# HUATAI SECURITIES (USA), INC. X-17A-5/A (2021-03-01) — Broker-dealer annual report

- Company: HUATAI SECURITIES (USA), INC.
- Form: X-17A-5/A
- Filed: 2021-03-01
- Period: 2020-12-31
- Accession: 0001755393-21-000004
- CIK: 1755393
- File #: 8-70231
- Material weakness: No
- Auditor: Citrin Cooperman & Company, LLP
- Auditor location: New York, NY
- Contact: Dmitriy Rutitskiy
- Phone: 2127514422
- Signed by: Bryan Lin (Chief Executive Officer)

Original filing: https://www.sec.gov/Archives/edgar/data/1755393/000175539321000004/HuataiPublic2020.pdf

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UNITED ST ATES SECURITLES ANO EXCHANGE COMMISSlON Washington, D.C. 20549

|             | OMS APPROVAL                  |
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|             | Expires: October 31, 2023     |
|             | Estimated average burden      |
|             | hours oer resoonse .• _ 12.00 |
|             | SEC FILE NUMBER               |
|             | 8 - 70231                     |

## **ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill**

#### FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder

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|                                                                                                                                               | A. REGISTRANT IDENTIFICATION                                |                   |                             |
| AME OF BROKER-DEALER:                                                                                                                         |                                                             |                   |                             |
| Huatai Securities (USA), Inc<br>ADDRESS OF PRr CIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)                                             |                                                             |                   | OFFICIAL USE ONLY           |
|                                                                                                                                               |                                                             |                   | FIRM ID. NO.                |
|                                                                                                                                               | 10 HUDSON YARDS, 41ST FLOOR                                 |                   |                             |
|                                                                                                                                               | (No. and Srreet)                                            |                   |                             |
| NEW YORK                                                                                                                                      | NY                                                          |                   | 10001                       |
| (City)                                                                                                                                        | (State)                                                     |                   | (Zip Code)                  |
|                                                                                                                                               |                                                             |                   | (Area Code - Telephone No.) |
|                                                                                                                                               | B. ACCOUNTANT IDENTIFICATION                                |                   |                             |
| INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report*                                                                     |                                                             |                   |                             |
|                                                                                                                                               | Citrin Cooperman & Company, LLP                             |                   |                             |
|                                                                                                                                               | (Name - 1( i111/Jwtluul. stale las1. first. middle 11a111e) |                   |                             |
| 529 5th Ave                                                                                                                                   | New York                                                    | NY                | 10017                       |
| (Address)                                                                                                                                     | (City)                                                      | (State)           | (Zip Code}                  |
| CHECK ONE:<br>[!) Certified P11blic Accountanr<br>D Public Accountant<br>0 Accountant not resident in United States or any of its possessions |                                                             |                   |                             |

*\*Claims for exe111ptio11 fro111 1he require111e111 1ha1 1he 01111110/ reporl be covered by 1he opinion of 011 indepe11den1 public acco111110111 must be suppon ed by a sta1emen1 of fac1s and circumstances relied on as the basis for the exemption. See section 240. I la·5(e){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.

SEC 1410 (06-02)

