UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

(Amendment No. 1)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended December 31, ~~2022~~2021

			OR

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ________ to _________

Commission File Number 001-33034


			FREEDOM HOLDING CORP.
			(Exact name of registrant as specified in its charter)

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

50040

(Address of principal executive offices)

(Zip Code)

+7 727 311 10 64

(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common ~~Stock, par value $0.001 per share~~	FRHC	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No x

As of February ~~10,~~7, 2022, the registrant had ~~59,542,212~~59,534,712 shares of common stock, par value $0.001, issued and outstanding.

Explanatory Note

This Amendment No. 1 on Form 10-Q/A (this "Quarterly Report on Form 10-Q/A") amends and restates certain items noted below in the Quarterly Report on Form 10-Q of Freedom Holding Corp. (the “Company”) for the quarterly period ended December 31 2021, as originally filed with the Securities and Exchange Commission (“SEC”) on February 9, 2022 (the “Original Form 10-Q”).

Background and Effect of the Restatement

As previously disclosed in the Company's Current Report on Form 8-K dated November 14, 2022, the Audit Committee (“Audit Committee”) of the Board of Directors of the Company, after discussion with management, concluded that the financial statements of the Company in the Original Form 10-Q and any reports, related earnings releases, investor presentations or similar communications of such prior financial statements should no longer be relied upon. The determination made by the Audit Committee resulted from an error in the Original Form 10-Q related to the classification of certain loans and deposits from banking institutions within the Consolidated Statements of Cash Flows (the "Cash Flow Statement Error"). Specifically, the Company determined that, in the Consolidated Statements of Cash Flows, certain loans issued were presented as “Operating activities” whereas they should have been presented as “Investing activities,” and deposits from banking institutions were presented as “Operating activities” whereas they should have been presented as “Financing activities."

In addition, as previously disclosed in the Company's Current Report on Form 8-K datedFebruary 10, 2023, the Audit Committee, after discussion with management, concluded that the Original Form 10-Q, and any reports, related earnings releases, investor presentations or similar communications of the same period should not longer be relied upon due to an error in the identified by the Company related to the classification of certain interest income derived from margin lending made by subsidiaries of the Company within the Company’s income statement (the "Income Statement Error"). Specifically, the Company determined that, in the Consolidated Statements of Operations and Other Comprehensive Income in the Original Form 10-Q, certain interest income from margin lending was presented as “Fee and commission income” whereas it should have been presented as “Interest income.”

The Company determined that the misclassifications described above did not have any impact on the Company's operating performance or reported key performance indicators.

This Amendment reflects the correction of the classification errors described above, which were identified subsequent to the filing of the Original Form 10-Q. In addition, because the Company entered into an agreement to sell its Russian subsidiaries subsequent to December 31, 2021 but prior to the date of the filing of this Amendment, at which time such subsidiaries met the held for sale criteria, this Amendment presents the Company's Russian subsidiaries as assets and liabilities held for sale and discontinued operations, in accordance with ASC 205 and 360.

Restatement of Other Financial Statements

In addition to this Quarterly Report on Form 10-Q/A, the Company is concurrently filing amendments to its Annual Report on Form 10-K for the year ended March 31, 2022 (the "Form 10-K/A) and its Quarterly Reports on Form 10-Q for the quarters ended June 30, 2022 (the "June 2022 Form 10-Q/A") and September 30, 2022 (the "September 2022 Form 10-Q/A"). The Company is filing such other amended reports to restate its audited and unaudited condensed consolidated financial statements, as the case may be, and related financial information for the periods contained in those reports and to amend certain other items within those reports in relation to (i) the Income Statement Error described above, (ii) in the case of the the Form 10-K/A and the June 2022 Form 10-Q/A, the Cash Flow Statement Error described above and (iii) an error with related to the classification of funds received under the Kazakhstan state program for financing of mortgage loans “7-20-25” within the Consolidated Statements of Cash Flows for the relevant periods.

Internal Control Considerations

As a result of this restatement, the Company’s management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of December 31, 2021. Management has concluded that the Company’s disclosure controls and procedures were not effective at December 31, 2021, and its internal control over financial reporting was not effective as of December 31, 2021 due to the following material weaknesses. Specifically, there were material weaknesses in (i) the design of a control activity with respect to the classification of certain loans and deposits from banking institutions within the Consolidated Statements of Cash Flows, (ii) the design of a control activity with respect to the classification of certain interest income from margin lending within the Consolidated Statements of Operations and Other Comprehensive Income, and (iii) the design of a control activity with respect to the

classification of funds received under the Kazakhstan state program for financing of mortgage loans “7-20-25” within the Company’s Consolidated Statements of Cash Flows. See additional discussion included in Part I, Item 4. “Controls and Procedures” of this Quarter Report.

Items Amended in This Quarterly Report on Form 10-Q/A

For the convenience of the reader, this Quarterly Report on Form 10-Q/A presents the Original Form 10-Q in its entirety. The following sections in the Original Form 10-Q have been revised in this Amendment: Part I, Item 1: “Unaudited Condensed Consolidated Financial Statements ”; Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; Part I, Item 3. “Qualitative and Quantitative Disclosures about Market Risk”; Part I, Item 4. “Controls and Procedures”; and Part II, Item 6. “Exhibits and Financial Statement Schedules”.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is also including with this Quarterly Report on Form 10-Q/A currently dated certifications of the Company’s principal executive officer and principal financial officer (included in Part II, Item 6. “Exhibits” and attached as Exhibits 31.1, 31.2 and 32.1).

This Quarterly Report on Form 10-Q/A is presented as of the date of the Original Form 10-Q and does not reflect adjustments for events occurring subsequent to the filing of the Original Form 10-Q, except to the extent they are otherwise required to be included and discussed herein and does not substantively modify or update the disclosures herein other than as required to reflect the adjustments described above. Among other things, forward-looking statements made in the Original Form 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Form 10-Q, other than the adjustments described above, and such forward-looking statements should be read in conjunction with our filings with the SEC, including those subsequent to the filing of the Original Form 10-Q.

FREEDOM HOLDING CORP.

FORM 10-Q

TABLE OF CONTENTS


		Pages
PART I — FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets as of December 31, ~~2022,~~2021 and March 31, ~~2022~~2021	3

	Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income for the Threeand Nine Months Ended December 31, ~~2022~~2021 and ~~202~~20201	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, ~~2022~~2021 and ~~202~~20201	6

	Condensed Consolidated Statements of Shareholders’ Equity for ~~the~~The Threeand Nine Months Ended December 31, ~~2022~~2021 and ~~202~~12020	9

	Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6855

Item 3.	Qualitative and Quantitative Disclosures About Market Risk	9477

Item 4.	Controls and Procedures	9980

PART II — OTHER INFORMATION		~~100~~81

Item 1.	Legal Proceedings	~~100~~81

Item 1A.	Risk Factors	~~100~~81

Item 6.	Exhibits	~~102~~82

Signatures		~~103~~83

~~Table~~T a ble of ~~contents~~Contents


FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)


		December 31, 2022		March 31, 2022*			December 31, 2021		March 31, 2021
				(Recasted)			(recast)		(recast)
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	664,095	$	225,464	Cash and cash equivalents	$	146,358	$	168,017
Restricted cash	Restricted cash	449,979		547,950		Restricted cash	416,743		490,691
Trading securities	Trading securities	1,929,840		1,158,377		Trading securities	947,833		587,546
Available-for-sale securities, at fair value	Available-for-sale securities, at fair value	174,326		161,364		Available-for-sale securities, at fair value	1		1
Margin lending, brokerage and other receivables, net		403,568		147,659
Brokerage and other receivables, net						Brokerage and other receivables, net	194,158		49,518
Loans issued	Loans issued	639,377		92,446		Loans issued	42,439		9,626
Fixed assets, net	Fixed assets, net	43,862		17,823		Fixed assets, net	17,399		15,571
Intangible assets, net	Intangible assets, net	9,010		5,163		Intangible assets, net	3,672		3,902
Goodwill	Goodwill	9,460		5,898		Goodwill	7,840		7,137
Right-of-use asset	Right-of-use asset	24,054		7,431		Right-of-use asset	6,926		4,626
Insurance contract assets		11,243		5,712
Other assets	Other assets	47,754		27,044		Other assets	24,030		15,639
Assets held for sale	Assets held for sale	961,566		825,419		Assets held for sale	919,592		748,048
TOTAL ASSETS	TOTAL ASSETS	$	5,368,134	$	3,227,750	TOTAL ASSETS	$	2,726,991	$	2,100,322

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations	Securities repurchase agreement obligations	$	1,233,928	$	840,224	Securities repurchase agreement obligations	$	627,493	$	374,718
Customer liabilities	Customer liabilities	1,786,452		765,628		Customer liabilities	553,015		671,825
Margin lending and trade payables		142,341		45,083
Liabilities from insurance activity		156,542		119,490
Trade payables						Trade payables	50,375		22,002
Current income tax liability	Current income tax liability	—		14,556		Current income tax liability	20,579		14,199
Securities sold, not yet purchased – at fair value	Securities sold, not yet purchased – at fair value	—		13,865		Securities sold, not yet purchased – at fair value	15,167		8,569
Loans received						Loans received	3,497		3,373
Debt securities issued	Debt securities issued	37,192		34,390		Debt securities issued	33,647		31,349
Lease liability	Lease liability	24,175		7,504		Lease liability	7,031		4,811
Payable for acquisition		16,055		—
Liability arising from continuing involvement		319,694		6,447
Deferred income tax liabilities						Deferred income tax liabilities	1,486		4,007
Deferred distribution payments						Deferred distribution payments	8,534		8,534
Other liabilities	Other liabilities	37,940		21,477		Other liabilities	4,950		4,707
Liabilities held for sale	Liabilities held for sale	931,484		812,478		Liabilities held for sale	809,727		676,568
TOTAL LIABILITIES	TOTAL LIABILITIES	$	4,685,803	$	2,681,142	TOTAL LIABILITIES	2,135,501		1,824,662
Commitments and Contingent Liabilities (Note 26)		—		—

Commitments and Contingent Liabilities (Note 20)						Commitments and Contingent Liabilities (Note 20)	—		—

SHAREHOLDERS’ EQUITY	SHAREHOLDERS’ EQUITY					SHAREHOLDERS’ EQUITY
Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding	Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding	—		—		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; 59,542,212 shares issued and outstanding as of December 31, 2022, and March 31, 2022, respectively		59		59
Common stock - $0.001 par value; 500,000,000 shares authorized; 59,534,712 and 58,443,212 shares issued and outstanding as of December 31, 2021 and March 31, 2021, respectively						Common stock - $0.001 par value; 500,000,000 shares authorized; 59,534,712 and 58,443,212 shares issued and outstanding as of December 31, 2021 and March 31, 2021, respectively	59		58
Additional paid in capital	Additional paid in capital	159,580		174,745		Additional paid in capital	115,278		104,672
Retained earnings	Retained earnings	592,115		441,924		Retained earnings	516,149		208,617
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(60,920)		(63,125)		Accumulated other comprehensive loss	(39,152)		(36,046)
TOTAL FRHC SHAREHOLDERS’ EQUITY		$	690,834	$	553,603
TOTAL EQUITY ATTRIBUTABLE TO THE COMPANY						TOTAL EQUITY ATTRIBUTABLE TO THE COMPANY	592,334		277,301

Non-controlling interest	Non-controlling interest	(8,503)		(6,995)		Non-controlling interest	(844)		(1,641)
TOTAL SHAREHOLDERS’ EQUITY	TOTAL SHAREHOLDERS’ EQUITY	$	682,331	$	546,608	TOTAL SHAREHOLDERS’ EQUITY	591,490		275,660

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,368,134	$	3,227,750	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,726,991	$	2,100,322

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

* Please see Note 3

T ~~able~~Table of ~~contents~~Contents


FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

Three Months Ended December 31, Nine Months Ended December 31,
2022 2021* 2022 2021*
(Restated) (Restated)
Revenue:
Fee and commission income $ 80,883 $ 91,408 $ 253,486 $ 262,549
Net gain on trading securities 25,456 7,663 38,894 197,947
Interest income 80,255 33,657 187,817 82,514
Insurance underwriting income 28,557 21,394 78,998 51,491
Net gain on foreign exchange operations 20,866 1,361 30,014 4,076
Net loss on derivative (21,469) (314) (22,523) (1,028)
TOTAL REVENUE, NET 214,548 155,169 566,686 597,549
Expense:
Fee and commission expense 18,314 24,782 60,068 68,626
Interest expense 52,037 21,890 132,971 52,852
Insurance claims incurred, net of reinsurance 17,419 16,286 51,586 41,096
Operating expense 50,608 31,581 126,367 72,772
Provision for impairment losses/(recovery) 24,140 (333) 30,294 911
Other expense 570 979 79 2,426
TOTAL EXPENSE 163,088 95,185 401,365 238,683
INCOME BEFORE INCOME TAX 51,460 59,984 165,321 358,866
Income tax expense (5,069) (1,806) (26,567) (39,026)
INCOME FROM CONTINUING OPERATIONS 46,391 58,178 138,754 319,840
Income/(loss) before income tax (expense)/benefit of discontinued operations (including loss on disposal of $2,509 and $0 for the three months ended December 31, 2022 and 2021, respectively, and loss on disposal of $43,973 and $0 for nine months ended December 31, 2022 and 2021, respectively, see Note 25) 13,667 (5,067) 14,467 (4,609)
Income tax (expense)/benefit of discontinued operations 2,342 962 (4,538) 953
Income/(loss) from discontinued operations 16,009 (4,105) 9,929 (3,656)
NET INCOME 62,400 54,073 148,683 316,184
Less: Net loss attributable to non-controlling interest in subsidiary (464) (343) (1,508) (415)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 62,864 $ 54,416 $ 150,191 $ 316,599
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect (54) (1,063) 2,309 (1,789)
Reclassification adjustment for net realized loss on available-for-sale investments disposed of in the period, net of tax effect 320 953 197 1,606
Foreign currency translation adjustments (5,611) (8,650) (301) (4,447)


	Three months ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
	(restated)		(restated)		(restated)		(restated)
Revenue:
Fee and commission income	$	91,411	$	58,099	$	262,715	$	135,987
Net gain on trading securities	7,014		13,972		195,270		19,243
Interest income	24,799		5,224		59,339		11,762
Net gain on foreign exchange operations	1,106		103		3,773		142
Net (loss)/gain on derivative	(314)		946		(1,028)		61
TOTAL REVENUE, NET	124,016		78,344		520,069		167,195

Expense:
Fee and commission expense	20,640		18,295		61,246		45,771
Interest expense	18,434		3,223		44,432		8,802
Operating expense	28,243		10,338		63,544		22,236
Provision for impairment losses	32		952		614		1,573
Other (income)/expense, net	(94)		15		480		(57)
TOTAL EXPENSE	67,255		32,823		170,316		78,325

NET INCOME BEFORE INCOME TAX	56,761		45,521		349,753		88,870

Income tax expense	(1,768)		(6,599)		(38,980)		(11,698)

INCOME FROM CONTINUING OPERATIONS	54,993		38,922		310,773		77,172

Income/(loss) before income tax (expense)/benefit of discontinued operations	(5,067)		4,511		(4,609)		18,190

Income tax (expense)/benefit of discontinued operations	962		(1,112)		953		(5,202)

Income/(loss) from discontinued operations	(4,105)		3,399		(3,656)		12,988

NET INCOME	50,888		42,321		307,117		90,160

Less: Net (loss)/income attributable to non-controlling interest in subsidiary	(343)		(53)		(415)		243

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	51,231	$	42,374	$	307,532	$	89,917

OTHER COMPREHENSIVE INCOME
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect	—		—		—		71
Foreign currency translation adjustments, net of tax effect	(7,336)		6,851		(3,106)		4,565

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	43,552	$	49,172	$	304,011	$	94,796

Less: Comprehensive (loss)/income attributable to non-controlling interest in subsidiary	(343)		(53)		(415)		243

T ~~able~~Table of ~~contents~~Contents


FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

OTHER COMPREHENSIVE (LOSS)/ INCOME (5,345) (8,760) 2,205 (4,630)
COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS $ 57,055 $ 45,313 $ 150,888 $ 311,554
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (464) (343) (1,508) (415)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 57,519 $ 45,656 $ 152,396 $ 311,969
EARNINGS PER COMMON SHARE (In U.S. dollars):
Earnings from continuing operations per common share - basic 0.79 0.98 2.37 5.40
Earnings from continuing operations per common share - diluted 0.78 0.98 2.33 5.40
Earnings/(loss) from discontinued operations per common share - basic 0.59 (0.07) 0.49 (0.06)
Earnings/(loss) from discontinued operations per common share - diluted 0.58 (0.07) 0.48 (0.06)
Earnings per common share - basic 1.38 0.91 2.86 5.34
Earnings per common share - diluted 1.36 0.91 2.81 5.34
Weighted average number of shares (basic) 58,678,730 59,534,712 58,642,637 59,326,201
Weighted average number of shares (diluted) 59,522,701 59,534,712 59,527,743 59,326,201


COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	43,895	$	49,225	$	304,426	$	94,553

EARNINGS PER COMMON SHARE (In U.S. dollars):
Earnings from continuing operations per common share - basic	0.93		0.67		5.25		1.32
Earnings from continuing operations per common share - diluted	0.93		0.67		5.25		1.32

(Loss)/earnings from discontinued operations per common share - basic	(0.07)		0.06		(0.06)		0.22
(Loss)/earnings from discontinued operations per common share - diluted	(0.07)		0.06		(0.06)		0.22

Earnings per common share - basic	0.86		0.73		5.18		1.54
Earnings per common share - diluted	0.86		0.72		5.18		1.54

Weighted average number of shares (basic)	59,534,712		58,395,606		59,326,201		58,370,521
Weighted average number of shares (diluted)	59,534,712		58,450,688		59,326,201		58,423,467

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

Table of ~~contents~~Contents


FREEDOM HOLDING ~~CORP~~CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

For the Nine Months Ended December 31,
2022 2021*
(Restated)
Cash Flows From Operating Activities
Net income $ 148,683 $ 316,184
Net income/(loss) from discontinued operations $ 9,929 $ (3,656)
Net income from continued operations $ 138,754 $ 319,840
Adjustments to reconcile net income used in operating activities:
Depreciation and amortization 3,502 2,854
Noncash lease expense 3,453 2,587
Change in deferred taxes (3,392) (2,508)
Stock compensation expense 6,520 5,636
Unrealized gain on trading securities (65,684) (7,903)
Net change in accrued interest (35,984) (27,858)
Change in insurance reserves 42,236 35,381
Allowances for receivables 30,294 907
Changes in operating assets and liabilities:
Trading securities (630,879) (364,995)
Margin lending, brokerage and other receivables (270,725) (141,678)
Insurance contract assets 6,460 (106)
Other assets (11,058) (12,028)
Securities sold, not yet purchased – at fair value (13,865) 5,979
Brokerage customer liabilities 240,362 (230,143)
Current income tax liability (14,556) 6,404
Margin lending and trade payables 92,225 28,720
Lease liabilities (3,470) (2,839)
Liabilities from insurance activity (22,581) (7,937)
Other liabilities 10,432 735
Net cash flows used in operating activities from continuing operations (497,956) (388,952)
Net cash flows from/(used in) operating activities from discontinued operations 32,165 (222,901)
Net cash flows used in operating activities (465,791) (611,853)
Cash Flows Used In Investing Activities
Purchase of fixed assets (27,345) (4,078)
Proceeds from sale of fixed assets — 172
Purchase from microfinance organizations loans, net (57,031) (22,192)
Net change in loans issued to customers (507,728) (11,946)
Purchase of available-for-sale securities, at fair value (205,781) (223,482)
Proceeds from sale of available-for-sale securities, at fair value 196,799 171,221
Consideration paid for acquisition of London Almaty (16,343) —
Consideration paid for acquisition of Freedom Life (13,630) —
Cash, cash equivalents and restricted cash received from acquisitions 11,385 —
Net cash flows used in investing activities from continuing operations (619,674) (90,305)


	Nine Months Ended December 31,
	2021		2020
	(restated)		(restated)
Cash Flows (Used In)/From Operating Activities
Net income	$	307,117	$	90,160
Net income/(loss) from discontinued operations	(3,656)		12,988
Net income/(loss) from continued operations	310,773		77,172
Adjustments to reconcile net income (used in)/from operating activities:
Depreciation and amortization	2,433		2,109
Noncash lease expense	2,344		2,094
Change in deferred taxes	(2,508)		1,485
Stock compensation expense	5,635		57
Share based payment	—		517
Unrealized (gain)/loss on trading securities	(5,487)		(5,680)
Net change in accrued interest	(24,664)		(392)
Allowances for receivables	615		1,573
Changes in operating assets and liabilities:
Lease liabilities	(2,613)		(1,873)
Trading securities	(358,257)		(37,819)
Brokerage and other receivables	(143,118)		52,407
Other assets	(9,680)		(1,289)
Securities sold, not yet purchased – at fair value	5,979		9,078
Customer liabilities	(230,970)		336,882
Current income tax liability	6,380		1,123
Trade payables	28,750		10,824
Other liabilities	(346)		(174)
Net cash flows (used in)/from operating activities from continuing operations	(414,734)		448,094
Net cash flows (used in)/from operating activities from discontinued operations	(222,901)		156,483
Net cash flows (used in)/from operating activities	(637,635)		604,577

Cash Flows (Used In)/From Investing Activities
Purchase of fixed assets	(4,066)		(1,011)
Proceeds from sale of fixed assets	175		7
Loans purchased from microfinance organization	(29,020)		—
Loans sold to microfinance organization	6,828		—
Loans issued	(11,946)		122
Proceeds from sale of available-for-sale securities, at fair value	—		6,437
Consideration paid for Zerich Capital Management	—		(7,110)
Consideration paid for Prime Executions	—		(2,500)
Consideration paid for Freedom Bank KZ	—		(53,097)
Cash, cash equivalents and restricted cash received from acquisitions	—		157,533
Net cash flows (used in)/from investing activities from continuing operations	(38,029)		100,381
Net cash flows (used in)/from investing activities from discontinued operations	(2,790)		(1,102)
Net cash flows (used in)/from investing activities	(40,819)		99,279

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

Table of ~~contents~~Contents


FREEDOM HOLDING ~~CORP~~CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

Net cash flows used in investing activities from discontinued operations (21,647) (2,790)
Net cash flows used in investing activities (641,321) (93,095)
Cash Flows From Financing Activities
Proceeds from securities repurchase agreement obligations 388,675 315,383
Proceeds from issuance of debt securities 23,861 13,000
Repurchase of debt securities (23,387) (10,104)
Repurchase of mortgage loans under the State Program (7,117) —
Funds received under state program for financing of mortgage loans 318,330 —
Net change in bank customer deposits 779,044 83,448
Capital contributions 677 1,966
Exercise of options — 119
Net cash flows from financing activities from continuing operations 1,480,083 403,812
Net cash flows from financing activities from discontinued operations 26,105 37,982
Net cash flows from financing activities 1,506,188 441,794
Effect of changes in foreign exchange rates on cash and cash equivalents from continued operations 23,591 (7,321)
Effect of changes in foreign exchange rates on cash and cash equivalents from discontinued operations 61,473 13,695
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 484,140 (256,780)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD FROM CONTINUED OPERATIONS 773,414 659,495
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD FROM DISCONTINUED OPERATIONS 456,886 559,385
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 1,230,300 1,218,880
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD FROM CONTINUED OPERATIONS $ 1,114,074 $ 582,376
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD FROM DISCONTINUED OPERATIONS $ 600,366 $ 379,724
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD $ 1,714,440 $ 962,100


Cash Flows From Financing Activities
Proceeds from securities repurchase agreement obligations	270,146		(1,511)
Proceeds from issuance of debt securities	13,000		3,554
Repurchase of debt securities	(10,104)		(8,186)
Net change in bank customer deposits	83,448		6,555
Proceeds from loans received	—		2,423
Exercise of options	119		118
Net cash flows from/(used in) financing activities from continuing operations	356,609		2,953
Net cash flows from/(used in) financing activities from discontinued operations	37,982		193,788
Net cash flows from financing activities	394,591		196,741

Effect of changes in foreign exchange rates on cash and cash equivalents from continuing operations	(5,100)		(1,050)
Effect of changes in foreign exchange rates on cash and cash equivalents from discontinued operations	13,695		4,837


NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(275,268)		904,384

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD FROM CONTINUING OPERATIONS	658,708		76,820
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD FROM DISCONTINUED OPERATIONS	559,385		110,361
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	1,218,093		187,181

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD FROM CONTINUING OPERATIONS	563,101		616,267
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD FROM DISCONTINUED OPERATIONS	379,724		475,298
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	942,825	$	1,091,565

For The Nine Months Ended December 31,
2022 2021
(Restated)
Supplemental disclosure of cash flow information:
Cash paid for interest $ 133,286 $ 29,190
Income tax paid $ 47,262 $ 42,237
Supplemental non-cash disclosures:
Operating lease right-of-use assets obtained/disposed of in exchange for operating lease obligations during the period, net $ 19,089 $ 4,684

* Please see Note 4


	For The Nine Months ended
	December 31, 2021		December 31, 2020
Supplemental disclosure of cash flow information:
Cash paid for interest	$	20,632	$	5,948
Income tax paid	$	42,237	$	10,222

Supplemental non-cash disclosures:
Operating lease right-of-use assets obtained/disposed of in exchange for operating lease obligations during the period, net	$	4,686	$	1,037

Table of ~~contents~~Contents


FREEDOM HOLDING ~~CORP~~CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

The following table provides a reconciliation of cash, cash equivalents, and restricted cash from continuing operations reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows:


		December 31, 2022		December 31, 2021			December 31, 2021		December 31, 2020
				(Restated)
Cash and cash equivalents	Cash and cash equivalents	$	664,095	$	165,633	Cash and cash equivalents	$	146,358	$	155,376
Restricted cash	Restricted cash	449,979		416,743		Restricted cash	416,743		460,891
Total cash, cash equivalents and restricted cash shown as in the statement of cash flows		$	1,114,074	$	582,376
Total cash, cash equivalents and restricted cash from continuing operations shown as in the statement of cash flows						Total cash, cash equivalents and restricted cash from continuing operations shown as in the statement of cash flows	$	563,101	$	616,267

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

Table of ~~contents~~Contents


FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~SHAREHOLDERS’~~SHAREHOLDER'S EQUITY (Unaudited) (All amounts in ~~thousands~~thousand of United States dollars, except share data, unless otherwise stated)


	Common Stock				Additional paid in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest		Total
	Shares		Amount

Balance At September 30, 2021	59,534,712		$	59	$	110,717	$	464,918	$	(31,816)	$	(501)	$	543,377

Stock based compensation	—		—		4,561		—		—		—		4,561
Translation difference	—		—		—		—		(7,336)		—		(7,336)
Net income /(loss)	—		—		—		51,231		—		(343)		50,888

Balance At December 31, 2021	59,534,712		$	59	$	115,278	$	516,149	$	(39,152)	$	(844)	$	591,490

Balance At March 31, 2021	58,443,212		$	58	$	104,672	$	208,617	$	(36,046)	$	(1,641)	$	275,660

Stock based compensation	1,031,500		1		11,283		—		—		—		11,284
Sale of Freedom UA shares	—		—		(796)		—		—		1,212		416
Exercise of options	60,000		—		119		—		—		—		119
Translation difference	—		—		—		—		(3,106)		—		(3,106)
Net income (loss)	—		—		—		307,532		—		(415)		307,117

Balance At December 31, 2021	$	59,534,712	$	59	$	115,278	$	516,149	$	(39,152)	$	(844)	$	591,490

Common Stock Additional
paid
in capital Retained
earnings Accumulated
other
comprehensive
(loss)/income Total equity attributable to the shareholders'
Non-
controlling
interest
Total
Shares Amount
Balance As At September 30, 2022 59,542,212 $ 59 $ 155,635 $ 529,251 $ (55,575) $ 629,370 $ (8,039) $ 621,331
Stock based compensation — — 3,945 — — 3,945 — 3,945
Other comprehensive income — — — — 266 266 — 266
Translation difference — — — (5,611) (5,611) (5,611)
Net income/(loss) — — — 62,864 — 62,864 (464) 62,400
Balance As At December 31, 2022 59,542,212 $ 59 $ 159,580 $ 592,115 $ (60,920) $ 690,834 $ (8,503) $ — $ 682,331
Balance As At March 31, 2022 59,542,212 $ 59 $ 174,745 $ 441,924 $ (63,125) $ 553,603 $ (6,995) $ 546,608
Stock based compensation — — 10,746 — — 10,746 — 10,746
Contribution of shareholder — — 677 — — 677 — 677
Acquisition of insurance companies — — (26,588) — (26,588) — (26,588)
Other comprehensive income — — — — 2,506 2,506 — 2,506
Translation difference — — — — (301) (301) — (301)
Net income/(loss) — — — 150,191 — 150,191 (1,508) 148,683
Balance As At December 31, 2022 59,542,212 $ 59 $ 159,580 $ 592,115 $ (60,920) $ 690,834 $ (8,503) $ 682,331

Table of Contents


FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (Unaudited) (All amounts in thousand of United States dollars, except share data, unless otherwise stated)


	Common Stock				Additional paid in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest		Total
	Shares		Amount

Balance At September 30, 2020	58,358,212		$	58	$	103,945	$	113,878	$	(40,189)	$	(1,976)	$	175,716

Stock based compensation	15,000		—		35		—		—		—		35
Share based payment	10,000		—		517		—		—		—		517
Exercise of options	60,000		—		118		—		—		—		118
Translation difference	—		—		—		—		6,851		—		6,851
Net income /(loss)	—		—		—		42,374		—		(53)		42,321

Balance At December 31, 2020	58,443,212		$	58	$	104,615	$	156,252	$	(33,338)	$	(2,029)	$	225,558

Balance At March 31, 2020	58,358,212		$	58	$	102,890	$	66,335	$	(37,974)	$	(2,272)	$	129,037

Stock based compensation	15,000		—		1,090		—		—		—		1,090
Share based payment	10,000		—		517		—		—		—		517
Exercise of options	60,000		—		118		—		—		—		118
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect	—		—		—		—		71		—		71
Translation difference	—		—		—		—		4,565		—		4,565
Net income	—		—		—		89,917		—		243		90,160

Balance At December 31, 2020	$	58,443,212	$	58	$	104,615	$	156,252	$	(33,338)	$	(2,029)	$	225,558

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

~~Table of contents~~


~~FREEDOM HOLDING CORP.~~ ~~CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

Common Stock Additional
paid
in capital Retained
earnings Accumulated
other
comprehensive
loss Total equity attributable to the shareholders'
Non-
controlling
interest
Total
Shares Amount
Balance As At September 30, 2021 (Recasted) 59,534,712 $ 59 $ 143,268 $ 476,610 $ (36,304) $ 583,633 $ (501) $ 583,132
Stock based compensation — — 4,561 — — 4,561 — 4,561
Other comprehensive loss — — — — (109) (109) — (109)
Translation difference — — — — (8,650) (8,650) — (8,650)
Net income/(loss) — — — 54,416 — 54,416 (343) 54,073
Balance As At December 31, 2021 59,534,712 $ 59 $ 147,829 $ 531,026 $ (45,063) $ 633,851 $ (844) $ 633,007
Balance As At March 2021 (Recasted) 58,443,212 $ 58 $ 135,260 $ 214,427 $ (40,433) $ 309,312 $ (1,641) $ 307,671
Stock based compensation 1,031,500 1 11,280 — — 11,281 — 11,281
Sale of Freedom Ukraine shares — — (796) — — (796) 1,212 416
Contribution of shareholder — — 1,966 — — 1,966 — 1,966
Exercise of options 60,000 — 119 — — 119 — 119
Other comprehensive loss — — — — (183) (183) — (183)
Translation difference — — — — (4,447) (4,447) — (4,447)
Net income/(loss) — — — 316,599 — 316,599 (415) 316,184
Balance As At December 31, 2021 59,534,712 $ 59 $ 147,829 $ 531,026 $ (45,063) $ 633,851 $ (844) $ 633,007

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

Table of Contents


FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 1 – DESCRIPTION OF BUSINESS

Overview

Freedom Holding Corp. (the ~~"Company"~~“Company” or ~~"FRHC"~~“FRHC”) is a corporation organized in the United States under the laws of the State of Nevada that through its operating subsidiaries provides financial services including retail securities brokerage, investment research, investment ~~counseling,~~advisory services, securities trading, market making, ~~retail banking, corporate~~ investment banking and underwriting services ~~commercial~~and complementary banking ~~and insurance products.~~services in Eurasia. The Company is headquartered in Almaty, Kazakhstan, with supporting administrative office locations in Russia, Cyprus and the United ~~States and Russia (with the Russian business classified as discontinued operations pending sale).~~States. The Company has retail locations in Russia, Kazakhstan, ~~Russia (with the Russian business classified as discontinued operations pending sale),~~Cyprus, Ukraine, Uzbekistan, Kyrgyzstan, Azerbaijan, Armenia ~~Cyprus, the United Kingdom, Greece, Spain, France, Germany, the United Arab Emirates~~ and ~~Turkey.~~Germany. The Company also ~~has a subsidiary in~~owns an institutional broker dealer registered with the ~~United States which is a~~ U.S. Securities and Exchange Commission ~~("SEC"~~(“SEC”) ~~registered broker dealer.~~. The ~~Company's~~Company’s common stock trades on the Nasdaq Capital ~~Market, KASE, AIX and SPBX.~~Market.

~~As of December 31, 2022, the~~The Company ~~owned~~owns directly, or through subsidiaries, the following companies:

•LLC Investment Company Freedom Finance, a Moscow, Russia-based securities broker-dealer (“Freedom RU”);

•LLC FFIN Bank, a Moscow, Russia-based bank (“Freedom Bank RU”);

•JSC Freedom Finance, ~~JSC,~~ an Almaty, Kazakhstan-based securities broker-dealer ("(“Freedom ~~KZ"~~KZ”);

•Freedom Finance Global PLC, an Astana International Financial Centre-based securities broker-dealer, ("(“Freedom ~~Global"~~Global”);

•Bank Freedom Finance Kazakhstan JSC, an Almaty, Kazakhstan-based bank ("(“Freedom Bank ~~KZ");~~

•~~Freedom Finance Life JSC, an Almaty, Kazakhstan-based life/health insurance company ("Freedom Life");~~

•~~Freedom Finance Insurance JSC, an Almaty, Kazakhstan-based general insurance company ("Freedom Insurance"~~KZ”);

•Freedom Finance Special Purpose Company LTD, an Astana International Financial Centre-based special purpose company ("(“Freedom ~~SPC"~~SPC”);

•Freedom Finance Commercial LLP, a Kazakhstan-based sales consulting company ("(“Freedom ~~Commercial"~~Commercial”);

•Freedom Finance Europe Limited, a Limassol, Cyprus-based broker-dealer ("(“Freedom ~~EU"~~EU”);

•Freedom Finance Technologies Ltd, a Limassol, Cyprus-based IT development company ("(“Freedom ~~Technologies"~~Technologies”);

•Freedom Finance Germany GmbH, a Berlin, Germany-based tied agent of Freedom EU ("(“Freedom ~~GE"~~GE”);

•~~Freedom~~ UK Prime Limited, a London, United Kingdom-based financial intermediary company ("(“Prime ~~UK"~~UK”);

•LLC Freedom Finance Uzbekistan, ~~LLC,~~ a Tashkent, Uzbekistan-based broker-dealer ("(“Freedom ~~UZ"~~UZ”);

•LLC Freedom Finance Azerbaijan, ~~LLC,~~ an Azerbaijan-based financial educational center ("(“Freedom ~~AZ"~~AZ”);

•LLC Freedom Finance Armenia, ~~LLC,~~ an Armenia-based broker-dealer ("(“Freedom ~~AR"~~AR”);

•Prime Executions, Inc., a New York City, New York-based NYSE institutional brokerage, that ~~is also authorized~~recently received approval to engage in certain capital markets and investment banking activities ~~("PrimeEx"~~(“PrimeEx”); and

•FFIN Securities, Inc., a currently-dormant Nevada corporation ~~("FFIN"~~(“FFIN”);

•~~Freedom Finance Ltd., a Dubai, United Arab Emirates-based financial intermediary company ("Freedom UAE");~~

•~~ITS Tech Limited, an Astana International Financial Centre-based, IT-support company ("ITS Tech");~~

•~~Freedom Kazakhstan PC Ltd. ("Freedom Kazakhstan PC Ltd.")~~

•~~Ticketon Events LLP, an Almaty, Kazakhstan-based online ticket sales company ("Ticketon");~~

•~~Freedom Finance Turkey LLC, an Istanbul, Turkiye-based financial consulting company ("Freedom TR");~~

•~~Investment Company Freedom Finance LLC, a Moscow, Russia-based securities broker-dealer ("Freedom RU");~~

•~~FFIN Bank LLC, a Moscow, Russia-based bank ("Freedom Bank RU"); and~~

•~~Freedom Finance Auto LLC, a Russia-based car loans company ("Freedom Auto").~~

~~The~~As of December 31, 2021, the Company also ~~owns~~owned a 9% interest in LLC Freedom Finance Ukraine, ~~LLC,~~ a Kiev, Ukraine-based broker-dealer ("(“Freedom ~~UA"~~UA”). The remaining 91% interest in Freedom UA is ~~controlled~~owned by Askar Tashtitov, the ~~Company's~~Company’s president. ~~The~~However, as a result of a series of contractual relationships between FRHC and Freedom UA, we account for Freedom UA as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Freedom UA are consolidated into the financial statements of the Company.

Prior to July 2021 we owned approximately 32.9% of Freedom UA, but due to recent changes to Ukrainian regulations to further restrict foreign ownership of registered Ukrainian broker-dealers, in July 2021 we were required to sell approximately 23.9% of our equity interest in Freedom UA to Mr. Tashtitov, reducing our direct ownership interest in Freedom UA to approximately 9%. In April 2019 the Company ~~has~~ entered into a series of contractual arrangements with Freedom UA and Mr. Tashtitov ~~including a consulting services agreement, an operating agreement and an option agreement.~~

~~Because such agreements~~that obligate the Company to guarantee the performance of all Freedom UA obligations and provide Freedom UA sufficient funding to cover all ~~Freedom UA~~ operating losses and net capital requirements, enable the Company to receive 90% of the net profits of Freedom UA after tax, and require the Company to provide Freedom UA the

Table of Contents


FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

management competence, operational support, and ongoing access to the ~~Company's~~Company’s significant assets, necessary technology resources and expertise to conduct the business of Freedom ~~UA,~~UA.

On October 17, 2022, the ~~Company determined that Freedom UA is a variable interest entity ("VIE"). Accordingly, the Company consolidated Freedom UA into the financial statements of the Company.~~

Prior to July 2021, the Company controlled approximately 32.9% of Freedom UA, but due to changes to Ukrainian regulations to restrict foreign ownership of registered Ukrainian broker-dealers, in July 2021, the Company was required to sell approximately 23.9% of its equity interest in Freedom UA to Mr. Tashtitov, reducing the Company's direct ownership interest in Freedom UA to approximately 9%.

~~The~~ Company has entered into an agreement to sell its Russian subsidiaries, Freedom RU and Freedom Bank RU. For financial information regarding the Company's Russian subsidiaries see Note 2522 - Assets and Liabilities held for sale and Divestiture of our Russian Subsidiaries in the Overview section of Management's Discussion and Analysis of Financial Condition and Results of Operations in this quarterly report on Form ~~10-Q. The sale of~~10-Q/A. In addition, the ~~Company's Russian subsidiaries was approved by the Central Bank of the Russian Federation on February 10, 2023, and the sale is expected~~Company intends to ~~be completed before the end of February 2023.~~

~~In July 2022, Freedom RU established a Russian subsidiary Freedom Finance Auto LLC. In January 2023, Freedom RU concluded an agreement with Maxim Povalishin to~~ sell its Freedom Finance Auto LLC ~~for RUB 50 million (approximately $695 based on~~subsidiary, which is not material in the ~~applicable currency exchange rate on the reporting date). On February 7, 2023, the~~context of its operations. The sale of Freedom Finance Auto LLC ~~was completed.~~

~~Through its subsidiaries,~~by the Company is a condition precedent in the agreement to sell Freedom RU and Freedom Bank RU.

The Company’s subsidiaries are professional ~~participant, with a license to provide one or more types of services,~~participants on ~~a number of stock exchanges, including~~ the Kazakhstan Stock Exchange (KASE), ~~the~~ Astana ~~International~~ Stock Exchange (AIX), ~~the~~ Moscow Exchange (MOEX), ~~the~~ Saint-Petersburg Exchange (SPBX), the Ukrainian Exchange (UX), the Republican Stock Exchange of Tashkent (UZSE) ~~and~~, the Uzbek Republican Currency Exchange (UZCE) and is a member of the New York Stock Exchange (NYSE) and ~~the~~ Nasdaq Stock Exchange (Nasdaq). ~~The Company~~We also ~~owns~~own a 24.3% interest in the UX. ~~Freedom EU provides the Company's clients with operational support and access to investment opportunities in the U.S. and European securities markets.~~

On October 19, 2022, Freedom UA's brokerage license was suspended for a period of five years and its assets were frozen by the Ukrainian authorities following its inclusion on a sanctions list of the Ukrainian government. As of December 31, 2022, Freedom UA's total assets and total liabilities of $7,835 and $7,284, respectively, were reclassified to restricted assets and liabilities as part of other assets and other liabilities, respectively. The Company believes that the decision to include Freedom UA on such list was erroneous and it is in the process of appealing such decision.

Unless otherwise specifically indicated or as is otherwise contextually ~~indicated,~~required, FRHC, Freedom RU, Freedom Bank RU, Freedom KZ, Freedom Global, Freedom Bank KZ, Freedom SPC, Freedom Commercial, Freedom EU, Freedom Technologies, Freedom GE, Prime UK, Freedom UZ, Freedom AZ, Freedom AR, PrimeEx and FFIN are collectively referred to herein as the “Company” ~~refers to FRHC, together with its consolidated subsidiaries.~~.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting principles

The ~~Company's~~Company’s accounting policies and accompanying condensed consolidated financial statements conform to accounting principles generally accepted in the United States of America (U.S. GAAP).

These financial statements have been prepared on the accrual basis of accounting.

Basis of presentation and principles of consolidation

The ~~condensed~~Company’s consolidated financial statements present the ~~condensed~~ consolidated accounts of FRHC, Freedom RU, Freedom Bank RU, Freedom KZ, Freedom Global, Freedom Bank KZ, Freedom SPC, Freedom Commercial, Freedom EU, Freedom Technologies, Freedom GE, Prime UK, Freedom UZ, Freedom AZ, Freedom AR, PrimeEx, and ~~its consolidated subsidiaries. In~~FFIN. All significant inter-company balances and transactions have been eliminated from the ~~opinion of management, all normal, recurring adjustments necessary for fair presentation of the condensed~~ consolidated financial ~~statements have been included.~~statements.

Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities ~~("VIEs"~~(“VIEs”), the primary beneficiary is required to consolidate the VIE for financial reporting purposes. VIEs are generally entities that lack sufficient equity to finance their activities without additional ~~subordinated~~ financial support from other

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

parties or whose equity holders ~~at risk~~ lack adequate ~~decision making~~decision-making ability. VIEs must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. As of and for the three and nine months ended December 31, 2022, the only VIE of the Company was Freedom UA.

~~The carrying amounts of the VIE’s consolidated assets and liabilities are as follows:~~

December 31, 2022 March 31, 2022
Cash and cash equivalents 1 134
Restricted cash 1,942 2,843
Trading securities 3,477 2,942
Margin lending, brokerage and other receivables, net 967 435
Fixed assets, net 800 1,043
Intangible assets, net 140 205
Right-of-use asset 424 905
Other assets 84 127
Total assets 7,835 8,634
Customer liabilities 6,441 8,439
Securities repurchase agreement obligations 12 3,267
Trade payables 81 35
Lease liability 454 914
Other liabilities 296 434
Total liabilities 7,284 13,089

Use of estimates

The preparation of financial statements in conformity with U.S. 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 ~~the Company's~~its financial statements are reasonable and prudent. Actual results could differ from those estimates.

Table of Contents


FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Revenue ~~and expense~~ recognition

Accounting Standards Codification ~~("ASC"~~(“ASC”) Topic 606, Revenue from Contracts with Customers ("(“ASC Topic ~~606"~~606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the ~~entity's~~entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services promised to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. A significant portion of the ~~Company's~~Company’s revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as loans and investment securities, as these activities are subject to other U.S. GAAP guidance discussed elsewhere within these disclosures. Descriptions of the ~~Company's~~Company’s revenue-generating activities that are within the scope of ASC Topic 606, which are presented in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income as components of ~~total revenue, net~~non-interest income are as follows:

•Commissions on brokerage services;

•Commissions on banking services (money transfers, foreign exchange operations and other); and

•Commissions on investment banking services (underwriting, market making, and bondholders’ representation services).

Under Topic 606, the Company is required to recognize commission fees when they are probable and there is not a significant chance of reversal in the future. The Company recognizes revenue in accordance with this core principle by applying the following steps:

•Step 1: Identify the contract(s) with a customer - A contract is an agreement between two or more parties that creates enforceable rights and obligations.

•Step 2: Identify the performance obligations in the contract - A contract includes promises to transfer goods or services to a customer. If those goods or services are distinct, the promises are performance obligations and are accounted for separately.

•Step 3: Determine the transaction price - The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price can be a fixed amount of customer consideration, but it may sometimes include variable consideration or consideration in a form other than cash. The transaction price also is adjusted for the effects of the time value of money if the contract includes a significant financing component and for any consideration payable to the customer. If the consideration is variable, an entity estimates the amount of consideration to which it will be entitled in exchange for the promised goods or services. The estimated amount of variable consideration will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

•Step 4: Allocate the transaction price to the performance obligations in the contract - An entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. If a standalone selling price is not observable, an entity estimates it. Sometimes, the transaction price includes a discount or a variable amount of consideration that relates entirely to a part of the contract.

•Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation - An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). For performance obligations satisfied over time, an entity recognizes revenue over time by selecting an appropriate method for measuring the entity’s progress toward complete satisfaction of that performance obligation.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

•~~Commissions on investment banking services (underwriting, market making, and bondholders' representation services).~~

~~Gross Versus Net Revenue~~

ASC 606 provides guidance on proper recognition of principal versus agent considerations which is used to determine gross versus net revenue recognition. Under ASC 606, the core objective of the guidance on gross versus net revenue recognition is to help determine whether the Company is a principal or an agent in a transaction. In general, the primary difference between these two is the performance obligation being satisfied. The principal has a performance obligation to provide the desired goods or services to the end customer, whereas the agent arranges for the principal to provide the desired goods or services. Additionally, a fundamental characteristic of a principal in a transaction is control. A principal substantively controls the goods and services before they are transferred to the customer as well as controls the price of the good or service being provided. An agent normally receives a commission or fee for these activities. In addition to control, the level at which the Com controls the price of the good or service being transferred determines principal versus agent status. The more discretion over setting price a company has in providing the good or service, the more likely they are considered a principal rather than an agent.

In certain cases, other parties are involved with providing products and services to our customers. If the Company is principal in the transaction (providing goods or services itself), revenues are reported based on the gross consideration received from the customer and any related expenses are reported gross in noninterest expense. If the ~~Company is an agent~~ ~~in the transaction (arranging for another party to provide goods or services), the Company reports its net fee or commission retained as revenue.~~

Interest income

Interest income on margin loans, loans issued, trading securities, available-for-sale securities and reverse repurchase agreement obligations is recognized based on the contractual provisions of the underlying arrangements.

Loan premiums and discounts are deferred and generally amortized into interest income as yield adjustments over the contractual life and/or commitment period using the effective interest method.

Unamortized premiums, discounts and other basis adjustments on trading securities are generally recognized in interest income over the contractual lives of the securities using the effective interest method.

