|
Nevada
|
|
30-0233726
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification No.)
|
“Esentai Tower” BC, Floor 7
77/7 Al Farabi Ave
|
|
|
Almaty, Kazakhstan
|
|
050040
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Title
of each class
|
|
Trading
Symbol(s)
|
|
Name of
each exchange on which registered
|
Common
|
|
FRHC
|
|
The Nasdaq Capital Market
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☒
|
Non-accelerated
filer
|
☐
|
Smaller
reporting company
|
☒
|
|
|
Emerging
growth company
|
☐
|
|
PART I
— FINANCIAL INFORMATION
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
PART II
— OTHER INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
March 31,
2019
|
ASSETS
|
|
|
Cash
and cash equivalents
|
$93,653
|
$49,960
|
Restricted
cash
|
49,726
|
38,460
|
Trading
securities
|
164,145
|
167,949
|
Available-for-sale
securities, at fair value
|
7,483
|
2
|
Brokerage
and other receivables, net
|
157,217
|
73,836
|
Loans
issued
|
10,775
|
2,525
|
Deferred
tax assets
|
281
|
1,265
|
Derivative
assets
|
242
|
-
|
Fixed
assets, net
|
6,619
|
5,563
|
Intangible
assets, net
|
4,430
|
4,226
|
Goodwill
|
2,969
|
2,936
|
Operating
lease right-of-use assets
|
15,748
|
-
|
Other
assets, net
|
9,953
|
4,189
|
|
|
|
TOTAL ASSETS
|
$523,241
|
$350,911
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Securities
sold, not yet purchased – at fair value
|
$4,385
|
$-
|
Loans
received
|
-
|
4,008
|
Debt
securities issued
|
39,150
|
28,538
|
Customer
liabilities
|
192,754
|
82,032
|
Trade
payables
|
56,130
|
32,695
|
Deferred
distribution payments
|
8,534
|
8,534
|
Securities
repurchase agreement obligations
|
57,875
|
73,621
|
Current
income tax liability
|
165
|
754
|
Operating
lease obligations
|
17,270
|
-
|
Other
liabilities
|
5,067
|
3,132
|
TOTAL LIABILITIES
|
381,330
|
233,314
|
|
|
|
Commitments and Contingent Liabilities
|
-
|
-
|
|
|
|
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; 58,343,212
and 58,043,212 shares issued and outstanding as of December 31,
2019 and March 31, 2019, respectively
|
58
|
58
|
Additional
paid in capital
|
102,149
|
99,093
|
Retained
earnings
|
62,007
|
41,498
|
Accumulated
other comprehensive loss
|
(21,618)
|
(23,052)
|
TOTAL EQUITY ATTRIBUTABLE TO THE COMPANY
|
142,596
|
117,597
|
|
|
|
Noncontrolling
interest
|
(685)
|
-
|
TOTAL STOCKHOLDERS’ EQUITY
|
141,911
|
117,597
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$523,241
|
$350,911
|
|
Three months
ended
December
31,
|
Nine months
ended
December
31,
|
||
|
2019
|
2018
|
2019
|
2018
|
Revenue:
|
|
|
|
|
Fee
and commission income
|
$20,583
|
$12,274
|
$69,538
|
$31,033
|
Net
gain on trading securities
|
6,448
|
11,641
|
12,957
|
12,669
|
Interest
income
|
3,063
|
2,976
|
8,999
|
11,823
|
Net
loss on foreign exchange operations
|
(1,080)
|
(498)
|
(241)
|
(3,746)
|
Net
gain on derivatives
|
556
|
-
|
556
|
-
|
|
|
|
|
|
TOTAL REVENUE, NET
|
29,570
|
26,393
|
91,809
|
51,779
|
|
|
|
|
|
Expense:
|
|
|
|
|
Interest
expense
|
3,167
|
3,180
|
9,976
|
11,471
|
Fee
and commission expense
|
5,525
|
1,422
|
14,068
|
3,155
|
Operating
expense
|
16,608
|
12,117
|
43,214
|
31,272
|
Provision
/(recovery) for impairment losses
|
152
|
243
|
(1,316)
|
358
|
Other
expense/(income), net
|
118
|
(14)
|
675
|
223
|
Loss
from disposal of subsidiary
|
-
|
-
|
-
|
15
|
TOTAL EXPENSE
|
25,570
|
16,948
|
66,617
|
46,494
|
NET
INCOME BEFORE INCOME TAX
|
4,000
|
9,445
|
25,192
|
5,285
|
|
|
|
|
|
Income
tax benefit/(expense)
|
50
|
(545)
|
(4,292)
|
(1,009)
|
|
|
|
|
|
NET INCOME
|
$4,050
|
$8,900
|
$20,900
|
$4,276
|
|
|
|
|
|
Less:
Net loss attributable to noncontrolling interest in
subsidiary
|
(991)
|
-
|
(1,120)
|
-
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$5,041
|
$8,900
|
$22,020
|
$4,276
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME/(LOSS)
|
|
|
|
|
Change
in unrealized gain on available-for-sale securities, net of tax
effect
|
$(1)
|
$-
|
$26
|
$-
|
Reclassification
adjustment relating to available-for-sale securities disposed of in
the period, net of tax effect
|
-
|
-
|
-
|
22
|
Foreign
currency translation adjustments, net of tax effect
|
2,841
|
(5,596)
|
1,408
|
