# JAYPEE INTERNATIONAL, INC. X-17A-5 (2021-06-29) — Broker-dealer annual report - Company: JAYPEE INTERNATIONAL, INC. - Form: X-17A-5 - Filed: 2021-06-29 - Period: 2021-03-31 - Accession: 0001327612-21-000006 - CIK: 1327612 - File #: 8-66945 - Material weakness: No - Auditor: Ryan and Juraska - Auditor location: Chicago, IL - Contact: Sorabh Arora - Phone: 312-254-5044 - Email: info@jaypeeusa.com - Website: jaypeeusa.com - Signed by: Sorabh Arora (President) Original filing: https://www.sec.gov/Archives/edgar/data/1327612/000132761221000006/Binderfinal2021Audit.pdf --- {0}------------------------------------------------ #### **CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES PURSUANT TO SEC RULE 17a-5(d) AND REGULATION 1.10 UNDER THE COMMODITY EXCHANGE ACT** **March 31, 2021** {1}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 # ANNUAL AUDITED REPORT FORM X-17A-5 PART III | | OMB APPROVAL | | |--------------------------|--------------|---------------------------| | OMB Number: | | 3235-0123 | | Expires: | | October 31, 2023 | | Estimated average burden | | | | | | hours per response 12.00 | | SEC FILE NUMBER | | | |-----------------|--|--| | 8-66045 | | | 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 04/01/2020 | | | | AND ENDING 03/31/2021 | | |--------------------------------------------------------------------------|--|---------------------------------------------------------------------|------------------|------------------------------------------------|--| | | | MM/DD/YY | | MM/DD/YY | | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: Jaypee International, Inc. | | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | | 30 South Wacker Drive, Suite 2200 | | | | | | | | | (No. and Street) | | | | | Chicago | | Illinois | | 60606 | | | (City) | | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | | Sorabh Arora | | | | 312-254-5044
(Area Code - Telephone Number) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | Ryan and Juraska | | | | | | | | | (Name - if individual, state last, first, middle name) | | | | | 141 W. Jackson Blvd. St 2250 Chicago | | | Rame Roman Roman | 60604 | | | (Address) | | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | | Certified Public Accountant
Public Accountant | | | | | | | | | 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 m must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(c)(2) > Potential 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. {2}------------------------------------------------ #### OATH OR AFFIRMATION #### I. Sorabh Arora swear (or a more , swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Jaypee International, Inc. of March 31st a money and correct and correct. I further swear (or affirm) that neither the company nor any partner, principal officer or director has any proprietary interest in any account classified solely as that of a customer, except as follows: President Notary Public This report \*\* contains (check all applicable boxes): - (a) Facing Page. - 7 (b) Statement of Financial Condition. - (c) (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 Changes in Financial Condition. - (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. - | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. - V (g) Computation of Net Capital. - (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. - (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. (i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. - (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of consolidation. - (I) An Oath or Affirmation. - (m) A copy of the SIPC Supplemental Report. - (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). ![](_page_2_Picture_21.jpeg) Signature {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) RYAN & JURASKA LLP Certified Public Accountants 141 West Jackson Boulevard Chicago, Illinois 60604 Tel: 312 972 0062 Fax: 312.922.0672 ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of Jaypee International, Inc. and Subsidiary #### Opinion on the Financial Statements We have audited the accompanying consolidated statement of financial condition of Jaypee International, Inc. and Subsidiary (the "Company") as of March 31, 2021, the related statements of operations, changes in stockholder's equity, and cash flows for the year then ended that you are filing pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 and Regulation 1.10 under the Commodity Exchange Act (CEAct), and the related notes and supplementary schedules (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Jaypee International, Inc. and Subsidiary as of March 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion These consolidated financial statements are the responsibility of Jaypee International, Inc. and Subsidiary's management. Our responsibility is to express an opinion on the Company's consolidated financial statements 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 Jaypee International, Inc. and Subsidiary in accordance with the U.S. federal securities laws and regulations of the Securities and Exchange Commission and the PCAOB. We have served as Jaypee International, Inc. and Subsidiary's auditor since 2008. 