Derivative financial instruments

In the normal course of business, the Company invests in various derivative financial contracts including futures. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The fair values are estimated based on quoted market prices or pricing models that take into account the current market and contractual prices of the underlying instruments and other factors. Derivatives are carried as assets when their fair value is positive and as liabilities when it is negative.

Loans

The ~~Company's~~Company’s loan portfolio is divided ~~into:~~into three portfolio segments: credit cards, mortgages ~~uncollateralized bank customer~~and retail banking loans. Credit cards consist of loans ~~collateralized bank customer loans, car loans~~provided to individuals and ~~subordinated loans.~~businesses through the cards. Mortgage loans consist of loans provided to individuals to purchase real estate, which is used as collateral for the loan. ~~Uncollateralized bank customer~~Retail banking loans consist of ~~loans provided through credit cards to individuals and retail~~ unsecured ~~banking~~ loans provided to individuals. Collateralized bank customer loans consist of retail collateralized loans provided to individuals. Subordinated loans consist of uncollateralized loans provided to the legal entities to support their businesses, that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Margin loans are not classified as part of the Company's loan portfolio and are instead recorded on the Condensed Consolidated Balance Sheets under Margin lending, brokerage and other receivables, net.

Loans Acquired

All purchased loans are initially recorded at fair value, which includes consideration of expected future losses, at the date of the loan acquisition. To determine the fair value of loans at the date of acquisition, the Company estimates the discounted contractual cash flows due using an observable market rate of interest, adjusted for factors such as probable default rates of the borrowers, and the loan terms that a market participant would consider in determining fair value. In determining fair value, contractual cash flows are adjusted to include prepayment estimates based upon historical payment trends, forecasted default rates and loss severities and other relevant factors. The difference between the fair value and the contractual cash flows is recorded as a loan premium or discount, which may relate to either credit or non-credit factors, at acquisition.

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

The Company accounts for purchased loans under the accounting guidance for purchased financial assets with credit deterioration when, at the time of purchase, the loans have experienced a more-than-insignificant deterioration in credit quality since origination.

The Company recognizes an allowance for credit losses on purchased loans that have not experienced a more-than-insignificant deterioration in credit quality since origination at the time of purchase through earnings in a manner that is consistent with originated loans. The policies relating to the allowance for credit losses on loans is described below in the ~~"Estimate~~“Estimate of Incurred Loan ~~Losses"~~Losses” section of this Note.

Estimate of Incurred Loan ~~Losses~~

Losses.

The allowance represents ~~management's~~management’s current estimate of incurred loan losses inherent in the ~~Company's~~Company’s loan portfolio as of each balance sheet date. The provision for credit losses reflects credit losses the Company believes have been incurred and will eventually be recognized over time through charge-offs.

Management performed a quarterly analysis of the ~~Company's~~Company’s loan portfolio to determine if impairment had occurred and to assess the adequacy of the allowance based on historical and current trends as well as other factors affecting credit losses. The Company applied separate calculations of the allowances for its credit cards, mortgages and retail loan portfolios. Based on the adopted methodology, the Company estimated the probability of default based on historical default rates, adjusted for certain macro indicators, such as GDP, average exchange rates, unemployment rate and real wage ~~index, inflation rate and retail trade~~ index.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Loss given default is calculated based on the collateral coverage of the loans. The ~~Company's~~Company’s allowance for loan losses consists of two components that are allocated to cover the estimated probable losses in each loan portfolio based on the results of the ~~Company's~~Company’s detailed review and loan impairment assessment ~~process~~process: (i) a component for loans collectively evaluated for ~~impairment.~~impairment; and (ii) an asset-specific component for individually impaired loans.

~~Derivative financial instruments~~

InThe component of the ~~normal course of business,~~allowance related to credit card, mortgages and retail banking loans that the Company ~~invests in various derivative financial contracts including futures. Derivatives are initially recognized at fair value at the date a derivative contract~~collectively evaluated for impairment is ~~entered into and are subsequently re-measured to their fair value at each reporting date. The fair values are estimated~~ based on ~~quoted market prices or pricing models that take into account~~a statistical calculation and on its historical loss experience for loans with similar risk characteristics and consideration of the current ~~market and contractual prices~~credit quality of the ~~underlying instruments~~portfolio. The asset-specific component of the allowance includes smaller-balance homogeneous credit card and ~~other factors. Derivatives are carried as assets when their fair~~retail banking loans whose terms have been modified in a troubled debt restructuring and larger-balance nonperforming, non-homogeneous commercial banking loans. The Company generally measures the asset-specific component of the allowance based on the difference between the recorded investment of individually impaired loans and the present value ~~is positive and as liabilities when it is negative.~~of expected future cash flows. In addition to the allowance, the Company also estimates probable losses related to contractually binding unfunded lending commitments.

Functional currency

Management has adopted ASC 830, Foreign Currency Translation Matters as it pertains to its foreign currency translation. The ~~Company's~~Company’s functional currencies are the ~~Kazakhstan tenge, the~~ Russian ruble, ~~the~~European euro, ~~the~~ U.S. dollar, ~~the~~ Ukrainian hryvnia, ~~the~~ Uzbekistani som, ~~the~~Kazakhstani tenge, Kyrgyzstani som, ~~the~~UK pound sterling, Azerbaijani manat ~~the British pound sterling,~~and the Armenian dram, ~~the United Arab Emirates dirham and the Turkish lira,~~ and its reporting currency is the U.S. dollar. For financial reporting purposes, foreign currencies are translated into U.S. dollars as the reporting currency. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average ~~quarterly~~monthly rates are used to translate revenues and expenses. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of ~~shareholders'~~stockholders’ equity as ~~"Accumulated~~“Accumulated other comprehensive ~~loss"~~loss”. ~~The Company uses exchange rates from the National Bank of the Republic of Kazakhstan for foreign currency translation purposes.~~

Cash and cash equivalents

Cash and cash equivalents are generally comprised of certain highly liquid investments with ~~original~~ maturities of three months or less at the date of purchase. Cash and cash equivalents include ~~those~~ reverse repurchase agreements ~~where maturity is less than 90 days, and the credit risk of the counterparty is low,~~ which are recorded at the amounts at which the securities were acquired or sold plus accrued interest.

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

Securities reverse repurchase and repurchase agreements

A reverse repurchase agreement is a transaction in which the Company purchases financial instruments from a seller, typically in exchange for cash, and simultaneously enters into an agreement to resell the same or substantially the same financial instruments to the seller for an amount equal to the cash or other consideration exchanged plus interest at a future date. Securities purchased under reverse repurchase agreements are accounted for as collateralized financing transactions and are recorded at the contractual amount for which the securities will be resold, including accrued interest. Financial instruments purchased under reverse repurchase agreements are recorded in the financial statements as cash placed on deposit collateralized by securities and classified as cash and cash equivalents in the Condensed Consolidated Balance Sheets.

A repurchase agreement is a transaction in which the Company sells financial instruments to another party, typically in exchange for cash, and simultaneously enters into an agreement to reacquire the same or substantially the same financial instruments from the buyer for an amount equal to the cash or other consideration exchanged plus interest at a future date. These agreements are accounted for as collateralized financing transactions. The Company retains the financial instruments sold under repurchase agreements and classifies them as trading securities in the Condensed Consolidated Balance Sheets. The ~~cash~~ consideration received under repurchase agreements is classified as securities repurchase agreement obligations in the Condensed Consolidated Balance Sheets.

The Company enters into reverse repurchase, ~~agreements,~~ repurchase, ~~agreements,~~ securities borrowed and securities loaned transactions to, among other things, acquire securities to leverage and grow its proprietary trading portfolio, cover short positions and settle other securities obligations, to accommodate ~~customers'~~customers’ needs and to finance its inventory positions. The Company enters into these transactions in accordance with normal market practice. Under standard terms for repurchase transactions, the

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

recipient of collateral has the right to sell or repledge the collateral, subject to returning equivalent securities on settlement of the transaction.

Available-for-sale securities

Financial assets categorized as available-for-sale ~~("AFS"~~(“AFS”) are non-derivatives that are either designated as available-for-sale or not classified as (a) loans and receivables, (b) ~~held to maturity investments~~held-to-maturity securities or (c) trading securities.

Listed shares and listed redeemable notes held by the Company that are traded in an active market are classified as AFS and are stated at fair value. The Company has investments in unlisted shares that are not traded in an active market that are also classified as investments AFS and stated at fair value (because Company management considers that fair value can be reliably measured). Gains and losses arising from changes in fair value are recognized in other comprehensive income and ~~accumulated~~are included in ~~the Accumulated~~accumulated other comprehensive loss, with the exception of other-than-temporary impairment losses, interest calculated using the effective interest method, dividend income and foreign exchange gains and losses, which are recognized in the Condensed Consolidated Statements of Operations and Statements of ~~Other~~other Comprehensive Income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the ~~accumulated other comprehensive (loss)/income~~investments’ revaluation reserve is then reclassified to ~~net realized gain/(loss) on investments available-for-sale in the~~ Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income.

Trading securities

Financial assets are classified as trading securities if the financial asset has been acquired principally for the purpose of selling it in the near term.

Trading securities are stated at fair value, with any gains or losses arising on remeasurement recognized in revenue. Changes in fair value are recognized in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income and included in net gain on trading securities. Interest earned and dividend income are recognized in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income and are included in interest income, according to the terms of the contract and when the right to receive the payment has been established.

Investments in nonconsolidated managed funds are accounted for at fair value based on the net asset value (“NAV”) of the funds provided by the fund managers with gains or losses included in net gain on trading securities in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income.

Debt securities issued

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs. Subsequently, amounts due are stated at amortized cost and any difference between net proceeds and the redemption value is recognized over the period of the borrowings using the effective interest method. If the Company purchases its own debt, it is removed from the Condensed Consolidated Balance Sheets and the difference between the carrying amount of the liability and the consideration paid is recognized in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income.

~~Margin lending, brokerage~~Brokerage and other receivables

~~The Company engages in securities financing transactions with and for clients through margin lending.~~ ~~In margin lending, the Company's customers borrow funds from the Company against the value of their qualifying securities, primarily for the purpose of purchasing additional securities.~~ Under these agreements, the Company is permitted to sell or repledge securities received as collateral. Furthermore, the Company can use the collateral for repurchase agreement operations, securities lending transactions or delivery to counterparties to cover short positions.

~~Margin lending, brokerage~~Brokerage and other receivables ~~comprise margin lending receivables, brokerage~~are comprised of commissions and ~~other~~ receivables related to the securities brokerage and banking activity of the Company. At initial recognition, ~~margin lending,~~ brokerage and other receivables are recognized at fair value. Subsequently, ~~margin lending,~~ brokerage and other receivables are carried at cost net of any allowance for impairment losses.

Margin lending

The Company engages in securities financing transactions with and for clients through margin lending. Under agreements, the Company is permitted to sell or repledge securities received as collateral and use these securities to secure securities acquired under resale agreements, enter into securities lending transactions or deliver these securities to counterparties to cover short positions.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Margin lending tends to have lower credit risk due to the value of the collateral held and also its short-term nature. Margin lending balances tend to fluctuate from period to period as total customer balances change because of changing market levels, customer positioning and leverage.

Client margin requirements and established credit limits are continuously monitored by risk management of the Company. It is Company policy that clients must post additional collateral or reduce positions when necessary to avoid automatic liquidation of their positions.

Derecognition of financial assets

A financial asset (or, where applicable a part of a financial asset or a part of a group of similar financial assets) is derecognized ~~where~~when all of the following conditions are met:

•The transferred financial assets have been isolated from the Company - put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership.

•The transferee has rights to pledge or exchange financial assets.

•The Company or its agents do not maintain effective control over the transferred financial assets or third-party beneficial interests related to those transferred ~~assets.~~assets

Where the Company has not met the asset derecognition conditions above, it continues to recognize the asset to the extent of its continuing involvement.

Impairment of long-lived assets

In accordance with the accounting guidance for the impairment or disposal of long-lived assets, the Company periodically evaluates the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the fair value from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows, discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. During the fiscal year ended March 31, 2022, the Company write-off the client base that was recognized with the Company's acquisition of Zerich in the amount of $3,125 due to economic uncertainty during the Company's fourth fiscal quarter stemming from the Russia/Ukraine Conflict. During the nine months ended December 31, 2022, there were no write-offs.

Impairment of goodwill

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, goodwill recorded in the Company’s ~~Condensed~~ Consolidated Balance Sheets totaled ~~$9,460~~$7,840 and ~~$5,898,~~$7,868, respectively. The Company performs an impairment review at least annually unless indicators of impairment exist in interim periods. The ~~entity~~impairment test for goodwill uses a two-step approach. Step one compares the estimated fair value of a reporting unit with goodwill to its carrying ~~amount. The goodwill impairment charge recognized for the amount by which the reporting unit’s carrying amount exceeds its fair~~ value. If ~~fair~~the carrying value exceeds the estimated fair value, step two must be performed. Step two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit as if the reporting unit was acquired in a business combination. If the carrying amount noof a reporting unit’s goodwill exceeds the implied fair value of its goodwill, an impairment loss is ~~recorded.~~recognized in an amount equal to the excess. In its annual goodwill impairment test, the Company estimated the fair value of the reporting unit based on the income approach (also known as the discounted cash flow method) and determined the fair value of the Company’s goodwill exceeded the carrying amount of the Company’s goodwill. The goodwill value as of December 31, 2021, decreased compared to March 31, 2021, due to foreign exchange currency translation.

The changes in the carrying amount of goodwill as of March 31, 2021, and for the quarter December 31, 2021, were as follows:


Balance as of March 31, 2021	$	7,137

Foreign currency translation	703

Balance as of December 31, 2021	$	7,840

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

cash flow method) and determined the fair value of the Company’s goodwill previously recognized for Freedom Bank RU, Freedom UA and Zerich is below of the carrying amount of the Company’s goodwill. The Company recognized impairment loss for the goodwill in the amount of $2,300 as of March 31, 2022, and presented goodwill, net of impairment loss in the Company's Condensed Consolidated Balance Sheets. During the nine months ended December 31, 2022, the Company did not recognize additional impairment loss for the goodwill.

The carrying amount of goodwill on the Company's Condensed Consolidated Balance Sheet as of December 31, 2022, increased compared to March 31, 2022, due to the Company's acquisition of London Almaty and Ticketon.

~~The changes in the carrying amount of goodwill as of March 31, 2022, and as of December 31, 2022, were as follows:~~


	~~Amount~~
~~Balance as of March 31, 2022 (Recasted)~~	$	~~5,898~~

~~Acquisition of London Almaty~~	~~485~~
~~Acquisition of Ticketon~~	~~3,172~~
~~Foreign currency translation~~	~~(95)~~

~~Balance as of December 31, 2022~~	$	~~9,460~~

Asset and Liabilities Held for Sale

The Company classifies assets and liabilities (the "disposal group") as held for sale in the period when all of the relevant criteria to be classified as held for sale are met. Criteria include management commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets held for sale are reported at the lower of their carrying value or fair value less cost to sell. Any loss resulting from the measurement is recognized in the period the held for sale criteria are met. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group. Assets held for sale are not amortized or depreciated. During the three months ended December 31, 2022, the Company accrued provision for impairment of discontinued operations by an amount of $2,509. As a result, the provision for impairment of discontinued operations, within the line item Net income from discontinued operation on the Condensed Consolidated Statements of Operations, amounted to $43,973 as of December 31, 2022.

A disposal group that represents a strategic shift to the Company or is acquired with the intention to sell is reflected as a discontinued operation on the Condensed Consolidated Statements of Operation and Statement of Other Comprehensive Income and prior periods are recast to reflect the earnings or losses as income from discontinued operations. The Condensed Consolidated Financial Statements and related Notes reflect the securities brokerage and complementary banking operations in Russia as discontinued operations as the Company has entered into an agreement to divest these operations. The sale of these operations was approved by the Central Bank of the Russian Federation on February 10, 2023, and the sale ~~is expected to be~~was completed ~~before the end of~~on February 28, 2023.

~~See~~ ~~Note 25 Assets~~For the purpose of preparing current amended condensed consolidated financial statements, the Company has reclassified Russian business's assets and ~~Liabilities~~liabilities as held for ~~sale, for more~~sale. Additional information ~~on assets held for sale and discontinued operations.~~is presented in Note 3 "Recast".

Income taxes

The Company recognizes deferred tax liabilities and assets based on the difference between the financial statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

Current income tax expenses are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The Company accounts for income taxes using the asset and liability approach. Under this method,

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

deferred income taxes are recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to affect taxable income.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

~~The Company~~ will include interest and penalties arising from the underpayment of income taxes in the provision for income taxes (if anticipated). As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had no accrued interest or penalties related to uncertain tax positions.

The Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax ~~Cuts and Jobs~~Reform Act require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company has presented the deferred tax impacts of GILTI tax in its ~~Condensed Consolidated Balance Sheets~~consolidated financial statements as of December 31, ~~2022,~~2021 and ~~March 31, 2022, and in its Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2022, and 2021.~~2020.

Financial instruments

Financial instruments are carried at fair value as described below.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. Fair value is the current bid price for financial assets, current ask price for financial liabilities and the average of current bid and ask prices when the Company is both in short and long positions for the financial instrument. A financial instrument is regarded as quoted in an active

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

market if quoted prices are readily and regularly available from an exchange or other institution and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

Leases

The Company ~~follows~~adopted ASU No. 2016-02, “Leases (Topic 842)”, which requires leases with durations greater than twelve months to be recognized on the balance sheet.

~~Operating lease~~Right-of-use assets and corresponding lease liabilities ~~were~~are recognized on the ~~Company's Condensed~~Company’s Consolidated Balance Sheets. Refer to Note 23 19 - Leases,, within the notes to ~~the~~ condensed consolidated financial statements for additional disclosure and significant accounting policies affecting leases.

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 ~~sixty-five~~seven years.

~~Insurance contract assets and liabilities~~

~~Insurance and reinsurance receivable~~

Insurance and reinsurance receivable is recognized when related income is earned and measured on initial recognition at the fair value of the consideration receivable. Subsequent to initial recognition, any insurance and reinsurance receivable is measured at cost net of any allowance for impairment losses.

~~Insurance and reinsurance payable~~

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

Payables on insurance business comprise advances received, amounts payable to insured (claims and premium refund payable) and amounts payable to agents and brokers, and advances received from insurers and reinsurers.

Payables on reinsurance business comprise net amounts payable to reinsurers. Amounts payable to reinsurers include ceded reinsurance premiums, assumed premium refunds and claims on assumed reinsurance. Insurance and reinsurance payable are accounted for at amortized cost.

~~Unearned premium reserve and claims~~

Unearned premium is determined by the method of proportion for each contract, as the product of the insurance premium under the contract for the ratio of the expiration of the insurance cover (in days) to the balance sheet date (in days) from the date of recognition of the insurance premium in accounting as income until the end of the insurance coverage. The reinsurer's share in the unearned premium reserve is calculated separately for each insurance (reinsurance) contract and is determined as the ratio of the insurance premium under the reinsurance contract to the insurance premium under the insurance contract multiplied by the unearned premium reserve.

Results of insurance activity includes net written insurance premiums reduced by the net change in the unearned premium reserve, commissions recognized from assumed insurance and reinsurance contracts, claims paid net and net change in the loss reserves.

Net written insurance premiums represent gross written premiums less premiums ceded to reinsurers. Upon inception of a contract (except for classes of life and annuity insurance), premiums are recorded as written and are earned on a pro rata basis over the term of the related contract coverage. The unearned premium reserve represents the portion of the premiums written relating to the unexpired terms of coverage and is included in the accompanying statement of Condensed Consolidated Balance Sheets.

~~Unearned premium reserve relates to non-life insurance products and non-annuity insurance products.~~

~~Claims are expensed to~~ th~~e Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income as incurred.~~

~~Loss reserves~~

~~Non-life and general insurance~~

Loss reserves are a summary of estimates of ultimate losses, and include both claims reported but not settled (RBNS) and claims incurred but not reported (IBNR). RBNS is created for existing reported claims not settled at the reporting date. Estimates are made on the basis of information received by the Company during its investigation of insured events. IBNR is estimated by the Company based on its previous history of reported/settled claims using actuarial methods of calculation, which include claim development triangles.

~~Reinsurance assets in IBNR are estimated applying the same actuarial method used in IBNR estimation.~~

~~Life insurance~~

Not incurred claims reserves (NIC) on life insurance contracts equal the NIC amount for all life insurance contracts valid as at the reporting date. NIC reserve on a separate contract of life insurance is equal to the maximum value of the net level premium reserve and gross-premium reserve. Net level premium reserve is the present value of future benefits (excluding survival benefits) less present value of future net premiums. Gross-premium reserve is present value of benefits, expenses of the Company that are directly related to consideration, settlement, and determination of the benefit amount, operating expenses of the Company related to conducting of the business, less present value of future gross-premiums.

~~Annuity insurance~~

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

NIC reserve on annuity contracts is the sum of the present value of future benefits, the claims for annuity insurance and administrative expenses on annuity insurance contracts maintenance, less the present value of insurance contributions (in case of lump sum - insurance premium), which the Company is due to receive after the settlement date.

The reserves are either based on current assumptions or calculated using the assumptions established at the time the contract was issued, in which case a margin for risk and adverse deviation is generally included.

Segment information

Historically, the Company's chief operating decision maker ("CODM"), who is its chief executive officer, viewed the Company as a single operating segment offering financial services to its customers in a single geographic region covering Eurasia. ~~During the fourth quarter of the Company's fiscal year ended March 31, 2022, the~~The CODM recently, however, restructured the Company's operations into five geographical regions ("segments"). These regions include Central Asia, Europe, the U.S., Russia, and Middle East/~~Caucasus.~~Causcasus.

In order to determine appropriate segment disclosure as stated in ASC 280-10-55-26 the Company followed the steps outlined below:

•identified operating segments using the management approach;

•determined whether two or more operating segments may be aggregated into a single operating segment;

•applied the quantitative thresholds and other criteria to determine reportable segments;

•considered what information should be disclosed for each reportable segment; and

•considered what information should be disclosed on an entity-wide basis.

Recent accounting pronouncements

In June 2016 the FASB issued Accounting Standards Update No. 2016-13, ~~"Financial~~“Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments"~~Instruments”, which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. In November 2019, the FASB issued ASU 2019-10 ~~"Financial~~“Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)"”. The ~~Board~~FASB developed a philosophy to extend and simplify how effective dates are staggered between larger public companies (bucket one) and all other entities (bucket two). Those other entities include private companies, smaller public companies, not-for-profit organizations, and employee benefit plans. Under this philosophy, a major update would first be effective for bucket-one entities, that is, public business entities that are SEC filers, excluding entities eligible to be smaller reporting companies (SRCs) under the ~~SEC's~~SEC’s definition. The Master Glossary of the Codification defines public business entities and SEC filers. All other entities, including SRCs, other public business entities, and nonpublic business entities (private companies, not-for-profit organizations, and employee benefit plans) would compose bucket two. For those entities, it is anticipated that the ~~Board~~FASB will consider requiring an effective date staggered at least two years after bucket one for major updates. At the date when ASU 2016-13 was issued, the Company was an SRC and according to ASU 2019-10, qualifies for bucket two. Accordingly, ASU 2016-13 and ASU 2017-12 are effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact that ASU 2016-13 and 2017-12 will have on its consolidated financial statements and related disclosures.

In January 2021 the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that certain optional expedients and exceptions in FASB Accounting Standards Codification (ASC) Topic 848, Reference Rate Reform, for contract modifications and hedge accounting apply as well to derivatives that are affected by the changes in

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

interest rates used for margining, discounting or contract price alignment (i.e., the discounting transition). Examples of such use include (1) rates used in interest rate swaps to compute the cash flows for the swap’s variable leg, (2) interest rate indexes used to discount the future cash flows of a derivative instrument to determine its fair value, and (3) the compensation or the interest amount earned on margin payments (i.e., contract price alignment). The amended guidance in ASU No. 2021-01 is effective immediately for all entities. The guidance may be applied on (1) a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (2) a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of ASU No. 2021-01 through the date that financial statements are available to be issued. If any of the amendments are applied for an eligible hedging relationship, adjustments resulting therefrom must be reflected as of the date that the election is applied. The Company's adoption of the provisions of ASU No. 2021-01 had no significant impact on the Company's consolidated financial statements.

In May 2021 the FASB issued Accounting Standards Update No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, a consensus of the Emerging Issues Task Force (EITF) , which amends the FASB Accounting Standards Codification (ASC or the “Codification”) to provide explicit guidance, and, thus, reduce diversity in practice, on accounting by issuers for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange. This amendment provides that for an entity that presents earnings per share (EPS) in accordance with Topic 260, the effects of a modification or an exchange of a freestanding equity-classified written call option that is recognized as a dividend should be an adjustment to net income (or net loss) in the basic EPS calculation. The amended guidance becomes mandatorily effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and should be applied prospectively to modifications or exchanges occurring on or after the effective date. The Company is currently evaluating the impact that ASU 2021-04 will have on its consolidated financial statements and related disclosures.

In August 2021 the FASB issued Accounting Standard Update No 2021-06 ~~"Presentation~~“Presentation of Financial Statements (Topic 205), Financial Services — Depository and Lending (Topic 942), and Financial Services — Investment Companies (Topic 946)"” which amends various SEC paragraphs pursuant to the issuance of SEC Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. SEC issued Final Rulemaking Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, which modified the disclosure and presentation requirements concerning acquisitions and disposals of businesses. Primarily, the new rules amended (1) Rule 1-02(w) of Regulation S-X, Definition of Terms Used in Regulation S-X, Significant Subsidiary, (2) Rule 3-05 of Regulation S-X, Financial Statements of Businesses Acquired or to Be Acquired, (3) Rule 8-05 of Regulation S-X, Pro Forma Financial Information (which covers smaller reporting companies), and (4) Article 11 of Regulation S-X, Pro Forma Financial Information. In addition, new Rule 6-11 of Regulation S-X, Financial Statements of Funds Acquired or to Be Acquired, covering acquisitions specific to investment companies, was added. Corresponding changes were made to other Regulation S-X rules, various Securities Act and Securities Exchange Act rules, and Forms 8-K and 10-K. Compliance with the amended rules is required from the beginning of a ~~registrant's~~registrant’s fiscal year commencing after December 31, 2020 (i.e., the mandatory compliance date). Acquisitions and dispositions that are probable or consummated after the mandatory compliance date are required to be evaluated for significance pursuant to the amended rules. Early compliance is permitted,

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

provided that all the amended rules are applied in their entirety from the early compliance date. ASU No. 2021-06 amends SEC material in the Codification to give effect to Release No. 33-10786. The new rules apply to fiscal years ending on or after December 15, 2021 (i.e., calendar-year 2021). Early voluntary compliance is allowed. Note that the rescission of Industry Guide 3 is effective on January 1, 2023. ASU No. 2021-06 amends SEC material in the Codification to give effect to Release No. 33-10835. The Company ~~does not expect~~is currently evaluating the impact that ~~the~~ ASU 2021-06 will have ~~a significant impact~~ on its consolidated financial statements and related disclosures.

In October 2021, The SEC issued the amendment of Compensation-Stock Compensation No. 2021-07, Determining the Current Price of an Underlying Share for Equity-Classified Share-Based Awards a consensus of the Private Company Council. The main amendments were concentrated in add paragraphs 718-10-30-20C through 30-20H and their related heading, with a link to transition paragraph 718-10-65-16, in which as a practical expedient, a nonpublic may use a value determined by the reasonable application of a reasonable valuation method as the current price of its underlying share for purposes of determining the fair value of an award that is classified as equity in accordance with paragraphs 718-10-25-6 through 25-18 at grant date or upon a modification. Moreover, in the topic was amended paragraph 718-10-50-2(f), with a

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

link to transition paragraph 718-10-65-16, which states that listed requirements indicates the minimum information needed to achieve the objectives in paragraph 718-10-50-1 and illustrates how the disclosure requirements might be satisfied. In some circumstances, an entity may need to disclose information beyond the following to achieve the disclosure objectives. Firstly, a description of the method used during the year to estimate the fair value (or calculated value) of awards under share-based payment arrangements. Secondly, a description of the significant assumptions used during the year to estimate the fair value (or calculated value) of share-based compensation awards, including: i. Expected term of share options and similar instruments, including a discussion of the method used to incorporate the contractual term of the instruments and grantees' expected exercise and post vesting termination behavior into the fair value of the instrument. ii. Expected volatility of the entity's shares and the method used to estimate it. An entity that uses a method that employs different volatilities during the contractual term shall disclose the range of expected volatilities used and the weighted-average expected volatility. iii. Expected dividends. iv. Risk-free rate(s). v. Discount for post vesting restrictions and the method for estimating it. vi. Practical expedient for current price input. The topic also contains added paragraph 718-10-65-16, that illustrates the transition and effective date information related to Accounting Standards Update No. 2021-07 by the listed requirement: a. The pending content that links to this paragraph shall be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. b. An entity shall apply the pending content that links to this paragraph prospectively. c. Early application, including application in an interim period, is permitted for financial statements that have not been issued or made available for issuance as of October 25, 2021. The Company is currently evaluating the impact that ASU 2021-06 will have on its consolidated financial statements and related disclosures.

In October 2021, ~~the~~The SEC issued the amendment of Business Combinations (Topic 805), No. 2021-08, which related to Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The main amendments were concentrated in paragraphs 805-20-25-16 through 25-17 and add paragraph 805-20-25-28C and its related heading, with a link to transition paragraph 805-20-65-3, where the topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. Moreover, the topic amends paragraphs 805-20-30-10 through 30-12 and add paragraphs 805-20-30-27 through 30-30 and their related heading, with a link to transition paragraph 805-20-65-3. Paragraph 805-20-25-16 notes that the Business Combinations Topic provides limited exceptions to the recognition and measurement principles applicable to business combinations. In the topic has been added paragraph 805-20-65-3, in which the following represents the transition and effective date information related to Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers: a. For public business entities, the pending content that links to this paragraph shall be effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the impact that ASU 2021-06 will have on its consolidated financial statements and related disclosures.

~~In March 2022,~~ the FASB issued Accounting Standards Update No. 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method", which introduces the amendments, which targeted on improvements to the optional hedge accounting model with the objective of improving hedge accounting to better portray the economic results of an entity's risk management activities in its financial statements. The amendments in this Update apply to the Company that elect to apply the portfolio layer method of hedge accounting in accordance with Table of Contents Topic 815. For a closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments, the last-of-layer method allows an entity to hedge a stated amount of the asset or assets in the closed portfolio that is anticipated to be outstanding for the designated hedge period. If the requirements for the last-of-layer method are met, prepayment risk is not incorporated into the measurement of the hedged item. Accordingly, ASU 2022-01 is effective for fiscal years beginning after December 15, 2022. ASU 2022-01 will not have an impact on the Company's consolidated financial statements and related disclosures.

~~In March 2022,~~ the FASB issued Accounting Standards Update No. 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures", which introduces the amendments on solving two issues of creditors related to troubled debt restructurings and gross write-offs of vintage debt disclosures. The amendments in Update 2016-13 require that an entity measure and record the lifetime expected credit losses on an asset that is within the scope of the Update upon origination or acquisition, and, as a result, credit losses from loans modified as troubled debt restructurings (TDRs) have been incorporated into the allowance for credit losses. Investors and preparers observed that the additional designation of a loan modification as a TDR and the related accounting are unnecessarily complex and no longer provide decision-useful information.

Moreover, investors and other financial statement users observed that disclosing gross write-offs by year of origination provides important information that allows them to better understand changes in the credit quality of an entity's loan portfolio and underwriting performance. Accordingly, ASU 2022-02 is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact that ASU 2022-02 will have on its consolidated financial statements and related disclosures.

In June 2022, FASB Issued Accounting Standard Updated No. 2022-03 “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB has issued this standard to (1) clarify the guidance in Topic 820 – Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in this update affects all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2022-03 will have on its consolidated financial statements and related disclosures.

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

In September 2022, the FASB issued Accounting Standards Update No. 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” to enhance the transparency of supplier finance programs. This requires all entities, which apply those programs in connection with the purchase of goods and services (buyer party), to disclose qualitative and quantitative information about the use of the finance programs to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

Accordingly, ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact that ASU 2022-04 will have on its consolidated financial statements and related disclosures.

In December 2022, FASB Issued Accounting Standard Updated No. 2022-05 “Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI)”. The amendments in Update 2018-12 require that an insurance entity apply a retrospective transition method as of the beginning of the earliest period presented or the beginning of the prior fiscal year if early application is elected. It amends in this Update the LDTI transition guidance to allow an insurance entity to make an accounting policy election on a transaction-by-transaction basis. The Board is issuing this Update to reduce implementation costs and complexity associated with the adoption of LDTI for contracts that have been derecognized in accordance with the amendments in this Update before the LDTI effective date. Without the amendments an insurance entity would be required to reclassify a portion of the previously recognized gains or losses to the LDTI transition adjustment because of the adoption of a new accounting standard. This Update affects insurance entities that have derecognized contracts before the LDTI effective date. For public business entities that meet the definition of a U.S. Securities and Exchange Commission (SEC) filer and are not smaller reporting companies, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early application is permitted. The Company is currently evaluating the impact that ASU 2022-05 will have on its consolidated financial statements and related disclosures.

In December 2022, the FASB issued Accounting Standards Update No. 2022-06 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The objective of the guidance in Topic 848 is to provide temporary relief during the transition period. The Board included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (FCA) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set for December 31, 2022—12 months after the expected cessation date of all currencies and tenors of LIBOR. The amendments in this Update apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this Update are effective for all entities upon issuance of this Update. The Company has evaluated that the Update No. 2022-06 will not have an impact on its consolidated financial statements and related disclosures.

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

NOTE 3 – RECAST

When preparing the condensed consolidated financial statements as of September 30, 2022 and for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2022, management determined that certain amounts included in the Company’s condensed consolidated financial statements as of March 31, 2022, required revision due to the closing on May 17, 2022, of the Company's acquisition of two insurance companies in Kazakhstan, a life insurance company, Freedom Life, and a direct insurance carrier, excluding life, health and medical, Freedom Insurance, which were deemed to be entities under common control with the Company since 2018. Prior to the Company's acquisition of these companies, each was wholly owned by the Company's controlling shareholder, chairman and chief executive officer, Timur Turlov, who had previously acquired Freedom Life and Freedom Insurance from a non-related party on February 28, 2018, and August 22, 2018, respectively. The two companies were deemed to be under common control with the Company since the dates when they were acquired by Timur Turlov.

The Company acquired these companies from Mr. Turlov at the historical cost paid by him plus amounts he had contributed as additional paid in capital since his purchase. The Company acquired the two companies to expand its presence in the insurance segment. The purchase price for 100% of the outstanding shares of Freedom Insurance was $13,977 and the purchase price for 100% of the outstanding shares of Freedom Life was $12,611. As at December 31, ~~2022 Freedom KZ had repaid the payable for acquisition of Freedom Life for $13,630. The payment of the consideration for the acquisition of Freedom Insurance is planned to be made in February 2023.~~

As2021, and 2020, required by ASC 805 Business Combinations, acquisitions with parties under common control are required to have all previously presented periods recast to the date of the initial acquisition by the seller. Accordingly, the financial results of Freedom Life and Freedom Insurance have been consolidated in the condensed consolidated financial statements as of and for the three and nine months ended December 31, 2022, and in the corresponding periods of 2021 for comparative purposes, as if they had been acquired prior to such periods.

~~In addition,~~revision, because the assets and liabilities to be disposed of in connection with the planned sale of Freedom RU and Freedom Bank RU met the held for sale criteria, ~~as of December 31, 2022,~~ such subsidiaries are presented as discontinued operations in accordance with ASC 205 and 360 in the condensed consolidated financial statements as of December 31, 2021 and for the three and nine months ended December 31, ~~2022~~2021 and in the corresponding periods of ~~2021~~2020 for comparative purposes. For additional information see Note 2522 Assets and Liabilities held for sale to the condensed consolidated financial statements.

The previously issued Condensed Consolidated Balance ~~Sheet~~Sheets as of December 31, 2021, and March 31, ~~2022,~~2021 and Condensed Consolidated Statement of Operations and Statements of Other Comprehensive Income for the three and nine months ended December 31, 2021, and 2020 have been revised as follows:

As of March 31, 2022
As previously reported FF Life acquisition Elimi-nations FF Insurance acquisition Elimi-nations Recast discontinued operations As recasted
ASSETS
Cash and cash equivalents $ 625,547 $ 1,427 $ (901) $ 371 $ (82) $ (400,898) $ 225,464
Trading securities 1,203,479 8,875 — 68,520 — (122,497) 1,158,377
Restricted cash 553,680 — — — — (5,730) 547,950
Margin lending, brokerage and other receivables, net 357,567 173 (34) 60 (20) (210,087) 147,659
Loans issued 94,797 44 — — — (2,395) 92,446
Other assets 37,725 7,267 — 427 — (18,375) 27,044
Fixed assets, net 21,365 182 — 254 — (3,978) 17,823
Right-of-use asset 15,669 532 — 152 — (8,922) 7,431
Intangible assets, net 5,791 1,489 — 161 — (2,278) 5,163
Goodwill 5,388 359 — 151 — — 5,898
Available-for-sale securities, at fair value 1 161,363 — — — — 161,364
Insurance contract assets — 3,555 — 2,157 — — 5,712
Assets held for sale — — — — — 825,419 825,419

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


	As of December 31, 2021
	As previously reported		Recast discontinued operations		As recasted
ASSETS
Cash and cash equivalents	$	493,263	$	(346,905)	$	146,358
Trading securities	1,348,656		(400,823)		947,833
Restricted cash	404,718		12,025		416,743
Brokerage and other receivables, net	302,403		(108,245)		194,158
Loans issued	44,995		(2,556)		42,439
Other assets	30,321		(6,291)		24,030
Fixed assets, net	21,221		(3,822)		17,399
Right-of-use asset	17,830		(10,904)		6,926

Intangible assets, net	8,703		(5,031)		3,672
Goodwill	7,840		—		7,840
Available-for-sale securities, at fair value	1		—		1

Assets held for sale	—		919,592		919,592
TOTAL ASSETS	$	2,679,951	$	47,040	$	2,726,991

LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations	$	710,284	$	(82,791)	$	627,493
Customer liabilities	1,145,070		(592,055)		553,015
Trade payables	51,031		(656)		50,375

Current income tax liability	20,620		(41)		20,579
Securities sold, not yet purchased – at fair value	15,167		—		15,167
Loans received	3,497		—		3,497
Debt securities issued	105,363		(71,716)		33,647
Lease liability	17,573		(10,542)		7,031
Deferred income tax liabilities	1		1,485		1,486
Deferred distribution payments	8,534		—		8,534
Liabilities held for sale	—		809,727		809,727
Other liabilities	11,321		(6,371)		4,950
TOTAL LIABILITIES	2,088,461		47,040		2,135,501
Commitments and Contingent Liabilities (Note 30)	—		—		—

SHAREHOLDERS’ 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;	59		—		59
Additional paid in capital	115,278		—		115,278
Retained earnings	516,149		—		516,149
Accumulated other comprehensive loss	(39,152)		—		(39,152)
TOTAL EQUITY ATTRIBUTABLE TO THE COMPANY	592,334		—		592,334

Non-controlling interest	(844)		—		(844)
TOTAL SHAREHOLDERS’ EQUITY	591,490		—		591,490

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,679,951	$	47,040	$	2,726,991

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


	As of March 31, 2021
	As previously reported		Recast discontinued operations		As recasted
ASSETS
Cash and cash equivalents	$	698,828	$	(530,811)	$	168,017
Trading securities	736,188		(148,642)		587,546
Restricted cash	437,958		52,733		490,691
Brokerage and other receivables, net	64,801		(15,283)		49,518
Loans issued	11,667		(2,041)		9,626
Other assets	19,902		(4,263)		15,639
Fixed assets, net	18,385		(2,814)		15,571
Right-of-use asset	13,262		(8,636)		4,626

Intangible assets, net	9,785		(5,883)		3,902
Goodwill	7,868		(731)		7,137
Available-for-sale securities, at fair value	1		—		1

Assets held for sale	—		748,048		748,048
TOTAL ASSETS	$	2,018,645	$	81,677	$	2,100,322

LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations	$	426,715	$	(51,997)	$	374,718
Customer liabilities	1,163,697		(491,872)		671,825
Trade payables	22,304		(302)		22,002

Current income tax liability	14,843		(644)		14,199
Securities sold, not yet purchased – at fair value	8,592		(23)		8,569
Loans received	3,373		—		3,373
Debt securities issued	68,443		(37,094)		31,349
Lease liability	13,249		(8,438)		4,811
Deferred income tax liabilities	4,385		(378)		4,007
Deferred distribution payments	8,534		—		8,534
Liabilities held for sale	—		676,568		676,568
Other liabilities	8,850		(4,143)		4,707
TOTAL LIABILITIES	1,742,985		81,677		1,824,662
Commitments and Contingent Liabilities (Note 30)	—		—		—

SHAREHOLDERS’ 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		—		58
Additional paid in capital	104,672		—		104,672
Retained earnings	208,617		—		208,617
Accumulated other comprehensive loss	(36,046)		—		(36,046)
TOTAL EQUITY ATTRIBUTABLE TO THE COMPANY	277,301		—		277,301

Non-controlling interest	(1,641)		—		(1,641)
TOTAL SHAREHOLDERS’ EQUITY	275,660		—		275,660

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,018,645	$	81,677	$	2,100,322

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


	Three months ended December 31, 2021
	As previously reported*		Recast discontinued operations		As recasted
Revenue:
Fee and commission income	$	117,316	$	(25,905)	$	91,411
Net gain on trading securities	403		6,611		7,014
Interest income	27,828		(3,029)		24,799
Net (loss)/gain on foreign exchange operations	451		655		1,106
Net loss on derivative	(314)		—		(314)
TOTAL REVENUE, NET	145,684		(21,668)		124,016

Expense:
Fee and commission expense	22,716		(2,076)		20,640
Interest expense	20,799		(2,365)		18,434
Operating expense	50,496		(22,253)		28,243
Provision for impairment losses	45		(13)		32
Other expense, net	(64)		(30)		(94)
TOTAL EXPENSE	93,992		(26,737)		67,255

INCOME BEFORE INCOME TAX	51,692		5,069		56,761

Income tax expense	(806)		(962)		(1,768)

INCOME FROM CONTINUING OPERATIONS	50,886		4,107		54,993

Income/(loss) before income tax (expense)/benefit of discontinued operations	—		(5,067)		(5,067)

Income tax (expense)/benefit of discontinued operations	—		962		962

Income/(loss) from discontinued operation	—		(4,105)		(4,105)

NET INCOME	50,886		2		50,888

Less: Net loss attributable to non-controlling interest in subsidiary	(343)		—		(343)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	51,229	$	2	$	51,231

OTHER COMPREHENSIVE INCOME

Reclassification adjustment for net realized gain on available-for-sale investments disposed of in the period, net of tax effect	—		—		—
Foreign currency translation adjustments, net of tax effect	(7,336)		2,672		(4,664)

OTHER COMPREHENSIVE INCOME/(LOSS)	(7,336)		2,672		(4,664)

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	43,550	$	2,674	$	46,224

Less: Comprehensive loss attributable to non-controlling interest in subsidiary	(343)		—		(343)

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	43,893	$	2,674	$	46,567

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

TOTAL ASSETS $ 2,921,009 $ 185,266 $ (935) $ 72,253 $ (102) $ 50,259 $ 3,227,750
LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations $ 775,178 $ 47,691 $ — $ 49,824 $ — $ (32,469) $ 840,224
Customer liabilities 1,417,937 — (901) — (82) (651,326) 765,628
Margin lending and trade payables 45,229 — — 21 (20) (147) 45,083
Liabilities from insurance activity — 106,329 — 13,161 — — 119,490
Current income tax liability 14,556 — — — — — 14,556
Securities sold, not yet purchased – at fair value 14,103 — — — — (238) 13,865
Debt securities issued 99,027 — — — — (64,637) 34,390
Lease liability 15,315 543 — 176 — (8,530) 7,504
Liability arising from continuing involvement 6,447 — — — — — 6,447
Other liabilities 25,542 550 (35) 292 — (4,872) 21,477
Liabilities held for sale — — — — — 812,478 812,478
TOTAL LIABILITIES $ 2,413,334 $ 155,113 $ (936) $ 63,474 $ (102) $ 50,259 $ 2,681,142
Commitments and Contingent Liabilities (Note 26) — — — — — — —
SHAREHOLDERS’ 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; 59 9,465 (9,465) 15,577 (15,577) — 59
Additional paid in capital 141,340 — 16,499 — 16,906 — 174,745
Retained earnings 426,563 28,131 (6,666) (4,811) (1,293) — 441,924
Accumulated other comprehensive loss (53,291) (7,443) (368) (1,987) (36) — (63,125)
TOTAL FRHC SHAREHOLDERS’ EQUITY $ 514,671 $ 30,153 $ — $ 8,779 $ — $ — $ 553,603
Non-controlling interest (6,996) 1 — — — — (6,995)
TOTAL SHAREHOLDERS’ EQUITY $ 507,675 $ 30,154 $ — $ 8,779 $ — $ — $ 546,608
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,921,009 $ 185,267 $ (936) $ 72,253 $ (102) $ 50,259 $ 3,227,750

Three months ended December 31, 2021
As previously reported * FF Life acquisition Elimi-nations FF Insurance acquisition Elimi-nations Recast discontinued operations As restated
Revenue:
Fee and commission income $ 117,316 $ — $ — $ (3) $ — $ (25,905) $ 91,408
Net gain on trading securities 403 490 — 159 — 6,611 7,663
Interest income 27,828 6,534 — 2,324 — (3,029) 33,657
Insurance underwriting income — 18,030 — 3,364 — — 21,394
Net gain on foreign exchange operations 451 239 — 16 — 655 1,361
Net loss on derivative (314) — — — — — (314)
TOTAL REVENUE, NET 145,684 25,293 — 5,860 — (21,668) 155,169

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

Expense:
Fee and commission expense 22,716 3,946 — 196 — (2,076) 24,782
Interest expense 20,799 1,606 — 1,850 — (2,365) 21,890
Insurance claims incurred, net of reinsurance — 13,246 — 3,040 — — 16,286
Operating expense 50,496 1,681 — 1,657 — (22,253) 31,581
Provision for impairment losses 45 — — (365) — (13) (333)
Other expense, net (64) 1,073 — — — (30) 979
TOTAL EXPENSE 93,992 21,552 — 6,378 — (26,737) 95,185
INCOME/(LOSS) BEFORE INCOME TAX 51,692 3,741 — (518) — 5,069 59,984
Income tax (expense)/benefit (806) 12 (50) (962) (1,806)
INCOME/(LOSS) FROM CONTINUING OPERATIONS 50,886 3,753 — (568) — 4,107 58,178
Loss before income tax (expense)/benefit of discontinued operation — — — — — (5,067) (5,067)
Income tax benefit of discontinued operations — — — — — 962 962
Loss from discontinued operation — — — — (4,105) (4,105)
NET INCOME/LOSS $ 50,886 $ 3,753 $ — $ (568) $ — $ 2 $ 54,073
Less: Net loss attributable to non-controlling interest in subsidiary (343) — — — — — (343)
NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 51,229 $ 3,753 $ — $ (568) $ — $ 2 $ 54,416
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect — (1,063) — — — — (1,063)
Reclassification adjustment for net realized gain on available-for-sale investments disposed of in the period, net of tax effect — 953 — — — — 953
Foreign currency translation adjustments (7,336) (1,284) — (2,702) — 2,672 (8,650)
OTHER COMPREHENSIVE LOSS (7,336) (1,394) — (2,702) — 2,672 (8,760)

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

COMPREHENSIVE INCOME/(LOSS) BEFORE NON-CONTROLLING INTERESTS $ 43,550 $ 2,359 $ — $ (3,270) $ — $ 2,674 $ 45,313
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (343) — — — — — (343)
COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 43,893 $ 2,359 $ — $ (3,270) $ — $ 2,674 $ 45,656

For the three months ended December 31, 2021, the Company’s EPS as reported was 0.86 for basic and diluted EPS. Due to the items noted above, the Company’s EPS has been recast to ~~0.98, (0.09)~~0.93, (0.07), and ~~0.91~~0.86 for basic and diluted EPS for continuing operations, discontinued operations, and total EPS, respectively.