(17,836)
|
|
|
|
|
|
COMPREHENSIVE INCOME/(LOSS) BEFORE NONCONTROLLING
INTERESTS
|
$6,890
|
$3,304
|
$22,334
|
$(13,538)
|
|
|
|
|
|
Less:
Comprehensive loss attributable to noncontrolling interest in
subsidiary
|
(991)
|
-
|
(1,120)
|
-
|
|
|
|
|
|
COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS
|
$7,881
|
$3,304
|
23,454
|
$(13,538)
|
BASIC
NET INCOME PER COMMON SHARE
|
$0.07
|
$0.15
|
$0.36
|
$0.07
|
DILUTED
NET INCOME PER COMMON SHARE
|
$0.07
|
$0.15
|
$0.36
|
$0.07
|
Weighted
average number of shares (basic)
|
58,158,864
|
58,038,864
|
58,116,825
|
58,035,103
|
Weighted
average number of shares (diluted)
|
58,391,547
|
58,248,924
|
58,335,749
|
58,225,549
|
|
For the nine months
ended
|
|
|
December 31,
2019
|
December 31,
2018
|
|
|
|
Cash
Flows From Operating Activities
|
|
|
Net
income
|
$20,900
|
$4,276
|
Adjustments to
reconcile net income from operating activities:
|
|
|
Depreciation
and amortization
|
1,925
|
1,503
|
Depreciation
of lease assets
|
3,322
|
-
|
Loss on sale of
fixed assets
|
202
|
31
|
Change in deferred
taxes
|
1,001
|
(260)
|
Stock compensation
expense
|
2,100
|
2,533
|
Share based
payment
|
836
|
-
|
Unrealized loss on
trading securities
|
5,251
|
9,623
|
Unrealized gain on
derivative asset
|
(233)
|
-
|
Net change in
accrued interest
|
610
|
75
|
Allowance for
receivables
|
(1,316)
|
350
|
Changes in
operating assets and liabilities:
|
|
|
Changes in lease
liabilities
|
(4,733)
|
-
|
Trading
securities
|
(59)
|
14,277
|
Brokerage and other
receivables
|
(80,423)
|
(28,968)
|
Loans
issued
|
(8,180)
|
5,644
|
Other
assets
|
(5,763)
|
(292)
|
Customer
liabilities
|
105,560
|
32,620
|
Current income tax
liability
|
(593)
|
81
|
Trade
payables
|
22,069
|
4,931
|
Securities sold,
not yet purchased
|
4,385
|
(1,071)
|
Other
liabilities
|
1,784
|
526
|
Net
cash flows from operating activities
|
68,645
|
45,879
|
|
|
|
Cash
Flows From Investing Activities
|
|
|
Purchase of fixed
assets
|
(3,608)
|
(4,311)
|
Proceeds from sale
of fixed assets
|
468
|
268
|
Proceeds from
sale/(purchase) of available-for-sale securities, at
fair value,
net
|
(7,455)
|
235
|
Consideration paid
for Asyl Invest
|
-
|
(2,240)
|
Net
cash flows used in investing activities
|
(10,595)
|
(6,048)
|
Cash
Flows From Financing Activities
|
|
|
Repurchase of
securities repurchase agreement obligations
|
(15,285)
|
(65,238)
|
Proceeds from
issuance of debt securities
|
17,722
|
22,059
|
Repurchase of debt
securities
|
(7,256)
|
(3,346)
|
Proceeds from loans
received
|
-
|
5,615
|
Repayment of loans
received
|
(4,008)
|
(8,143)
|
Exercise of
options
|
455
|
-
|
Capital
contributions
|
-
|
245
|
Net
cash flows used in financing activities
|
(8,372)
|
(48,808)
|
Effect of changes
in foreign exchange rates on cash
and cash
equivalents
|
5,281
|
(10,188)
|
|
|
|
NET
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
54,959
|
(19,165)
|
CASH,
CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF
PERIOD
|
88,420
|
87,693
|
CASH,
CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$143,379
|
$68,528
|
|
For the nine
months ended
|
|
|
December 31,
2019
|
December 31,
2018
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash paid for
interest
|
$7,686
|
$10,654
|
Income tax
paid
|
$5,094
|
$417
|
|
|
|
Supplemental
non-cash disclosures:
|
|
|
Operating lease
right-of-use assets obtained in exchange for operating lease
obligations
|
$14,960
|
$-
|
Lease obligations
obtained on adoption of new lease standard
|
$16,471
|
$-
|
Balance
as of March 31,
2019
|
$2,936
|
|
|
Foreign currency
translation
|
33
|
|
|
Balance
as of December 31, 2019
|
$2,969
|
|
December 31,
2019
|
March 31,
2019
|
|
|
|
Securities
purchased under reverse repurchase agreements
|
$21,578
|
$7,887
|
Accounts
with stock exchanges
|
21,062
|
10,507
|
Current accounts
with commercial banks
|
17,689
|
6,656
|
Current
accounts in clearing organizations
|
14,088
|
5,887
|
Petty
cash in bank vault and on hand
|
6,802
|
2,674
|
Current account
with Central Bank (Russia)
|
5,948
|
2,161
|
Current
account with Central Depository (Kazakhstan)
|
2,834
|
2,693
|
Current
accounts with brokers
|
1,862
|
10,220
|
Current account