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, 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 consolidated 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 consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. #### Supplemental Information The Supplementary Schedules (the "supplemental information") have been subjected to audit procedures performed in conjunction with the audit of Jaypee International, Inc. and Subsidiary's consolidated financial statements. The supplemental is the responsibility of Jaypee International, Inc. and Subsidiary's management. Our audit procedures included determining whether the supplemental information reconciles to the consolidated financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the mation. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5 and pursuant to Regulation 1.10 under the CEAct. In our opinion, the Supplementary Schedules are fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. Chicago, Illinois June 25, 2021 {4}------------------------------------------------ ### **Assets** | Cash | \$
494,007 | |------------------------------------------------------------|-----------------| | Receivables from brokers | 546,648 | | Exchange membership, at cost (market value \$100,000) | 118,500 | | Receivable from affiliate | 13,530 | | Deposits and other | 11,040 | | | \$
1,183,725 | | | | | Liabilities and Stockholder's Equity | | | Liabilities: | | | Accounts payable | 20,761 | | Short term loan | 15,000 | | | 35,761 | | Stockholder's Equity | | | Common stock, \$1 par value; 47,000,000 shares authorized, | | | 44,583,200 shares issued and outstanding | 44,583,200 | | Accumulated (deficit) | (43,435,236) | | Total Equity | 1,147,964 | | | \$
1,183,725 | {5}------------------------------------------------ **Jaypee International, Inc. and Subsidiary Statement of Operations, Consolidated Year Ended March 31, 2021** ### **Revenue** | Commissions | \$
202,990 | |------------------------------------|-----------------| | Commodity Platform fee income | 918,000 | | Interest income | 1,943 | | Trading (Loss) | (15,645) | | | \$
1,107,288 | | Expenses | | | Employee compensation and benefits | \$
117,000 | | Commissions and exchange fees | 9,908 | | Professional fees | 19,810 | | Regulatory and membership fee | 14,604 | | Technology fees | 31,735 | | Occupancy | 41,911 | | Other expenses | 21,072 | | Office expenses | 29,564 | | Franchise and other taxes | 44,817 | | | \$
330,421 | | Net income | \$
776,867 | {6}------------------------------------------------ #### **Jaypee International, Inc. and Subsidiary** #### **Statement of Changes in Stockholder's Equity, Consolidated** **Year Ended March 31, 2021** | | Common
Stock | Accumulated
Deficit | Total | |---------------------------|------------------------|------------------------|-----------| | Balance at April 1, 2020 | \$
44,583,200
\$ | (44,212,103) \$ | 371,097 | | Net income | - | 776,867 | 776,867 | | Balance at March 31, 2021 | \$
44,583,200
\$ | (43,435,236) \$ | 1,147,964 | {7}------------------------------------------------ ## **Cash flows from operating activities** | Net income | \$
776,867 | |-------------------------------------------------|---------------| | Adjustments to reconcile net income to net cash | | | Provided by operating activities: | | | (Increase) decrease in operating assets: | | | Receivables from brokers | (413,793) | | Deposit and Other | 97,716 | | Right of Use Asset | 16,096 | | Increase (decrease) in operating liabilities: | | | Accounts payable | 2,364 | | Lease Liability | (16,096) | | Net cash provided by operating activities | 463,154 | | Cash flows from financing activities | | | Proceeds from Short term loan | 15,000 | | Net cash provided by financing activities | 15,000 | | Increase in cash | 478,154 | | Cash at beginning of the year | 15,853 | | Cash at end of the year | \$