		Nine months ended December 31, 2021														Three months ended December 31, 2020
		As previously reported *		FF Life acquisition		Elimi-nations		FF Insurance acquisition		Elimi-nations		Recast discontinued operations		As restated		As previously reported*		Recast discontinued operations		As recasted
Revenue:	Revenue:														Revenue:
Fee and commission income	Fee and commission income	$	327,966	$	—	$	(91)	$	86	$	(161)	$	(65,251)	262,549	Fee and commission income	$	72,484	$	(14,385)	$	58,099
Net gain on trading securities	Net gain on trading securities	185,554		1,090		—		1,587		—		9,716		197,947	Net gain on trading securities	18,944		(4,972)		13,972
Net realized loss on investments available for sale		—				—		—		—		—		—
Interest income	Interest income	69,259		16,634		—		6,541		—		(9,920)		82,514	Interest income	9,223		(3,999)		5,224
Insurance underwriting income		—		42,091		—		9,400		—		—		51,491
Net gain on foreign exchange operations		885		277		—		26		—		2,888		4,076
Net loss on derivative		(1,028)		—		—		—		—		—		(1,028)
Net (loss)/gain on foreign exchange operations															Net (loss)/gain on foreign exchange operations	(1,413)		1,516		103
Net gain on derivative															Net gain on derivative	995		(49)		946
TOTAL REVENUE, NET	TOTAL REVENUE, NET	582,636		60,092		(91)		17,640		(161)		(62,567)		597,549	TOTAL REVENUE, NET	100,233		(21,889)		78,344

Expense:	Expense:														Expense:
Fee and commission expense	Fee and commission expense	67,547		7,074		(91)		558		(161)		(6,301)		68,626	Fee and commission expense	20,278		(1,983)		18,295
Interest expense	Interest expense	51,256		3,604		—		4,816		—		(6,824)		52,852	Interest expense	6,649		(3,426)		3,223
Insurance claims incurred, net of reinsurance		—		31,862		—		9,234		—		—		41,096
Operating expense	Operating expense	117,384		4,293		—		4,935		—		(53,840)		72,772	Operating expense	21,921		(11,583)		10,338
Provision for impairment losses	Provision for impairment losses	704		—		—		297		—		(90)		911	Provision for impairment losses	1,109		(157)		952
Other expense/(income), net		600		1,949		—		(3)		—		(120)		2,426
Other expense, net															Other expense, net	244		(229)		15
TOTAL EXPENSE	TOTAL EXPENSE	237,491		48,782		(91)		19,837		(161)		(67,175)		238,683	TOTAL EXPENSE	50,201		(17,378)		32,823

INCOME BEFORE INCOME TAX	INCOME BEFORE INCOME TAX	345,145		11,310		—		(2,197)		—		4,608		358,866	INCOME BEFORE INCOME TAX	50,032		(4,511)		45,521

Income tax expense	Income tax expense	(38,037)		11		—		(57)		—		(943)		(39,026)	Income tax expense	(7,711)		1,112		(6,599)

INCOME FROM CONTINUING OPERATIONS	INCOME FROM CONTINUING OPERATIONS	307,108		11,321		—		(2,254)		—		3,665		319,840	INCOME FROM CONTINUING OPERATIONS	42,321		(3,399)		38,922

Income/(loss) before income tax(expense)/benefit of discontinued operation		—		—		—		—		—		(4,609)		(4,609)
Income before income tax expense of discontinued operations															Income before income tax expense of discontinued operations	—		4,511		4,511

Income tax (expense)/benefit of discontinued operations		—		—		—		—		—		953		953
Income tax expense of discontinued operations															Income tax expense of discontinued operations	—		(1,112)		(1,112)

Income from discontinued operations															Income from discontinued operations	—		3,399		3,399

NET INCOME															NET INCOME	42,321		—		42,321

Less: Net loss attributable to non-controlling interest in subsidiary															Less: Net loss attributable to non-controlling interest in subsidiary	(53)		—		(53)

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS															NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	42,374	$	—	$	42,374

OTHER COMPREHENSIVE INCOME															OTHER COMPREHENSIVE INCOME

Reclassification adjustment for net realized gain on available-for-sale investments disposed of in the period, net of tax effect															Reclassification adjustment for net realized gain on available-for-sale investments disposed of in the period, net of tax effect	—		—		—
Foreign currency translation adjustments, net of tax effect															Foreign currency translation adjustments, net of tax effect	6,851		—		6,851

OTHER COMPREHENSIVE INCOME															OTHER COMPREHENSIVE INCOME	6,851		—		6,851

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS															COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	49,172	$	—	$	49,172

Less: Comprehensive loss attributable to non-controlling interest in subsidiary															Less: Comprehensive loss attributable to non-controlling interest in subsidiary	(53)		—		(53)

2725

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Income from discontinued operation — — — — — (3,656) (3,656)
NET INCOME $ 307,108 $ 11,321 $ — $ (2,254) $ — $ 9 $ 316,184
Less: Net loss attributable to non-controlling interest in subsidiary (415) — — — — — (415)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 307,523 11,321 — (2,254) — $ 9 $ 316,599
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect — (1,789) — — — — (1,789)
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect — 1,606 — — — — 1,606
Foreign currency translation adjustments (3,106) (1,213) — (2,702) 2,574 (4,447)
OTHER COMPREHENSIVE INCOME (3,106) (1,396) — (2,702) — 2,574 (4,630)
COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS $ 304,002 $ 9,925 $ — $ (4,956) $ — $ 2,583 $ 311,554
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (415) — — — — — (415)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS 304,417 9,925 — (4,956) — 2,583 311,969



COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	49,225	$	—	$	49,225

For the three months ended December 31, 2020, the Company’s EPS as reported was 0.73 for basic and diluted EPS. Due to the items noted above, the Company’s EPS has been recast to 0.67, 0.06, and for basic and diluted EPS for continuing operations, discontinued operations, and 0.73, 0.72 for basic and diluted total EPS, respectively.


	Nine months ended December 31, 2021
	As previously reported*		Recast discontinued operations		As recasted
Revenue:
Fee and commission income	$	327,966	$	(65,251)	$	262,715
Net gain on trading securities	185,554		9,716		195,270
Interest income	69,259		(9,920)		59,339
Net (loss)/gain on foreign exchange operations	885		2,888		3,773
Net loss on derivative	(1,028)		—		(1,028)
TOTAL REVENUE, NET	582,636		(62,567)		520,069

Expense:
Fee and commission expense	67,547		(6,301)		61,246
Interest expense	51,256		(6,824)		44,432
Operating expense	117,384		(53,840)		63,544
Provision for impairment losses	704		(90)		614
Other expense, net	600		(120)		480
TOTAL EXPENSE	237,491		(67,175)		170,316

INCOME BEFORE INCOME TAX	345,145		4,608		349,753

Income tax expense	(38,037)		(943)		(38,980)

INCOME FROM CONTINUING OPERATIONS	307,108		3,665		310,773

Income/(loss) before income tax (expense)/benefit of discontinued operations	—		(4,609)		(4,609)

Income tax (expense)/benefit of discontinued operations	—		953		953

Income/(loss) from discontinued operations	—		(3,656)		(3,656)

NET INCOME	307,108		9		307,117

Less: Net loss attributable to non-controlling interest in subsidiary	(415)		—		(415)

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	307,523	$	9	$	307,532

OTHER COMPREHENSIVE INCOME

Reclassification adjustment for net realized gain on available-for-sale investments disposed of in the period, net of tax effect	—		—		—
Foreign currency translation adjustments, net of tax effect	(3,106)		2,574		(532)

OTHER COMPREHENSIVE INCOME/(LOSS)	(3,106)		2,574		(532)

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)



COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	304,002	$	2,583	$	306,585

Less: Comprehensive loss attributable to non-controlling interest in subsidiary	(415)		—		(415)

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	304,417		2,583		307,000

For the nine months ended December 31, 2021, the Company’s EPS as reported was 5.18 for basic and diluted EPS. Due to the items noted above, the Company’s EPS has been recast to ~~5.40, (0.08)~~5.25, (0.06), and ~~5.34~~5.18 for basic and diluted EPS for continuing operations, discontinued operations, and total EPS, respectively.


	Nine months ended December 31, 2020
	As previously reported*		Recast discontinued operations		As recasted
Revenue:
Fee and commission income	$	169,590	$	(33,603)	$	135,987
Net gain on trading securities	36,330		(17,087)		19,243
Interest income	18,930		(7,168)		11,762
Net gain on foreign exchange operations	1,359		(1,217)		142
Net gain on derivative	149		(88)		61
TOTAL REVENUE, NET	226,358		(59,163)		167,195

Expense:
Fee and commission expense	50,068		(4,297)		45,771
Interest expense	15,092		(6,290)		8,802
Operating expense	52,214		(29,978)		22,236
Provision for impairment losses	1,775		(202)		1,573
Other expense/(income), net	149		(206)		(57)
TOTAL EXPENSE	119,298		(40,973)		78,325

INCOME BEFORE INCOME TAX	107,060		(18,190)		88,870

Income tax expense	(16,900)		5,202		(11,698)

INCOME FROM CONTINUING OPERATIONS	90,160		(12,988)		77,172

Income before income tax expense of discontinued operations	—		18,190		18,190

Income tax expense of discontinued operations	—		(5,202)		(5,202)

Income from discontinued operations	—		12,988		12,988

NET INCOME	90,160		—		90,160

Less: Net income attributable to non-controlling interest in subsidiary	243		—		243

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	89,917	$	—	$	89,917

OTHER COMPREHENSIVE INCOME

Table of Contents


FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


Reclassification adjustment for net realized gain on available-for-sale investments disposed of in the period, net of tax effect	71		—		71
Foreign currency translation adjustments, net of tax effect	4,565		—		4,565

OTHER COMPREHENSIVE INCOME	4,636		—		4,636

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	94,796	$	—	$	94,796

Less: Comprehensive income attributable to non-controlling interest in subsidiary	243		—		243

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	94,553	$	—	$	94,553

For the nine months ended December 31, 2020, the Company’s EPS as reported was 1.54 for both basic and diluted EPS. Due to the items noted above, the Company’s EPS has been recast to 1.32, 0.22, and 1.54 for both basic and diluted EPS for continuing operations, discontinued operations, and total EPS, respectively.

*amounts with restatement in fee and commission income and interest income, for more information please see Note 4 Restatement.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 4 – RESTATEMENT

~~As previously disclosed in our quarterly report on Form 10-Q for the three and six months ended September 30, 2022, it~~It was determined that there ~~was an error~~were errors in the Company's ~~accounting~~previously issued consolidated financial statements for the year ended March 31, 2022 related to the classification of loans issued, ~~and~~ bank customer accounts inand funds received under the ~~Company's Condensed~~Kazakhstan state program for financing of mortgage loans “7-20-25” within the Consolidated ~~Statement~~Statements of Cash Flows ~~and during the course of the Company's preparation of quarterly report on Form 10-Q~~ for the ~~three months~~year ended ~~December~~March 31, 2022, it was determined that there was an error in the Company's quarterly report on Form 10-Q for the three months ended December 31, 2021 related to the classification of interest income from margin lending to clients on the Company's Condensed Consolidated Statement of Operations.

Specifically, the Company identified that activities related to certain loans had been classified within "Cash flows from operating activities" and should have been classified within "Cash flows from investing activities"~~. In addition, the Company identified~~, that activities related to bank customer accounts had been classified within "Cash flows from operating activities" and should have been classified within "Cash flows from financing activities"~~. On~~, and that activities related to funds received under the ~~Condensed Consolidated Statement~~Kazakhstan state program for financing of ~~Operations, the Company's interest income from margin lending to clients~~mortgage loans “7-20-25” had been classified within ~~fee and commission income~~"Cash flows from operating activities" and should have been classified within ~~interest income.~~

"Cash flows from financing activities". The Company has evaluated the effect of the ~~foregoing~~ incorrect classifications and concluded that restatement of previously filed consolidated financial statements as of and for the years ended March 31, 2022, 2021 and 2020 and for each of the quarterly periods ended June 30, 2022 and September 30, 2022 was necessary. The Company determined that the incorrect classifications did not have any impact on the Company’s net income or any per-share amounts.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

and concluded that restatement was necessary. The Company determined that the restatement did not have any impact on the Company’s operating performance or any per-share amounts.

The following ~~table summarizes~~tables summarize the impact of ~~the correction~~these corrections of ~~the~~ errors ~~on the Condensed Consolidated Statement of Cash Flows~~ for the ~~period presented:~~nine months ended December 31, 2021, and 2020:

Nine months ended December 31, 2021
As previously reported FF Life and FF Insurance acquisitions Adjustments for discontinued operations As recasted Correction of errors As restated
Net cash flows (used in)/from operating activities $ (582,080) $ 25,782 (34,465) $ (590,763) $ (21,090) $ (611,853)
Net cash flows used in investing activities (6,110) (52,276) — (58,386) (34,709) (93,095)
Net cash flows (used in)/from financing activities 338,792 47,203 — 385,995 55,799 441,794
Effect of changes in foreign exchange rates on cash and cash equivalents 10,593 (2,221) (1,998) 6,374 — 6,374
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH $ (238,805) $ 18,488 $ (36,463) $ (256,780) $ — $ (256,780)


	For the nine months ended December 31, 2021
	As previously reported		Adjustments for discontinued operations		As recasted		Correction of errors		As restated

Net cash flows from operating activities	$	(582,080)	$	(34,465)	$	(616,545)	$	(21,090)	$	(637,635)
Net cash flows from investing activities	(6,110)		—		(6,110)		(34,709)		(40,819)
Net cash flows from financing activities	338,792		—		338,792		55,799		394,591
Effect of changes in foreign exchange rates on cash and cash equivalents	10,593		(1,998)		8,595		—		8,595

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(238,805)	$	(36,463)	$	(275,268)	$	—	$	(275,268)

~~The following table summarizes the impact of the correction of errors broken down by continuing and discontinued operations:~~

Nine months ended December 31, 2021
As restated Correction of errors As restated
Net cash flows used in operating activities from continuing operations $ (256,764) $ (132,188) $ (388,952)
Net cash flows (used in)/from operating activities from discontinued operations (333,999) 111,098 (222,901)
Net cash flows used in investing activities from continuing operations (56,167) (34,138) (90,305)
Net cash flows used in investing activities from discontinued operations (2,219) (571) (2,790)
Net cash flows from financing activities from continuing operations 320,364 83,448 403,812
Net cash flows from/used in financing activities from discontinued operations 65,631 (27,649) 37,982
Effect of changes in foreign exchange rates on cash and cash equivalents from continuing operations (7,321) — (7,321)
Effect of changes in foreign exchange rates on cash and cash equivalents from discontinued operations 13,695 — 13,695
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH $ (256,780) $ — $ (256,780)


	For the nine months ended December 31, 2020
	As previously reported		Adjustments for discontinued operations		As recasted		Correction of errors		As restated

Net cash flows from operating activities	$	698,954	$	41,110	$	740,064	$	(135,487)	$	604,577
Net cash flows from investing activities	98,418		739		99,157		122		99,279
Net cash flows from financing activities	61,952		(576)		61,376		135,365		196,741
Effect of changes in foreign exchange rates on cash and cash equivalents	3,787		—		3,787		—		3,787

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	863,111	$	41,273	$	904,384	$	—	$	904,384

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts~~In addition, it was determined that in ~~thousands of United States dollars, except share data, unless otherwise stated)~~

In the Company's previously issued condensed consolidated financial statements for the three and nine months ended December 31, 2021 and 2020, interest income from margin lending to clients had been erroneously classified within fee and commission income from brokerage services. Such income has been reclassified to interest income as a separate sub-line item within interest income entitled interest income from margin lending to clients. ~~For additional information see~~ ~~Note 19 Net interest income/(expense)~~ ~~to the condensed consolidated financial statements.~~ The following

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

tables summarize the impact of corrections of the errors on the Condensed Consolidated ~~Statement~~Statements of Operations and Other Comprehensive Income for the periods presented:


		For the three months ended December 31, 2021													For the three months ended December 31, 2021
		Issued		FF Life and FF Insurance acquisition		Adjustments for discontinued operations		As restated		Correction of errors		As restated			As previously reported		Adjustments for discontinued operations		As restated		Correction of errors		As restated
Fee and commission income	Fee and commission income	$	122,237	$	(3)	$	(25,905)	$	96,329	$	(4,921)	$	91,408	Fee and commission income	$	122,237	$	(25,905)	$	96,332	$	(4,921)	91,411
Net gain on trading securities	Net gain on trading securities	403		649		6,611		7,663		—		7,663		Net gain on trading securities	403		6,611		7,014		—		7,014
Interest income	Interest income	22,907		8,858		(3,029)		28,736		4,921		33,657		Interest income	22,907		(3,029)		19,878		4,921		24,799
Insurance underwriting income		—		21,394		—		21,394		—		21,394
Net gain on foreign exchange operations	Net gain on foreign exchange operations	451		255		655		1,361		—		1,361		Net gain on foreign exchange operations	451		655		1,106		—		1,106
Net loss on derivative	Net loss on derivative	(314)		—		—		(314)		—		(314)		Net loss on derivative	(314)		—		(314)		—		(314)

TOTAL REVENUE, NET	TOTAL REVENUE, NET	145,684		31,153		(21,668)		155,169		—		155,169		TOTAL REVENUE, NET	$	145,684	$	(21,668)	$	124,016	$	—	$	124,016


		For the nine months ended December 31, 2021													For the three months ended December 31, 2020
		Issued		FF Life and FF Insurance acquisition		Adjustments for discontinued operations		As restated		Correction of errors		As restated			As previously reported		Adjustments for discontinued operations		As restated		Correction of errors		As restated
Fee and commission income	Fee and commission income	$	336,178	$	(166)	$	(65,251)	$	270,761	$	(8,212)	$	262,549	Fee and commission income	$	74,333	$	(14,385)	$	59,948	$	(1,849)	58,099
Net gain on trading securities	Net gain on trading securities	$	185,554	2,677		9,716		197,947		—		197,947		Net gain on trading securities	18,944		(4,972)		13,972		—		13,972
Interest income	Interest income	61,047		23,175		(9,920)		74,302		8,212		82,514		Interest income	7,374		(3,999)		3,375		1,849		5,224
Insurance underwriting income		—		51,491		—		51,491		—		51,491
Net gain on foreign exchange operations	Net gain on foreign exchange operations	885		303		2,888		4,076		—		4,076		Net gain on foreign exchange operations	(1,413)		1,516		103		—		103
Net loss on derivative	Net loss on derivative	(1,028)		—		—		(1,028)		—		(1,028)		Net loss on derivative	995		(49)		946		—		946

TOTAL REVENUE, NET	TOTAL REVENUE, NET	582,636		77,480		(62,567)		597,549		—		597,549		TOTAL REVENUE, NET	$	100,233	$	(21,889)	$	78,344	$	—	$	78,344

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


	For the nine months ended December 31, 2021
	As previously reported		Adjustments for discontinued operations		As restated		Correction of errors		As restated
Fee and commission income	$	336,178	$	(65,251)	$	270,927	$	(8,212)	262,715
Net gain on trading securities	185,554		9,716		195,270		—		195,270
Interest income	61,047		(9,920)		51,127		8,212		59,339
Net gain on foreign exchange operations	885		2,888		3,773		—		3,773
Net loss on derivative	(1,028)		—		(1,028)		—		(1,028)

TOTAL REVENUE, NET	$	582,636	$	(62,567)	$	520,069	$	—	$	520,069


	For the nine months ended December 31, 2020
	As previously reported		Adjustments for discontinued operations		As restated		Correction of errors		As restated
Fee and commission income	$	171,949	$	(33,603)	$	138,346	$	(2,359)	135,987
Net gain on trading securities	36,330		(17,087)		19,243		—		19,243
Interest income	16,571		(7,168)		9,403		2,359		11,762
Net gain on foreign exchange operations	1,359		(1,217)		142		—		142
Net loss on derivative	149		(88)		61		—		61

TOTAL REVENUE, NET	$	226,358	$	(59,163)	$	167,195	$	—	$	167,195

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 5 – CASH AND CASH EQUIVALENTS

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, cash and cash equivalents consisted of the following:

December 31, 2022 March 31, 2022
(Recasted)
Short term deposits in National Bank (Kazakhstan) $ 350,203 $ 42,517
Securities purchased under reverse repurchase agreements 129,955 19,947
Short term deposits in commercial banks 98,846 70,155
Short term deposits on brokerage accounts 43,507 71,061
Petty cash in bank vault and on hand 20,552 18,607
Short term deposits in stock exchanges 19,293 2,828
Overnight deposits 1,667 —
Cash in transit 63 35
Short term deposits in the Central Depository (Kazakhstan) 9 314
Total cash and cash equivalents $ 664,095 $ 225,464


	December 31, 2021		March 31, 2021
	(Recast)		(Recast)
Current account with National Bank (Kazakhstan)	$	55,816	$	36,726
Current accounts with commercial banks	39,076		61,203
Current accounts with brokers	27,582		37,324
Securities purchased under reverse repurchase agreements	13,826		11,917
Petty cash in bank vault and on hand	7,051		14,916
Accounts with stock exchanges	2,254		5,873
Current account with Central Depository (Kazakhstan)	753		58
Total cash and cash equivalents	$	146,358	$	168,017

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, with the exception of funds deposited with banks in the United States which may qualify for FDIC insurance up to $250,000, cash and cash equivalents were not insured.

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the cash and cash equivalents balance included ~~short-term~~ collateralized securities received under reverse repurchase agreements on the terms presented below:


		December 31, 2022									December 31, 2021 (Recast)
		Interest rates and remaining contractual maturity of the agreements									Interest rates and remaining contractual maturity of the agreements
		Average interest rate		Up to 30 days		30-90 days		Total			Average interest rate		Up to 30 days		30-90 days		Total
Securities purchased under reverse repurchase agreements	Securities purchased under reverse repurchase agreements									Securities purchased under reverse repurchase agreements
US sovereign debt										US sovereign debt	0.35	%	$	7,773	$	—	$	7,773
Non-US sovereign debt										Non-US sovereign debt	0.51	%	5,811		—		5,811
Corporate equity										Corporate equity	14.62	%	242		—		242
Corporate debt	Corporate debt	16.09	%	$	70,363	$	—	$	70,363	Corporate debt	—	%	—		—		—
Non-US sovereign debt		13.15	%	40,678		—		40,678
US sovereign debt		2.74	%	18,596		—		18,596
Corporate equity		18.57	%	318		—		318
Total securities sold under repurchase agreements	Total securities sold under repurchase agreements			$	129,955	$	—	$	129,955	Total securities sold under repurchase agreements			$	13,826	$	—	$	13,826

March 31, 2022 (Recasted)
Interest rates and remaining contractual maturity of the agreements
Average interest rate
Up to 30 days 30-90 days Total
Securities purchased under reverse repurchase agreements
US sovereign debt 16.38 % $ 9,952 $ — $ 9,952
Non-US sovereign debt 12.51 % 9,786 — 9,786
Corporate equity 16.90 % 152 — 152
Corporate debt 11.88 % 57 — 57
Total securities sold under repurchase agreements $ 19,947 $ — $ 19,947

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~


	March 31, 2021 (Recast)
	Interest rates and remaining contractual maturity of the agreements
	Average interest rate		Up to 30 days		30-90 days		Total
Securities purchased under reverse repurchase agreements
Corporate debt	10.15	%	$	8,460	$	—	$	8,460
US sovereign debt	0.88	%	1,785		—		1,785
Corporate equity	0.50	%	1,562		—		1,562
Non-US sovereign debt	13.09	%	110		—		110
Total securities sold under repurchase agreements			$	11,917	$	—	$	11,917

The securities received by the Company as collateral under reverse repurchase agreements are liquid trading securities with market quotes and significant trading volume. The fair value of collateral received by the Company under reverse repurchase agreements as of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, was ~~$137,377~~$333,803 and ~~$19,911,~~$12,123, respectively.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 6 – RESTRICTED CASH

Restricted cash for the periods ended December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, consisted of:


		December 31, 2022		March 31, 2022			December 31, 2021		March 31, 2021
				(Recasted)			(Recast)		(Recast)
Brokerage customers’ cash	Brokerage customers’ cash	$	355,294	$	531,032	Brokerage customers’ cash	$	408,175	$	482,135
Deferred distribution payments						Deferred distribution payments	8,534		8,535
Guaranty deposits	Guaranty deposits	100,463		5,540		Guaranty deposits	34		21
Deferred distribution payments		156		8,534
Restricted bank accounts		—		2,844

Allowance for restricted cash		(5,934)		—

Total restricted cash	Total restricted cash	$	449,979	$	547,950	Total restricted cash	$	416,743	$	490,691

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company’s restricted cash included the cash portion of the funds segregated in a special custody account for the exclusive benefit of its brokerage customers.

~~As of March 31, 2022, restricted~~ Restricted cash also included a deferred distribution payment amount, ~~of $8,534, representing cash~~which is a reserve held for distribution to shareholders who have not yet claimed their distributions from the 2011 sale of the Company’s ~~legacy~~ oil and gas exploration and production operations ~~which~~of $8,534. This distribution is currently payable, subject to the ~~subject~~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 their distribution payment. The entire deferred distribution payment amount was held in cash at December 31, 2021, and March 31, 2021. A Company shareholder entitled to a portion of the ~~Estate of Toleush Tolmakov litigation.~~distribution amount died before claiming the distribution. As a result of disputes between ~~a shareholder’s~~the individual’s putative heirs ~~no party~~and potential owners of an entity that also claimed through the shareholder, the Company has ~~yet established legal and beneficial ownership of the distribution payment. The Company did not claim an ownership interest in~~been unable to determine who is legally entitled to receive the distribution payment. During the ~~three months~~quarter ended December 31, ~~2022, $8,378~~2021, the putative estate asserted claims in Utah state court seeking, among other things, payment of ~~this amount was deposited with~~ the ~~court registry in accordance with a court order~~distribution. The Company and ~~was written off by~~ the ~~Company. Interest on such amount in~~putative estate have agreed to attempt to mediate the ~~amount of $156 continues to be recorded as restricted cash.~~dispute. For additional information regarding this matter see Part II, Item 1 Legal Proceedings of this quarterly report on Form ~~10-Q.~~10-Q/A.

NOTE 7 – TRADING AND AVAILABLE-FOR-SALE SECURITIES AT FAIR VALUE

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, trading and available-for-sale securities consisted of:

December 31, 2022 March 31, 2022
(Recasted)
Corporate debt $ 1,097,488 $ 712,134
Non-U.S. sovereign debt 734,068 360,570
Corporate equity 62,351 72,354
U.S. sovereign debt 34,012 10,435
Exchange traded notes 1,921 2,884
Total trading securities $ 1,929,840 $ 1,158,377

December 31, 2022 March 31, 2022
(Recasted)
Corporate debt $ 157,548 $ 145,837
Non-U.S. sovereign debt 12,905 12,997
U.S. sovereign debt 3,873 2,530
Total available-for-sale securities, at fair value $ 174,326 $ 161,364

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~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

~~The following tables present maturity analysis for available-for-sale securities as of December 31, 2022, and March 31, 2022:~~

December 31, 2022
Remaining contractual maturity of the agreements
Up to 1 year 1-5 years 5-10 years More than 10 years Total
Corporate debt 46,229 64,260 47,047 12 157,548
Non-US sovereign debt — 5,280 861 6,764 12,905
US sovereign debt — 898 1,712 1,263 3,873
Total available-for-sale securities, at fair value $ 46,229 $ 70,438 $ 49,620 $ 8,039 $ 174,326


		March 31, 2022
		Remaining contractual maturity of the agreements
		Up to 1 year		1-5 years		5-10 years		More than 10 years		Total			December 31, 2021		March 31, 2021
													(Recast)		(Recast)
Corporate debt	Corporate debt	69,364		50,155		26,284		34		145,837		Corporate debt	$	513,671	$	301,898
Non-US sovereign debt	Non-US sovereign debt	1,692		864		1,086		9,355		12,997		Non-US sovereign debt	395,667		239,630
Corporate equity												Corporate equity	22,149		39,280
Exchange traded notes												Exchange traded notes	9,386		2,077
US sovereign debt	US sovereign debt	—		—		—		2,530		2,530		US sovereign debt	6,960		4,661
Total trading securities												Total trading securities	$	947,833	$	587,546

Equity securities												Equity securities	$	1	$	1
Total available-for-sale securities, at fair value	Total available-for-sale securities, at fair value	$	71,056	$	51,019	$	27,370	$	11,919	$	161,364	Total available-for-sale securities, at fair value	$	1	$	1

As of December 31, ~~2022,~~2021, the Company held debt securities of two issuers ~~each of~~ which individually exceeded 10% of the Company’s total trading securities - the Kazakhstan Sustainability Fund JSC ~~(Fitch: BBB~~(BBB credit rating) in the amount of ~~$727,340~~$279,636 and the Ministry of Finance of the Republic of Kazakhstan (~~S&P Global:~~ BBB- credit rating) in the amount of ~~$723,750.~~$372,100. As of March 31, ~~2022,~~2021, the Company held debt securities of two issuers ~~each of~~ which individually exceeded 10% of the Company’s total trading securities - the Ministry of Finance of the Republic of Kazakhstan and the Kazakhstan Sustainability Fund JSC in the amounts of ~~$357,343~~$232,958 and ~~$506,472,~~$232,601, respectively.

The Company recognized no other-than-temporary impairment in accumulated other comprehensive ~~loss.~~income.

The fair value of ~~securities~~assets and liabilities is determined using observable market data based on recent trading activity. Where observable market data is unavailable due to a lack of trading activity, the Company utilizes internally developed models to estimate fair value and independent third parties to validate assumptions, when appropriate. Estimating fair value requires

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

significant management judgment, including benchmarking to similar instruments with observable market data and applying appropriate discounts that reflect differences between the securities that the Company is valuing and the selected benchmark. Depending on the type of securities owned by the Company, other valuation methodologies may be required.

Measurement of fair value is classified within a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The valuation hierarchy contains three levels:

•Level 1 - Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

•Level 2 - Valuation inputs are quoted market prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets, and other observable inputs directly or indirectly related to the asset or liability being measured.

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

•Level 3 - Valuation inputs are unobservable and significant to the fair value measurement.

The following tables present securities assets in the ~~Сondensed Сonsolidated Balance Sheets~~Condensed Consolidated Financial Statements or disclosed in the Notes to the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements at fair value on a recurring basis as of December 31, ~~2022,~~2021, and March 31, ~~2022:~~2021:


		Weighted Average Interest Rate				Total				Fair Value Measurements as of December 31, 2022 using												Weighted Average Interest Rate				Total			Fair Value Measurements at December 31, 2021 using (Recast)
								Quoted Prices in Active Markets for Identical Assets				Significant Other Observable Inputs				Significant Unobservable Units								Quoted Prices in Active Markets for Identical Assets					Significant Other Observable Inputs		Significant Unobservable Units
								(Level 1)				(Level 2)				(Level 3)								(Level 1)					(Level 2)		(Level 3)

Corporate debt	Corporate debt			13.99	%			$	1,097,488			$	1,001,417			$	95,800			$	271				Corporate debt	8.80		%	$	513,671	$	512,887	$	415	$	369
Non-U.S. sovereign debt	Non-U.S. sovereign debt			12.26	%			734,068				577,828				156,213				27					Non-U.S. sovereign debt	9.35		%	395,667		393,124		1,593		950
Corporate equity	Corporate equity	—	%			62,351				60,127				1,895				329		Corporate equity		—				22,149			21,151		553		445
Exchange traded notes																				Exchange traded notes		—				9,386			9,386		—		—
U.S. sovereign debt	U.S. sovereign debt	4.30	%			34,012				34,012				—				—		U.S. sovereign debt		2	%			6,960			6,960		—		—
Exchange traded notes		—	%			1,921				1,223				698				—

Total trading securities	Total trading securities					$	1,929,840			$	1,674,607			$	254,606			$	627	Total trading securities						$	947,833		$	943,508	$	2,561	$	1,764

Corporate debt		14.88	%			$	157,548			$	134,427			$	23,121			$	—
Non-US sovereign debt		8.99	%			12,905				5,894				7,011				—
US sovereign debt		4.20	%			3,873				3,873				—				—

Equity securities																				Equity securities		—				$	1		$	—	$	—	$	1
Total available-for-sale securities, at fair value	Total available-for-sale securities, at fair value					$	174,326			$	144,194			$	30,132			$	—	Total available-for-sale securities, at fair value						$	1		$	—	$	—	$	1

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


		Weighted Average Interest Rate				Total				Fair Value Measurements as of March 31, 2022 (Recasted) using												Weighted Average Interest Rate					Total				Fair Value Measurements at March 31, 2021 using (Recast)
								Quoted Prices in Active Markets for Identical Assets				Significant Other Observable Inputs				Significant Unobservable Inputs									Quoted Prices in Active Markets for Identical Assets						Significant Other Observable Inputs				Significant Unobservable Units
								(Level 1)				(Level 2)				(Level 3)									(Level 1)						(Level 2)				(Level 3)

Non-U.S. sovereign debt																				Non-U.S. sovereign debt					8.06	%			$	239,630			$	239,630			$	—			$	—
Exchange traded notes																				Exchange traded notes			—					2,077				2,077				—				—
Corporate debt	Corporate debt			9.09	%			$	712,134			$	711,539			$	—			$	595		Corporate debt		9.22	%			301,898				301,538				—				360
Non-U.S. sovereign debt		13.15	%			360,570				352,274				—				8,296
Corporate equity	Corporate equity	—				72,354				71,827				276				251		Corporate equity		—					39,280				20,607				—				18,673
U.S. sovereign debt	U.S. sovereign debt	2.35	%			10,435				10,435				—				—		U.S. sovereign debt		1.68		%			4,661				4,661				—				—
Exchange traded notes		—				2,884				2,884				—				—

Total trading securities	Total trading securities					$	1,158,377			$	1,148,959			$	276			$	9,142	Total trading securities							$	587,546			$	568,513			$	—			$	19,033

Corporate debt		11.09	%			$	145,837			$	145,837			$	—			$	—
Non-U.S. sovereign debt		5.51	%			12,997				12,997				—				—
U.S. sovereign debt		2.17	%			2,530				2,530				—				—

Equity securities																				Equity securities		—					$	1			$	—			$	—			$	1
Total available-for-sale securities, at fair value	Total available-for-sale securities, at fair value					$	161,364			$	161,364			$	—			$	—	Total available-for-sale securities, at fair value							$	1			$	—			$	—			$	1

The ~~tables~~table below ~~present~~presents the valuation techniques and significant level 3 inputs used in the valuation as of December 31, ~~2022,~~2021, and March 31, ~~2022.~~2021. The ~~tables are~~table is not intended to be all inclusive, but instead ~~capture~~captures the significant unobservable inputs relevant to determination of fair value.

Type Valuation Technique FV as of December 31, 2022 Significant Unobservable Inputs %
Non-US sovereign debt DCF $ 27 Discount rate 48.8%
Estimated number of years 11 years
Corporate debt DCF 271 Discount rate 74.0%
Estimated number of years 3 months
Corporate equity DCF 329 Discount rate 58.8%
Estimated number of years 9 years
Total $ 627


Type	Valuation Technique	FV as of December 31, 2021		FV as of March 31, 2021		Significant Unobservable Inputs	%
		(Recast)		(Recast)
Non-US sovereign debt	DCF	$	949	$	—	Discount rate	13.8%
						Estimated number of years	1 year
Corporate equity	DCF	$	446	$	302	Discount rate	18.5%
						Estimated number of years	9 years
Corporate debt	DCF	$	369	$	360	Discount rate	16.5%
						Estimated number of years	9 years
Corporate equity	DCF	$	—	$	18,371	Discount rate	10.6%
						Estimated number of years	9 years
Total		$	1,764	$	19,033

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Type Valuation Technique FV as of March 31, 2022 Significant Unobservable Inputs %
Non-US sovereign debt DCF $ 7,524 Discount rate 69.0%
Estimated number of years 11 years
Non-US sovereign debt DCF 772 Discount rate 13.9%
Estimated number of years 1 year
Corporate debt DCF 595 Discount rate 45.0%
Estimated number of years 3 months
Corporate equity DCF 251 Discount rate 20.0%
Estimated number of years 9 years
Total $ 9,142

As of December 31, 2021, shares of SPBX held by the Company were transferred from level 3 to level 1, due to active trades on the market. During the nine months ended December 31, 2021, market trades of SPBX shares were executed in the market, and market data for these shares became available.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended December 31, ~~2022,~~2021, and the year ended March 31, ~~2022:~~2021:


	~~Trading securities~~
~~Balance as of March 31, 2022 (Recasted)~~	$	~~9,142~~
~~Purchase of investments that use Level 3 inputs~~	~~1,980~~
~~Reclassification to level 2~~	~~(1,842)~~
~~Reclassification of securities from Freedom UA to restricted accounts~~	~~(2,384)~~
~~Sale~~	~~(5,089)~~
~~Revaluation of investments that use Level 3 inputs~~	~~(622)~~
~~Translation difference~~	~~(558)~~
~~Balance as of December 31, 2022~~	$	~~627~~

~~Balance as of March 31, 2021 (Recasted)~~	$	~~19,032~~
~~Reclassification to level 3~~	~~682~~
~~Reclassification to level 1~~	~~(18,370)~~
~~Purchase of investments that use Level 3 inputs~~	~~10,812~~
~~Revaluation of investments that use Level 3 inputs~~	~~(3,014)~~
~~Balance as of March 31, 2022 (Recasted)~~	$	~~9,142~~

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~


	Trading securities		Available-for-sale securities
Balance as of March 31, 2021 (Recast)	$	19,033	$	1
Reclassification to level 1	(18,408)		—
Redemption of securities that use Level 3 inputs	(1,030)		—
Purchase of investments that use Level 3 inputs	2,059		—
Revaluation of investments that use Level 3 inputs	110		—
Balance as of December 31, 2021 (Recast)	1,764		1

Balance as of March 31, 2020 (Recast)	$	11,259	$	1
Sale of investments that use Level 3 inputs	(2)		—
Purchase of investments that use Level 3 inputs	739		—
Revaluation of investments that use Level 3 inputs	7,037		—
Balance as of March 31, 2021 (Recast)	$	19,033	$	1

The table below presents the amortized cost, unrealized gains and losses accumulated in other comprehensive income, and fair value of available-for-sale securities as of December 31, ~~2022,~~2021, and March 31, ~~2022:~~2021:

December 31, 2022
Assets measured at amortized cost Recognized impairment loss in Income Statement Unrealized gain/(loss) accumulated in other comprehensive
income/(loss) Assets
measured at
fair value Maturity Date
Corporate debt $ 154,689 $ (402) $ 2,883 $ 157,548 2023 - 2042
Non-US sovereign debt 14,482 — (1,577) 12,905 2024 - indefinite
U.S. sovereign debt 4,574 — (701) 3,873 2024 - 2044
Total available-for-sale securities, at fair value $ 173,745 $ (402) $ 605 $ 174,326


	December 31, 2021 (Recast)
	Assets measured at amortized cost		Unrealized loss accumulated in other comprehensive income/(loss)		Assets measured at fair value

Equity securities	$	1	$	—	$	1

Balance as of December 31, 2021	$	1	$	—	$	1

March 31, 2022 (Recasted)
Assets measured at amortized cost Unrealized loss accumulated in other comprehensive
income/(loss) Assets
measured at
fair value Maturity Date
Corporate debt $ 146,112 $ (275) $ 145,837 2022 - 2035
Non-U.S. sovereign debt 13,784 (787) 12,997 2022 - indefinite
U.S. sovereign debt 2,912 (382) 2,530 2044
Total available-for-sale securities, at fair value $ 162,808 $ (1,444) $ 161,364

~~NOTE 8 – MARGIN LENDING, BROKERAGE AND OTHER RECEIVABLES, NET~~

~~Margin lending, brokerage and other receivables as of December 31, 2022, and March 31, 2022, consisted of:~~

December 31, 2022 March 31, 2022
(Recasted)
Margin lending receivables $ 393,659 $ 138,983
Receivables from brokerage clients 6,624 4,386
Bonds coupon receivable 1,977 —
Bank commissions receivable 1,852 598
Long-term installments receivables 1,184 1,367
Receivable from sale of securities 858 884
Receivable for underwriting and market-making services 526 296
Dividends accrued — 45
Other receivables 4,734 3,207
Allowance for receivables (7,846) (2,107)
Total margin lending, brokerage and other receivables, net $ 403,568 $ 147,659


	March 31, 2021 (Recast)
	Assets measured at amortized cost		Unrealized loss accumulated in other comprehensive income/(loss)		Assets measured at fair value

Equity securities	$	1	$	—	$	1

Balance as of March 31, 2021	$	1	$	—	$	1

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 8 – BROKERAGE AND OTHER RECEIVABLES, NET

~~Margin lending~~Brokerage and other receivables are amounts owed to the Company from customers as a result of borrowings by such customers against the value of qualifying securities, primarily for the purpose of purchasing additional securities. Amounts may fluctuate from period to period as overall client balances change as a result of market levels, client positioning and leverage. Credit exposures arising from margin lending activities are generally mitigated by their short-term nature, the value of collateral held and our right to call for margin when collateral values decline.

~~The fair value of collateral received by the Company under margin loans~~ as of December 31, ~~2022,~~2021, and March 31, ~~2022 was $1,086,725 and $4,432,621~~, ~~respectively.~~2021, consisted of:


	December 31, 2021		March 31, 2021
	(Recast)		(Recast)
Margin lending receivables	$	186,373	$	43,138
Receivables from brokerage clients	3,637		3,896
Long-term installments receivables	1,208		1,280
Receivable from sale of securities	1,050		484
Receivable for underwriting and market-making services	812		564
Bank commissions receivable	337		697
Dividends accrued	120		1,392
Bonds coupon receivable	—		—
Other receivables	2,380		48

Allowance for receivables	(1,759)		(1,981)

Total brokerage and other receivables, net	$	194,158	$	49,518

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, amounts due from a single related party customer were ~~$161,139 and $107,649,~~$125,799 a $9,866, respectively or ~~40%~~65% and ~~73%~~20% respectively, of total margin lending, brokerage and other receivables, net. Approximately ~~97%~~59% and ~~95%~~83% of these balances were due from Freedom Securities Trading Inc. (formerly known as FFIN Brokerage Services, Inc.) (“FFIN Brokerage”), a company owned by the Company's controlling shareholder, chairman and chief executive officer, Timur Turlov. Based on historical data, the Company considers receivables due from related parties fully collectible. As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, using historical and statistical data, the Company recorded an allowance for brokerage receivables in the amounts of ~~$7,846~~$1,759 and ~~$2,107,~~$1,981, respectively.

NOTE 9 – LOANS ISSUED

Loans issued as of December 31, ~~2022,~~2021, consisted of the following:

Amount Outstanding Due Dates
Average Interest Rate
Fair Value of Collateral Loan Currency
Mortgage loans $ 493,993 January, 2023 - December, 2047 8.70% $496,452 KZT
Uncollateralized Bank customer loans 91,149 January, 2023 - December, 2042 16.53% — KZT
Collateralized Bank customer loans 12,852 January, 2023 - December, 2025 1.91% 12,796 KZT/RUB
Car loans 34,660 January, 2023 - December, 2029 27.25% 37,211 KZT
Subordinated loans 5,000 December, 2025 3.00% — USD
Loans issued to policyholders 1,426 March, 2023 - December, 2023 14.97% 1,697 KZT
Other 297 March, 2023 - August, 2027 2.71% — EUR/KZT
Total loans issued $ 639,377


	Amount Outstanding		Due Dates	Average Interest Rate		Fair Value of Collateral		Loan Currency

Mortgage loan	$	19,874	February 2023 - September 2036	15.19	%	$	19,846	KZT
Uncollateralized bank customer loans	16,075		January 2022 - December 2036	18.22	%	—		KZT
Subordinated loan	5,132		December 2022-April 2024	4.89	%	—		USD
Subordinated loan	1,358		September 2029	7.00	%	—		UAH
	$	42,439

~~Freedom Bank KZ provides mortgage loans~~During the nine months ended December 31, 2021, the Company entered into agreements with a related party microfinance organization to ~~borrowers on behalf~~purchase uncollateralized consumer retail loans. The agreements provide the Company the ability to sell back to the microfinance organization up to $9,263 of the ~~JSC Kazakhstan Sustainability Fund ("Program Operator") related to the state mortgage program "7-20-25" and transfers the rights of claim on the~~total loans to the Program Operator. Under this program, borrowers can receive a mortgage at an interest rate of 7%, for 20 years. In accordance with the program and trust management agreement, Freedom Bank KZ carries out trust management of transferred mortgage loans, and transfers all repayments of principal amounts of mortgages plus 3% of the 7% interest to the Program Operator. The remaining 4% of the 7% interest is retained by Freedom Bank KZ as profit margin. Under the program and trust management agreement, Freedom Bank KZ is required to repurchase the rights of claims on transferred mortgage loans, when the loan principal amount and interest payments are overdue 90 days or more. The repurchase of delinquent loans is performed at the loan nominal value.purchased.

~~Since the Freedom Bank KZ sells those loans with recourse for uncollectible amounts, retains part of interest from those loans, and agrees to service those loans after the sale, Freedom Bank KZ~~The Company has determined that it ~~retains control over~~has assumed substantially all of the ~~mortgage loans transferred~~risks and ~~continues recognizing~~rewards from the ~~loans. As Freedom Bank KZ continues to recognize~~transferor of the loans, with the exception of the amount it has the right to sell back to the transferor, accordingly the Company has received control of the loans and has recognized the loans on its Condensed Consolidated Balance Sheets.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

also recognizes the associated liability in the amount of $319,694 as of December 31, 2022, which is presented separately as liability arising from continuing involvement in the Condensed Consolidated Balance Sheets. As of March 31, 2022 the corresponding liability amounted to $6,447.

~~As of December 31, 2022 and March 31,2022, mortgage loans include the state mortgage program "7-20-25" with a principal amount of $436,132 and $21,310,~~ ~~respectively~~.

Total loans issued as of December 31, 2022, includes uncollateralized bank customer loans purchased from a related party, microfinance organization Freedom Finance Credit (“FFIN Credit”), a start-up created and controlled by the Company's controlling shareholder, chairman and chief executive officer, Timur Turlov. FFIN Credit is a non-bank credit institution that issues loans in Kazakhstan under simplified lending procedures. FFIN Credit was created as a pilot project to test and improve the scoring models used for qualifying and issuing loans. The principal operation of FFIN Credit is to provide loans to customers online using biometric identification and its proprietary scoring process. After completion of the pilot launch, it is anticipated that the ownership of FFIN Credit will be sold by Mr. Turlov to the Company.

The agreements entered into by the Company with FFIN Credit to purchase uncollateralized bank customer loans provide the Company the ability to sell back to FFIN Credit up to $58,359 of the total loans purchased. ~~The Company has determined that it has received control over the loans purchased from FFIN Credit, and accordingly the Company has recognized such loans on its Condensed Consolidated Balance Sheets.~~

~~During the three and nine months ended December 31, 2022, the Company purchased loans in the aggregate amount of $50,594 and $89,935 and sold back loans totaling $12,977 and $32,904, respectively, to FFIN Credit, a company outside of the Company's group which is owned by Timur Turlov.~~ During the ~~three and~~ nine months ended December 31, 2021, the Company purchased loans in the aggregate ~~amount~~amount of ~~$9,546 and~~ $29,020 and sold back loans totaling ~~$3,968 and~~ $6,828 to ~~FFIN Credit, respectively.~~ the microfinance organization.

