# FINANTIA USA INC. X-17A-5 (2021-02-24) — Broker-dealer annual report
- Company: FINANTIA USA INC.
- Form: X-17A-5
- Filed: 2021-02-24
- Period: 2020-12-31
- Accession: 0001000316-21-000002
- CIK: 1000316
- File #: 8-48578
- Material weakness: No
- Auditor: WithumSmithBrown, PC
- Auditor location: New York, NY
- Contact: michael Stupay
- Phone: 212-509-7800
- Signed by: Filipe Marques (CCO)
Original filing: https://www.sec.gov/Archives/edgar/data/1000316/000100031621000002/s20fin.pdf
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# **Finantia USA** Inc.
Statement of Financial Condition Pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 December 31, 2020
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| | UNITED ST A TES | | 0MB APPROVAL |
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| | 0MB Number: 3235-0123
Expires: October 31, 2023 | | |
| SECURITIES AND EXCHANGE COMMISSION | | | |
| | Washington, D.C. 20549 | | Estimated average burden |
| | | | hours per response 12.00 |
| | ANNUAL AUDITED REPORT | | SEC FILE NUMBER |
| | FORM X-17A-5 | | 8-48578 |
| | PART III | | |
| | FACING PAGE | | |
| | Information Required of Brokers and Dealers Pursuant to Section 17 of the
Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | |
| | | ___ | |
| REPORT FOR THE PERIOD BEGINNING | ---'0"-'l-'--'/0'---"l=/2=0
-
MM/DD/YY | AND ENDING | 12/31/20 |
| | | | MM/DD/YY |
| | A. REGISTRANT IDENTIFICATION | | |
| NAME OF BROKER -
DEALER: | | | |
| | | | OFFICIAL USE ONLY |
| Finantia USA Inc. | | | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM ID. NO. |
| | 1221 Brickell A venue Suite 1460 | | |
| | (No. and Street) | | |
| Miami | FL | | 33131 |
| (City) | (State) | | (Zip Code) |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | |
| Michael Stupay | | | (212) 509-7800 |
| | | | (Area Code -
Telephone No.) |
| | | | |
| | B. ACCOUNT ANT IDENTIFICATION | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | |
| | | | |
| | WithumSmith + Brown | | |
| | (Name -
if individual, state last, first, middle name) | | |
| 1411 Broadway 9th Floor | New York | NY | 10018 |
| (Address) | (City) | (State) | (Zip Code) |
| CHECK ONE: | | | |
| [!] Certified Public Accountant | | | |
| D
Public Accountant | | | |
| | | | |
| D
Accountant not resident in United States or any of its possessions. | | | |
| | FOR OFFICIAL USE ONLY | | |
| | | | |
| | | | |
*\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See section 240. /7a-5(e)(2).SEC* 14IO (3-91)
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# **Finantia USA Inc.**
## **TABLE OF CONTENTS**
#### **This report\*\* contains (check all applicable boxes):**
- [x] Report oflndependent Registered Public Accounting Firm.
- [x] Facing Page.
- [x] Statement of Financial Condition.
- [ ] Statement of Earnings.
- [ ] Statement of Cash Flows.
- [] Statement of Changes in Members' Equity.
- [] Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable).
- [] Computation of Net Capital for Brokers and Dealers Pursuant to Rule I 5c3-1 under the Securities Exchange Act of 1934.
- [ ] Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934.
- [ ] Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule I 5c3-3 under the Securities Exchange Act of 1934.
- [] A Reconciliation, including appropriate explanations, of the Computation of Net Capital Pursuant to Rule I 5c3-1 (included with item (g)) and the Computation for Determination of Reserve Requirements Under Rule l 5c3-3 (included in item (g)).
- [] A Reconciliation Between the Audited and Unaudited Statements of Financial
- Condition With Respect to Methods of Consolidation (not applicable).
- [x] An Affirmation.
- [] A copy of the SIPC Supplemental Report.
- [ ] A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit (Supplemental Report on Internal Control).
- [] Report of Independent Registered Public Accounting Firm regarding Rule 15c3-3 exemption report.
- [] Management Statement Regarding Compliance with the Exemption Provision for SEC Rule l 5c3-3
- \*\* *For conditions of confidential treatment of certain portions of this filing, see section 2 4 0.17 a-5 (e)(3).*
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#### **AFFIRMATION**
I, Filipe Marques, affirm that, to the best of my knowledge and belief, the accompanying statement of financial condition pertaining to Finantia USA Inc. at December 31, 2020, is true and correct. I further affirm that neither the Company nor any officer or director has any proprietary interest in any account classified solely as that of a customer.
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Subscribed and swo"I I I .., . -b I I oe ~v\. \) I °'~ *w\_* lC-1 r ~ t>G) . to before e O'L\~ \~ l 'C> \ l
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## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Management and Stockholder of Finantia USA Inc.
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Finantia USA Inc. (the "Company") as of December 31 , 2020, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31 , 2020, in conformity with accounting principles generally accepted in the United States of America.
