Nevada
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30-0233726
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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“Esentai Tower” BC, Floor 7
77/7 Al Farabi Ave
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Almaty, Kazakhstan
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050040
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(Address
of principal executive offices)
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(Zip
Code)
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Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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None
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N/A
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N/A
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Large
accelerated filer ☐
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Accelerated
filer ☑
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Non-accelerated
filer ☐ (Do not check if smaller reporting
company)
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Smaller
reporting company ☑
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Emerging
growth company ☐
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PART I
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Page
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PART II
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PART III
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PART IV
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Name
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Age
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Position
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Timur
Turlov
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31
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Chief
Executive Officer and Chairman of the Board
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Askar
Tashtitov
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40
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President
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Evgeniy
Ler
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36
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Chief
Financial Officer
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●
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economic
volatility and sustained economic downturns;
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●
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difficulties
in enforcing contractual and intellectual property
rights;
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●
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currency
exchange rate fluctuations and currency exchange
controls;
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●
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changes
in the securities brokerage and banking laws and
regulations;
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difficulties
in developing, staffing, and simultaneously managing a number of
foreign operations;
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●
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potentially
adverse tax developments;
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exposure
to different legal standards;
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political
or social unrest, including terrorism;
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risks
related to government regulation and uncertain protection and
enforcement of our intellectual property rights; and
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●
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the
presence of corruption in certain countries.
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●
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industry
or general market conditions;
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●
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domestic
and international economic factors unrelated to our
performance;
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●
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country
risk associated with the countries in which we conduct
operations;
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changes
in our customers’ preferences;
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●
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new
regulatory pronouncements and changes in regulatory
guidelines;
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●
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lawsuits,
enforcement actions and other claims by third parties or
governmental authorities;
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●
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actual
or anticipated fluctuations in our quarterly operating
results;
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●
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changes
in securities analysts’ estimates of our financial
performance or lack of research coverage and reports by industry
analysts;
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●
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actions
by large position stockholders, including future sales of our
common stock;
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●
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announcements
by us of significant impairment charges;
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●
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speculation
in the press or investment community;
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●
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investor
perception of us and our industry;
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changes
in market valuations or earnings of similar companies;
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announcements
by us or our competitors of significant contracts, acquisitions,
dispositions or strategic partnerships;
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war, terrorist acts, civil unrest and epidemic
disease;
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any
future sales of our common stock or other securities;
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●
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additions
or departures of key personnel; and
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●
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misconduct
or other improper actions of our employees.
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the
requirement that a majority of the board of directors consist of
independent directors;
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●
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the
requirement that we have an audit committee that is composed
entirely of independent directors with a written charter addressing
the committee’s purpose and responsibilities;
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●
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the
requirement that our nominating and corporate governance committee
be composed entirely of independent directors with a written
charter addressing the committee’s purpose and
responsibilities;
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the
requirement that we have a compensation committee that is composed
entirely of independent directors with a written charter addressing
the committee’s purpose and responsibilities;
and
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●
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the
requirement for an annual performance evaluation of the nominating
and corporate governance and compensation committees.
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Year
Ended March 31, 2019
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Year
Ended March 31, 2018
(Recast)
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Amount
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%
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Amount
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%
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Revenue:
|
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Fee
and commission income
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$44,316
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60%
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$12,174
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21%
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Net gain on trading
securities
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20,162
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27%
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34,227
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59%
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Interest
income
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13,925
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19%
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8,835
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16%
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Net gain on
derivatives
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-
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0%
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643
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1%
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Net (loss)/gain on
foreign exchange operations
|
(4,118)
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(6%)
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1,878
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3%
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Total
revenue, net
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74,285
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100%
|
57,757
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100%
|
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Expense:
|
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Interest
expense
|
14,649
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20%
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14,735
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26%
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Fee
and commission expense
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6,238
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8%
|
2,288
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4%
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Operating
expense
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43,134
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58%
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21,700
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38%
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Provision
for impairment losses
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1,498
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2%
|
423
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1%
|
Other
expense/(income), net
|
236
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0%
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(4)
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0%
|
Loss from disposal
of subsidiary
|
15
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0%
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-
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0%
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Total
expense
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65,770
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88%
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39,142
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69%
|
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|
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Net income before
income tax
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8,515
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12%
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18,615
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32%
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Income tax
expense
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(1,368)
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(2%)
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(418)
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(1%)
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Net
income
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7,147
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10%
|
18,197
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31%
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Other
comprehensive income/loss
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Changes in
unrealized gain on investments available-for-sale, net of tax
effect
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-
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0%
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(76)
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0%
|
Reclassification
adjustment relating to available-for-sale investments disposed of
in the period, net of tax effect
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22
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0%
|
54
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0%
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Foreign
currency translation adjustments, net of tax
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(15,517)
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(21%)
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(598)
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(1%)
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Comprehensive income/(loss)
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$(8,348)
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(11%)
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$17,577
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30%
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Year
Ended March 31, 2019
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Year
Ended March 31, 2018
(Recast)
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Change
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|||
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Amount
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%
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Amount
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%
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Amount
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%
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Fee and commission
income
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$44,316
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60%
|
$12,174
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21%
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$32,142
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264%
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Net gain on trading
securities
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20,162
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27%
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34,227
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59%
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(14,065)
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(41%)
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Interest
income
|
13,925
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19%
|
8,835
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16%
|
5,090
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58%
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Net gain on
derivatives
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-
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0%
|
643
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1%
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(643)
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(100%)
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Net
(loss)/gain on foreign exchange operations
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(4,118)
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(6%)
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1,878
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3%
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(5,996)
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(319%)
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Total revenue, net
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$74,285
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100%
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$57,757
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100%
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$16,528
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29%
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Year Ended March 31, 2019
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Year Ended March 31, 2018
(Recast)
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Change
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|||
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Amount
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%
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Amount
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%
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Amount
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%
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Interest
expense
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$14,649
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22%
|
$14,735
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38%
|
$(86)
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(1%)
|
Fee and commission
expense
|
6,238
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10%
|
2,288
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6%
|
3,950
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173%
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Operating
expense
|
43,134
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66%
|
21,700
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55%
|
21,434
|
99%
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Provision for
impairment losses
|
1,498
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2%
|
423
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1%
|
1,075
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254%
|
Other
expense / (income), net
|
236
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0%
|
(4)
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0%
|
240
|
(6,000%)
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Loss from disposal
of subsidiary
|
15
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0%
|
-
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0%
|
15
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0%
|
|
|
|
|
|
|
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Total expense
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$65,770
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100%
|
$39,142
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100%
|
$26,628
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68%
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Year
ended
March 31,
2019
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Year
ended
March 31,
2018
(Recast)
|
|
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Net cash flows
from/(used in) operating activities
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$58,475
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$(117,167)
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Net cash flows
(used in)/from investing activities
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(6,732)
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10,778
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Net cash flows
(used in)/from financing activities
|
(42,323)
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161,706
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Effect of changes
in foreign exchange rates on cash and cash equivalents
|
(8,693)
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(2,989)
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NET CHANGE IN CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH
|
$727
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$52,328
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Plan
Category
|
Number
of
Securities to
be
Issued upon
Exercise
of Outstanding
Options,
Warrants and
Rights
(a)
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Weighted-Average
Exercise Price
of
Outstanding
Options,
Warrants and
Rights
(b)
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Number of
Securities
Remaining
Available for
Future Issuance
under
Equity
Compensation
Plans (excluding
securities
reflected in
column (a))
(c)
|
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Equity compensation
plans
approved by
security holders
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350,000
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$1.98
|
3,740,000
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Equity compensation