with National Settlement Depository (Russia)
|
1,790
|
1,275
|
Total
cash and cash equivalents
|
$93,653
|
$49,960
|
|
December
31,
2019
|
March
31,
2019
|
|
|
|
Brokerage
customers’ cash
|
$43,495
|
$28,931
|
Guaranty
deposits
|
4,642
|
732
|
Deferred
distribution payments
|
1,053
|
8,534
|
Reserve with
Central Bank of Russia
|
536
|
263
|
Total
restricted cash
|
$49,726
|
$38,460
|
|
December 31,
2019
|
March 31,
2019
|
|
|
|
Debt
securities
|
$85,233
|
$62,691
|
Equity
securities
|
78,912
|
105,017
|
Mutual investment
funds
|
-
|
241
|
Total
trading securities
|
$164,145
|
$167,949
|
|
|
|
Certificates
of deposit
|
$6,018
|
$-
|
Mutual
investment funds
|
696
|
-
|
Debt
securities
|
455
|
-
|
Preferred
shares
|
312
|
-
|
Equity
securities
|
2
|
2
|
Total
available-for-sale securities, at fair value
|
$7,483
|
$2
|
|
|
Fair Value Measurements at
|
||
|
|
December 31, 2019 using
|
||
|
|
Quoted Prices in
Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
Significant Unobservable
Inputs
|
|
December 31, 2019
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|
|
|
|
|
Debt
securities
|
$85,233
|
$85,233
|
$-
|
$-
|
Equity
securities
|
78,912
|
68,446
|
-
|
10,466
|
Total
trading securities
|
$164,145
|
$153,679
|
$-
|
$10,466
|
|
|
|
|
|
Certificates
of deposit
|
$6,018
|
$-
|
$6,018
|
$-
|
Mutual
investment funds
|
696
|
696
|
-
|
-
|
Debt
securities
|
455
|
-
|
455
|
-
|
Preferred
shares
|
312
|
-
|
312
|
-
|
Equity
securities
|
2
|
-
|
-
|
2
|
Total
available-for-sale securities, at fair value
|
$7,483
|
$696
|
$6,785
|
$2
|
|
|
Fair Value
Measurements at
March 31, 2019
using
|
||
|
|
Quoted Prices in
Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
Significant
Unobservable Inputs
|
|
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
|
|
|
|
|
|
Equity
securities
|
$2
|
$-
|
$-
|
$2
|
Total
available-for-sale securities, at fair value
|
$2
|
$-
|
$-
|
$2
|
Type
|
Valuation
Technique
|
FV as
of
December
31,
2019
|
FV as
of
March
31,
2019
|
Significant
Unobservable Inputs
|
Input
|
|
|
|
|
|
|
Corporate
bonds
|
DCF
|
$-
|
$504
|
Discount
rate
|
11.3%
|
Equity
security
|
DCF
|
10,466
|
-
|
Discount
rate
|
9.8%
|
|
|
|
|
Estimated number of
years
|
9 years
|
|
Trading
securities
|
Available for
sale securities
|
Balance
as of March 31, 2019
|
$504
|
$2
|
|
|
|
Sale of investments
that use Level 3 inputs
|
(497)
|
-
|
Purchase of
investments that use Level 3 inputs
|
10,430
|
-
|
Foreign currency
translation
|
29
|
-
|
Balance
as of December 31, 2019
|
$10,466
|
$2
|
|
December 31,
2019
|
March
31,
2019
|
|
|
|
Margin lending
receivables
|
$155,058
|
$46,716
|
Receivables from
brokerage clients
|
1,175
|
824
|
Receivables from
sale of securities
|
1,037
|
27,684
|
Bank commissions
receivable
|
74
|
-
|
Receivable for
underwriting and market-making services
|
65
|
-
|
Dividends
accrued
|
1
|
108
|
Other
receivables
|
47
|
130
|
|
|
|
Allowance for
receivables
|
(240)
|
(1,626)
|
Total
brokerage and other receivables, net
|
$157,217
|
$73,836
|
|
Amount
Outstanding
|
Due
Dates
|
Average Interest
Rate
|
Fair Value of
Collateral
|
Loan
Currency
|
Subordinated
loan
|
$5,023
|
Dec. 2022 - Apr.
2024
|
4.89%
|
$-
|
USD
|
Uncollateralized
non-bank loan
|
3,101
|
Sep.
2020
|
2.00%
|
-
|
USD
|
Subordinated
loan
|
1,568
|
Sep.
2029
|
12.00%
|
-
|
UAH
|
Bank customer
loans
|
578
|
Jul. 2020 - May
2044
|
13.10%
|
324
|
RUB
|
Uncollateralized
non-bank loan
|
505
|
Nov.
2020
|
6.50%
|
-
|
RUB
|
|
$10,775
|
|
|
$324
|
|
|
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. 2039
|
13.34%
|
-
|
RUB
|
|
$2,525
|
|
|
$4,718
|
|
|
December 31,
2019
|
March 31,
2019
|
|
|
|
Deferred tax assets:
|
|
|
Tax losses
carryforward
|
$2,246
|
$2,376
|
Revaluation on
trading securities
|
-
|
2,095
|
Accrued
liabilities
|
75
|
35
|
Valuation
allowance
|
(1,538)
|
(3,241)
|
Deferred tax assets
|
$783
|
$1,265
|
|
|
|
Deferred tax liabilities:
|
|
|
Revaluation on
trading securities
|
$502
|
$-
|
|
|
|
Deferred tax liabilities
|
$502
|
$-
|
|
|
|
Net deferred tax assets
|
$281
|
$1,265
|
Borrower
|
Lender
|
December 31, 2019
|
March 31, 2019
|
Interest rate
|
Term
|
Maturity
date
|
Freedom Holding Corp.