#### **Basis for Opinion**
This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this 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 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 presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion ..
We have served as the Company's auditor since 2014.
**WithumSmith+Brown, PC** February 23, 2021
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## **Finantia USA Inc. Statement of Financial Condition December 31 , 2020**
| Assets
Cash | \$ 2,185,045 |
|-------------------------------------------------------------|--------------|
| Fail to deliver | 58,558 |
| Due from affiliates | 191 ,785 |
| Leasehold improvements, furniture and equipment | |
| (net of accumulated depreciation of \$136,123) | 112,692 |
| Operating lease right-of-use assets | 153,551 |
| Security deposits | 26,959 |
| Prepaid income taxes | 107,490 |
| Other assets | 29,162 |
| Total assets | \$ 2,865,242 |
| Liabilities and Stockholder's Equity | |
| Liabilities: | |
| Fail to receive | \$
58,558 |
| Operating lease liabilities | 169,925 |
| Deferred taxes payable | 18,200 |
| Accrued expenses and other liabilities | 52,589 |
| Total liabilities | 299,272 |
| Stockholder's Equity: | |
| Common stock (\$.01 par value; 1,000 shares authorized, 200 | |
| issued and outstanding) | 2 |
| Additional paid-in capital | 514.219 |
| Retained earnings | 2,051.749 |
| | |
| Total stockholder's equity | 2.565,970 |
| Total liabilities and stockholder's equity | \$ 2,865,242 |
The accompanying notes are an integral part of these financial statement.
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## **1. Organization and Business**
Finantia USA Inc. (the "Company"), incorporated under the laws of the State of Delaware, is a broker-dealer in securities registered with the Securities and Exchange Commission (the "SEC") and a member of the Financial Industry Regulatory Authority ("FINRA"). The Company is a wholly owned subsidiary of Finantia Holdings B.V. (the "Parenf'), which is an indirect wholly owned subsidiary of Banco Finantia S.A. (the "Ultimate Parent").
The Company acts as a broker for institutional customers in the purchase and sale of foreign securities. The Company executes and clears all of these foreign trades through two separate affiliates. These trades are settled on a delivery versus payment basis.
#### **2. Summary of Significant Accounting Policies**
#### **Basis of Presentation**
This financial statement is prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reported period. Actual results could differ from these estimates.
### **Revenue Recognition**
The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The guidance requires the Company to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.
## **Transfer Pricing Revenue:**
Pursuant to a Services Agreement between the Company and two affiliates, the Company acts on behalf of those affiliates, providing execution and brokerage services for transactions with its institutional investors primarily in the purchase and sales of foreign securities, in accordance with SEC Rule l Sa-6. This represents the only performance obligation which is satisfied over time as the services are provided. The Company and the affiliates agreed to a cost-plus arrangement, which is in agreement with a transfer pricing study obtained by both the Company and its affiliates.
The amounts due pursuant to this agreement are received periodically by the Company from the affiliates in the normal course of business. Amounts due from the affiliates at December 31 , 2020 were \$191 ,785.
#### **Cash**
Cash deposits are held at one financial institution and therefore are subject to the credit risk at this financial institution. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits.
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#### **2. Summary of Significant Accounting Policies (continued)**
#### **Leasehold Improvements, Furniture and Equipment**
Leasehold improvements are recorded at cost, net of accumulated amortization, which is calculated on a straight-line basis over the lesser of the economic useful life of the improvement or the term of the lease. Furniture and equipment are recorded at cost, net of accumulated depreciation, which is calculated on a straight-line basis over estimated useful lives of three to five years.
## **Fair Value of Financial Instruments**
Certain financial instruments are carried at amounts that approximate fair value due to the short-tenn nature and negligible credit risk. These instruments include cash, short-term receivables, accounts payable, and other liabilities.
## **Income Taxes**
The Company's earnings are subject to applicable U.S. federal, state and local taxes. The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. In the event it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is recorded. Management has detennined that no valuation allowance is required.
At December 31, 2020, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. The Company's conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof.
The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized as of and for the year ended December 3 1, 2020.
#### **Leases**
The Company recognizes its leases in accordance with ASC Topic 842, Leases ("ASC 842"). The guidance increases transparency and comparability by requiring the recognition of right-of-use assets and lease liabilities on the statement of financial condition.
The Company conducts an analysis of contracts, including real estate leases and service contracts to identify embedded leases, to determine the initial recognition of right-of-use assets ("ROU") and lease liabilities, which required subjective assessment over the detennination of the associated discount rates.
The discount rate is the implicit rate if it is readily detenninable or otherwise the Company uses its incremental borrowing rate. The implicit rates of the Company's leases are not readily detenninable and accordingly, the Company uses its incremental borrowing rate based on the infonnation available at the commencement date for all leases. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment.
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#### **2. Summary of Significant Accounting Policies (continued)**
The Company has elected, for all underlying classes of assets, to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commence~ent, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease costs associated with short-term leases on a straight-line basis over the lease term.