494,007 | {8}------------------------------------------------ ## **Notes to Consolidated Financial Statements March 31, 2021** ## **1. Organization and Business** Jaypee International, Inc. (JPII) was incorporated in the State of Delaware in June 2003. JPII is the sole owner of Aeon Capital Management Inc. (collectively, "the Company"). JPII is registered as a broker-dealer with the Securities and Exchange Commission, is registered with CFTC as an independent introducing broker under the Commodity Exchange Act and is a member of both the Financial Industry Regulatory Authority ("FINRA") and the National Futures Association (the "NFA"). The Company engages in trading of securities, options on securities, futures, options on futures, OTC derivatives, and forward contracts for its own account. The Company also solicits and accepts orders to buy and sell equity transactions and futures contracts or option on futures while not accepting or holding margin deposits. These deposits are held by respective clearing brokers. The Company is a wholly owned subsidiary of Jaypee Capital Services, Ltd. (the "Parent"), a securities and futures brokerage firm based in India. ## **2. Summary of Significant Accounting Policies** #### Accounting policies The Company follows Generally Accepted Accounting policies (GAAP) as established by the Financial Accounting Standards Board (the FASB), to ensure consistent reporting of financial condition, result of operation and cash flows. #### Revenue Recognition Securities, futures, options on futures, and forward transactions are recorded on trade date and carried at fair value based on quoted prices, with resulting gains and losses reflected in income. Unrealized gains and losses from proprietary transactions are reflected in trading gains and losses, net of direct trading expenses. Commission income, platform fee income and expense are recorded on accrual basis. The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied at a point of time or over time. #### Commission Income The Company buys and sells securities on behalf of its customers. Each time a customer enters a buy or a sell transaction, the Company charges a commission. Comission and related clearing expenses are recorded on the trade date (the date the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with its customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from customer. #### Algorithm DMA Platform and Network Fee The Company excels in algorithm trading driven by behavioral science and artificial intelligence in equity, currency, and commodity markets. The Company actively researches and refines its state-of-the-art technology to differentiate itself. The Company's distributed platform automates and integrates opportunity search, execution, and robust risk management, delivering consistent returns from scalable innovative trading strategies. {9}------------------------------------------------ ### **Notes to Consolidated Financial Statements, continued March 31, 2021** ## **2. Summary of Significant Accounting Policies, Continued** The Company provides its customers with this in house proprietary algorithmic software program, servers, co-location services, and P2P network connectivity. The Company receives a monthly fee from its clients for providing these services. The client is invoiced for these services each month which is when its performance obligation is satisfied. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"). This ASU amends several aspects of the measurement of credit losses on financial instruments, including replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses model ("CECL"). Under CECL, the allowance for losses reflects management's estimate of credit losses over the remaining expected life of the financial assets and expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, would be recognized in earnings. Expected credit losses will be measured based on historical experience, current conditions, and forecasts that affect the collectability of the reported amount and will be generally recognized earlier than under current standards. The standard is effective for the Company for fiscal years beginning after December 15, 2019. The adoption of this standard on April 1, 2020, did not have a material impact on the Company's financial statement. #### Principles of Consolidation The consolidated financial statements include the accounts of Jaypee International, Inc. and its wholly-owned subsidiary, Aeon Capital Management Inc. All significant inter-Company balances and transactions have been eliminated. #### Income Taxes Deferred income taxes are recorded to reflect the future tax consequences of difference between the carrying value of assets and liabilities for income tax and financial reporting purposes, and for the benefits of tax credit and loss carryforwards. The amounts of any future tax benefits are reduced by a valuation allowance to the extent such benefits are not expected to be fully realized. The Company has adopted FASB ASC topic 740, which provides guidance regarding how uncertain income tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. FASB ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. The Company continues to evaluate uncertain tax positions, if any, and income tax contingencies under FASB ASC topic 450 Accounting for Contingencies. FASB