|
Non-Bank
|
$-
|
$3,917
|
3%
|
1-2
years
|
April, 2019 -
December, 2019
|
Freedom Finance
Cyprus Limited
|
Non-Bank
|
-
|
91
|
1%
|
2
years
|
November,
2019
|
Total
|
|
$-
|
$4,008
|
|
|
|
|
December
31,
2019
|
March
31,
2019
|
|
|
|
Debt securities
issued denominated in USD
|
$30,630
|
$20,265
|
Debt securities
issued denominated in RUB
|
8,077
|
7,724
|
Accrued
interest
|
443
|
549
|
Total
|
$39,150
|
$28,538
|
|
December
31,
2019
|
March
31,
2019
|
|
|
|
Brokerage
customers
|
$126,974
|
$47,686
|
Banking
customers
|
65,780
|
34,346
|
Total
|
$192,754
|
$82,032
|
|
December
31,
2019
|
March
31,
2019
|
|
|
|
Margin lending
payable
|
$41,823
|
$29,081
|
Trade payable for
securities purchased
|
13,499
|
2,939
|
Payables to
suppliers of goods and services
|
343
|
555
|
Coupons
payable
|
283
|
-
|
Other
payables
|
182
|
120
|
Total
|
$56,130
|
$32,695
|
Vesting period
(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, March
31, 2019
|
350,000
|
$1.98
|
8.52
|
$2,342
|
Granted
|
-
|
-
|
-
|
-
|
Exercised
|
(230,000)
|
1.98
|
-
|
2,630
|
Forfeited/cancelled/expired
|
-
|
-
|
-
|
-
|
Outstanding, at
December 31, 2019
|
120,000
|
$1.98
|
7.77
|
$1,507
|
Exercisable,
at December 31, 2019
|
-
|
$-
|
-
|
$-
|
|
Shares
|
Weighted Average Fair
Value
|
Outstanding,
March 31, 2019
|
2,275,000
|
$4,777
|
Granted
|
-
|
-
|
Vested
|
-
|
-
|
Forfeited/cancelled/expired
|
-
|
-
|
Outstanding,
at December 31, 2019
|
2,275,000
|
$4,777
|
|
Classification on Balance Sheet
|
December 31, 2019
|
Assets
|
|
|
Operating
lease assets
|
Right-of-use
assets
|
$15,748
|
Total lease assets
|
|
$15,748
|
|
|
|
Liabilities
|
|
|
Operating
lease liability
|
Operating
lease obligations
|
$17,270
|
Total lease liability
|
$17,270
|
Twelve
months ending March 31,
|
|
2020
– remainder
|
$1,554
|
2021
|
6,828
|
2022
|
6,317
|
2023
|
4,645
|
2024
|
1,102
|
2025
|
238
|
Total
payments
|
20,684
|
Less:
amounts representing interest
|
(3,414)
|
Lease
obligation, net
|
$17,270
|
Weighted
average remaining lease term (in months)
|
31
|
Weighted
average discount rate
|
12%
|
|
Three Months Ended December 31, 2019
|
Three Months Ended December 31, 2018
|
||
|
Amount
|
%*
|
Amount
|
%*
|
Revenues:
|
|
|
|
|
Fee
and commission income
|
$20,583
|
70%
|
$12,274
|
47%
|
Net gain on trading
securities
|
6,448
|
22%
|
11,641
|
44%
|
Interest
income
|
3,063
|
10%
|
2,976
|
11%
|
Net loss on foreign
exchange operations
|
(1,080)
|
(4%)
|
(498)
|
(2%)
|
Net gain on
derivatives
|
556
|
2%
|
-
|
-
|
Total
revenue, net
|
29,570
|
100%
|
26,393
|
100%
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Interest
expense
|
3,167
|
11%
|
3,180
|
12%
|
Fee
and commission expense
|
5,525
|
19%
|
1,422
|
5%
|
Operating
expense
|
16,608
|
56%
|
12,117
|
46%
|
Provision/(recovery)
for impairment losses
|
152
|
1%
|
243
|
1%
|
Other expense,
net
|
118
|
0%
|
(14)
|
0%
|
Total
expense
|
25,570
|
87%
|
16,948
|
64%
|
|
|
|
|
|
Net income before
income taxes
|
4,000
|
14%
|
9,445
|
36%
|
Income tax
benefit/(expense)
|
50
|
(0%)
|
(545)
|
(2%)
|
Net income
|
$4,050
|
14%
|
$8,900
|
34%
|
Less:
Net loss attributable to noncontrolling interest in
subsidiary
|
(991)
|
(3%)
|
-
|
-
|
Net income attributable to common shareholders
|
$5,041
|
17%
|
$8,900
|
34%
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
Change
in unrealized gain on available-for-sale, net of tax
effect
|
$(1)
|
0%
|
$-
|
-
|
Foreign
currency translation adjustments, net of tax effect
|
2,841
|
10%
|
(5,596)
|
(21%)
|
Comprehensive income before noncontrolling interests
|
$6,890
|
23%
|
$3,304
|
13%
|
Less:
comprehensive loss attributable to noncontrolling interest in
subsidiary
|
(991)
|
(3%)
|
-
|
-
|
Comprehensive income attributable to common
shareholders
|
$7,881
|
27%
|
$3,304
|
13%
|
|
Three
Months Ended
December
31, 2019
|
Three
Months Ended
December
31, 2018
|
Change
|
|||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Fee and commission
income
|
$20,583
|
70%
|
$12,274
|
47%
|
$8,309
|
68%
|
Net gain on trading
securities
|
6,448
|
22%
|
11,641
|
44%
|
(5,193)
|
(45%)
|
Interest
income
|
3,063
|
10%
|
2,976
|
11%
|
87
|
3%
|
Net
loss on foreign exchange operations
|
(1,080)
|
(4)%
|
(498)
|
(2%)
|
(582)
|
117%
|
Net
gain on derivatives
|
556
|
2%
|
-
|
-
|
556
|
0%
|
Total revenue, net
|
$29,570
|
100%
|
$26,393
|
100%
|
$3,177
|
12%
|
|
Three Months Ended
December 31, 2019
|
Three Months Ended
December 31, 2018
|
Change
|
|||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Interest
expense
|
$3,167
|
12%
|
$3,180
|
19%
|
$(13)
|
0%
|
Fee and commission
expense
|
5,525
|
22%
|
1,422
|
8%
|
4,103
|
289%
|
Operating
expense
|
16,608
|
65%