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#### OATH OR AFFIRMATION

|                                                                                                       | . S"car (or affum) that, to the<br>BfVllil Lin                                                                                    |         |
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|                                                                                                       | best of my knowledge and beheflhe accomp1111ying financml statcmC'llt and supporting schedules pertaining to the finn of          |         |
|                                                                                                       | Huatai Secunllcs (USA), Inc                                                                                                       | , as of |
| December 3 I, 2020                                                                                    | , are true and correct. I further swear (or affirm) 11181 ne1lher lhe company                                                     |         |
|                                                                                                       | nor any partntr. proprietor. prmcipal officer or dircaor has any propnetary interest in any account classified solely as lhat of  |         |
| a CUSIOIDCr. excepl as fullows:                                                                       |                                                                                                                                   |         |
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|                                                                                                       | Tnl•                                                                                                                              |         |
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|                                                                                                       | VIVIAN LIN                                                                                                                        |         |
|                                                                                                       | NOTARY PUBLIC STATE OF NEW YORK<br>NO. 01L16074797                                                                                |         |
|                                                                                                       | Qualified in Nassau County                                                                                                        |         |
|                                                                                                       | My commission Expires May 20, 20:1,'f                                                                                             |         |
| This "-\>Of\•• cootams (check all appLicable boxes):                                                  |                                                                                                                                   |         |
| Gj (a) Fncmg page.                                                                                    |                                                                                                                                   |         |
| @ (b) Statement ofFinancial Condiuon.                                                                 |                                                                                                                                   |         |
| 0 (c) Statement oflncome (Loss).                                                                      |                                                                                                                                   |         |
| 0 (d) Statement of Changes in Financial Condition.                                                    |                                                                                                                                   |         |
| D<br>(e) :>cate:mcnt orCJumges m Stodcbolder.i" 6qw1y or Plll'Ul~n · ur Suk Propiil:coi:. · Cllpital. |                                                                                                                                   |         |
| 0<br>(J) Statcmenl of Changes in Liabihues Subonlinllled to Claims of Creditors.                      |                                                                                                                                   |         |
| 0<br>(g) Compulll11on ofNet Capital                                                                   |                                                                                                                                   |         |
| 0 (b) Qimputabon for Detemunalloo of Reserve ReqwremenlS Pumumt to Rule 15c3-3                        |                                                                                                                                   |         |
| 0 (i) lnformauon Relating to the P~1on or oontrol RcqwrcmenlS Under Ruic I Sc3-3                      |                                                                                                                                   |         |
|                                                                                                       | 0 0) A Reconciliation. including appropriate explanation of lhe Computation of Net Capitnl Under Rule l5c3-J and the              |         |
|                                                                                                       | CompulllUon for Detmninlluon of the Reserve Rcquiremcnls Under £xbibi1 A ofRule 15c3-3.                                           |         |
|                                                                                                       | 0 (k) A Recoociliation between the audited and unaudi1cd Stattments ofFin.ancial Qindition with respect to methods of con         |         |
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| sohdabon.<br>Iii Cll An Oath or Affumarion.                                                           |                                                                                                                                   |         |
| 0 (m) A cop} of the SlPC Supplemeotal Report.                                                         |                                                                                                                                   |         |
|                                                                                                       | D {n) A report descnbing any matenal tnlldequacies found to extSt or found to have CX.1.Sted since the date of the pRvious audit. |         |
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*••For a:mdmons of confidennal treoJnuml of* ct!l1tm1 po111ons of *thisfiltng. see section UO.l 7o-5(e)(3).* 

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## HUAT AI SECURITIES (USA), INC.

Statement of Financial Condition

December 31, 2020

(With Report of Independent Registered Public Accounting Firm)

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# **Huatai Securities (USA), Inc. Table of Contents**

|                                                         | Page |
|---------------------------------------------------------|------|
| Report of Independent Registered Public Accounting Firm |      |
| Financial Statements:                                   |      |
| Statement of Financial Condition                        | 2    |
| Notes to Statement of Financial Condition               | 3-7  |

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![](_page_4_Picture_0.jpeg)

## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder and Board of D irectors Huatai Securities (USA), Inc.

## Opinion on the Financial Statement

We have audited the accompanying statement of financial condition of Huatai Securities (USA), Inc. as of December 31, 2020, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of Huatai Securities (USA), 1nc. as of D ecember 31, 2020, in conformity 'vith accounting principles generally accepted in the United States of America.

### Basis for Opinion

This financial statement is the responsibility of Huatai Securities (USA), Inc.'s management. Our responsibility is to express an opinion on Huatai Securities (USA), Inc.'s financial statement based on our audit. We are a public accounting firm registered 'vitb the Public Company Accounting Ovei.:sight Board (United States) ("PCAOB") and are required to be independent with respect to Huatai Securities (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 Huatai Securities (USA), Inc.'s auditor since 2019. New York, New York February 26, 2021

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#### Huatai Securities (USA), Inc. Statement of Financial Condition December 31, 2020