plans not
approved by
security holders
|
--
|
--
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--
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Total
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350,000
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|
3,740,000
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Exhibit
No.
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|
Exhibit
Description
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||
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||
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Restated
Articles of Incorporation of Freedom Holding Corp.(1)
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By-Laws
of Freedom Holding Corp. (as amended through February 4,
2019)(2)
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Description
of Securities*
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Freedom Holding Corp., 2019 Equity Incentive
Plan(3)
+
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|||
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Form of Restricted Stock Grant Award Agreement pursuant to the
Freedom Holding Corp 2018 Equity Incentive Plan(4) +
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Form of Nonqualified Stock Option Award Agreement pursuant to the
Freedom Holding Corp 2018 Equity Incentive Plan(4) +
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Code of
Ethics(5)
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Schedule
of Subsidiaries*
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Consent
of Independent Registered Public Accounting Firm*
|
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Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*
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Certification
of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*
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|||
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Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002*
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101
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The
following Freedom Holding Corp. financial information for the year
ended March 31, 2019, formatted in XBRL (eXtensive Business
Reporting Language): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Operations, (iii) the Consolidated
Statements of Stockholders’ Equity, (iv) the Consolidated
Statements of Cash Flows, and (v) the Notes to the Consolidated
Financial Statements.*
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FREEDOM HOLDING CORP.
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Date: June 14, 2019
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By:
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/s/
Timur Turlov
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Timur Turlov
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Chief Executive Officer
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(Duly Authorized Representative)
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Signatures
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Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/
Timur Turlov
|
|
Chief Executive Officer and
|
|
June 14, 2019
|
Timur Turlov
|
|
Chairman
|
|
|
|
|
|
|
|
|
|
|
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|
/s/
Evgeniy Ler
|
|
Chief Financial Officer
|
|
June
14, 2019
|
Evgeniy Ler
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
/s/
Askar Tashtitov
|
|
President and Director
|
|
June
14, 2019
|
Askar Tashtitov
|
|
|
|
|
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|
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/s/
Boris Cherdabayev
|
|
Director
|
|
June
14, 2019
|
Boris Cherdabayev
|
|
|
|
|
|
|
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|
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|
|
|
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|
/s/
Jason Kerr
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|
Director
|
|
June
14, 2019
|
Jason Kerr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Leonard Stillman
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Director
|
|
June
14, 2019
|
Leonard Stillman
|
|
|
|
|
|
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Page
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Reports
of Independent Registered Public Accounting Firm – WSRP,
LLC
|
F-1
|
|
|
Consolidated
Balance Sheets as of March 31, 2019 and March 31, 2018
|
F-3
|
|
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Consolidated
Statements of Operations and Statements of Other Comprehensive
Income/(Loss) for the years ended March 31, 2019 and
2018
|
F-4
|
|
|
Consolidated
Statements of Shareholders’ Equity for the years ended March
31, 2019 and 2018
|
F-5
|
|
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Consolidated
Statements of Cash Flows for the years ended March 31, 2019 and
2018
|
F-6
|
|
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Notes
to Audited Consolidated Financial Statements
|
F-8
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|
March 31, 2019
|
March 31, 2018*
|
|
|
(Recast)
|
ASSETS
|
|
|
Cash
and cash equivalents
|
$49,960
|
$65,731
|
Restricted
cash
|
38,460
|
21,962
|
Trading
securities
|
167,949
|
212,595
|
Available-for-sale
securities, at fair value
|
2
|
240
|
Brokerage
and other receivables, net
|
73,836
|
24,885
|
Loans
issued
|
2,525
|
8,754
|
Deferred
tax assets
|
1,265
|
772
|
Fixed
assets, net
|
5,563
|
2,410
|
Intangible
assets, net
|
4,226
|
5,692
|
Goodwill
|
2,936
|
3,288
|
Other
assets, net
|
4,189
|
4,573
|
|
|
|
TOTAL ASSETS
|
$350,911
|
$350,902
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Securities
sold, not yet purchased - at fair value
|
$-
|
$1,135
|
Loans
received
|
4,008
|
7,143
|
Debt
securities issued
|
28,538
|
11,222
|
Customer
liabilities
|
82,032
|
30,672
|
Trade
payables
|
32,695
|
9,013
|
Deferred
distribution payments
|
8,534
|
8,534
|
Securities
repurchase agreement obligations
|
73,621
|
154,775
|
Current
income tax liability
|
754
|
-
|
Other
liabilities
|
3,132
|
1,376
|
TOTAL LIABILITIES
|
233,314
|
223,870
|
|
|
|
Commitments and Contingencies (Note 28)
|
-
|
-
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Preferred
stock - $0.001 par value; 20,000,000 shares authorized, no shares
issued or outstanding
|
-
|
-
|
Common
stock - $0.001 par value; 500,000,000 shares authorized; 58,043,212
and 58,033,212 shares issued and outstanding as of March 31, 2019
and 2018, respectively
|
58
|
58
|
Additional
paid in capital
|
99,093
|
100,180
|
Retained
earnings
|
41,498
|
34,351
|
Accumulated
other comprehensive loss
|
(23,052)
|
(7,557)
|
TOTAL STOCKHOLDERS’ EQUITY
|
117,597
|
127,032
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$350,911
|
$350,902
|
|
Years
ended March 31,
|
|
|
2019
|
2018*
|
Revenue:
|
|
(Recast)
|
|
|
|
Fee
and commission income
|
$44,316
|
$12,174
|
Net
gain on trading securities
|
20,162
|
34,227
|
Interest
income
|
13,925
|
8,835
|
Net
gain on derivatives
|
-
|
643
|
Net
(loss)/gain on foreign exchange operations
|
(4,118)
|
1,878
|
|
|
|
TOTAL REVENUE, NET
|
74,285
|
57,757
|
|
|
|
Expense:
|
|
|
Interest
expense
|
14,649
|
14,735
|
Fee
and commission expense
|
6,238
|
2,288
|
Operating
expense
|
43,134
|
21,700
|
Provision
for impairment losses
|
1,498
|
423
|
Other
expense/(income), net
|
236
|
(4)
|
Loss
from disposal of subsidiary
|
15
|
-
|
|
|
|
TOTAL EXPENSE
|
65,770
|
39,142
|
NET
INCOME BEFORE INCOME TAX
|
8,515
|
18,615
|
|
|
|
Income
tax expense
|
(1,368)
|
(418)
|
|
|
|
NET INCOME
|
$7,147
|
$18,197
|
|
|
|
OTHER
COMPREHENSIVE INCOME/(LOSS)
|
|
|
Change
in unrealized gain on investments available-for-sale,
net
of tax effect
|
-
|
(76)
|
Reclassification
adjustment relating to available-for-sale investments disposed of
in the period, net of tax effect
|
22
|
54
|
Foreign
currency translation adjustments, net of tax
|
(15,517)
|
(598)
|
|
|
|
COMPREHENSIVE INCOME/(LOSS)
|
$(8,348)
|
$17,577
|
BASIC
NET INCOME PER COMMON SHARE (In US Dollars)
|
$0.12
|
$0.55
|
DILUTED
NET INCOME PER COMMON SHARE (In US Dollars)
|
$0.12
|
$0.54
|
Weighted
average number of shares (basic)
|
58,037,102
|
33,249,013
|
Weighted
average number of shares (diluted)
|
58,237,123
|
33,393,877
|
|
Common Stock
|
|
|
|
|
|
|
Shares
(post-split)
|
Amount
|
Additional paid in capital
|
Retained earnings
|
Accumulated other comprehensive loss
|
Total
|
|
|
|
|
|
|
|
At March 31, 2017
|
11,213,926
|
$11
|
$34,659
|
$16,154
|
$(6,937)
|
$43,887
|
|
|
|
|
|
|
|
Capital
contributions
|
-
|
-
|
8,594
|
-
|
-
|
8,594
|
Issuance of
shares of common stock in the private placement
|
9,108,279
|
9
|
40,435
|
-
|
-
|
40,444
|
Acquisition of
Freedom RU
|
20,665,023
|
21
|
(21)
|
-
|
-
|
-
|
Acquisition of
Freedom UA
|
387,700
|
-
|
1,485
|
-
|
-
|
1,485
|
Acquisition of
Freedom CY
|
12,758,011
|
13
|
(13)
|
-
|
-
|
-
|
Acquisition of
Nettrader
|
-
|
-
|
7,037
|
-
|
-
|
7,037
|
Acquisition of
Asyl Invest
|
-
|
-
|
6,094
|
-
|
-
|
6,094
|
Stock based
compensation
|
3,900,000
|
4
|
1,617
|
-
|
-
|
1,621
|
Debt
forgiveness by shareholder
|
-
|
-
|
293
|
-
|
-
|
293
|
Fractional
shares from reverse stock split
|
273
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Change in
unrealized gain on investments
available-for-sale
|
-
|
-
|
-
|
-
|
(76)
|
(76)
|
Reclassification
adjustment relating to available-for-sale investments disposed of
in the period, net of tax effect
|
-
|
-
|
-
|
-
|
54
|
54
|
Translation
difference
|
-
|
-
|
-
|
-
|
(598)
|
(598)
|
Net
income
|
-
|
-
|
-
|
18,197
|
-
|
18,197
|
|
|
|
|
|
|
|
At March 31, 2018 (Recast)
|
58,033,212
|
$58
|
$100,180
|
$34,351
|
$(7,557)
|
$127,032
|
|
|
|
|
|
|
|
Capital
contributions
|
-
|
-
|
225
|
-
|
-
|
225
|
Exercise of
options
|
10,000
|
-
|
20
|
-
|
-
|
20
|
Acquisition of
Nettrader
|
-
|
-
|
(2,590)
|
-
|
-
|
(2,590)
|
Acquisition of
Asyl Invest
|
-
|
-
|
(2,240)
|
-
|
-
|
(2,240)
|
Stock based
compensation
|
-
|
-
|
3,498
|
-
|
-
|
3,498
|
|
|
|
|
|
|
|
Reclassification adjustment relating to
available-for-sale investments disposed of in the period, net of
tax effect
|
-
|
-
|
-
|
-
|
22
|
22
|
Translation
difference
|
-
|
-
|
-
|
-
|
(15,517)
|
(15,517)
|
Net
income
|
-
|
-
|
-
|
7,147
|
-
|
7,147
|
|
|
|
|
|
|
|
At March 31, 2019
|
58,043,212
|
$58
|
$99,093
|
$41,498
|
$(23,052)
|
$117,597
|
|
For the years
ended
|
|
|
March 31,
2019
|
March 31,
2018*
|
|
|
(Recast)
|
Cash
Flows From Operating Activities
|
|
|
Net
income
|
$7,147
|
$18,197
|
|
|
|
Adjustments to
reconcile net income from /(used in)operating
activities:
|
|
|
Depreciation and
amortization
|
2,034
|
1,486
|
Loss on sale of
fixed assets
|
30
|
203
|
Change in deferred
taxes
|
(580)
|
286
|
Stock compensation
expense
|
3,498
|
1,621
|
Unrealized
loss/(gain) on trading securities
|
5,373
|
(16,502)
|
Net change in
accrued interest
|
322
|
150
|
Net gain on
derivatives
|
-
|
(482)
|
Allowance for
receivables
|
1,498
|
423
|
Changes in
operating assets and liabilities:
|
|
|
Trading
securities
|
8,452
|
(110,896)
|
Brokerage and other
receivables, net
|
(52,174)
|
(21,394)
|
Loans
issued
|
5,536
|
(8,295)
|
Other assets,
net
|
(244)
|
(3,694)
|
Securities sold,
but not yet purchased – at fair value
|
(1,063)
|
1,135
|
Customer
liabilities
|
52,745
|
11,029
|
Current income tax
liability
|
754
|
(128)
|
Trade
payables
|
23,201
|
8,759
|
Other
liabilities
|
1,946
|
935
|
|
|
|
Net
cash flows from/(used in) operating activities
|
58,475
|
(117,167)
|
|
|
|
Cash
Flows From Investing Activities
|
|
|
Purchase of fixed
assets
|
(4,987)
|
(2,020)
|
Proceeds from sale
of fixed assets
|
264
|
679
|
Proceeds from sale
of intangible assets
|
-
|
18
|
Proceeds from sale
of available-for-sale securities, at fair value
|
231
|
97
|
Consideration paid
for Asyl Invest
|
(2,240)
|
-
|
Cash, cash
equivalents and restricted cash received from
acquisitions
|
-
|
12,004
|
|
|
|
Net
cash flows (used in)/from investing activities
|
(6,732)
|
10,778
|
|
|
|
Cash
Flows From Financing Activities
|
|
|
(Repurchase
of)/proceeds from securities repurchase agreement
obligations
|
(59,663)
|
96,831
|
Proceeds from
issuance of debt securities
|
34,287
|
12,125
|
Repurchase of debt
securities
|
(14,786)
|
(3,319)
|
Proceeds from
private placements
|
-
|
40,444
|
Capital
contributions
|
225
|
8,594
|
Exercise of
options
|
20
|
-
|
Proceeds from loans
received
|
5,609
|
7,033
|
Repayment of loans
received
|
(8,015)
|
(2)
|
|
|
|
Net
cash flows (used in)/from financing activities
|
(42,323)
|
161,706
|
|
|
|
Effect
of changes in foreign exchange rates on cash
and
cash equivalents
|
(8,693)
|
(2,989)
|
|
|
|
NET
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
727
|
52,328
|
CASH,
CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF
PERIOD
|
87,693
|
35,365
|
CASH,
CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$88,420
|
$87,693
|
|
For the years
ended
|
|
|
March 31,
2019
|
March
31, 2018*
|
|
|
(Recast)
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash paid for
interest
|
$(13,323)
|
$(13,102)
|
Income tax
paid
|
$(1,287)
|
$(536)
|
|
|
|
Consideration for
Nettrader acquisition to be settled
|
$2,590
|
$-
|
Common stock issued
for acquisition of Freedom UA
|
$-
|
$1,485
|
Assets
received from acquisition of Freedom UA
|
$-
|
$1,652
|
Liabilities
assumed from acquisition of Freedom UA
|
$-
|
$999
|
Debt
forgiveness by shareholder in Freedom CY
|
$-
|
$293
|
Assets
received from acquisition of Asyl Invest
|
$-
|
$14,870
|
Liabilities
assumed from Asyl Invest
|
$-
|
$10,287
|
Assets
received from acquisition of Nettrader
|
$-
|
$11,158
|
Liabilities
assumed from Nettrader
|
$-
|
$4,121
|
|
Amount
|
Balance
as of March 31, 2017
|
$981
|
|
|
Acquisition of
Asyl
|
1,511
|
Acquisition of
Freedom UA
|
832
|
Foreign currency
translation
|
(36)
|
|
|
Balance
as of March 31, 2018 (Recast)
|
$3,288
|
|
|
Foreign currency
translation
|
(352)
|
|
|
Balance
as of March 31, 2019
|
$2,936
|
|
As of March 31,
2018
|
||
BALANCE SHEETS (RECAST)
|
As previously reported
|
Recast
|
As recasted
|
|
|
|
|
ASSETS
|
|
|
|
Cash
and cash equivalents
|
$64,531
|
$1,200
|
$65,731
|
Restricted
cash
|
13,671
|
8,291
|
21,962
|
Trading
securities
|
212,319
|
276
|
212,595
|
Available-for-sale
securities, at fair value
|
2
|
238
|
240
|
Brokerage
and other receivables, net
|
21,109
|
3,776
|
24,885
|
Loans
issued
|
8,754
|
-
|
8,754
|
Deferred
tax assets
|
1,046
|
(274)
|
772
|
Fixed
assets, net
|
2,362
|
48
|
2,410
|
Intangible
assets, net
|
-
|
5,692
|
5,692
|
Goodwill
|
1,798
|
1,490
|
3,288
|
Other
assets, net
|
4,494
|
79
|
4,573
|
TOTAL ASSETS
|
$330,086
|
$20,816
|
$350,902
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Securities
sold, not yet purchased - at fair value
|
$1,135
|
$-
|
$1,135
|
Loans
received
|
7,143
|
-
|
7,143
|
Debt
securities issued
|
10,840
|
382
|
11,222
|
Customer
liabilities
|
21,855
|
8,817
|
30,672
|
Trade
payables
|
8,998
|
15
|
9,013
|
Deferred
distribution payments
|
8,534
|
-
|
8,534
|
Securities
repurchase agreement obligations
|
154,775
|
-
|
154,775
|
Deferred
income tax liabilities
|
387
|
(387)
|
-
|
Other
liabilities
|
1,319
|
57
|
1,376
|
TOTAL LIABILITIES
|
214,986
|
8,884
|
223,870
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Preferred
stock
|
-
|
-
|
-
|
Common
stock
|
58
|
-
|
58
|
Additional
paid in capital
|
87,049
|
13,131
|
100,180
|
Retained
earnings
|
35,387
|
(1,036)
|
34,351
|
Accumulated
other comprehensive loss
|
(7,394)
|
(163)
|
(7,557)
|
TOTAL STOCKHOLDERS’ EQUITY
|
115,100
|
11,932
|
127,032
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$330,086
|
$20,816
|
$350,902
|
|
For the year ended March 31, 2018
|
||
STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE
INCOME (RECAST)
|
As previously reported
|
Recast
|
As recasted
|
|
|
|
|
Revenue:
|
|
|
|
Fee
and commission income
|
$10,796
|
$1,378
|
$12,174
|
Net gain on trading
securities
|
33,746
|
481
|
34,227
|
Interest
income
|
8,184
|
651
|
8,835
|
Net gain on
derivatives
|
643
|
-
|
643
|
Net gain on sale of
fixed assets
|
5
|
(5)
|
-
|
Net
gain on foreign exchange operations
|
1,850
|
28
|
1,878
|
|
|
|
|
TOTAL REVENUE, NET
|
55,224
|
2,533
|
57,757
|
|
|
|
|
Expense:
|
|
|
|
Interest
expense
|
14,244
|
491
|
14,735
|
Fee
and commission expense
|
2,066
|
222
|
2,288
|
Operating
expense
|
18,927
|
2,773
|
21,700
|
Provision
for impairment losses
|
-
|
423
|
423
|
Other
(income)/expense, net
|
275
|
(279)
|
(4)
|
|
|
|
|
TOTAL EXPENSE
|
35,512
|
3,630
|
39,142
|
|
|
|
|
NET
INCOME BEFORE INCOME TAX
|
19,712
|
(1,097)
|
18,615
|
|
|
|
|
Income
tax expense
|
(479)
|
61
|
(418)
|
|
|
|
|
NET INCOME
|
$19,233
|
$(1,036)
|
$18,197
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME
|
|
|
|
Changes
in unrealized gain on investments available-for-sale, net of tax
effect
|
-
|
(76)
|
(76)
|
Reclassification
adjustment relating to available-for-sale investments disposed of
in the period, net of tax effect
|
-
|
54
|
54
|
Foreign
currency translation adjustments, net of tax
|
(457)
|
(141)
|
(598)
|
|
|
|
|
COMPREHENSIVE INCOME
|
$18,776
|
$(1,199)
|
$17,577
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Accounts
with stock exchange
|
$10,507
|
$214
|
Current
accounts with brokers
|
10,220
|
22,748
|
Securities
purchased under reverse repurchase agreements
|
7,887
|
27,389
|
Current account
with commercial banks
|
6,656
|
9,035
|
Current
account in clearing organizations
|
5,887
|
131
|
Current
account with Central Depository (Kazakhstan)
|
2,693
|
1,280
|
Petty
cash in bank vault and on hand
|
2,674
|
2,712
|
Current account
with Central Bank (Russia)
|
2,161
|
980
|
Current account
with National Settlement Depository (Russia)
|
1,275
|
1,242
|
Total
cash and cash equivalents
|
$49,960
|
$65,731
|
|
March 31,
2019
|
|||
|
Interest rates and remaining contractual maturity of the
agreements
|
|||
|
Average Interest rate
|
Up to 30 days
|
30-90 days
|
Total
|
Securities
purchased under reverse repurchase agreements
|
|
|
|
|
Corporate
equity
|
11.90%
|
$4,328
|
$804
|
$5,132
|
Corporate
debt
|
14.00%
|
120
|
-
|
120
|
Non-US sovereign
debt
|
8.25%
|
2,635
|
-
|
2,635
|
|
|
|
|
|
Total
|
|
$7,083
|
$804
|
$7,887
|
|
March 31, 2018 (Recast)
|
|||
|
Interest rates and remaining contractual maturity of the
agreements
|
|||
|
Average Interest rate
|
Up to 30 days
|
30-90 days
|
Total
|
Securities
purchased under reverse repurchase agreements
|
|
|
|
|
Corporate
equity
|
14.99%
|
$11,095
|
$15,572
|
$26,667
|
Corporate
debt
|
14.96%
|
521
|
201
|
722
|
|
|
|
|
|
Total
|
|
$11,616
|
$15,773
|
$27,389
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Brokerage
customers’ cash
|
$28,931
|
$12,963
|
Deferred
distribution payments
|
8,534
|
8,534
|
Guaranty
deposits
|
732
|
350
|
Reserve with
Central Bank of Russia
|
263
|
115
|
Total
restricted cash
|
$38,460
|
$21,962
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Equity
securities
|
$105,017
|
$177,339
|
Debt
securities
|
62,691
|
34,986
|
Mutual investment
funds
|
241
|
270
|
Total
trading securities
|
$167,949
|
$212,595
|
|
|
|
Equity
securities
|
$2
|
$240
|
Total
available-for-sale securities, at fair value
|
$2
|
$240
|
|
|
Fair Value Measurements at
|
||
|
|
March 31, 2019 using
|
||
|
|
Quoted Prices in
Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
Significant
unobservable units
|
|
March 31,
2019
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|
|
|
|
|
Equity
securities
|
$105,017
|
$105,017
|
$-
|
$-
|
Debt
securities
|
62,691
|
62,187
|
-
|
504
|
Mutual investment
funds
|
241
|
241
|
-
|
-
|
Total
trading securities
|
$167,949
|
$167,445
|
$-
|
$504
|
|
|
Fair Value Measurements at
|
||
|
|
March 31, 2018 (Recast) using
|
||
|
|
Quoted Prices in
Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
Significant
unobservable units
|
|
March 31, 2018
(Recast)
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|
|
|
|
|
Equity
securities
|
$177,339
|
$177,339
|
$-
|
$-
|
Debt
securities
|
34,986
|
34,986
|
-
|
-
|
Mutual investment
funds
|
270
|
270
|
-
|
-
|
Total
trading securities
|
$212,595
|
$212,595
|
$-
|
$-
|
Type
|
Valuation
Technique
|
FV as of March
31,2019
|
Significant
Unobservable Inputs
|
%
|
|
|
|
|
|
Corporate
bonds
|
DCF
|
$504
|
Discount
rate
|
11.3%
|
|
|
|
|
|
Amount
|
Balance
as of March 31, 2018 (Recast)
|
$-
|
|
|
Transfer between
Level 1 and Level 3
|
507
|
Foreign currency
translation
|
(3)
|
Balance
as of March 31, 2019
|
$504
|
|
March 31,
2019
|
||
|
Assets measured
at amortized cost
|
Unrealized gain
accumulated in other comprehensive
income/(loss)
|
Assets measured at fair value
|
|
|
|
|
Equity
securities
|
$1
|
$1
|
$2
|
|
|
|
|
Available-for-sale
securities, at fair value
|
$1
|
$1
|
$2
|
|
March 31,
2018
(Recast)
|
||
|
Assets measured
at amortized cost
|
Unrealized loss
accumulated in other comprehensive
income/(loss)
|
Assets measured at fair value
|
|
|
||
Equity
securities
|
$261
|
$(21)
|
$240
|
|
|
|
|
Available-for-sale
securities, at fair value
|
$261
|
$(21)
|
$240
|
|
March 31,
2019
|
March 31,
2018
|
|
|
(Recast)
|
Margin lending
receivables
|
$46,716
|
$17,276
|
Receivable from
purchase or sale of securities
|
27,684
|
6,061
|
Receivables from
brokerage clients
|
824
|
710
|
Dividends
accrued
|
108
|
-
|
Receivable for
underwriting and market-making services
|
88
|
72
|
Other
receivables
|
25
|
55
|
Bank commissions
receivable
|
17
|
1,016
|
Bonds coupon
receivable
|
-
|
119
|
|
|
|
Allowance for
receivables
|
(1,626)
|
(424)
|
|
|
|
Total
brokerage and other receivables, net
|
$73,836
|
$24,885
|
|
Amount
Outstanding
|
Due
Dates
|
Average Interest
Rate
|
Fair Value of
Collateral
|
Loan
Currency
|
|
|
|
|
|
|
Collateralized
brokerage loans
|
$1,888
|
Dec.