|
12,117
|
72%
|
4,491
|
37%
|
Provision/(recovery)
for
impairment
losses
|
152
|
1%
|
243
|
1%
|
(91)
|
(37%)
|
Other
expense/(income), net
|
118
|
0%
|
(14)
|
0%
|
132
|
(943%)
|
Total expense, net
|
$25,570
|
100%
|
$16,948
|
100%
|
$8,622
|
51%
|
|
Nine
Months Ended
December
31, 2019
|
Nine
Months Ended
December
31, 2018
|
Change
|
|||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Fee and commission
income
|
$69,538
|
76%
|
$31,033
|
60%
|
$38,505
|
124%
|
Net gain on trading
securities
|
12,957
|
14%
|
12,669
|
24%
|
288
|
2%
|
Interest
income
|
8,999
|
10%
|
11,823
|
23%
|
(2,824)
|
(24%)
|
Net
(loss) on foreign exchange operations
|
(241)
|
(1%)
|
(3,746)
|
(7%)
|
3,505
|
94%
|
Net
gain on derivatives
|
556
|
1%
|
-
|
-
|
556
|
0%
|
Total revenue, net
|
$91,809
|
100%
|
$51,779
|
100%
|
$40,030
|
77%
|
|
Nine Months Ended
December 31, 2019
|
Nine Months Ended
December 31, 2018
|
Change
|
|||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Interest
expense
|
$9,976
|
15%
|
$11,471
|
25%
|
$(1,495)
|
(13%)
|
Fee and commission
expense
|
14,068
|
21%
|
3,155
|
7%
|
10,913
|
346%
|
Operating
expense
|
43,214
|
65%
|
31,272
|
67%
|
11,942
|
38%
|
Provision/(recovery)
for
impairment
losses
|
(1,316)
|
(2)%
|
358
|
1%
|
(1,674)
|
(468%)
|
Other
expense/(income), net
|
675
|
1%
|
223
|
0%
|
452
|
203%
|
Net gain/loss on
disposal of subsidiary
|
-
|
-
|
15
|
0%
|
(15)
|
(100%)
|
Total expense, net
|
$66,617
|
100%
|
$46,494
|
100%
|
$20,123
|
43%
|
|
For the nine
months ended December 31, 2019
|
For the nine
months ended December 31, 2018
|
|
|
|
Net cash flows from
operating activities
|
$68,645
|
$45,879
|
Net cash flows used
in investing activities
|
(10,595)
|
(6,048)
|
Net cash flows used
in financing activities
|
(8,372)
|
(48,808)
|
Effect of changes
in foreign exchange rates on cash
and cash
equivalents
|
5,281
|
(10,188)
|
|
|
|
NET CHANGE IN CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH
|
$54,959
|
$(19,165)
|
Exhibit No.*
|
|
Description of Exhibit
|
|
Location
|
|
|
|
|
|
Item 4
|
|
Instruments Defining the Rights of Securities
Holders
|
|
|
|
Terms and
Conditions of FRHC 7.000% Interest Notes due December
2022
|
|
Attached
|
|
Item 31
|
|
Rule
13a-14(a)/15d-14(a) Certifications
|
|
|
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
Attached
|
|
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
Attached
|
|
Item 32
|
|
Section 1350 Certifications
|
|
|
|
Certification
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
|
Attached
|
|
Item 101
|
|
Interactive Data File
|
|
|
101
|
|
The
following Freedom Holding Corp, financial information for the
periods ended December 31, 2019, formatted in XBRL (eXtensive
Business Reporting Language): (i) the Condensed Consolidated
Balance Sheets, (ii) the Condensed Consolidated Statements of
Operations and Statements of Other Comprehensive Income, (iii) the
Condensed Consolidated Statements of Cash Flows, and (iv) the Notes
to the Unaudited Condensed Consolidated Financial
Statements.
|
|
Attached
|
|
|
FREEDOM
HOLDING CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
February 10, 2020
|
/s/
Timur Turlov
|
|
|
|
|
Timur
Turlov
Chief
Executive Officer
|
||
|
|
|
|
|
|
|
|
|
|
Date:
|
February 10, 2020
|
/s/
Evgeniy Ler
|
|
|
|
|
Evgeniy
Ler
Chief
Financial Officer
|
Definitions
|
Whenever
used in these Note Terms and Conditions, unless there is something
in the subject matter or context inconsistent therewith, the
following words and phrases will have the respective meanings
ascribed to them as follows:
“Accredited
Investor” has the meaning set forth in Rule 1.1.2(6)
of the AIX Market Rules, i.e., (i) any natural person who acquires
or intends to acquire securities for a total consideration of at
least U.S.$100,000 (one hundred thousand U.S. dollars) per person
for each separate offer; or (ii) an “authorized
person;” or (iii) a “body corporate” as defined
under the AIX Market Rules;
“AIFC”
means the Astana International Financial Centre;
“AIFC
Laws” means the Acting law of the Astana International
Financial Centre;
“AIX”
means the Astana International Exchange, operated by the Astana
International Exchange Ltd.;
“AIX
CSD” means the Astana International Exchange Central
Securities Depository, Ltd.;
“Day
Count Fraction" means, for purposes of determining Note
interest payments, time calculated on the basis of a year of 360
(three hundred and sixty) days consisting of 12 (twelve) months of
30 (thirty) days each;
“Depository”
means the AIX CSD;
“Exchange
Act” means the United States Securities Exchange Act
of 1934, as amended;
“Face
Value” means U.S.$100,000 (one hundred thousand U.S.