As of December 31, ~~2022,~~2021, the Company held outstanding loans purchased from ~~FFIN Credit~~the microfinance organization totaling ~~$100,433,~~$16,802, net of an allowance of ~~$7,511.~~$727.

Loans issued as of March 31, ~~2022,~~2021, consisted of the following:

Amount Outstanding Due Dates
Average Interest Rate
Fair Value of Collateral Loan Currency
Mortgage loans $ 51,924 April 2022 - March 2047 11.86 % 52,134 KZT
Uncollateralized bank customer loans 34,067 April 2022 - March 2047 17.56 % — KZT
Subordinated loan 5,033 December 2022-April 2024 4.89 % — USD
Subordinated loan 1,256 December 2022-April 2024 7.00 % — UAH
Other 123 February 2022-Febraury 2027 2.50 % — USD
Loans to policyholders 43 July 2022 - March 2023 12.02 % 284 KZT
Total loans issued (recasted) $ 92,446


	Amount Outstanding		Due Dates	Average Interest Rate		Fair Value of Collateral		Loan Currency

Subordinated loan	$	5,033	December 2022-April 2024	3.69	%	$	—	USD
Uncollateralized non-bank loan	2,382		January 2022 – February 2022	3.00	%	—		USD
Subordinated loan	1,331		September 2029	7.00	%	—		UAH
Bank customer loans	880		March 2024	15.41	%	729		KZT
	$	9,626

NOTE 10 – ~~PROVISION FOR INCOME TAXES~~DEFERRED TAX LIABILITIES

The Company is subject to taxation in the Russian Federation, Kazakhstan, ~~Russia,~~ Kyrgyzstan, Cyprus, Ukraine, Uzbekistan, Germany, Azerbaijan United Kingdom, Armenia and the United States of America.

The tax rates used for deferred tax assets and liabilities as of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, were 21% for the U.S., 20% for ~~Kazakhstan,~~ the Russian Federation, Kazakhstan, and ~~Azerbaijan,10% for~~ Kyrgyzstan, 31% for Germany, 12.5% for Cyprus, 18% for Ukraine, 2% for Azerbaijan, 25% for United Kingdom, 18% for Armenia and 15% for Uzbekistan. This note is presented excluding the discontinued operations, which is presented separately in Note 26 "Assets and Liabilities Held for Sale".

Deferred tax assets and liabilities of the Company are comprised of the following:


	December 31, 2021		March 31, 2021
	(Recast)		(Recast)
Deferred tax assets:
Tax losses carryforward	$	305	$	316
Accrued liabilities	97		109
Depreciation	16		16
Revaluation on trading securities	—		—
Valuation allowance	(305)		(316)
Deferred tax assets	$	113	$	125

Deferred tax liabilities:
Revaluation on trading securities	$	978	$	2,041
Fixed and intangible assets	621		1,568
Subordinated debt	—		523
Deferred tax liabilities	$	1,599	$	4,132

Net deferred tax liabilities	$	(1,486)	$	(4,007)

During the nine months ended December 31, ~~2022,~~2021, and ~~2021,~~2020, the effective tax rate was equal to ~~16.1%~~11.1% and ~~10.9%~~13.2%, respectively.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Net operating loss carryforwards as of December 31, 2021, and March 31, 2021, were $305 and $2,104, respectively, and are subject to income tax in Uzbekistan.

NOTE 11 – SECURITIES REPURCHASE AGREEMENT OBLIGATIONS

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, trading securities included collateralized securities subject to repurchase agreements as described in the following table:


		December 31, 2022									December 31, 2021 (Recast)
		Interest rates and remaining contractual maturity of the agreements									Interest rates and remaining contractual maturity of the agreements
		Average interest rate		Up to 30 days		30-90 days		Total			Average interest rate		Up to 30 days		30-90 days		Total
Securities sold under repurchase agreements	Securities sold under repurchase agreements									Securities sold under repurchase agreements
Non-US sovereign debt		16.26	%	$	572,731	$	51,898	$	624,629
Corporate debt	Corporate debt	16.44	%	586,939		4,774		591,713		Corporate debt	10.30	%	$	314,217	$	—	$	314,217
Non-U.S. sovereign debt										Non-U.S. sovereign debt	10.51	%	308,878		—		308,878
US sovereign debt	US sovereign debt	1.91	%	17,586		—		17,586		US sovereign debt	0.36	%	4,398		—		4,398
Total securities sold under repurchase agreements				$	1,177,256	$	56,672	$	1,233,928
Corporate equity										Corporate equity	—	%	—		—		—
Total										Total			$	627,493	$	—	$	627,493


		March 31, 2022 (Recasted)									March 31, 2021 (Recast)
		Interest rate and remaining contractual maturity of the agreements									Interest rate and remaining contractual maturity of the agreements
		Average interest rate		Up to 30 days		30-90 days		Total			Average interest rate		Up to 30 days		30-90 days		Total
Securities sold under repurchase agreements	Securities sold under repurchase agreements									Securities sold under repurchase agreements
Non-US sovereign debt										Non-US sovereign debt	9.28	%	$	229,122	$	—	$	229,122
Corporate debt	Corporate debt	11.96	%	$	609,405	$	142	$	609,547	Corporate debt	9.27	%	138,029		—		138,029
Non-US sovereign debt		10.85	%	222,893		—		222,893
Corporate equity										Corporate equity	3.78	%	5,757		—		5,757
US sovereign debt	US sovereign debt	0.77	%	7,396		—		7,396		US sovereign debt	0.40	%	1,810		—		1,810
Corporate equity		14.00	%	388		—		388
Total securities sold under repurchase agreements	Total securities sold under repurchase agreements			$	840,082	$	142	$	840,224	Total securities sold under repurchase agreements			$	374,718	$	—	$	374,718

The fair value of collateral pledged under repurchase agreements as of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, was ~~$1,248,410~~$711,850 and ~~$834,583,~~$374,610, respectively.

Securities pledged as collateral by the Company under repurchase agreements are liquid trading securities with market quotes and significant trading volume.

NOTE 12 – CUSTOMER LIABILITIES

The Company recognizes customer liabilities associated with ~~deposit~~ funds ~~of its~~held by our brokerage and bank customers. ~~As of~~ ~~December 31, 2022, and March 31, 2022, customer~~Customer liabilities ~~consisted~~consist of:

December 31, 2022 March 31, 2022
(Recasted)
Banking customers 1,026,605 246,284
Brokerage customers $ 759,847 $ 519,344
Total customer liabilities $ 1,786,452 $ 765,628

~~As of December 31, 2022,~~ banking customer liabilities consisted of demand deposits and term deposits of $697,736 and $328,869, respectively. As of March 31, 2022, banking customer liabilities consisted of demand deposits and term deposits of $155,494 and $90,790~~, respectively.~~


	December 31, 2021		March 31, 2021
	(Recast)		(Recast)
Brokerage customers	$	360,652	$	547,349
Banking customers	192,363		124,476
Total	$	553,015	$	671,825

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

In accordance with Kazakhstan local law requirements, commercial banks conclude agreements with JSC Kazakhstan Deposit Insurance Fund ("KDIF"), under which banks have to pay commissions to KDIF on a recurring basis, the amountAs of ~~which, depends on the term and demand deposits received by banks from the customers. Under the agreement, KDIF insures the term and demand deposits up to $43 to each customer. As at~~ December 31, ~~2022~~2021, banking customer liabilities consisted of current accounts and deposits of $69,629 and $124,701, respectively. As of March 31, ~~2022, respectively, Freedom Bank KZ had a total amount~~2021, banking customer liabilities consisted of ~~insured bank~~current accounts and deposits ~~in amounts~~ of ~~$185,159~~$133,493 and ~~$42,697 for all customers.~~$92,118, respectively.

NOTE 13 – ~~MARGIN LENDING AND~~ TRADE PAYABLES

~~As of~~ ~~December 31, 2022, and March 31, 2022, margin lending and trade~~Trade payables of the Company ~~was~~is comprised of the following:


		December 31, 2022		March 31, 2022			December 31, 2021		March 31, 2021
				(Recasted)			(Recast)		(Recast)
Margin lending payables		$	139,214	$	39,250
Margin lending payable						Margin lending payable	$	45,990	$	20,120
Payables to suppliers of goods and services	Payables to suppliers of goods and services	1,375		4,462		Payables to suppliers of goods and services	3,666		1,383
Trade payable for securities purchased	Trade payable for securities purchased	476		462		Trade payable for securities purchased	516		292
Other	Other	1,276		909		Other	203		207
Total margin lending and trade payables		$	142,341	$	45,083
Total						Total	$	50,375	$	22,002

On December 31, ~~2022,~~2021, and March 31, ~~2022, margin lending payable~~2021, trade payables due to a single re~~lated~~related party were ~~$4,507~~$41,801 or ~~3% of total margin lending payable an~~83%~~d $38,889~~ and $13,810 or ~~86% of margin lending payable,~~62%, respectively.

NOTE 14 – SECURITIES SOLD, NOT YET PURCHASED – AT FAIR VALUE

~~The following table provides a reconciliation~~As of December 31, 2021, and March 31, 2021, the ~~beginning and ending balances for~~Company’s securities sold, not yet purchased - at fair value bywas $15,167 and $8,569, respectively.

During the nine months ended December 31, 2021, the Company assold shares that were not owned by it in the amount of $6,285 and closed short positions in the amount of $23. During the nine months ended December 31, ~~2022,~~2021, the Company recognized a loss on the change in the fair value of financial liabilities in the amount of $313 in the Condensed Consolidated Statements of Operations and ~~March 31, 2022:~~


	~~Total~~
~~Balance as of March 31, 2021 (Recasted)~~	$	~~8,569~~
~~Short sales~~	~~7,055~~
~~Repurchase~~	~~(346)~~
~~Net gain on trading securities~~	~~(1,413)~~
~~Balance as of March 31, 2022 (Recasted)~~	$	~~13,865~~

~~Balance as of March 31, 2022 (Recasted)~~	$	~~13,865~~
~~Short sales~~	~~410~~
~~Repurchase~~	~~(15,627)~~
~~Net loss on trading securities~~	~~1,352~~
~~Balance as of December 31, 2022~~	$	—

Statements of Other Comprehensive Income.

A short sale involves the sale of a security that is not owned with the expectation of purchasing the same security (or a security exchangeable) at a later date at a lower price. A short sale involves the risk of a theoretically unlimited increase in the market price of the security that would result in a theoretically unlimited loss.

NOTE 15 – LOANS RECEIVED

Loans received by the Company includes:


Company	Lender	December 31, 2021		March 31, 2021		Interest Rate		Term	Maturity dates
		(Recast)		(Recast)
Freedom Holding Corp.	Non-Bank	$	3,497	$	3,373	5.00	%	26 months	12/31/22
Total		$	3,497	$	3,373

As of December 31, 2021, non-bank loans received were unsecured. As of December 31, 2021, and March 31, 2021, accrued interest on the loans totaled $197 and $73, respectively.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 1516 – DEBT SECURITIES ISSUED

~~As of December 31, 2022, and March 31, 2022, outstanding~~Outstanding debt securities ~~issued by~~of the Company ~~included~~include the following:

Debt securities issued by: December 31, 2022 March 31, 2022
(Recasted)
Freedom SPC $ 36,799 $ 13,203
Freedom Holding Corp. — 20,499
Accrued interest 393 688
Total debt securities issued $ 37,192 $ 34,390


	December 31, 2021		March 31, 2021
	(Recast)		(Recast)
Debt securities issued denominated in USD	$	33,498	$	30,700
Accrued interest	149		649
Total	$	33,647	$	31,349

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the ~~Company’s outstanding~~Company's debt securities ~~had fixed annual coupon rates ranging from 5.5% to 7% and maturity dates ranging from December 2022 to October 2026.~~

Asinclude $20,498 of ~~December 31, 2022, the Company fully redeemed~~ FRHC notes ~~which were~~ issued from December 2019 to February 2020. The FRHC notes denominated in U.S. dollars, bear interest at an annual rate of 7%7.00% and ~~were~~are due in December 2022. The FRHC notes were issued under Astana International Financial Centre law and ~~traded~~trade on the AIX.

The Company’s debt securities ~~as of December 31, 2022,~~also include ~~$36,799~~$13,000 of Freedom SPC bonds issued in October 2021. The Freedom SPC bonds are denominated in U.S. dollars, bear interest at an annual rate of ~~5.5%~~5.50% and are due in October 2026. The Freedom SPC bonds were issued under Astana International Financial Centre law and trade on the AIX. FRHC is a guarantor of the Freedom SPC bonds. The proceeds from ~~the issuance of the~~ Freedom SPC bonds were loaned to FRHC pursuant to a loan agreement dated November 22, 2021. The interest rate ~~under~~of the loan agreement is 5.5% per annum. Interest payments are duly semi-annually in April and October. Repayment of the loan is due October 2026.

On May 29, 2021 the Company retired U.S. dollar denominated 8% Freedom KZ bonds that had a carrying value of $10,477 including interest accrued of $274 as of March 31, 2021

Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs.~~The group has no covenants to comply with.~~

~~NOTE 16 – INSURANCE CONTRACTS ASSETS AND LIABILITIES FROM INSURANCE ACTIVITIES~~

~~As of December 31, 2022, and March 31, 2022, insurance and reinsurance receivables of the Company was comprised of the following:~~

December 31, 2022 March 31, 2022
Assets: (Recasted)
Amounts due from policyholders $ 5,615 $ 3,500
Claims receivable from reinsurance 897 769
Amounts due from reinsured 52 23
Less provision for impairment losses (995) (343)
Insurance and reinsurance receivables: 5,569 3,949
Unearned premium reserve, reinsurers’ share 3,763 143
Reserves for claims and claims’ adjustment expenses, reinsurers’ share 1,911 1,620
Total $ 11,243 $ 5,712

~~As of December 31, 2022, and March 31, 2022, the premium receivables from policyholders increased due to the expansion of operations.~~

~~Table of Contents~~


~~FREEDOM HOLDING CORP.~~ ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~ ~~(All amounts in thousands of United States dollars, except share data, unless otherwise stated)~~

~~As of December 31, 2022, and March 31, 2022, insurance and reinsurance payable of the Company was comprised of the following:~~

December 31, 2022 March 31, 2022
Liabilities: (Recasted)
Amounts payable to reinsurers $ 2,405 $ 402
Amounts payable to insured 2,305 685
Amounts payable to agents and brokers 2,081 1,981
Insurance and reinsurance payables: 6,791 3,068
Unearned premium reserve 31,103 17,985
Reserves for claims and claims’ adjustment expenses 118,648 98,437
Total $ 156,542 $ 119,490

~~As of December 31, 2022, and March 31, 2022, the amount payable to agents and brokers increased due to the expansion of operations.~~

~~Table of~~ C ~~ontents~~


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

~~NOTE 17 – FEE AND COMMISSION INCOME~~

Fee and commission income is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any.

The Company’s revenues from contracts with customers are recognized when the performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. The majority of the Company’s performance obligations are satisfied at a point in time and are typically collected from customers by debiting their brokerage account with the Company.

~~Brokerage Services and Bank services~~

Commissions from brokerage services — The Company earns commission revenue by executing, settling and clearing transactions with clients primarily in exchange-traded and over-the-counter corporate equity and debt securities, money market instruments and exchange-traded options and futures contracts. Commissions from bank services — The Company earns bank commissions by executing client order for money transfer, purchase and sale of foreign currency, and other bank services. A substantial portion of the Company's revenue is derived from commissions from private clients through accounts with transaction-based pricing. Trade execution and clearing services, when provided together, represent a single performance obligation, as the services are not separately identifiable in the context of the contract. Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade date when the performance obligation is satisfied.

Commission revenue is generally paid on settlement date, which is generally two business days after trade date for equity securities and corporate bond transactions and one day for government securities, options and commodities transactions. The Company records a receivable on the trade date and receives a payment on the settlement date.

~~Investment Banking~~

The Company earns underwriting revenues by providing capital raising solutions for corporate clients through initial public offerings, follow-on offerings, equity-linked offerings, private investments in public entities, and private placements. Underwriting revenues are recognized at a point in time on trade date, as the client obtains the control and benefit of the capital markets offering at that point. These fees are generally received within 90 days after the transactions are completed. Transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction, are deferred and recognized in the same period as the related investment banking transaction revenue. Underwriting revenues and related expenses are presented gross on the condensed consolidated income statements of operations.

~~Receivables and Contract Balances~~

Receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. Margin lending, brokerage and other receivables are disclosed in Note 8 in the notes to condensed consolidated financial statements.

~~Table of~~ C ~~ontents~~


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Contract assets arise when the revenue associated with the contract is recognized before the Company’s unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. As of December 31, 2022 and March 31, 2022, contract asset balances were not material.

Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized either when a milestone is met triggering the contractual right to bill the customer or when the performance obligation is satisfied. As of December 31, 2022 and March 31, 2022, contract liability balances were not material.

~~During the three and nine months ended December 31, 2022, and December 31, 2021, fee and commission income was comprised of:~~

Three months ended December 31, 2022
Central Asia Europe U.S. Middle East/Caucasus Total
Brokerage services $ 19,490 $ 47,893 $ 1,149 $ — $ 68,532
Bank services 5,507 — — — 5,507
Underwriting and market-making services 4,778 — — — 4,778
Other fee and commission income 1,473 593 — — 2,066
Total fee and commission income $ 31,248 $ 48,486 $ 1,149 $ — $ 80,883

Nine months ended December 31, 2022
Central Asia Europe U.S. Middle East/Caucasus Total
Brokerage services $ 31,814 $ 192,330 $ 3,332 $ — $ 227,476
Bank services 15,100 — — — 15,100
Underwriting and market-making services 8,008 — — — 8,008
Other fee and commission income 1,793 1,109 — — 2,902
Total fee and commission income $ 56,715 $ 193,439 $ 3,332 $ — $ 253,486

~~Table of~~ C ~~ontents~~


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Three months ended December 31, 2021 (Restated)
Central Asia Europe U.S. Middle East/Caucasus Total
Brokerage service (1)
$ 2,474 $ 82,970 $ 1,256 $ — $ 86,700
Bank services 2,295 — — — 2,295
Underwriting and market-making services 1,828 — — — 1,828
Other fee and commission income 393 192 — — 585
Total fee and commission income $ 6,990 $ 83,162 $ 1,256 $ — $ 91,408

~~________________~~

~~(1) Amounts are shown after reclassification of interest income from margin lending. Please see Note 4.~~

Nine months ended December 31, 2021 (Restated)
Central Asia Europe U.S. Middle East/Caucasus Total
Brokerage services (1)
$ 5,706 $ 240,152 $ 3,391 $ — $ 249,249
Bank services 4,027 — — — 4,027
Underwriting and market-making services 5,832 — — — 5,832
Other fee and commission income 2,527 914 — — 3,441
Total fee and commission income $ 18,092 $ 241,066 $ 3,391 $ — $ 262,549

~~____________________~~

~~(1) Amounts are shown after reclassification of interest income from margin lending. Please see Note 4.~~

~~Table of~~ C ~~ontents~~


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 1817 – NET GAIN ON TRADING SECURITIES

~~During the three and nine months ended December 31, 2022, and December 31, 2021, net~~

Net gain on trading securities ~~was~~is comprised of:

Three Months Ended
December 31, 2022
Three Months Ended
December 31, 2021
(Restated)
Net unrealized gain/(loss) recognized during the reporting period on trading securities still held at the reporting date $ 73,257 $ (33,567)
Net (loss)/gain recognized during the period on trading securities sold during the period (47,801) 41,230
Net gain recognized during the period on trading securities $ 25,456 $ 7,663
Nine Months Ended
December 31, 2022
Nine Months Ended
December 31, 2021
(Restated)
Net unrealized gain recognized during the reporting period on trading securities still held at the reporting date $ 65,684 $ 7,903
Net (loss)/gain recognized during the period on trading securities sold during the period (26,790) 190,044
Net gain recognized during the period on trading securities $ 38,894 $ 197,947


	Three Months Ended December 31, 2021		Three Months Ended December 31, 2020
	(Recast)		(Recast)
Net gain recognized during the period on trading securities sold during the period	$	41,386	$	6,571
Net unrealized (loss)/gain recognized during the reporting period on trading securities still held at the reporting date	(34,372)		7,401
Net gain recognized during the period on trading securities	$	7,014	$	13,972


	Nine Months Ended December 31, 2021		Nine Months Ended December 31, 2020
	(Recast)		(Recast)
Net gain recognized during the period on trading securities sold during the period	$	189,783	$	13,563
Net unrealized (loss)/gain recognized during the reporting period on trading securities still held at the reporting date	5,487		5,680
Net gain recognized during the period on trading securities	$	195,270	$	19,243

As of December 31, 2021, and March 31, 2021, the Company held in its proprietary trading portfolio shares SPBX at fair value of $7,182 and $18,371, respectively.

During the quarter ended December 31, 2022, the Company sold 5,350,000 SPBX shares. As a result of such sale, for the three months ended December 31, 2022, we recognized net loss on trading securities sold of $51,240, which included $52,072 of unrealized net loss recognized during previous periods that was reclassified to realized net loss during the quarter ended December 31, 2022.

~~During the quarter ended December 31, 2021, we exchanged approximately 1,000,000 shares of stock in the SPBX we held~~

~~in our proprietary trading account for units in the SPBX ETF. As a result, for~~ the three months ended December 31, 2021, ~~we recognized net gain on trading securities~~the Company exchanged approximately 1,000,000 shares of its stock of SPBX for units in the closed-end unit investment combined fund “SPB fund” (the “SPBX ETF”) and sold ~~of $39,658, which included $36,079 of unrealized net gain recognized during previous periods that was reclassified to realized net gain during the quarter ended December 31, 2021.~~

those SPBX

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~~NOTE 19 - NET INTEREST INCOME/EXPENSE~~

~~Net interest income/expense~~ETF units to approximately 490 investors through placement agents for net proceeds of $11,338. Additionally, during the three ~~and nine~~ months ended December 31, ~~2022, and~~2021, the Company sold approximately 2,423,000 shares of SPBX to the market for net proceeds of $32,858. As a result, during the three months ended December 31, 2021, ~~includes:~~the Company recognized net gain on trading securities sold of $39,658, which included $36,079 of unrealized net gain recognized during previous periods that was reclassified to realized gain during the three months ended December 31, 2021.

Three months ended December 31, 2022 Three months ended December 31, 2021
Interest income: (Restated)
Interest income on securities repurchased under reverse repurchase agreements and amounts due from banks $ 4,062 $ 280
Interest income on trading securities 44,760 20,745
Interest income on available-for-sale securities 6,727 6,470
Interest income on margin lending (2)
12,379 4,921
Interest income on loans issued 12,327 1,241
Total interest income $ 80,255 $ 33,657
Interest expense:
Interest expense on securities repurchase agreement obligations $ 39,958 $ 15,671
Interest expense on customer liabilities 11,149 5,732
Interest expense on debt securities issued 842 394
Other interest expense 88 93
Total interest expense $ 52,037 $ 21,890
Net interest income $ 28,218 $ 11,767

Nine months ended December 31, 2022 Nine months ended December 31, 2021
Interest income: (Restated)
Interest income on securities repurchased under reverse repurchase agreements and amounts due from banks $ 6,198 $ 887
Interest income on trading securities 116,922 54,966
Interest income on available-for-sale securities 13,280 16,244
Interest income on margin lending (2)
27,259 8,212
Interest income on loans issued 24,158 2,205
Total interest income $ 187,817 $ 82,514
Interest expense:
Interest expense on securities repurchase agreement obligations $ 105,466 $ 38,548
Interest expense on customer accounts and deposits 24,780 12,645
Interest expense on debt securities issued 2,457 1,323
Interest expense on loans received 268 291
Other interest expense — 45
Total interest expense $ 132,971 $ 52,852
Net interest income $ 54,846 $ 29,662

~~____________________~~

~~(2) Amounts for~~During the ~~three and~~ nine months ended December 31, 2021, ~~are shown after reclassification~~the Company exchanged approximately 12,500,000 shares of ~~interest income~~its stock of SPBX for units in the SPBX ETF. During the nine months ended December 31, 2021, the Company sold its SPBX ETF units to approximately 15,490 investors through placement agents for net proceeds of $167,011. Additionally, during the three months ended December 31, 2021, the Company sold approximately 2,423,000 shares of SPBX to the market for net proceeds of $32,858. As a result, during the nine months ended December 31, 2021, the Company recognized net gain on trading securities sold of $189,783, which included $177,146 of realized gain from ~~margin lending. Please see Note 4~~

the sale of the SPBX ETF and SPBX shares
.

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~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 2018 – RELATED PARTY TRANSACTIONS

During the three months ended December 31, 2021, and 2020, the Company earned commission income from related parties in the amounts of $76,655 and $51,436, respectively. During the nine months ended December 31, ~~2022~~2021, and ~~2021,~~2020, the Company ~~engaged~~earned commission income from related parties in ~~various related party transactions, a substantial amount~~the amounts of which were conducted with Freedom Securities Trading Inc. (formerly known as FFIN Brokerage Services, Inc.) (“FFIN Brokerage”), a Belize company which is owned personally by the Company’s chief executive officer, chairman$220,563 and majority shareholder, Timur Turlov, and is not part of the FRHC group of companies. FFIN Brokerage has its own brokerage customers, which include individuals and market-maker institutions and conducts business with the Company through a client omnibus account at Freedom EU.

~~Fee and commission~~$116,771, respectively. Commission income earned from related parties is comprised primarily of brokerage commissions and commissions for money transfers by brokerage clients, principally FFIN Brokerage. Fee and commission income earned from FFIN Brokerage principally consists of fees and commissions paid by FFIN Brokerage to Freedom EU to execute trades requested by brokerage customers of FFIN Brokerage, as well as commissions paid by FFIN Brokerage for order flow, which is net compensation received from firms to which our broker-dealer subsidiaries send equity and options orders, and fees for outstanding short sale positions. clients.

During the three months ended December 31, ~~2022~~2021, and ~~2021,~~2020, the Company ~~earned fee and~~paid commission ~~income from~~expense to related parties in the ~~amounts~~amount of ~~$44,590~~$3,805 and ~~$80,024,~~$6,139, respectively. Fee and commission income generated from FFIN Brokerage accounted for approximately 98% of the Company's total related party fee and commission income for the three months ended December 31, 2022, as compared to approximately 94% of the Company's total related party fee and commission income for the three months ended December 31, 2021. During the nine months ended December 31, ~~2022~~2021, and ~~2021,~~2020, the Company ~~earned fee and~~paid commission ~~income from~~expense to related parties in the ~~amounts~~amount of ~~$181,396~~$14,297 and $230,026, respectively. Fee and commission income generated from FFIN Brokerage accounted for approximately 93% and 96% of the Company's total related party fee and commission income for the nine months ended December 31, 2022 and 2021,$19,302, respectively.

Interest income earned from related parties is comprised entirely of interest income from FFIN Brokerage, principally interest income from margin lending. During the three months ended December 31, ~~2022~~2021 and ~~2021,~~2020, the Company earned interest income from related parties in the amounts of ~~$10,796~~$3,813 and ~~$3,807,~~$1,677, respectively. Interest income generated from FFIN Brokerage accounted for approximately 100% of the Company's total related party interest income for each of the three months ended December 31, ~~2022,~~2021, and ~~the three months ended December 31, 2021.~~2020. During the nine months ended December 31, ~~2022~~2021 and ~~2021,~~2020, the Company earned interest income from related parties in the amounts of ~~21,659~~$5,076 and ~~$4,221,~~$2,062, respectively. Interest income generated from FFIN Brokerage accounted for approximately 100% of the Company's total related party interest income for each of the nine months ended December 31, ~~2022~~2021, and ~~2021, respectively~~.2020.

During the three months ended December 31, ~~2022~~2021, and 2021, the Company paid fee and commission expense for brokerage services to Wisdompoint Capital LTD and FFIN Brokerage in the amount of $2,304 and $3,823, respectively. During the nine months ended December 31, 2022 and 2021, the Company paid fee and commission expense for brokerage services to related parties in the amounts of $2,657 and $14,350, respectively.

~~During the three months ended December 31, 2022 and 2021,~~2020, the Company recorded stock-based compensation expense for restricted stock grants to related parties in the amount of ~~$345~~$385 and ~~$385,~~$0, respectively. During the nine months ended December 31, ~~2022,~~2021, and ~~2021,~~2020, the Company recorded stock-based compensation expense for restricted stock grants to related parties in the amount of ~~$1,028~~951 and ~~$950, respectively.~~$0, respectively.

~~Margin lending, brokerage and other receivables from related parties result principally from borrowings made under margin loans by related parties, principally FFIN Brokerage.~~ As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had ~~margin lending receivables with~~cash and cash equivalents held in brokerage accounts of related parties totaling ~~$161,139~~$22,822 and ~~$107,649,~~$12,237, respectively. ~~97% and 95% of these balances were due from FFIN Brokerage. Margin lending receivables from FFIN Brokerage principally represent margin loans granted by Freedom EU to FFIN Brokerage.~~

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had bank commission receivables and receivables from brokerage clients from related parties totaling ~~$947~~$361 and ~~$190,~~$960, respectively. Brokerage and other receivables from related parties result principally from commissions receivable on the brokerage operations of related parties.

As of December 31, 2021, and March 31, 2021, the Company had margin lending receivables with related parties totaling $125,799 and $9,866, respectively.

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had margin lending payables to related parties, totaling ~~$4,507~~$41,801 and ~~$38,889,~~$13,810, respectively. ~~100% of these balances were due to Wisdompoint Capital LTD, as~~

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had accounts payable due to a related party totaling $438 and $299, respectively. ~~Wisdompoint Capital LTD (formerly Tradernet Limited) is a Cyprus company~~

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~~related to Freedom EU through common management. Wisdompoint Capital LTD provides brokerage services to the Company.~~

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had ~~accounts payable to Timur Turlov~~financial liability with related parties totaling ~~$271~~$1,712 and ~~$313,~~$1,707, respectively.

As of December 31, ~~2022,~~2021, and March 31, 2022, the Company had amounts due to Timur Turlov related to the purchase price for the acquisition by the Company from Timur Turlov of two insurance companies, Freedom Life and Freedom Insurance, totaling $12,958 and $21,477, respectively. During the three months ended December 31, 2022 the Company paid the payable for acquisition of Freedom Life for $13,630. The payment of the consideration for Freedom Insurance is planned to be paid in February 2023.

~~As of December 31, 2022, and March 31, 2022,~~2021, the Company had customer liabilities to related parties totaling ~~$351,140~~$181,260 and ~~$325,904,~~$235,460 respectively. As of December 31, 2022, and March 31, 2022, 73% and 54%, respectively, of these balances were deposits from FFIN Brokerage held by Freedom EU related to brokerage services provided by Freedom EU to FFIN Brokerage.

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, the Company had restricted customer cash deposited in current and brokerage accounts with related parties in the amounts of ~~$127,211~~$195,824 and ~~$222,651. As of December 31, 2022, and March 31, 2022, 19% and 78%, respectively, of these balances were from FFIN Brokerage.~~$156,878.

During the ~~the three and~~ nine months ended December 31, ~~2022,~~2021, the Company purchased loans in the aggregate amount of ~~$50,594 and $89,935~~$29,020 and sold back loans totaling ~~$12,977 and $32,904, respectively,~~$6,828 to ~~FFIN Credit,~~ a ~~company outside of the FRHC group which is owned by Timur Turlov.~~

related party microfinance organization. As of December 31, ~~2022, and March 31, 2022~~2021, the Company ~~had cash and cash equivalents~~ held ~~in brokerage accounts~~outstanding loans purchased from the microfinance organization totaling $16,802, net of ~~related parties totaling $15,971 and $22,787 respectively. 100%~~an allowance of ~~these balances were due to Wisdompoint Capital LTD.~~

$727.

In July 2021, to comply with certain foreign ownership restrictions relating to registered Ukrainian broker-dealers, the Company sold 23.88% of ~~its~~the outstanding equity interest inof Freedom UA ~~for $415~~ to Askar Tashtitov, the Company’s president, ~~reducing the Company's direct ownership interest in Freedom UA to approximately 9%.~~for $416. For additional information regarding this transaction, see Note 1 – Description of Business.

~~During the three months ended December 31, 2022 and 2021 Freedom Finance Technologies sold SPBX shares with a value of $832 and $1,912, respectively, to FFIN Brokerage.~~

~~Margin lending, brokerage~~Brokerage and related banking services, including margin lending, were provided to related parties pursuant to standard client account agreements and at standard market rates.

NOTE 2119 – STOCKHOLDERS’ EQUITY

On October 6, 2022, the Company awarded a restricted stock grant totaling 20,000 shares of its common stock to key employees of the Company. Of the 20,000 shares awarded pursuant to the restricted stock grant awards, 4,000 shares vested on the date of the award, 4,000 shares vest on May 18, 2023, 4,000 shares vest on May 18, 2024, 4,000 shares vest on May 18, 2025 and 4,000 shares vest on May 18, 2026.

On October 11, 2022, the Company awarded a stock grant totaling 18,284 shares of its common stock to key employees of the Company's subsidiary, which vested on the date of the award, and on October 20, 2022, the Company awarded a stock grant totaling 8,000 shares of its common stock to a consultant of the Company, which vested on the date of the award.

In May 2022, Freedom KZ completed the acquisition of two insurance companies, Freedom Life and Freedom Insurance. Prior to being acquired by the Company, these two companies were 100% controlled by Timur Turlov. The consideration for the purchase was $26,588. The Company is required to pay the purchase price to Timur Turlov by no later than December 31, 2022. As at December 31,2022 Freedom KZ has repaid the payable for acquisition of Freedom Life for $13,630. The payment of the consideration for Freedom Insurance is planned to be paid in February 2023.

During the ~~three and~~ nine months ended December 31, ~~2022, Timur Turlov made~~2021, non-qualified stock options to purchase 60,000 shares were exercised at a ~~capital contribution to~~strike price of $1.98 per share for total proceeds of $119. During the ~~Company in the amount of $0 and $677, respectively.~~

T ~~able of Contents~~nine months ended December 31, 2020, no outstanding non-qualified stock options were exercised.


~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

On March 30, 2022, the Company awarded a restricted stock grant totaling 7,500 shares of its common stock to one executive officer of the Company. Of the 7,500 shares awarded pursuant to the restricted stock grant awards, 3,000 shares vest on May 18, 2023, 1,500 shares vest on May 18, 2024, 1,500 shares vest on May 18, 2025 and 1,500 shares vest on May 18, 2026.

On May 18, 2021, the Company awarded restricted stock grants totaling 1,031,500 shares of its common stock to 56 employees and consultants of the Company, including two executive officers of the Company. Of the 1,031,500 shares awarded pursuant to the restricted stock grant awards, 200,942 shares are subject to one-year vesting, 211,658 shares are subject to two-year vesting and 206,300 shares per year are subject to three, four and five-year vesting schedule, respectively.

~~The~~On December 30, 2020, the Company ~~recorded stock-based compensation expense for~~awarded restricted stock grants ~~and stock options~~ in the amount of ~~$3,945~~15,000 shares of its common stock to three employees. Of the 15,000 shares awarded pursuant to the restricted stock grant awards, 4,500 shares are subject to one-year vesting conditions, 4,500 shares are subject to two-year vesting conditions and ~~$10,746 during the three and nine months ended December 31, 2022.~~ 6,000 shares are subject to three-year vesting conditions.

The Company recorded stock-based compensation expense for restricted stock grants and stock options in the amount of $4,561 and $11,283 during the three and nine months ended December 31, ~~2021.~~2021, respectively. During the three and nine months ended December 31, 2020, the Company recorded stock-based compensation expense for restricted stock grants and stock options in the amount of $35 and $1,090, respectively.

NOTE 2220 – STOCK BASED COMPENSATION

During the nine months ended December 31, ~~2022,~~2021, a total of ~~20,000~~1,031,500 restricted shares ~~with five year vesting period~~ were awarded to key ~~employees and 26,284 shares with immediate vesting were awarded to key~~ employees.

The compensation expense related to restricted stock grants was ~~$3,945 during the three months ended December 31, 2022, and~~ $4,561 during the three months ended December 31, ~~2021.~~2021, and $31 during three months ended December 31, 2020. The compensation expense related to restricted stock grants was $11,283 during the nine months ended December 31, 2021, and $978 during the nine months ended December 31, 2020. As of December 31, ~~2022 and March 31, 2022,~~2021, there was ~~$14,379 and~~ $28,899 of total unrecognized compensation cost related to non-vested shares of common stock granted. The cost is expected to be recognized over a weighted average period of ~~3.33~~4.36 years.

~~The Company has determined the fair value of restricted shares awarded as of grant date, using the Monte Carlo valuation model based on the following key assumptions:~~


~~Term (years)~~	~~3.62~~
~~Volatility~~	~~35.2~~	%
~~Risk-free rate~~	~~4.18~~	%

~~The table below summarizes the activity for the Company’s restricted stock outstanding during the nine months ended December 31, 2022:~~

Shares Weighted
Average
Fair Value
Outstanding, at March 31, 2022 1,049,500 $ 40,303
Granted 46,284 2,175
Vested (255,226) (10,153)
Forfeited/cancelled/expired (68,000) (2,602)
Outstanding, at December 31, 2022 772,558 $ 29,723

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The Company has determined the fair value of restricted shares awarded during the nine months ended December 31, 2021 using the Monte Carlo valuation model based on the following key assumptions:


Term (years)	5
Volatility	41.5	%
Risk-free rate	0.06	%

The table below summarizes the activity for the Company’s restricted stock outstanding during the nine months ended December 31, 2021:


	Shares	Weighted Average Fair Value
Outstanding, at March 31, 2021	15,000	$	775
Granted	1,031,500	39,465
Vested	—	—
Forfeited/cancelled/expired	—	—
Outstanding, at December 31, 2021	1,046,500	$	40,240

During the nine months ended December 31, 2021 and 2020, no stock options were awarded. Total compensation expense related to outstanding options was $0 for the three and nine months ended December 31, 2021, and $54 and $162, for the three and nine months ended December 31, 2020, respectively. During the nine months ended December 31, 2021, options to purchase a total of 60,000 shares were exercised.

The Company has determined the fair value of such stock options using the Black-Scholes option valuation model based on the following key assumptions:


Term (years)	3
Volatility	165.33	%
Risk-free rate	1.66	%

Stock-based compensation expense for the cost of the awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company’s employee stock options.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The following is a summary of stock option activity for the nine months ended December 31, 2021:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Outstanding, March 31, 2021	60,000	$	1.98	6.52	$	3,083,000
Granted	—	—		—	—
Exercised	(60,000)	1.98		6.52	3,742,000
Forfeited/cancelled/expired	—	—		—	—
Outstanding, at December 31, 2021	—	$	—	0	$	—
Exercisable, at December 31, 2021	—	$	—	0	$	—

NOTE 2321 – LEASES

The Company determines whether a contract contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When ~~readily determinable,~~available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate.

The ~~following~~ table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of December 31, ~~2022, the annual maturities~~2021:


	Classification on Balance Sheet	December 31, 2021
Assets
Operating lease assets	Right-of-use assets	$	6,926
Total lease assets		$	6,926

Liabilities
Operating lease liability	Operating lease obligations	$	7,031
Total lease liability		$	7,031

Lease obligations at December 31, 2021, consisted of the ~~lease liabilities:~~following:


Twelve months ended March 31,
Twelve months ending March 31,					Twelve months ending March 31,
2022					2022	$	990
2023	2023	$	2,248		2023	3,578
2024	2024	6,154			2024	1,430
2025	2025	5,965			2025	1,070
2026	2026	5,705			2026	1,006
2027		4,743
Thereafter	Thereafter	6,733			Thereafter	182
Total payments	Total payments	31,548			Total payments	8,256
Less: amounts representing interest	Less: amounts representing interest	7,373			Less: amounts representing interest	(1,225)
Lease liability, net	Lease liability, net	$	24,175		Lease liability, net	$	7,031
Weighted average remaining lease term (in months)	Weighted average remaining lease term (in months)	23			Weighted average remaining lease term (in months)	22
Weighted average discount rate	Weighted average discount rate	12		%	Weighted average discount rate	12		%

Lease commitments for short term operating leases as of December 31, ~~2022, was~~2021, are approximately ~~$258.~~$99. The Company’s ~~lease~~rent expense for office sp~~ace~~space was ~~$1,414~~$194 and ~~$2,530~~$1,123 for the three and nine months ended December 31, ~~2022,~~2021, and ~~$286~~$80 and ~~$777~~$827 for the three and nine months ended December 31, ~~2021,~~2020, respectively.

~~NOTE 24 – ACQUISITIONS OF SUBSIDIARIES~~

~~Acquisition of London-Almaty~~

On September 1, 2022, the Company completed the acquisition of Insurance Company IC "London-Almaty", following receipt of the approval from the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market, by purchasing 100% of its outstanding shares. The Company acquired IC "London-Almaty" to expand its presence in the insurance sector.

~~As of September 1, 2022, the date of the acquisition of IC "London-Almaty", the fair value of IC "London-Almaty" was $15,858. The total purchase price was allocated as follows:~~

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	~~As of September 1, 2022~~

~~ASSETS~~
~~Cash and cash equivalents~~	$	~~8,077~~
~~Due from banks~~	~~2,176~~
~~Trading securities~~	~~6,178~~
~~Value of business acquired~~	~~1,677~~
~~Assets from insurance activities~~	~~3,401~~
~~Fixed assets~~	~~806~~
~~Intangible assets~~	~~127~~
~~Other assets~~	~~1,505~~
~~TOTAL ASSETS~~	~~23,947~~

~~Insurance reserves~~	~~6,380~~
~~Liabilities from insurance activity~~	~~1,429~~
~~Other liabilities~~	~~280~~
~~TOTAL LIABILITIES~~	~~8,089~~

~~Net assets acquired~~	~~15,858~~

~~Goodwill~~	~~485~~

~~Total purchase price~~	$	~~16,343~~

On December 15, 2022, IC "London-Almaty" was merged into Freedom Insurance and its separate legal existence was terminated. The assets and liabilities of IC "London-Almaty" were transferred to Freedom Insurance at their respective carrying amounts on the date of the merger was completed.

~~Acquisition of Ticketon~~

As of September 30, 2022, the date of the acquisition of Ticketon by purchasing 100% of its authorized capital. The Company acquired Ticketon to accelerate its growth in fintech sector. The negative fair value of Ticketon on the date of the acquisition was $172. The total purchase price was allocated as follows:

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~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


	~~As of September 30, 2022~~

~~ASSETS~~
~~Cash and cash equivalents~~	$	~~3,029~~
~~Brokerage and other receivables~~	~~169~~
~~Fixed assets~~	20
~~Intangible assets~~	33
~~Right-of-use asset~~	63
~~Other assets~~	~~606~~
~~TOTAL ASSETS~~	~~3,920~~

~~Deferred income tax liabilities~~	34
~~Lease liability~~	63
~~Other liabilities~~	~~3,995~~
~~TOTAL LIABILITIES~~	~~4,092~~

~~Net assets acquired~~	~~(172)~~

~~Goodwill~~	~~3,172~~

~~Total purchase price~~	$	~~3,000~~

NOTE ~~25 –~~22 - 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"~~("Russian segment"). On October 17, 2022, the Company entered into an agreement with Maxim Povalishin for the sale of 100% of the share capital of ~~the companies comprising the Russia Segment.~~its Russian segment. Maxim Povalishin, the purchaser, is currently the Deputy General Director and a member of the Board of Directors of Freedom RU. The transaction ~~was approved by~~is subject to the approval of the Central Bank of the Russian Federation ~~on February 10, 2023,~~ and ~~the sale~~ is expected to be completed ~~before~~within the ~~end of the February 2023.~~thee months ended December 31, 2022.

The ~~consideration~~Company has classified the Russia segment as discontinued operations as of December 31, 2021 and for the ~~purchase~~three and nine months ended December 31, 2021, because the subsidiaries to be disposed of in this transaction met the ~~Russian Subsidiaries consists~~held for sale criteria.

In accordance with US GAAP, the Company has reported separately the discontinued operations in the condensed consolidated financial statements. As of December 31, 2021, and March 31, 2021, the major classes of assets and liabilities from discontinued operations included the following:


	December 31, 2021		March 31, 2021
Cash and cash equivalents	$	346,996	$	531,791
Restricted cash	32,728		27,594
Trading securities	400,823		148,642
Brokerage and other receivables, net	108,245		15,575
Loans issued	2,557		2,041
Other assets	28,243		22,405

Total assets held for sale	$	919,592	$	748,048

Customer liabilities	$	636,898	$	573,181
Debt securities issued	71,716		37,095
Securities repurchase agreement obligations	82,791		51,997
Other liabilities	18,322		14,295

Total liabilities held for sale	$	809,727	$	676,568

The results of operations for discontinued operations for the three and nine months ended December 31, 2021 and 2020, consist of the following:

•Mr. Povalishin will be assigned the Company’s obligation to Freedom RU under an outstanding deferred payment in the amount of approximately RUB 6.6 billion (at foreign exchange rate on the reporting date approximately $91 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 will pay 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 sell this new subsidiary to Mr. Povalishin for RUB 50 million (approximately

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~~$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.~~


	Three months ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020

Fee and commission income	$	23,147	$	13,571	$	59,596	$	30,810
Net (loss)/gain on trading securities	(6,611)		4,972		(9,716)		17,087
Interest income	5,786		4,813		15,574		9,961
Net gain/(loss) on foreign exchange operations	(655)		(1,516)		(2,889)		1,217
Net gain/(loss) on derivative	—		49		—		88

Total revenue	21,667		21,889		62,565		59,163

Fee and commission expense	2,075		1,983		6,300		4,298
Interest expense	2,365		3,426		6,824		6,289
Operating expense	22,253		11,583		53,841		29,979
Provision for impairment losses	13		156		89		200
Other (income)/expense, net	28		230		120		207

Total expense	26,734		17,378		67,174		40,973

Profit before income tax	$	(5,067)	$	4,511	$	(4,609)	$	18,190

The ~~Company has classified the Russia Segment as~~net cash flows from/(used in) operating and investing activities from discontinued operations as of December 31, 2022 and for the three and nine months ended December 31, 2022, because the subsidiaries to be disposed of in this transaction met the held for sale criteria as of December 31, 2022.

The cumulative translation adjustment attributable to the Russia Segment of $18,650 is included within Accumulated Other Comprehensive Loss within the Condensed Consolidated Balance Sheet as of December 31, 2022. In light of the Russia/Ukraine Conflict, and the consequent U.S., UK and EU economic sanctions and Russian countersanctions, the Company was seeking to sell its interests in its three Russian subsidiaries that resulted in a net non-cash $43,973 impairment charge, which was recorded for the nine months ended December 31, 2022, within the line item Net income from discontinued operation on the Condensed Consolidated Statements of Operations. The Company will continue to evaluate the Russia Segment for changes in the valuation until it is sold.

~~In accordance with United States tax regulations, the Company applies the check-the-box election for disregarding the Russian Segment~~2021 and treating it as an asset. The Company's position that the loss arising from the Russian Segment in the amount of $43,973 for the nine months ended December 31, 2022, cannot be deducted for income tax purposes in the United States and, therefore, it does not recognize a related deferred tax asset.

