Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2016 | Feb. 13, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | BMB MUNAI INC | |
Entity Central Index Key | 924,805 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2016 | |
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 | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 280,339,467 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Dec. 31, 2016 | Mar. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 13,586 | $ 99,678 |
Restricted cash | 8,533,566 | 8,533,566 |
Prepaid expenses | 935 | 50,375 |
Total current assets | 8,548,087 | 8,683,619 |
NON-CURRENT ASSETS | ||
Fixed assets, net | 2,923 | 5,431 |
Total non-current assets | 2,923 | 5,431 |
TOTAL ASSETS | 8,551,010 | 8,689,050 |
CURRENT LIABILITIES | ||
Accounts payable | 145,826 | 50,229 |
Accrued payroll and other liabilities | 1,691 | 0 |
State taxes payable | 0 | 100 |
Deferred distribution payments | 8,533,566 | 8,533,566 |
Total current liabilities | 8,681,083 | 8,583,895 |
SHAREHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value; 20,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock - $0.001 par value; 500,000,000 shares authorized; 280,339,467 shares issued and outstanding as of December 31, 2016 and March 31, 2016, respectively | 280,340 | 280,340 |
Additional paid in capital | 655,448 | 455,448 |
Accumulated deficit | (1,065,861) | (630,633) |
Total shareholders' deficit | (130,073) | 105,155 |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 8,551,010 | $ 8,689,050 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Dec. 31, 2016 | Mar. 31, 2016 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 20,000,000 | 20,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 500,000,000 | 500,000,000 |
Common stock, issued shares | 280,339,467 | 280,339,467 |
Common stock, outstanding shares | 280,339,467 | 280,339,467 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||||
REVENUES | $ 0 | $ 0 | $ 0 | $ 0 |
OPERATING EXPENSES | ||||
Professional fees | 55,470 | 40,360 | 254,032 | 195,405 |
General and administrative | 44,165 | 61,449 | 181,659 | 188,688 |
Depreciation | 828 | 786 | 2,508 | 2,465 |
Total operating expenses | 100,463 | 102,595 | 438,199 | 386,558 |
LOSS FROM OPERATIONS | (100,463) | (102,595) | (438,199) | (386,558) |
OTHER INCOME | ||||
Interest income, net | 995 | 575 | 2,971 | 618 |
Total other income | 995 | 575 | 2,971 | 618 |
LOSS BEFORE INCOME TAX | (99,468) | (102,020) | (435,228) | (385,940) |
Income tax expense | 0 | (2,888) | 0 | (3,293) |
NET LOSS | $ (99,468) | $ (104,908) | $ (435,228) | $ (389,233) |
BASIC AND DILUTED NET LOSS PER COMMON SHARE | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average shares outstanding | 280,339,467 | 247,594,598 | 280,339,467 | 232,260,739 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (435,228) | $ (389,233) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation expense | 2,508 | 2,465 |
Deferred taxes | 0 | 3,293 |
Changes in operating assets and liabilities: | ||
Employee receivables | 0 | 1,300 |
Prepaid expenses | 49,440 | 476 |
Accounts payable | 95,597 | (17,358) |
Accrued payroll and other liabilities | 1,691 | (4,700) |
State tax payable | (100) | 0 |
Net cash used in operating activities | (286,092) | (403,757) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of fixed assets | 0 | (198) |
Cash resulting from acquisition of BMB Munai, Inc. | 0 | 8,586,822 |
Net cash from investing activities | 0 | 8,586,624 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Capital contributions | 200,000 | 50,000 |
Net cash from financing activities | 200,000 | 50,000 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (86,092) | 8,232,867 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 8,633,244 | 402,718 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 8,547,152 | 8,635,585 |
Supplemental disclosure of cash flows for: | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 100 | 0 |
Non-cash investing and financing: | ||
Assumption of liabilities in connection with acquisition | $ 0 | $ 8,675,580 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 9 Months Ended |
Dec. 31, 2016 | |
Shareholders Equity | |
