# IDFC CAPITAL (USA) INC. X-17A-5 (2020-05-18) — Broker-dealer annual report - Company: IDFC CAPITAL (USA) INC. - Form: X-17A-5 - Filed: 2020-05-18 - Period: 2020-03-31 - Accession: 0001499647-20-000001 - CIK: 1499647 - File #: 8-68685 - Material weakness: No - Auditor: Citrin Cooperman & Company - Auditor location: New York, NY - Contact: Fredric Obsbaum - Phone: 212-897-1694 - Signed by: Fredric Obsbaum (CFO / FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1499647/000149964720000001/sidfc19.pdf --- {0}------------------------------------------------ UNITED STA TES SECURJTIBS AND EXCHANGE COMMJSSION Washington, D.C. 20549 0MB APPROVAL 0MB Number: 3235-01 23 Expires: August 31, 2020 Estimated average burden hours per response ... 12.00 8-68685 I SEC FILE NUMBER I ## **ANNUAL AUDITED REPORT FORM X-17A-5 PARTID** #### **FACING PAGE** ## **Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Role 17a-S Thereunder** | REPORT FOR THE PERIOD BEGINN1NG | -~ | ___
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MM/00/YY | AND ENDING | 03/31
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MM/DD/YY | | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|---------------------------------|------------|--------------------------|--|--| | A. REGISTRANT IDENTIFICATION | | | | | | | | NAME OF BROKER -
DEALER: | | | | | | | | IDFC Capital (USA), Inc. | | | | OFFICIAL USE ONLY | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | FJRMID. NO. | | | | | | | | | | | | 600 Third Avenue
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Suite 241 | (No. and Street) | | | | | | | | | | | | | | | New York | NY | | | 10116 | | | | (City) | (State) | | | (Zip Code) | | | | | | | | o. | | | | | B. ACCOUNT ANT IDENTlFICATION | | | | | | | | | | | | | | | | | | | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONT ACT TN REGARD TO THIS REPORT
Fredric Obsbaum
INDEPENDENT PUB UC ACCOUNT ANT whose opinion is contained in this Report*
Citrin Cooperman & Company, LLP | (Name - if individual, state last, first, middle name) | | | | | | | 529 Fifth A venue | New York | | NY | 10017 | | | | {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. | | | | | | | *\*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 240.17 a-5 (e)(2).SEC* 1410 (3-91) {1}------------------------------------------------ IDFC CAPITAL (USA), INC. (A Wholly Owned Subsidiary ofIDFC Securities Limited) ### STATEMENT OF FINANCIAL CONDITION MARCH 31, 2020 \*\*\*\*\*\* {2}------------------------------------------------ # **TABLE OF CONTENTS** ## **This report\*\* contains (check all applicable boxes):** - [x] Report of Independent Registered Public Accounting Firm. - [x] (a) Facing Page. [x] - [x] (b) Statement of Financial Condition. - [] (c) Statement of Operations. - [] (d) Statement of Changes in Stockholder's Equity. - [] (e) Statement of Cash Flows. - [] (f) Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable). - Notes to Financial Statements. - [] (g) Computation of Net Capital for Brokers and Dealers Pursuant to Rule l 5c3-1 under the Securities Exchange Act of 1934. - [] (h) Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934. - [] (i) Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule I5c3-3 under the Securities Exchange Act of 1934. - [ ] G) A Reconciliation, including appropriate explanations, of the Computation of Net Capital Pursuant to Rule l 5c3-l and the Computation for Determination of Reserve Requirements Under Rule l 5c3-3 (not applicable). - [ ] (k) A Reconciliation Between the Audited and Unaudited Statements of Financial Condition With Respect to Methods of Consolidation (not applicable). - [x] (I) An Affirmation. - [] (m) A Report Describing the Broker-Dealer's Compliance with the Exemptive Provisions of subparagraph k of SEC Rule I 5c3-3 (the "Exemption Report") and Report oflndependent Registered Public Accounting Firm Thereon. - \* \* *For conditions of confidential treatment of certain portions of this filing, see section 2 40.17 a-5 (e)(3).* {3}------------------------------------------------ #### AFFIRMATION I, Fredric Obsbaum, affirm that, to the best of my knowledge and belief, the accompanying statement, of financial condition pertaining to IDFC Capital (USA), Inc. as of March 31, 2020, is true and correct. I further affirm that neither the Company nor any officer or director bas any proprietary interest in any ,..,.un, **cla,sified** ,ol,ly as~ L ~ Signature CFO/FINOP Title {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Audit Committee of IDFC Securities Limited and Stockholder of IDFC Capital (USA), Inc. ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of IDFC Capital (USA), Inc. as of March 31, 2020, and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of IDFC Capital (USA), Inc. as of March 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 IDFC Capital (USA), Inc.'s management. Our responsibility is to express an opinion on IDFC Capital (USA), Inc.'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 IDFC Capital (USA), Inc. 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 IDFC Capital (USA), Inc.'s auditor since 2018. N ew York, New York May 13, 2020 {5}------------------------------------------------ ## **Statement of Financial Condition March 31, 2020** | Assets | | |---------------------------------------------------------------|---------------| | Cash | \$
869,065 | | Due from parent | 87,905 | | Deferred tax asset | 26,100 | | Income tax receivable | 4,065 | | Other assets | 11,118 | | Total assets | \$
998,253 | | Liabilities and Stockholder's Equity | | | Liabilities: | | | Accrued expenses and other liabilities | \$
11,101 | | Stockholder's equity: | | | Common stock (\$.01 par value; 100,000,000 shares authorized, | | | issued and outstanding) | 1,000,000 | | Accumulated deficit | (12,848) | | Total stockholder's equity | 987,152 | | Total liabilities and stockholder's equity | \$