Dollars) per one Note;
“Interest
Payment Date” means the 27 of December and 27 of June
in each year, the first Interest Payment Date being 27 June
2020;
“Interest
Period” means each period beginning on (and including)
the Issue Date or any subsequent Interest Payment Date and ending
on (but excluding) the next Interest Payment Date;
“Investor”
means a person that purchases one or more Notes pursuant to a
subscription under the Offering Memorandum;
“ISIN”
means the International Securities Identification Number that
uniquely identifies the Notes, as defined by the
“International Organization for Standardization” in ISO
6166;
“Issue
Date” means 27 December 2019;
“Issuer”
means Freedom Holding Corp., a corporation organized in the State
of Nevada, United States of America, with Entity No.
C3081-2004;
“Lead
Manager of admission to AIX” means Freedom Finance
JSC, 77/7, Al-Farabi ave., Esentai Tower BC, 3rd floor, Almaty,
A15E3H4 (050040), the Republic of Kazakhstan;
“Maturity
Date” means 27 December 2022, the third anniversary
date of Issue Date;
“Notes”
means the U.S.$50,000,000 aggregate principal amount of 7.000%
Notes due 27 December, 2022 of the Issuer;
“Offering”
means the offer and sale of the Notes by the Issuer made through
the Offering Memorandum;
“Offering
Memorandum” means the Issuer’s offering
memorandum, dated 24 December 2019;
“Official
List” means the Official List of Securities maintained
by the AIX;
“Person”
means any individual, company, corporation, firm, partnership,
joint venture, association, organization, state or agency of a
state or other entity, whether or not having separate legal
personality;
“Placement
Agent” means jointly and severally, Freedom Finance
JSC, 77/7, Al-Farabi ave., Esentai Tower BC, Floor 3and 7, Almaty,
A15E3H4 (050059), Kazakhstan and Freedom Finance Cyprus
Ltd.”, Andrea Zappa 1, office 1, 4040 Limassol,
Cyprus;
“Rate
of Interest” means 7.000 per cent per
annum;
“Regulation
S” means Regulation S under the Securities
Act;
“Registrar”
means Astana International Exchange Registrar Limited, a company
incorporated in the AIFC under company identification number
180840900010;
“Registry
Agreement” means the Registry Services Agreement (as
amended or supplemented from time to time), between the Issuer and
the Registrar; acting from the AIFC as registrar and transfer agent
for the Notes, acting in accordance with the Acting law of the
AIFC.
“Relevant
Date” means, in relation to any payment in respect of
a Note, whichever is the later of (1) the date on which the payment
in question first becomes due and (2) if the full amount payable
has not been received by the Noteholder prior to such due date, the
date on which the full amount has been so received by the
Noteholder;
“SEC”
means the United States Securities and Exchange
Commission;
“Securities
Act” means the United States Securities Act of 1933,
as amended;
“Transfer
Agent” means the Registrar acting as a transfer agent
under the Registry Agreement.
“U.S.
Dollars” and “U.S.$” means the lawful currency
of the United States;
“U.S.
GAAP” means accounting principles generally accepted
in the United States;
“United
States” means the United States of
America;
“Wholesale
Notes” means the Notes that are (i) offered and sold
exclusively to Accredited Investors; and (2) have a principal
amount of at least U.S.$100,000 (one hundred thousand U.S.
dollars).
|
Aggregate Principal Amount of the Notes
|
The
aggregate principal amount of the Notes is U.S.$50,000,000 (fifty
million U.S. dollars).
|
Note Issue Price
|
Each
Note will be sold by the Issuer for 100% (one hundred percent) of
the face value of the Note, plus accrued interest premium from the
Issue Date, if any. The proceeds from Offering shall be paid to the
Issuer in U.S.$.
|
Currency
|
The
Notes will be denominated in U.S. Dollars
(“U.S.$”).
|
Note ISIN
|
KZX000000294
|
Placement of the Notes
|
The
Notes will be sold by the Issuer through the Placement Agent. The
Placement Agent will be paid a fee equal to 1% of the Notes sold by
the Placement Agent.
|
Note Form and Denomination
|
Notes
are in registered form, without certificates, in denominations of
U.S.$100,000 (one hundred thousand dollars) per Note issued under the Acting law of AIFC,
including AIX Markets Listing Rules (section 16-1);
If
Notes are admitted to trading on the AIX, the Notes shall be
tradeable only in the minimum authorized denomination of
U.S.$100,000 (one hundred thousand U.S. dollars).
|
Register, Title and Transfer
|
The
Notes are subject to the terms of the Registry Services Agreement.
All Note registrations and transfers will be conducted exclusively
by Registrar under the terms of the Registry Agreement. Holders of
the Notes are bound by, and are deemed to have notice of, all the
provisions of the Registry Agreement applicable to them. Copies of
the Registry Agreement are available for inspection during normal
business hours at the office of the Registrar.
(a) Register: The Registrar will maintain a
register (the
“Register”) in
electronic book-entry form in respect of the Notes in accordance
with the provisions of the Registry Agreement. In these Terms and
Conditions, the “Holder” or “Noteholder” of a Note means the
person in whose name such Note is for the time being registered in
the Register (or, in the case of a joint holding, the first named
thereof). In case of nominee holding, recording of the Notes shall
be made by way of registration thereof through a brokerage or
direct accounts opened with the AIX CSD.
(b) Title: The Holder of each Note shall
(except as otherwise required by law) be treated as the absolute
owner of such Note for all purposes whether or not it is overdue
and regardless of any notice of ownership, trust or any other
interest therein. No person other than a Holder shall have any
right to enforce any term or condition of the Notes.
(c) Transfers: Subject to paragraph (e)
(Closed periods), a Note
may be transferred only in conformity to the Registry Agreement,
Regulation S and the market rules of an exchange where the Notes
are admitted to trading on the exchange.
(d) Charge: The transfer of a Note may be
subject to a reasonable and normal charge imposed by the Registrar
in connection with such transfer.