| Assets                                                                             |               |            |
|------------------------------------------------------------------------------------|---------------|------------|
| Cash                                                                               | \$            | 15,295,133 |
| Receivables from clearing organization                                             |               | 1,000,000  |
| Operating lease right of use asset                                                 |               | 822,773    |
| Furniture, equipment and leasehold improvements,                                   |               |            |
| net of accumulated depreciation and amortization of \$142,693                      |               | 234,875    |
| Prepaid expenses                                                                   |               | 180,475    |
| Accounts receivable                                                                |               | 58,460     |
| Other Assets                                                                       |               | 4,044      |
| Total assets                                                                       | \$            | 17,595,760 |
| Liabilities and stockholder's equity                                               |               |            |
| Accrued expenses                                                                   | \$            | 4,205,3 11 |
| Operating lease liability                                                          |               | 861,0 19   |
| Total liabilities                                                                  |               | 5,066,330  |
| Stockholder's equity:                                                              |               |            |
| Common stock, \$0.0 I par value. Authorized, issued and outstanding I 0,000 shares |               | 100        |
| Additional paid-in capital                                                         |               | 31,588,320 |
| Accumulated deficit                                                                | ( 19,058,990) |            |
| Total stockholder's equity:                                                        |               | 12,529,430 |
| Total liabilities and stockhoJder's equity                                         | \$            | 17,595,760 |

The accompanying notes are an integral part of this statement of financial condition.

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## 1. Organization and Nature of Business

Huatai Securities (USA), Inc. (the "Company") is incorporated in Delaware on August 24, 2018 and is wholly owned by Huatai Tnternational Financial Holdings Company Limited (the "Parent"). The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and received approval to commence business operations from the Financial Industry Regulatory Authority, lnc. ("FJNRA") effective June 3, 20 19.

The Company conducts the following businesses, all solely with institutional investors:

- Solicitation of investors in connection with primary and secondary market placements of U.S.- and Hong Kong-listed and regional securities (equity and debt), including acting as an underwriter in firm commitment or best efforts registered offerings, or as an initial purchaser in unregistered offerings, including Rule 144A offerings;
- Acting as a placement agent in the private p lacements of securities;
- Facilitating and arranging deals in investments, including primary and secondary market placements of U.S.- and Hong Kong-listed securities (equity and debt), including acting as underwriter in firm commitment or best efforts registered offerings, selling agent, solicitation, reception and handling of investors' orders in the U.S.;
- Soliciting clients for, and completing account opening and related procedures for securities relationships between its affiliates;
- Providing information to U.S. investors (existing and potential clients), including distribution of third-party research reports, generally prepared by its Hong Kong and Peoples Republic of China affiliates;
- M&A advisory activities;
- Acting as broker in secondary market transactions in non-U.S.-listed securities for U.S. institutional investors, which transactions may be executed and settled by a non-U.S. broker-dealer affiliate of the Company; and
- Trading securities for its own account.

## 2. Summary of Significant Accounting Policies

## Basis of Presentation

The preparation of financial statements in conformity with generally accepted accounting princ iples in the United States of America ("U.S. GAA P") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assel<> and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

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## Huatai Securities (USA), Inc. Notes to Statement of Financial Condition December 31, 2020

### Right-of-use asset and lease liabilities

The Company accounts for its material leases in accordance with Accounting Standards Codification ("ASC") Topic 842, "Leases". The guidance requires the recognjtion of rightof-use assets and lease liabilities on the statement of financial condition. The recognition of these lease assets and lease liabilities represents a change from previous U.S. GAAP requirements, which did not require lease assets and lease liabilities to be recognized for most leases.

The Company leases office space in New York City, its base of operations and the location of all of its employees. This lease tenn expires on March 3 1, 2022. For the period from January I, 2020 through December 31, 2020, payments related to this lease totaled \$7 19,040.

The undiscounted maturity of the non-cancellable lease payments under the current lease agreement as of Dec 31 , 2020 are as follows:

Year ending December 3 I,

| 202 l                                | \$<br>719,040 |
|--------------------------------------|---------------|
| 2022                                 | 179,760       |
| Total undiscounted lease payments \$ | 898,800       |

The imputed interest included in computation of the lease liability as of December 3 1, 2020 was \$37,781.

#### F urniture, Equipment and Leasehold Improvements

Furniture, equipment and leasehold improvements are carried at cost, less accumulated depreciation and amortization. Equipment is depreciated using the straight line method, based on the estimated useful life. Leasehold improvements are amortized using the straight line melho<l over the shorter of their useful lives or the terms of the respective lease.

#### Income Taxes

The Company uses the asset and liability method to provide for income taxes in accordance with ASC 740, "lncome Taxes". Deferred tax assets and liabilities are recorded and adj usted for the future tax consequences of events that have been recorded in the financial statements or the tax ri;;Lums. DilTerences beLwet:n the t:arrying amounts of existing asst:Ls anti l iabilities in the financial statements and their respective tax bases are attributable to these deferrals. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

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## Huatai Securities (USA), Inc. Notes to Statement of Financial Condition December 31, 2020

The Company accounts for unce1tainties in income taxes pursuant to ASC 740, " Income Taxes". ASC 740 requires that the Company determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured to determine the amount of benefit to be recognized in the financial statements.