2019
|
4.75%
|
$4,718
|
USD
|
Bank customer
loans
|
637
|
May 2019 –
Jan. 2019
|
13.34%
|
-
|
RUB
|
|
$2,525
|
|
|
|
|
|
Amount
Outstanding
|
Due
Dates
|
Average Interest
Rate
|
Fair Value of
Collateral
|
Loan
Currency
|
|
|
|
|
|
|
Collateralized
brokerage loans
|
$5,371
|
Jan. 2019 –
Feb. 2019
|
3.00%
|
$6,992
|
USD
|
Uncollateralized
brokerage loans
|
2,832
|
Jan. 2019 –
Mar. 2019
|
0.00%
|
-
|
KZT
|
Bank customer
loans
|
551
|
Nov. 2018 –
Feb. 2028
|
12.32%
|
-
|
RUB
|
|
$8,754
|
|
|
|
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Deferred tax assets:
|
|
|
Tax losses
carryforward
|
$2,376
|
$3,050
|
Revaluation on
trading securities
|
2,095
|
88
|
Accrued
liabilities
|
35
|
49
|
Stock compensation
expenses
|
-
|
405
|
Valuation
allowance
|
(3,241)
|
(2,433)
|
Deferred
tax assets
|
$1,265
|
$1,159
|
|
|
|
Deferred tax liabilities:
|
|
|
Revaluation on
trading securities
|
$-
|
$387
|
|
|
|
Deferred
tax liabilities
|
$-
|
$387
|
|
|
|
Net
deferred tax assets
|
$1,265
|
$772
|
|
Year
ended
March 31,
2019
|
Year
ended
March 31,
2018
(Recast)
|
|
|
|
Profit before tax
at 21% and 34%
|
$1,788
|
$6,329
|
Nontaxable gains
|
(3,811)
|
(7,129)
|
Provision for impairment losses
|
386
|
81
|
Impact of Tax
Reform
|
-
|
190
|
Foreign tax rate differential
|
(1,211)
|
30
|
Other
differences
|
418
|
439
|
Permanent differences
|
430
|
-
|
Global Intangible
Low Taxed Income
|
573
|
-
|
Stock based
compensations
|
309
|
-
|
Losses carried
forward adjustment
|
1,678
|
-
|
Valuation
allowance
|
808
|
478
|
Income
tax provision
|
$1,368
|
$418
|
|
Year
ended
March 31,
2019
|
Year
ended
March 31,
2018
(Recast)
|
Current income tax
charge
|
$1,817
|
$131
|
Deferred income
tax charge/(benefit)
|
(449)
|
287
|
Income tax provision
|
$1,368
|
$418
|
|
March 31,
2019
|
March 31,
2018
|
|
|
(Recast)
|
Capital
expenditures on lease improvement
|
$1,724
|
$17
|
Furniture
|
1,713
|
435
|
Office
equipment
|
1,452
|
670
|
Processing and
storage data centers
|
679
|
617
|
Land
|
394
|
445
|
Vehicles
|
353
|
449
|
Buildings
|
-
|
392
|
Other
|
457
|
267
|
|
|
|
Less: Accumulated
depreciation
|
(1,209)
|
(882)
|
|
|
|
Total fixed
assets
|
$5,563
|
$2,410
|
|
March 31,
2019
|
March 31,
2018
|
|
|
(Recast)
|
Trading
platform
|
$3,052
|
$3,451
|
Client
base
|
1,602
|
2,443
|
Other intangible
assets
|
1,061
|
638
|
|
|
|
Less: Accumulated
amortization
|
(1,489)
|
(840)
|
|
|
|
Total intangible
assets
|
$4,226
|
$5,692
|
|
March 31,
2019
|
March 31,
2018
|
|
|
(Recast)
|
Prepaid
expenses
|
$1,851
|
$1,641
|
Rent guarantee
deposit
|
714
|
965
|
Current income tax
asset
|
502
|
365
|
Outstanding
settlement operations
|
429
|
-
|
Taxes other than
income taxes
|
149
|
147
|
Guaranty
deposit
|
69
|
75
|
Prepaid
insurance
|
21
|
26
|
Advances
paid for leasehold improvements
|
-
|
1,057
|
Other
|
516
|
355
|
|
|
|
Total
other assets
|
4,251
|
4,631
|
|
|
|
Allowance
for other assets
|
(62)
|
(58)
|
|
|
|
Other assets, net
|
$4,189
|
$4,573
|
Company
|
Lender
|
March 31,
2019
|
March 31, 2018
(Recast)
|
Interest rate
|
Term
|
Maturity dates
|
Freedom Holding
Corp.
|
Non-Bank
|
$3,917
|
$-
|
3%
|
1-2
year
|
04/30/2019
- 12/31/2019
|
Freedom Finance
Cyprus Limited
|
D-FINANCE
Inc.
|
91
|
99
|
1%
|
2 year
|
12/11/2019
|
JSC Freedom
Finance
|
JSC AsiaCreditBank
|
-
|
7,044
|
7%
|
1 year
|
2/5/2019
|
Total
|
|
$4,008
|
$7,143
|
|
|
|
|
March 31,
2019
|
March 31,
2018
|
|
|
(Recast)
|
Debt securities
issued denominated in USD
|
$20,265
|
$7,006
|
Debt securities
issued denominated in RUB
|
7,724
|
-
|
Debt securities
issued denominated in KZT
|
-
|
4,025
|
Accrued
interest
|
549
|
191
|
|
|
|
Total
|
$28,538
|
$11,222
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Brokerage
customers
|
$47,686
|
$21,367
|
Banking
customers
|
34,346
|
9,305
|
Total
|
$82,032
|
$30,672
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Margin lending
payable
|
$29,081
|
$6,604
|
Trade payable for
securities purchased
|
2,939
|
1,065
|
Payables to
suppliers of goods and services
|
555
|
152
|
Guaranty fee
received
|
-
|
709
|
Payable for
acquisition of servers
|
-
|
395
|
Other
|
120
|
88
|
|
|
|
Total
|
$32,695
|
$9,013
|
|
March 31, 2019
|
||||
|
Interest rates and remaining contractual maturity of the
agreements
|
||||
|
Average interest rate
|
Up to 30
days
|
30-90
days
|
Over 90
days
|
Total
|
|
|
|
|
|
|
Securities sold under repurchase agreements
|
|
|
|
|
|
Corporate
equity
|
12.06%
|
$49,048
|
$-
|
$2,146
|
$51,194
|
Corporate
debt
|
10.38%
|
13,548
|
-
|
-
|
13,548
|
Non-US sovereign
debt
|
8.62%
|
8,879
|
-
|
-
|
8,879
|
Total
securities sold under repurchase agreements
|
|
$71,475
|
$-
|
$2,146
|
$73,621
|
|
March 31, 2018 (Recast)
|
||||
|
Interest rate and remaining contractual maturity of the
agreements
|
||||
|
Average interest rate
|
Up to 30
days
|
30-90
days
|
Over 90
days
|
Total
|
|
|
|
|
|
|
Securities sold under repurchase agreements
|
|
|
|
|
|
Corporate
equity
|
12.04%
|
$109,821
|
$8,960
|
$7,149
|
$125,930
|
Corporate
debt
|
10.64%
|
24,257
|
2,023
|
-
|
26,280
|
Non-US sovereign
debt
|
8.54%
|
2,565
|
-
|
-
|
2,565
|
Total
securities sold under repurchase agreements
|
|
$136,643
|
$10,983
|
$7,149
|
$154,775
|
|
March 31,
2019
|
March 31,
2018
(Recast)
|
|
|
|
Salaries and other
employee benefits
|
$1,307
|
$255
|
Vacation
reserve
|
942
|
537
|
Outstanding
settlements operations
|
314
|
-
|
Payable to
suppliers
|
212
|
-
|
Taxes payable other
than income tax
|
127
|
130
|
Advance received
for sale of fixed asset
|
-
|
288
|
Other
|
230
|
166
|
|
|
|
Total
|
$3,132
|
$1,376
|
|
Year
ended
March 31,
2019
|
Year
ended
March 31,
2018
(Recast)
|
|
|
|
Fee and commission income:
|
|
|
|
|
|
Brokerage
services
|
$36,810
|
$6,429
|
Bank
services
|
6,133
|
3,419
|
Underwriting
services
|
861
|
2,109
|
Other commission
income
|
512
|
217
|
|
|
|
Total
fee and commission income
|
$44,316
|
$12,174
|
|
|
|
|
|
|
Fee and commission expense:
|
|
|
|
|
|
Brokerage
services
|
$4,164
|
$305
|
Bank
services
|
919
|
1,629
|
Exchange
services
|
574
|
199
|
Central Depository
services
|
301
|
155
|
Other commission
expense
|
280
|
-
|
|
|
|
Total
fee and commission expense
|
$6,238
|
$2,288
|
|
|
|
|
Year
ended
March 31,
2019
|
Year
ended
March 31,
2018
(Recast)
|
|
|
|
Net gain recognized
during the period on trading securities sold during the
period
|
$25,535
|
$17,725
|
Net unrealized
gain/(loss) recognized during the reporting period on trading
securities still held at the reporting date
|
(5,373)
|
16,502
|
Net
gain recognized during the period on trading
securities
|
$20,162
|
$34,227
|
|
Year
ended
March 31,
2019
|
Year
ended
March 31,
2018
(Recast)
|
|
|
|
Interest income:
|
|
|
Interest income on
financial assets recorded at amortized cost comprises:
|
|
|
|
|
|
Interest income on
reverse repurchase agreements and amounts due from
banks
|
$2,290
|
$3,166
|
Interest income on
loans to customers
|
264
|
268
|
|
|
|
Total interest
income on financial assets recorded at amortized cost
|
$2,554
|
$3,434
|
|
|
|
Interest income on
financial assets recorded at fair value through profit or loss
comprises:
|
|
|
|
|
|
Interest income on
trading securities
|
$11,371
|
$5,401
|
|
|
|
Total interest
income on financial assets recorded at fair value through profit or
loss
|
11,371
|
5,401
|
|
|
|
Total
interest income
|
$13,925
|
$8,835
|
Interest expense:
|
|
|
Interest expense on
financial liabilities recorded at amortized cost
comprises:
|
|
|
|
|
|
Interest expense on
securities repurchase agreement obligations
|
$11,113
|
$13,380
|
Interest expense on
debt securities issued
|
1,907
|
1,076
|
Interest expense on
customer accounts and deposits
|
1,305
|
244
|
Interest expense on
loans received
|
324
|
35
|
|
|
|
Total interest
expense on financial liabilities recorded at amortized
cost
|
14,649
|
14,735
|
|
|
|
Total
interest expense
|
$14,649
|
$14,735
|
|
Year
ended
March 31,
2019
|
Year
ended
March 31,
2018
(Recast)
|
|
|
|
Translation
difference
|
$(4,115)
|
$1,232
|
Sales and purchases
of foreign currency, dealing
|
(3)
|
646
|
|
|
|
Total
net gain/(loss) on foreign exchange operations
|
$(4,118)
|
$1,878
|
Term
(years)
|
3
|
Volatility
|
165.33%
|
Risk-free
rate
|
1.66%
|
|
Shares
|
Weighted Average Exercise Price
|
Weighted
Average Remaining Contractual Term
(In Years)
|
Aggregate
Intrinsic Value
|
Outstanding
at March 31, 2018
|
360,000
|
$1.98
|
9.52
|
$1,753
|
Granted
|
-
|
-
|
-
|
-
|
Exercised
|
(10,000)
|
1.98
|
-
|
66
|
Forfeited/cancelled/expired
|
-
|
-
|
-
|
-
|
Outstanding,
at March 31, 2019
|
350,000
|
$1.98
|
8.52
|
2,342
|
Exercisable
at March 31, 2019
|
110,000
|
$1.98
|
8.52
|
$736
|
|
Shares
|
Weighted Average Fair Value
|
Non-vested at March
31, 2018
|
3,900,000
|
$8,190
|
Granted
|
-
|
-
|
Vested
|
1,625,000
|
3,413
|
Forfeited/cancelled
|
-
|
-
|
Non-vested
at March 31, 2019
|
2,275,000
|
$4,777
|
|
Purchase price
allocation
|
|
As of April 28,
2017
|
Assets:
|
|
Cash and cash
equivalents
|
$310
|
Restricted
cash
|
10,204
|
Trading
securities
|
858
|
Available-for-sale
securities, at fair value
|
324
|
Fixed
assets
|
313
|
Intangible
assets
|
1,971
|
Brokerage and other
receivables
|
856
|
Other
assets
|
34
|
Total
assets
|
$14,870
|
|
|
Liabilities:
|
|
Customer
liabilities
|
$10,204
|
Deferred income tax
liabilities
|
33
|
Other
liabilities
|
50
|
Total
liabilities
|
$10,287
|
|
|
Net assets
acquired
|
$4,583
|
|
|
Goodwill
|
1,511
|
|
|
Total purchase
price
|
$6,094
|
|
Purchase price
allocation
|
|
As of May 18,
2017
|
Assets:
|
|
Cash and cash
equivalents
|
$120
|
Restricted
cash
|
938
|
Brokerage and other
receivables
|
4,637
|
Loan
issued
|
338
|
Fixed
assets
|
460
|
Intangible
assets
|
4,523
|
Deferred income tax
assets
|
60
|
Other
assets
|
81
|
Total
assets
|
$11,157
|
|
|
Liabilities:
|
|
Customer
liabilities
|
$4,103
|
Trade
and other payables
|
3
|
Other
liabilities
|
14
|
Total
liabilities
|
$4,120
|
|
|
Net assets
acquired
|
$7,037
|
|
|
Goodwill
|
-
|
|
|
Total purchase
price
|
$7,037
|
|
Purchase price
allocation
|
|
As of November
1, 2017
|
Assets:
|
|
Cash and cash
equivalents
|
$432
|
Trading
securities
|
6
|
Fixed
assets
|
88
|
Customer
list
|
176
|
Brokerage and other
receivables
|
947
|
Other
assets
|
3
|
Total
assets
|
$1,652
|
|
|
Liabilities:
|
|
Customer
liabilities
|
$997
|
Trade
payables
|
1
|
Other
liabilities
|
1
|
Total
liabilities
|
$999
|
|
|
Net assets
acquired
|
$653
|
|
|
Goodwill
|
832
|
|
|
Total purchase
price
|
$1,485
|
|
Payments Due By
Period
|
||||
|
Total
|
Less than 1
year
|
1-3
years
|
3-5
years
|
More than 5
years
|
Operating
Leases:
|
|
|
|
|
|
Office
Leases(1)
|
$11,871
|
$5,599
|
$6,272
|
$-
|
$-
|
Total
Operating Leases
|
$11,871
|
$5,599
|
$6,272
|
$-
|
$-
|
Exhibit
No.
|
|
Exhibit
Description
|
|
|
|
|
Description
of Securities
|
|
|
Subsidiaries
|
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
Subsidiary Name
and Jurisdiction of Formation
|
|
Our
%
Ownership
|
|
U.S.