DESCRIPTION OF BUSINESS | FFIN Securities, Inc. (“FFIN”) was incorporated in the state of Nevada on August 25, 2014, for the purpose of primarily serving brokerage clients referred from foreign brokerage firms under common ownership as part of a strategy to provide foreign customers with access to the U.S. securities markets. FFIN is currently determining whether to submit a new application to become a member of Financial Industry Regulatory Authority, Inc. (“FINRA”) and a licensed securities broker-dealer with the United States Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). BMB Munai, Inc. (“BMBM”) is a Nevada corporation that originally incorporated in the state of Utah in 1981. From 2003 to 2011, BMBM’s business activities focused on oil and natural gas exploration and production in the Republic of Kazakhstan through its then wholly-owned subsidiary Emir Oil LLP (“Emir Oil”). In September 2011, BMBM sold all of its interest in Emir Oil, including its right, title, and interest in and to the oil and gas licenses and licensed territory owned by Emir Oil, to an independent third party for cash of about $170 million. The proceeds of the sale were used to, among other things, repay outstanding obligations, satisfy certain post-closing undertakings, meet ongoing expenses, and make two separate cash distributions totaling approximately $74,750,000 to its stockholders. On November 23, 2015, BMBM entered into a Share Exchange and Acquisition Agreement with Timur Turlov (the “Acquisition Agreement”) with the intent to build an international, broadly based brokerage and financial services firm to meet the growing demand from an increasing number of investors in Russia and Kazakhstan for access to the financial opportunities, relative stability, and comprehensive regulatory reputation of the U.S. securities markets. Pursuant to the Acquisition Agreement, BMBM acquired all of the issued and outstanding common stock of FFIN from Mr. Turlov in exchange for 224,551,913 shares of BMBM common stock, which constituted approximately 80.1% of BMBM’s outstanding common stock after giving effect to the transaction. BMBM and its wholly-owned subsidiary FFIN are collectively referred to herein as the “Company” unless otherwise specifically indicated or as is otherwise contextually required. The Acquisition Agreement also provides, subject to the satisfaction of various closing conditions, for the possible acquisition by the Company of Mr. Turlov’s 100% equity interests in Investment Company Freedom Finance LLC, a Russian limited company (“Freedom RU”), and the securities brokerage, financial services and banking business conducted by it in Russia, and its wholly owned subsidiary, Freedom Finance JSC, a Kazakhstan joint stock company (“Freedom KZ”), and the securities brokerage and financial services business conducted by it in Kazakhstan, and FFINEU Investments Limited, a Cyprus limited company (“Freedom CY”) and the securities brokerage and financial services business conducted by Freedom CY. Freedom RU, Freedom KZ, and Freedom CY and the businesses conducted by each of them, in each case, are collectively referred to herein as the “Freedom Companies” unless otherwise specifically indicated or as is otherwise contextually required. The acquisition of the Freedom Companies is not contingent upon FFIN’s decision to pursue licensure to operate as a broker-dealer in the U.S. or whether FFIN is ultimately successful in becoming a U.S. registered broker-dealer. These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business one year from February 14, 2017. The Company currently has no revenue generating activities and has incurred losses since inception, resulting in an accumulated deficit of $1,065,861 as of December 31, 2016. Until the Company closes the acquisition of at least one of the Freedom Companies, or elects to and is successful in obtaining regulatory approval and commence operations as a licensed broker/dealer in the United States, further losses are anticipated. This raises substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company closing the acquisition of at least one of the Freedom Companies, which the Company believes will lead to generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, capital contributions from Mr. Turlov and/or a private placement of Company common stock. There is no guarantee that the Company will be able to raise any capital through any type of offering or to receive additional capital contributions from Mr. Turlov. As a result of the closing of the acquisition of FFIN, Mr. Turlov was issued approximately 80.1% of the outstanding common stock of BMBM after giving effect to the transaction. He was also appointed as the Company’s Chief Executive Officer and Chairman of the board of directors. The Company has determined to treat the acquisition of FFIN as a reverse merger and recapitalization, with FFIN as the acquirer for accounting purposes. Consequently, the assets and liabilities and the historical operations that are reflected in the Company's financial statements are those of FFIN. These financial statements are presented as a continuation of FFIN. The equity of FFIN is presented as the equity of the combined company and the capital stock account of FFIN is adjusted to reflect the par value of the issued and outstanding common stock of the Company, being the legal acquirer, after giving effect to the number of shares issued in connection with the acquisition of FFIN. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Dec. 31, 2016 | |