## 3. Cash

At December 3 1, 2020, cash consists of a checking account at a major bank which is insured up to \$250,000 by the Federal Deposit Insurance Corporation resulting in a balance in excess of such insurance coverage of approximately \$ 15,045,000. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits.

## 4. Related Party Transactions

The Company may, from time to time, share in the services provided by one or more thirdparty vendors paid by the Company's affiliates, Huatai Financial Holdings (Hong Kong) Limited and Huatai United Securities Co. Ltd., or pay certain travel and lodging expenses for personnel of its affil iates.

## 5. Income taxes

The deferre.d income taxes reflect the tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities. At December 3 1, 2020, the Company has a federal net operating loss carryforward (''NOL") of approximately \$ 11, 170,000 which will be carried forward indefinitely. The Company also has NOL's for California, New York State and New York City of approximately \$3,568,000, \$4,498,000 and \$4,206,000, respectively which will begin to expire in 2039. The Company also has timing differences primarily attributable to depreciation and bonus accruals which will increase the Company tax deductions by approximately \$6,800,000. The NOLs and other timing differences created a cumulative deferred tax asset of approximately \$4,536,000 as of December 31 , 2020. The Company recorded a full valuation allowance against its deferred tax assets, as future realization is uncertain.

The Company records uncertain tax positions in accordance with ASC 740 "Accounting for Uncertainty in Income Taxes" on the basis noted in note (2) above.

## 6. Net Capital Requirements

The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-I), which requires the maintenance of minimum net capital as defined. The Company computes its net capital under the alternative method permitted by the net capital rule, which requires that minimum net capital shall not be Jess than the greater of \$250,000 or 2% of aggregate debit items arising from customer transactions. At December 3 I, 2020, the Company had net capital of \$12,05 1,576, which was \$ <sup>11</sup> ,801 ,576 in excess of its required net capital of \$250,000.

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#### 7. New Accounting Prooouncements

On January 1, 2020, the Company adopted Accounting Standards Update 20 J 6-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the cutTent expected credit loss (CECL) methodology.

The Company's estimate of expected credit losses considers the expected risk of credit loss even if that risk is remote, regardless of the method applied to estimate credit losses.

The Company, however, is not required to measure expected credit losses on a financial asset (or group of financial assets) in which historical credit loss infom1ation adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is remote.

### Receivables from clearing organization

These amounts consist of a \$ 1,000,000 balance with Virtu Americas LLC ("Virtu"). The Company maintains awareness of the creditworthiness of the clearing organizations. Also, the regulatory community constantly maintains its awareness of the liquidity of these organizations. Based on the current credit rating, the Company expects a de minimus loss and therefore is not required to estimate or recognize an allowance for credit losses.

#### 8. Contingencies

The Company is subject to litigation in the normal course of business. The Company has no litigation in progress at December 31 , 2020.

### 9. Risks and Uncertainties

During the 2020 calendar year, the World Health Organization has declared COVlD- 19 to constitute a "Public Health Emergency of International Concern". This pandemic has disrupted economic markets and the economic impact, duration and spread of the COVI D-19 virus is uncertain at this time. The financial performance of the Company is subject to future developments re lated to the COVID-19 outbreak and possible government 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. The financial statements do not include any adj ustments that might result from the outcome of this uncertainty.

#### 10. Concentration of Credit Risk

During the period ended December 3 1, 2020, 56% of the Company's revenues were derived from two customers.

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### **11. Employee Benefit Plan**

The Company has a 40 I (k) Plan whereby employees voluntarily participate in the Plan. Employees may contribute up to 15% of their salary subject to ce11ain limits based on federal tax laws. The Company makes matching contributions equal to 50% of the employees' contribution, subject to limits based on federal tax laws, and then employees have the ability to make discretionary contributions above the matching contribution. However, matching contributions cannot exceed defined limits set by the Company.

### **12. Subsequent Events**

The Company has evaluated whether events or transactions have occurred after December 3 1, 2020 that would require recognition or disclosure in these financial statements through February 26, 2021, which is the issuance date of these financial statements.

There were no subsequent events wbich would require disclosure in the footnotes to the financial statements.


Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.