Subsidiaries of our Subsidiaries
|
|
Non-U.S.
Subsidiaries of our Subsidiaries
|
|
|
|
|
|
|
|
LLC IC
Freedom Finance, Russia
|
|
100%
|
|
-
|
|
4
|
JSC
Freedom Finance, Kazakhstan(1)
|
|
|
|
|
|
|
LLC
FFIN Bank, Russia(2)
|
|
|
|
|
|
|
Branch
Office of LLC IC Freedom Finance in
Kazakhstan,
Kazakhstan(3)*
|
|
|
|
|
|
|
Freedom
Finance Cyprus Limited, Cyprus
|
|
100%
|
|
-
|
|
1
|
Freedom
Finance Germany TT GmbH,
Germany(4)
|
|
|
|
|
|
|
LLC
Freedom Finance Ukraine, Ukraine
|
|
100%
|
|
-
|
|
-
|
LLC
Freedom Finance Uzbekistan, Uzbekistan
|
|
100%
|
|
-
|
|
-
|
FFIN
Securities, Inc., Nevada, USA*
|
|
100%
|
|
-
|
|
-
|
|
|
|
|
Date: June 14, 2019
|
|
By:
|
/s/ Timur
Turlov
|
|
|
|
Timur Turlov
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: June 14, 2019
|
|
By:
|
/s/ Evgeniy
Ler
|
|
|
|
Evgeniy Ler
|
|
|
|
Chief Financial Officer
|
|
|
|
|
Date: June 14, 2019
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By:
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/s/ Timur
Turlov
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Timur Turlov
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Chief Executive Officer
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Date: June 14, 2019
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By:
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/s/ Evgeniy
Ler
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Evgeniy Ler
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Chief Financial Officer
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Document and Entity Information - USD ($) |
12 Months Ended | ||
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Mar. 31, 2019 |
Jun. 12, 2019 |
Sep. 30, 2018 |
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Document And Entity Information | |||
Entity Registrant Name | Freedom Holding Corp. | ||
Entity Central Index Key | 0000924805 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 128,059,471 | ||
Entity Common Stock, Shares Outstanding | 58,093,212 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS (AUDITED) (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, authorized shares | 20,000,000 | |
Preferred stock, issued shares | 0 | |
Preferred stock, outstanding shares | 0 | |
Common stock, par value | $ 0.001 | |
Common stock, authorized shares | 500,000,000 | |
Common stock, issued shares | 58,043,212 | |
Common stock, outstanding shares | 58,043,212 | |
(Recast) | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, authorized shares | 20,000,000 | |
Preferred stock, issued shares | 0 | |
Preferred stock, outstanding shares | 0 | |
Common stock, par value | $ 0.001 | |
Common stock, authorized shares | 500,000,000 | |
Common stock, issued shares | 58,033,212 | |
Common stock, outstanding shares | 58,033,212 |
1. Description of Business |
12 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business |
Overview
Freedom Holding Corp. (the “Company” or “FRHC”) is corporation organized in the United States under the laws of the State of Nevada that through its operating subsidiaries engages in a broad range of activities in the securities industry, including retail securities brokerage, research, investment counseling, securities trading, market making, corporate investment banking and underwriting services in Eastern Europe and Central Asia. The Company is headquartered in Almaty, Kazakhstan, with supporting administrative office locations in Russia, Cyprus and the United States.
The Company owns directly, or through subsidiaries, the following companies: LLC Investment Company Freedom Finance, a Moscow, Russia-based securities broker-dealer (“Freedom RU”); LLC FFIN Bank, a Moscow, Russia-based bank (“FFIN Bank”); JSC Freedom Finance, an Almaty, Kazakhstan-based securities broker-dealer (“Freedom KZ”); Freedom Finance Cyprus Limited, a Limassol, Cyprus-based broker-dealer (“Freedom CY”); Freedom Finance Germany TT GmbH, a Berlin, Germany-based tied agent (“Freedom GE”), LLC Freedom Finance Ukraine, a Kiev, Ukraine-based broker-dealer (“Freedom UA”); LLC Freedom Finance Uzbekistan, a Tashkent, Uzbekistan-based broker-dealer (“Freedom UZ”); and FFIN Securities, Inc., a Nevada corporation (“FFIN”).
The Company’s subsidiaries are professional participants on the Kazakhstan Stock Exchange (KASE), Astana Stock Exchange (AIX), Moscow Exchange (MOEX), Saint-Petersburg Exchange (SPB), the Ukrainian Exchange, and the Republican Stock Exchange of Tashkent (UZSE). Freedom CY serves to provide the Company’s clients with operations support and access to the investment opportunities, relative stability, and integrity of the U.S. and European securities markets, which under the regulatory regimes of many jurisdictions where the Company operates do not currently allow investors direct access to international securities markets.
In November 2015, the Company entered into a Share Exchange and Acquisition Agreement with Timur Turlov to acquire FFIN, Freedom RU and Freedom CY. The acquisition of FFIN closed in November 2015. In June 2017, the Company closed the acquisition of Freedom RU, which included the acquisition of Freedom RU and its wholly-owned subsidiaries FFIN Bank and Freedom KZ. In exchange for his 100% interest in Freedom RU and its subsidiaries, Timur Turlov, our chief executive officer and chairman, was issued 20,665,023 shares of restricted Company common stock. In November 2017, the Company closed the acquisition of Freedom CY. The Company issued Mr. Turlov 12,758,011 shares of restricted Company common stock in exchange for his 100% ownership interest in Freedom CY.
In November 2017, the Company closed the acquisition of Freedom UA with BusinessTrain, Ltd. in exchange for 387,700 shares of restricted Company common stock.
In April 2018, the Company completed the acquisition and merger of JSC Asyl Invest (“Asyl”) into Freedom KZ for approximately $2.2 million, which was equal to the fair value of the net assets acquired.
In May 2018, the Company completed the acquisition and merger of Nettrader LLC (“Nettrader”) for approximately $3.8 million, which was equal to the fair value of the net assets acquired.
On September 6, 2017, the Company effected a one-share-for-twenty-five-shares reverse stock split of its common stock. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the stock split as if such stock split occurred on the first day of the first period presented. Certain amounts in the notes to the financial statements may be slightly different than previously reported due to rounding of fractional shares as a result of the reverse stock split. |
2. Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Accounting principles
The Company’s accounting policies and accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (US GAAP).
These financial statements have been prepared on the accrual basis of accounting.
Basis of presentation and principles of consolidation
The Company’s consolidated financial statements present the consolidated accounts of FRHC, Freedom RU, Freedom KZ, FFIN Bank, Freedom CY, Freedom UA, Freedom UZ, Freedom GE, FFIN and the financial results of LLC First Stock Store (“Freedom 24”) up to the date of its disposal on September 30, 2018. All significant inter-company balances and transactions have been eliminated from the consolidated financial statements.
As further discussed in Note 27 – Acquisitions and Disposal of Subsidiary, the acquisitions of Asyl and Nettrader were each considered transactions between entities under common control, therefore the accompanying financial information has been recast to include these acquisitions for all periods presented. Accordingly, the accompanying consolidated financial statements include historical cost-basis accounts of the assets of: (i) Asyl prior to April 12, 2018, the date of completion of the Asyl acquisition and merger, and (ii) Nettrader prior to May 28, 2018, the date of completion of the Nettrader acquisition and merger.
Use of estimates
The preparation of financial statements in conformity with US 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. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from those estimates.
Revenue and expense recognition
Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services promised to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. A significant portion of the Company’s revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities, as these activities are subject to other US GAAP guidance discussed elsewhere within these disclosures. Descriptions of the Company’s revenue-generating activities that are within the scope of ASC Topic 606, which are presented in the Consolidated Statements of Operations and Statements of Other Comprehensive Income as components of non-interest income are as follows:
The Company adopted the new guidance on April 1, 2018. Under Topic 606, the Company is required to recognize incentive fees when they are probable and there is not a significant chance of reversal in the future. For the brokerage commission, banking service commission and investment banking services commission contracts in place at the time of adoption, this change in policy did not result in any actual change in revenue that had already been recognized and therefore there was no transition adjustment necessary.
The Company recognizes revenue when five basic criteria have been met:
Derivative financial instruments
In the normal course of business, the Company invests in various derivative financial contracts including futures. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The fair values are estimated based on quoted market prices or pricing models that take into account the current market and contractual prices of the underlying instruments and other factors. Derivatives are carried as assets when their fair value is positive and as liabilities when it is negative. Derivatives are included in assets and liabilities at fair value through profit or loss in the Consolidated Balance Sheets.
The Company purchases foreign currency futures contracts from financial institutions to minimize the risk caused by foreign currency fluctuation on its foreign currency receivables and payables and also purchases foreign currency futures contracts for speculative purposes. Futures are traded on the KASE and represent commitments to purchase or sell a particular foreign currency at a future date and at a specific price.
All gains and losses on foreign currency contracts were realized during the year ended March 31, 2019, and are included in net gain on derivatives in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss).
Functional currency
Management has adopted ASC 830, Foreign Currency Translation Matters as it pertains to its foreign currency translation. The Company’s functional currencies are the Russian ruble, European euro, Ukrainian hryvnia, Uzbekistani som and Kazakhstani tenge, and its reporting currency is the US dollar. Monetary assets and liabilities denominated in foreign currencies are translated into US dollars using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in revenue.
The functional currencies of our operating subsidiaries are the Russian ruble, European euro, Ukrainian hryvnia, Uzbekistani som and the Kazakhstani tenge. For financial reporting purposes, those currencies are translated into United States dollars as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive loss” reserve.
Cash and cash equivalents
Cash and cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase. Cash and cash equivalents include reverse repurchase agreements which are recorded at the amounts at which the securities were acquired or sold plus accrued interest.
Securities reverse repurchase and repurchase agreements
A reverse repurchase agreement is a transaction in which the Company purchases financial instruments from a seller, typically in exchange for cash, and simultaneously enters into an agreement to resell the same or substantially the same financial instruments to the seller for an amount equal to the cash or other consideration exchanged plus interest at a future date. Securities purchased under reverse repurchase agreements are accounted for as collateralized financing transactions and are recorded at the contractual amount for which the securities will be resold, including accrued interest. Financial instruments purchased under reverse repurchase agreements are recorded in the financial statements as cash placed on deposit collateralized by securities and classified as cash and cash equivalents in the Consolidated Balance Sheets.
A repurchase agreement is a transaction in which the Company sells financial instruments to another party, typically in exchange for cash, and simultaneously enters into an agreement to reacquire the same or substantially the same financial instruments from the buyer for an amount equal to the cash or other consideration exchanged plus interest at a future date. These agreements are accounted for as collateralized financing transactions. The Company retains the financial instruments sold under repurchase agreements and classifies them as trading securities in the Consolidated Balance Sheets. The consideration received under repurchase agreements is classified as securities repurchase agreement obligations in the Consolidated Balance Sheets.
The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions to, among other things, acquire securities to leverage and grow its proprietary trading portfolio, cover short positions and settle other securities obligations, to accommodate customers’ needs and to finance its inventory positions. The Company enters into these transactions in accordance with normal market practice. Under standard terms for repurchase transactions, the recipient of collateral has the right to sell or repledge the collateral, subject to returning equivalent securities on settlement of the transaction.
Available-for-sale securities
Financial assets categorized as available-for-sale (“AFS”) are non-derivatives that are either designated as available-for-sale or not classified as (a) loans and receivables, (b) held to maturity investments or (c) trading securities.
Listed shares and listed redeemable notes held by the Company that are traded in an active market are classified as AFS and are stated at fair value. The Company has investments in unlisted shares that are not traded in an active market but that are also classified as investments AFS and stated at fair value (because Company management considers that fair value can be reliably measured). Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in the Accumulated other comprehensive income/(loss), with the exception of other-than-temporary impairment losses, interest calculated using the effective interest method, dividend income and foreign exchange gains and losses are recognized in the Consolidated Statements of Operations and Statements of other Comprehensive Income/(Loss). Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss.
Trading securities
Financial assets are classified as trading securities if the financial asset has been acquired principally for the purpose of selling it in the near term.
Trading securities are stated at fair value, with any gains or losses arising on remeasurement recognized in revenue. Changes in fair value are recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss) and included in net gain/(loss) on trading securities. Interest earned and dividend income are recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss) and included in interest income, according to the terms of the contract and when the right to receive the payment has been established.
Investments in nonconsolidated managed funds are accounted for at fair value based on the net asset value of the funds provided by the fund managers with gains or losses included in net gain on trading securities in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss).
Debt securities issued
Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs. Subsequently, amounts due are stated at amortized cost and any difference between net proceeds and the redemption value is recognized over the period of the borrowings using the effective interest method. If the Company purchases its own debt it is removed from the Consolidated Balance Sheets and the difference between the carrying amount of the liability and the consideration paid is recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss).
Brokerage and other receivables
Brokerage and other receivables comprise commissions and receivables related to the securities brokerage and banking activity of the Company. At initial recognition, brokerage and other receivables are recognized at fair value. Subsequently, brokerage and other receivables are carried at cost net of any allowance for impairment losses.
Derecognition of financial assets
A financial asset (or, where applicable a part of a financial asset or a part of a group of similar financial assets) is derecognized where all of the following conditions are met:
Where the Company has not met the asset derecognition conditions above, it continues to recognize the asset to the extent of its continuing involvement.
Impairment of long lived assets
In accordance with the accounting guidance for the impairment or disposal of long-lived assets, the Company periodically evaluates the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the fair value from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. As of March 31, 2019 and March 31, 2018, the Company had not recorded any charges for impairment of long-lived assets.
Impairment of goodwill
As of March 31, 2019 and March 31, 2018, goodwill recorded in the Company’s Consolidated Balance Sheets totaled $2,936 and $3,288, respectively. The Company performs an impairment review at least annually unless indicators of impairment exist in interim periods. The impairment test for goodwill uses a two-step approach. Step one compares the estimated fair value of a reporting unit with goodwill to its carrying value. If the carrying value exceeds the estimated fair value, step two must be performed. Step two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit as if the reporting unit was acquired in a business combination. If the carrying amount of a reporting unit's goodwill exceeds the implied fair value of its goodwill, an impairment loss is recognized in an amount equal to the excess. In its annual goodwill impairment test, the Company estimated the fair value of the reporting unit based on the income approach (also known as the discounted cash flow method) and determined the fair value of the Company’s goodwill exceeded the carrying amount of the Company’s goodwill. The goodwill value as March 31, 2019 decreased compared to March 31, 2018 due to foreign exchange currency translation.
The changes in the carrying amount of goodwill for the year ended March 31, 2019 and 2018 were as follows:
Income taxes
The Company recognizes deferred tax liabilities and assets based on the difference between the financial statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.
Current income tax expenses are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The Company accounts for income taxes using the asset and liability approach. Under this method, deferred income taxes are recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income.
The Company will include interest and penalties arising from the underpayment of income taxes in the provision for income taxes. As of March 31, 2019 and March 31, 2018, the Company had no accrued interest or penalties related to uncertain tax positions.
