# QUANTEDGE CAPITAL USA INC. X-17A-5 (2021-02-23) — Broker-dealer annual report - Company: QUANTEDGE CAPITAL USA INC. - Form: X-17A-5 - Filed: 2021-02-23 - Period: 2020-12-31 - Accession: 0001685816-21-000002 - CIK: 1653572 - File #: 8-69679 - Material weakness: No - Auditor: Baker Tilly US, LLP - Auditor location: New York, NY - Contact: Pascal Rcohe - Phone: 2127514422 - Signed by: Daniel Lowen (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1653572/000168581621000002/shorqe.pdf --- {0}------------------------------------------------ Financial Statements and Supplementary Information Pursuant to Rule 17a-5(e)(3) under the Securities and Exchange Act of 1934 As of and for the year ended December 31, 2020 (with Reports of Independent Registered Public Accounting Firm Therein) (Confidential Treatment Requested) {1}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 #### OMB APPROVAL OMB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response ... . . . . 12.00 ## ANNUAL AUDITED REPORT FORM X-17A-5 PART III | | | | SEC FILE NUMBER | |---------|--|--|-----------------| | B-69679 | | | | 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 | 01/01/20 | AND ENDING | 12/31/20 | | |------------------------------------------------------------------------------------------------------|---------------------------------------------------------|------------|--------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. RECISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: QUANTEDGE CAPITAL USA INC. | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | 540 MADISON AVENUE | | | | | | | (No. und Street) | | | | | New York | NY | | 10022 | | | (City) | (State) | | (Zip Cade) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Diamel Lowen 212 326-8933 | | | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Baker Tilly US, LLP | | | | | | | (Name - If truttvidual, state last, first, middle name) | | | | | One Penn Plaza - Suite 3000 | New York | NY | 10119 | | | (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 regurement 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 240.170-5(0)(2) > information oontained in this form are not required to reapond unless the form dieplaye a ourrently valid OMB oontrol number. SEC 1410 (11-05) {2}------------------------------------------------ #### OATH OR AFFIRMATION | of Decamber 31, | | 20 20 are true and correct. I further swear (or affirm) that | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------------------------------------------------------------| | telliber the company not any participal office of director has any proprietary atterest in any account | | | | classified solely as that of a customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PETER J SENDROWSK | alghature | | | NOTWAY LOGUC-SINIE OF WEW YORK | | | | No. DISEB320733 | | | | ALLOGO 3 718414 UF DONAL BOO | Itie | | | NA Committeeion Expirism Ge-10-3021 | | | | | | | | | | | | Nowly Public | | | | This report "" contains (check all applicable boxes): | | | | (a) Pacing Page | | | | (b) Statement of Financial Condition. | | | | | | | | (c) Statement of Income (Loss) or, if there is other comprehensive income in the persontel, a Statement
of Comprehensive Income (as defined in §210.1-12 of Regalation S-X). | | | | (d) Statement of Changes in Financial Condition. | | | | | | | | (o) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | (1) Statement of Changes in Liabilities Subsidinated to Claims of Creditors. | | | | (g) Computation of Net Capital. | | | | (h) Computation for Deremination of Beserve Requirements Pursuant to Rule 1503-3; | | | | (1) Information Relating to the Possession or Control Requirements Linder Ritle 1563-2. | | | | | | | | () A Reconclinetion, including appropriate explanation of Net Capital Inder Raile 15c- I and the | | | | | | | | Computation for Determination of the Reserve Requirements Uniter Labibit A of Rule 13ch-2. | | | | (k) A Recordification between the and unsucited 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 my material inadequacies found to existed since the date of the previous and | | | \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3) {3}------------------------------------------------ ### INDEX ## December 31, 2020 | Report of Independent Registered Public Accounting Firm | r | |-------------------------------------------------------------------------------------------------------|-----| | Financial Statements | | | Statement of Financial Condition | 2 | | Statement of Income | ತಿ | | Statement of Changes in Stockhoider's Equilty | ঘ | | Statement of Cash Flows | 5 | | Notes to Financial Statements | 8-9 | | Supplementary Information | | | Schedule I. Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange
Commission | 10 | | Schedule II. Statement Regarding SEC Rule 15c3-3 | 11 | | Report of Independent Registered Public Accounting Firm Regarding Rule
15c3-3 Exemption Report | 12 | | Rule 15c3-3 Exemption Report | 13 | | Report of Independent Registered Public Accounting Firm on Applying