ASC 450 requires the Company to accrue for losses it believes are probable and can be reasonably estimated. Management believes the impact of FASB ASC 740 on its financial position and results of operations will have an immaterial effect on its consolidated financial statements. #### Securities and Derivatives Valuation Securities and Derivatives are recorded at fair value in accordance with FASB ASC 820, *Fair Value Measurement and Disclosure* (see note 3). {10}------------------------------------------------ ## **Notes to Consolidated Financial Statements, continued March 31, 2021** ## **2. Summary of Significant Accounting Policies, Continued** ## Use of Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management determines that the estimates utilized in preparing consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates. Exchange Memberships Exchange memberships are held for operating purposes and carried at cost. ## **3. Fair Value Measurement and Disclosure** FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy of fair value inputs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income, or cost approach, as specified by FASB ASC 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. - x *Level 1.* Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. - x *Level 2.* Inputs other than quoted prices included within 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 availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Company's accounting policy {11}------------------------------------------------ ## **Notes to Consolidated Financial Statements, continued March 31, 2021** ## **3. Fair Value Measurement and Disclosure, Continued** regarding the recognition of transfers between levels of the fair value hierarchy. There were no significant transfers among levels 1, 2, and 3 during the year. The Company values its investments based on the following principles and method of valuation: The Company held no Level 1, Level 2 or Level 3 investments as of March 31st, 2021. ## **4. Related Party Transactions** At March 31, 2021, the Company had a receivable from Aeon Emerging Market Fund, an affiliate. The Company had no transactions with the affiliate during the year ended March 31st, 2021. ## **5. Financial Instruments, Market Risk and Concentration of Credit Risk** FASB ASC 815, Derivatives and Hedging requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit risk related contingent features in derivative agreements. The disclosure requirements of ASC 815 distinguish between derivatives, which are accounted for as "hedges" and those that do not qualify for such accounting. Although the Company may sometimes use derivatives, the Company reflects derivatives at fair value and recognizes changes in fair value through the consolidated statement of operations, and as such do not qualify for ASC 815 hedge accounting treatment. Futures contracts provide for the delayed delivery/receipt of securities or money market instruments with the seller/buyer agreeing to make/take delivery at a specified date, at a specified price. Fair value of futures contracts is included in receivable from broker dealers. The contractual or notional amounts related to these financial instruments reflect the volume and activity and do not reflect the amounts at risk. Futures contracts are executed on an exchange, and cash settlement is made daily for market movements. Accordingly, futures contracts generally do not have credit risk. Options contracts grant the purchaser, for the payment of a premium, the right to either purchase from or sell to the writer a specified financial instrument under agreed terms. As a writer of options contracts, the Company receives a premium in exchange for bearing the risk of unfavorable changes in the price of the financial instruments underlying the options. In connection with its proprietary trading activities, the Company enters transactions involving derivative financial instruments, primarily exchange traded futures and options on futures contracts. These financial instruments may have market risk or credit risk in excess of those amounts recorded in the consolidated statement of financial condition. Since the Company does not clear its own securities and futures transactions, it has established accounts with clearing brokers for this purpose. {12}------------------------------------------------ **Notes to Consolidated Financial Statements, continued March 31, 2021** ### *5***. Financial Instruments, Market Risk and Concentration of Credit Risk, Continued** The Company's customer's securities and futures transactions are introduced on a fully disclosed basis with its clearing brokers. The clearing brokers carry all the accounts of the customers of the Company and offer the following services: execution, collection of payment