# CREDITEASE FINANCIAL SERVICES (USA) CORP. X-17A-5 (2022-02-22) — Broker-dealer annual report - Company: CREDITEASE FINANCIAL SERVICES (USA) CORP. - Form: X-17A-5 - Filed: 2022-02-22 - Period: 2021-12-31 - Accession: 0001768560-22-000001 - CIK: 1768560 - File #: 8-70296 - Type: Broker-dealer - Material weakness: No - Auditor: Hutchinson & Bloodgood, LLP - Auditor location: Glendale, CA - Contact: Ross Marlin - Phone: 2127514422 - Website: hbllp.com - Signed by: Ross Marlin (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1768560/000176856022000001/credteasepublic2021.pdf --- {0}------------------------------------------------ # **CREDITEASE FINANCIAL SERVICES (USA) CORP.** **STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021** {1}------------------------------------------------ 9/29/2003 261 {2}------------------------------------------------ #### OATH OR AFFIRMATION | ROSS MARLIN | | swear (or affirm) that, to the best of my knowledge and belief, the | | |------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------| | December 31 | financial report pertaining to the firm of ___CREDITEASE FINANCIAL SERVICES (USA) CORP. | | as of | | | | ______ 2_021_ is true and correct. I further swear (or affirm) that neither the company nor any
partner, officer, director, or equivalent person, as the case may proprietary interest in any account classified solely | | | as that of a customer. | | | | | Vill
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with
Notary Public | MARYROSE MERCADO
Notary Public, State of NEW York
Registration No. 01ME6423025
Qualified in Queens County
Commission Expires October 4, 2025
10/2022 | Signature:
Ross Marlin
Title:
CFO | | #### This filing\*\* contains (check all applicable boxes): - (a) Statement of financial condition. - 2 (b) Notes to consolidated statement of financial condition. - □ (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). - O (d) Statement of cash flows. 1 - □ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - □ (f) Statement of changes in liabilities subordinated to claims of creditors. - □ (g) Notes to consolidated financial statements. - [ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - [ (i) Computation of tangible net worth under 17 CFR 240.18a-2. - □ (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - □ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - □ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - [ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - □ (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - □ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - [ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ਖ (t) Independent public accountant's report based on an examination of the statement of financial condition. - □ (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - □ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - | (x) Supplemental reports on applying agreed upon procedures, in accordance with 17 CFR 240.17a-12. as applicable. - □ (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - □ (z) Other: \*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {3}------------------------------------------------ # **CREDITEASE FINANCIAL SERVICES (USA) CORP.** # **Page(s)** | Report of Independent Registered Public Accounting Firm

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5 | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 550 N. Brand Blvd., 14th Floor Glendale, CA 91203 t 818.637.5000 f 818.240.0949 www.hbllp.com ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders of CreditEase Financial Services (USA) Corp. Irvine, California #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of CreditEase Financial Services (USA) Corp. (the Company) as of December 31, 2021, and the related statements of operations, shareholders' equity, and cash flows for the year then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for 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 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, 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 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 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 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. {5}------------------------------------------------ #### Supplemental Information The supplementary information contained in Schedules I and II (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 responsibility of the Company's management. Our audit procedures included determining whether the Supplemental Information reconciles to the financial statements or the underlying 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. § 240.17a-5. In our opinion, the supplementary information contained in Schedules I and II is fairly stated, in all material respects, in relation to the financial statements as a whole. Hutchinsa, and Bloodgood L We have served as the Company's auditor since 2020. Glendale, California February 22, 2022 {6}------------------------------------------------ # **CREDITEASE FINANCIAL SERVICES (USA) CORP. Statement of Financial Condition As of December 31, 2021** | Assets | | | |--------------------------------------------|----|---------| | Cash | | 227,902 | | Cash, restricted | | 3,545 | | Prepaid expenses and other assets | | 1,593 | | Right of use asset | | 10,284 | | Total assets | \$ | 243,324 | | Liabilities and Shareholder's Equity | | | | Accounts payable and accrued expenses | | 38,250 | | Lease liability | | 10,657 | | Total liabilities | | 48,907 | | Shareholder's Equity | | 194,417 | | Total liabilities and Shareholder's equity | \$ | 243,324 | {7}------------------------------------------------ #### **1. Organization** CreditEase Financial Services (USA) Corp., (the "Company") was organized in the state of Delaware on April 19, 2018. The Company is part of CreditEase Group of companies, a leading FinTech group based in China. The Company operates from the headquarters in Irvine, California. The Company was organized as a corporation principally to engage in private placement activity (Reg D) and is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority, Inc.