Agreed Upon Procedures | 14 | | SIPC Assessment and Payments | 15 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### Report of Independent Registered Public Accounting Firm To the Stockholder of Quantedge Capital USA, Inc. #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Quantedge Cepital USA, Inc. (the Company) as of December 31, 2020, and the related statements of income, changes in stockholder's equily and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, 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 financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's 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 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 statements are free of material misstatement, whither due to error or frauxi, and performing procedures that respond to those risks. Such procedures included examining, on a fest 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. The supplemental information has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the 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 supplemental information. 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. § 240.17a5. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 201B. New York, New York February 18, 2021 {5}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION | December 31, 2020 | | | |--------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------| | Assets | | | | Cash | S | 775,486 | | Prepaid expenses and other assets | | 39,700 | | Total Assets | S | 815,186 | | Liabilities and Stockholder's Equity | | | | Liabilities | | | | Due to affiliate | S | 4,648 | | Accounts payable and accrued expenses | | 63.735 | | Total Liabilities | | 68,383 | | Common stock, 3,01 per value, 1,000 also co
authorized, issued and outstanding
Additional paid in capital
Retained earnings | | 10
569,990
176,803 | | Total Stockholder's Equity | | 746,803 | | Total Liabilities and Stockholder's Equity | | 815,186 | {6}------------------------------------------------ ### STATEMENT OF INCOME ## Year Ended December 31, 2020 | Revenues
Service fee
Interest | S
900,000
રેસે | |-----------------------------------------|----------------------| | Total revenues | 900.038 | | Expenses | | | Employee compensation and benefits | 600,172 | | Other expenses | 78.158 | | Professiona fees | 88,812 | | Communication and technology | 34,213 | | Occupancy | 43,800 | | Travel and entertainment | 9.640 | | Regulatory and registration fees | 3,850 | | Total expenses | 858,645 | | Income before provison for income taxes | 41,393 | | ncome tax provision | 7.439 | | Net Income | 33.954 | {7}------------------------------------------------ #### STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY #### Year Ended December 31, 2020 | CONNEC BOLLERS POLICISCO COLLECT OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTION OF LECTIO | | | | | | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|---|-------------------------------|---|------------------|---------| | | Cammon Stock | | Additional Paid-in
Capital | | Retained Eamings | Tota | | Stockholder's equity, beginning of year | \$10 | S | 569,990 | - | 142,849 \$ | 712,849 | | Net income | | | = | | 33,954 | 33,954 | | Stockholder's equity, end of year | \$10 | 5 | 569,990 | 2 | 176,803 \$ | 746,803 | | | | | | | | | {8}------------------------------------------------ ### STATEMENT OF CASH FLOWS ### Year Ended December 31, 2020 | Cash flows from operating activities
Net Income | S | 33,954 | |--------------------------------------------------------------------------------------|---|---------| | Adjustments to reconcile net income to net cash
provided by operating activities: | | | | Changes in operating assets and liabilities: | | | | Prepaid expenses and other assets | | (4,684) | | Accounts payable and accrued expenses | | 5,812 | | Due to affiliate | | (8.809) | | Net cash provided by operating activities | | 25,274 | | Net increase in cash | | 25,274 | | Cash, beginnning of year | | 750,212 | | Cash, end of year | | 775,486 | | Supplemental disclosure of cash flow information: | | | | Cash paid during the year for: | | | | Income taxes paid | | 15.097 | {9}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENTS #### 1. Nature of Business #### Nature of Business Quantedge Capital USA, Inc. (the "Company") was organized as a corporation in the state of Delaware on August 21, 2015. The Company is 100% owned by Quantedge inc. (the Parent), The Company was organized to engage soley in marketing and facilitating the private pacement of investments in Quantedge Global Fund, as o 100% managed by the Parent. The Company is registered as a broker with the Securities and Exchange Commission (the "SEC") and is a member of the Financial Industry ("[NRA"] effective March 30. 