On December 22, 2017, the U.S. bill commonly referred to as the Tax Cuts and Jobs Act (“Tax Reform Act”) was enacted, which significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Tax Reform Act also provided for a one-time deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Global Intangible Low-Taxed Income ("GILTI") provisions of the Tax Reform Act require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company may be subject to incremental U.S. tax on GILTI income beginning in 2018, depending upon expense allocations and the applicable U.S. foreign tax credit rules. The Company has presented the deferred tax impacts of GILTI tax in its consolidated financial statements for the year ended March 31, 2019.
Financial instruments
Financial instruments are carried at fair value as described below.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. Fair value is the current bid price for financial assets, current ask price for financial liabilities and the average of current bid and ask prices when the Company is both in short and long positions for the financial instrument. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange or other institution and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
Leases
Rent payable under operating leases is charged to expense on a straight-line basis over the term of the relevant lease.
Fixed assets
Fixed assets are carried at cost, net of accumulated depreciation. Maintenance, repairs, and minor renewals are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range between three and seven years.
Advertising expense
For the years ended March 31, 2019 and 2018, the Company had expenses related to advertising in the amount of $4,500 and $1,384, respectively. All costs associated with advertising are expensed in the period incurred.
Recent accounting pronouncements
In May 2018, the FASB issued ASU No. 2018-06, Codification Improvements to Topic 942, Financial Services - Depository and Lending. The FASB issued this Update to supersede outdated guidance related to the Office of the Comptroller of the Currency’s Banking Circular 202, Accounting for Net Deferred Tax Charges (Circular 202). The Board has an ongoing project on its agenda about Codification improvements to clarify the FASB Accounting Standards Codification or to correct unintended application of guidance. Those Codification improvement items generally are not expected to have a significant effect on current accounting practice or to create a significant administrative cost for most entities. The amendments in this Update are of a similar nature, and, therefore, the Board is addressing the improvements through the Codification improvements project. The Board decided to issue a separate Update to increase stakeholders’ awareness of the improvements to Topic 942, Financial Services—Depository and Lending. The amendments in this Update remove outdated guidance related to Circular 202 and should have no effect on reporting entities.
ASU 2016-02, “Leases,” ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842,” ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements”: In February 2016, the FASB issued ASU 2016-02 which requires entities to include substantially all leases on the balance sheet by requiring the recognition of right-of-use assets and lease liabilities for all leases. Entities may elect to exclude from the balance sheet those leases with a maximum possible term of less than 12 months. For lessees, a lease is classified as finance or operating, and the asset and liability are initially measured at the present value of the lease payments. For lessors, accounting for leases is largely unchanged from previous provisions of U.S. GAAP, other than certain changes to align lessor accounting to specific changes made to lessee accounting and ASC 606. ASU 2016-02 also requires new qualitative and quantitative disclosures for both lessees and lessors. In July 2018 the FASB adopted ASU 2018-10 which makes technical corrections and clarifications to the accounting guidance in Topic 842.
For public entities, ASU 2016-02, 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01 are effective for fiscal years beginning after December 15, 2018, including interim periods therein, with early adoption permitted. ASU 2016-02 requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2018-11 provides entities an optional transition method to apply the new guidance as of the adoption date, rather than as of the earliest period presented. In transition, entities may elect certain practical expedients when applying ASU 2016-02. These include a package of practical expedients that must be applied in its entirety to all leases commencing before the effective date, unless the lease is modified, to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. ASU 2016-02 also includes a practical expedient to use hindsight in making judgments when determining the lease term and any long-lived asset impairment. ASU 2018-01 allows entities to elect a practical expedient that would exclude application of ASU 2016-02 to land easements that existed prior to its adoption, if they were not accounted for as leases under previous U.S. GAAP. ASU 2018-11 provides a lessor practical expedient for separating lease and non-lease components. The Company plans to apply the practical expedients permitted within the guidance, which allows the Company to carryforward its historical lease classification, and to apply the transition option which does not require application of the guidance to comparative periods in the year of adoption. ASU 2018-20 affect the amendments in Update 2016-02, which are not yet effective but can be early adopted. ASU 2019-01 brings attention to issues related to Update 2016-02: (a) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers; (b) Presentation on the statement of cash flows—sales-type and direct financing leases; (c) Transition disclosures related to Topic 250, Accounting Changes and Error Corrections. The adoption of this ASU will result in the recognition of significant right-of-use assets and lease liabilities in the Company’s Consolidated Balance Sheets. The preparation for adoption is ongoing, including the assessment of other potential impacts of this ASU, which includes analysis of potential transitional adjustments to Stockholders’ equity and impact of adoption on the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. In March 2014, the Board issued a proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, which the Board finalized on August 28, 2018. The disclosure framework project’s objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by generally accepted accounting principles (GAAP). The amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this Update apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. Through that Update, the Board added Topic 326 and made several consequential amendments to the FASB Accounting Standards Codification. The amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The effective date and transition requirements for the amendments in this Update are the same as the effective dates and transition requirements in Update 2016-13, as amended by this Update. The Company does not expect material impact from new guidance on its condensed consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. Through that Update, the Board added Topic 326 and made several consequential amendments to the FASB Accounting Standards Codification. The amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The effective date and transition requirements for the amendments in this Update are the same as the effective dates and transition requirements in Update 2016-13, as amended by this Update. The Company does not expect material impact from new guidance on its condensed consolidated financial statements.
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3. Revision of Financial Statement |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revision of Financial Statement |
When preparing the consolidated financial statements for the year ended March 31, 2019, management determined that certain amounts included in the Company’s March 31, 2018, consolidated financial statements required revision, due to the closing of the acquisition of Freedom RU on June 29, 2017 the closing of the acquisition of Freedom CY on November 1, 2017, and the completion of the mergers of Nettrader in May 2018, and Asyl in April 2018, which were deemed to be entities under common control with the Company.
Certain reclassifications also have been made to the prior year’s consolidated financial statements to enhance comparability with the current year’s consolidated financial statements following the increase in intangible assets of the Company related to acquisition of the Tradernet trading platform. As a result, certain line items have been amended in the Consolidated Balance Sheets. Comparative figures have been adjusted to conform to the current period’s presentation.
The previously issued Consolidated Balance Sheet as of March 31, 2018, and Consolidated Statement of Operations and Statements of Other Comprehensive Income for the year ended March 31, 2018 have been revised as follows:
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4. Cash and Cash Equivalents |
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Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents |
As of March 31, 2019 and March 31, 2018, cash and cash equivalents were not insured. As of March 31, 2019 and March 31, 2018, the cash and cash equivalents balance included collateralized securities received under reverse repurchase agreements on the terms presented below:
The securities received by the Company as collateral under reverse repurchase agreements are liquid trading securities with market quotes and significant trading volume. The fair value of collateral received by the Company under reverse repurchase agreements as of March 31, 2019 and March 31, 2018, was $8,472 and $28,311, respectively.
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5. Restricted Cash |
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Restricted Cash [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Restricted Cash | As of March 31, 2019 and March 31, 2018, the Company’s restricted cash consisted of cash segregated in a special custody account for the exclusive benefit of our brokerage customers, deferred distribution payments, guaranty deposits and required reserves with the Central Bank of the Russian Federation which represents cash on hand balance requirements. The deferred distribution payment amount is the reserve held for distribution to shareholders who have not yet claimed their distributions from the 2011 sale of the Company’s oil and gas exploration and production operations of $8,534. This distribution is currently payable, subject to the entitled shareholders completing and submitting to the Company the necessary documentation to claim his, her or its distribution payments. The Company has no control over when, or if, an entitled shareholder will submit the necessary documentation to claim his, her, or its distribution payment. Restricted cash consisted of:
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6. Trading and Available-For-Sale Securities at Fair Value |
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Debt Securities, Available-for-sale [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading and Available-For-Sale Securities at Fair Value | As of March 31, 2019, and March 31, 2018, trading securities consisted of:
The Company recognized no other than temporary impairment in accumulated other comprehensive income.
The fair value of assets and liabilities is determined using observable market data based on recent trading activity. Where observable market data is unavailable due to a lack of trading activity, the Company utilizes internally developed models to estimate fair value and independent third parties to validate assumptions, when appropriate. Estimating fair value requires significant management judgment, including benchmarking to similar instruments with observable market data and applying appropriate discounts that reflect differences between the securities that the Company is valuing and the selected benchmark. Depending on the type of securities owned by the Company, other valuation methodologies may be required.
Measurement of fair value is classified within a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The valuation hierarchy contains three levels:
There was a transfer between Level 1 and Level 3 valuation techniques during the year ended March 31, 2019, in the amount of $504. This transfer was related to corporate bonds of one issuer, and was made due to an absence of a market price from a stock exchange. As of March 31, 2019, fair value of these bonds was determined based on the discounted cash flows methodology.
The following tables present trading securities assets in the Consolidated Financial Statements or disclosed in the Notes to the Consolidated Financial Statements at fair value on a recurring basis as of March 31, 2019 and March 31, 2018:
The table below presents the Valuation Techniques and Significant Level 3 Inputs used in the valuation as of March 31, 2019. The table is not intended to be all inclusive, but instead captures the significant unobservable inputs relevant to determination of fair value.
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended March 31, 2019:
As of March 31, 2019 and 2018, approximately $60,000 and $105,000, respectively, worth of the Company’s proprietary trading account was invested in the securities of a single company. This represents approximately 36% and 49%, respectively, of the Company’s proprietary portfolio. |
7. Brokerage and Other Receivables, Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brokerage and Other Receivables, Net |
On March 31, 2019 and March 31, 2018, amounts due from a single related party customer were $31,792 or 43% and $6,564 or 26%, respectively. Based on experience, the Company considers receivables due from related parties fully collectible. During the year ended March 31, 2019 and 2018, using historical and statistical data, the Company recorded an allowance for brokerage receivables in the amount of $1,626 and $424, respectively.
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8. Loans Issued |
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Loans Issued | Loans issued as of March 31, 2019, consisted of the following:
Loans issued as of March 31, 2018, consisted of the following:
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9. Deferred Tax Assets |
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Deferred Tax Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Tax Assets | The Company is subject to taxation in the Russian Federation, Kazakhstan, Kyrgyzstan, Cyprus, Ukraine, Uzbekistan, Germany and the United States of America.
The tax rates used for deferred tax assets and liabilities for the years ended March 31, 2019 and 2018, is 21% for the U.S., 20% for the Russian Federation, Kazakhstan, Kyrgyzstan, 31% for Germany, 12.5% for Cyprus, 18% for Ukraine and 12% for Uzbekistan.
Deferred tax assets and liabilities of the Company are comprised of the following:
The Company is subject to the U.S. federal income taxes at a rate of 21%. The reconciliation of the provision for income taxes at the 21% tax rate compared to the Company’s income tax expense as reported is as follows:
The income tax expense comprises:
During the years ended March 31, 2019 and 2018, the Company realized net income before income tax of $8,515 and $18,615, respectively. During the same periods, the Company’s effective tax rate was equal to 16.07% and 2.25%, respectively. This increase in income tax expense despite lower income before income taxes was primarily attributable to a $20,432 increase in commissions earned by Freedom CY during the fiscal year ended March 31, 2019.
Tax losses carryforward as of March 31, 2019 was $ 2,376 and is subject to income tax in US, Russia, Ukraine and Uzbekistan.
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10. Fixed Assets, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Assets, Net |
Depreciation expense totaled $790 and $290 for the years ended March 31, 2019 and 2018, respectively.
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11. Intangible Assets, Net |
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Intangible Assets Net | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net |
Amortization expense totaled $1,244 and $1,196 for the years ended March 31, 2019 and 2018, respectively.
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12. Other Assets, Net |
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Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets, Net |
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13. Securities Sold, Not Yet Purchased - At Fair Value |
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Financial Instruments Sold, Not yet Purchased, at Fair Value [Abstract] | |
Securities Sold, Not Yet Purchased - At Fair Value |
As of March 31, 2019, and March 31, 2018, the Company’s securities sold, not yet purchased – at fair value was $0 and $1,135, respectively.
During the year ended March 31, 2019, the Company sold shares received as pledges under reverse repurchase agreements and recognized financial liabilities at fair value in the amount $7,357 and partially closed short positions in the amount of $7,547 by purchasing securities from third parties, reducing its financial liability. During the year ended March 31, 2019, the Company recognized a gain on the change in the fair value of financial liabilities in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss) in the amount of $872, with foreign exchange translation gains of $73.
A short sale involves the sale of a security that is not owned in the expectation of purchasing the same security (or a security exchangeable) at a later date at a lower price. A short sale involves the risk of a theoretically unlimited increase in the market price of the security that would result in a theoretically unlimited loss. |
14. Loans Received |
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Loans Received |
As of March 31, 2018, the Company had received United States dollar denominated loans from JSC AsiaCredit Bank in the total amount of $7,031, under a credit line agreement with a $9,000 withdrawal limit. During the year ended March 31, 2019, the Company fully repaid the loan from JSC AsiaCredit Bank. Non-bank loans received are unsecured. As of March 31, 2019 and March 31, 2018, accrued interest on the loans totaled $52 and $16, respectively.
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15. Debt Securities Issued |
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Debt Securities Issued |
As of March 31, 2019 and 2018, the Company had outstanding bonds of Freedom KZ and Freedom RU in the amount of $28,538 and $11,222, respectively. As of March 31, 2019, these bonds had fixed annual coupon rates ranging from 8% to 12% and maturity dates ranging from June 2020 and February 2022. During the fiscal year ended March 31, 2019, the Company retired Kazakhstani tenge denominated bonds of Asyl and Freedom KZ which had a carrying value of $4 million as of March 31, 2018.
Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs. Debt securities issued as of March 31, 2019 and March 31, 2018, included $549 and $191 accrued interest, respectively. The Freedom KZ bonds are actively traded on KASE. |
16. Customer Liabilities |
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Customer Liabilities | ||||||||||||||||||||||||||
Customer Liabilities | The Company recognizes customer liabilities associated with funds held by our brokerage and bank customers. Customer liabilities consist of:
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17. Trade Payables |
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Accounts Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Payables |
On March 31, 2019 and March 31, 2018, amounts due to a single related party were $938 or 3% and $1,478 or 16%, respectively.
During the years ended March 31, 2019 and 2018, the Company received guaranty fees of $0 and $709, respectively, pursuant to a reverse repurchase agreement. The reverse repurchase agreement specifies that the Company has a right to claim a certain amount to be placed as a guaranty fee if the share price of the pledged securities falls significantly from the price as of the date of the transaction. In the event the price of the pledged securities falls further, the Company can require an increase in the guaranty fee. The reverse repurchase agreement under which guaranty fees were received was closed during the year ended March 31, 2019.
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18. Securities Repurchase Agreement Obligations |
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Securities Repurchase Agreement Obligations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Repurchase Agreement Obligations | As of March 31, 2019 and March 31, 2018, trading securities included collateralized securities subject to repurchase agreements as described in the following table:
The fair value of collateral pledged under repurchase agreements as of March 31, 2019 and March 31, 2018, was $105,842 and $203,140, respectively.
Securities pledged as collateral by the Company under repurchase agreements are liquid trading securities with market quotes and significant trading volume. |
19. Other Liabilities |
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Other Liabilities |
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20. Fee and Commission Income/Expense |
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21. Net Gain on Trading Securities |
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Net Gain on Trading Securities |
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22. Net Interest Income/Expense |
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Net Interest Income/(Expense) |
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23. Net Gain on Foreign Exchange Operations |
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24. Related Party Transactions |
12 Months Ended |
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Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions |
During the years ended March 31, 2019 and 2018, the Company earned commission income from related parties in the amounts of $38,974 and $6,270, respectively. Commission income earned from related parties is comprised primarily of brokerage commissions and commissions for money transfers by brokerage clients.