Shareholders Equity | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The Company’s consolidated financial statements present the consolidated results of FFIN Securities, Inc., including the results of its parent, BMB Munai, Inc., starting November 24, 2015. All significant inter-company balances and transactions have been eliminated from the consolidated financial statements. Accounting Principles The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, they are condensed and do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. The accompanying financial statements should be read in conjunction with the Company’s most recent audited annual financial statements included in its annual report on Form 10-K filed with the SEC on July 14, 2016. Operating results for the nine-month period ended December 31, 2016, are not necessarily indicative of the results that may be expected for the year ending March 31, 2017. 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 Subject to compliance with regulatory requirements and the commencement of securities broker-dealer activities, revenues and expenses from all securities transactions will be recorded on the trade date of the transaction. The Company does not participate in any proprietary securities transactions. For the nine months ended December 31, 2016 and 2015, the Company had not yet established an ongoing source of revenue sufficient to cover its operating costs as it determines whether to continue to pursue the application and licensure process to become a registered broker-dealer in the United States. Cash and Cash Equivalents Cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase. 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 nine months ended December 31, 2016 and 2015, the Company has had no expenses related to advertising. The Company does not anticipate engaging in any advertising activities in the United States for brokerage services until licensure is applied for and regulatory approval is received. At that point all costs associated with advertising will be expensed in the period incurred. 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 anticipated undiscounted cash flow 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 December 31, 2016 and March 31, 2016, the Company had not recorded any charges for impairment of long-lived assets. 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. Income tax expense differs from amounts that would be calculated by applying the federal statutory rate because of the federal surtax, state income tax rates, certain nondeductible expenses, and net operating loss carrybacks, if any. The Company will include interest and penalties arising from the underpayment of income taxes in the statement of operations in the provision for income taxes. As of December 31, 2016 and March 31, 2016, the Company had no accrued interest or penalties related to uncertain tax positions. Tax years that remain subject to examination are years 2012 forward. Financial Instruments Financial instruments include employee receivables, prepaid expenses, accounts payable, and accrued expenses. Management estimates that the carrying amount of these financial instruments represents their fair values, which were determined by their near term nature or by comparable financial instruments’ market value. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers.” Revenue is an important number to users of financial statements in assessing an entity’s financial performance and position. Previous revenue recognition guidance in US GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. Accordingly, the FASB and the International Accounting Standards Board (IASB) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for US GAAP and International Financial Reporting Standards (IFRS) that would: 1. Remove inconsistencies and weaknesses in revenue requirements. 2. Provide a more robust framework for addressing revenue issues. 3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. 4. Provide more useful information to users of financial statements through improved disclosure requirements. 5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet these objectives, the FASB is amending the FASB Accounting Standards Codification (ASC) and creating a new Topic 606, “Revenue from Contracts with Customers.” The Company will be evaluating the impact of ASU 2014-09 as it pertains to the Company’s financial statements and other required disclosures on an ongoing basis until its eventual adoption and incorporation. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The amendments in this update define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides related footnote disclosure requirements. Under US GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. This update provides guidance on when there is substantial doubt about an organization’s ability to continue as a going concern and how the underlying conditions and events should be disclosed in the footnotes. It is intended to reduce diversity that existed in footnote disclosures because of the lack of guidance about when substantial doubt existed. The amendments in this update are effective for the Company beginning in the first quarter of 2017. Early application is permitted. The Company adopted this standard during the period ended December 31, 2016, applying it prospectively. Adoption of this amendment did not have a significant impact on the Company’s results of operations or financial position. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” This new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the new guidance. The new guidance is effective for the Company on April 1, 2017, with early adoption permitted as of the beginning of an interim or annual reporting period. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. Entities will also have to record changes in instrument-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. In addition, entities will be required to present enhanced disclosures of financial assets and financial liabilities. The guidance is effective beginning January 1, 2018, with early adoption of certain provisions of the ASU permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The guidance is effective beginning January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash.” This ASU requires require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in this Update should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. |
3. CASH AND CASH EQUIVALENTS
3. CASH AND CASH EQUIVALENTS | 9 Months Ended |
Dec. 31, 2016 | |
Shareholders Equity | |
CASH AND CASH EQUIVALENTS | As of December 31, 2016 and March 31, 2016, the cash balance totaled $8,547,152 and $8,633,244, respectively. The Company is exposed to concentrations of credit risk related to cash deposits. The Company maintains cash at a financial institution where the total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to its limit. At any given time, the Company’s cash balance may exceed the balance insured by the FDIC. As of December 31, 2016 and March 31, 2016, $8,347,987 and $8,332,244, respectively, of the Company’s cash was in excess of FDIC limits. As of December 31, 2016 and March 31, 2016, the cash balance included restricted cash in the amount of $8,533,566, respectively, which corresponds to the deferred distribution payments liability. |
4. SHAREHOLDER'S EQUITY
4. SHAREHOLDER'S EQUITY | 9 Months Ended |
Dec. 31, 2016 | |
Shareholders Equity | |
SHAREHOLDER'S EQUITY | Shareholder Distributions Following the sale for cash in September 2011, of BMBM’s oil and gas assets in operations in Kazakhstan, BMBM distributed the net proceeds to its shareholders. As of December 31, 2016 and March 31, 2016, distributions aggregating $8,533,566, respectively, have not been distributed to certain shareholders pending the completion of necessary documentation of such shareholders’ ownership of the stock on which the distribution is based. |
5. RELATED PARTY TRANSACTIONS
5. RELATED PARTY TRANSACTIONS | 9 Months Ended |
Dec. 31, 2016 | |
Shareholders Equity | |
RELATED PARTY TRANSACTIONS | During the nine months ended December 31, 2016, Mr. Turlov made capital contributions of $200,000 to the Company. At the time such contributions were made, Mr. Turlov was the Chief Executive Officer, Chairman of the board, and majority shareholder of the Company. |
6. LEASE COMMITMENTS
6. LEASE COMMITMENTS | 9 Months Ended |
Dec. 31, 2016 | |
Lease Commitments | |
LEASE COMMITMENTS | FFIN entered into a 30-month lease agreement on January 1, 2015, for office space. At December 31, 2016, the future minimum lease payments under the lease are as follows: Lease commitments Fiscal year ending March 31, 2017 $ 7,187 Fiscal year ending March 31, 2018 7,187 Total $ 14,374 FFIN’s rent expense for its office space was $22,457 and $21,925, for the nine months ended December 31, 2016 and 2015, respectively. BMBM leases office space on a month-to-month basis for $250 per month. |
7. COMMITMENTS AND CONTINGENT L
7. COMMITMENTS AND CONTINGENT LIABILITIES | 9 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingent Liabilities | |
COMMITMENTS AND CONTINGENT LIABILITIES | The Company had the following significant commitments and contingencies as of December 31, 2016: Payments Due By Period Contractual obligations Total Less than 1 year 2-3 years 4-5 years After 5 years Initial cash distribution payable (1) $ 6,620,623 $ 6,620,623 (2) $ - $ - $ - Second cash distribution payable (1) 1,912,943 1,912,943 (2) - - - Office lease (3) 14,374 14,374 - - - TOTAL $ 8,547,940 $ 8,547,940 $ - $ - $ - (1) See Note 4 – Shareholders’ Equity (2) These distributions are 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. (3) FFIN entered into a lease agreement on January 1, 2015, for office space that expires in June 2017. |