The Company's office space leases require it to make variable payments for the Company's proportionate share of the building's property taxes, insurance, and common area maintenance. These variable lease payments are not included in lease payments used to determine lease liability and are recognized as variable costs when incurred.
Other information related to leases as of December 31 , 2020 is as follows:
| Weighted average remaining operating lease term | 2.33 years | |
|----------------------------------------------------|------------|--|
| Weighted average discount rate of operating leases | 5.5% | |
#### **Allowance for Credit Losses**
Effective January I, 2020, the Company adopted 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 Company could determine there are no expected credit losses in certain circumstances ( e.g., based on the credit quality of the client).
The Company identified fees and other receivables (including, but not limited to, receivables related to securities transactions, and advisory fees) as impacted by the new guidance. ASC 326 specifies that the Company adopt the new guidance prospectively by means of a cumulative-effect adjustment to the opening member's equity as of January 1, 2020. Accordingly, the Company recognized no adjustment upon adoption.
The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments, including fees and other receivables utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with fees and other receivables is not significant and accordingly, the Company has not provided an allowance for credit losses at December 31, 2020.
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## **3. Customer Transactions**
In the nonnal course of business, the Company effects transactions on behalf of customers on a basis of either delivery or receipt versus payment. If these transactions do not settle due to failure to perform by either the customer or the counterparty, the Company may be obligated to discharge the obligation of the nonperforming party and, as a result, may incur a loss if the market value of the securities is different from the contract amounts. The risk of loss to the Company is normally limited to the differences in the market value of the securities compared to their contract amounts. At December 31, 2020, the Company had fail to deliver and fail to receive each in the amount of \$58,558.
#### **4. Regulatory Requirements**
The Company is subject to Securities and Exchange Commission Uniform Net Capital Rule 15c3 l and has elected to compute its net capital requirements in accordance with the Alternative Net Capital Method. Under this alternative, net capital, as defined, shall not be less than \$250,000. At December 31, 2020, the Company had net capital of approximately \$2,090,000, which exceeded the required net capital by approximately \$1 ,840,000.
The Company does not carry customer accounts or perform custodial functions relating to customer securities and, accordingly is exempt from SEC Rule l 5c3-3, under the Securities Exchange Act of 1934, pursuant the provisions of paragraph (k)(2)(i) of that rule.
## **5. Leasehold Improvements, Furniture and Equipment**
Details of leasehold improvements, furniture and equipment are as follows:
| Leasehold Improvements | \$
173,723 |
|-------------------------------------------------|---------------|
| Furniture | 32,629 |
| Equipment | 42,463 |
| | 248,815 |
| Less: accumulated depreciation and amortization | (136,123) |
| | \$
112,692 |
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#### **6. Commitments**
The Company leases office space under a non-cancellable lease agreement in Florida which expires May 31 , 2023. The Company leases space in New York on a month-to-month basis. Maturities of lease liability under the noncancelable operating lease at December 31, 2020 are as follows:
| 2021 | \$
75,980 |
|-----------------------------------|---------------|
| 2022 | 78,645 |
| 2023 | 26,977 |
| Total undiscounted lease payments | 181,602 |
| Less: | |
| Imputed interest | (
11 ,677) |
| Total lease liabilities | \$
169,925 |
The minimum annual rents are subject to escalation based on increases in real estate tax and certain operating costs incurred by the lessor. The Company also has security deposits of\$26,959 relating to the leases. Rent expense for the year was approximately \$93,500.
#### **7. Related Party Transactions**
In accordance with the Services Agreement, two affiliates will pay the Company a fee that is defined by the agreement. At December 31 , 2020, the Company is due \$99,728 and \$92,057 from the two affiliates under this arrangement.
The terms of any of these transactions may not be the same as those that would otherwise exist or result from agreements and transactions among unrelated parties.
#### **8. Income Taxes**
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financ ial reporting purposes and the amounts used for income tax purposes. At December 31, 2020, the significant components of the Company's deferred tax assets and liabilities, at their tax effect, are as follows:
| \$ 10,600 |
|-------------|
| |
| \$
3,500 |
| 25,300 |
| 28,800 |
| \$ 18,200 |
| |
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## **9. COVID-19**
During the 2020 calendar year, the World Health Organization has declared COVID-19 to constitute a "Public Health Emergency of International Concern". This pandemic has disrupted economic markets and the economic impact, duration and spread of the COVID-19 virus is uncertain at this time. The financial performance of the Company is subject to future developments related to the COVID-19 outbreak and possible government advisories and restrictions placed on the financial markets and business activities. The impacts on financial markets and the overall economy, all of which are highly uncertain, cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company's results may be materially affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
#### **10. Subsequent Events**
Management of the Company has evaluated events or transactions that may have occurred since December 31, 2020 and determined that there are no material events that would require disclosure in the Company's financial statements.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.