In accordance with US GAAP, the Company has reported separately the discontinued operations in the condensed consolidated financial statements. As of December 31, 2022 and March 31, 2022, the major classes of assets and liabilities from discontinued operations included the following:

December 31, 2022 March 31, 2022
Cash and cash equivalents $ 582,314 $ 428,480
Restricted cash 18,052 28,406
Trading securities 112,801 122,497
Margin lending, brokerage and other receivables, net 240,414 210,087
Loans issued 17,201 2,395
Other assets 34,757 33,554
Less: valuation allowance (43,973) —
Total assets held for sale $ 961,566 $ 825,419
Customer liabilities $ 820,394 $ 701,584
Securities repurchase agreement obligations 30,971 32,469
Debt securities issued 63,207 64,637
Other liabilities 16,912 13,788
Total liabilities held for sale 931,484 812,478

~~The results of operations for discontinued operations for the three and nine months ended December 31, 2022, and 2021,~~2020, consist of the following:

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For The Three Months Ended For The Nine Months Ended
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Fee and commission income $ 14,230 $ 23,147 $ 62,290 $ 59,596
Net gain/(loss) on trading securities 799 (6,611) 13,898 (9,716)
Net loss on derivative (43) — (43) —
Interest income 17,599 5,786 47,460 15,574
Net gain/(loss) on foreign exchange operations 19,965 (655) 40,379 (2,889)
TOTAL REVENUE, NET 52,550 21,667 163,984 62,565
Operating expense 29,839 22,253 83,379 53,841
Interest expense 3,124 2,365 13,143 6,824
Fee and commission expense 2,750 2,075 7,000 6,300
Provision for impairment losses 1,594 13 2,176 89
Provision for impairment of discontinued operations 2,509 — 43,973 —
Other (income)/expense, net (933) 28 (154) 120
TOTAL EXPENSE 38,883 26,734 149,517 67,174
INCOME/(LOSS) BEFORE INCOME TAX $ 13,667 $ (5,067) $ 14,467 $ (4,609)

~~The net cash flows used in operating and investing activities for discontinued operations for the nine months ended December 31, 2022, and 2021, consist of the following:~~

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~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

For the Nine Months Ended December 31,
2022 2021*
(Recasted)
Cash Flows From Operating Activities
Net income/(loss) from discontinued operations $ 9,929 $ (3,656)
Adjustments to reconcile net income used in operating activities:
Depreciation and amortization 1,794 1,637
Noncash lease expense 4,947 3,785
Change in deferred taxes 4,121 (1,892)
Stock compensation expense 4,226 5,647
Unrealized loss/(gain) on trading securities (47,926) 9,082
Net change in accrued interest 810 1,436
Provision for impairment of discontinued operations 43,973 —
Allowances for receivables 2,053 89
Changes in operating assets and liabilities:
Trading securities 61,479 (262,438)
Margin lending, brokerage and other receivables (4,755) (93,717)
Other assets 1,557 (1,948)
Securities sold, not yet purchased – at fair value 257 (24)
Customer liabilities (47,602) 121,173
Current income tax liability 1 (623)
Margin lending and trade payables (16) 319
Lease liabilities (5,509) (3,947)
Other liabilities 2,826 2,176
Net cash flows from/(used in) operating activities from discontinued operations 32,165 (222,901)
Cash Flows Used In Investing Activities
Purchase of fixed assets (3,998) (2,918)
Proceeds from sale of fixed assets — 699
Net change in loans issued to customers (17,649) (571)
Net cash flows used in investing activities from discontinued operations (21,647) (2,790)

~~The following table presents reconciliation of anticipated provision for impairment from sale of net assets held for sale as of disposal date:~~

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~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

December 31, 2022
Pre-elimination balance Eliminations Post-elimination balance
Cash and cash equivalents 582,314 — 582,314
Restricted cash 18,052 — 18,052
Trading securities 112,801 — 112,801
Margin lending, brokerage and other receivables, net 331,682 (91,269) 240,413
Loans issued 17,201 — 17,201
Other assets 34,758 — 34,758
Total assets held for sale $ 1,096,808 $ (91,269) $ 1,005,539
Customer liabilities 820,394 — 820,394
Securities repurchase agreement obligations 30,971 — 30,971
Debt securities issued 63,207 — 63,207
Other liabilities 16,913 — 16,913
Total liabilities held for sale $ 931,485 $ — $ 931,485
Net assets held for sale $ 165,323 $ 74,054
Unrealized loss from translation adjustment 18,650
Adjusted net assets held for sale $ 183,973
Expected selling price 140,000
Provision for impairment of discontinued operations $ (43,973)


	Nine Months Ended December 31,
	2021		2020
Cash Flows (Used In)/From Operating Activities

Net income from discontinued operations	$	(3,656)	$	12,988

Adjustments to reconcile net income from operating activities:
Depreciation and amortization	1,637		439
Noncash lease expense	3,785		2,847
Impairment of Freedom Bank RU goodwill	—		—
Impairment of Zerich goodwill	—		—
Loss on sale of fixed assets	—		—
Client base write-off	—		—
Change in deferred taxes	(1,892)		1,406
Stock compensation expense	5,647		1,033
Unrealized (gain)/loss on trading securities	9,082		(1,988)
Net change in accrued interest	1,436		567
Allowances/(recovery) for receivables	89		203
Changes in operating assets and liabilities:
Trading securities	(262,438)		(81,345)
Brokerage and other receivables	(93,717)		5,444
Other assets	(1,948)		(1,792)
Securities sold, not yet purchased – at fair value	(24)		—
Customer liabilities	121,173		217,034
Current income tax liability	(623)		990
Trade payables	319		219
Lease liabilities	(3,947)		(2,988)
Other liabilities	2,176		1,426
Net cash flows (used in)/from operating activities from discontinued operations	(222,901)		156,483

Cash Flows (Used In)/From Investing Activities
Purchase of fixed assets	(2,918)		(985)
Proceeds from sale of fixed assets	699		—
Purchase of intangible assets	—		—
Loans issued	(571)		(117)
Net cash flows (used in)/from investing activities from discontinued operations	$	(2,790)	$	(1,102)

NOTE 2623 – COMMITMENTS AND CONTINGENCIES

Freedom Bank KZ is a party to certain off-balance sheet financial instruments. These financial instruments include guarantees and unfunded commitments under existing lines of credit. These commitments expose the Company to varying degrees of credit and market risk which are essentially the same as those involved in extending loans to customers, and are subject to the same credit policies used in underwriting loans. Collateral may be obtained based on the ~~Company's~~Company’s credit evaluation of the counterparty. The ~~Company's~~Company’s maximum exposure to credit loss is represented by the contractual amount of these commitments.

Unfunded commitments under lines of credit

Unfunded commitments under lines of credit include commercial, commercial real estate, home equity and consumer lines of credit to existing customers. These commitments may mature without being fully funded.

~~Unfunded commitments under guarantees~~

~~Unfunded commitments under guarantees are conditional commitments issued by Freedom Bank KZ to provide bank guarantees to customers. These commitments may mature without being fully funded.~~

~~Bank guarantees~~

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Unfunded commitments under lines of guarantees

Unfunded commitments under lines of guarantees are conditional commitments issued by the Company to provide bank guarantees to a customers. These commitments may mature without being fully funded.

Bank guarantees

Bank guarantees are conditional commitments issued by ~~Freedom Bank KZ~~the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support trade transactions or guarantee arrangements. The credit risk involved in issuing guarantees is essentially the same as that involved in extending loan facilities to customers. A significant portion of the issued guarantees are collateralized by cash. Total lending related commitments outstanding ~~as of~~at December 31, ~~2022, and March 31, 2022,~~2021, were as follows:

As of December 31, 2022 As of March 31, 2022
(Recasted)
Unfunded commitments under lines of credits and guarantees $ 18,838 $ 11,292
Bank guarantees 4,874 6,384
Total $ 23,712 $ 17,676

~~Table of Contents~~


	December 31, 2021		March 31, 2021
Bank guarantees	$	5,232	$	6,594
Unfunded commitments under lines of credits and guarantees	10,142		182
	$	15,374	$	6,776


~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 2724 – SEGMENT REPORTING

~~During the fourth quarter of 2022 fiscal year, the Company's CODM restructured the way he views the Company's business from~~The Company historically operated as a single operating ~~segment~~segment. Subsequent to the initial issuance of these financial statements, with the planned restructuring of the Company's operations and divestiture of Russian subsidiaries, coupled with the continued expansion, there was an election to reorganize operations geographically into five ~~geographic~~ regional ~~segments including~~segments: Central Asia, Europe, United States, ~~Russia~~Middle East/Caucasus and Middle East/Caucasus. The Company has classified the Russia segment as discontinued operations for the periods presented because the assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of December 31, 2022.Russia. The Company's CODM do not review inter-segment revenues as part of Segment reporting.

Due to the restatements as discussed in Note 4, the Company has also restated its segment ~~reporting.~~reporting to align with the changes in reportable segments subsequent to the initial issuance of these financial statements. Restated segment information was provided to CODM in their reports.

The following tables summarize the Company's Statement of Operations and Statements of Other Comprehensive Income by its geographic segments. Intercompany balances were eliminated for separate disclosure:

Three months ended December 31, 2022
STATEMENTS OF OPERATIONS Central Asia Europe U.S. Middle East/Caucasus Total
Fee and commission income (1)
$ 31,248 $ 48,486 $ 1,149 $ — $ 80,883
Net gain/(loss) on trading securities 28,080 819 (3,443) — 25,456
Interest income 66,324 11,417 2,500 14 80,255
Insurance underwriting income 28,557 — — — 28,557
Net gain/(loss) on foreign exchange operations 20,402 313 152 (1) 20,866
Net loss on derivative (21,469) — — — (21,469)
TOTAL REVENUE, NET 153,142 61,035 358 13 214,548
Fee and commission expense 10,110 7,933 255 16 18,314
Interest expense 43,880 4,590 3,567 — 52,037
Insurance claims incurred, net of reinsurance 17,418 1 — — 17,419
Operating expense (2)
28,494 12,824 8,655 635 50,608
Provision for impairment losses 12,767 11,363 10 — 24,140
Other expense/(income), net 647 (74) — (3) 570
TOTAL EXPENSE 113,316 36,637 12,487 648 163,088
INCOME/(LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS $ 39,826 $ 24,398 $ (12,129) $ (635) $ 51,460
Income tax expense (95) (4,557) (398) (19) (5,069)
INCOME/(LOSS) FROM CONTINUING OPERATIONS $ 39,731 $ 19,841 $ (12,527) $ (654) $ 46,391

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		Nine months ended December 31, 2022										Three months ended December 31, 2021 (Restated)
STATEMENTS OF OPERATIONS	STATEMENTS OF OPERATIONS	Central Asia		Europe		U.S.		Middle East/Caucasus		Total	STATEMENTS OF OPERATIONS	Central Asia		Europe		U.S.		Middle East/Caucasus	Total

Fee and commission income (1)	Fee and commission income (1)	$	56,715	$	193,439	$	3,332	$	—	253,486	Fee and commission income (1)	$	6,993	$	83,162	$	1,256	—	91,411
Net gain/(loss) on trading securities		65,497		(21,815)		(4,788)		—		38,894
Net gain on trading securities											Net gain on trading securities	6,432		481		101		—	7,014
Interest income	Interest income	154,300		24,014		9,489		14		187,817	Interest income	19,845		4,940		14		—	24,799
Insurance underwriting income		78,998		—		—		—		78,998
Net gain/(loss) on foreign exchange operations	Net gain/(loss) on foreign exchange operations	32,270		(1,517)		(747)		8		30,014	Net gain/(loss) on foreign exchange operations	1,747		(437)		(209)		5	1,106
Net loss on derivative		(22,523)		—		—		—		(22,523)
Net (loss)/ gain on derivative											Net (loss)/ gain on derivative	(314)		—					(314)
TOTAL REVENUE, NET	TOTAL REVENUE, NET	365,257		194,121		7,286		22		566,686	TOTAL REVENUE, NET	34,703		88,146		1,162		5	124,016

Fee and commission expense	Fee and commission expense	32,638		26,834		551		45		60,068	Fee and commission expense	2,381		18,106		153		—	20,640
Interest expense	Interest expense	110,410		10,250		12,311		—		132,971	Interest expense	14,097		3,919		418		—	18,434
Insurance claims incurred, net of reinsurance		51,585		1		—		—		51,586
Operating expense		70,975		34,923		19,015		1,454		126,367
Provision for impairment losses/(recoveries)		18,930		11,362		2		—		30,294
Other expense/(income), net		116		31		(8)		(60)		79
Operating expense / (income)											Operating expense / (income)	11,909		10,517		5,903		(86)	28,243
Provision for impairment losses											Provision for impairment losses	—		—		32		—	32
Other income /(expense) , net											Other income /(expense) , net	(83)		(13)				2	(94)
TOTAL EXPENSE	TOTAL EXPENSE	284,654		83,401		31,871		1,439		401,365	TOTAL EXPENSE	28,304		32,529		6,506		(84)	67,255

INCOME/(LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS		$	80,603	$	110,720	$	(24,585)	$	(1,417)	165,321
NET INCOME BEFORE INCOME TAX											NET INCOME BEFORE INCOME TAX	$	6,399	$	55,617	$	(5,344)	89	$	56,761

Income tax expense	Income tax expense	(691)		(18,403)		(7,475)		2		(26,567)	Income tax expense	1,294		(7,176)		4,114		—	(1,768)
INCOME/(LOSS) FROM CONTINUING OPERATIONS		$	79,912	$	92,317	$	(32,060)	$	(1,415)	138,754
NET PROFIT/(LOSS)											NET PROFIT/(LOSS)	$	7,693	$	48,441	$	(1,230)	89	$	54,993

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)


		Three months ended December 31, 2021 (Restated)											Nine months ended December 31, 2021 (Restated)
STATEMENTS OF OPERATIONS	STATEMENTS OF OPERATIONS	Central Asia		Europe		U.S.		Middle East/Caucasus		Total		STATEMENTS OF OPERATIONS	Central Asia		Europe		U.S.		Middle East/Caucasus	Total

Fee and commission income(1)	Fee and commission income(1)	$	6,990	$	83,162	$	1,256	$	—	$	91,408	Fee and commission income(1)	$	18,258	$	241,066	$	3,391	—	262,715
Net gain on trading securities		7,081		481		101		—		7,663
Net gain/(loss) on trading securities												Net gain/(loss) on trading securities	16,102		179,473		(305)		—	195,270
Interest income	Interest income	28,703		4,940		14		—		33,657		Interest income	51,250		8,015		74		—	59,339
Insurance underwriting income		21,394		—		—		—		21,394
Net gain/(loss) on foreign exchange operations	Net gain/(loss) on foreign exchange operations	2,002		(437)		(209)		5		1,361		Net gain/(loss) on foreign exchange operations	4,472		(497)		(207)		5	3,773
Net loss on derivative		(314)		—		—		—		(314)
Net (loss)/ gain on derivative												Net (loss)/ gain on derivative	(1,028)		—		—		—	(1,028)
TOTAL REVENUE, NET	TOTAL REVENUE, NET	65,856		88,146		1,162		5		155,169		TOTAL REVENUE, NET	89,054		428,057		2,953		5	520,069

Fee and commission expense	Fee and commission expense	6,523		18,106		153		—		24,782		Fee and commission expense	3,797		56,946		503		—	61,246
Interest expense	Interest expense	17,553		3,919		418		—		21,890		Interest expense	35,891		7,422		1,119		—	44,432
Insurance claims incurred, net of reinsurance		16,286		—		—		—		16,286
Operating expense	Operating expense	15,247		10,517		5,903		(86)		31,581		Operating expense	29,099		20,089		14,275		81	63,544
Provision for impairment (recoveries)/losses		(365)		—		32		—		(333)
Other expense/(income), net		990		(13)				2		979
Provision for impairment losses												Provision for impairment losses	571		11		32		—	614
Other income/(expense), net												Other income/(expense), net	503		(21)		—		(2)	480
TOTAL EXPENSE	TOTAL EXPENSE	56,234		32,529		6,506		(84)		95,185		TOTAL EXPENSE	69,861		84,447		15,929		79	170,316

INCOME BEFORE INCOME TAX FROM CONTINUING OPERATIONS		$	9,622	$	55,617	$	(5,344)	$	89	59,984
NET INCOME BEFORE INCOME TAX												NET INCOME BEFORE INCOME TAX	19,193		343,610		(12,976)		(74)	349,753

Income tax benefit/(expense)		1,256		(7,176)		4,114		—		(1,806)
INCOME FROM CONTINUING OPERATIONS		$	10,878	$	48,441	$	(1,230)	$	89	$	58,178
Income tax (expense)/ benefit												Income tax (expense)/ benefit	1,324		(21,190)		(19,114)		—	(38,980)
NET PROFIT/(LOSS)												NET PROFIT/(LOSS)	20,517		322,420		(32,090)		(74)	310,773


	Three months ended December 31, 2020 (Restated)
STATEMENTS OF OPERATIONS	Central Asia	Europe	U.S.	Total
Fee and commission income	3,445	54,629	25	58,099
Net gain on trading securities	6,768	28	7,176	13,972
Interest income	2,980	2,031	213	5,224
Net gain/(loss) on foreign exchange operations	295	88	(280)	103
Net (loss)/ gain on derivative	946	—	—	946
	14,434	56,776	7,134	78,344
TOTAL REVENUE, NET

Fee and commission expense	332	17,874	89	18,295
Interest expense	1,603	1,096	524	3,223
Operating expense	4,776	4,070	1,492	10,338
Provision for impairment losses	952	—	—	952
Other income/ (expense), net	16	(1)	—	15

TOTAL EXPENSE	7,679	23,039	2,105	32,823

NET INCOME BEFORE INCOME TAX	6,755	33,737	5,029	45,521

Income tax (expense)/benefit	(3)	(3,548)	(3,048)	(6,599)
NET PROFIT/(LOSS)	6,752	30,189	1,981	38,922

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~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Nine months ended December 31, 2021 (Restated)
STATEMENTS OF OPERATIONS Central Asia Europe U.S. Middle East/Caucasus Total
Fee and commission income $ 18,092 $ 241,066 $ 3,391 $ — $ 262,549
Net gain/(loss) on trading securities 18,779 179,473 (305) — 197,947
Interest income 74,425 8,015 74 — 82,514
Income from insurance activity 51,491 — — — 51,491
Net gain/(loss) on foreign exchange operations 4,775 (497) (207) 5 4,076
Net loss on derivative (1,028) — — — (1,028)
TOTAL REVENUE, NET 166,534 428,057 2,953 5 597,549
Fee and commission expense 11,177 56,946 503 — 68,626
Interest expense 44,311 7,422 1,119 — 52,852
Insurance claims incurred, net of reinsurance 41,096 — — — 41,096
Operating expense 38,327 20,089 14,275 81 72,772
Provision for impairment losses 868 11 32 — 911
Other expense/(income), net 2,449 (21) — (2) 2,426
TOTAL EXPENSE 138,228 84,447 15,929 79 238,683
INCOME/(LOSS) BEFORE INCOME TAX FROM CONTINUING OPERATIONS $ 28,306 $ 343,610 $ (12,976) $ (74) $ 358,866
Income tax benefit/(expense) 1,278 (21,190) (19,114) — (39,026)
NET INCOME/(LOSS) FROM CONTINUING OPERATIONS $ 29,584 $ 322,420 $ (32,090) $ (74) $ 319,840

~~(1)~~ All trading of U.S. and European exchange traded and OTC securities by all of the Company's securities brokerage firms, excluding PrimeEx, are routed to and executed through Freedom EU and all fee and commission income for those transactions is recognized at Freedom EU.

~~(2)~~ ~~Operating expense includes significant noncash items stock based compensation expenses. The following table summarizes the Company's stock based compensation by its geographic segments:~~

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~~FREEDOM HOLDING CORP.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Three Months Ended December 31, Nine Months Ended December 31,
2022 2021* 2022 2021*
Central Asia $ 2,077 $ 1,384 $ 4,215 $ 3,414
U.S. 717 691 1,869 1,737
Europe 145 196 436 485
Total stock based compensation $ 2,939 $ 2,271 $ 6,520 $ 5,636

~~The following tables summarize the Company's total asset and total liabilities by its geographic segments. Intercompany balances were eliminated for separate disclosure:~~

December 31, 2022
Central Asia Europe U.S. Russia (Discontinued operations) Middle East/Caucasus Total
Total assets $ 3,770,032 $ 519,760 $ 114,609 $ 961,566 $ 2,167 $ 5,368,134
Total liabilities 3,071,804 607,536 74,618 931,484 361 4,685,803
Net assets $ 698,228 $ (87,776) $ 39,991 $ 30,082 $ 1,806 $ 682,331

March 31, 2022 (Recasted)
Central Asia Europe U.S. Russia (Discontinued operations) Middle East/Caucasus Total
Total assets $ 1,423,529 $ 805,768 $ 172,679 $ 825,419 $ 355 $ 3,227,750
Total liabilities 1,203,473 489,883 175,136 812,478 172 2,681,142
Net assets $ 220,056 $ 315,885 $ (2,457) $ 12,941 $ 183 $ 546,608

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

~~Central Asia Segment~~


	Nine months ended December 31, 2020 (Restated)
STATEMENTS OF OPERATIONS	Central Asia	Europe	U.S.	Total
Fee and commission income	11,754	124,208	25	135,987
Net gain on trading securities	12,117	87	7,039	19,243
Interest income	8,379	2,731	652	11,762
Net gain/(loss) on foreign exchange operations	605	(238)	(225)	142
Net (loss)/ gain on derivative	61	—	—	61

TOTAL REVENUE, NET	32,916	126,788	7,491	167,195

Fee and commission expense	618	44,927	226	45,771
Interest expense	5,020	2,018	1,764	8,802
Operating expense	12,640	6,671	2,925	22,236
Provision for impairment losses	770	404	399	1,573
Other income/(expense), net	(41)	(16)	—	(57)

TOTAL EXPENSE	19,007	54,004	5,314	78,325

NET INCOME BEFORE INCOME TAX	13,909	72,784	2,177	88,870

Income tax (expense)/benefit	(6)	(7,381)	(4,311)	(11,698)
NET PROFIT/(LOSS)	13,903	65,403	(2,134)	77,172

(1)

~~The Central Asia segment comprises~~All trading of U.S. and European exchange traded and OTC securities by all of the ~~Kazakhstan headquarters and operations in Kazakhstan (including in the AIFC), Kyrgyzstan, Uzbekistan, Ukraine and Turkey.~~

~~Recently acquired insurance companies, Freedom Insurance, Freedom Life, and London Almaty, are included within Central Asia segment.~~

~~Europe Segment~~

~~The Cyprus~~Company's securities brokerage ~~firm,~~firms, excluding PrimeEx, are routed to and executed through Freedom EU ~~oversees the Europe segment operations (consisting of operations in Cyprus, the UK, Germany, Spain, Greece,~~ and ~~France).~~

~~U.S. Segment~~

~~The U.S. segment currently consists of FRHC~~all fee and ~~the Company's PrimeEx subsidiary.~~

~~Middle East/Caucasus Segment~~

~~As of December 31, 2022, the Middle East/Caucasus segment consisted of four offices, in Azerbaijan, Armenia and the United Arab Emirates,~~ that provide brokerage and investment education services. The Company entered into the Caucasus market during fiscal year 2022 by establishing subsidiaries in Azerbaijan and Armenia, and in April 2022 it entered into the Middle East market by establishing a subsidiary in the United Arab Emirates.

~~Russia Segment~~

~~The Russia segment, that was classified as assets and liabilities held~~commission income for ~~sale, includes the securities brokerage subsidiary~~those transactions is recognized at Freedom ~~RU and~~ ~~its subsidiaries Freedom Bank RU and Freedom Auto~~.EU.

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FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The following tables summarize the Company's total asset and total liabilities by its geographic segments. Intercompany balances were eliminated for separate disclosure:


	December 31, 2021 (Restated)
	Central Asia		Europe		U.S.		Middle East/Caucasus		Held for Sale		Total

Total assets	1,157,484		622,309		27,219		387		919,592		2,726,991

Total liabilities	905,796		344,521		75,279		178		809,727		2,135,501
Net assets	$	251,688	$	277,788	$	(48,060)	$	209	$	109,865	$	591,490


	March 31, 2021 (Restated)
	Central Asia		Europe		U.S.		Middle East/Caucasus		Held for Sale		Total

Total assets	714,380		591,072		46,682		140		748,048		2,100,322

Total liabilities	557,747		530,227		60,117		3		676,568		1,824,662
Net assets	$	156,633	$	60,845	$	(13,435)	$	137	$	71,480	$	275,660

NOTE 2825 – SUBSEQUENT EVENTS

The Company has performed an evaluation of subsequent events through the time of filing this quarterly report on Form ~~10-Q~~10-Q/A with the SEC. During this period the Company did not have any additional material recognizable subsequent ~~events other than as set forth below.~~

~~On February 8, 2023, the Company acquired Kazakhstan company Paybox Technologies LLP and its subsidiaries ("Paybox"). The purchase price for the acquisition of Paybox was $11,500.~~

events.

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

The following discussion and analysis is intended to assist you in understanding ~~the~~our results of operations and our present financial condition of Freedom Holding Corp. and its consolidated subsidiaries (referred to herein as the "Company," "FRHC," "we," "our," and "us"). References to "fiscal year(s)" means the 12-month periods ended March 31 for the referenced year.condition. Our unaudited condensed consolidated financial statements and the accompanying notes included in this quarterly report on Form ~~10-Q~~10-Q/A contain additional information that should be referred to when reviewing this material and this document 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 Exchange Commission ("SEC")~~SEC including our annual report on Form 10-K ~~for the fiscal year ended March 31, 2022,~~ filed with the SEC on ~~May 31, 2022.~~June 15, 2021.

The following discussion contains forward-looking statements based on assumptions and estimates and is subject to risks and uncertainties. Our future results could differ materially from those discussed below. See “Special Note About Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements.

Special Note About Forward-Looking Information

All statements other than statements of historical fact included herein and in the documents incorporated by reference in this quarterly report on Form ~~10-Q,~~10-Q/A, if any, including without limitation, statements regarding our future financial position, business strategy, potential acquisitions, ~~or divestitures,~~ budgets, projected costs, and plans and objectives of management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “will,” “would,” and other similar expressions and their negatives.

Forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which may be beyond our control. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and actual results could differ materially as a result of various factors. The following include some but not all of the factors that could cause actual results or events to differ materially from anticipated results or events:

•economic sanctions imposed by the U.S., UK, EU and other countries against Russia in response to the ongoing large-scale Russian military action against Ukraine (the "Russia/Ukraine Conflict"), as well as Russian countersanctions enacted in response to such economic sanctions;

•~~a failure to successfully complete the sale of our Russian subsidiaries or to achieve the intended effects of such sale;~~

•general economic and political conditions globally and in the particular markets where we operate;

•declines in global financial markets;

•trading volumes and demand for brokerage services in our key markets;

•changes in our relationships or arrangements with related parties and third party service providers;

•the ~~continuing~~ impacts of the COVID-19 pandemic, including viral variants, future outbreaks and the effectiveness of measures implemented to contain its spread;

•a lack of liquidity, e.g., access to funds or funds at reasonable rates for use in our businesses;

•anthe inability to meet regulatory capital or liquidity requirements;

•increased competition, including downward pressures on commissions and fees;

•risks inherent to the brokerage, banking and market making ~~banking and insurance~~ businesses;

•fluctuations in interest rates and foreign currency exchange rates;

•failure to protect or enforce our intellectual property rights in our proprietary technology;

•risks associated with being a “controlled company” within the meaning of the rules of Nasdaq;

•the loss of key executives or failure to recruit and retain personnel;

•our ability to keep up with rapid technological change;

•information technology, trading platform and other ~~electronic~~ system failures, cyber security ~~breaches~~threats and other disruptions;

•losses caused by non-performance by third parties;

•decreased profitability if loan payment delinquencies in our lending portfolio increase;

•losses (whether realized or unrealized) on our investments;

•our inability to integrate any businesses we acquire or otherwise adapt to expansion and rapid growth in our business;

•risks inherent in doing business in Russia and the other developing markets in which we do business;

•the impact of tax laws and regulations, and their changes, in any of the jurisdictions in which we operate;

•non-compliance with laws and regulations in each of the jurisdictions in which we operate, particularly those relating to the securities and banking industries;

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•the creditworthiness of our trading counterparties, and banking and margin ~~lending~~ customers;

•litigation and regulatory liability;

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•unforeseen or catastrophic events, including the emergence of pandemics, terrorist attacks, extreme weather events or other natural disasters, military conflict, political discord and social unrest;

•~~risks associated with our insurance businesses, such as inaccuracies in our modeling and risk assumptions, or inability to obtain or collect on reinsurance;~~ and

•other factors discussed in this report, as well as in our annual report on Form 10-K ~~for the fiscal year ended March 31, 2022,~~ filed with the SEC on ~~May 31, 2022.~~June 15, 2021 and our quarterly report on Form 10-Q filed with the SEC on November 8, 2021.

Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not place undue reliance on forward-looking statements. Forward-looking statements are based on the beliefs of management as well as assumptions made by and information currently available to management and apply only as of the date of this report or the respective dates of the documents from which they incorporate by reference. Neither we nor any other person assumes any responsibility for the accuracy or completeness of forward-looking statements. Further, except to the extent required by law, we undertake no obligations to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, made by us or on our behalf, are also expressly qualified by these cautionary statements.

~~OVERVIEW~~

~~Our Business~~

Overview

Freedom Holding Corp. ~~(together with its consolidated subsidiaries, referred to herein as the "Company, " "FRHC," "we," "our," and "us")~~ is a holding company that owns and operates ~~internationally through our~~several diversified financial services ~~subsidiary~~ businesses. Our subsidiaries engage in a broad range of activities in the financial services industry, including ~~securities dealing, market making,~~full-service retail securities brokerage, banking services, investment research ~~investment counseling,~~and advisory services, securities trading, investment banking, ~~and~~retail banking, underwriting services ~~commercial banking~~ and ~~insurance. Our principal executive office is~~market making activities in Eurasia. We are headquartered in Almaty, Kazakhstan, ~~and we have regional~~with supporting administrative offices in Russia, Cyprus and the United States ~~("U.S."), Europe, and Russia. On October 19, 2022, we announced that we had entered into an agreement to sell our two Russian subsidiaries. The sale~~ of ~~these subsidiaries was approved by the Central Bank of the Russian Federation on February 10, 2023, and the sale is expected to be completed before the end of February 2023.~~America.

Our ~~securities brokerage~~ subsidiaries are professional participants on the Kazakhstan Stock Exchange (KASE), ~~the~~ Astana ~~International~~Stock Exchange (AIX), ~~the~~ Moscow Exchange (MOEX), ~~the~~ Saint-Petersburg Exchange (SPBX), the Ukrainian Exchange (UX), the Republican Stock Exchange of Tashkent (UZSE) ~~and~~, the Uzbek Republican Currency Exchange (UZCE) and a member of the New York Stock Exchange (NYSE) and ~~the~~ Nasdaq Stock Exchange (Nasdaq). Our Cyprus office provides our clients with operations support and access to the investment opportunities, relative stability, and integrity of the U.S., European and Asian securities ~~broker dealer activities are subject~~markets, which under the regulatory regimes of many jurisdictions where we operate, provide only limited or no direct investor access to ~~extensive regulation in the various jurisdiction where they conduct business.~~international securities markets.

~~Our~~We provide an array of financial services to our target retail ~~customers include~~audience of individuals and small and medium-sized enterprises seeking to diversify their investment portfolios to manage economic risk associated with political, regulatory, currency, banking, and national uncertainties. We also provide broker dealer services to other financial institutions. ~~We provide~~Our customers are provided online tools and retail locations ~~for our customers~~ to establish accounts and conduct securities trading on transaction-based ~~pricing, to engage in banking activities and to purchase insurance products.~~pricing. We market our products and services through a number of channels, including telemarketing, training seminars and investment conferences, print and online advertising using social media, our mobile app and search engine optimization activities.

As of December 31, 2021, we were the largest securities broker in Kazakhstan based on volume, revenues and number of clients for transactions on the KASE, according to National Bank of Kazakhstan and were recently recognized as the top investment bond bookrunner in Kazakhstan for 2021 by Cbonds. As of December 31, 2021, we were the ninth largest retail broker in Russia based on MOEX data. On December 21, 2021, S&P Global Ratings (“S&P”) assigned its “B/Stable/B” issuer credit rating to each of Freedom EU, Freedom RU, Freedom KZ and Freedom Global and on January 26, 2022, S&P assigned its “B/Stable/B” issuer credit rating to Freedom Bank KZ, while maintaining its Kazakhstan national scale rating of “kzBB+”.

As of December 31, 2021, we provided our retail brokerage services through 103 offices that provide brokerage, banking and other financial services, investment consulting and education, including (43) in Russia, (32) in Kazakhstan, (15) in Ukraine, (8) in Uzbekistan, and (1) in each of Cyprus, Germany, Kyrgyzstan, Azerbaijan and Armenia. In the United States we own PrimeEx a floor broker on the NYSE with an international clientele, but to date Freedom EU does not have an account with or conduct trading activities with PrimeEx. PrimeEx recently received approval to provide certain capital markets and investment banking activities in the U.S. We have representative offices of Freedom EU in Greece and

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Spain. We also have a subsidiary in the United Kingdom which has applied for a brokerage license. In Russia (32) of our retail brokerage and financial services offices also provide banking services to our customers. During the quarter ended December 31, 2021, Freedom Bank RU received a universal banking license, which will allow Freedom Bank RU to offer services to customers outside of Russia, as well as, expanding the types of services it can offer. We operate a significant online and mobile banking presence, in particular through our proprietary “Tradernet” online securities trading platform and social network. Our Freedom EU subsidiary in Cyprus serves our Cypriot and emerging European clientele as well as servicing for international trading originating in Russia and Kazakhstan.

All of our securities broker dealer activities are subject to extensive regulation in the various jurisdiction where they conduct business. Freedom RU is a member of the Russian National Association of Securities Market Participants (“NAUFOR”), a statutory self-regulatory organization with wide responsibility in regulation, supervision and enforcement of its broker-dealer, investment banking, commercial banking and other member firms in Russia. Freedom Bank RU is a member of the National Financial Association in Russia. In Kazakhstan, Freedom KZ and Freedom Bank KZ are members of the Association of Financiers of Kazakhstan. Freedom UA is a member of the Professional Association of Capital Market participants and Derivatives (“PARD”) in Ukraine. Freedom EU is a member of the Association for Financial Markets in Europe (“AFME”).

We have experienced recent rapid growth in our business over a short period. Our number of total client accounts,not including Freedom RU, increased from approximately 93,000 as of March 31, 2020 to approximately 170,000 as of March 31, 2021, to approximately 222,000 as of December 31, 2021. As of December 31, 2021, more than 60% of those client accounts, not including Freedom RU, carried positive cash or asset account balances. Internally, we designate “active accounts” as those in which at least one transaction occurs per quarter. For the three months ended December 31, 2021, we had approximately 53,000 active accounts, not including Freedom RU. Our total assets increased by 73% to approximately $2.7 billion as of December 31, 2021 from approximately $1.6 billion as of December 31, 2020. In addition, we have made several recent significant acquisitions, including the acquisitions of Freedom Bank KZ and PrimeEx both in December 2020. Our strategy includes making other acquisitions to grow our business.

Regional Segments

~~Our~~Recently our chief operating decision maker (“CODM”), who is our CEO, restructured the way he views our business asfrom a single operating segment to five geographic regional segments: Central Asia, Europe, the U.S., Russia and Middle East/Caucasus.

Central Asia Segment

Our Central Asia segment comprises our Kazakhstan headquarters ~~and our operations in~~which oversees Kazakhstan, ~~(including the AIFC),~~ Kyrgyzstan, Uzbekistan ~~Ukraine~~ and ~~Turkey.~~ Ukraine. In Kazakhstan, Freedom KZ and Freedom Bank KZ are members of the Association of Financiers of Kazakhstan. Freedom UA is a member of the Professional Association of Capital Market participants and Derivatives (“PARD”) in Ukraine.

As of December 31, ~~2022,~~2021, our Central Asia segment had 4956 securities brokerage offices, including offices in Kazakhstan, Ukraine, Uzbekistan and Kyrgyzstan, that provide brokerage and financial services, and investment consulting and education.

As of December 31, ~~2022,~~2021, our Central Asia segment had 1411 bank ~~offices,~~office locations, all in Kazakhstan, that provide commercial banking ~~services.~~

During the nine months ended December 31, 2022, we completed the acquisition of three insurance companies with a total of 51 insurance offices in Kazakhstan. The insurance companies provide consumer lifeservices to our customers. We generate banking service fees by providing services that include lending operations, deposit services, money transfers, opening and ~~general insurance~~maintaining correspondent accounts, renting safe deposit boxes, e-commerce money transfer services ~~including life insurance, health insurance, annuity insurance, accident insurance, obligatory worker emergency insurance, travel insurance,~~for legal entities, tender guarantees, and ~~general insurance products in property (including automobile), casualty, civil liability, personal insurance and reinsurance.~~payment card services.

Freedom KZ and Freedom Bank KZ are members of the Association of Financiers of Kazakhstan. Freedom UA is a member of the Professional Association of Capital Market participants and Derivatives (“PARD”) in Ukraine.

On October 19, 2022, Freedom UA's brokerage license was suspended for a period of five years and its assets frozen by the Ukrainian authorities following its inclusion on a sanctions list of the Ukrainian government. We believe that the decision to include Freedom UA on such list was erroneous and we are in the process of appealing such decision.

The Central Asia segment accounted for approximately ~~$153.1~~$34.7 million, or ~~71%~~28% of our total revenue, net and approximately ~~$113.3 million,~~$28.3 million, or ~~69.5%~~42% of our total expense, during the three months ended December 31, ~~2022.~~2021, and approximately $89.1 million, or 17% of our total revenue, net and approximately $69.9 million, or 41% of our total expense, during the nine months ended December 31, 2021.

Europe Segment

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Our Cyprus securities brokerage firm, Freedom EU, oversees our Europe segment operations (consisting of operations in Cyprus, the UK, Germany, Spain, Greece, and France). Freedom EU is licensed to receive, transmit and execute customer orders, establish custodial accounts, engage in foreign currency exchange services and margin lending. Through ~~Freedom EU,~~our Cyprus subsidiary we provide transaction processing and intermediary services to our non-U.S. segment customers and to institutional customers ~~seeking~~that may seek access to securities markets in the U.S. and Europe. A significant amount of the brokerage business conducted by Freedom EU has historically, and is currently, provided to FFIN Brokerage, an affiliate of the Company incorporated in Belize, pursuant to an omnibus brokerage agreement. All trading of U.S. and European exchange traded and OTC securities by our brokerage firms, excluding our U.S. subsidiary, PrimeEx, are routed to and executed through Freedom EU. Freedom EU is a member of the Association for Financial Markets in Europe (“AFME”).

As ofof December 31, ~~2022,~~2021, our Europe segment had ~~seven~~two brokerage offices, including offices in Cyprus, ~~the UK,~~ Germany, ~~France, Spain and Greece,~~ that provide securities broker dealer and financial services, and investment consulting and ~~education.~~education. During the three months ended December 31, ~~2022~~,2021, our Europe segment generated approximately ~~$61.0~~$88.1 million, or ~~28%~~71%, of our total revenue, net and approximately ~~$36.6~~$32.5 million, or ~~22%~~48% of our total expense.

During the nine months ended December 31, 2021, our Europe segment generated approximately $428.1 million, or 82%, of our total revenue, net and approximately $84.4 million, or 50% of our total expense.

U.S. Segment

Our U.S. segment currently consists of FRHC and our PrimeEx subsidiary. PrimeEx is a registered agency-only execution broker-dealer on the floor of the NYSE. PrimeEx is a member of the NYSE, Nasdaq, the Financial Industry Regulatory Authority ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). In January 2022, PrimeEx received regulatory approval from FINRA to establish an investment banking and equity capital markets arm, which does business as Freedom Capital Markets ("FCM"). FCM is authorized to provide its corporate and institutional customers with a full array of investment banking, corporate finance, and capital markets advisory services, with capabilities including initial and follow-on offerings, PIPEs (Private Investment in Public Equity), SPACs (Special Purpose Acquisition Company), private placements, convertible issues, debt capital, mergers and acquisitions, corporate access, and corporate

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restructuring. We currently have 2 offices in the U.S. segment, including PrimeEx and FRHC. During the three months ended December 31, ~~2022,~~2021, the U.S. ~~segment~~region generated approximately ~~$0.4~~$1.2 million, or ~~0.00%~~1%, of our total revenue, net and approximately ~~$12.5~~$6.5 million, or ~~7.7%~~10%, of our total expense. During the nine months ended December 31, 2021, the U.S. region generated approximately $3.0 million, or 1%, of our total revenue, net and approximately $15.9 million, or 9%, of our total expense.

Middle East/Caucasus Segment

~~As of December 31, 2022, our Middle East/Caucasus region consisted of four offices, in Azerbaijan, Armenia and the United Arab Emirates,~~ ~~that provide brokerage and investment education services.~~ We entered into the Caucasus market during fiscal year 2022 by establishing subsidiaries in Azerbaijan and ~~Armenia, and in~~Armenia. In April 2022, we entered into the Middle East market by establishing a subsidiary in the United Arab Emirates. As of December 31, 2021, our Middle East/Caucasus region consisted of 2 offices that provide brokerage and education services. The Middle East/Caucasus region ~~generated minimal~~did not generate revenue and ~~incurred~~generated minimal expense during the three and nine months ended December 31, ~~2022,~~2021, as we are still in the process of ~~setting up our~~establishing operations in ~~these three locations.~~Azerbaijan, Armenia.

Russia Segment

Our Russia segment includes our securities brokerage ~~subsidiary Freedom RU,~~ ~~its subsidiary Freedom Bank RU, which provides~~and complementary banking operations ~~and Freedom Auto, that provides~~ ~~car loans.~~in Russia. As of December 31, ~~2022,~~2021, our Russia segment had 4443 offices and branches. Freedom RU is a member of the Russian National Association of Securities Market Participants (“NAUFOR”), a statutory self-regulatory organization with wide responsibility in regulation, supervision and enforcement of its broker-dealer, investment banking, commercial banking and other member firms in Russia. Freedom Bank RU is a member of the National Financial Association in Russia.

During the three months ended December 31, ~~2022,~~2021, the Russia segment generated approximately ~~$52.6~~$21.7 million of our total revenue, net and approximately ~~$38.9~~$26.7 million of our total expense. During the nine months ended December 31, 2021, the Russia segment generated approximately $62.6 million, net and approximately $67.2 million of our total expense. Although we currently continue to operate our ~~Russia~~ Russian segment, we have agreed to sell our three Russian subsidiaries and accordingly this segment is accounted for as discontinued operations. See "~~Sale~~"Sale of Russian Subsidiaries and Corporate ~~Restructuring~~Restructuring" below.

~~" below.~~

Sale of Russian Subsidiaries

On October 19, 2022, we announced that we had entered into an agreement to sell our two Russian subsidiaries. The ~~sale~~transaction is subject to the approval of ~~these subsidiaries was approved by~~ the Central Bank of the Russian Federation ~~on February 10, 2023,~~ and ~~the sale~~ is expected to ~~be completed before~~close in the ~~end of February 2023.~~coming months. Until such time as the sale is completed, in a manner consistent with U.S. sanctions, we intend to provide ~~financial~~financial support only for "maintenance" of our investment in our Russian subsidiaries consistent with our previously established practices and in support of pre-existing projects and operations in conformity with OFAC guidance concerning

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such activities. We do not intend to engage in funding of new projects or expansion of pre-existing projects of our Russian subsidiaries. Because the Russian subsidiaries met the held for sale criteria ~~as of~~subsequent to December 31, ~~2022,~~2021 but prior to the date of filing this Amendment on form 10-Q/A, we have classified them as discontinued operations as of December 31, ~~2022~~2021 and for the three and nine months ended December 31, ~~2022,~~2021, in accordance with ASC 205 and 360.

On November 11, 2022, the Company has finalized transaction for purchase of 90.43% of the share capital of Freedom KZ (with its subsidiaries) from Freedom RU as part of a corporate restructuring, as a result of which the Company became the 100% direct owner of Freedom KZ. The transaction was finalized after receipt of the regulatory approval in Kazakhstan.

In addition, in July 2022, Freedom RU established a subsidiary Freedom Finance Auto LLC. In January 2023, Freedom RU concluded an agreement with Mr. Povalishin to sell this new subsidiary 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.

Corporate Restructuring

In conjunction with the sale of our Russian subsidiaries, we ~~completed~~are in the process of undertaking a corporate

restructuring ~~during the three months ended December 31, 2022,~~ which ~~resulted~~will result in Freedom KZ (together with its wholly owned subsidiaries Freedom Bank KZ, Freedom

Life and Freedom Insurance)~~, which had previously been directly~~ being wholly owned by FRHC directly. Currently, Freedom RU owns approximately 90% of

of Freedom KZ, with the remaining interest being owned by FRHC directly. ~~As a result~~The transfer of ~~such corporate restructuring,~~ownership from Freedom RU

to FRHC ~~now directly owns 100% of Freedom KZ.~~

~~Acquisitions~~

~~Historically we have~~has been ~~active in pursuing inorganic growth through mergers and acquisitions. We expect this trend to continue in the future.~~

~~Credit Ratings~~

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In June 2022, S&P Global Ratings (“S&P”) affirmed its “B-/B” rating of FRHC and its brokerage and banking subsidiaries Freedom KZ, Freedom Bank KZ, Freedom Europe and Freedom Global and removed them from CreditWatch negative. The outlook on FRHC is stable and the outlooks for the aforementioned subsidiaries are positive. S&P also raisedapproved by the Kazakhstan ~~national scale ratings of Freedom KZ~~financial sector regulator, and Freedom Bank KZ to “kzBB” from “kzBB-”. In September 2022, S&P Global Ratings raised the internation scale of Freedom Life to "B+" with a stable outlook and Kazakhstan national scale to "kzBBB" from "kzBBB-". On December, 2022, the international rating agency S&P Global Ratings also announced an increase of credit rating and the financial stability rating of Freedom Insurance from "B" to "B+", national scale has also changed from "kzBBB-" to "kzBBB" and the outlook for the ratings is stable. As a resultcompletion of the ~~Russia/Ukraine Conflict, S&P~~transfer is ~~no longer rating Russian entities, including~~expected to occur prior to the closing of the sale of our Russian subsidiaries.

Key F~~actors~~Factors Affecting Our Results of Operations

Our operations have been, and may continue to be, affected by certain key factors as well as certain historical events and actions. The key factors affecting our business and the results of operations ~~include:~~include, in particular: the business environment in which we operate, the growth of retail brokerage activity in our key markets, the ~~Russia/Ukraine Conflict (including but not limited to related sanctions and countersanctions), our decision to sell our Russian subsidiaries, relationships with related parties,~~impact of COVID-19, governmental polices and ~~the impact~~acquisitions. Each of ~~COVID-19, as~~these factors is discussed in more detail below.

Business Environment

Financial services industry performance is closely correlated to economic conditions and financial market activity. The Russia/Ukraine Conflict which began in February 2022 has caused significant disruption in the currency and securities markets, affected interest rates, and negatively impacted Russian and Ukrainian customer confidence. Additionally, general marketMarket conditions and ~~investor~~ activity are ~~products~~a product of many ~~factors,~~variables, most of which are generally beyond our control and ~~unpredictable, and which~~unpredictable. These factors may affect ~~our clients'~~the financial and investing decisions of our clients, including their level of participation in the financial markets and ~~resulting~~ use of our services. Our clients’ financial decisions can directly affect our business.