8. SUBSEQUENT EVENTS
8. SUBSEQUENT EVENTS | 9 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company evaluated all material events and transactions that occurred after December 31, 2016 through February 14, 2017, the date these financial statements were available to be issued. During this period the Company did not have any material recognizable subsequent events, except as described below. On January 9, 2017, Mr. Turlov made a $70,000 capital contribution to the Company. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies Policies | |
Basis of presentation | The Company’s consolidated financial statements present the consolidated results of FFIN Securities, Inc., including the results of its parent, BMB Munai, Inc., starting November 24, 2015. All significant inter-company balances and transactions have been eliminated from the consolidated financial statements. |
Accounting principles | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, they are condensed and do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. The accompanying financial statements should be read in conjunction with the Company’s most recent audited annual financial statements included in its annual report on Form 10-K filed with the SEC on July 14, 2016. Operating results for the nine-month period ended December 31, 2016, are not necessarily indicative of the results that may be expected for the year ending March 31, 2017. |
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 | Subject to compliance with regulatory requirements and the commencement of securities broker-dealer activities, revenues and expenses from all securities transactions will be recorded on the trade date of the transaction. The Company does not participate in any proprietary securities transactions. For the nine months ended December 31, 2016 and 2015, the Company had not yet established an ongoing source of revenue sufficient to cover its operating costs as it determines whether to continue to pursue the application and licensure process to become a registered broker-dealer in the United States. |
Cash and cash equivalents | Cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase. |
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 nine months ended December 31, 2016 and 2015, the Company has had no expenses related to advertising. The Company does not anticipate engaging in any advertising activities in the United States for brokerage services until licensure is applied for and regulatory approval is received. At that point all costs associated with advertising will be expensed in the period incurred. |
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 anticipated undiscounted cash flow 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 December 31, 2016 and March 31, 2016, the Company had not recorded any charges for impairment of long-lived assets. |
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. Income tax expense differs from amounts that would be calculated by applying the federal statutory rate because of the federal surtax, state income tax rates, certain nondeductible expenses, and net operating loss carrybacks, if any. The Company will include interest and penalties arising from the underpayment of income taxes in the statement of operations in the provision for income taxes. As of December 31, 2016 and March 31, 2016, the Company had no accrued interest or penalties related to uncertain tax positions. Tax years that remain subject to examination are years 2012 forward. |
Financial instruments | Financial instruments include employee receivables, prepaid expenses, accounts payable, and accrued expenses. Management estimates that the carrying amount of these financial instruments represents their fair values, which were determined by their near term nature or by comparable financial instruments’ market value. |
Recent accounting pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers.” Revenue is an important number to users of financial statements in assessing an entity’s financial performance and position. Previous revenue recognition guidance in US GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. Accordingly, the FASB and the International Accounting Standards Board (IASB) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for US GAAP and International Financial Reporting Standards (IFRS) that would: 1. Remove inconsistencies and weaknesses in revenue requirements. 2. Provide a more robust framework for addressing revenue issues. 3. Improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. 