As of March 31, 2019 and March 31, 2018, the Company had bank commission receivables and receivables from brokerage clients from related parties totaling $192 and $1,055, respectively. Brokerage and other receivables from related parties result principally from commissions receivable on the brokerage operations of related parties.
As of March 31, 2019 and March 31, 2018, the Company had cash and cash equivalents held in brokerage accounts of related parties totaling $8,444 and $17,795, respectively.
As of March 31, 2019 and March 31, 2018, the Company had loans issued to related parties totaling $1,888 and $7,119, respectively.
As of March 31, 2019 and March 31, 2018, the Company had margin lending receivables with related parties totaling $43,720 and $8,748, respectively.
As of March 31, 2019 and March 31, 2018, the Company had advances received for the sale of fixed assets from a related party totaling $0 and $288, respectively.
As of March 31, 2019, and March 31, 2018, the Company had margin lending payable to related parties, totaling $1,090 and $81, respectively.
As of March 31, 2019, and March 31, 2018, the Company had loans received from a related party totaling $3,957 and $99, respectively.
As of March 31, 2019, and March 31, 2018, the Company had accounts payable due to a related party totaling $345 and $0, respectively.
As of March 31, 2019, and March 31, 2018, the Company had consideration due to a related party for the Nettrader acquisition totaling $2,590 and $0, respectively.
As of March 31, 2019, and March 31, 2018, the Company had customer liabilities on brokerage accounts and bank accounts of related parties totaling $29,904 and $3,402, respectively. As of March 31, 2019, and March 31, 2018, the Company held restricted customer cash on brokerage accounts of related parties totaling $13,999 and $2,004, respectively. |
25. Stockholder's Equity |
12 Months Ended |
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Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholder's Equity |
The Company reviewed FASB ASC Topic No. 470-50, Debt Extinguishment, to evaluate the debt extinguishment gain incurred from the debt to equity transaction in Freedom CY. Upon completion of the evaluation, it was determined that the gain associated with extinguishment of the debt from shareholder to equity should be accounted for as a capital contribution and was recorded to Additional Paid in Capital. During the year ended March 31, 2018, equity interest exchanged in Freedom CY was $293.
On June 29, 2017, the Company and Timur Turlov closed the acquisition of Freedom RU. Pursuant to the terms of the Acquisition Agreement, Mr. Turlov received a total of 20,665,023 shares of restricted common stock in exchange for his 100% interest in Freedom RU.
On October 6, 2017, the Company awarded restricted stock grants totaling 3,900,000 shares of its common stock to 16 employees and awarded nonqualified stock options to purchase an aggregate of 360,000 shares of its common stock to two employees. Of the 3,900,000 shares awarded pursuant to the restricted stock grant awards, 1,200,000 shares are subject to two-year vesting conditions and 2,700,000 shares are subject to three-year vesting conditions. All of the nonqualified stock options are subject to three-year vesting conditions. The Company recorded stock based compensation expense for restricted stock grants and stock options in the amount of $3,498 and $1,621, respectively, during the years ended March 31, 2019 and 2018.
As disclosed in Note 1 on November 10, 2017, FRHC issued 12,758,011 shares of restricted Company common stock in exchange for Mr. Turlov 100% equity interest in Freedom CY and Freedom CY became a wholly owned subsidiary of the Company.
As disclosed in Note 1, on November 1, 2017, the Company entered into a Share Exchange and Acquisition Agreement and agreed to issue 387,700 shares of restricted common stock to BusinessTrain Ltd. to acquire 100% of the outstanding equity interest of Freedom UA.
On December 8, 2017, the Company completed a private placement of 3,681,667 shares of its restricted common stock in exchange for an aggregate offering proceeds of $11,045. The shares of common stock were sold to non-U.S. persons pursuant to the exemption from registration provided in Regulation S promulgated under the Securities Act for offers and sales made outside the United States.
On March 2, 2018, the Company completed a private placement of 5,426,612 shares of its restricted common stock in exchange for an aggregate offering proceeds of $29,399. The shares of common stock were sold to three non-U.S. persons pursuant to the exemption from registration provided in Regulation S promulgated under the Securities Act for offers and sales made outside the United States. Askar Tashtitov, a Company officer and director, purchased 28,000 shares for $154.
As disclosed in more detail in Note 26, during the year ended March 31, 2019, nonqualified stock options to purchase 10,000 shares were exercised at a strike price of $1.98 per share for total proceeds of $20.
During the years ended March 31, 2019, Mr. Turlov, the Company’s chief executive officer, chairman of the board and the majority shareholder of the Company made capital contributions of $225.
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26. Stock Based Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation |
On October 6, 2017, the Company issued restricted stock awards totaling 3,900,000 shares of its common stock to 16 employees and awarded nonqualified stock options to purchase an aggregate of 360,000 shares of its common stock at a strike price $1.98 per share to two employees. Shares of restricted stock have the same dividend and voting rights as common stock while options do not. All awards were issued at the fair value of the underlying shares at the grant date.
During the year ended March 31, 2019, no stock options were granted. During the year ended March 31, 2018, the Company granted options to purchase 360,000 shares with a strike price of $1.98. Total compensation expense related to options granted was $215 for the year ended March 31, 2019 and $104 for the year ended March 31, 2018. As of March 31, 2019 and 2018, there was total remaining compensation expense of $328 and $543, respectively, related to stock options, which will be recorded over a weighted average period of approximately 1.52 years. During the year ended March 31, 2019, options to purchase a total of 10,000 shares were exercised.
The Company has determined fair value of stock options using the Black-Scholes option valuation model based on the following key assumptions:
Stock-based compensation expense for the cost of the awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company's employee stock options.
The following is a summary of stock option activity for year ended March 31, 2019:
During the year ended March 31, 2019, no restricted shares were awarded. During the year ended March 31, 2018, a total of 3,900,000 restricted shares were awarded. The compensation expense related to restricted stock awards was $3,283 during the year ended March 31, 2019, and $1,517 during the year ended March 31, 2018. As of March 31, 2019 and 2018, there was $3,386 and $6,669, respectively, of total unrecognized compensation cost related to nonvested shares of restricted stock granted. The cost is expected to be recognized over a weighted average period of 1.37 years.
The table below summarizes the activity for the Company's restricted stock outstanding during the year ended March 31, 2019:
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27. Acquisitions and Disposal of Subsidiary |
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Acquisitions and Disposal of Subsidiary |
Acquisition of Asyl
On April 12, 2018, we completed the acquisition and merger of Asyl into the Company. This acquisition joined the two largest retail brokerage firms in Kazakhstan. Asyl was formerly controlled by Mr. Turlov since April 28, 2017. The Company agreed to acquire Asyl from Mr. Turlov for approximately $2.2 million.
When preparing the consolidated financial statements for the year ended March 31, 2019, management determined that certain amounts included in the Company’s consolidated financial statements as of March 31, 2018 and for the year ended March 31, 2018, required revision, due to completion of the merger of Asyl in April 2018, which was deemed to be an entity under common control with the Company since April 28, 2017. The transaction is accounted for as a restructuring transaction and all the assets and liabilities of Asyl were transferred to the Company at their respective carrying amounts on the date of transaction.
As of the acquisition date by Mr. Turlov, the fair value of Asyl was $4,583. The total purchase price was allocated as follows:
Acquisition of Nettrader
On May 28, 2018, we completed the acquisition and merger of Nettrader. This acquisition also finalized our acquisition of the Tradernet trading platform, a browser-based application and in some countries a supporting mobile app to facilitate our customers’ trading activities and ability to monitor and manage all aspects of their personal accounts and participate in our client social network. Nettrader was formerly owned by Mr. Turlov since May 18, 2017. The Company acquired Nettrader for approximately $3.8 million.
When preparing the consolidated financial statements for the year ended March 31, 2019, management determined that certain amounts included in the Company’s consolidated financial statements as of March 31, 2018 and for the year ended March 31, 2018, required revision, due to the completion of the merger of Nettrader in May 2018, which was deemed to be an entity under common control with the Company since May 18, 2017. The transaction is accounted for as a restructuring transaction and all the assets and liabilities of Nettrader were transferred to the Company at their respective carrying amounts on the date of transaction.
As of the acquisition date by Mr. Turlov, the fair value of Nettrader was $7,037. The total purchase price was allocated as follows:
Acquisition of Freedom UA:
On November 1, 2017, FRHC acquired 100% of the outstanding common shares and voting interest in Freedom UA in exchange for 387,700 shares of restricted common stock of the Company with the fair market value of $1,485. FRHC acquired Freedom UA to expand its existing securities brokerage business to the Ukrainian securities brokerage market. The Company believes it can take advantage of the synergies that exist between its current expertise and infrastructure and Freedom UA’s existing business to rapidly expand the Company’s presence in the Ukrainian financial services industry.
As of the acquisition date, the fair value of Freedom UA was $653. For the five months ended March 31, 2018, net loss of Freedom UA totaled $53.
The total purchase price was allocated as follows:
Disposal of First Stock Store
During the year ended March 31, 2019, the Company fully disposed of its subsidiary LLC First Stock Store. LLC First Stock Store provided an online securities marketplace in Russia through a project called Freedom24. LLC First Stock Store was disposed of for $7, with net assets as of the date of disposal of $22. The difference was recognized as loss on disposal of subsidiary in the amount of $15. Prior to the disposal, the Freedom24 project and the First Stock Store employees were transferred to Freedom RU.
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28. Commitments and Contingent Liabilities |
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Commitments and Contingent Liabilities | The table below shows approximate lease commitments and other contingent liabilities of the Company as of March 31, 2019:
The Company’s rent expense for office space was $4,819 and $2,661 for the year ended March 31, 2019 and 2018, respectively. |
29. Subsequent Events |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events |
The Company has performed an evaluation of subsequent events through the time of filing this annual report on Form 10K with the SEC. Other than as disclosed below, during this period the Company did not have any additional material recognizable subsequent events.
On April 4, 2019, Freedom KZ received a license that allows Freedom KZ to offer foreign currency exchange services to Freedom KZ customers for assets on deposit in the customer’s Freedom KZ account. |
2. Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Accounting principles | The Company’s accounting policies and accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (US GAAP).
These financial statements have been prepared on the accrual basis of accounting. |
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Basis of presentation and principles of consolidation |
The Company’s consolidated financial statements present the consolidated accounts of FRHC, Freedom RU, Freedom KZ, FFIN Bank, Freedom CY, Freedom UA, Freedom UZ, Freedom GE, FFIN and the financial results of LLC First Stock Store (“Freedom 24”) up to the date of its disposal on September 30, 2018. All significant inter-company balances and transactions have been eliminated from the consolidated financial statements.
As further discussed in Note 27 – Acquisitions and Disposal of Subsidiary, the acquisitions of Asyl and Nettrader were each considered transactions between entities under common control, therefore the accompanying financial information has been recast to include these acquisitions for all periods presented. Accordingly, the accompanying consolidated financial statements include historical cost-basis accounts of the assets of: (i) Asyl prior to April 12, 2018, the date of completion of the Asyl acquisition and merger, and (ii) Nettrader prior to May 28, 2018, the date of completion of the Nettrader acquisition and merger. |
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Use of estimates | The preparation of financial statements in conformity with US 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. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from those estimates. |
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Revenue and expense recognition | Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services promised to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. A significant portion of the Company’s revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities, as these activities are subject to other US GAAP guidance discussed elsewhere within these disclosures. Descriptions of the Company’s revenue-generating activities that are within the scope of ASC Topic 606, which are presented in the Consolidated Statements of Operations and Statements of Other Comprehensive Income as components of non-interest income are as follows:
The Company adopted the new guidance on April 1, 2018. Under Topic 606, the Company is required to recognize incentive fees when they are probable and there is not a significant chance of reversal in the future. For the brokerage commission, banking service commission and investment banking services commission contracts in place at the time of adoption, this change in policy did not result in any actual change in revenue that had already been recognized and therefore there was no transition adjustment necessary.
The Company recognizes revenue when five basic criteria have been met:
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Derivative financial instruments | In the normal course of business, the Company invests in various derivative financial contracts including futures. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The fair values are estimated based on quoted market prices or pricing models that take into account the current market and contractual prices of the underlying instruments and other factors. Derivatives are carried as assets when their fair value is positive and as liabilities when it is negative. Derivatives are included in assets and liabilities at fair value through profit or loss in the Consolidated Balance Sheets.
The Company purchases foreign currency futures contracts from financial institutions to minimize the risk caused by foreign currency fluctuation on its foreign currency receivables and payables and also purchases foreign currency futures contracts for speculative purposes. Futures are traded on the KASE and represent commitments to purchase or sell a particular foreign currency at a future date and at a specific price.
All gains and losses on foreign currency contracts were realized during the year ended March 31, 2019, and are included in net gain on derivatives in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss). |
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Functional currency |
Management has adopted ASC 830, Foreign Currency Translation Matters as it pertains to its foreign currency translation. The Company’s functional currencies are the Russian ruble, European euro, Ukrainian hryvnia, Uzbekistani som and Kazakhstani tenge, and its reporting currency is the US dollar. Monetary assets and liabilities denominated in foreign currencies are translated into US dollars using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in revenue.
The functional currencies of our operating subsidiaries are the Russian ruble, European euro, Ukrainian hryvnia, Uzbekistani som and the Kazakhstani tenge. For financial reporting purposes, those currencies are translated into United States dollars as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive loss” reserve. |
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Cash and cash equivalents | Cash and cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase. Cash and cash equivalents include reverse repurchase agreements which are recorded at the amounts at which the securities were acquired or sold plus accrued interest.
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Securities reverse repurchase and repurchase agreements | A reverse repurchase agreement is a transaction in which the Company purchases financial instruments from a seller, typically in exchange for cash, and simultaneously enters into an agreement to resell the same or substantially the same financial instruments to the seller for an amount equal to the cash or other consideration exchanged plus interest at a future date. Securities purchased under reverse repurchase agreements are accounted for as collateralized financing transactions and are recorded at the contractual amount for which the securities will be resold, including accrued interest. Financial instruments purchased under reverse repurchase agreements are recorded in the financial statements as cash placed on deposit collateralized by securities and classified as cash and cash equivalents in the Consolidated Balance Sheets.
A repurchase agreement is a transaction in which the Company sells financial instruments to another party, typically in exchange for cash, and simultaneously enters into an agreement to reacquire the same or substantially the same financial instruments from the buyer for an amount equal to the cash or other consideration exchanged plus interest at a future date. These agreements are accounted for as collateralized financing transactions. The Company retains the financial instruments sold under repurchase agreements and classifies them as trading securities in the Consolidated Balance Sheets. The consideration received under repurchase agreements is classified as securities repurchase agreement obligations in the Consolidated Balance Sheets.
The Company enters into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions to, among other things, acquire securities to leverage and grow its proprietary trading portfolio, cover short positions and settle other securities obligations, to accommodate customers’ needs and to finance its inventory positions. The Company enters into these transactions in accordance with normal market practice. Under standard terms for repurchase transactions, the recipient of collateral has the right to sell or repledge the collateral, subject to returning equivalent securities on settlement of the transaction. |
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Available-for-sale securities | Financial assets categorized as available-for-sale (“AFS”) are non-derivatives that are either designated as available-for-sale or not classified as (a) loans and receivables, (b) held to maturity investments or (c) trading securities.
Listed shares and listed redeemable notes held by the Company that are traded in an active market are classified as AFS and are stated at fair value. The Company has investments in unlisted shares that are not traded in an active market but that are also classified as investments AFS and stated at fair value (because Company management considers that fair value can be reliably measured). Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in the Accumulated other comprehensive income/(loss), with the exception of other-than-temporary impairment losses, interest calculated using the effective interest method, dividend income and foreign exchange gains and losses are recognized in the Consolidated Statements of Operations and Statements of other Comprehensive Income/(Loss). Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. |
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Trading securities |
Financial assets are classified as trading securities if the financial asset has been acquired principally for the purpose of selling it in the near term.