(e) Closed
periods: Noteholders may not require transfers to be
registered during the period of 15 days ending on the due date for
any payment of principal or interest in respect of the
Notes.
|
Role of Registrar
|
In
acting under the Registry Agreement and in connection with the
Notes, the Registrar acts solely as agent of the Issuer and does
not assume any obligations towards or relationship of agency or
trust for or with any of the Noteholders.
|
Non-business Days
|
If any
date for payment in respect of the Notes is not a business day, the
holder shall not be entitled to payment until the next following
business day nor to any interest or other sum in respect of such
postponed payment. In this paragraph, “business day”
means a day on which banks and exchange markets are open for
business in the Republic of Kazakhstan.
|
Redemption
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Notes
shall be redeemable at par. The redemption of the Notes shall be
made concurrently with the final payment of interest within 10
(ten) calendar days after (and including) the relevant Maturity
Date.
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Early Redemption
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Early redemption at the option of the Issuer
The
Notes may be redeemed in whole at par before their stated maturity
at the option of the Issuer only if the Issuer has secured prior
written consent(s) of the Holders of at least three-fourth in
principal amount of the Notes then outstanding.
Early redemption at the option of Holders of the Notes
If at
any time while any of the Notes remains outstanding an Event of
Default occurs, the Issuer shall, at the option of the holder of
the Notes, upon the holder of the Notes giving not less than 15
(fifteen) nor more than 30 (thirty) day notice to the Issuer,
redeem such Notes on the day specified in such notice at 100% (one
hundred percent) of its principal amount together with the interest
accrued to (but excluding) the date specified for the
redemption.
Following
the occurrence of any Event of Default the Issuer may arrange
negotiations with the Holders of the Notes in respect of the early
redemption at the option of the Holders of the Notes.
Within
10 (ten) calendar days after (and including) the second and fourth
Interest Payment Dates the Issuer shall, at the option of the
holder of the Notes, upon the holder of the Notes giving not less
than 10 (ten) calendar day notice before the relevant Interest
Payment Date to the Issuer, redeem such Notes at 100% (one hundred
percent) of its principal amount together with the interest to be
paid on the relevant Interest Payment Dates.
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Open Market Purchases
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The
Issuer or its affiliates may at any time purchase Notes in the open
market or otherwise at any price. Any such purchased Notes will not
be resold, except in compliance with applicable requirements or
exemptions under the relevant securities laws.
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Events of Default
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If any
of the following events (each an “Event of Default”)
occurs, the Issuer within 2 (two) business days shall notify the
Holders of the Notes about such Event of Default, and any Holder of
a Note then outstanding is entitled to give notice to the Issuer
that the Note is, and shall immediately become, due and payable at
100% (one hundred percent) of its principal amount together with
accrued interest to the date specified for redemption in such
notice:
(a) Non-payment: the
Issuer fails to pay the principal of any of the Notes when such
principal becomes due and payable at maturity, by declaration or
otherwise, or the Issuer is in default with respect to the payment
of interest or penalty on the Notes, and such default continues for
a period of at least 10 (ten) business days; or
(b) Breach of other
obligations: the Issuer is in default of the performance, or is
otherwise in breach, of any covenant, obligation, undertaking or
other agreement, including but not limited to, the breach of
Condition “Other obligations of the Issuer” below, and
such default or breach is not remedied within 30 (thirty) calendar
days after a notice thereof has been given to the Issuer by any
holder of the Notes.
Any
claim against the Issuer in respect of the Notes other than for
payments of principal and interest shall become invalid, unless it
is filed within 1 (one) year from the date of the nonpayment or
breach.
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Taxation
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The Constitutional Law “On Astana International Financial
Centre”, provides that any interest or capital gain on the
securities listed on the AIX are tax exempt until 1 January 2066.
Accordingly, following the admission of the Notes to the Official
List of the AIX, any income derived from owning or selling such
Notes will be tax exempt as long as the Notes are listed on the
AIX. Delisting of the
Notes from the official list of AIX may subject gains and interest
payments on the Notes to tax in the Republic of
Kazakhstan.
All payments of principal and interest in respect of the Notes by
or on behalf of the Issuer shall be made free and clear of, and
without withholding or deduction for or on account of, any present
or future taxes, duties, assessments or governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by
or on behalf of the United States or the Republic of Kazakhstan or
any political subdivision thereof or any authority therein or
thereof having power to tax, unless the withholding or deduction of
such taxes, duties, assessments or governmental charges is required
by law. In the event the Issuer shall pay such additional amounts
as will result in receipt by the Noteholders of such amounts after
such withholding or deduction as would have been received by them
had no such withholding or deduction been required.
Any reference in these Terms and Conditions to principal or
interest shall be deemed to include any additional amounts in
respect of principal or interest (as the case may be) which may be
payable under this condition.
If the Issuer becomes subject at any time to any taxing
jurisdiction other than the United States or the Republic of
Kazakhstan references in these Note Terms and Conditions to the
United States or (as the case may be) the Republic of Kazakhstan
shall be construed as references to the United States or (as the
case may be) the Republic of Kazakhstan and/or such other
jurisdiction.
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Placement Methods, Delivery, Clearing and Settlements
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The
delivery of the Notes shall be done over the counter through the
AIX Registrar system. The primary placement of the Notes with
subscribers shall be done through a subscription agreement to be
entered into by the Issuer and each subscriber.
The
proceeds from primary placement of the Notes shall be paid to the
Issuer in accordance with such subscription agreement. Recording of
the Notes shall be made by way of registration thereof with the
Registrar. In case of nominee holding, recording of the Notes shall
be made by way of registration thereof through a brokerage or
direct account opened with the AIX CSD.