998,253 | {6}------------------------------------------------ ## **Notes to Statement of Financial Condition March 31, 2020** ### **1. Organization** IDFC Capital (USA), Inc. (the "Company") is a wholly owned subsidiary of IDFC Securities Limited ("the Parent"). The Parent is a wholly owned subsidiary of IDFC Limited ("the U1timate Parent"). The Company is a broker-dealer registered with the Securities and Exchange Com.mission (the "SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company's principal business activity is brokering transactions in Indian equities for U.S. institutional clients under SEC Rule I Sa-6a(3). The customers introduced by the Company transact their business on a delivery versus payment basis with settlement of the transactions facilitated by the Parent in India for securities traded in Indian stock markets. ## **2. Significant Accounting Policies** ### **Basis of Ptesentation** The Company's statement of financial condition was prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). ## **Use of Estimates** In preparing the statement of fmancial condition, management makes estimates and assumptions that may affect the reported amounts. Such estimates include assumptions used in determining the provision for income taxes. Actual results could differ from these estimates. ### **Fixed Assets** Fixed assets represent equipment and are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the assets' estimated useful lives of 3 years. ### **Transfer Pricing Income** The Company receives fees from the Parent for performing sales and marketing functions on behalf of the Parent in order to attract institutional customers. The fees are based on expenses incurred by the Company in relation to the marketing activities such as compensation and benefits, professional services, occupancy, travel and other operating costs, plus a transfer pricing agreement profit factor of7%. #### **Income Taxes** Deferred tax assets and liabilities are recognized for the future tax effect of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates. 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. {7}------------------------------------------------ ## **Notes to Statement of Financial Condition March 31, 2020** ## **2. Significant Accounting Policies (continued)** ## **Income Taxes (continued)** The Company applies a single, comprehensive model for how a company should recognize, measure, present and disclose in its statement of financial condition uncertain tax positions that the company has taken or expects to take on its tax returns. Income tax expense is based on pre-tax accounting income, including adjustments made for the recognition or derecognition related to uncertain tax positions. The Company evaluates uncertain tax positions by reviewing against applicable tax law alJ positions taken by the Company with respect to tax years for which the statute of limitations remains open. A tax benefit from an uncertain tax position would be recognized when it is considered to be more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. ## **3. Income Taxes** Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the statement of financial condition. As of March 31, 2020, the Company has a deferred tax asset of \$26,100, recorded in the accompanying statement of :financial condition and is a result of temporary differences primarily related to amortization of organization costs. The Company has determined that it is more likely than not that the deferred tax asset will be realized and therefore there is no valuation allowance against the deferred tax asset. Based upon the Company's review of its federal, state, local income tax returns and tax filing positions, the Company determined no unrecognized tax benefits for uncertain tax positions were required to be recorded, and as such, there were no reserves recorded for uncertain tax positions for the Company's open tax years. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record significant amounts of unrecognized tax benefits within the next twelve months. ## **4. Concentration of Credit Risk** In the normal course of business, the Company's activities involve transactions with the Parent. These activities may expose the Company to risk in the event the Parent is unable to fulfill its contractual obligations. The Company maintains its cash balances at a major financial institution which at times may exceed federally insured limits. The Company does not believe that these amounts are exposed to significant risk. {8}------------------------------------------------ ## **Notes to Statement of Financial Condition March 31, 2020** ## **5. Regulatory Requirements** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1) ("the Rule") under the Securities Exchange Act of 1934. The Company has elected to use the alternative method permitted by the Rule, which requires that the Company maintain minimum net capital, as defined, shall not be less than \$250,000. At March 31, 2020, the Company had net capital of \$857,964 which was \$607,964 in excess of its required minimum net capital of \$250,000. The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934 as the Company's activities are limited to those set forth in the condition for exemption appearing in paragraph (k)(2)(i). ## **6. Related Party Transactions** The Company maintains a service level agreement with the Parent whereby the Company distributes research on its behalf. The Parent compensates the Company by paying its expenses plus a markup. At March 31, 2020 \$87,905 remained unpaid and is reflected as due from Parent on the statement of financial condition. The activities of the Company include significant transactions with affiliates and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Company had operated as an unaffiliated business. ## **7. Commitments and Contingencies** The Company rents office space under an operating lease, which expires August 31, 2020. The future minimum base rent payments required under this operating lease is \$12,175. There is no pending litigation against the Company. ## **8. Fixed Assets** Fixed assets consisted of the following at March 31, 2020: | Equipment | \$
46,735 | |--------------------------------|--------------| | Less: accumulated depreciation | (46,735) | | | \$ | {9}------------------------------------------------ ## **Notes to Statement of Financial Condition March 31, 2020** ## **9. Leases** 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 commencement, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease cost associated with its short-term leases on a straight-line basis over the term of the lease. #### **10. Subsequent Events** The Company has evaluated subsequent events up to the date on which the financial statements are issued. The Company's evaluation noted no subsequent events that require adjustment to, or disclosure in, this financial statement #### **11. New Accounting Pronouncements** In June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Currently, GAAP requires an "incurred loss" methodology that delays recognition until it is probable a loss has been incurred. Under the new standard, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This provision of the guidance requires a modified retrospective transition method with a cumulative-effect adjustment in retained earnings upon adoption. This guidance is effective for the Company on April 1, 2020, and the Company adopted this guidance on that date. The impact of this guidance was not material to the Company. ## **12. 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 and financial 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 governmental advisories and restrictions placed on the financial markets and business activities. The impact 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. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.