Trading securities are stated at fair value, with any gains or losses arising on remeasurement recognized in revenue. Changes in fair value are recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss) and included in net gain/(loss) on trading securities. Interest earned and dividend income are recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss) and included in interest income, according to the terms of the contract and when the right to receive the payment has been established.
Investments in nonconsolidated managed funds are accounted for at fair value based on the net asset value of the funds provided by the fund managers with gains or losses included in net gain on trading securities in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss). |
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Debt securities issued | Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs. Subsequently, amounts due are stated at amortized cost and any difference between net proceeds and the redemption value is recognized over the period of the borrowings using the effective interest method. If the Company purchases its own debt it is removed from the Consolidated Balance Sheets and the difference between the carrying amount of the liability and the consideration paid is recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss). |
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Brokerage and other receivables | Brokerage and other receivables comprise commissions and receivables related to the securities brokerage and banking activity of the Company. At initial recognition, brokerage and other receivables are recognized at fair value. Subsequently, brokerage and other receivables are carried at cost net of any allowance for impairment losses. |
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Derecognition of financial assets |
A financial asset (or, where applicable a part of a financial asset or a part of a group of similar financial assets) is derecognized where all of the following conditions are met:
Where the Company has not met the asset derecognition conditions above, it continues to recognize the asset to the extent of its continuing involvement. |
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Impairment of long lived assets | In accordance with the accounting guidance for the impairment or disposal of long-lived assets, the Company periodically evaluates the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the fair value from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. As of March 31, 2019 and March 31, 2018, the Company had not recorded any charges for impairment of long-lived assets. |
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Impairment of goodwill | As of March 31, 2019 and March 31, 2018, goodwill recorded in the Company’s Consolidated Balance Sheets totaled $2,936 and $3,288, respectively. The Company performs an impairment review at least annually unless indicators of impairment exist in interim periods. The impairment test for goodwill uses a two-step approach. Step one compares the estimated fair value of a reporting unit with goodwill to its carrying value. If the carrying value exceeds the estimated fair value, step two must be performed. Step two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit as if the reporting unit was acquired in a business combination. If the carrying amount of a reporting unit's goodwill exceeds the implied fair value of its goodwill, an impairment loss is recognized in an amount equal to the excess. In its annual goodwill impairment test, the Company estimated the fair value of the reporting unit based on the income approach (also known as the discounted cash flow method) and determined the fair value of the Company’s goodwill exceeded the carrying amount of the Company’s goodwill. The goodwill value as March 31, 2019 decreased compared to March 31, 2018 due to foreign exchange currency translation.
The changes in the carrying amount of goodwill for the year ended March 31, 2019 and 2018 were as follows:
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Income taxes | The Company recognizes deferred tax liabilities and assets based on the difference between the financial statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.
Current income tax expenses are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The Company accounts for income taxes using the asset and liability approach. Under this method, deferred income taxes are recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income.
The Company will include interest and penalties arising from the underpayment of income taxes in the provision for income taxes. As of March 31, 2019 and March 31, 2018, the Company had no accrued interest or penalties related to uncertain tax positions.
On December 22, 2017, the U.S. bill commonly referred to as the Tax Cuts and Jobs Act (“Tax Reform Act”) was enacted, which significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Tax Reform Act also provided for a one-time deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Global Intangible Low-Taxed Income ("GILTI") provisions of the Tax Reform Act require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company may be subject to incremental U.S. tax on GILTI income beginning in 2018, depending upon expense allocations and the applicable U.S. foreign tax credit rules. The Company has presented the deferred tax impacts of GILTI tax in its consolidated financial statements for the year ended March 31, 2019. |
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Financial instruments | Financial instruments are carried at fair value as described below.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. Fair value is the current bid price for financial assets, current ask price for financial liabilities and the average of current bid and ask prices when the Company is both in short and long positions for the financial instrument. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange or other institution and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
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Leases | Rent payable under operating leases is charged to expense on a straight-line basis over the term of the relevant lease. |
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Fixed assets | Fixed assets are carried at cost, net of accumulated depreciation. Maintenance, repairs, and minor renewals are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range between three and seven years.
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Advertising expense | For the years ended March 31, 2019 and 2018, the Company had expenses related to advertising in the amount of $4,500 and $1,384, respectively. All costs associated with advertising are expensed in the period incurred. |
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Recent accounting pronouncements | In May 2018, the FASB issued ASU No. 2018-06, Codification Improvements to Topic 942, Financial Services - Depository and Lending. The FASB issued this Update to supersede outdated guidance related to the Office of the Comptroller of the Currency’s Banking Circular 202, Accounting for Net Deferred Tax Charges (Circular 202). The Board has an ongoing project on its agenda about Codification improvements to clarify the FASB Accounting Standards Codification or to correct unintended application of guidance. Those Codification improvement items generally are not expected to have a significant effect on current accounting practice or to create a significant administrative cost for most entities. The amendments in this Update are of a similar nature, and, therefore, the Board is addressing the improvements through the Codification improvements project. The Board decided to issue a separate Update to increase stakeholders’ awareness of the improvements to Topic 942, Financial Services—Depository and Lending. The amendments in this Update remove outdated guidance related to Circular 202 and should have no effect on reporting entities.
ASU 2016-02, “Leases,” ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842,” ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements”: In February 2016, the FASB issued ASU 2016-02 which requires entities to include substantially all leases on the balance sheet by requiring the recognition of right-of-use assets and lease liabilities for all leases. Entities may elect to exclude from the balance sheet those leases with a maximum possible term of less than 12 months. For lessees, a lease is classified as finance or operating, and the asset and liability are initially measured at the present value of the lease payments. For lessors, accounting for leases is largely unchanged from previous provisions of U.S. GAAP, other than certain changes to align lessor accounting to specific changes made to lessee accounting and ASC 606. ASU 2016-02 also requires new qualitative and quantitative disclosures for both lessees and lessors. In July 2018 the FASB adopted ASU 2018-10 which makes technical corrections and clarifications to the accounting guidance in Topic 842.
For public entities, ASU 2016-02, 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01 are effective for fiscal years beginning after December 15, 2018, including interim periods therein, with early adoption permitted. ASU 2016-02 requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2018-11 provides entities an optional transition method to apply the new guidance as of the adoption date, rather than as of the earliest period presented. In transition, entities may elect certain practical expedients when applying ASU 2016-02. These include a package of practical expedients that must be applied in its entirety to all leases commencing before the effective date, unless the lease is modified, to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. ASU 2016-02 also includes a practical expedient to use hindsight in making judgments when determining the lease term and any long-lived asset impairment. ASU 2018-01 allows entities to elect a practical expedient that would exclude application of ASU 2016-02 to land easements that existed prior to its adoption, if they were not accounted for as leases under previous U.S. GAAP. ASU 2018-11 provides a lessor practical expedient for separating lease and non-lease components. The Company plans to apply the practical expedients permitted within the guidance, which allows the Company to carryforward its historical lease classification, and to apply the transition option which does not require application of the guidance to comparative periods in the year of adoption. ASU 2018-20 affect the amendments in Update 2016-02, which are not yet effective but can be early adopted. ASU 2019-01 brings attention to issues related to Update 2016-02: (a) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers; (b) Presentation on the statement of cash flows—sales-type and direct financing leases; (c) Transition disclosures related to Topic 250, Accounting Changes and Error Corrections. The adoption of this ASU will result in the recognition of significant right-of-use assets and lease liabilities in the Company’s Consolidated Balance Sheets. The preparation for adoption is ongoing, including the assessment of other potential impacts of this ASU, which includes analysis of potential transitional adjustments to Stockholders’ equity and impact of adoption on the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. In March 2014, the Board issued a proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, which the Board finalized on August 28, 2018. The disclosure framework project’s objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by generally accepted accounting principles (GAAP). The amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this Update apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. Through that Update, the Board added Topic 326 and made several consequential amendments to the FASB Accounting Standards Codification. The amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The effective date and transition requirements for the amendments in this Update are the same as the effective dates and transition requirements in Update 2016-13, as amended by this Update. The Company does not expect material impact from new guidance on its condensed consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. Through that Update, the Board added Topic 326 and made several consequential amendments to the FASB Accounting Standards Codification. The amendment clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The effective date and transition requirements for the amendments in this Update are the same as the effective dates and transition requirements in Update 2016-13, as amended by this Update. The Company does not expect material impact from new guidance on its condensed consolidated financial statements.
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2. Summary of Significant Accounting Policies (Tables) |
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Goodwill |
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3. Revision of Financial Statement (Tables) |
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Revision of financial statements |
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4. Cash and Cash Equivalents (Tables) |
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Securities purchased under agreement to resell |
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5. Restricted Cash (Tables) |
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Schedule of restricted cash |
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6. Trading and Available-For-Sale Securities at Fair Value (Tables) |
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Schedule of trading securities |
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Assets at fair value on a recurring basis |
The following tables present trading securities assets in the Consolidated Financial Statements or disclosed in the Notes to the Consolidated Financial Statements at fair value on a recurring basis as of March 31, 2019 and March 31, 2018:
The table below presents the Valuation Techniques and Significant Level 3 Inputs used in the valuation as of March 31, 2019. The table is not intended to be all inclusive, but instead captures the significant unobservable inputs relevant to determination of fair value.
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended March 31, 2019:
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7. Brokerage and Other Receivables, Net (Tables) |
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8. Loans Issued (Tables) |
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Loans issued |
Loans issued as of March 31, 2018, consisted of the following:
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9. Deferred Tax Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Tax Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets and liabilities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income tax expense/benefit |
|
10. Fixed Assets, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fixed assets |
|
11. Intangible Assets, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Net Tables Abstract | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets |
|
12. Other Assets, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other assets |
|
14. Loans Received (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Issued | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loans received |
|
15. Debt Securities Issued (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Debt Securities Issued | |||||||||||||||||||||||||||||||||||||||||
Debt securities issued |
|
16. Customer Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||
Customer Liabilities | ||||||||||||||||||||||||||
Customer liabilities |
|
17. Trade Payables (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of trade payables |
|
18. Securities Repurchase Agreement Obligation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Repurchase Agreement Obligations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities under repurchase agreement obligations |
|
19. Other Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other liabilities |
|
20. Fee and Commission Income/(Expense) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fee And Commission Incomeexpense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fee and commission income/expense |
|
21. Net Gain on Trading Securities (Tables) |
12 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||
Gain (Loss) on Investments [Abstract] | ||||||||||||||||||||||||||
Schedule of net gains on trading securities |
|
22. Net Interest Income/(Expense) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Income (Expense), Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of interest income/expense |
|
23. Net (Loss)/Gain on Foreign Exchange Operations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||
Net Gain On Foreign Exchange Operations | |||||||||||||||||||||||||||||||
Schedule of Net (Loss)/Gain on Foreign Exchange Operations |
|
26. Stock Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions used |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock activity |
|
27. Acquisitions and Disposal of Subsidiary (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase price allocation |
|
28. Commitments and Contingent Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies |
|
2. Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Goodwill, beginning | $ 3,288 | |
Foreign currency translation | (352) | |
Goodwill, ending | 2,936 | $ 3,288 |
(Recast) | ||
Goodwill, beginning | $ 3,288 | 981 |
Acquisition of Asyl | 1,511 | |
Acquisition of Freedom UA | 832 | |
Foreign currency translation | (36) | |
Goodwill, ending | $ 3,288 |
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Goodwill | $ 2,936 | $ 3,288 | |
Advertising expense | $ 4,500 | ||
(Recast) | |||
Goodwill | 3,288 | $ 981 | |
Advertising expense | $ 1,384 |
4. Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Total cash and cash equivalents | $ 49,960 | |
(Recast) | ||
Total cash and cash equivalents | $ 65,731 | |
Accounts with stock exchange | ||
