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ASSETS AND LIABILITIES HELD FOR SALE | Oct. 17, 2022
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Discontinued Operations and Disposal Groups [Abstract] |
ASSETS AND LIABILITIES HELD FOR SALE | ASSETS AND LIABILITIES HELD FOR SALE In the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022, the Company announced its plans to divest its interests in its Russian securities brokerage and complementary banking operations in Russia (the "Russia Segment"). On October 17, 2022, the Company entered into an agreement with Maxim Povalishin for the divestiture of 100% of the share capital of the companies comprising the Russia Segment. Maxim Povalishin, the purchaser, was at the time of the transaction the Deputy General Director and a member of the Board of Directors of Freedom RU. The transaction was approved by the Central Bank of the Russian Federation on February 10, 2023, and the divestiture was completed on February 28, 2023 (disposal date). The consideration for the purchase of the Russian Subsidiaries consists of the following: •Mr. Povalishin was assigned the Company’s obligation to Freedom RU under an outstanding deferred payment in the amount of approximately RUB 6.6 billion (approximately $88.5 million) (the “Deferred Payment Obligation”) which resulted from the purchase by the Company of 90.43% of the share capital of Freedom RU’s Kazakhstan subsidiary Freedom Finance JSC (“Freedom KZ”) (with its subsidiaries) from Freedom RU as part of a corporate restructuring, as a result of which the Company has become the 100% direct owner of Freedom KZ. The agreement for the purchase of Freedom KZ was entered on September 13, 2022, that was approved by regulatory body and finalized during November 2022; and •Mr. Povalishin paid cash in an amount equal to (x) $140 million less (y) the amount of the Deferred Payment Obligation as translated into U.S. dollars at the official exchange rate on the closing date. In addition, in July 2022, Freedom RU established a Russian subsidiary Freedom Finance Auto LLC. In January 2023, Freedom RU concluded an agreement to divest this new subsidiary to Mr. Povalishin for RUB 50 million (approximately $695 based on the applicable currency exchange rate on the reporting date). On February 7, 2023, the sale of Freedom Finance Auto LLC was completed. The Company has classified the Russia Segment as discontinued operations as of March 31, 2022 and for the years ended March 31, 2023, 2022 and 2021, because the subsidiaries sold in this transaction met the held for sale criteria as of March 31, 2022. In accordance with US GAAP, the cumulative translation adjustment attributable to the Russia Segment of $25,415 was reclassified from Accumulated Other Comprehensive Loss within the Consolidated Balance Sheet as of disposal date to Loss from Disposal of Discontinued Operations within Consolidated Statements of Operations and Other Comprehensive Income. In accordance with US GAAP, the Company has reported separately the discontinued operations in the consolidated financial statements. As of disposal date and March 31, 2022, the major classes of assets and liabilities from discontinued operations included the following:
| February 28, 2023 |  | March 31, 2022
Cash and cash equivalents | 593,953 |  |  | 428,480 |
Restricted cash | 6,033 |  |  | 28,406 |
Trading securities | 113,845 |  |  | 122,497 |
Margin lending, brokerage and other receivables, net | 257,184 |  |  | 210,087 |
Loans issued | 23,169 |  |  | 2,395 |
Other assets | 32,398 |  |  | 33,554 |
Total assets held for sale | 1,026,582 |  |  | 825,419 |
Customer liabilities | 776,425 |  |  | 701,584 |
Securities repurchase agreement obligations | 33,275 |  |  | 32,469 |
Debt securities issued | 34,379 |  |  | 64,637 |
Other liabilities | 16,385 |  |  | 13,788 |
Total liabilities held for sale | 860,464 |  |  | 812,478 |
The results of operations for discontinued operations for the eleven months ended February 28, 2023 and for the years ended March 31, 2022 and 2021, consist of the following:
| For The Eleven Months Ended February 28, 2023 |  | For The Year Ended March 31, 2022 |  | For The Year Ended March 31, 2021
Fee and commission income | 77,109 |  |  | 69,742 |  |  | 52,780 |
Net gain/(loss) on trading securities | 22,045 |  |  | (78,674) |  |  | 20,275 |
Net loss on derivative | (44) |  |  | — |  |  | 39 |
Interest income | 53,410 |  |  | 28,399 |  |  | 11,221 |