of funds and receipt and delivery of securities and futures relative to customer transactions. Off-balance sheet risk exists with respect to these transactions due to the possibility that customer maybe unable to fulfil their contractual commitments wherein the clearing broker may charge any losses that it incurs to the Company. The Company seeks to minimize this risk through procedures designed to monitor the creditworthiness of its customers and that the customer transactions are properly executed with the Company's clearing broker. At March 31st 2021, a credit concentration consisted of 47% of the net equity of the Company with the Company's clearing brokers. Additionally, the Company had balance at banks which exceeded federally insured deposit limits throughout the year. Compliance with the various guidelines is monitored daily and, pursuant to such guidelines, customers may be required to deposit additional collateral or reduce positions when necessary. ## **6. Receivable From Brokers** Amounts due from brokers on March 31st, 2021, consist of cash of \$526,269 and commissions receivable of \$20,379. ## **7. Guarantees** FASB ASC 460, *Guarantees*, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460, G*uarantees*, defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in underlying (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability, or equity security of a guaranteed party. Customer transactions are introduced to and a cleared through the Company's clearing brokers on a fully disclosed basis. Under the terms of the clearing agreements, the Company is required to guarantee the performance of its customer in meeting contracted obligations. In conjunction with the broker, the Company seeks to control the risk associated with its customer activities by requiring the customers to maintain collateral in compliance with various regulatory and internal guidelines and, pursuant to such guidelines, customer maybe required to deposit additional collateral, or reduce positions where necessary. The maximum potential amount of future payments that the Company could be required to make could not be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others. {13}------------------------------------------------ ## **Notes to Consolidated Financial Statements, continued March 31, 2021** #### **8. Income Taxes** In December 2017, The Tax Cuts and Jobs Act went into effect and reduced the corporate federal tax rate to 21%. Additionally, the Tax Cuts and Jobs act amended IRC section 172, Net operating loss deductions ("NOL"). Under the amendment, NOLs can be carried forward indefinitely for all losses incurred after tax years ending December 31st, 2017. At March 31, 2021, the Company has a net operating loss carryforward available to offset future taxable income of approximately \$44,207,000 of which \$43,601,000 expires in years 2025 through 2037. The Company has a deferred tax asset of approximately \$11,742,050 arising from this net operating loss carryforward, which is fully reserved as realization is not assured. During the year ended March 31st, 2021, the net operating loss carryforward and deferred tax asset decreased by approximately \$65,000 and \$20,000, respectively. ### **9. Lease Commitment** The Company conducts its operations in leased office facilities and annual rent is charged to current operations. The leases are subject to escalation clause, based on the operating expenses of the lessor. The Company has obligations under non-cancelable leases that will expire December 2021. At March 31, 2021, the aggregate minimum annual rental commitment under these leases are as follows: December 31st, 2021, \$12,900 Rent expense for the year ended March 31, 2021, totaled \$41,911 and is included in occupancy on the statement of operations. The Company recognizes leases in accordance with FASB ASC Topic 842, Leases. The guidance was amended to require public business entities to recognize a right of use asset and a lease liability in the statement of financial condition. The amendment is effective for the Company's fiscal year beginning after December 15, 2018. For year ended March 31st 2021, the Company did not recognize a right of use asset and lease liability as Company only had short-term leases of 12 months or less. #### **10. Minimum Capital Requirements** The Company is a broker-dealer subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1) and an introducing broker subject to the Commodity Futures Trading Commission minimum capital requirements (Regulation 1.17). Under these rules, the Company is required to maintain "net capital" of 6 2/3 percent of "aggregate indebtedness" or \$100,000, whichever is greater, as these terms are defined, or the amount required by one of its self-regulatory organizations. At March 31, 2021, the