4. Provide more useful information to users of financial statements through improved disclosure requirements. 5. Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet these objectives, the FASB is amending the FASB Accounting Standards Codification (ASC) and creating a new Topic 606, “Revenue from Contracts with Customers.” The Company will be evaluating the impact of ASU 2014-09 as it pertains to the Company’s financial statements and other required disclosures on an ongoing basis until its eventual adoption and incorporation. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The amendments in this update define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides related footnote disclosure requirements. Under US GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. This update provides guidance on when there is substantial doubt about an organization’s ability to continue as a going concern and how the underlying conditions and events should be disclosed in the footnotes. It is intended to reduce diversity that existed in footnote disclosures because of the lack of guidance about when substantial doubt existed. The amendments in this update are effective for the Company beginning in the first quarter of 2017. Early application is permitted. The Company adopted this standard during the period ended December 31, 2016, applying it prospectively. Adoption of this amendment did not have a significant impact on the Company’s results of operations or financial position. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” This new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the new guidance. The new guidance is effective for the Company on April 1, 2017, with early adoption permitted as of the beginning of an interim or annual reporting period. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is evaluating the impact that the new guidance will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. Entities will also have to record changes in instrument-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. In addition, entities will be required to present enhanced disclosures of financial assets and financial liabilities. The guidance is effective beginning January 1, 2018, with early adoption of certain provisions of the ASU permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The guidance is effective beginning January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash.” This ASU requires require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in this Update should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. |
6. LEASE COMMITMENTS (Tables)
6. LEASE COMMITMENTS (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Lease Commitments Tables | |
Future minimum lease payments | Lease commitments Fiscal year ending March 31, 2017 $ 7,187 Fiscal year ending March 31, 2018 7,187 Total $ 14,374 |
7. COMMITMENTS AND CONTINGENT16
7. COMMITMENTS AND CONTINGENT LIABILITIES (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingent Liabilities Tables | |
Commitments and contingencies | Payments Due By Period Contractual obligations Total Less than 1 year 2-3 years 4-5 years After 5 years Initial cash distribution payable (1) $ 6,620,623 $ 6,620,623 (2) $ - $ - $ - Second cash distribution payable (1) 1,912,943 1,912,943 (2) - - - Office lease (3) 14,374 14,374 - - - TOTAL $ 8,547,940 $ 8,547,940 $ - $ - $ - |
3. CASH AND CASH EQUIVALENTS (D
3. CASH AND CASH EQUIVALENTS (Details Narrative) - USD ($) | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Cash And Cash Equivalents Details Narrative | ||||
Cash | $ 8,547,152 | $ 8,633,244 | $ 8,635,585 | $ 402,718 |
5. RELATED PARTY TRANSACTIONS (
5. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transactions Details Narrative | ||
Capital contributions | $ 200,000 | $ 50,000 |
6. LEASE COMMITMENTS (Details)
6. LEASE COMMITMENTS (Details) | Dec. 31, 2016USD ($) |
Lease Commitments Details | |
Fiscal year ending March 31, 2017 | $ 7,187 |
Fiscal year ending March 31, 2018 | 7,187 |
Total | $ 14,374 |
6. LEASE COMMITMENTS (Details N
6. LEASE COMMITMENTS (Details Narrative) - USD ($) | 9 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Lease Commitments Details Narrative | ||
Rent expense | $ 22,457 | $ 21,925 |
7. COMMITMENTS AND CONTINGENT21
7. COMMITMENTS AND CONTINGENT LIABILITIES (Details) | Dec. 31, 2016USD ($) |
Total | $ 8,547,940 |
Less than 1 year | 8,547,940 |
2 - 3 years | 0 |
4 - 5 years | 0 |
After 5 years | 0 |
Initial Cash Distribution Payable | |
Total | 6,620,623 |
Less than 1 year | 6,620,623 |
2 - 3 years | 0 |
4 - 5 years | 0 |
After 5 years | 0 |
Second Cash Distribution Payable | |
Total | 1,912,943 |
Less than 1 year | 1,912,943 |
2 - 3 years | 0 |
4 - 5 years | 0 |
After 5 years | 0 |
Office Lease | |
Total | 14,374 |
Less than 1 year | 14,374 |
2 - 3 years | 0 |
4 - 5 years | 0 |
After 5 years | $ 0 |