Total cash and cash equivalents | 10,507 | 214 |
Current accounts with brokers | ||
Total cash and cash equivalents | 10,220 | 22,748 |
Securities purchased under reverse repurchase agreements | ||
Total cash and cash equivalents | 7,887 | 27,389 |
Current account with commercial banks | ||
Total cash and cash equivalents | 6,656 | 9,035 |
Current account in clearing organizations | ||
Total cash and cash equivalents | 5,887 | 131 |
Current account with Central Depository (Kazakhstan) | ||
Total cash and cash equivalents | 2,693 | 1,280 |
Petty cash | ||
Total cash and cash equivalents | 2,674 | 2,712 |
Current account with Central Bank (Russia) | ||
Total cash and cash equivalents | 2,161 | 980 |
Current account with National Settlement Depository (Russia) | ||
Total cash and cash equivalents | $ 1,275 | $ 1,242 |
4. Cash and Cash Equivalents (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Remaining contractual maturity: up to 30 days | $ 7,083 | |
Remaining contractual maturity: 30 - 90 days | 804 | |
Total contractual maturity | $ 7,887 | |
(Recast) | ||
Remaining contractual maturity: up to 30 days | $ 11,616 | |
Remaining contractual maturity: 30 - 90 days | 15,773 | |
Total contractual maturity | $ 27,389 | |
Corporate equity | ||
Average interest rate | 11.90% | 14.99% |
Remaining contractual maturity: up to 30 days | $ 4,328 | $ 11,095 |
Remaining contractual maturity: 30 - 90 days | 804 | 15,572 |
Total contractual maturity | $ 5,132 | $ 26,667 |
Corporate debt | ||
Average interest rate | 14.00% | 14.96% |
Remaining contractual maturity: up to 30 days | $ 120 | $ 521 |
Remaining contractual maturity: 30 - 90 days | 0 | 201 |
Total contractual maturity | $ 120 | $ 722 |
Non-US sovereign debt | ||
Average interest rate | 8.25% | |
Remaining contractual maturity: up to 30 days | $ 2,635 | |
Remaining contractual maturity: 30 - 90 days | 0 | |
Total contractual maturity | $ 2,635 |
5. Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Restricted cash | $ 38,460 | |
(Recast) | ||
Restricted cash | $ 21,962 | |
Brokerage customers' cash | ||
Restricted cash | 28,931 | 12,963 |
Deferred distribution payments | ||
Restricted cash | 8,534 | 8,534 |
Guaranty deposits | ||
Restricted cash | 732 | 350 |
Reserve with Central Bank of Russia | ||
Restricted cash | $ 263 | $ 115 |
6. Trading and Available-For-Sale Securities at Fair Value (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Trading securities | $ 167,949 | |
Available-for-sale securities, at fair value | 2 | |
(Recast) | ||
Trading securities | $ 212,595 | |
Available-for-sale securities, at fair value | 240 | |
Equity securities | ||
Trading securities | 105,017 | 177,339 |
Available-for-sale securities, at fair value | 2 | 240 |
Debt securities | ||
Trading securities | 62,691 | 34,986 |
Mutual investment funds | ||
Trading securities | $ 241 | $ 270 |
6. Trading and Available-For-Sale Securities at Fair Value (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Trading securities | $ 167,949 | |
(Recast) | ||
Trading securities | $ 212,595 | |
Level 1 | ||
Trading securities | 167,445 | 212,595 |
Level 2 | ||
Trading securities | 0 | 0 |
Level 3 | ||
Trading securities | 504 | 0 |
Equity securities | ||
Trading securities | 105,017 | 177,339 |
Equity securities | Level 1 | ||
Trading securities | 105,017 | 177,339 |
Equity securities | Level 2 | ||
Trading securities | 0 | 0 |
Equity securities | Level 3 | ||
Trading securities | 0 | 0 |
Debt securities | ||
Trading securities | 62,691 | 34,986 |
Debt securities | Level 1 | ||
Trading securities | 62,187 | 34,986 |
Debt securities | Level 2 | ||
Trading securities | 0 | 0 |
Debt securities | Level 3 | ||
Trading securities | 504 | 0 |
Mutual investment funds | ||
Trading securities | 241 | 270 |
Mutual investment funds | Level 1 | ||
Trading securities | 241 | 270 |
Mutual investment funds | Level 2 | ||
Trading securities | 0 | 0 |
Mutual investment funds | Level 3 | ||
Trading securities | $ 0 | $ 0 |
6. Trading and Available-For-Sale Securities at Fair Value (Details 2) $ in Thousands |
12 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Trading securities, ending | $ 167,949 |
Level 3 | |
Trading securities, beginning | 0 |
Transfer between Level 1 and Level 3 | 507 |
Foreign currency translation | (3) |
Trading securities, ending | $ 504 |
6. Trading and Available-For-Sale Securities at Fair Value (Details 3) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Assets measured at amortized cost | $ 1 | |
Unrealized gain accumulated in other comprehensive income | 1 | |
Assets measured at fair value | 2 | |
(Recast) | ||
Assets measured at amortized cost | $ 261 | |
Unrealized gain accumulated in other comprehensive income | (21) | |
Assets measured at fair value | 240 | |
Equity securities | ||
Assets measured at amortized cost | 1 | 261 |
Unrealized gain accumulated in other comprehensive income | 1 | (21) |
Assets measured at fair value | $ 2 | $ 240 |
7. Brokerage and Other Receivables, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Brokerage and other receivables, net | $ 73,836 | |
(Recast) | ||
Brokerage and other receivables, net | $ 24,885 | |
Margin lending receivables | ||
Brokerage and other receivables, net | 46,716 | 17,276 |
Receivable from purchase or sale of securities | ||
Brokerage and other receivables, net | 27,684 | 6,061 |
Receivables from brokerage clients | ||
Brokerage and other receivables, net | 824 | 710 |
Dividends accrued | ||
Brokerage and other receivables, net | 108 | 0 |
Receivable for underwriting market-making services | ||
Brokerage and other receivables, net | 88 | 72 |
Other receivables | ||
Brokerage and other receivables, net | 25 | 55 |
Bank commissions receivable | ||
Brokerage and other receivables, net | 17 | 1,016 |
Bonds coupon receivable | ||
Brokerage and other receivables, net | 0 | 119 |
Allowance for receivables | ||
Brokerage and other receivables, net | $ (1,626) | $ (424) |
8. Loans Issued (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Loans issued | $ 2,525 | |
(Recast) | ||
Loans issued | $ 8,754 | |
Collateralized brokerage loans | ||
Loans issued | $ 1,888 | $ 5,371 |
Due dates | Dec. 2019 | Jan. 2019 - Feb. 2019 |
Weighted average interest rate | 4.75% | 3.00% |
Fair value of collateral | $ 4,718 | $ 6,992 |
Loan currency | USD | |
Uncollateralized brokerage loan | ||
Loans issued | $ 2,832 | |
Due dates | Jan. 2019 - Mar. 2019 | |
Weighted average interest rate | 0.00% | |
Fair value of collateral | $ 0 | |
Loan currency | KZT | |
Bank customer loans | ||
Loans issued | $ 637 | $ 551 |
Due dates | May 2019 - Jan. 2019 | Nov. 2018 - Feb. 2028 |
Weighted average interest rate | 13.34% | 12.32% |
Fair value of collateral | $ 0 | $ 0 |
Loan currency | RUB |
9. Deferred Tax Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Deferred tax asset: | ||
Tax losses carryforward | $ 2,376 | |
Revaluation on trading securities | 2,095 | |
Accrued liabilities | 35 | |
Stock compensation expenses | 0 | |
Valuation allowance | (3,241) | |
Deferred tax assets | 1,265 | |
Deferred tax liabilities: | ||
Revaluation on trading securities | 0 | |
Deferred tax liabilities | 0 | |
Net deferred tax assets | $ 1,265 | |
(Recast) | ||
Deferred tax asset: | ||
Tax losses carryforward | $ 3,050 | |
Revaluation on trading securities | 88 | |
Accrued liabilities | 49 | |
Stock compensation expenses | 405 | |
Valuation allowance | (2,433) | |
Deferred tax assets | 1,159 | |
Deferred tax liabilities: | ||
Revaluation on trading securities | 387 | |
Deferred tax liabilities | 387 | |
Net deferred tax assets | $ 772 |
9. Deferred Tax Assets (Details 1) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Profit before tax at 21% and 34% | $ 1,788 | |
Nontaxable gains | (3,811) | |
Provision for impairment losses | 386 | |
Impact of Tax Reform | 0 | |
Foreign tax rate differential | (1,211) | |
Other differences | 418 | |
Permanent differences | 430 | |
Global Intangible Low Taxed Income | 573 | |
Stock based compensations | 309 | |
Losses carried forward adjustment | 1,678 | |
Valuation allowance | 808 | |
Income tax provision | $ 1,368 | |
(Recast) | ||
Profit before tax at 21% and 34% | $ 6,329 | |
Nontaxable gains | (7,129) | |
Provision for impairment losses | 81 | |
Impact of Tax Reform | 190 | |
Foreign tax rate differential | 30 | |
Other differences | 439 | |
Permanent differences | 0 | |
Global Intangible Low Taxed Income | 0 | |
Stock based compensations | 0 | |
Losses carried forward adjustment | 0 | |
Valuation allowance | 478 | |
Income tax provision | $ 418 |
9. Deferred Tax Assets (Details 2) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Current income tax charge | $ 1,817 | |
Deferred income tax charge/(benefit) | (449) | |
Income tax provision | $ 1,368 | |
(Recast) | ||
Current income tax charge | $ 131 | |
Deferred income tax charge/(benefit) | 287 | |
Income tax provision | $ 418 |
10. Fixed Assets, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Less: Accumulated depreciation and amortization | $ (1,209) | |
Fixed assets, net | 5,563 | |
(Recast) | ||
Less: Accumulated depreciation and amortization | $ (882) | |
Fixed assets, net | 2,410 | |
Capital expenditures on lease improvement | ||
Fixed assets, gross | 1,724 | 17 |
Furniture | ||
Fixed assets, gross | 1,713 | 435 |
Office equipment | ||
Fixed assets, gross | 1,452 | 670 |
Processing and storage data centers | ||
Fixed assets, gross | 679 | 617 |
Land | ||
Fixed assets, gross | 394 | 445 |
Vehicles | ||
Fixed assets, gross | 353 | 449 |
Buildings | ||
Fixed assets, gross | 0 | 392 |
Other | ||
Fixed assets, gross | $ 457 | $ 267 |
10. Fixed Assets, Net (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Depreciation and amortization expense | $ 790 | |
(Recast) | ||
Depreciation and amortization expense | $ 290 |
11. Intangible Assets, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Less: Accumulated amortization | $ (1,489) | |
Intangible assets, net | 4,226 | |
(Recast) | ||
Less: Accumulated amortization | $ (840) | |
Intangible assets, net | 5,692 | |
Trading platform | ||
Intangible assets, gross | 3,052 | 3,451 |
Client base | ||
Intangible assets, gross | 1,602 | 2,443 |
Other intangible assets | ||
Intangible assets, gross | $ 1,061 | $ 638 |
11. Intangible Assets, Net (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Amortization expense | $ 1,244 | |
(Recast) | ||
Amortization expense | $ 1,196 |
12. Other Assets, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Other assets, gross | $ 4,251 | |
Allowance for other assets | (62) | |
Other assets, net | 4,189 | |
(Recast) | ||
Other assets, gross | $ 4,631 | |
Allowance for other assets | (58) | |
Other assets, net | 4,573 | |
Prepaid expenses | ||
Other assets, gross | 1,851 | 1,641 |
Rent guarantee deposit | ||
Other assets, gross | 714 | 965 |
Current income tax asset | ||
Other assets, gross | 502 | 365 |
Outstanding settlement operations | ||
Other assets, gross | 429 | 0 |
Taxes other than income taxes | ||
Other assets, gross | 149 | 147 |
Guaranty deposit | ||
Other assets, gross | 69 | 75 |
Prepaid Insurance | ||
Other assets, gross | 21 | 26 |
Advances paid for leasehold improvements | ||
Other assets, gross | 0 | 1,057 |
Other | ||
Other assets, gross | $ 516 | $ 355 |
14. Loans Received (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Loans received | $ 4,008 | |
(Recast) | ||
Loans received | $ 7,143 | |
Freedom Holding Corp. | ||
Lender | Non-Bank | |
Loans received | $ 3,917 | 0 |
Interest rate | 3.00% | |
Freedom Holding Corp. | Minimum | ||
Term | 1 year | |
Maturity date | Apr. 30, 2019 | |
Freedom Holding Corp. | Maximum | ||
Term | 2 years | |
Maturity date | Dec. 31, 2019 | |
FFINEU Investments Limited | ||
Lender | D-FINANCE Inc. | |
Loans received | $ 91 | 99 |
Interest rate | 1.00% | |
Term | 2 years | |
Maturity date | Dec. 11, 2019 | |
JSC Freedom Finance | ||
Lender | JSC AsiaCreditBank | |
Loans received | $ 0 | $ 7,044 |
Interest rate | 7.00% | |
Term | 1 year | |
Maturity date | Feb. 05, 2019 |
15. Debt Securities Issued (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Debt securities issued denominated in USD | $ 20,265 | |
Debt securities issued denominated in RUB | 7,724 | |
Debt securities issued denominated in KZT | 0 | |
Accrued interest | 549 | |
Total | $ 28,538 | |
(Recast) | ||
Debt securities issued denominated in USD | $ 7,006 | |
Debt securities issued denominated in RUB | 0 | |
Debt securities issued denominated in KZT | 4,025 | |
Accrued interest | 191 | |
Total | $ 11,222 |
16. Customer Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Customer liabilities | $ 82,032 | |
(Recast) | ||
Customer liabilities | $ 30,672 | |
Brokerage customers | ||
Customer liabilities | 47,686 | 21,367 |
Banking customers | ||
Customer liabilities | $ 34,346 | $ 9,305 |
17. Trade Payables (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Trade payables | $ 32,695 | |
(Recast) | ||
Trade payables | $ 9,013 | |
Margin lending payable | ||
Trade payables | 29,081 | 6,604 |
Trade payable for securities purchased | ||
Trade payables | 2,939 | 1,065 |
Payables to suppliers of goods and services | ||
Trade payables | 555 | 152 |
Guaranty fee received | ||
Trade payables | 0 | 709 |
Payable for acquisition of servers | ||
Trade payables | 0 | 395 |
Other | ||
Trade payables | $ 120 | $ 88 |
19. Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Other liabilities | $ 3,132 | |
(Recast) | ||
Other liabilities | $ 1,376 | |
Salaries and other employee benefits | ||
Other liabilities | 1,307 | 255 |
Vacation reserve | ||
Other liabilities | 942 | 537 |
Outstanding settlements operations | ||
Other liabilities | 314 | 0 |
Payable to suppliers | ||
Other liabilities | 212 | 0 |
Taxes payable other than income tax | ||
Other liabilities | 127 | 130 |
Advance received for sale of fixed asset | ||
Other liabilities | 0 | 288 |
Other | ||
Other liabilities | $ 230 | $ 166 |
20. Fee and Commission Income/(Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fee and commission income | $ 44,316 | |
Fee and commission expense | 6,238 | |
(Recast) | ||
Fee and commission income | $ 12,174 | |
Fee and commission expense | 2,288 | |
Brokerage services | ||
Fee and commission income | 36,810 | 6,429 |
Fee and commission expense | 4,164 | 305 |
Bank services | ||
Fee and commission income | 6,133 | 3,419 |
Fee and commission expense | 919 | 1,629 |
Exchange services | ||
Fee and commission expense | 574 | 199 |
Central Depository services | ||
Fee and commission expense | 301 | 155 |
Other commission income | ||
Fee and commission income | 512 | 217 |
Fee and commission expense | 280 | 0 |
Underwriting services | ||
Fee and commission income | $ 861 | $ 2,109 |
21. Net Gain on Trading Securities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Net gain recognized during the period on trading securities sold during the period | $ 25,535 | |
Net unrealized gain/loss recognized during the reporting period on trading securities still held at the reporting date | (5,373) | |
Net gain recognized during the period on trading securities | $ 20,162 | |
(Recast) | ||
Net gain recognized during the period on trading securities sold during the period | $ 17,725 | |
Net unrealized gain/loss recognized during the reporting period on trading securities still held at the reporting date | 16,502 | |
Net gain recognized during the period on trading securities | $ 34,227 |
22. Net Interest Income/(Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Interest income | $ 13,925 | |
Interest expense | 14,649 | |
(Recast) | ||
Interest income | $ 8,835 | |
Interest expense | 14,735 | |
Amortized cost | ||
Interest expense | 14,649 | 14,735 |
Amortized cost | Reverse repurchase agreements and amounts due from banks | ||
Interest income | 2,290 | 3,166 |
Amortized cost | Loans to customers | ||
Interest income | 264 | 268 |
Amortized cost | Securities repurchase agreements | ||
Interest income | 2,554 | 3,434 |
Interest expense | 11,113 | 13,380 |
Amortized cost | Debt securities issued | ||
Interest expense | 1,907 | 1,076 |
Amortized cost | Customer accounts and deposits | ||
Interest expense | 1,305 | 244 |
Amortized cost | Loans received | ||
Interest expense | 324 | 35 |
Fair value through profit or loss | ||
Interest income | 11,371 | 5,401 |
Fair value through profit or loss | Trading securities | ||
Interest income | $ 11,371 | $ 5,401 |
23. Net (Loss)/Gain on Foreign Exchange Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Translation difference | $ (4,115) | |
Sales and purchases of foreign currency, dealing | (3) | |
Total net gain/(loss) on foreign exchange operations | $ (4,118) | |
(Recast) | ||
Translation difference | $ 1,232 | |
Sales and purchases of foreign currency, dealing | 646 | |
Total net gain/(loss) on foreign exchange operations | $ 1,878 |
26. Stock Based Compensation (Details) |
12 Months Ended |
---|---|
Mar. 31, 2019 | |
Share-based Compensation [Abstract] | |
Term (years) | 3 years |
Volatility | 165.33% |
Risk-free rate | 1.66% |
26. Stock Based Compensation (Details 2) |
12 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Share-based Compensation [Abstract] | |
Restricted stock outstanding, beginning | shares | 3,900,000 |
Restricted stock granted | shares | 0 |
Restricted stock vested | shares | 1,625,000 |
Restricted stock forfeited/cancelled/expired | shares | 0 |
Number of restricted stock units outstanding, ending | shares | 2,275,000 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 8,190 |
Weighted average exercise price granted | $ / shares | 0 |
Weighted average exercise price vested | $ / shares | 3,413 |
Weighted average exercise price forfeited/cancelled/expired | $ / shares | 0 |
Weighted average exercise price outstanding, ending | $ / shares | $ 4,777 |
28. Commitments and Contingent Liabilities (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Less than 1 year | $ 5,599 |
1-3 years | 6,272 |
3-5 years | 0 |
More than 5 years | 0 |
Total | 11,871 |
Office Lease | |
Less than 1 year | 5,599 |
1-3 years | 6,272 |
3-5 years | 0 |
More than 5 years | 0 |
Total | $ 11,871 |
28. Commitments and Contingent Liabilities (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 4,819 | $ 2,661 |
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