Growth of Retail Brokerage Activity In Our Key Markets

The retail brokerage markets in ~~the regions in which we operate~~Russia and Kazakhstan, our two main markets, have grown rapidly in recent years. This growth has had a significant positive effect on our results of operations ~~which has contributed~~ in recent periods. According to ~~growth in~~the Moscow Exchange (based on data provided by NAUFOR), the number of ~~our customer accounts. Our number of total customer accounts~~retail clients on the MOEX increased from approximately ~~170,000~~$11.1 million as of March 31, 2021 to ~~approximately 250,000 as of March 31, 2022, to approximately 350,000~~$16.8 million as of December 31, ~~2022. As~~2021. According to the MOEX, the rapid growth in retail securities investing in Russia has been driven by a number of ~~December 31, 2022,~~factors, including among others the extension of trading hours on the MOEX and regulatory changes that have stimulated retail participation in the Russian financial market. In particular: in 2015, tax-advantaged individual investment accounts for private investors were introduced; in 2021, individual investment accounts became more relevant when bond coupons and interest on deposit (principal greater than ~~56% of those customer~~RUB 1 million) became taxable; a tax exemption applies to capital gains on securities held for three or more years (up to RUB 9 million) for securities purchased after January 1, 2014; and retail investors are now able to remotely open brokerage accounts ~~carried positive cash or asset account balances. Internally, we designate “active accounts” as those~~(which is particularly important in ~~which at least one transaction occurs per quarter. For~~Russia’s remote regions). According to data from the ~~three months ended December 31, 2022, we had approximately 56,000 active accounts. The increases in~~KASE, the number of ~~our customer~~active accounts ~~have~~of retail investors on the KASE equity market increased from approximately 150.2 thousand in ~~turn contributed~~March 2021 to ~~increases~~218.3 thousand in ~~our customer liabilities over these periods.~~

~~Effect of the Russia/Ukraine Conflict~~

In February 2022, without provocation, Russia invaded Ukraine. The war has lasted longer than previously anticipated, and it seems likely will last for an extended period of time as the Ukrainians continue to be more successful than initially expected at turning back Russian forces and as NATO countries supply the Ukrainians with armaments and supplies. The European Union and the United States have imposed broad-based sanctions and impounded financial assets of Russia and various Russian companies and individuals. The impact of the sanctions has led to the increase of the price of hydrocarbons and the costs of various agricultural products produced by both Russia and Ukraine to disrupt supplies for those products, which has further increased inflationary pressures in Europe as well as the rest of the world. It has also had the indirect effect of lowering consumer confidence and consumer spending, all of which could have an adverse impact on financial markets and thus on our business.

December 2021.

Planned Divestiture of Russian Subsidiaries

In our 10-K report for the fiscal year ended March 31, 2022, wethe Company announced ~~our~~its plans for divesting ~~our~~its interests in ~~our~~its Russian securities brokerage and complementary banking operations in Russia ~~(the "Russia Segment"~~("Russian segment"). On October ~~19,~~17, 2022, wethe Company entered into an agreement with Maxim Povalishin for the sale of 100% of the share capital of its Russian segment. The transaction is subject to the ~~companies comprising the Russia Segment. The sale~~approval of ~~these subsidiaries was approved by~~ the Central Bank of the Russian Federation ~~on February 10, 2023,~~ and ~~the sale~~ is expected to be completed ~~before~~within the ~~end of February 2023.~~next fiscal quarter. Because the assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of December ~~31, 2022,~~30, 2021, in accordance with ASC 205 and 360 our Russian subsidiaries are presented as discontinued operations in the condensed consolidated financial statements as of and for the three and nine months ended December 31, ~~2022~~2021 and in the corresponding periods of ~~2021~~2020 for comparative purposes.

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Impact of COVID-19

~~Following~~The COVID-19 pandemic has affected the global financial markets. The pandemic has resulted in unprecedented global market conditions that have led to significant growth in our ~~planned divestiture~~customer accounts, as well as increased activity from our existing customers, resulting in higher fee and commission income. These market conditions have also resulted in significant gains in our investment portfolio.

We continue to monitor conditions surrounding COVID-19, as well as economic and capital market conditions. We continue to follow the enhanced cleaning practices and other measures employed in our offices and retail locations in response to local health mandates. We have limited essential business travel and implemented practices to ensure that exposed employees, or those displaying symptoms of COVID-19, self-quarantine. In spring 2020, we transitioned the vast majority of our ~~Russian subsidiaries,~~workforce to work remotely, with only essential employees working in the ~~scale~~office. Where dictated by local health mandates, or as seems prudent to local management, this practice continues. As the pandemic continues to evolve, we regularly evaluate protocols and process in place to meet local health mandates. There have been no material disruptions to our business or processes to date as a result of these changes.

We believe that as a result of the intervention from banks and governments in response to the COVID-19 pandemic, the prospects and the subsequent introduction of viable vaccines, and increased time people have spent at home during the pandemic, there has been a corresponding opportunity and optimism in opening investment accounts and investing in financial markets worldwide, particularly in the U.S. capital markets, and in the non-U.S. markets where we operate. The increased levels of client activity combined with greater market volatility have led to significant growth in our ~~operations will contract significantly. As of~~client accounts, trading volume, commission and fee income and net income during the fiscal year ended March 31, 2021, and the nine months ended December 31, ~~2022,~~2021.

While the overall impact of COVID-19 has been largely positive for our ~~Russian subsidiaries had 44 offices~~business during the quarters ended December 31, 2021 and ~~branches~~2020, its future impacts on our business, operational and ~~2,611 employees. We expect that~~financial performance is uncertain. Developments such as the ~~sale~~duration and severity of our Russian subsidiaries will reduce our exposure to the current challenging geopolitical circumstances and will enable us to accelerate growth in other markets. We also expect that, following the completionfuture outbreaks of the ~~sale~~same or different strains of the ~~Russian subsidiaries, a number~~disease, such as the delta, omicron or other variants, the effectiveness of ~~existing clients of~~vaccines, new or additional measures implemented by governments, might impact our ~~Russian subsidiaries will invest in~~customers and employees, the ~~non-Russian international capital~~financial markets, ~~going forward through accounts at other companies within our group, subject to appropriate on-boarding for compliance purposes. However, these matters are subject to uncertainty~~the global economy and ~~changes in circumstances. A failure by us to achieve~~ the ~~intended effects~~economies of the ~~sale~~countries in which we operate. Because of ~~our Russian subsidiaries could have a material adverse effect~~these uncertainties, we cannot determine the future impacts of the pandemic on our ~~results of operations in future periods.~~

business.

Relationships with Related Parties

~~During the three and nine months ended December 31, 2022 and 2021, the Company engaged in various related party transactions, a substantial amount of which were conducted with~~

Freedom Securities Trading Inc. (formerly known as FFIN Brokerage Services, Inc.) (“FFIN Brokerage”), is a corporation registered in and licensed as a broker dealer in ~~Belize.~~Belize to service the investment needs of customers desiring broader investments options in international securities markets. FFIN Brokerage was formed in 2014 and is owned personally by ~~the~~ Company's controlling shareholder, chairman and chief executive officer,Timur Turlov. FFIN Brokerage is not part of our group of companies. FFIN Brokerage has its own brokerage customers, which include individuals, some entities and three institutional market-makers. FFIN Brokerage holds four transparent omnibus brokerage accounts with Freedom EU. The majority of the order flow from FFIN Brokerage relates to ~~Freedom EU represents transactions of customers~~customer activities within FFIN Brokerage's omnibus accounts. We estimate that more than 40% of FFIN ~~Brokerage, which are executed by FFIN Brokerage through its omnibus~~Brokerage's customers also hold brokerage accounts with ~~Freedom EU.~~us through our brokerage subsidiaries. Our ~~omnibus brokerage~~cross border agreement with FFIN Brokerage requires FFIN Brokerage to conduct AML/CTF and sanctions screening on its individual and business entity customers permitted to trade through its omnibus accounts at Freedom EU. Our relationship with FFIN Brokerage has also provided us and our customers with a substantial liquidity pool for trading.

In accordance with our Audit Committee Charter, our audit committee, all members of which are independent, is responsible for reviewing, approving and overseeing any transaction between the Company, including its subsidiaries, and any related person and any other potential conflict of interest situations on an ongoing basis.

~~Our arrangement with~~ We expect FFIN Brokerage ~~dates from~~will continue to process brokerage transactions for its customers through us for the ~~time of the establishment of~~foreseeable future, subject to our ~~company and we plan to reduce the volume of business we conduct involving FFIN Brokerage over time.~~ standard compliance requirements.

Fee and commission income generated from FFIN Brokerage accounted for approximately ~~54%~~75% and ~~67%~~88% of our total fee and commission income for the three and nine months ended December 31, 2022, respectively, and approximately 83% and 84% of our total fee and commission income for the three and nine months ended December 31, 2021. ~~Interest income generated from FFIN Brokerage accounted for approximately 13% and 11% of the Company's total interest income~~revenue for the three months ended December 31, ~~2022,~~2021 and ~~2021, respectively,~~ ~~as well as 12%~~2020, respectively. And approximately 79% and 5%82% of ~~the Company's~~our total ~~interest income~~revenue for the nine months ended December 31, ~~2022~~2021 and ~~2021~~.2020, respectively. For additional information regarding ~~our~~ transactions with FFIN Brokerage, see Note 2018 Related Party Transactions to the condensed consolidated financial statements included in this quarterly report on Form ~~10-Q.~~10-Q/A. Our transactions with FFIN Brokerage were performed in the ordinary course of our brokerage and banking businesses and such transactions were made on substantially the same terms and conditions as those prevailing at the time for comparable transactions with similarly situated unaffiliated third parties.

Interest income generated from FFIN Brokerage accounted for approximately 13% and 32% of the Company's total interest income for the three months ended December 31, 2021, and 2020, respectively, as well as 9% and 17% of the Company's total interest income for the nine months ended December 31, 2021, and 2020. For additional information

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regarding our transactions with FFIN Brokerage, see Note 18 Related Party Transactions to the condensed consolidated financial statements included in this quarterly report on Form 10-Q/A. Our transactions with FFIN Brokerage were performed in the ordinary course of our brokerage and banking businesses and such transactions were made on substantially the same terms and conditions as those prevailing at the time for comparable transactions with similarly situated unaffiliated third parties.

Governmental Policies

Our earnings are and will be affected by the monetary and fiscal policies of the governments of Russia, Kazakhstan, Cyprus, the United States and other countries in which we ~~operate, including among others Kazakhstan, Cyprus and the United States.~~operate. The monetary policies of these countries may have a significant effect upon our operating results. It is not possible to predict the nature and impact of future changes in monetary and fiscal policies.

Acquisitions

~~Imp~~Historically we have been active in pursuing inorganic growth through mergers and acquisitions. We expect this trend to continue in the future. We have made five acquisitions in the past four years, one of which was of a U.S. company (PrimeEx), two of which were of Russian companies (LLC Nettrader, and Zerich, which was merged into Freedom RU) and two of which were of Kazakhstani companies (Asyl Invest and Freedom Bank KZ).~~act~~We anticipate making future acquisitions with a focus on enhancing or expanding our financial services offerings. We anticipate that we will continue to acquire financial services-related companies in the Commonwealth of ~~COVID-19~~Independent States (CIS) region, on an opportunistic basis. In December 2020, we established a presence in the United States with our acquisition of PrimeEx, an NYSE floor broker servicing sell-side institutional clients, that recently received regulatory approval to expand its services offering to include certain capital markets and investment banking activities. As part of our strategy, we will be exploring potential opportunities to acquire buy-side institutional brokers, investment research firms, investment banking and securities clearing firms in the United States, to enhance our international financial services offering. We anticipate that our acquisition of any company operating in the financial services industry in the United States will be subject to prior regulatory approval. Currently our strategy in the U.S. is to focus on expansion mainly in the institutional investor segment with a potential expansion in the retail segment in the medium-term and long-term future.

Planned Acquisitions

We ~~continue~~are in the process of acquiring two insurance companies in Kazakhstan, JSC Life Insurance Company Freedom Finance Life, a life insurance company (“Freedom Life”), and Insurance Company Freedom Finance, a direct insurance carrier, excluding life, health and medical, (“Freedom Insurance”). Each of these companies is currently wholly owned by our controlling shareholder, Chairman and CEO, Timur Turlov. We have agreed with Mr. Turlov to ~~monitor conditions surrounding COVID-19,~~acquire these companies from him at the historical cost paid by him plus amounts he has contributed as ~~well~~additional paid in capital since his purchase. These companies were not initially acquired directly by us because at the time they were put on the market for sale by their prior owner they did not have audit reports conforming to U.S. GAAP standards and had not demonstrated sustained profitability. We do not consider our planned acquisition of these two insurance companies collectively to be a material acquisition based on their size relative to the size of our group. These acquisitions require prior regulatory approval in Kazakhstan, which we are currently pursuing but which has not yet been granted. We plan to complete these acquisitions as ~~economic~~soon as reasonably practicable following receipt of regulatory approval and ~~capital market conditions~~execution of definitive acquisition agreements.

We have also agreed to purchase Asset Management Company Vostok-Zapad (East-West) Limited (“Vostok”), an asset management firm operating in Moscow, Russia, with assets under management of approximately $690 million. Vostok manages 13 mutual funds, including both open-end and ~~their potential impact on our employees, business and operations. The extent to which developments (such as the duration and severity of future outbreaks~~closed-end funds. A number of the same or new strains or variants of the disease, the effectiveness of vaccines, or new or additional measures implemented by governments) might impact our customers, employees, business, the general financial markets, the global economy and the economies of the countries in which we operate is highly uncertain and cannot be predicted. For further informationmutual funds are listed for trading on the ~~possible future impact~~SPBX, KASE and MOEX. We are also in the process of acquiring PayBox Technologies, and Ticketon.kz. PayBox is headquartered in Kazakhstan and operates regional payment aggregator platforms in Kazakhstan, Russia, Uzbekistan and Kyrgyzstan that provide businesses and consumers the ~~COVID-19 pandemic~~ability to accept payments online and at point-of-sale locations using all major credit and debit methods. Ticketon.kz is a Kazakhstani online entertainment, cultural and recreational event ticketing system organized in 2011. It currently has locations in 21 cities with 150 connected facilities and is expanding its operations into Tajikistan, Uzbekistan and Kyrgyzstan. We do not consider our planned acquisitions of Vostok, PayBox or Ticketon.kz to collectively be material acquisitions based on their size relative to the size of our ~~business,~~group. We plan to complete these acquisitions as soon as reasonably practicable following execution of definitive acquisition agreements and necessary approvals.

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While we believe that it is probable that the above planned acquisitions will be completed in the near future, there can be no assurance that this will be the case.

New Banking Products

~~results~~

Digital Mortgage

Digital mortgage is a new product launched by Freedom Bank KZ in July 2021, that allows customers in Kazakhstan to apply for and complete the residential mortgage loan process online. This service significantly speeds up the mortgage registration process. Moreover, there is no cost to the customer to complete the initial online assessment. As of ~~operations~~December 31, 2021, 615 digital mortgage loans have been approved and ~~financial condition, see Part 1A –~~issued in the aggregate amount of $22,233. ~~Risk Factors~~Approval of ~~our annual report~~all loans is carried out by Freedom Bank KZ. Since the launch of the digital mortgage product, nearly 59,000 online assessments have been submitted through Freedom Bank KZ’s digital mortgage portal.

Invest Card

Freedom Bank KZ has also successfully developed and launched its "Invest card" product. Invest cards offer features unique to the Kazakhstani market, including the ability to quickly and conveniently transfer money to and from a customer’s investment accounts, around-the-clock access to the customer’s brokerage accounts, instant card issuance upon approval, instant replenishment and payment for purchases without commissions, and daily interest of up to 3% per annum in U.S. dollars on ~~Form 10-K for~~ the ~~fiscal year ended March 31, 2022, filed with~~outstanding balance on the ~~SEC on May 31, 2022.~~

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card.

Key Income Statement Line Items

~~Revenue~~Revenue

We derive revenue primarily from fee and commission income earned from our retail brokerage and banking ~~customers~~clients, fee and commission income from investment banking services, ~~net gains from~~ our proprietary trading activities and interest income. Fee and commission income as a percentage of our total revenue was 84% and ~~insurance underwriting premiums.~~74% in the three month periods ended December 31, 2021 and 2020, and 58% and 76% in the nine month periods ended December 31, 2020 and 2021, respectively.

Fee and Commission Income

Fee and commission income consists principally of retail brokerage fees from customer trading and related banking services, fees for customers' outstanding short positions, fees for underwriting, market making and consulting services. Fee and commission income as a percentage of our total revenue was 38% and 59% in the three months ended December 31, 2022 and 2021, 45% and 44% in the nine months ended December 31, 2022 and 2021, respectively.

A substantial portion of our revenue is derived from commissions from ~~customers~~clients through accounts with ~~transaction-based~~transaction based pricing. Brokerage commissions are charged on investment products in accordance with ~~schedules~~a schedule we have formulated that ~~align~~aligns with local ~~practice in the relevant market.~~ practices. Retail brokerage service fee and commission income as a percentage of our total fee and commission income was ~~85%~~70% and ~~95%~~71% in the three ~~months~~month periods ended December 31, ~~2022~~2021 and ~~2021.~~2020, respectively and 48% and 76% in the nine month periods ended December 31, 2021 and 2020, respectively. Fees received for banking services consist primarily of wire transfer fees, commissions for payment processing and commissions for currency exchange operations. The following table presents our fee and commission income as a percentage of our total revenue by type for the periods presented.


	Three months ended December 31,				Nine months ended December 31,
	2021		2020		2021		2020
	(Restated)		(Restated)		(Restated)		(Restated)
Retail brokerage fee and commission income	70	%	71	%	48	%	76	%
Investment banking fee and commission income	1	%	1	%	1	%	3	%
Commission from bank services	2	%	—	%	1	%	—	%
Other fee and commission income	—	%	2	%	1	%	2	%

Total fee and commission income as a percentage of total revenue	74	%	74	%	51	%	81	%

Net Gain on Trading Securities

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Net gain on trading securities reflects the ~~change in value of the securities held in~~gains and losses from our proprietary trading ~~portfolio in the relevant period. A net gain~~activities. Net gains or ~~loss is~~losses are comprised of ~~both~~ realized and unrealized gains and ~~losses during the period being presented. Realized gains~~losses. Gains or losses are ~~recognized~~realized when we close ~~an open~~a position in a security and ~~recognize~~realize a gain or a loss on that position. U.S. GAAP requires that we ~~also~~ reflect in our ~~Condensed Consolidated Statements of Operations~~financial statements unrealized gains and ~~Statements of Other Comprehensive Income any unrealized gain or loss~~losses on ~~each~~all our securities trading positions that remain open ~~securities positions~~ as of the end of each period based on whether the value of the open position is higher or lower at the period end than it was at either: (i) the beginning of the period, if the position was held for the full period; or (ii) at the time the position was opened, if the position was opened during the period.

Fluctuations in unrealized gains or losses from one period to another can occur as a result of factors beyond our control, such as fluctuations in the market prices of the open securities positions we hold or the short or long term halting of trading in certain markets, either of which may ~~result from unpredictable factors such as significant market volatility stemming from market and economic uncertainty related to global or local events. Fluctuations might also~~ result from factors within our control, such as when we elect to close an open securities position, which would have the effect of reducing our open positions and, thereby potentially reducing or increasing the amount of unrealized gains or losses ~~we might recognize~~ in a period. ~~These~~Changes in unrealized gains and losses from period to period may also occur as a result of factors beyond our control, such as fluctuations ~~can~~in the market prices of the open securities positions we hold. This may adversely affect the ultimate value we realize from ~~our proprietary trading activities.~~these investments. Unrealized gains or losses in a particular period may or may not be indicative of the gain or loss we will ~~ultimately~~ realize on a securities position when the position is closed. As a result, we ~~might~~may realize significant ~~fluctuations~~swings in ~~net~~ gains and losses realized on our trading securities year-over-year ~~or from one quarter to the next.~~and quarter-to-quarter.

Interest Income

We earn interest income from trading securities, reverse repurchase transactions, interest on margin lending to customers secured by marketable securities these customers hold with us and loans to customers. Interest income on trading securities consists of interest earned from investments in debt securities and dividends earned on equity securities held in our proprietary trading account.

~~Insurance Underwriting Income~~

Life insurance premiums are recognized as revenue when due; accident and health insurance premiums are recognized as revenue over the premium paying period and property and casualty insurance premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided.

~~Net Gain on Foreign Exchange Operations~~

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Net gain on foreign exchange operations reflects the net gain from: (i) the change in value resulting from currency fluctuations of monetary assets and liabilities denominated in any currency other than the functional currency of the entity holding such asset or liability; and (ii) purchases and sales of foreign currency. Under U.S. GAAP, we are required to revalue assets and liabilities denominated in foreign currencies into our reporting currency, the U.S. dollar, which can result in gains or losses on foreign exchange operations. Fluctuations in foreign currency exchange rates are beyond the Company's control, and the Company may suffer losses as a result of such fluctuations.

Fee and Commission Expense

We incur fee and commission expense infor operations within our brokerage ~~banking,~~ and ~~insurance~~banking activities. Fee and commission expense consists of expenses related to brokerage, banking, stock exchange, clearing ~~depository~~ and ~~agent~~depository services. Generally, we expect fee and commission expense ~~from brokerage and banking activities~~ to increase and decrease corresponding to increases and decreases in fee and commission income. For our insurance operations, fee and commission expense arises from the deferral and subsequent amortization of the costs of acquiring business, which are referred to as “deferred acquisition costs” (principally commissions, and other incremental direct costs of issuing policies). Deferred acquisition costs (“DAC”) are amortized over the estimated premium-paying period of the related policies. DAC for property insurance, accident insurance and health insurance is amortized over the effective period of the related insurance policies. Acquisition costs for life insurance policies, except for accident insurance and health insurance, are not capitalized in DAC, and recognized as they arise and are included in commission expense.

Interest Expense

Interest expense includes the expenses associated with our short-term and long-term financing, which consist of interest on securities repurchase agreement obligations, customer accounts and deposits, debt securities issued and loans received.

Operating Expense

Operating expense includes payroll and bonuses, advertising expenses, lease cost, professional expenses, depreciation and amortization, communication services, software support, stock compensation expense, representative expenses, business trip expenses, utilities, charity and other expenses.

~~Insurance Claims Incurred, Net of Reinsurance~~

Insurance claims incurred are expenses directly associated with our insurance activity, and represent actual amounts paid or to be paid to policyholders when insurable events occur, minus any amounts we receive from reinsurers related to the insurable event. This amount is adjusted for changes in loss reserves, including claims reported but not settled (RBNS), claims incurred but not reported (IBNR) and not incurred claims reserve (NIC).

Foreign Currency Translation Adjustments, Net of Tax

The functional currencies of our operating subsidiaries are the Russian ruble, the Kazakhstan tenge, ~~the Russian ruble,~~ the euro, the U.S. dollar, the Ukrainian hryvnia, the ~~Uzbekistan~~Uzbekistani som, the Kyrgyzstani som, the UK pound sterling, the Azerbaijani manat and the Armenian ~~dram, the British pound sterling and the United Arab Emirates dirham.~~dram. Our reporting currency is the U.S. dollar. Pursuant to U.S. GAAP we are required to revalue our assets from our functional currencies to our reporting currency for financial reporting purposes.

Net Income/(Loss) Attributable to ~~Non-controlling~~Noncontrolling Interest

~~Net income/(loss) attributable to non-controlling interest includes our net income/(loss) attributable to our non-controlling interest in Freedom UA.~~ We own a 9% interest in Freedom ~~UA, with the~~UA. The remaining 91% interest ~~controlled~~is owned by Askar Tashtitov, the president of our Company. Through a series of agreements entered into with Freedom UA that obligate us to guarantee the performance of all Freedom UA obligations, provide Freedom UA adequate funding to cover its operating losses and net capital requirements, provide the management competence and operational support and ongoing access to our significant assets, technology resources and expertise in exchange for 90% of all net profits of Freedom UA after tax, we account for Freedom UA as a variable interest entity. We reflect our ownership of Freedom UA as a noncontrolling interest in our consolidated statements of financial condition, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows. Prior to July 2021 we owned approximately 32.9% of Freedom UA, but due to recent changes to Ukrainian regulations to further restrict foreign ownership of registered Ukrainian broker-dealers, in July 2021 we were required to sell approximately 23.9% of our equity interest in Freedom UA to Mr. Tashtitov (which sale was for US$0.4 million), reducing our direct ownership interest in Freedom UA to approximately 9%.

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All ~~U.S.~~ dollar amounts reflected in "Results of Operations", "Liquidity and Capital Resources", "Contractual Obligations" and "Critical Accounting Policies" of this Management’s Discussion and Analysis of

~~Table of Contents~~

Financial Condition and Results of Operations (“MD&A”) are presented in thousands of U.S. dollars unless the context indicates otherwise.

~~RESULTS OF OPERATIONS~~Results of Operations

Comparison of ~~the~~ Three-month Periods Ended December 31, ~~2022~~2021 and ~~2021~~2020

The following comparison of our financial ~~results~~result for the three-month periods ended December 31, ~~2022~~2021 and ~~2021~~2020, is not necessarily indicative of future results.

Revenue

The following table sets out information or our ~~total~~ revenue ~~net~~ for the periods presented.

Three months ended December 31, 2022 Three months ended December 31, 2021 Change
(Restated)
Amount %* Amount %* Amount %
Fee and commission income $ 80,883 37 % $ 91,408 59 % $ (10,525) (12) %
Net gain on trading securities 25,456 12 % 7,663 5 % 17,793 232 %
Interest income 80,255 37 % 33,657 22 % 46,598 138 %
Insurance underwriting income 28,557 13 % 21,394 14 % 7,163 33 %
Net gain on foreign exchange operations 20,866 10 % 1,361 1 % 19,505 1,433 %
Net loss on derivative (21,469) (10) % (314) — % (21,155) 6,737 %
Total revenue, net $ 214,548 100 % $ 155,169 100 % $ 59,379 38 %

* ~~Percentage of total revenue, net.~~


	Three months ended December 31, 2021			Three months ended December 31, 2020			Change
	(Restated)			(Restated)
	Amount		%	Amount		%	Amount		%
Fee and commission income	$	91,411	74	$	58,099	74	$	33,312	57
Net gain on trading securities	7,014		6	13,972		18	(6,958)		(50)
Interest income	24,799		20	5,224		7	19,575		375
Net gain on foreign exchange operations	1,106		1	103		—	1,003		974
Net loss on derivatives	(314)		—	946		1	(1,260)		(133)
Total revenue, net	$	124,016	100	$	78,344	100	$	45,672	58

For the three months ended December 31, ~~2022,~~2021, we realized total net revenue ~~net~~ of ~~$214,548,~~$124,016, a ~~$59,379~~58% increase compared to three months ended December 31, ~~2021.~~2020. Revenue during the three months ended December 31, ~~2022,~~2021, was significantly higher than the three months ended December 31, ~~2021,~~2020, primarily due to ~~increases in~~increased fee and commission income and interest income, ~~and~~which was partially offset by decreased net gain on ~~foreign exchange operations between the two periods. These increases were offset in part by an increase in net loss on derivative.~~

trading securities.

Fee and commission income.During the course of the Company's preparation of its quarterly report on Form 10-Q for the three months ended December 31, 2022, it was determined that there was an error in the Company's quarterly report on Form 10-Q for the three months ended December 31, 2021, related to the classification of interest income on margin lending on the Company's Condensed Consolidated Statement of Operations. This classification has been corrected in the foregoing table. Please see Note 4 ~~Restatement~~ ~~to the condensed consolidated financial statements included in this quarterly report on Form 10-Q for more information.~~

~~Fee and commission income~~

~~The following table presents our fee and commission income as a percentage of our total revenue by type for the periods presented.~~

Three months ended December 31,
2022 2021 (Restated) Amount Change % Change
Brokerage services $ 68,532 $ 86,700 $ (18,168) (21) %
Bank services 5,507 2,295 3,212 140 %
Underwriting and market-making services 4,778 1,828 2,950 161 %
Other fee and commission income 2,066 585 1,481 253 %
Total fee and commission income $ 80,883 $ 91,408 $ (10,525) (12) %

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Three months ended December 31,
2022 2021 (Restated)
(as a % of total revenue)
Brokerage services 85 % 95 %
Bank services 7 % 3 %
Underwriting and market-making services 6 % 2 %
Other fee and commission income 3 % 1 %
Total fee and commission income as a percentage of total revenue 100 % 100 %

~~For the three months ended December 31, 2022,~~ fee and commission income was ~~$80,883, a decrease~~$91,411, an increase of ~~$10,525,~~$33,313, or ~~12%~~57%, as compared to fee and commission income of ~~$91,408~~$58,099 for the ~~three months ended~~ December 31, ~~2021.~~2020. This ~~decrease~~increase in fee and commission income was primarily attributable to a ~~decrease~~$31,352 increase in ~~fee~~fees and commission ~~income~~ from ~~retail~~ brokerage ~~services of $18,168.~~services. The decrease in fee and commission income from retail brokerage services was attributable to lower volume of trades by clients in comparison with the three months ended December 31, 2021. We believe that decrease is not indicative of a broader trend, and is instead largely attributable to the high volatility on the capital markets and the geopolitical and economic situation in the world over the relevant periods. The decrease was offset in part by an increase in fee and commission income from brokerage services was attributable to a number of factors including: growth in client accounts through acquisitions (inorganic) and organic efforts including expansion of our retail financial advisers and increases in the volume of analysts’ reports made available to our customer base; and significantly increased trading volume and client activity stemming from government and bank ~~services by $3,212 due~~interventions and other events in response to the ~~expansion of the operations of Freedom Bank KZ~~COVID-19 pandemic and the ~~growing activity of its clients between the two periods.~~resulting increased market volatility and economic uncertainty.

Net gain on trading securities

. Net gain on trading securities was ~~$25,456~~$7,014 for the three months ended December 31, ~~2022, an increase of $17,793~~2021, as compared to ~~$7,663~~$13,972 for the three months ended December 31, ~~2021.~~2020. See the following table for information regarding our net gains and losses ~~on trading activities~~ during the three months ended December 31, ~~2022~~2021 and ~~2021:~~2020:
Realized Net (Loss)/Gain Unrealized Net Gain/(Loss) Net Gain
Three months ended December 31, 2022 $ (47,801) $ 73,257 $ 25,456
Three months ended December 31, 2021 (Recasted) $ 41,230 $ (33,567) $ 7,663


	Realized Net Gain		Unrealized Net (Loss)/Gain		Net Gain
Quarter ended December 31, 2021 (Restated)	$	41,386	$	(34,372)	$	7,014
Quarter ended December 31, 2020 (Restated)	$	6,571	$	7,401	$	13,972

During the three months ended December 31, 2022, we had a realized loss on trading securities of $51,240, which is attributable to SPBX shares sold during the three months ended December 31, 2022. This loss was offset in part by a realized net gain of $3,439 from the sale of securities during this period, resulting in a realized net loss of $47,801. We had an unrealized net gain in the three months ended December 31, 2022, due to securities positions we continued to hold at December 31, 2022, having appreciated by $21,185 as compared to September 30, 2022. In addition to this unrealized gain,we reclassified an unrealized loss of $52,072 of SPBX shares which was recognized during previous periods to a realized net loss during the three months ended December 31, 2022, resulting in an unrealized net gain of $73,257 for the three months ended December 31, 2022.

~~During the three months~~quarter ended December 31, 2021, we exchanged approximately 1,000,000 shares of stock in the SPBX we held in our proprietary trading account for units in the SPBX ETF. The main contributing factors to the increase in realized net gain on trading securities during the three months ended December 31, 2021, compared to the three months ended December 31, 2020, was the sale of those SPBX ETF units and the sale of other SPBX shares we held. As a result, for the three months ended December 31, 2021, we recognized net gain on trading securities sold of ~~$39,658,~~$41,386, which included $36,079 of unrealized net gain recognized during previous periods that was reclassified to realized net gain during the quarter ended December 31, 2021.

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~~Interestincome~~

~~The following tables set forth information regarding our revenue from interest income for the periods presented.~~

Three months ended December 31,
2022

2021 (Restated) Amount Change %
Change
Interest income on margin loans to customers $ 12,379 $ 4,921 $ 7,458 152 %
Interest income on trading securities 44,760 20,745 24,015 116 %
Interest income on loans to customers 12,327 1,241 11,086 893 %
Interest income on available-for-sale securities 6,727 6,470 257 4 %
Interest income on reverse repurchase agreements and amounts due from banks 4,062 280 3,782 1351 %
Total interest income $ 80,255 $ 33,657 $ 46,598 138 %

Interest income

Three months ended December 31,
2022 2021 (Restated)
(as a % of total interest income)
Interest income on margin loans to customers 15 % 15 %
Interest income on trading securities 56 % 62 %
Interest income on loans to customers 15 % 4 %
Interest income on available-for-sale securities 8 % 19 %
Interest income on reverse repurchase agreements and amounts due from banks 5 % 1 %
Total interest income as a percentage of total revenue 100 % 100 %

~~For~~. During the three months ended December 31, ~~2022,~~2021, we recognized a $19,576, or 375%, increase in interest income ~~was $80,255, representing an increase of $46,598, or 138%,~~as compared to the three months ended December 31, ~~2021. The increase in interest income was primarily attributable to~~2020. We recognized a ~~$24,015,~~$15,330, or ~~116%~~502%, increase in interest income from trading securities ~~between~~for the ~~two periods,~~three months ended December 31, 2021, as ~~result of an increase~~compared to the three months ended December 31, 2020, due to increases in the total size of our trading portfolio and an increase in the amount of bonds we held as a percentage of our total trading ~~portfolio between the two periods.~~portfolio. Moreover, we recognized ~~a $7,458, or 152%,~~an increase in ~~interest~~ income onfrom margin loans to customers ~~resulting from a higher usage~~in the amount of ~~margin loans for trades by our clients, including our affiliate FFIN Brokerage. In addition, we recognized a $11,086,~~$3,072 or 893%, increase in interest income on loans to customers between the two periods, which is mainly attributable to the issuing of mortgage loans and the purchase of uncollateralized bank customer loans from our affiliate FFIN Credit.166%.

Net gain on foreign exchange operations

Under U.S. GAAP, we are required to revalue assets and liabilities denominated in any currency other than the functional currency of the entity holding such asset or liability to the functional currency of that entity.

~~During~~. For the three months ended December 31, ~~2022,~~2021, we realized a net gain on foreign exchange operations of ~~$20,866~~$1,105, as compared to a net gain of ~~$1,361~~$103 during the three months ended December 31, 2021. The increase was primarily due to a net gain of $19,439 by our subsidiary Freedom Bank KZ in the three months ended December 31, 2022 from the purchase and sale of foreign currency, as the volume of currency transactions conducted by such subsidiary increased by 92% in the three months ended December 31, 2022 as compared to the three months ended December 31, 2021. This gain was primarily the result of the appreciation of the Kazakhstani tenge against the Russian ruble by approximately 25% and appreciation of U.S dollar against the Kazakhstani tenge by 3%.

~~Insurance underwriting income~~

2020. During the three months ended December 31, ~~2022, we had insurance underwriting income~~2021, the value of ~~$28,557, an increase of $7,163, or 33%, as compared to~~ the ~~three months ended December 31, 2021.~~Kazakhstani tenge depreciated by 1.4% against the U.S. dollar. The ~~increase was primarily attributable~~Company recognized gains on foreign currency exchange operations mostly due to a $8,852, or 40%, increase in insurance underwriting income from written insurance premiums for the three months ended December 31, 2022, as compared to the three months ended December 31, 2021, due to the expansionhigher volume of ~~our insurance~~cash and non-cash operations between the two periods. This increase in income from written insurance premiums was partially offset by a $2,577, or 8313%, increase in income from insurance activities due to the reinsurance premiums ceded for the

~~Table~~which resulted of ~~Contents~~purchasing and selling of foreign currencies.

three months ended December 31, 2022, as compared to the three months ended December 31, 2021. The following table sets out information on our insurance underwriting income for the periods presented.

Three months ended December 31,
2022 2021 (Restated)
Written insurance premiums $ 30,718 $ 21,866
Reinsurance premiums ceded (2,608) (31)
Change in unearned premium reserve, net 447 (441)
Insurance underwriting income $ 28,557 $ 21,394

Expense

The following table sets out the information on our total expense for the periods presented.

Three months ended December 31, 2022 Three months ended December 31, 2021 Change
(Recasted)
Amount %* Amount Amount %
Fee and commission expense $ 18,314 11 % $ 24,782 26 % $ (6,468) (26) %
Interest expense 52,037 32 % 21,890 23 % 30,147 138 %
Insurance claims incurred, net of reinsurance 17,419 11 % 16,286 17 % 1,133 7 %
Operating expense 50,608 31 % 31,581 33 % 19,027 60 %
(Recovery of provision)/provision for impairment losses 24,140 15 % (333) — % 24,473 (7349) %
Other (income)/expense, net 570 — % 979 1 % (409) (42) %
Total expense $ 163,088 100 % $ 95,185 100 % $ 67,903 71 %
~~______________~~

* Percentage of total expense.


	Three months ended December 31, 2021			Three months ended December 31, 2020			Change
	(Recast)			(Recast)
	Amount		%	Amount		%	Amount		%
Fee and commission expense	$	20,640	31	$	18,295	56	$	2,345	13
Interest expense	18,434		27	3,223		10	15,211		472
Operating expense	28,243		42	10,338		31	17,905		173
Provision for impairment losses	32		—	952		3	(920)		(97)
Other (income)/expense, net	(94)		—	15		—	(109)		(727)
Total expense	$	67,255	100	$	32,823	100	$	34,432	105

For the three months ended December 31, ~~2022,~~2021, we incurred total ~~expense~~expenses of ~~$163,088, a $67,903, or 71%~~$67,255, an 105%, increase as compared to total expense of $32,823 for the three months ended December 31, ~~2021. The~~2020. Expenses increased with the increase ~~was mainly attributable to an increase in~~of interest expense and ~~provision for impairment losses. Also contributing to the increase was an increase in operating expense, which was in turn largely attributable to~~ the growth of our business primarily in connection with increases in administrative costs and fees from the growth in our revenue generating activities and integrating our acquisition targets.

Fee and commission expense.Fee and commission expense ~~decreased~~increased by ~~26% between the two periods.~~

~~Fee and commission expense~~

~~Fee and commission expense decreased by $6,468,~~$2,345, or ~~26%~~13%, for the three months ended December 31, ~~2022,~~2021, as compared to the three months ended December 31, ~~2021.~~2020. This included increases in bank services of $1,954. The ~~decrease was primarily attributable to a decrease~~increases in ~~brokerage services fees of $10,230 due to using a new prime broker, as a~~fee and commission expense were the result of ~~which we had a different composition of order flow transactions, which were charged at lower rates. The decrease was also offset by the effect of increase~~both growth in ~~the bank services fees of $1,024 due to the expansion of the operations of Freedom Bank KZ between the two periods~~our customer base and ~~an increase in agency fee~~increased transaction volume from ~~insurance activities of $2,214 due to the expansion of~~ our ~~insurance operations between the two periods.~~customers.

Interest expense

~~During~~. For the three months ended December 31, ~~2022,~~2021, we ~~had~~incurred a ~~$30,147,~~$15,211, or ~~138%~~472%, increase in interest expense as compared to the three months ended December 31, ~~2021.~~2020. The increase in interest expense ~~was~~is primarily attributable to a $24,287, or 155%, increase in interest expense on short-term financing through securities repurchase agreements due to an increase in the volume of such financing, and a $5,417, or 95%, increase in interest on customer deposits. During the three months ended December 31, 2022, we increased our volume of short-term financing through securities repurchase agreements primarily in order to fund our investment portfolio. The increase in interest on customer deposits was a result of growth of our banking client base due to the expansion of the operations of Freedom Bank KZ between the two periods. As of December 31, 2022 and March 31, 2022, banking customer liabilities of Freedom Bank KZ were $1,026,605 and $246,284, respectively.

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~~Insurance claims incurred, net of reinsurance~~

During the three months ended December 31, 2022, we had a $1,133, or 7%, increase in insurance claims incurred, net of reinsurance, as compared to the three months ended December 31, 2021. The increase was primarily attributable to a $3,883 or 59%, increase in other expenses and a $3,227 or 99%, increase in expenses for claims for the three months ended December 31, 2022, as compared to the three months ended December 31, 2021, in each case due to the expansion of our insurance operations between the two periods. The increases were offset in part by a $5,977, or 92%, decrease in expenses for insurance reserve between the two periods.

~~Operating expenses~~

Operating expenses during the three months ended December 31, 2022 were $50,608, which increased by $19,027, or 60%, compared to operating expenses of $31,581 in the three months ended December 31, 2021. This increase was primarily attributable to the following increases: $7,528 in payroll and bonus expense as a result expansion of our workforce through hiring; $2,169 in fines, penalties and forfeit primarily due to penalties imposed in the three months ended December 31, 2022 on a subsidiary of the Company by a local regulator for regulatory noncompliance; $1,758 in charity and sponsorship expense due to humanitarian aid to the Ukraine-based charitable fund in connection with the geopolitical and economic situation; $667 decrease in stock based compensation expense due to the separation between continued and discontinued operations; $1,128 in rent expense; $796 in software support expense and a $5,766 increase in other operating expenses. We had 3,116 employees as of December 31, 2022 as compared to 1,540 employees as of December 31, 2021, in each case excluding employees from discontinued operations. The increase in the number of our employees was primarily due to the opening of new branches of Freedom Bank KZ and the acquisitions of ~~Freedom Life and Freedom Insurance, in each case during the 2022 calendar year.~~

~~Provision for impairment losses~~

We recognized provision for impairment losses in the amount of $24,140 for the three months ended December 31, 2022, as compared to recovery for impairment losses of $333 for the three months ended December 31, 2021. The increase was primarily attributable to growth of the loan portfolio of Freedom Bank KZ, as the majority of provisions is accrued on loan products. In addition, the Company accrued a one-off provision expense for restricted brokerage customers' cash which was held with Lek Securities Limited and a one-off provision expense for loans issued by a Ukrainian bank due to the Russia/Ukraine Conflict.

~~Income tax expense~~

We recognized income before income tax of $51,460 and $59,984 during the three months ended December 31, 2022, and December 31, 2021, respectively. Income tax expense for the three months ended December 31, 2022, and December 31, 2021 was $5,069 and $1,806, respectively. Our effective tax rate during the three months ended December 31, 2022, increased to 9.9%, from 3.0% during the three months ended December 31, 2021, as a result of changes in the composition of the revenues we realized from our operating activities, the tax treatment of those revenues in the various jurisdictions where our subsidiaries operate, and the incremental U.S. GILTI tax.

~~Net income from continuing operations~~

As a result of the foregoing factors, for the three months ended December 31, 2022, and the three months ended December 31, 2021, we recognized net income from continuing operations of $46,391 and $58,178, respectively.

~~Net income/(loss) from discontinued operation~~

Net income/(loss) from discontinued operation represents the net income or loss from our subsidiaries in Russia, which are classified as discontinued operations. Net income from discontinued operations was $16,009 for the three months ended December 31, 2022, as compared to net loss from discontinued operations of $4,105 for the three months ended December 31, 2021.

The change from a net loss to net income was primarily due to the presence of a significant net asset position in Chinese yuan by Freedom RU starting from June 2022. The exchange rate of the Chinese yuan against the Russian ruble increased by 24% during the three months ended December 31, 2022, as a result of which the Russia segment recognized a gain on foreign exchange operations on dealing operations of $14,431 during the three months ended December 31, 2022,

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and Freedom RU recognized a $5,340 foreign exchange gain in the three months ended December 31, 2022. This gain was partially offset by the accrual of an additional provision for impairment of discontinued operations in an amount of $2,509.

~~Net income~~

As a result of the foregoing factors, for the three months ended December 31, 2022, we realized net income of $62,400 compared to $54,073 for the three months ended December 31, 2021, an increase of 15%.

~~Non-controlling interest~~

We reflect Mr. Tashtitov's ownership of Freedom UA as a non-controlling interest in our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income, Condensed Consolidated Statements of Shareholders’ Equity and Condensed Consolidated Statements of Cash Flows. We recognized a net loss attributable to non-controlling interest of $464 for the three months ended December 31, 2022, as compared to a net loss attributable to non-controlling interest of $343 for the three months ended December 31, 2021. This change was largely a result of the deterioration of trading positions of Freedom UA after the impact of the Russia/Ukraine Conflict.

~~Foreign currency translation adjustments, net of tax~~

Due to an approximately 25% depreciation of the Russian ruble and an approximately 3% depreciation of the Kazakhstan tenge each against the U.S. dollar during the three months ended December 31, 2022, we realized a foreign currency translation loss of $5,611 for the three months ended December 31, 2022, as compared to a foreign currency translation loss of $8,650 for the three months ended December 31, 2021.

~~Comparison of the Nine-month Periods Ended December 31, 2022 and 2021~~

~~The following comparison of our financial results for the nine-month periods ended December 31, 2022 and 2021 is not necessarily indicative of future results.~~

~~Revenue~~

~~The following table sets out information or our total revenue, net for the periods presented.~~

Nine Months Ended December 31, 2022 Nine Months Ended December 31, 2021 Change
(Restated)
Amount %* Amount %* Amount %
Fee and commission income $ 253,486 45 % $ 262,549 44 % $ (9,063) (3) %
Net gain on trading securities 38,894 7 % 197,947 33 % (159,053) (80) %
Interest income 187,817 33 % 82,514 14 % 105,303 128 %
Insurance underwriting income 78,998 14 % 51,491 9 % 27,507 53 %
Net gain on foreign exchange operations 30,014 5 % 4,076 1 % 25,938 636 %
Net loss on derivative (22,523) (4) % (1,028) — % (21,495) 2091 %
Total revenue, net $ 566,686 100 % $ 597,549 100 % $ (30,863) (5 %)

~~______________~~

* Percentage of total revenue, net.

For the nine months ended December 31, 2022, we realized total net revenue of $566,686, a 5% decrease compared to the nine months ended December 31, 2021. The decrease was primarily attributable to a decrease in net gain on trading securities in the amount of $159,053, which was offset in part by an increase in interest income. We consider the net gain on trading securities during the three months ended December 31, 2021 as an extraordinary event that we do not believe to be indicative of a trend in future periods.

During the course of the Company's preparation of its quarterly report on Form 10-Q for the nine months ended December 31, 2022, it was determined that there was an error in the Company's quarterly report on Form 10-Q for the nine months ended December 31, 2021 related to the classification of interest income on margin lending on the Company's

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~~Condensed Consolidated Statement of Operations. This classification has been corrected in the foregoing table. Please see Note 4~~ ~~Restatement~~ ~~to the condensed consolidated financial statements included in this quarterly report on Form 10-Q for more information.~~

~~Fee and commission income~~

~~The following table presents our fee and commission income as a percentage of our total revenue by type for the periods presented.~~

Nine months ended December 31,
2022 2021 (Restated) Amount Change % Change
Brokerage services $ 227,476 $ 249,249 $ (21,773) (9) %
Bank services 15,100 4,027 11,073 275 %
Underwriting and market-making services 8,008 5,832 2,176 37 %
Other fee and commission income 2,902 3,441 (539) (16) %
Total fee and commission income $ 253,486 $ 262,549 $ (9,063) (3) %

Nine months ended December 31,
2022 2021 (Restated)
(as a % of total revenue)
Brokerage services 90 % 95 %
Bank services 6 % 2 %
Underwriting and market-making services 3 % 2 %
Other fee and commission income 1 % 1 %
Total fee and commission income as a percentage of total revenue 100 % 100 %

For the nine months ended December 31, 2022, fee and commission income was $253,486, a decrease of $9,063, or 3%%, as compared to fee and commission income of $262,549 for the nine months ended December 31, 2021. This decrease in fee and commission income was primarily attributable to a decrease in fee and commission income from retail brokerage services of $21,773. The decrease in fee and commission income from retail brokerage services was attributable to a decrease in the volume of trades by clients in comparison with the nine months ended December 31, 2021. We believe that decrease is not indicative of a broader trend, and is instead largely attributable to the high volatility on the capital markets and the geopolitical and economic situation in the world over the relevant periods. The decrease was offset in part by an increase in fee and commission income from bank services by $11,073 due to the expansion of the operations of Freedom Bank KZ and the growing activity of its clients between the two periods.