Company had net capital and net capital requirements of \$1,019,894 and \$100,000, respectively. The net capital rule may effectively restrict stockholder withdrawals. {14}------------------------------------------------ **Notes to Consolidated Financial Statements, continued March 31, 2021** #### **11. PPP loan** At March 31st, 2021, the Company had a bank loan through US Small Business Administration. The loan of \$15,000 is due April 30th, 2022, with an interest of 1.0 percent. The loan has since been forgiven in April 2021 and was utilized to pay for the required expenses per the Paycheck Protection Program guidelines. ## **12. Subsequent Events** Management has evaluated events and transactions from April 1, 2021, through June 25th, 2021, the date the consolidated financial statements were available to be issued. There were no material events requiring disclosure in the Company's consolidated financial statements. {15}------------------------------------------------ SUPPLEMENTARY SCHEDULES . {16}------------------------------------------------ | Jaypee International, Inc. and Subsidiary | | | | | | |--------------------------------------------------------------------------------|----|-----------|--|--|--| | Computation of Net Capital for Brokers and Dealers pursuant to SEC Rule 15c3-1 | | | | | | | and CFTC Regulation 1.17 of the Commodity Exchange Act
March 31, 2021 | | | | | | | | | | | | | | Computation of net capital | | | | | | | Total stockholder's equity | \$ | 1,147,964 | | | | | Deduct stockholder's equity not allowable for Net Capital | | | | | | | Addition PPP | | 15,000 | | | | | Total stockholder's equity qualified for net capital | | 1,162,964 | | | | | | | | | | | | Deductions and /or charges:
Nonallowable assets:
Receivable from affiliate
Exchange membership
Deposits and other
Commodity futures contracts and spot commodities
proprietary capital charges | 13,530
118,500
11,040 | (143,070)
0 | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|-----------------| | Net capital before haircuts on securities positions | | 1,019,894 | | Haircuts on securities:
Haircut on other securities
Undue Concentration Charges | \$ | 0 | | Net capital | | \$
1,019,894 | | Computation of basic capital requirement | | | | 0LQLPXPQHWFDSLWDOUHTXLUHGJUHDWHURIRUҀ
of aggregate indebtedness) | | 100,000 | | Excess net capital | | \$
919,894 | | Computation of aggregate indebtedness | | | | Aggregate indebtedness | | \$
20,761 | | Ratio of aggregate indebtedness to net capital | |
2.04 | | | | | There are no material differences between the above computation and the Company's corresponding unaudited Form FOCUS Part II of form X-17-A-5 as of March 31, 2021 and pursuant to CFTC rule 1.17. {17}------------------------------------------------ ## **JAYPEE INTERNATIONAL, INC.** ## **SUPPLEMENTAL INFORMATION** **March 31st, 202** # **Schedule II Computation of Determination of Reserve Requirements Pursuant to Rule 15c3-3** **The Company did not handle any customer cash or securities during the year ended March 31 ,202** ## **Information for Possession or Control** **Requirements under Rule 15c3-3** **The Company did not handle any customer cash or securities during the year ended March 31 ,202** {18}------------------------------------------------ ![](_page_18_Picture_0.jpeg) RYAN & JURASKA LLP Certified Public Accountants 141 West Jackson Boulevard Tel: 312.922.0062 Fax: 312.922.0672 Chicago, Illinois 60604 ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of Jaypee International, Inc. and Subsidiary We have reviewed managements, included in the accompanying Jaypee International, Inc. Exemption Report, in which (1) Jaypee International, Inc. and Subsidiary (the Company) claimed an exemption from 17 C.F.R. §15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3 (k)(2)(ii) (the "exemption provisions") and (2) the Company stated that it met the identified exemption provisions in 17 C.F.R. §240.15c3-3 (k)(2)(ii) throughout the most recent financial year without exception. The Company is also filing this Exemption Report because the business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 are limited to proprietary trading, and the Company (1) did not directly receive, hold, or otherwise owe funds or securities for or to customers; (2) did not cary accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent financial year without exception. The Company's management is responsible for compliance with the exemption and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, therefore, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934 and the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, and related SEC Staff Frequently Asked Questions. Chicago, Illinois June 25, 2021 {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) ## **Jaypee International, Inc Exemption Report** Jaypee International, Inc. (The Company) is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. § 240. 