2016. In addition, the Company is a member of Securities Investor Protection Corporation ("SPC") and National Futures Association (NFA). On February 1, 2017, the Company changed its registration status from full service Broker-Dealer to a Capital Acquisition Broker #### 2. Summary of Significant Accounting Policies #### Basis of Presentation The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly Equid investments purchased with an original maturity of three months or less to be cash equivalents, #### Income Taxes Management has analyzed the tax positions taken and has concluded that as of December 31, 2020, there are no uncertain positions taken or expected to be taken that would require recognition of a frability (or asset) or disclosure in the financial statements. The Company's federal, state and local tax returns are subject to possible examination by the taxing authorities unlike spiration of the related statutes of Imitations on those tax returns. As of December 31, 2020 the tax year that remain subject to examination by the federal, state, local and foreign tax jurisdictions under statue of Imilations are 2016 and forward ( with Imited exceptions). The Company would recognize accrued interest and periallies associated with uncertain fax positions, if any, as part of the income tax provision. #### Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and discosures. Accordingly, actual results could differ from those estimates. #### Revenue Recognition The Company recognizes revenues in accordance with ASC 606, Revenue from Contracts with Customers, which stipulates that revenue generally is realized or realizable and earned, once persuasive evidence of an arrangement. exists, delivery has ocurred or services have been rendered, the fee is fixed or determinatie and collectablility is assessed as probable. {10}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ### 2. Summary of Significant Accounting Policies (Continued) #### Service Fee The Company earns a nonthly service fee from an affiliate under common control for the marketing and facilizating the private pacement of investments in to affiliated funds. The monthly service fee is established in the expense sharing agreement and revisited annually via a pro forma analysis is done during December and January, and if the fee is amended, the new fee takes effect in February, #### Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes, The Company follows an asset and fability approach to financial accounting for income taxes. Deferred income tax assets and labilies are computed as the difference between the financial statement and lax bases of assets and fiabilities based on presently enacted tax laws and rates, At December 31, 2020, management has determined that the Company had no uncetain tax positions that would require firancial statement recognition will aways be subject to organg reevauation as facts and circumstances may require. The Company's 2017 through 2020 tax years are open for examination by the federal, state and local tax authorities. #### Leases The Company follows the provisions of ASU 2016-02, Leases (Topic 842), which superseded the existing guidance for pase accounting. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application. The Company evaluated its existing vendor agreements, including its expense sharing agreement for the recognition criteria under this guidance. It was determined that as of January 1, or during the year ended December 2020 no agreements or arrangements existed that would be classified as a lease under the adopted guidance. #### 3. Reated Party Transactions #### Service Agreement and Due toffrom Affiliate Pursuant to a service agreement with Quantedge USA Inc., an afficate under common control, Quantedge USA Inc., provides various services to the Company. These include rent, utilities, the use of fixed assets, travel, general office insurance and IT support. For the year ended December 31, 2020, the total amount incurred by the Company under this agreement was approximately \$58,400, The Company paid approximately \$62,700 in 2020, which includes approximately \$8,900 that was a payable to the affliate at December 31, 2019. For the year ended December 31, 2020, the Company owed approximately \$4,600 to the affirate, Pursuant to an agreement for the year ended December 31, 2020, 100% of the Company's revenue was derived from an affiliate under common control, Quantedge Capital Pte., Ltd. {11}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS ### 4\_ Net Capital Requirement The Company is a member of the Financial Industry Regulatory Authority and is subject to the Securities and Exchange Commission Uniform Net Capital Rue 15c3-1. This Rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equily capital may not be withdrawn if the resulting net capital ratio would exceed 10 to 1. At December 31, 2020, the Company's net capital was \$707.103 which was \$702.103 in excess of its minimum requirement of \$5,000. The Company's aggregate indebtedness to net capital ratio was 0.10 to 1 as of December 31, 2020. ## 5. Exemption from Rule 15c3-3 The Company does not daim an exemption from SEA Rule 15c3-3, in reflance on footnote 74 to SEC Release 34-70073, as discussed in Q&A 8 of the related FAQ issued by SEC staff. ### 6. Concentration of Credit Risk The Company is engaged in brokerage activities in which it engages in investment activities. The Company's financial instruments that are subject to concentrations of credit risk primary consist of cash. The Company places its cash with one high credit quality institution. At times, such cash may be in excess of the FDC insurance limits. The Company believes that it is not exposed to any significant risk related to cash. #### 7. Guarantees and Indemnifications FASE ASC 460. Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. FASB ASC 460 defines quarantees as contracts and indemnification agreements that contingently require a guarants to the guaranteed party based on changes in an underlying factor (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, Bablity or equity of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to the guaranteed party based on another entity's fallure to perform under an agreement as well as indirect guarantees of indebtedness of others. The Company has issued no guarantees at December 31, 2020 or during the year then ended. The Company has no indemnifications to disclose at December 31, 2020 or during the year then ended. #### 8. Risks and Uncertainties During 2020 the World Health Organization has decared the coronavirus ("Covid-19") to constitute a "Public Health Emergency of International Concern". This pandemic has discupted 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 realed to the COVID-19 outbreak and possible government advisories and restrictions placed on the financial markets and business activities. The impact of 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. {12}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENTS #### 9. Allowance for Credit Losses Effective January 1, 2020. the Company adopted ASU 2016-13 Topic 326, Financial Instruments - Credit Losses ('ASC 326'), ASC 326 impairnent mode for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodogy to estimate expected credit losses over the entire fre of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to delermine there are no expected credit losses in certain circumstances, The Company identified fees receivable carned at amortized cost 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 retained earnings as of the beginning of the first reporting period effective. The Company believes there is no impact to opening stockholder's equity upon adoption of ASC 326. The allowance for credit lossed on the Company's expectation of the collectability of financial instruments carried at amortized cost, including fors receivable 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 collectablily in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with fees receivables is not significant until they are 90 days past due on the contractual arrangement and expectation of collection in accordance with industry standards. Management does not believe that an allowance is required as of December 31, 2020. #### 10. Income Taxes For the year ended December 31, 2020, the Gempany's provision for income taxes consisted of current federal income taxes of approximately \$7,400. At December 31, 2020, the Company had a current federal income tax overpayment of approximately \$6,100 included in Prepaid expenses and other assets in the accompanying statement of financial condition. The Company accounts for interest and penaties resated to income tax matters and uncertain tax positions as part of federal tax expense, There were no material interest or penallies for the year ended December 31, 2020. #### 11. Subsequent Events The Company has evaluated events subsequent to the Statement of Financial Condition date for items requiring recording or discosure in the financial statements. The evauation was performed through the date the financial statements were available to be issued. Based upon this review, the Company has determined that there are no events which took pace that would have a material impact on its financial statements, {13}------------------------------------------------ ### SUPPLEMENTARY INFORMATION COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION | Schedule I | | | |------------|--|--| | | | | | | | | | December 31, 2020 | | | |-----------------------------------------------------------------------------|---|----------| | Stockholder's equity | S | 746,803 | | Non-allowable assets | | 39,700 | | Net capital | | 707,103 | | Aggregate indebtedness | | 68.383 | | Computed minimum net capital required
(6 2/3% of aggregate indebtedness) | | 4,559 | | Minimum net capital required (under SEC Rule 15c3-1) | | 5.000 | | Excess net capital | | 702.103 | | Ratio of aggregate indebtedness to net capital | | | | | | 0.10 : 1 | There are no material differences between the computation of net capital presented above and the computation of net capital in the Company's originally filed unaudited Form X-17A-5, Part II-A filing as of December 31, 2020. {14}------------------------------------------------ #### SUPPLEMENTARY INFORMATION STATEMENT REGARDING SEC RULE 15C3-3 Computation for Determining of the Reserve Requirement and Information Relating to Possession or Control Requirements #### Year ended December 31, 2020 The Firm will not daim an exemption from SEA Rule 15c3-3, in reliance on footnote 74 to SEC Release 34-70073, and as discussed in Q&A 8 of the related FAQ issued by SEC staff. The Firm has represented that it does not and will not, - 1) directly or indirectly receive, hold, or othervise owe funds or securities for or to customers - 2) does not and will not carry