than ninety days. {8}------------------------------------------------ ### Cash Deposits with Clearing Brokers Cash deposits with clearing broker consist of funds on deposit with the Clearing Broker pursuant to the Firm's clearing agreement. The agreement requires the firm to maintain a minimum clearing deposit of \$500,000, based on the Firm having only U.S customers and executing trades exclusively through Apex. As of June 30, 2025, the Firm had \$524,088.22 in the clearing deposit account, the difference representing earnings on the money on deposit. As long as the Firm continues to use the clearing and execution services of the Clearing Broker, the Firm will be required to maintain the cash on deposit. ### Due from clearing broker and commissions receivables Due from the clearing broker and commissions receivable represent monies due the Firm from the Clearing Broker through securities generated transactions. An allowance for doubtful is not recorded since the Clearing Broker adjusts accounts monthly to actual collections. ### 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, 2025, APEX was the only major counterparty that the Firm engaged in brokerage activities. ### Note 3 — Credit Losses The Firm follows ASC Topic 326, Financial Instruments – Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset. Under the accounting update, the Firm has the ability to determine that there are no expected credit losses in certain circumstances (e.g, based on the credit quality of the customer). The Firm had accounts receivable as of June 30, 2025, 2024, and 2025 of \$16,493 and \$57,290, respectively. # Note 4 — Net Capital Requirements The Firm is subject to the SEA Uniform Net Capital Rule("SEA Rule15c3-1"), 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, 2025, the Firm had net capital of \$599,691, which was \$571,312in excess of its required net capital. The Firm's ratio of aggregated indebtedness to net capital was 0.47 to 1 at June 30, 2025. {9}------------------------------------------------ # Note 5 — 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 Firm incurred \$237,889 in shared expenses, which are recorded on the Statement of Operations. At June 30, 2025, the Firm has an outstanding payable of \$74,040 to the Parent. The Parent has contributed \$850,000 in capital contributions, and \$400,000 in debt forgiveness is recorded as capital contributions. The Firm debits management fees and credits promotion bonuses to customer brokerage accounts on behalf of the Affiliate through its clearing broker. As of June 30, 2025, the Firm has an outstanding receivable of \$170,492 and an outstanding payable of \$121,551 to the Affiliate. ### Note 6 - Commitments and Contingencies The Firm does not have any commitments or contingencies as of June 30, 2025. ### 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. ### Note 9 – Fair Value Measurements The Firm measures certain financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are defined as follows: {10}------------------------------------------------ # 2Note 9 – Fair Value Measurements (CONTINUED) - x Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Firm can access at the measurement date. - x Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. - x Level 3: Unobservable inputs for the asset or liability. The following table presents the Firm's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025: | | Level 1 | Level 2 | Level 3 | Total | |---------------------|-----------|---------|---------|-----------| | U.S. Treasury bills | \$523,906 | - | - | \$523,906 | The Firm's investments in U.S. Treasury bills are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. There were no transfers between levels of the fair value hierarchy during the year ended June 30, 2025. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.