The
Issuer, at its sole discretion, may also opt to conduct the primary
placement of the Notes through subscription using the book-building
platform of the trading system of the AIX in accordance with the
AIX Market Rules and relevant AIX market notice. In that case the
payment and settlement will be made through the settlement system
of the AIX CSD in accordance with the rules and regulations of the
AIX CSD, in particular delivery of the Notes through the system of
the AIX CSD. In order to participate in the offering of the Notes
through the book-building procedure, take delivery of the Notes and
trade the Notes on the AIX, investors are required to have an
account opened with a brokerage company admitted as an AIX Trading
Member and an AIX CSD Participant. The Notes will be held on behalf
of investors in the relevant AIX Trading Member’s custodial
account at AIX CSD.
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Notices
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To the Holders of the Notes
All
notices to the Holders of the Notes shall be deemed to have been
duly given if, so long as the Notes are listed on the AIX and so
long as the rules of the AIX so require, by publication (i) on the
internet website of the AIX at www.aix.kz or (ii) otherwise in
accordance with the regulations of the AIX. If the Notes cease to
be listed on the AIX, any notice shall be sent to the Holders of
the Notes by first class mail (or its equivalent) or (if posted to
an overseas address) by airmail at their respective addresses in
the Register, and any such notice shall be deemed to have been
given on the fourth day after the date of mailing.
To the Issuer
Notices
to the Issuer will be deemed to be validly given if delivered to
the Issuer at 324 South 400 West, Suite 250, Salt Lake City, Utah,
84101, USA for the attention of the Secretary and will be deemed to
have been validly given when received by the Issuer, or such other
United States administrative office address as stated on its
corporate website:
https://www.freedomholdingcorp.com/about/office-locations
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Amendments
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No
amendment to the Note Terms and Conditions shall be made by the
Issuer unless the Issuer has secured prior written consent(s) of
the Holders of at least three-fourth in principal amount of the
Notes then outstanding, except the Issuer may without the consent
or vote of and Holders of the Notes, amend or supplement the Note
Terms and Conditions for the following purposes:
(a) to cure any
ambiguity, omission, defect or inconsistency;
(b) to add to the
covenants of the Issuer for the benefit of the
Noteholders;
(c) to surrender any
right conferred upon the Issuer;
(d) to provide for the
issuance of additional Notes;
(e) make any other
change that does not materially and adversely affect the rights of
any Noteholder; and
(f)
to comply with any applicable requirements of the AIX or
SEC.
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Authorizations
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The
Issuer has obtained all necessary consents, approvals and
authorizations in connection with its entry into, and the
performance of its obligations under the documents to be entered
into by the Issuer in relation to the issue of the
Notes.
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Use of Proceeds
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Proceeds
from the issue of the Notes will be used for restructuring
corporate borrowing, general corporate purposes and financing of
business development initiatives.
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Applicable Law and Jurisdiction
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The
Notes, these Note Terms and Conditions, and any non-contractual
obligations arising out of, or in connection with, the Notes shall
be governed by, and construed in accordance with, the laws of the
AIFC. The Issuer has agreed herein the conditions in favor of the
Holders of the Notes that any claim, dispute or discrepancy of any
nature arising out of, or in connection with, the Notes (including
claims, disputes or discrepancies regarding the existence,
termination thereof, or any non-contractual obligations arising out
of, or in connection with, the Notes) shall be brought to, and
finally resolved by, the Court of the AIFC in accordance with the
rules thereof, or the International Arbitration Center of the AIFC
in accordance with the rules thereof, currently in effect, such
rules shall be deemed incorporated herein.
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Future Issuances
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The
Issuer may, from time to time, without the consent of the Holders
of the Notes, create and issue further debt securities including
debentures, debenture stock, bonds, loan notes, having either the
same terms and conditions as any outstanding debt securities of any
series (including the Notes) so that such further issue shall be
consolidated and form a single series with the outstanding debt
securities of the relevant series (including the Notes), or upon
such terms as the Issuer may determine at the time of their
issue.
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Noteholder Meetings
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The
Noteholders may require the Issuer to convene a meeting of the
Holders of the Notes to transact matters concerning the Notes,
including the amendment of any provision of these Terms and
Conditions. No amendment to the Terms and Conditions shall be
allowed, unless it is approved by a resolution of the Holders of at
least three-fourth in principal amount of the Notes then
outstanding.
A
meeting shall be convened by the Issuer at a written request of the
Holders of not less than 10% (ten percent) of the total face amount
of the unredeemed Notes upon at least 30 day notice (exclusive of
the day on which notice is given and of the day on which the
relevant meeting is to be held).
The
quorum at any meeting of the Noteholder(s) convened for voting on
any matter in relation to these Terms and Conditions shall
constitute two or more Persons holding or representing at least 50%
(fifty percent) of the total amount of the unredeemed Notes, or, in
case of a meeting in absentia, two or more Persons acting as
Holders of the Notes or representatives thereof, holding or
representing at least 50% (fifty percent) of the total amount of
the unredeemed Notes. Any resolution passed at any such meeting
shall be binding upon all Holders of the Notes, regardless of
whether they present at such meeting or not. If all outstanding
Notes are owned by a single holder, no meeting of the Holders of
the Notes shall be held.
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Headings
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The
headings and sub-headings are for ease of reference only and shall
not affect the construction of these Terms and
Conditions.
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Date:
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February 10, 2020
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/s/
Timur Turlov
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Timur
Turlov
Chief
Executive Officer
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Date:
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February
10, 2020
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/s/
Evgeniy Ler
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Evgeniy
Ler
Chief
Financial Officer
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Date:
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February 10, 2020
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/s/
Timur Turlov
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Timur
Turlov
Chief
Executive Officer
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Date:
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February 10, 2020
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/s/
Evgeniy Ler
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Evgeniy
Ler
Chief
Financial Officer
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