accounts of or for customers - 3) does not and will not carry PAB accounts The firm's business activities are, and will remain: - a) Private placements of securities and - b) Broker selling securities of only one issuer or associate issuers. {15}------------------------------------------------ ![](_page_15_Picture_0.jpeg) #### Report of Independent Registered Public Accounting Firm To the Stockholder of Quantedge Capital USA, Inc. We have reviewed managements, included in the accompanying Exemption Report, in which (1) Quantedge Capital USA, Inc. (the Company) stated that Quantedge Capital USA, Inc. does not claim an exemption under paragraph (k) of 17 C.F.R. §240.15c3-3, and (2) Quantedge Capital USA, Inc. stated that Quantedge Capital USA, Inc. is filing its Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. §240.17a-5 because Quantedge Capital USA, Inc. limits Its business activities exclusively to engaging solely in activities permitted for capital acquisition brokers (CAB) as defined in FINRA's CAB rules and approved for membership in FINRA as a CAB, and Quantedge Capital USA, Inc. (i) did not directly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and prompty transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promplly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to Quartedge Capital USA, Inc.); (ii) did not carry accounts of or for customers; and (ii) did not carry PAB accounts (as defined in Rule 15c3-3 throughout the year ended December 31, 2020 without exception. The Company's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemplions. 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 conditions set forth in paragraph (k) of Rule 15c3-3 under the Securities Exchange Act of 1934. New York, New York February 18, 2021 {16}------------------------------------------------ #### Quantedge Capital USA Inc.'s Exemption Report Quantedge Capital USA INC. (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: (1) The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240, 15c3-3, and (2) The Company is filing this Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.170-5 because the Company limits its business activities exclusively to engaging solely in activities permitted for capital acquisition brokers ("CAB") as defined in FINRA's CAB rules and approved for membership in FINRA as a CAB, and the Company (1) did not directly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and or funds received and promply transmitted for effecting via subscriptions on a subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. I, Daniel Lowen, swear (or affirm) that, to my best knowedge and bollef, this Exemption Report is the and correct. BV: Title: President & CEO February 18, 2021 {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) #### Report of Independent Registered Public Accounting Firm on Applying Agreed-Upon Procedures To the Stockholder of Quantedge Capital USA, Inc .: We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection (SIPC) Series 600 Rules, which are enumerated below, and were agreed to by Quantedge Capital USA, Inc. (the Company) and the SIPC, solely to assist you and the SIPC in evaluating the Compliance with the applicable instructions of the General Assessment Recondiation Form SIPC-7) for the year ended December 31, 2020. Management of the Company is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed upon procedures engagement was conducted in accordance with the standards of the Public Company Accountling Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below elther for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings are as follows: - 1. Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement. records entries noting no differences; - 2. Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2020, with the Total Revenue amounts reported in Form SIPC-7 for the year ended December 31, 2020 noting no differences; - 3. Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers noting no differences; - 4. Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments noting no differences; and - 5. Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed noting no differences. We were not engaged to, and did not conduct an examination or a roview, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's compliance with the applicable instructions of the Form SIPC-7 for the year ended December 31, 2020. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the SIPC and is not intended to be and should not be used by anyone other than these specified parties. New York, New York February 18, 2021 {18}------------------------------------------------ #### Quantedge Capital USA Inc. Schedule of Securities Investor Protection Corporation Assessments and Payments For the Year Ended December 31, 2020 | | | Amount | |-----------------------------------|---|--------| | Total assessment | ટ | 1,350 | | SIPC-6 general assessment | | | | Payment made on July 24, 2020 | | (675) | | SIPC-7 general assessment | | | | Payment made on February 18, 2021 | | (6/5 | | Total assessment balance | | | | (overpayment carried forward) | S | | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.