~~Net gain on trading securities~~

~~The following table sets out information regarding our net gains on trading securities during the nine months ended December 31, 2022 and 2021:~~

Realized Net (Loss)/Gain Unrealized Net Gain Net Gain
Nine months ended December 31, 2022 $ (26,790) $ 65,684 $ 38,894
Nine months ended December 31, 2021 $ 190,044 $ 7,903 $ 197,947

During the nine months ended December 31, 2022, we sold securities for a realized net gain of $24,450. This realized gain was offset by realized loss of $51,240, which is attributable to SPBX shares sold during the nine months ended December 31, 2022, resulting in realized net loss of $26,790. Similarly, securities positions we continued to hold at December 31, 2022, had appreciated by $35,985 as compared to March 31, 2022. In addition to this unrealized gain, unrealized loss of $29,699 of SPBX shares which was recognized during previous periods was reclassified to realized net loss during the three months ended December 31, 2022, resulting in an unrealized net gain of $65,684 for such nine month period.

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The primary contributing factors to the increase in net gain on trading securities during the nine months ended December 31, 2021, were the sale of SPBX ETF units we held in our proprietary trading account and higher unrealized net gain as a result of revaluation of securities we continued to hold in our proprietary accounts at December 31, 2021. We do not consider the significant increase in realized net gain on trading securities resulting from the sale of SPBX ETF units and the increase in unrealized net gain from revaluation of securities held in our portfolio at December 31, 2021, to be indicative of a trend toward higher net gains on trading securities in the future.

~~Interest income~~

~~The following tables set forth information regarding our revenue from interest income for the periods presented.~~

Nine months ended December 31,
2022

2021 (Restated) Amount Change %
Change
Interest income on margin lending $ 27,259 $ 8,212 $ 19,047 232 %
Interest income on trading securities 116,922 54,966 61,956 113 %
Interest income on loans to customers 24,158 2,205 21,953 996 %
Interest income on available-for-sale securities 13,280 16,244 (2,964) (18) %
Interest income on reverse repurchase agreements and amounts due from banks 6,198 887 5,311 599 %
Total interest income $ 187,817 $ 82,514 $ 105,303 128 %

Nine months ended December 31,
2022 2021 (Restated)
(as a % of total interest income)
Interest income on margin lending 15 % 10 %
Interest income on trading securities 62 % 67 %
Interest income on loans to customers 13 % 3 %
Interest income on available-for-sale securities 7 % 20 %
Interest income on reverse repurchase agreements and amounts due from banks 3 % 1 %
Total interest income as a percentage of total revenue 100 % 100 %

Interest income increased by $105,303, or 128% in the nine months ended December 31, 2022, compared to the nine months ended December 31, 2021. We earned interest income from margin lending to clients, trading securities, reverse repurchase transactions and loans to customers and amounts due from banks.

The Company recognized a $19,047 increase in interest income on margin lending between the two nine month periods, as a result of a higher usage of margin loans for trades by our clients, including our affiliate FFIN Brokerage.

Interest income on trading securities consists of interest earned from investments in debt securities held in our proprietary trading account. We recognized a $61,956, or 113% increase in interest income from trading securities during the nine months ended December 31, 2022 due to an increase in the total size of our trading portfolio and an increase in the percentage of our investments in bonds as compared to other securities.

We also recognized a $21,953, or 996% increase in interest income from loans to customers between the two nine month periods as a result of issuing of mortgage loans in connection with the expansion of the operations of Freedom Bank KZ and the purchase of uncollateralized bank customer loans from our affiliate FFIN Credit.

We recognized a $5,311 increase in interest income from reverse repurchase transactions and due from banks because we engaged in a larger volume of such transactions during the nine months ended December 31, 2022.

~~Net gain on foreign exchange operations~~

During the nine months ended December 31, 2022, we realized a net gain on foreign exchange operations of $30,014 compared to a net gain of $4,076 during the nine months ended December 31, 2021. The increase was primarily due to a net gain of $30,986 in the nine months ended December 31, 2022 by our subsidiary Freedom Bank KZ due to

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purchase and sale of foreign currency, as the volume of currency transactions conducted by such subsidiary increased by 165% in the nine months ended December 31, 2022 as compared to the nine months ended December 31, 2021.

~~Insurance underwriting income~~

During the nine months ended December 31, 2022, we recognized a $27,507, or 53%, increase in insurance underwriting income as compared to the nine months ended December 31, 2021. We recognized a $32,424, or 59%, increase in insurance underwriting income from written insurance premiums for the nine months ended December 31, 2022, as compared to the nine months ended December 31, 2021, due to the expansion of our insurance operations. This increase in income from written insurance premiums was partially offset by a $3,096, or 1005%, decrease in income from insurance activities due to the reinsurance premiums ceded and $1,822, or 56%, decrease in income from insurance activities due to the unearned premium reserve for the nine months ended December 31, 2022, as compared to the nine months ended December 31, 2021.

~~Expense~~

~~The following table sets out the information on our total expense for the periods presented.~~

Nine Months Ended December 31, 2022 Nine Months Ended December 31, 2021 Change
(Recasted)
Amount %* Amount %* Amount %*
Fee and commission expense $ 60,068 15 % $ 68,626 29 % $ (8,558) (12) %
Interest expense 132,971 33 % 52,852 22 % 80,119 152 %
Insurance claims incurred, net of reinsurance 51,586 13 % 41,096 17 % 10,490 26 %
Operating expense 126,367 31 % 72,772 30 % 53,595 74 %
Provision for impairment losses 30,294 8 % 911 — % 29,383 3225 %
Other (expense)/income, net 79 — % 2,426 1 % (2,347) (97) %
Total expense $ 401,365 100 % $ 238,683 100 % $ 162,682 68 %

~~______________~~

* Percentage of total expense.

During the nine months ended December 31, 2022, we incurred total expenses of $401,365, a 68% increase compared to the nine months ended December 31, 2021. Expenses increased with the growth of our business primarily in connection with increases in interest expense and administrative costs and fees from the growth in our revenue generating activities and integrating our acquisition targets.

~~Fee and commission expense~~

Fee and commission expense was essentially constant at $60,068 for the nine months ended December 31, 2022 and $68,626 the nine months ended December 31, 2021. There were increases of commissions paid to bank services of $7,979, other commission expenses of $5,414 and agency fee expenses of $7,018, which increases were offset by a decrease in brokerage commissions by $29,792 due to using a new prime broker, as a result of which we had a different composition of order flow transactions, which were charged at lower rates. Additionally these decrease in expense of brokerage commissions were the result of decrease of commission income from retail brokerage services in comparison with nine months ended December 31, 2021. Generally, we expect fee and commission expense to increase and decrease in correspondence with increases and decreases in fee and commission income.

~~Interest expense~~

~~During the nine months ended December 31, 2022, we incurred a 152% increase in interest expense. The increased expense was primarily attributable to a $66,918~~$10,826 increase in the volume of short-term financing through securities repurchase agreements, and a ~~$12,135~~$4,519 increase in interest on customer deposits.

We In the three months ended December 30, 2021, we increased our volume of short-term financing through securities repurchase agreements primarily in order to fund our investment portfolio. The increase in interest on customer deposits and loans received was a result of a growth of ~~client base.~~customer deposits.

Operating expenses. Operating expenses for the three months ended December 31, 2021, was $28,243, a 173% increase compared to the three months ended December 31, 2020. This increase was primarily attributable to an $7,287 increase in payroll and bonuses expense as a result expansion of our workforce through acquisition and hiring, a $2,270 increase in stock compensation expense resulting from issuing restricted stock grants to key employees in May 2021, a $2,151 increase in advertising expenses, and a $3,438 increase in professional services as a result of expansion of our business.

Income tax expense

We recognized net income before income tax of $56,761 and $45,521 during the three months ended December 31, 2021 and December 31, 2020, respectively. Our effective tax rate during the three months ended December 31, 2021, decreased to 3.1%, from 14.5% during the three months ended December 31, 2020, as a result of changes in the

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~~Insurance claims incurred, net of reinsurance~~

During the nine months ended December 31, 2022, we recognized a $10,490, or 26%, increase in expenses from insurance activities as compared to the nine months ended December 31, 2021. We recognized a $5,945 or 26%, increase in expenses for insurance reserve, a $6,423 or 74%, decrease in expenses for claims, and a $10,012 or 102%, increase in other expenses for the nine months ended December 31, 2022, as compared to the nine months ended December 31, 2021, due to the expansion of operations of our insurance companies.

~~Operating expenses~~

We recognized a $53,595, or 74%, increase in operating expenses during the nine months ended December 31, 2022 compared with the nine months ended December 31, 2021. The increase was primarily attributable to the following increases: a $23,384, or 44% in payroll and bonus expense as a result expansion of our workforce through hiring; $9,043 in charity and sponsorship expense due to humanitarian aid to the Ukraine-based charitable fund in connection with the geopolitical and economic situation; $4,712 in professional services; $2,628 in software support; $2,383 in fines, penalties and forfeit primarily due to penalties imposed in the nine months ended December 31, 2022, on a subsidiary of the Company by a local regulator for regulatory noncompliance; $882 in stock based compensation expense; $1,753 in rent expenses; and a $9,133 increase in other operating expenses. During the nine months ended December 31, 2022 we had 2,529 employees, as compared to 1,356 employees for nine months ended December 31, 2021 in each case excluding employees from discontinued operations. The increase in the number of our employees was primarily due to the opening of new branches of ~~Bank Freedom Finance Kazakhstan~~ ~~and the acquisitions of~~ ~~Freedom Finance Insurance~~ ~~and~~ ~~Freedom Finance Life, in each case during the nine months ended December 31, 2022.~~

~~Provision for impairment losses~~

We recognized provision for impairment losses in the amount of $30,294 for the nine months ended December 31, 2022, as compared to provision for impairment losses of $911 for the nine months ended December 31, 2021. The increase was primarily attributable to growth of the loan portfolio of Freedom Bank KZ, as the majority of provisions is accrued on loan products. In addition, the Company accrued a one-off provision expense for restricted brokerage customers cash which was held with Lek Securities Limited and a one-off provision expense for loans issued by a Ukrainian bank due to the Russia/Ukraine Conflict.

~~Income tax expense~~

We recognized income before income tax of $165,321 and $358,866 during the nine months ended December 31, 2022, and the nine months ended December 31, 2021, respectively. Income tax expense for the nine months ended December 31, 2022, and the nine months ended December 31, 2021 were $26,567 and $39,026, respectively. Our effective tax rate during the nine months ended December 31, 2022, increased to 16.1%, from 10.9% during the nine months ended December 31, 2021, as a result of changes in the composition of the revenues we realized from our operating activities, the tax treatment of those revenues in the various foreign jurisdictions where our subsidiaries operate, and the incremental U.S. GILTI tax.

Net income from continuing operations

As a result of the foregoing factors, for the ~~nine~~three months ended December 31, ~~2022,~~2021, and the three months ended December 31, 2020, we recognized net income from continuing operations of $54,993 and $38,922, respectively.

Net income/(loss) from discontinued operations

Net income/(loss) from discontinued operations represents the net income or loss from our subsidiaries in Russia, which are classified as discontinued operations. Net loss from discontinued operations was $4,105 for the three months ended December 31, 2021, as compared to net gain from discontinued operations of $3,399 for the three months ended December 31, 2020. The negative change in the amount of $7,504 was primarily attributable to a $10,670 increase in operating expense due to increase in payroll and bonuses expense as a result of expansion of workforce through hiring.

Net income

As a result of the foregoing factors, for the three months ended December 31, 2021, we had net income of $54,993 as compared to $38,922 for the three months ended December 31, 2020, an increase of 41%.

Non-controlling interest

We reflect our ownership of Freedom UA as a non-controlling interest in our consolidated statements of financial condition, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows. We recognized a net loss attributable to non-controlling interest of $343 for the three months ended December 31, 2021, as compared to a net loss attributable to non-controlling interest of $53 for the three months ended December 31, 2020.

Foreign currency translation adjustments, net of tax

Due to the depreciation of the Russian ruble by almost 2% and depreciation of the Kazakhstan tenge by almost 1.4%, respectively, against the U.S. dollar for the three months ended December 31, 2021, as compared to the three months ended December 31, 2020, we realized a foreign currency translation loss of $7,336 for the three months ended December 31, 2021, compared to a foreign currency translation gain of $6,851 for the three months ended December 31, 2020.

Comparison of the Nine-month Periods Ended December 31, 2021 and 2020

The following comparison of our financial results for the nine-month periods ended December 31, 2021 and 2020, is not necessarily indicative of future results.

Revenue

The following table sets out information on our revenue for the periods presented.


	Nine months ended December 31, 2021			Nine months ended December 31, 2020			Change
	(Restated)			(Restated)
	Amount		%	Amount		%	Amount		%
Fee and commission income	$	262,715	51	$	135,987	81	$	126,728	93
Net gain on trading securities	195,270		38	19,243		12	176,027		915
Interest income	59,339		11	11,762		7	47,577		404
Net gain on foreign exchange operations	3,773		1	142		—	3,631		2557
Net (loss)/gain on derivative	(1,028)		—	61		—	(1,089)		(1785)
Total revenue, net	$	520,069	100	$	167,195	100	$	352,874	211

For the nine months ended December 31, 2021, we realized total net revenue of $520,069, a 211%, increase compared to the nine months ended December 31, 2020. The increase was primarily due to increases in fee and

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commission income, net gain on trading securities and interest income. As discussed in more detail below under “Net Gain on Trading Securities” $195,270 of total revenue, net for the nine months ended December 31, 2021, was realized from the sale of certain securities held in our proprietary trading portfolio and from revaluation of securities we continued to hold in our portfolio at December 31, 2021. We consider the sale of certain securities from our own portfolio as an extraordinary event that we do not believe to be indicative of a trend in future periods.

Fee and commission income. For the nine months ended December 31, 2021, fee and commission income increased by $126,728, a 93% increase as compared to the nine months ended December 31, 2020. This increase was primarily attributable to a $122,321 increase in fees and commissions from brokerage services and a $3,836 increase in fees and commission income from related bank services. The increase in fee and commission income from brokerage services and related banking services was attributable to a number of factors including: growth in client accounts through acquisition (inorganic) and organic efforts including expansion of our retail financial advisers and increases in the volume of analysts' reports made available to our customer base; and significantly increased trading volume and client activity stemming from government and bank interventions and other events in response to the COVID-19 pandemic and the resulting increased market volatility and economic uncertainty.

Net gain on trading securities. Net gain on trading securities was $195,270 for the nine months ended December 31, 2021, as compared to $19,243 for the three months ended December 31, 2020. See the following table for information regarding our net gains and losses during the nine months ended December 31, 2021 and 2020:


	Realized Net Gain		Unrealized Net Gain/(Loss)		Net Gain
Quarter ended December 31, 2021 (Restated)	$	189,783	$	5,487	$	195,270
Quarter ended December 31, 2020 (Restated)	$	13,563	$	5,680	$	19,243

During nine months ended December 31, 2021, we exchanged approximately 12,500,000 shares of stock in the SPBX we held in our proprietary trading account for units in the SPBX ETF. The main contributing factors to the increase in realized net gain on trading securities during the nine months ended December 31, 2021, were the sale of those SPBX ETF units and the sale of other SPBX shares we held. As a result, during the nine months ended December 31, 2021, the Company recognized a net gain on trading securities of $195,270, which included $189,783 of realized gain and $5,487 of net unrealized loss. By comparison, for the nine month period ended December 31, 2020, we recognized a net gain on trading securities of $36,330, which included $28,635 of realized net gain and $7,695 of unrealized net gain from favorable market conditions, a significant increase upon revaluation of certain Level 3 securities we held as of December 31, 2020, increased use and success of intraday algorithmic trading and increased market-making activities on the SPBX outside of regular U.S. market hours. We do not consider the significant increase in realized net gain on trading securities for the nine months ended December 31, 2021, to be indicative of a trend toward higher net gains on trading securities in the future.

Interest income. For the nine months ended December 31, 2021, we had $51,127 of interest income, as compared to $9,403 of interest income for the nine months ended December 31, 2020, an increase of $47,577 or 404%. We had an increase of interest income from trading securities during the nine months ended December 31, 2021, as compared to the nine months ended December 31, 2020, due to increases in the total size of our trading portfolio and an increase in the amount of bonds we held as a percentage of our total trading portfolio. We had an $985, or 550%, increase in interest income from reverse repurchase transactions for the nine months ended December 31, 2021, as compared to the nine months ended December 31, 2020, due to an increase in the volume of such transactions between the two periods. We had a $1,864, or 647%, increase in interest income from loans to customers for the nine months ended December 31, 2021, as compared to the nine months ended December 31, 2020, as a result of new loans issued by Freedom Bank KZ after we completed the acquisition of it in December 2020. In addition, we recognized an increase in income from margin loans to customers in the amount of $5,853 or 243%.

Net gain on foreign exchange operations. For the nine months ended December 31, 2021, we realized a net gain on foreign exchange operations of $3,774, as compared to a net gain on foreign exchange operations of $142 for the nine months ended December 31, 2020. During the nine months ended December 31, 2021, the value of the Kazakhstani tenge depreciated by almost 1.6% against the U.S. dollar. As a result, we realized a net loss on foreign exchange operations in the amount of $510. This loss was offset by a higher volume of cash operations, which resulted in a $4,284 net gain on purchases and sales of foreign currency during the nine months ended December 31, 2021 as compared to a $112 net gain during the nine months ended December 31, 2020.

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Expense

The following table sets out information on our total expense for the periods presented.


	Nine months ended December 31, 2021			Nine months ended December 31, 2020			Change
	(Recast)			(Recast)
	Amount		%	Amount		%	Amount		%
Fee and commission expense	$	61,246	36	$	45,771	58	$	15,475	34
Interest expense	44,432		26	8,802		11	35,630		405
Operating expense	63,544		38	22,236		28	41,308		186
Provision for impairment losses	614		—	1,573		2	(959)		(61)
Other expense, net	480		—	(57)		—	537		(942)
Total expense	$	170,316	100	$	78,325	100	$	91,991	117

For the nine months ended December 31, 2021, we incurred total expenses of $170,316, a 117% increase as compared to the nine months ended December 31, 2020. Expenses increased with the growth of our business primarily in connection with increases in administrative costs and fees from the growth in our revenue generating activities and integrating our acquisition targets.

Fee and commission expense. Fee and commission expense increased by $15,475, a 34% increase, for the nine months ended December 31, 2021, as compared to the nine months ended December 31, 2020. This included increases in brokerage commissions to our prime brokers of $11,676 and commissions paid for bank services of $3,461. The increases in fee and commission expense were the result of both growth in our customer base and increased transaction volume from our customers.

Interest expense. For the nine months ended December 31, 2021, we had a 405% increase in interest expense as compared to the nine months ended December 31, 2020. The increase in interest expense was primarily attributable to a $24,408 increase in volume of short-term financing through securities repurchase agreements and a $10,806 increase in interest on customer deposits. In the nine months ended December 31, 2021, we increased our volume of short-term financing through securities repurchase agreements primarily in order to fund our investment portfolio. The increase in interest on customer deposits and loans was a result of growth of customer deposits.

Operating expenses. Operating expenses during the nine months ended December 31, 2021, was $63,544, a $41,308 increase compared to the nine months ended December 31, 2020. This increase was primarily attributable to a $16,444 increase in payroll and bonuses expense as a result of expansion of our workforce through acquisition and hiring, a $5,580 increase in stock compensation expense resulting from issuing restricted stock grants to key employees in May 2021, an increase of $5,461 in advertising expenses, a $6,446 increase in professional services, an increase of $1,023 in depreciation and amortization and a $298 increase in lease cost.

Income tax expense

We recognized net income before income tax of $349,753 and $88,870 for the nine months ended December 31, 2021, and December 31, 2020, respectively. Our effective tax rate during the nine months ended December 31, 2021, decreased to 11.1%, from 13.2% during the nine months ended December 31, 2020, as a result of changes in the composition of the revenues we realized from our operating activities, the tax treatment of those revenues in the various foreign jurisdictions where our subsidiaries operate, and the incremental U.S. GILTI tax.

Net income from continuing operations

As a result of the foregoing factors, for the nine months ended December 31, 2021, and the nine months ended December 31, 2020, we recognized net income from continuing operations of ~~$138,754~~$310,773 and ~~$319,840,~~$77,172, respectively.

Net income/(loss) from discontinued operation

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Net income/(loss) from discontinued operation represents the net income or loss from our subsidiaries in Russia, which are classified as discontinued operations. Net ~~income~~loss from discontinued operations was ~~$9,929~~$3,656 for the nine months ended December 31, ~~2022,~~2021, as compared to net ~~loss~~gain from discontinued operations of ~~$3,656~~$12,988 for the nine months ended December 31, ~~2021.~~

2020. The negative change ~~from a net loss to net income~~in the amount of $16,644 was primarily attributable to a $23,862 increase in operating expense due to the presence of a significant net asset position in Chinese yuan by Freedom RU starting from June 2022. The exchange rate of the Chinese yuan against the Russian ruble increased by 29% during the six months ended December 31, 2022. For this reason, the Russia Segment recognized a gain on foreign exchange operations on dealing operations of $37,848 for the nine months ended December 31, 2022. Interest

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income increased by $31,886 due to increased interest income generated on margin loans to customers, resulting from a higher usage of margin loans for trades by clients. Net gain on trading securities increased by $23,614, mainly due to gain from the sale of securities. Operating expenses increased by $29,538 primarily due to an increase in payroll ~~expenses~~and bonuses expense as a result of ~~a 40% increase in the average number~~expansion of employees between the two periods. In addition, as presented in Note 25 to the condensed consolidated financial statements included in this quarterly report on Form 10-Q we recognized provision for impairment of discontinued operations in the amount of $43,973.workforce through acquisition and hiring.

Net income

As a result of the foregoing factors, for the nine months ended December 31, ~~2022,~~2021, we ~~realized~~had net income of ~~$148,683~~$310,773 as compared to ~~$316,184~~$77,172 for the nine months ended December 31, ~~2021,~~2020, an ~~decrease~~increase of ~~53%~~241%.

Non-controlling interest

We reflect our ownership of Freedom UA as a non-controlling interest in our ~~Condensed Consolidated Balance Sheets, Condensed Consolidated Statements~~consolidated statements of ~~Operations~~financial condition, consolidated statements of comprehensive income, consolidated statements of changes in equity and ~~Statements~~consolidated statements of ~~Other Comprehensive Income, Condensed Consolidated Statements of Shareholders’ Equity and Condensed Consolidated Statements of Cash Flows.~~cash flows. We recognized ~~a net loss attributable to non-controlling interest of $1,508 for the nine months ended December 31,2022, as compared to~~ a net loss attributable to non-controlling interest of $415 for the nine month ended December 31, 2021, as compared to net income attributable to non-controlling interest of $243 for the nine months ended December 31, 2021. This change was largely as a result of the Russia/Ukraine Conflict and its impacts on the securities markets where Freedom UA held most of its open securities positions. We recognized an unrealized net loss on open trading positions of $1,800 in Freedom UA during the first fiscal quarter 2023.2020.

Foreign currency translation adjustments, net of tax

The functional currencies of our operating subsidiaries are the Kazakhstani tenge, Russian ruble, European euro, U.S. dollar, Ukrainian hryvnia, Uzbekistani som, Kyrgyzstani som, UK pound sterling, Turkish lira and Azerbaijani manat. Our reporting currency is the U. S. dollar. Pursuant to U.S. GAAP we are required to revalue our assets from our functional currencies to our reporting currency for financial reporting purposes. Due to the appreciation of the ~~value of~~ Russian ruble by ~~nearly 14%~~almost 2% and ~~appreciation on~~depreciation of the Kazakhstan tenge by ~~nearly 2%~~almost 1.6%, respectively, against the U.S. dollar ~~during~~for the nine months ended December 31, ~~2022,~~2021, as compared to the nine months ended December 31, 2020, we realized a foreign currency translation loss of ~~$301, as~~$3,106 for the nine months ended December 31, 2021, compared to a foreign currency translation ~~loss~~gain of ~~$4,447 during~~$4,565 for the nine months ended December 31, ~~2021.~~

2020.

Segment Results of Operations

We have ~~organized~~historically operated as a single operating segment. With the planned restructuring of our operations and divestiture of our Russian subsidiaries, coupled with our continued expansion, we have elected to reorganize our operations geographically into five regional segments: Central Asia, Europe, United States, ~~and~~ Middle East/~~Caucasus.~~ Caucasus and Russia.Moving forward after completion of the divestiture of our Russian subsidiaries, we will manage our operations in five regional segments. These operating segments are based on how our CODM will be making decisions about allocating resources and assessing performance.

The results of our Russian subsidiaries are presented as discontinued operations in the condensed consolidated financial statements as of and for the three and ~~six~~nine months ended December 31, ~~2022~~2021 and ~~in the corresponding periods of 2021~~2020 for comparative purposes.

The ~~following table sets out~~ total revenue, net ~~by segment for~~associated with our segments is summarized in the ~~three month periods presented (not including discontinued operations):~~following table:


		Three months ended December 31,									Three months ended December 31,
		2022		2021 (Restated)		Amount Change		% Change			2021 (Restated)		2020 (Restated)		Amount Change		% Change
Central Asia	Central Asia	$	153,142	$	65,856	$	87,286	133	%	Central Asia	$	34,703	$	14,434	$	20,269	140	%
Europe	Europe	61,035		88,146		(27,111)		(31)	%	Europe	88,146		56,776		31,370		55	%
U.S.	U.S.	358		1,162		(804)		(69)	%	U.S.	1,162		7,134		(5,972)		(84)	%
Middle East/Caucasus	Middle East/Caucasus	13		5		8		160	%	Middle East/Caucasus	5		—		$	5	100	%
Total revenue, net	Total revenue, net	$	214,548	$	155,169	$	59,379	38	%	Total revenue, net	$	124,016	$	78,344	$	45,672	212	%

During the three months ended December 31, ~~2022,~~2021, total revenue, net increased across each of our regional operating segments, except ~~Europe and U.S.~~U.S.. The ~~changes~~increase in total net ~~revenue, net~~revenues for the three months ended December 31, ~~2022,~~2021, compared to the three months ended December 31, ~~2021, were~~2020, was driven by the following:

•Total revenue, net in our Central Asia segment increased ~~133%~~by 140% for the three months ended December 31, ~~2022~~2021 as compared to the three months ended December 31, ~~2021.~~2020. This increase was driven by an increase in interest

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income as a result of an increase in interest received on securities held in our trading portfolio and an increase in interest accrued on loans issued. This segment was also significantly affected by an increase in income from insurance activities, caused by expansion of our insurance business.portfolio. The increase of revenue was also due to ~~an increase in net gain on trading securities, related to growth of our trading portfolio and~~ an increase in net gain on foreign exchange operations, which was mainly driven by an increase in foreign exchange dealing operations. ~~The~~Moreover, the increase in revenue was also attributable to an

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increase in commission fees from brokerage and banking services due to an increase in brokerage activity in the Central Asia segment. ~~The increase in total revenue was partially offset by a net loss on derivative.~~

•Total revenue, net in our Europe segment ~~decreased~~increased by ~~31%~~55% for the quarter ended December 31, ~~2022.~~2021. This ~~decrease~~increase was mainly driven by ~~a decrease~~an increase in fee and commission income from the Europe segment, which ~~decreased~~increased by ~~41.7%~~52,2% in the three months ended December 31, ~~2022~~2021 as compared to the three months ended December 31, ~~2021,~~2020. This increase was primarily driven by an increase in fee and commission income which attributable to increased trading volume and client activity stemming from government and bank interventions and other events in response to the COVID-19 pandemic and the resulting increased market volatility and economic uncertainty. Also was an increase in net gain on trading securities due to ~~a decrease~~the revaluation of ~~client~~our trading ~~activities between the two periods. This decrease~~portfolio. The increase of revenue was ~~partially offset by~~also attributable to an increase in interest income from margin lending between the two three month periods, ~~by 37%,~~ resulting from a higher usage of margin loans for trades by our clients.

•Total revenue, net in our U.S. segment decreased by ~~69%~~84% during the three months ended December 31, ~~2022~~2021 as compared to the three months ended December 31, ~~2021.~~2020. This decrease was driven mainly by a net loss on trading securities which was ~~partially~~ offset by increased ~~interest~~fee and commission income ~~on bonds in our trading portfolio.~~from brokerage services.

The following table sets out total expense, net by segment for the three month periods ~~presented (not including discontinued operations):~~presented:


		Three months ended December 31,									Three months ended December 31,
		2022		2021 (Restated)		Amount Change		% Change			2021 (Restated)		2020 (Restated)		Amount Change		% Change
Central Asia	Central Asia	113,316		56,234		$	57,082	102	%	Central Asia	28,304		7,679		$	20,625	269	%
Europe	Europe	36,637		32,529		4,108		13	%	Europe	32,529		23,039		$	9,490	41	%
U.S.	U.S.	12,487		6,506		5,981		92	%	U.S.	6,506		2,105		$	4,401	209	%
Middle East/Caucasus	Middle East/Caucasus	648		(84)		732		(871)	%	Middle East/Caucasus	(84)		—		$	(84)	100	%
Total expense, net	Total expense, net	$	163,088	$	95,185	$	67,903	71	%	Total expense, net	$	67,255	$	32,823	$	34,432	619	%

During the three months ended December 31, ~~2022,~~2021, total expense increased across each of our regional operating segments ~~except Europe,~~ compared to the three months ended December 31, ~~2021.~~2020. The ~~changes~~increase in total ~~expense, net,~~expenses for the three months ended December 31, ~~2022, were~~2021, was driven by the following:

•Total expense, net, in our Central Asia segment increased by ~~102%~~269% for the three months ended December 31, ~~2022.~~2021. This increase was primarily recognized by Freedom Bank KZ and was driven by an increase in interest expense primarily from an increase in interest on securities repurchase agreements obligations and growth in customer ~~deposits, and an increase in provision for impairment losses which was driven by an increase in loans issued.~~deposits. In addition, there was an increase of fee and commission expense ~~by 26%~~ during three months ended December 31, ~~2022,~~2021, in comparison with the three months ended December 31, ~~2021,~~2020, which was mainly attributable to an increase of execution of client trading orders within the Central Asia segment. This segment also experienced an increase in operating expenses which is mainly affected by an increase in payroll and bonuses, resulting from an increase of ~~employees approximately~~employees. The increase was partially offset by ~~42%.~~the decrease in provision for impairment losses.

•Total expense in our Europe segment increased by ~~13%~~41% for the quarter ended December 31, ~~2022.~~2021. This increase was mainly due to an increase in interest expense primarily from growth in interest paid ~~on securities repurchase agreements and growth in customer deposits~~to clients and an increase in operating expenses, mainly due to ~~charity and sponsorship, software support~~marketing fees and payroll and bonuses. This increase was partially offset by a decrease in fee and commission expense which was driven by the lower commission expense due to a change of our prime broker and a different composition of order flow transactions, which were charged at lower rates.

•Total expense in our U.S. segment increased by ~~92%~~209% during the three months ended December 31, ~~2022.~~2021. This increase was driven mainly by an operating expenses due to increase in ~~interest~~payroll and bonuses expense ~~on securities repurchase agreement obligations.~~as a result expansion of our workforce through acquisition and due to growth of stock compensation expense.

The following table presents total revenue, net for the nine month periods ~~presented (not including discontinued operations):~~presented:

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		Nine months ended December 31,									Nine months ended December 31,
		2022		2021 (Restated)		Amount Change		% Change			2021 (Restated)		2020 (Restated)		Amount Change		% Change
Central Asia	Central Asia	$	365,257	$	166,534	$	198,723	119	%	Central Asia	$	89,054	$	32,916	$	56,138	171	%
Europe	Europe	194,121		428,057		(233,936)		(55)	%	Europe	428,057		126,788		301,269		238	%
U.S.	U.S.	7,286		2,953		4,333		147	%	U.S.	2,953		7,491		(4,538)		(61)	%
Middle East/Caucasus	Middle East/Caucasus	22		5		17		340	%	Middle East/Caucasus	5		—		5		100	%
Total revenue, net	Total revenue, net	$	566,686	$	597,549	$	(30,863)	(5)	%	Total revenue, net	$	520,069	$	167,195	$	352,874	211	%

For the nine months ended December 31, ~~2022,~~2021, total revenue, net increased across each of our regional operating segments, except Europe. The changes in total net revenues for the nine months ended December 31, ~~2022,~~2021, compared to the nine months ended December 31, ~~2021,~~2020, were driven by the following:

•Total revenue, net in our Central Asia segment increased by ~~119%~~171% for the nine months ended December 31, 2022. This increase was driven by an increase in interest income, as a result of an increase in interest received from securities held in our trading portfolio and an increase in interest accrued on loans issued.2021. This segment was ~~also~~ significantly affected by an increase in income from insurance activities, caused by expansion of our insurance business. The increase of revenue was also due to a rise in net gain on trading securities, related to growth of our trading portfolio and an increase in net gain on foreign exchange operations, which was mainly driven by an increase in foreign exchange dealing operations. In addition, the increase was driven by an increase in interest income as a result of an increase in interest income from securities held in our trading portfolio. The increase ~~in total~~of revenue was ~~partially offset by~~also due to a rise in fee and commission income and net ~~loss~~gain on ~~derivative.~~trading securities, related to growth of brokerage activity in the Central Asia segment and of our trading portfolio.

•Total revenue, net in our Europe segment ~~decreased~~increased by ~~55%~~238% for the nine months ended December 31, ~~2022.~~2021. This ~~decrease~~increase was primarily driven by ~~a decrease~~an increase in fee and commission income which attributable to increased trading volume and ~~by a decrease~~client activity stemming from government and bank interventions and other events in response to the COVID-19 pandemic and the resulting increased market volatility and economic uncertainty. Also was an increase in net gain on trading securities due to the revaluation of our trading portfolio. These decreases were partially offset by an increase in interest income from margin lending during the nine months ended December 31, 2021, resulting from a higher usage of margin loans for trades by our clients.

•Total revenue, net in our U.S. segment ~~increased~~decreased by ~~147%~~61% during the nine months ended December 31, ~~2022.~~2021. This ~~increase~~decrease was driven mainly ~~by an increase in interest income from the bonds in our trading portfolio. The increase was partially offset~~ by a net loss on trading ~~securities.~~securities which was offset by increased fee and commission income from brokerage services.

The following table sets out total expenses associated with our segments for the nine month periods ~~presented (not including discontinued operations):~~presented:


		Nine months ended December 31,									Nine months ended December 31,
		2022		2021 (Restated)		Amount Change		% Change			2021 (Restated)		2020 (Restated)		Amount Change		% Change
Central Asia	Central Asia	$	284,654	$	138,228	$	146,426	106	%	Central Asia	$	69,861	$	19,007	$	50,854	268	%
Europe	Europe	83,401		84,447		(1,046)		(1)	%	Europe	84,447		54,004		30,443		56	%
U.S.	U.S.	31,871		15,929		15,942		100	%	U.S.	15,929		5,314		10,615		200	%
Middle East/Caucasus	Middle East/Caucasus	1,439		79		1,360		1,722	%	Middle East/Caucasus	79		—		79		100	%
Total expense, net	Total expense, net	$	401,365	$	238,683	$	162,682	68	%	Total expense, net	$	170,316	$	78,325	$	91,991	117	%

For the nine months ended December 31, ~~2022,~~2021, total expense increased across each of our regional operating segments, except Europe, compared to the nine months ended December 31, ~~2021.~~2020. The changes in total expenses for the nine months ended December 31, ~~2022,~~2021, were driven by the following:

•Total expense in our Central Asia segment increased by ~~106%~~268% for the nine months ended December 31, ~~2022.~~2021. This increase was primarily recognized by Freedom Bank KZ and was driven by an increase in interest expense primarily from an increase in interest ~~paid~~expense on securities repurchase agreements and growth in customer ~~deposits, and an increase in provision for impairment losses which was driven by an increase in loans issued.~~deposits. In addition, fee and commission expense increased ~~by 192.01%~~ during the nine months ended December 31, ~~2022,~~2021, in comparison with the nine months ended December 31, ~~2021,~~2020, mainly due to an increase in the volume of client trading orders within the Central Asia segment. This segment also experienced an increase in operating expenses primarily due to growth in payroll and bonuses, resulting from an increase of ~~employees approximately by 42%.~~employees.

•Total expense in our Europe segment ~~decreased~~increased by 1%56% for the nine months ended December 31, ~~2022.~~2021. This ~~decrease~~increase was driven by ~~lower~~higher commission ~~expense due to a change of our prime broker~~expenses and ~~by a different composition of order flow transactions, which were charged at lower rates. This decrease was partially offset~~

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~~mainly by increased~~ operating expenses, mainly due to ~~charity and sponsorship, software support~~marketing fees and payroll and bonuses.

•Total expense in our U.S. segment increased by ~~100%~~200% during the nine months ended December 31, ~~2022.~~2021. This increase was driven mainly by ~~increased interest~~operating expenses due to increase in payroll and bonuses expense ~~on securities repurchase agreement obligations.~~as a result expansion of our workforce through acquisition and due to growth of stock compensation expense.

~~LIQUIDITY AND CAPITAL RESOURCES~~

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Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet our potential cash requirements for general business purposes. During the ~~period~~periods covered in this report our operations were primarily funded through a combination of existing cash on hand, cash generated from operations, returns generated from our proprietary trading and proceeds from the sale of bonds and other borrowings.

We regularly monitor and manage our leverage and liquidity risk through various committees and processes we have ~~established to maintain compliance with net capital and capital adequacy requirements imposed on securities brokerages, banks and insurance companies in the jurisdictions where we do business.~~established. We assess our leverage and liquidity risk based on considerations and assumptions of market factors, as well as other factors, including the amount of available liquid capital (i.e., the amount of cash and cash equivalents not invested in our operating business). While we are confident in the risk management monitoring and processes we have in place, a significant portion of our trading securities and cash and cash equivalents are subject to collateralization agreements. This significantly enhances our risk of loss in the event financial markets move against our positions. When this occurs our liquidity, capitalization and business can be negatively impacted. Certain market conditions can impact the liquidity of our assets, potentially requiring us to hold positions longer than anticipated. Our liquidity, capitalization, projected return on investment and results of ~~operations~~ can be significantly impacted by market events over which we have no control, and which can result in disruptions to our investment strategy for our assets.

We maintain a majority of our tangible assets in cash and securities that are readily convertible to cash, including governmental and quasi-governmental debt and highly liquid corporate equities and debt. Our financial instruments and other inventory positions are stated at fair value and should generally be readily marketable in most market conditions. The following sets out certain information on our assets as of the dates presented:


							As of
		December 31, 2022		March 31, 2022			December 31, 2021		March 31, 2021
				(Restated)			(Recast)		(Recast)
Cash and cash equivalents(1)	Cash and cash equivalents(1)	$	664,095	$	225,464	Cash and cash equivalents(1)	$	146,358	$	168,017
Trading securities	Trading securities	$	1,929,840	$	1,158,377	Trading securities	$	947,833	$	587,546
Total assets	Total assets	$	5,368,134	$	3,227,750	Total assets	$	2,726,991	$	2,100,322
Net liquid assets(2)	Net liquid assets(2)	$	3,045,257	$	1,558,544	Net liquid assets(2)	$	1,312,379	$	820,720

______________

(1)Of the ~~$664,095~~$146,358 in cash and cash equivalents we held at December 31, ~~2022, $129,955,~~2021, $13,826, or approximately ~~20%~~9%, was subject to reverse repurchase agreements. By comparison, at March 31, ~~2022,~~2021, we had cash and cash equivalents of ~~$225,464,~~$168,017, of which ~~$19,947,~~$11,917, or approximately 9%7%, ~~was~~were subject to reverse repurchase agreements. The amount of cash and cash equivalents we hold is subject to minimum levels set by regulatory bodies in relation to compliance with applicable rules and regulations, including capital adequacy and liquidity requirements for each entity.

(2)Consists of cash and cash ~~equivalents;~~equivalents, trading ~~securities; margin lending,~~securities, brokerage and other ~~receivables;~~receivable and other assets.

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, we had total liabilities of ~~$4,685,803~~$2,135,501 and ~~$2,681,142,~~$1,824,662, respectively, including customer liabilities of ~~$1,786,452~~$553,015 and ~~$765,628,~~$671,825, respectively.

We ~~finance~~financed our operating ~~activities~~activity primarily from cash flows from operations and short-term and long-term financing arrangements.

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~~CASH FLOWS~~Cash Flows

The following table presents ~~information from~~ our statement of cash flows for the periods indicated. Our cash and cash equivalents include restricted cash, which principally consists of cash of our brokerage customers which are segregated in a special custody ~~accounts~~account for the exclusive benefit of our brokerage customers.


		Nine Months Ended December 31, 2022		Nine Months Ended December 31, 2021			Nine Months Ended December 31, 2021		Nine Months Ended December 31, 2020
				(Restated)			(Restated)		(Restated)
Net cash flows used in operating activities		$	(465,791)	$	(611,853)
Net cash flows used in investing activities		(641,321)		(93,095)
Net cash flows (used in)/from operating activities						Net cash flows (used in)/from operating activities	$	(637,635)	$	604,577
Net cash flows (used in)/from investing activities						Net cash flows (used in)/from investing activities	(40,819)		99,279
Net cash flows from financing activities	Net cash flows from financing activities	1,506,188		441,794		Net cash flows from financing activities	394,591		196,741
Effect of changes in foreign exchange rates on cash and cash equivalents	Effect of changes in foreign exchange rates on cash and cash equivalents	85,064		6,374		Effect of changes in foreign exchange rates on cash and cash equivalents	8,595		3,787

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	$	484,140	$	(256,780)	NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	$	(275,268)	$	904,384

Net Cash Flows ~~Used In~~(Used In)/From Operating Activities

Net cash used in operating activities during the nine months ended December 31, ~~2022,~~2021, was comprised of net cash ~~from~~used in operating activities and net income adjusted for non-cash movements (changes in deferred taxes, unrealized gain on trading securities, net change in accrued ~~interest, change in insurance reserves, and allowance for receivables)~~interest). Net cash used in operating activities resulted primarily from changes in operating assets and liabilities. Such changes included those set out in the following table.

Nine Months Ended
December 31, 2022 Nine Months Ended
December 31, 2021
(Restated)
Increases in trading securities $ (630,879) (1) $ (364,995)
Increases/(decreases) in brokerage customer liabilities $ 240,362 (2) $ (230,143)
Increases in margin lending, brokerage and other receivables $ (270,725) (3) $ (141,678)
Increases in margin lending and trade payables $ 92,225 (4) $ 28,720


	Nine Months Ended December 31, 2021			Nine Months Ended December 31, 2020
	(Restated)			(Restated)
Increases in trading securities	$	(358,257)	(1)	$	(37,819)
(Decreases)/Increases in customer liabilities	(230,970)		(2)	336,882
(Increases)/decreases in brokerage and other receivables	(143,118)		(3)	52,407
Increases in trade payables	28,750		(4)	10,824

______________

(1)Resulted from increased purchases of securities held in our proprietary account.

(2)Resulted from ~~increased~~decreased funds in brokerage accounts from ~~new and~~ existing ~~customers.~~customers..

(3)Resulted from ~~increased volume~~larger amounts of margin lending receivables.

(4)Resulted from ~~increased volume~~larger amounts of margin lending payables.

The net cash ~~flow used in operating activities~~outflow in the nine months ended December 31, ~~2022,~~2021, was primarily attributable to ~~net cash outflows attributable to increases~~an increase in ~~trading securities and increases in margin lending,~~ brokerage and other receivables ~~which was offset in part by an increase in customer liabilities~~ over that period, which resulted from larger amounts of margin receivables. Margin lending balances fluctuate on a daily basis during the ~~increase~~normal course of ~~customer accounts in our Freedom Global subsidiary.~~business and depend on various factors, including trading activity of clients.

Net Cash Flows ~~Used In~~(Used In)/From Investing Activities

During the nine months ended December 31, ~~2022,~~2021, net cash used in investing activities was ~~$641,321~~$40,819 compared to net cash ~~used in~~from investing activities of ~~$93,095~~$99,279 during the nine months ended December 31, ~~2021.~~2020. During the nine months ended December 31, ~~2022,~~2021, cash used in investing activities was used for the ~~issuance of loans, net of repayment by customers, in the amount of $507,728, the~~ purchase of ~~loans from microfinance organizations,~~fixed assets, net of sales, in the amount of ~~$57,031,~~$3,891. In addition, the purchase of fixed assets in the amount of $27,345, considerations paid for acquisition of London Almaty and Freedom Life in the amount of $29,973, and for the purchase of available for sale securities, net of sales, in the amount of $8,982 . Net cash used in investing activities was ~~partially offset by cash and cash equivalents received as part~~used for purchase, net of ~~the acquisitions~~sales of ~~London Almaty and Ticketon~~uncollateralized consumer retail loans from FFIN Credit in the amount of ~~$11,385.~~$22,192 and for the issuance of loans resulted from the launching a first-in-market digital mortgage product by our subsidiary Freedom Bank KZ in the amount of $11,946. Cash from investing activities during the nine months ended December 31, 2020, included $157,533 received in the acquisition of Zerich, Freedom Bank KZ and PrimeEx and $6,437 from proceeds on the sale of investments available-for-sale, which was

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partially offset by consideration paid for the Freedom Bank KZ acquisition of $53,097, the Zerich acquisition of $7,110, the PrimeEx acquisition of $2,500 and the purchase of fixed assets, net of sales of $1,004.

Net Cash Flows From Financing Activities

Net cash from financing activities for ~~the nine months ended December 31, 2022, consisted principally of bank customer deposits in the amount of $779,044 due to the growth of banking activity in the Central Asia segment, proceeds~~

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from securities repurchase agreement obligations in the amount of $388,675, mortgage loans sold to JSC Kazakhstan Sustainability Fund as the Program Operator, net of repurchase, under the state mortgage program "7-20-25" in the amount of $311,213, proceeds from the issuance, net of repurchase, of debt securities in the amount of $474, and proceeds from capital contributions of $677. Net cash from financing activities during the nine months ended December 31, 2021, consisted principally of proceeds from securities repurchase agreement obligations in the amount of ~~$315,383, which was~~$270,146, net change in bank customer deposits in the amount of $83,448 and proceeds from issuance of debt securities of $13,000, partially offset by net cash used in the repurchase of outstanding Freedom KZ debt securities in the amount of $10,104. Net cash from financing activities during the nine months ended December 31, 2020, consisted principally of the proceeds from securities repurchase agreement obligations in the amount of $1,511, which was partially offset with net cash used in repurchase of outstanding Freedom KZ debt securities in the amount of $4,632.

~~DIVIDENDS~~Dividends

We have not declared or paid a cash dividend on our common stock during the past two fiscal years. Any payment of cash dividends on stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual and legal restrictions and other factors deemed relevant by our Board of Directors. We currently intend to retain any future earnings to fund the operation, development and expansion of our business, and therefore we do not anticipate paying any cash dividends on common stock in the foreseeable future.

~~INDEBTEDNESS~~Indebtedness

Short-term

Securities Repurchase Arrangements. Our short-term financing is primarily obtained through securities repurchase arrangements entered into onwith the KASE. We use repurchase arrangements, ~~to,~~ among other things, to finance our inventory positions. As of December 31, ~~2022, $1,233,928,~~2021, $627,493, or ~~65%~~75%, of the trading securities held in our proprietary trading account were subject to securities repurchase obligations compared to ~~$840,224,~~$374,718, or ~~72%~~64%, as of March 31, ~~2022.~~2021. The securities we pledge as collateral under repurchase agreements are liquid trading securities with market quotes and significant trading volume. For additional information regarding our securities repurchase agreement obligations see Note 11 ~~Securities Repurchase Agreement Obligations~~9 to ~~the~~our condensed consolidated financial ~~statements included in this quarterly report on Form 10-Q .~~statements.