17 a – 5, "Reports to be made by certain broker and dealers"). This exemption report was prepared as required by 17 ͘F.R. § 240.17a-5(d) (1) and (4). To the best of its knowledge and belief, the Company states the following: **JAYPEE INTERNATIONAL INC.** 30 S. WACKER DR, SUITE1700, CHICAGO,IL, 60606 TEL: +1 312 254 5044 FAX: +1 312 275 7300 Email: info@jaypeeusa.com, website: www. jaypeeusa.com - ;ϭͿ 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). - ;ϮͿ The Company met the identified exemption provisions in 17 C.F.R. §240. 15c3-3 (k)(2)(ii) throughout the most recent financial year without exception. - ;ϯͿ dŚĞŽŵƉĂŶLJŝƐĂůƐŽĨŝůŝŶŐƚŚŝƐdžĞŵƉƚŝŽŶZĞƉŽƌƚďĞĐĂƵƐĞƚŚĞŽŵƉĂŶLJ͛ƐŽƚŚĞƌďƵƐŝŶĞƐƐ ĂĐƚŝǀŝƚŝĞƐĐŽŶƚĞŵƉůĂƚĞĚďLJ&ŽŽƚŶŽƚĞϳϰŽĨƚŚĞ^ZĞůĞĂƐĞEŽ͘ϯϰͲϳϬϬϳϯĂĚŽƉƚŝŶŐ ĂŵĞŶĚŵĞŶƚƐƚŽϭϳ͘&͘Z͘ΑϮϰϬ͘ϭϳĂͲϱĂƌĞůŝŵŝƚĞĚƚŽƉƌŽƉƌŝĞƚĂƌLJƚƌĂĚŝŶŐ͖ĂŶĚƚŚĞ ŽŵƉĂŶLJ;ϭͿĚŝĚŶŽƚĚŝƌĞĐƚůLJŽƌŝŶĚŝƌĞĐƚůLJƌĞĐĞŝǀĞ͕ŚŽůĚ͕ŽƌŽƚŚĞƌǁŝƐĞŽǁĞĨƵŶĚƐŽƌ ƐĞĐƵƌŝƚŝĞƐĨŽƌŽƌƚŽĐƵƐƚŽŵĞƌƐ͕;ϮͿĚŝĚŶŽƚĐĂƌƌLJĂĐĐŽƵŶƚƐŽĨŽƌĨŽƌĐƵƐƚŽŵĞƌƐ͖ĂŶĚ;ϯͿĚŝĚ ŶŽƚĐĂƌƌLJWĂĐĐŽƵŶƚƐ;ĂƐĚĞĨŝŶĞĚŝŶZƵůĞϭϱĐϯͲϯͿƚŚƌŽƵŐŚŽƵƚƚŚĞŵŽƐƚƌĞĐĞŶƚĨŝƐĐĂů LJĞĂƌǁŝƚŚŽƵƚĞdžĐĞƉƚŝŽŶ͘ # **Jaypee International, Inc**. I, ^ŽƌĂďŚƌŽƌĂ swear (or affirm) that, to the best knowledge and belief, this exemption Report is true and correct. ^ŽƌĂďŚƌŽƌĂ President :ƵŶĞϮϱƚŚ, 20Ϯϭ {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) RYAN & JURASKA LLP Certified Public Accountants 141 West Jackson Boulevard Chicago, Illinois 60604 Tel: 312.922.0062 Fax: 312.922.0672 ## INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL To Management, the Board of Directors and Stockholder of Jaypee International, Inc. and Subsidiary, In planning and performing our audit of the consolidated financial statements of Jaypee International, Inc. and Subsidiary (the "Company"), as of and for the year ended March 31, 2021, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States) (PCAOB), our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Company's internal control. Also, as required by Regulation 1.16 of the Commodity Futures Trading Commission (CFTC), we have made a study of the practices and procedures followed by the Company including consideration of control activities for safeguarding customer and firm assets. This study included tests of such practices and procedures that we considered relevant to the objectives stated in Regulation 1.16 in making the periodic computations of minimum financial requirements pursuant to Regulation 1.17. Because the Company is an introducing broker (as defined by CFTC Regulation 1.3(mm)), we did not review the practices and procedures followed by the Company in making the following: - 1. The daily computations of the segregation requirements of Sections 4d(a)(2) and 4d(f)(2) of the Commodity Exchange Act and the regulations thereunder, and the segregation of funds based on such computations; - 2. The daily computations of the foreign futures and foreign options secured amount requirements pursuant to Regulation 30.7 of the CFTC. The management of the Company is responsible for establishing and maintaining internal control and the practices and procedures referred to in the preceding paragraph. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls and of the practices and procedures referred to in the preceding paragraph and to assess whether those practices and procedures can be expected to achieve the CFTC's previously mentioned objectives. Two of the objectives of internal control and the practices and procedures are to provide management with reasonable but not absolute assurance that assets for which the Company has responsibility are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit preparation of consolidated financial statements in conformity with U.S. generally accounting principles. Requlation 1.16(d)(2) list additional objectives of the practices and procedures listed in the preceding paragraph. Because of inherent limitations in internal control and the practices and procedures referred to above, error or fraud may occur and not be detected. Also, projection of any evaluation of them to future periods is subject to the risk that they may become inadequate because of changes in conditions or that the effectiveness of their design and operation may deteriorate. {21}------------------------------------------------ ![](_page_21_Picture_0.jpeg) \$ *deficiency in internal control* H[LVWV ZKHQ WKH GHVLJQ RU RSHUDWLRQ RI D FRQWURO GRHV QRW DOORZ PDQDJHPHQW RU HPSOR\HHV LQWKH QRUPDO FRXUVH RI SHUIRUPLQJWKHLU DVVLJQHGIXQFWLRQVWR SUHYHQW RU GHWHFWDQGFRUUHFWPLVVWDWHPHQWVRQDWLPHO\EDVLV\$*material weakness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ource: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.