(FINRA) effective July 27, 2020. ## **2. Summary of Significant Accounting Policies** ## **Basis of Presentation** The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. #### **Cash and Restricted Cash** Cash consists of cash in banks, primarily held at one financial institution which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company maintains a cash account with the Central Registration Depository (CRD) for regulatory purposes, this cash balance is considered restricted cash, and classified as such in the statement of financial condition. ## **Adoption of New Accounting Standard** In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326). The ASU introduces a new credit loss methodology, Current Expected Credit Losses (CECL), which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Since its original issuance in 2016, the FASB has issued several updates to the original ASU. The CECL methodology utilizes a lifetime "expected credit loss" measurement objective for the recognition of credit losses for certain financial assets at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The methodology replaces the multiple existing impairment methods in current U.S. GAAP, which generally require that a loss be incurred before it is recognized. Management is evaluating adoption of this ASU. The extent of the impact upon adoption is not known and will depend on the characteristics of the Company's financial instruments and economic conditions on that date as well as forecasted conditions thereafter. ## **Revenue Recognition** The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. {8}------------------------------------------------ #### **2. Summary of Significant Accounting Policies (Continued)** #### **Revenue Recognition (Continued)** The Company enters into arrangements with managed accounts or pooled investment vehicles (funds) to distribute shares to investors. The Company may receive placement fees paid by the fund up front, or over time or a combination thereof. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually quarterly. Placement fees recognized in the current period are related to performance obligations that have been satisfied. #### **Coronavirus** The outbreak of the novel coronavirus ("COVID-19") in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The World Health Organization has declared COVID-19 a "Public Health Emergency of International Concern." The global impact of the outbreak continues to evolve, and as cases of the virus have continued to be identified, many countries have reacted by instituting quarantines and restrictions on travel. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 could have a material impact on the Company's financial statements. #### **Income Taxes** Management has analyzed the tax positions taken and has conclude that as of December 31, 2021, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (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 until expiration of the related statutes of limitations on those tax returns. In general, the federal income tax returns have a three year statute of limitations. In CA, the statute of limitation is 4 years. The company would recognize accrued interest and penalties associated with uncertain tax positions, if any, as part of the income tax provision. #### **3. Related Party Transactions** . Effective September 1, 2020 the Company leases office space under a sublease agreement with Good Hope USA Consulting Services Inc ("Good Hope"). Good Hope is also part of CreditEase Group of companies, a leading FinTech group based in China. As of December 31, 2021, the Company owed \$0 to Good Hope. {9}------------------------------------------------ #### **3. Related Party Transactions (Continued)** On September 24, 2020, the Company and Good Hope entered into a Support Services Agreement (the "Expense Sharing Agreement"). In accordance with the Expense Sharing Agreement, the Company reimburses Good Hope, on a monthly basis, for a proportional share of support service and salaries by Good Hope who provided services to the Company. As of December 31, 2021, the Company owed \$0 to Good Hope. #### **4. Lease** The Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. All other leases are categorized as operating leases. Leases with contractual terms of 12 months or less are not recorded on the balance sheet. The Company had no finance leases during 2021. Operating lease liabilities are recognized at the present value of the fixed lease payments using a discount rate (3.25%) based on similarly secured borrowings available to us. Right of use assets are recognized based on the initial present value of the fixed lease payments. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. #### **5. Net Capital Requirements** The Company, as a member of the FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 8 to 1, and that equity may not be withdrawn if the resulting net capital ratio would exceed 10 to 1. At December 21, 2021, the Company's net capital was \$189,279 which was \$184,279 in excess of its minimum requirement of \$5,000 SEC Rule 15c3-1. #### **6. Subsequent Events** . The Company has evaluated subsequent events through the date of issuance of these financial statements on February 22nd, 2022. Based on this evaluation, the Company has determined that no events have occurred that were to be recognized or disclosed in the financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.