Freedom Holding - 10-Q quarterly report FY2014 Q1

 

BMB MUNAI, INC.

FORM 10-Q

TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION

 

Item 1 – Unaudited Condensed Financial Statements

 

BMB MUNAI, INC.

 

CONDENSED BALANCE SHEETS

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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Going concern

Subsequent event

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Use of estimates

Concentration of credit risk

Functional currency

Income taxes

Cash and cash equivalents

Other fixed assets

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Income (Loss) per common share

Recent accounting pronouncements

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Shareholder distributions

 

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our results of operations and our present financial condition. Our unaudited condensed financial statements and the accompanying notes included in this quarterly report on Form 10-Q contain additional information that should be referred to when reviewing this material and this document should be read in conjunction with our annual report on Form 10-K for the year ended March 31, 2014.

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) that are based on management’s beliefs and assumptions and on information currently available to management.  For this purpose any statement contained in this report that is not a statement of historical fact may be deemed to be forward-looking, including, but not limited to, our ability to identify or pursue other opportunities to exploit the expertise of the Company’s management staff and return value to the Company’s stockholders, our results of operations, cash flows, capital resources and liquidity, and future actions, intentions, plans, strategies and objectives.  Without limiting the foregoing, words such as “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “budget,” “plan,” “forecast,” “predict,” “may,” “should,” “could,” “will” or comparable terminology are intended to identify forward-looking statements.  These statements by their nature involve known and unknown risks and uncertainties and other factors that may cause actual results and outcomes to differ materially depending on a variety of factors, many of which are not within our control.  These factors include, but are not limited to, our ability to identify and exploit a new business opportunity, having sufficient funds then available to us to take advantage of any such opportunity, satisfaction of outstanding obligations, costs and expenses, economic conditions, competition, legislative requirements, sufficiency of working capital, capital resources and liquidity and other factors detailed herein and in our other Securities and Exchange Commission filings.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

Forward-looking statements are predictions and not guarantees of future performance or events.  Forward-looking statements are based on current industry, financial and economic information, which we have assessed but which by their nature are dynamic and subject to rapid and possibly abrupt changes.  Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business.  We hereby qualify all our forward-looking statements by these cautionary statements.

These forward-looking statements speak only as of their dates and should not be unduly relied upon.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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Throughout this report, unless otherwise indicated by the context, references herein to the “Company”, “BMB”, “we”, our” or “us” means BMB Munai, Inc., a Nevada corporation, and any corporate subsidiaries and predecessors.  Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations all references to dollar amounts ($) refers to U.S. dollars unless otherwise indicated.

The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this report and in our other filings with the Securities and Exchange Commission.

Overview

As discussed in Note 1 – Description of Business of the notes to our unaudited condensed financial statements accompanying this report, on September 19, 2011 we sold all our interest in our oil and natural gas exploration and production assets with the sale of our wholly-owned subsidiary Emir Oil LLP (the “Sale”).  Since September 2011 we have been working to complete the Sale, wind down our operations in Kazakhstan, and identify new business opportunities that will allow us to take advantage of the expertise of our management staff and return additional value to our stockholders.

This discussion summarizes the significant factors affecting our results of operations, financial condition, and liquidity and capital resources during the periods ended June 30, 2014 and 2013.  This discussion should be read in conjunction with the unaudited condensed financial statements and notes to the unaudited condensed financial statements accompanying this report.

We did not generate any revenue during the three months ended June 30, 2014 and 2013.

The following table presents details of our expenses for the three months ended June 30, 2014 and 2013:

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General and Administrative Expenses.  General and administrative expenses during the three months ended June 30, 2014 were $30,328 compared to $514,965 during the three months ended June 30, 2013.  General and administrative expenses were lower during the quarter ended June 30, 2014 period because the level of management services we required from Lakeview International, Inc. (“Lakeview”) was lower than during the quarter ended June 30, 2013.

Amortization and Depreciation. Amortization and depreciation expense for the three months ended June 30, 2014 was zero because our fixed assets are fully amortized as of June 30, 2014.

Loss from Operations.  During the three months ended June 30, 2014 we recognized a loss from operations of $30,328 compared to a loss from operations of $543,946 during the three months ended June 30, 2013. This decrease in loss from operations during three months ended June 30, 2014 is the result of the 94% decrease in general and administrative expenses.

Total Other Income.  During the three months ended June 30, 2014 we recognized total other income of $1,627 compared to total other income of $609 during the three months ended June 30, 2013. The increase resulted from higher interest income on our cash balances.

Net Loss. For all of the foregoing reasons, during the three months ended June 30, 2014 we incurred a net loss of $28,701 compared to a net loss of $543,337 for the three months ended June 30, 2013.  With the Sale, we are no longer generating revenues and as we wind down our operations, our expenses have decreased.  Because we have no revenue, we expect to continue to realize net losses in upcoming fiscal periods, albeit at lower levels compared to the same periods in prior fiscal years, unless our level of activity increases.

Liquidity and Capital Resources

As noted throughout this report, in September 2011 we completed the sale of our oil and natural gas exploration and production assets.  In September 2012 we completed our post-closing obligations in connection with the Sale.  We continue our efforts to identify new business opportunities that will allow us to capitalize on the expertise of the Company’s management staff and return additional value to our stockholders, but we have limited funds remaining to continue such efforts.  There is no assurance that we will be able to continue such efforts or that, at some point, our board of directors will not determine that it is in the best interest of the Company and its stockholders to dissolve the Company.

We do not currently generate revenue and do not anticipate generating revenue until such time as we are able to identify and exploit a new business opportunity.  No assurance can be given that we will be able to identify or exploit any new business opportunity, or that we will have the funds then available to us to take advantage of any such opportunity.  These factors raise substantial doubt about our ability to continue as a going concern or to return any additional value to our stockholders.

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During the three months ended June 30, 2014 cash was primarily used to pay for current expenses. See below for additional discussion and analysis of cash flow.

 

Our principal source of liquidity during the three months ended June 30, 2014 was cash and cash equivalents.  At March 31, 2014 cash and cash equivalents totaled $8,587,245.  At June 30, 2014 cash and cash equivalents totaled $8,585,884. Of this amount $8,540,365 is held for distribution to shareholders who have not yet claimed their distributions pursuant to the first and/or second stockholder distributions as reflected in the table of Contractual Obligations and Contingencies below.

 

The following table lists our significant commitments at June 30, 2014, excluding current liabilities as listed on our condensed balance sheet:

(1) See Note 4 – Shareholders’ Equity for additional information regarding the initial cash distribution payable and the second cash distribution payable.

As of June 30, 2014 we had no off-balance sheet financing arrangements.

As we have no operations, we believe inflation does not currently have a significant impact on our business.

 

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As a smaller reporting company, as defined in Rule 12b-2 promulgated under the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

Item 4. Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2014 our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

We believe there are no additions to the risk factors disclosed in our annual report on Form 10-K for the year ended March 31, 2014.

 

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Item 6. Exhibits

Exhibits.  The following exhibits are filed or furnished, as applicable, as part of this report:

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filer or part of a registration statement of prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Exchange Act and otherwise are not subject to liability under these sections.

 

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SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this Report to be signed on its behalf, thereunto duly authorized.