Net gain/(loss) on foreign exchange operations | 45,859 |  |  | (39,672) |  |  | 2,285 |
TOTAL REVENUE, NET | 198,379 |  |  | (20,205) |  |  | 86,600 |
Payroll and bonuses | 58,971 |  |  | 39,114 |  |  | 24,827 |
Professional services | 620 |  |  | 467 |  |  | 239 |
Stock compensation expense | 1,743 |  |  | 7,887 |  |  | 1,033 |
Advertising expense | 14,945 |  |  | 7,085 |  |  | 1,881 |
General and administrative expense | 26,031 |  |  | 18,476 |  |  | 14,001 |
Interest expense | 15,051 |  |  | 10,450 |  |  | 8,760 |
Fee and commission expense | 10,467 |  |  | 7,988 |  |  | 7,122 |
Provision for impairment losses | 1,566 |  |  | 779 |  |  | 45 |
Other (income)/expense, net | 825 |  |  | 4,748 |  |  | 174 |
TOTAL EXPENSE | 130,219 |  |  | 96,994 |  |  | 58,082 |
INCOME/(LOSS) BEFORE INCOME TAX | 68,160 |  |  | $ | (117,199) |  |  | $ | 28,518 |
The net cash flows used in operating and investing activities for discontinued operations for the eleven months ended February 28, 2023 and for the years ended March 31, 2022 and 2021, consist of the following:
| For The Eleven Months Ended February 28, 2023 |  | For The Year Ended March 31, 2022 |  | For The Year Ended March 31, 2021
|  |  | (Recasted) |  | (Recasted)
Cash Flows From Operating Activities |  |  |  |  |
Net income/(loss) from discontinued operations | $ | 12,424 |  |  | $ | (104,195) |  |  | $ | 21,783 |
Adjustments to reconcile net income used in operating activities: |  |  |  |  |
Depreciation and amortization | 2,103 |  |  | 2,035 |  |  | 1,745 |
Noncash lease expense | 5,772 |  |  | 4,932 |  |  | 3,826 |
Change in deferred taxes | 8,203 |  |  | (12,634) |  |  | 1,170 |
Impairment of FFIN Bank goodwill | — |  |  | 723 |  |  | — |
Impairment of Zerich goodwill | — |  |  | 810 |  |  | — |
Stock compensation expense | 1,743 |  |  | 7,887 |  |  | 1,033 |
Unrealized loss/(gain) on trading securities | (35,244) |  |  | 51,652 |  |  | (425) |
Net change in accrued interest | (276) |  |  | 354 |  |  | (1,921) |
Client base write-off | — |  |  | 3,125 |  |  | — |
Allowances for receivables | 1,871 |  |  | 771 |  |  | 41 |
Loss from divestiture of Russian subsidiaries | 51,533 |  |  | — |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Trading securities | 62,100 |  |  | (39,354) |  |  | (100,133) |
Margin lending, brokerage and other receivables | (23,325) |  |  | (218,852) |  |  | 28,845 |
Other assets | (2,684) |  |  | (3,684) |  |  | (1,292) |
Securities sold, not yet purchased – at fair value | 182 |  |  | 239 |  |  | 23 |
Customer liabilities | (106,396) |  |  | 198,608 |  |  | 392,855 |
Current income tax liability | 1 |  |  | (637) |  |  | 658 |
Margin lending and trade payables | (15) |  |  | (370) |  |  | 230 |
Lease liabilities | (5,763) |  |  | (5,166) |  |  | (3,854) |
Other liabilities | 3,676 |  |  | 1,256 |  |  | 2,433 |
Net cash flows from/(used in) operating activities from discontinued operations | (24,095) |  |  | (112,500) |  |  | 347,017 |
Cash Flows Used In Investing Activities |  |  |  |  |
Purchase of fixed assets | (4,421) |  |  | (3,438) |  |  | (2,137) |
Proceeds from sale of fixed assets | — |  |  | — |  |  | 76 |
Net change in loans issued to customers | (25,331) |  |  | (945) |  |  | (171) |
Cash, cash equivalents and restricted cash disposed from divestiture of Russia segment | (599,986) |  |  | — |  |  | — |
Net cash flows used in investing activities from discontinued operations | (629,738) |  |  | (4,383) |  |  | (2,232) |
The following table presents reconciliation of loss from disposal of discontinued operations as of disposal date:
|  | February 28, 2023
Cash and cash equivalents |  | 593,953 |
Restricted cash |  | 6,033 |
Trading securities |  | 113,845 |
Margin lending, brokerage and other receivables, net |  | 257,184 |
Loans issued |  | 23,169 |
Other assets |  | 32,398 |
Total assets of discontinued operations |  | $ | 1,026,582 |
Customer liabilities |  | 776,425 |
Securities repurchase agreement obligations |  | 33,275 |
Debt securities issued |  | 34,379 |
Other liabilities |  | 16,385 |
Total liabilities of discontinued operations |  | $ | 860,464 |
Net assets of discontinued operations |  | $ | 166,118 |
Reclassification of unrealized loss from cumulative translation adjustment |  | 25,415 |
Adjusted net assets of discontinued operations |  | $ | 191,533 |
Consideration received |  | 140,000 |
Loss from divestiture of discontinued operations |  | $ | (51,533) |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
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