Long-term

FRHC 7.00% Notes due December 2022. As of December 31, 2021, we had outstanding $20,498 in principal amount of FRHC 7.00% notes due December 2022, which are listed on the AIX. These notes provide for semi-annual interest payments in June and December and include customary events of default relating to the disposition of our assets outside the ordinary course of business, defaults on other liabilities and obligations, corporate reorganizations, initiation of bankruptcy proceeding, termination of the AIX listing by us, and substitution of the principal debtor without requisite approval. These notes mature in December 2022.

Freedom SPC Bonds. On November 16, 2021, Freedom SPC commenced a best efforts underwritten public offering of up to ~~US $66,000~~US$66,000 aggregate principal amount of its 5.50% US dollar denominated bonds due October 21, 2026 (the “Freedom SPC Bonds”), which are listed on the AIX. As of December 31, ~~2022,~~2021, there were outstanding ~~$36,799~~$13,000 in principal amount of the Freedom SPC Bonds. The offering may continue for a period of up to one year from the date of the commencement of the offering. The Freedom SPC Bonds are guaranteed by FRHC and the proceeds from the issuance of the Freedom SPC Bonds ~~were~~have been and will be, as the case may be, transferred to FRHC pursuant to an intercompany loan agreement that bears interest at a rate of 5.50% per annum.The foregoing does not purport to be a complete description of the terms and conditions of the Freedom SPC Bonds and is qualified in its entirety by reference to the Offer Terms of the 5.5% Coupon US$ 66,000,000 Bonds Due October 21, 2026, a copy of which is attached to this report as Exhibits 4.01 and incorporated by reference herein.

~~NET CAPITAL AND CAPITAL ADEQUACY~~

~~A number~~Freedom KZ USD Bonds. During the quarter ended June 30, 2021, we repaid in full at maturity our U.S. dollar denominated 8% Freedom KZ USD bonds that had a carrying value of ~~our subsidiaries~~$10,477 including interest accrued of $274 as of March 31, 2021.

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Net Capital Requirements

We are required to ~~satisfy minimum~~maintain a certain level of net capital ~~and capital adequacy requirements to conduct their brokerage, banking and insurance operations~~ in ~~the~~certain regulated subsidiaries within a number of jurisdictions, which we accomplish in ~~which they operate. This is partially maintained~~part by retaining cash and cash equivalent investments in ~~those subsidiaries or jurisdictions.~~such subsidiaries. As a result, such subsidiaries may be restricted in their ability to transfer cash between different jurisdictions and to FRHC. Additionally, transfers of cash between international jurisdictions may have adverse tax consequences that could discourage such transfers.

At December 31, ~~2022,~~2021, these minimum net capital ~~and capital adequacy~~ requirements ranged from approximately ~~$53~~$5 to ~~$21,690~~$22,750 and fluctuate depending on various ~~factors. At December 31, 2022,~~factors, and the aggregate net capital ~~and capital adequacy~~ requirements of our subsidiaries was approximately ~~$56,737.~~$29,280. Each of our subsidiaries that ~~are~~is subject to net capital ~~or capital adequacy~~ requirements exceeded the minimum required amount at December 31, ~~2022.~~

2021. Although weour subsidiaries generally operate with ~~levels~~a level of net capital ~~and capital adequacy~~ substantially greater than the minimum established thresholds, in the event ~~we fail~~a subsidiary fails to maintain minimum net capital, ~~or capital adequacy, we~~it may be subject to fines and penalties, suspension of operations, revocation of licensure and disqualification of ~~our~~its management from working in the industry. Our subsidiaries are also subject to various other rules and regulations, including liquidity and capital adequacy ratios. Our operations that require the intensive use of capital are limited to the extent that retaining capital is necessary to meet our regulatory requirements.

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Over the past several years, we have pursued an aggressive growth strategy both through acquisitions and organic growth efforts. During the fiscal ~~2023~~year ending March 31, 2022, we are continuing our efforts to expand the footprint of our business on a scale similar to the fiscal ~~2022, while at the same time we have entered into an agreement to sell our Russian subsidiaries.~~year ended March 31, 2021. While ~~our active growth~~this strategy has led to revenue growth it also results in increased expenses and greater need for capital resources. Additional growth and expansion ~~or the costs associated with a sale of our Russian subsidiaries and the impacts of that action,~~ may require greater capital resources than we currently possess, which could require us to pursue additional equity or debt financing from outside sources. ~~We cannot assure~~There can be no assurance that such financing will be available to us on acceptable terms, or at all, at the time it is needed.

We believe that our current cash and cash equivalents, cash expected to be generated from operating activities, and forecasted returns from our proprietary trading, combined with our anticipated ability to raise additional capital will be sufficient to meet our present and anticipated financing ~~needs.~~

needs for at least the next twelve months.

Contractual Obligations

The following table sets forth information related to our contractual obligations as of December 31, 2021:


	Payment Due by Period
Contractual Obligations	Total		Less than 1 year		Years 2-3		Years 4-5		More than 5 years
	(in thousands)

Operating lease obligations	$	8,355	1,089		5,008		2,076		182
Outstanding bonds and notes	52,762		1,433		22,469		14,430		14,430

TOTAL	$	61,117	$	2,522	$	27,477	$	16,506	$	14,612

~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~Off-Balance Sheet Financing Arrangements

Freedom Bank KZ is party to certain off-balance sheet financial instruments. These financial instruments include guarantees and unfunded commitments under existing lines of credit. These commitments expose us to varying degrees of credit and market risk which are essentially the same as those involved in extending loans to customers and are subject to the same credit policies used in underwriting loans. Collateral may be obtained based on our credit evaluation of the counterparty. Our maximum exposure to credit loss is represented by the contractual amount of these commitments. Unfunded commitments under lines of credit include commercial, commercial real estate, home equity and consumer lines of credit to existing customers. These commitments may mature without being fully funded. Bank guarantees are conditional commitments issued by us to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support trade transactions or guarantee arrangements. The credit risk involved in issuing guarantees is essentially the same as that involved in extending loan facilities to customers. A significant portion of the issued guarantees are collateralized by cash. Total lending related commitments outstanding at December 31, 2021, was $15,374, comprising $5,232 of bank guarantees and $10,142 of unfunded commitments under lines of credit. For additional information regarding off-balance sheet financing arrangements of the Company as of December 31, 2021, please see Note 20 to our condensed consolidated financial statements.

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Critical Accounting Policies and Estimates

Our financial statements are prepared in conformity with U.S. GAAP. The preparation of financial statements in ~~conformity~~accordance with U.S. 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 ~~Condensed Consolidated Balance Sheets~~financial statements and the reported amounts of revenue and expenses during the reporting ~~period of the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income.~~period. Actual results could differ from those estimates. Following are the accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results.

Allowance for accounts receivable

Allowance for accounts receivable is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the ~~collectability~~uncollectibility of an account receivable balance is ~~doubtful.~~confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance byrequired using past accounts receivable loss experience, the nature and volume of accounts receivable, information about specific ~~counterparties~~counteragent situations and estimated collateral values, economic conditions, and other factors.

Allocations of the allowance may be made for specific accounts receivable, but the entire allowance is available for any accounts receivable that in ~~management's~~management’s judgment should be charged off.

The allowance consists of specific and general components, the specific component relates to accounts receivable that are individually classified as impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the agreement. The general component is based on historical loss experience adjusted for current factors. The historical loss experience is based on the actual loss history we have experienced over ~~3-5~~the most recent period of time, mostly three to five years, which management reviews periodically.

~~Goodwill~~Business combinations

We have accounted for our acquisitions using the acquisition method of accounting. The acquisition method requires us to make significant estimates and assumptions, especially at the acquisition date as we allocate the purchase price to the estimated fair values of acquired tangible and intangible assets and the liabilities assumed. We also use our best estimates to determine the useful lives of the tangible and definite-lived intangible assets, which impact the periods over which depreciation and amortization of those assets are recognized. These best estimates and assumptions are inherently uncertain as they pertain to forward looking views of our businesses, ~~customer~~client behavior, and market conditions. In our acquisitions, we have also recognized goodwill at the amount by which the purchase price paid exceeds the fair value of the net assets acquired.

Our ongoing accounting for goodwill and the tangible and intangible assets acquired requires us to make significant estimates and assumptions as we exercise ~~judgement~~judgment to evaluate these assets for impairment. Our processes and accounting policies for evaluating impairments are further described in Note 2 ~~Summary of Significant Accounting Policies~~ to ~~the condensed~~our consolidated financial ~~statements included in this quarterly report on Form 10-Q .~~statements. As of December 31, ~~2022, the Company~~2021, we had goodwill of ~~$9,460.~~

~~Table~~$7,840. The results of ~~Contents~~

the 2021 annual goodwill impairment testing of all our reporting units indicated no goodwill impairment.

Income taxes

We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. Significant ~~judgement~~judgment is required in determining the provision for income tax. There are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, actual future tax consequences relating to uncertain tax positions may be materially different than our determinations or estimates.

We recognize deferred tax liabilities and assets based on the difference between the ~~Condensed Consolidated Balance Sheets~~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 taxes are determined in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. We account for income taxes using the asset and liability approach. Under this method, deferred income taxes are

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recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable to the differences that are expected to affect taxable income.

We periodically evaluate ~~and establish~~ the likelihood of tax assessments based on current and prior ~~years'~~years’ examinations, and unrecognized tax benefits related to potential losses that may arise from tax audits as established in accordance with the relevant accounting guidance. Once established, unrecognized tax benefits are adjusted when there is more information available or when an event occurs requiring a change.

Legal contingencies

We review outstanding legal matters at each reporting date, in order to assess the need for provisions and disclosures in our financial statements. Among the factors considered in making decisions on provisions are the nature of the matter, the legal process and potential legal exposure in the relevant jurisdiction, the progress of the matter (including the progress after the date of the financial statements but before those statements are issued), the opinions or views of our legal advisers, experiences on similar cases and any decision of our management as to how we will respond to the matter.

~~RECENT ACCOUNTING PRONOUNCEMENTS~~Recent Accounting Pronouncements

For details of applicable new accounting standards refer to Recent accounting pronouncements in Note 2 ~~Summary~~ of ~~Significant Accounting Policies~~ ~~to the condensed consolidated~~our financial statements ~~included in~~accompanying this quarterly report on Form ~~10-Q .~~10-Q/A.

Item 3. Qualitative and Quantitative Disclosures about Market Risk

The following information, together with information included in Part I, Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations,, describe our primary market risk exposures.

All dollar amounts reflected in this Part I, Item 3 are presented in thousands of U.S. dollars unless the context indicates otherwise.

Market risk

Market risk is the risk of economic loss arising from the adverse impact of market changes to the market value of our trading and investment positions. We are exposed to a variety of market risks, including interest rate risk, foreign currency exchange risk and equity price risk.

Interest rate risk

Our exposure to changes in interest rates relates primarily to our investment portfolio and outstanding debt. While we are exposed to global interest rate fluctuations, we are most sensitive to fluctuations in ~~Kazakhstan~~Kazakhstani and Russian interest rates. Changes in ~~Kazakhstan~~Kazakhstani and Russian interest rates may have significant effect on the fair value of our securities.

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Our investment policies and strategies are focused on preservation of capital and supporting our liquidity requirements. We typically invest in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. Our investment policies generally require securities to be investment grade and limit the amount of credit exposure to any one issuer (other than government and quasi-government securities). To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel sh~~ift~~shift in the yield curve. ~~yield curve.~~ Based on investment positions as of December 31, ~~2022,~~2021, and March 31, ~~2022 (not including assets held for sale),~~2021, a hypothetical 100 basis point increase in interest rates across all maturities would have resulted in ~~$65,382~~$43,262 and ~~$55,249~~$25,683 incremental decline in the fair market value of the portfolio, respectively. Such losses would only be realized if we sold the investments prior to maturity. A hypothetical 100 basis point decrease in ~~interest~~interest rates across all maturities would have resulted in a ~~$77,795~~$46,176 and ~~$61,002~~$29,480 incremental rise in the fair market value of the portfolio, ~~(not including assets held for sale),~~ respectively.

Foreign currency exchange risk

We have business operations in the Kazakhstan, Russia, Cyprus, Ukraine, Uzbekistan, Germany, Kyrgyzstan, ~~Armenia,~~United States, United Kingdom, Azerbaijan ~~Turkey, UAE, Greece, Spain, France, U.S.~~ and ~~UK. We have entered into an agreement to sell our Russian subsidiaries.~~Armenia. The activities and accumulated earnings in our foreign

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subsidiaries are exposed to fluctuations in foreign exchange rates between our functional currencies and our reporting currency, which is the U.S. dollar. In accordance with our risk management policies, we manage foreign currency exchange risk on financial assets by holding or creating financial liabilities in the same currency, maturity and interest rate profile. This foreign exchange risk is calculated on a net foreign exchange basis for individual currencies. We may also enter into foreign currency forward, swap and option contracts with financial institutions ~~or other parties~~ to mitigate foreign currency exposures associated with certain existing assets and liabilities, firmly committed transactions and forecasted future cash flows. An analysis of our December 31, ~~2022,~~2021, and March 31, ~~2022 (not including assets held for sale),~~2021, balance sheets estimates the net impact of a 10% percent adverse change in the value of the U.S. dollar relative to all other currencies, would have resulted in a decrease of income before income tax from continuing operation in the amount of ~~$5,513,~~$1,629 and ~~in the increase in the amount of $282,~~$4,107, respectively.

Equity price risk

Our equity investments are susceptible to market price risk arising from uncertainties about future values of such investment securities. Equity price risk results from fluctuations in the price and level of the equity securities or instruments we hold. We also have equity investments in entities where the investment is denominated in a foreign currency, or where the investment is denominated in U.S. dollars but the investee primarily makes investments in foreign currencies. The fair values of these investments are subject to change as the spot foreign exchange rate between these currencies and our functional currency fluctuates. We attempt to manage the risk of loss inherent in our equity securities portfolio through diversification and by placing limits on individual and total equity instruments we hold. Reports on our equity portfolio are submitted to management on a regular basis.

As of December 31, ~~2022,~~2021, and March 31, ~~2022,~~2021, our exposure to equity investments at fair value was ~~$62,351~~$22,149 and ~~$72,354,~~$39,280, respectively. ~~Based on an~~An analysis of the December 31, ~~2022,~~2021, and March 31, ~~2022 (not including assets held for sale),~~2021, balance sheets ~~we estimate that~~estimates a decrease of 10% in the equity price would have reduced the value of the equity securities or instruments we held by approximately ~~$6,235~~$3,154 and ~~$7,235,~~$4,136, respectively.

Credit risk

Credit risk refers to the risk of loss arising when a borrower or counterparty does not meet its financial obligations to us. We are primarily exposed to credit risk from institutions and individuals through the brokerage ~~and banking~~ services we offer. We incur credit risk in a number of areas, including margin lending.

Margin lending receivables risk

We extend margin loans to our customers, principally to our affiliate FFIN Brokerage. As of December 31, 2022, and March 31, 2022, 97% and 95% of our margin lending receivables balances were due from FFIN Brokerage. Margin lending receivables from FFIN Brokerage principally represent margin loans granted by Freedom EU to FFIN Brokerage for the purpose of funding margin loans by FFIN Brokerage to its brokerage customers.

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Margin lending is subject to regulation in the jurisdictions in which we operate. In particular, as most of our margin lending receivables are in Cyprus, Russia and Kazakhstan, we are subject to various regulatory requirements of the Markets in Financial Instruments Directive (Cyprus), the Central Bank of the Russian Federation (Russia) and Astana Financial Services Authority (Kazakhstan). Margin loans are collateralized by cash and securities in the customers’ accounts. The risks associated with margin credit increase during periods of fast market movements, or in cases where collateral is concentrated and market movements occur. During such times, customers who utilize margin loans and who have collateralized their obligations with securities may find that the securities have a rapidly depreciating value and may not be sufficient to cover their obligations in the event of a liquidation. We are also exposed to credit risk when our customers execute transactions, such as short sales of options and equities that can expose them to risk beyond their invested capital.

We expect this kind of exposure to increase with the growth of our overall business. Because we indemnify and hold harmless our clearing houses and counterparties from certain liabilities or claims, the use of margin loans and short sales may expose us to significant off-balance-sheet risk in the event that collateral requirements are not sufficient to fully cover losses that customers may incur and those customers fail to satisfy their obligations. As of December 31, ~~2022,~~2021, we had ~~$393,659~~$186,373 in margin lending receivables from our customers. The amount of risk to which we are exposed from the margin lending we extend to our customers and from short sale transactions by our customers is unlimited and not quantifiable as the risk is dependent upon analysis of a ~~potentially~~potential significant and ~~indeterminable~~undeterminable rise or fall in stock prices. As a matter of practice, we enforce real-time margin compliance monitoring and liquidate customers’ positions if their equity falls below ~~established~~required margin requirements. For margin lending to FFIN Brokerage, these risks may be increased by the fact that we do not have direct access to information on FFIN Brokerage's customers, who are the ultimate recipients of the loans.

We have a comprehensive policy implemented in accordance with regulatory standards to assess and monitor the suitability of investors to engage in various trading activities. To mitigate our risk, we also continuously monitor customer

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accounts to detect excessive concentration, large orders or positions, patterns of day trading and other activities that indicate increased risk to us.

Our credit exposure is to a great extent mitigated by our policy of automatically evaluating each account throughout the trading day and closing out positions automatically for accounts that are found to be under-margined. While this methodology is effective in most situations, it may not be effective in situations where no liquid market exists for the relevant securities or commodities or where, for any reason, automatic liquidation for certain accounts has been disabled. We continually monitor and evaluate our risk management policies, including the implementation of policies and procedures to enhance the detection and prevention of potential events to mitigate margin loan losses.

~~Loans to customers~~

We calculate loan loss provision (LLP) based on several probability-weighted scenarios to measure the expected cash shortfalls, discounted at an approximation to the effective interest rate. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive. The mechanics of the LLP calculations are outlined below and the key elements are as follows:

•The Probability of Default (PD) is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognised and is still in the portfolio.

•The Loss Given Default (LGD) is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from the realization of any collateral. It is usually expressed as a percentage of the EAD.

~~Definition of default~~

~~We consider a financial instrument defaulted and therefore credit-impaired for LLP calculations in all cases when the borrower becomes 90 days past due on its contractual payments.~~

As a part of a qualitative assessment of whether a customer is in default, we also considers a variety of instances that may indicate unlikeliness to pay. When such events occur, the Group carefully considers whether the event should result in treating the customer as defaulted and therefore assessed as credit-impaired for LLP calculations or whether unimpaired is appropriate. Such events include:

•~~Death of the borrower (co-borrower);~~

•~~The debtor (or any legal entity within the debtor’s group) filing for bankruptcy application/protection;~~

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•~~The debt was restructured due to deterioration of financial condition of the borrower once or more over the last 12 months with due account for the criteria for credit quality cure;~~

•~~Decision of the authorized body to assign a default status to a financial asset.~~

~~Retail lending~~

Retail lending includes unsecured loans to individuals, credit cards, overdrafts and loans secured by real estate. Evaluation of unsecured products is carried out using an automated scoring system based on qualitative and quantitative indicators. The main indicators used in the models are as follows: length of employment at the last job, credit history, frequency of pension contributions, education, marital status, as well as the ratio of the amount of the contribution on the expected loan to the average monthly income of the client. Evaluation of products secured by real estate is carried out by determining the level of solvency and the ratio of the loan to the collateral value of the collateral.

~~Loss given default~~

The credit risk assessment is based on a standardized LGD assessment framework that results in a certain LGD rate. These LGD rates take into account the outstanding amount of the loan in comparison to the amount expected to be recovered or realized from any collateral held.

We segment retail lending products into smaller homogeneous portfolios, based on key characteristics that are relevant to the estimation of future cash flows. The applied data is based on historically collected loss data and involves a wider set of transaction characteristics (e.g., product type, wider range of collateral types) as well as borrower characteristics.

Where appropriate, further recent data and forward-looking economic scenarios are used in order to determine the LGD rate for each group of financial instruments. When assessing forward-looking information, the expectation is based on multiple scenarios. Examples of key inputs involve changes in, collateral values including property prices for mortgages, payment status or other factors that are indicative of losses in the group.

~~Forward-looking information and multiple economic scenarios~~

~~In its ECL models, the Group relies on a broad range of forward-looking information as economic inputs, such as:~~

1.~~Growth of Gross Domestic Product;~~

2.~~Retail trade index~~

3.~~Currency exchange rates;~~

4.~~Real wage index;~~

5.~~Unemployment rates;~~

6.~~Inflation.~~

The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the financial statements. To reflect this, qualitative adjustments or overlays are occasionally made as temporary adjustments when such differences are significantly material.

The Group obtains the forward-looking information from third party sources (external rating agencies, governmental bodies). Experts of the Group’s Risk Management Department determine the weights attributable to the multiple scenarios. The tables show the values of the key forward looking economic variables/assumptions used in each of the economic scenarios for the ECL calculations.

Operational risk

Operational risk generally refers to the risk of loss, or damage to our reputation, resulting from inadequate or failed operations or external events, including, but not limited to, business disruptions, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes including cyber security incidents. For descriptions of related risks, see the information under the heading “~~Risks~~“Risks Related to Information Technology and Cyber ~~Security~~”Security” in Item 1A of our annual report on Form 10-K ~~for the fiscal year ended March 31, 2022,~~ filed with the SEC on ~~May 31, 2022.~~June 15, 2021.

To mitigate and control operational risk, we have developed and continue to enhance policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization and within specific departments. We also have business continuity plans in place that we believe will cover critical processes on a ~~company-~~

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~~wide~~company-wide basis, and redundancies are built into our systems as we have deemed appropriate. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that our various businesses are operating within established corporate policies and limits.

Legal and compliance risk

We operate in a number of jurisdictions, each with its own legal and regulatory structure that is unique and different from the other. Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and damage to our reputation as a result of failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities. ~~As a~~Such non-compliance could result ~~of any such non-compliance, we are subject to~~in the imposition of legal or regulatory sanctions, material financial loss, including fines, penalties, judgments, damages and/or settlements, or loss ofto reputation that we may suffer as a result of compliance failures. These risks include contractual and commercial risk, such as the risk that a counterparty’s performance obligations will be unenforceable. It also includes compliance with anti-money laundering and counter terrorism financing rules and regulations, terrorist financing, anti-corruption and sanctions rules and regulations.

We have established and continue to enhance procedures designed to ensure compliance with applicable statutory and regulatory requirements, such as public company reporting obligations, regulatory net capital and capital adequacy requirements, sales and trading practices, potential conflicts of interest, anti-money laundering, ~~counter terrorism financing,~~ privacy, sanctions and recordkeeping. The legal and regulatory focus on the financial services industry presents a continuing business challenge for us. Our business also subjects us to the complex income tax laws of the jurisdictions in which we operate, and these tax laws may be subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. We must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income taxes.

Effects of Inflation

Because our assets are primarily short-term and liquid in nature, they are generally not significantly impacted by inflation. The rate of inflation does, however, affect our expenses, including employee compensation, communications and information processing and office leasing costs, which may not be readily recoverable from our customers. To the extent inflation results in rising interest rates and has adverse impacts upon securities markets, it may adversely affect our results of operations and financial condition.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

and Internal Control over Financial Reporting

As of the end of the period covered by this quarterly report on Form ~~10-Q,~~10-Q/A, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the 2013 framework of the Committee of Sponsoring Organizations of the Treadway Commission.

Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, ~~2022,~~2021, due to the material ~~weaknesses~~weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective at the reasonable assurance level.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management ~~identified~~has concluded that the Company’s disclosure controls and procedures were not effective at December 31, 2021, and its internal control over financial reporting was not effective as of December 31, 2021 due to the following material weaknesses. Specifically, there were material weaknesses ~~related to~~in (i) the design of a ~~lack of an effectively designed specific~~ control activity ~~over the compliance of the presentation of certain items in the Consolidated Statements of Operations and the Consolidated Statement of Cash Flows~~ with ~~US GAAP. As a result of associated errors related~~respect to the ~~historical~~ classification of certain loans and deposits from banking institutions within ~~our Condensed~~the Consolidated Statements of Cash Flows, ~~and~~(ii) the ~~historical~~design of a control activity with respect to the classification of certain interest income from margin ~~loans~~lending within ~~our Condensed~~the Consolidated Statements of Operations ~~we have restated our Condensed~~and Other Comprehensive Income, (iii) the design of a control activity with respect to the classification of funds received under the Kazakhstan state program for financing of mortgage loans “7-20-25” within the Company’s Consolidated ~~Statement~~Statements of Cash Flows and our Condensed Consolidated Statement of Operations for the three and nine months ended December 31, 2021 as presented for comparative purposes in this quarterly report on Form 10-Q and we will be restating our previously filed consolidated financial statements as of and for the years ended March 31, 2022, 2021 and 2020 and for the quarterly period ended June 30, 2022 in relation to both matters, and for the quarterly period ended September 30, 2022 in relation to the presentation of the Condensed Consolidated Statement of Operations.Flows.

In light of ~~these~~the material weaknesses, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted principles. Accordingly, management concluded that the financial statements included in this quarterly report on Form ~~10-Q~~10-Q/A present fairly in all material respects our financial position, results of operations and cash flows for each of the periods presented.

Remediation Plan for the Material Weaknesses

In order to remediate the material weaknesses, our management plans to enhance the design of its control activities over the classification and presentation of ~~our~~its Consolidated Statements of Cash Flows and ~~our Condensed~~ Consolidated ~~Statement~~Statements of ~~Operations.~~Operations and Other Comprehensive Income to ensure compliance with U.S. GAAP. The material weaknesses cannot be considered remediated until the newly designed control ~~activity operates~~activities operate for a sufficient period of time and management has concluded, through testing, that the ~~control is~~controls are operating effectively.

Changes in Internal Control over Financial Reporting

~~During~~

Except for the identification of material weaknesses as described above, during the three months ended December 31, ~~2022,~~2021, no changes in our internal control over financial reporting occurred that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The financial services industry is highly regulated. In recent years, there has been an increasing incidence of litigation involving the ~~brokerage~~financial services industry, including ~~customer and shareholder~~ class action suits that generally seek substantial damages, including in some cases punitive damages. Compliance and trading problems that are reported to federal, state and provincial regulators, exchanges or other self-regulatory organizations by dissatisfied customers are investigated by such regulatory bodies, and, if pursued by such regulatory body or such customers, may rise to the level of arbitration or disciplinary action. ~~Financial services industry participants like us~~We are also subject to periodic ~~governmental and~~ regulatory audits and ~~inspections that might result in fines or other charges.~~inspections.

From time to time, we or our subsidiaries may be ~~named as defendants in~~party to various routine legal proceedings, claims, and regulatory inquiries inarising out of the ordinary course of ~~our~~their business. Management believes that the results of these routine legal proceedings, claims, and regulatory matters will not have a material adverse effect on our financial condition, or on our operations and cash flows. However, we cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, are unable to determine whether ~~these~~ future legal fees and expenses will have a material impact on our operations and cash flows. It is our policy to expense legal and other fees as incurred.

Estate of Toleush Tolmakov Litigation

~~On October 21, 2022,~~The Estate of Toleush Tolmakov (the “Estate”) has commenced a legal action against Freedom Holding Corp., and our subsidiary FFIN Securities, Inc. in ~~accordance with an order entered into by~~ the Third Judicial District Court of Salt Lake County, ~~we deposited~~State of Utah. A Summons and Complaint were served on the Company and FFIN on December 22, 2021. This proceeding relates to cash distributions arising from the 2011 sale of Emir Oil, LLP, then a subsidiary of BMB Munai, Inc. and an aggregate of 250,079 shares of common stock of the Company (the “Assets”) belonging to Toleush Tolmakov, who was a shareholder of the Company at the time he died in 2011, and Simage Limited, a now defunct British Virgin Islands corporation, in which Mr. Tolmakov may have had an interest and therefore the Assets belonging to Simage Limited may be part of the Estate. Since the 2011 death of Mr. Tolmakov, his putative heirs have litigated various disputes in Kazakhstan’s courts related to which of the putative heirs actually are heirs, the proper distribution of the estate and other matters, but without a conclusive final order regarding the distribution of the Assets. Since 2011, the Company has received several inconsistent claims to the Assets. In addition, the legal status of the portion of the Assets belonging to Simage is unclear because as a defunct entity, Simage Limited is unable to act. The Company has held the Assets since Mr. Tolmakov’s death because it did not know to whom they should be distributed and no party has yet established legal right of ownership of the Assets. The Company does not dispute that the Assets are owed to the rightful heirs of Mr. Tolmakov and Simage Limited. As the Estate has not cooperated to facilitate the distribution of Assets to the Estate, the Company has held the distribution funds in a segregated account for a number of years and holds 247,664 shares of the 250,079 shares. In addition to the dispute regarding the Assets, the Estate has asserted claims for alleged breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, conversion and constructive trust and is seeking delivery of the cash distributions in an amount ~~of $8,378 into the registry of the court, representing~~no less than $8,377,626, plus the amount of ~~cash distributions claimed by the Estate~~any interest or appreciation earned there on and delivery of ~~Toleush Tolmakov in this matter. Interest earned on this distribution payment~~250,079 shares of Company common stock, plus in the ~~amount~~event the Court finds the Company converted the Assets, any special damages incurred as a result of ~~$156 will be transferred~~Defendant’s conversion, including all previously unawarded attorney fees incurred to recover the ~~court~~Assets, as ~~soon as an order is rendered.~~well attorney fees in connection with this action. The Estate, the Company and FFIN have agreed to mediate the dispute. The Company ~~continues~~and FFIN intend to vigorously defend this matter if mediation is unsuccessful. The Company and FFIN deny ~~any and~~ all liability ~~in this matter.~~for claims of alleged breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, conversion and constructive trust.

Item 1A. Risk Factors

~~Except for the following additional risk factors, we~~We believe there ~~have~~has been no material changes from ~~the~~ risk factors previously disclosed in “Risk Factors” in our annual report on Form 10-K ~~for the fiscal year ended March 31, 2022,~~ filed with the ~~SEC~~Commission on ~~May 31, 2022.~~

~~Risks Related to~~June 15, 2021 and our quarterly report on Form 10-Q for the ~~Russia/Ukraine Conflict~~

~~Risks Related to~~quarter ended September 30, 2021, filed with the ~~Planned Sale of Our Russian Subsidiaries~~Commission on November 11, 2021.

On October 19, 2022, we announced that we had entered into an agreement to sell our two Russian subsidiaries. The sale of these subsidiaries was approved by the Central Bank of the Russian Federation on February 10, 2023, and the sale is expected to be completed before the end of February 2023. ~~In addition, o~~n August 5, 2022, Russia introduced a ban restricting the ability of investors from "unfriendly-states" to exit from investments in businesses in certain Russian industries, which could impair our ability to complete the sale of our Russian subsidiaries. The completion of the planned sale of our Russian subsidiaries is subject to factors outside of our control, and accordingly there can be no assurance that they will be completed within the timeframe we currently expect or at all.

~~Even if we are able to successfully complete the sale of our Russian subsidiaries, there can be no assurance that such sale will achieve its intended effects. In particular,~~ ~~we expect that the sale of our Russian subsidiaries will reduce our exposure to the current challenging geopolitical circumstances and will enable us to accelerate growth in other markets. We~~ ~~also expect that, following the completion of the sale of our Russian subsidiaries, a number of~~ existing clients of our Russian subsidiaries will invest in the non-Russian international capital markets going forward through accounts at other companies within our group, subject to appropriate on-boarding for compliance purposes. However, these matters are subject to uncertainty and changes in circumstances. ~~A failure by us to achieve the intended effects of the sale of our Russian subsidiaries could have a material adverse effect on our results of operations in future periods.~~

~~Risks Related to Our Insurance Businesses~~

~~Our Modeling and Assumptions Used in Assessing Risks may Differ Materially from Actual~~ ~~Results~~.

We use modeling and forecasts to estimate exposures, loss trends and other risks, and to assist us in decision-making related to underwriting, pricing, capital allocation, and other issues associated with our insurance businesses. Our models and forecasts are subject to various unverifiable assumptions, uncertainties, model design errors, complexities and

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inherent limitations, including those arising from the use of historical internal, industry, and unverified, third-party-provided data and assumptions. If, based upon these models, forecasts or other factors, we misprice our products or fail to correctly estimate the associated risks, our business, results of operations and financial condition may be materially adversely affected.

~~We also establish and monitor underwriting guidelines and an approval process for assessing and addressing~~ ~~risks~~ ~~and their limits; however, we cannot assure that the assumptions our guidelines and limits are based on, or the analysis of those assumptions, are correct or will accurately reflect future results.As a result, we cannot assure that these guidelines and approval process will be effective in mitigating our underwriting risks.~~

~~We may not be Able to Obtain Reinsurance at Required Levels or Prices, or Otherwise Collect on Reinsurance, Which Could Increase our Exposure or Limit our Ability to Write New Business.~~

The availability and cost of reinsurance are dependent on market conditions beyond our control. As a result, reinsurance may not be continuously available to us to the extent and on the terms we require to write new business. If we cannot obtain reinsurance or purchase reinsurance at acceptable prices, we would have to either accept an increase in our exposure, or reduce our insurance exposure by limiting writing new policies that we think necessitate reinsurance protections, either of which could have a materially adverse effect on our insurance businesses.

Further, our reinsurance programs have counterparty risk that may result in uncollectible claims. Collectability from reinsurers is subject to factors such as whether reinsurers have the financial capacity to make payments, whether insured losses meet the conditions of the reinsurance contract, and whether the reinsurer otherwise disputes coverage.~~Our inability to recover from reinsurers, for any reason, could have a material effect on our results of operations, financial condition and business prospects.~~

~~Risks Related to Our Internal Controls~~

We have identified material weaknesses in our internal control over financial reporting and may identify material weaknesses in the future or otherwise fail to establish and maintain effective internal control over financial reporting, which could have a material adverse effect on our business and stock price.

We are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), which requires management to certify financial and other information in our quarterly and annual reports and to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act requires management to provide an annual management report on the effectiveness of internal control over financial reporting. Additionally, we are required to have our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting. Our independent registered public accounting firm needs to issue an adverse report if there is a material weakness in our internal control over financial reporting.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. When evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate prior to the date of our annual management report.

The Audit Committee of our Board of Directors, after discussion with management, concluded that our (i) previously filed annual report on Form 10-K for the fiscal year ended March 31, 2022 and (ii) previously filed quarterly reports on Form 10-Q for each of the quarterly periods ended December 31, 2021, June 30, 2022 and September 30, 2022 (collectively the “Prior Financial Statements”) should no longer be relied upon. The determination resulted from an error in the Prior Financial Statements identified by us during the course of preparing our financial statements as of and for the three months ended September 30, 2022, and an error in the Prior Financial Statements identified by us during the course of preparing our financial statements as of and for the three months ended December 31, 2022, in each case based on inquiries from our recently appointed independent registered public accounting firm. Specifically, we determined that in the Consolidated Statements of Cash Flows in the Prior Financial Statements (other than the quarterly report on Form 10-Q for the period ended September 30, 2022), certain loans issued were presented as “Operating activities” whereas they should have been presented as “Investing activities,” and deposits from banking institutions were presented as “Operating activities” whereas they should have been presented as “Financing activities," and that the misclassification of such cash flows should be restated through amendments to the relevant Prior Financial Statements. In addition, we determined that in the Consolidated Statements of Operations in the Prior Financial Statements, interest income generated from margin loans was presented as "Fee and commission income" whereas it should have been presented as "Interest income" and that the

~~101~~

~~Table of Contents~~

misclassification of such income should be restated through amendments to the Prior Financial Statements. We have determined that the foregoing misclassifications did not have any impact on our net income or reported key performance indicators. We will be correcting these misclassifications by restating our Consolidated Statements of Cash Flows and Consolidated Statements of Operations through restatements of the Prior Financial Statements. We are diligently pursuing completion of the restatements and intend to file an amended annual report on Form 10-K and amended quarterly reports on Form 10-Q as soon as reasonably practicable.

In connection with such errors, we have concluded that there are material weaknesses in the design of a control activity with respect to the classification of certain loans and deposits from banking institutions within our Consolidated Statements of Cash Flows and with respect to the classification of interest income generated from margin loans within our Consolidated Statements of Operations and we have determined that our disclosure controls and procedures were not effective for the previously filed reports as described above and our internal control over financial reporting was not effective for the previously filed annual report on Form 10-K as described above.

We have commenced measures to remediate the identified material weaknesses. Until the material weaknesses are remediated, we will continue to perform additional analysis and other post-closing procedures to ensure that our consolidated financial statements are prepared in accordance with U.S. GAAP. The material weaknesses cannot be considered remediated until the newly designed control activities operate for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively. We can give no assurance that the measures we are taking and plan to take in the future will remediate the material weaknesses identified, or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our internal controls over financial reporting, in the future those controls may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial position and results of operations on a timely and accurate basis. If our financial statements are inaccurate, investors may not have a complete understanding of our operations and we could face the risk of stockholder litigation. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

Item 6. Exhibits

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


Exhibit No.						Exhibit Description

4.01						Offer Terms of the 5.5% Coupon US$ 66,000,000 Bonds Due October 21, 2026(1)
4.02						Securities Placement Terms and Conditions%#(1)
4.03						Resolution to Issue Securities#(1)
31.01						Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.02						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.01						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101						The following Freedom Holding Corp. financial information for the periods ended December 31, ~~2022,~~2021, formatted in inline XBRL (eXtensive Business Reporting Language): (i) the Cover Page; (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Operations, ~~and Statements of Other Comprehensive Income,~~ (iv) the Condensed Consolidated Statements of ~~Stockholders’~~stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Condensed Consolidated Financial Statements.*
104						Cover page formatted in inline XBRL (included in Exhibit 101). *

*~~Filed herewith.~~


*			Filed herewith.
%			Certain portions of this exhibit (indicated by "[***]") have been omitted pursuant to Item 601(a)(6) of Regulation S-K.
#			This exhibit is an English translation of a foreign language document. The Company hereby agrees to furnish to the SEC, upon request, a copy of the foreign language document.
(1)			Incorporated by reference to the Registrant’s original Quarterly Report on Form 10-Q filed with the SEC on February 9, 2022.

~~102~~82

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			FREEDOM HOLDING CORP.

Date: ~~February 14,~~April 26, 2023			/s/ Timur Turlov
			Timur Turlov Chief Executive Officer

Date: ~~February 14,~~April 26, 2023			/s/ Evgeniy Ler
			Evgeniy Ler Chief Financial Officer

~~103~~83


OTHER COMPREHENSIVE (LOSS)/ INCOME	(5,345)		(8,760)		2,205		(4,630)

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	57,055	$	45,313	$	150,888	$	311,554

Less: Comprehensive loss attributable to non-controlling interest in subsidiary	(464)		(343)		(1,508)		(415)

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	57,519	$	45,656	$	152,396	$	311,969

EARNINGS PER COMMON SHARE (In U.S. dollars):
Earnings from continuing operations per common share - basic	0.79		0.98		2.37		5.40
Earnings from continuing operations per common share - diluted	0.78		0.98		2.33		5.40

Earnings/(loss) from discontinued operations per common share - basic	0.59		(0.07)		0.49		(0.06)
Earnings/(loss) from discontinued operations per common share - diluted	0.58		(0.07)		0.48		(0.06)

Earnings per common share - basic	1.38		0.91		2.86		5.34
Earnings per common share - diluted	1.36		0.91		2.81		5.34

Weighted average number of shares (basic)	58,678,730		59,534,712		58,642,637		59,326,201
Weighted average number of shares (diluted)	59,522,701		59,534,712		59,527,743		59,326,201


	For the Nine Months Ended December 31,
	2022		2021*
			(Restated)
Cash Flows From Operating Activities
Net income	$	148,683	$	316,184
Net income/(loss) from discontinued operations	$	9,929	$	(3,656)
Net income from continued operations	$	138,754	$	319,840
Adjustments to reconcile net income used in operating activities:
Depreciation and amortization	3,502		2,854
Noncash lease expense	3,453		2,587
Change in deferred taxes	(3,392)		(2,508)
Stock compensation expense	6,520		5,636
Unrealized gain on trading securities	(65,684)		(7,903)
Net change in accrued interest	(35,984)		(27,858)
Change in insurance reserves	42,236		35,381
Allowances for receivables	30,294		907
Changes in operating assets and liabilities:
Trading securities	(630,879)		(364,995)
Margin lending, brokerage and other receivables	(270,725)		(141,678)
Insurance contract assets	6,460		(106)
Other assets	(11,058)		(12,028)
Securities sold, not yet purchased – at fair value	(13,865)		5,979
Brokerage customer liabilities	240,362		(230,143)
Current income tax liability	(14,556)		6,404
Margin lending and trade payables	92,225		28,720
Lease liabilities	(3,470)		(2,839)
Liabilities from insurance activity	(22,581)		(7,937)
Other liabilities	10,432		735
Net cash flows used in operating activities from continuing operations	(497,956)		(388,952)
Net cash flows from/(used in) operating activities from discontinued operations	32,165		(222,901)
Net cash flows used in operating activities	(465,791)		(611,853)

Cash Flows Used In Investing Activities
Purchase of fixed assets	(27,345)		(4,078)
Proceeds from sale of fixed assets	—		172
Purchase from microfinance organizations loans, net	(57,031)		(22,192)
Net change in loans issued to customers	(507,728)		(11,946)
Purchase of available-for-sale securities, at fair value	(205,781)		(223,482)
Proceeds from sale of available-for-sale securities, at fair value	196,799		171,221
Consideration paid for acquisition of London Almaty	(16,343)		—
Consideration paid for acquisition of Freedom Life	(13,630)		—
Cash, cash equivalents and restricted cash received from acquisitions	11,385		—
Net cash flows used in investing activities from continuing operations	(619,674)		(90,305)


Net cash flows used in investing activities from discontinued operations	(21,647)		(2,790)
Net cash flows used in investing activities	(641,321)		(93,095)

Cash Flows From Financing Activities
Proceeds from securities repurchase agreement obligations	388,675		315,383
Proceeds from issuance of debt securities	23,861		13,000
Repurchase of debt securities	(23,387)		(10,104)
Repurchase of mortgage loans under the State Program	(7,117)		—
Funds received under state program for financing of mortgage loans	318,330		—
Net change in bank customer deposits	779,044		83,448
Capital contributions	677		1,966
Exercise of options	—		119

Net cash flows from financing activities from continuing operations	1,480,083		403,812
Net cash flows from financing activities from discontinued operations	26,105		37,982
Net cash flows from financing activities	1,506,188		441,794
Effect of changes in foreign exchange rates on cash and cash equivalents from continued operations	23,591		(7,321)
Effect of changes in foreign exchange rates on cash and cash equivalents from discontinued operations	61,473		13,695

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	484,140		(256,780)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD FROM CONTINUED OPERATIONS	773,414		659,495
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD FROM DISCONTINUED OPERATIONS	456,886		559,385
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	1,230,300		1,218,880

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD FROM CONTINUED OPERATIONS	$	1,114,074	$	582,376
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD FROM DISCONTINUED OPERATIONS	$	600,366	$	379,724
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	1,714,440	$	962,100


	As of March 31, 2022
	As previously reported		FF Life acquisition		Elimi-nations		FF Insurance acquisition		Elimi-nations		Recast discontinued operations		As recasted
ASSETS
Cash and cash equivalents	$	625,547	$	1,427	$	(901)	$	371	$	(82)	$	(400,898)	$	225,464
Trading securities	1,203,479		8,875		—		68,520		—		(122,497)		1,158,377
Restricted cash	553,680		—		—		—		—		(5,730)		547,950
Margin lending, brokerage and other receivables, net	357,567		173		(34)		60		(20)		(210,087)		147,659
Loans issued	94,797		44		—		—		—		(2,395)		92,446
Other assets	37,725		7,267		—		427		—		(18,375)		27,044
Fixed assets, net	21,365		182		—		254		—		(3,978)		17,823
Right-of-use asset	15,669		532		—		152		—		(8,922)		7,431
Intangible assets, net	5,791		1,489		—		161		—		(2,278)		5,163
Goodwill	5,388		359		—		151		—		—		5,898
Available-for-sale securities, at fair value	1		161,363		—		—		—		—		161,364
Insurance contract assets	—		3,555		—		2,157		—		—		5,712
Assets held for sale	—		—		—		—		—		825,419		825,419


TOTAL ASSETS	$	2,921,009	$	185,266	$	(935)	$	72,253	$	(102)	$	50,259	$	3,227,750

LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations	$	775,178	$	47,691	$	—	$	49,824	$	—	$	(32,469)	$	840,224
Customer liabilities	1,417,937		—		(901)		—		(82)		(651,326)		765,628
Margin lending and trade payables	45,229		—		—		21		(20)		(147)		45,083
Liabilities from insurance activity	—		106,329		—		13,161		—		—		119,490
Current income tax liability	14,556		—		—		—		—		—		14,556
Securities sold, not yet purchased – at fair value	14,103		—		—		—		—		(238)		13,865
Debt securities issued	99,027		—		—		—		—		(64,637)		34,390
Lease liability	15,315		543		—		176		—		(8,530)		7,504
Liability arising from continuing involvement	6,447		—		—		—		—		—		6,447
Other liabilities	25,542		550		(35)		292		—		(4,872)		21,477
Liabilities held for sale	—		—		—		—		—		812,478		812,478
TOTAL LIABILITIES	$	2,413,334	$	155,113	$	(936)	$	63,474	$	(102)	$	50,259	$	2,681,142
Commitments and Contingent Liabilities (Note 26)	—		—		—		—		—		—		—

SHAREHOLDERS’ 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;	59		9,465		(9,465)		15,577		(15,577)		—		59
Additional paid in capital	141,340		—		16,499		—		16,906		—		174,745
Retained earnings	426,563		28,131		(6,666)		(4,811)		(1,293)		—		441,924
Accumulated other comprehensive loss	(53,291)		(7,443)		(368)		(1,987)		(36)		—		(63,125)
TOTAL FRHC SHAREHOLDERS’ EQUITY	$	514,671	$	30,153	$	—	$	8,779	$	—	$	—	$	553,603

Non-controlling interest	(6,996)		1		—		—		—		—		(6,995)
TOTAL SHAREHOLDERS’ EQUITY	$	507,675	$	30,154	$	—	$	8,779	$	—	$	—	$	546,608

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,921,009	$	185,267	$	(936)	$	72,253	$	(102)	$	50,259	$	3,227,750



Income from discontinued operation	—		—		—		—		—		(3,656)		(3,656)

NET INCOME	$	307,108	$	11,321	$	—	$	(2,254)	$	—	$	9	$	316,184

Less: Net loss attributable to non-controlling interest in subsidiary	(415)		—		—		—		—		—		(415)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	307,523	11,321		—		(2,254)		—		$	9	$	316,599

OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect	—		(1,789)		—		—		—		—		(1,789)
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect	—		1,606		—		—		—		—		1,606
Foreign currency translation adjustments	(3,106)		(1,213)		—		(2,702)				2,574		(4,447)

OTHER COMPREHENSIVE INCOME	(3,106)		(1,396)		—		(2,702)		—		2,574		(4,630)

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	304,002	$	9,925	$	—	$	(4,956)	$	—	$	2,583	$	311,554

Less: Comprehensive loss attributable to non-controlling interest in subsidiary	(415)		—		—		—		—		—		(415)

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	304,417		9,925		—		(4,956)		—		2,583		311,969


	Nine months ended December 31, 2021
	As previously reported		FF Life and FF Insurance acquisitions		Adjustments for discontinued operations		As recasted		Correction of errors		As restated
Net cash flows (used in)/from operating activities	$	(582,080)	$	25,782	(34,465)		$	(590,763)	$	(21,090)	$	(611,853)
Net cash flows used in investing activities	(6,110)		(52,276)		—		(58,386)		(34,709)		(93,095)
Net cash flows (used in)/from financing activities	338,792		47,203		—		385,995		55,799		441,794
Effect of changes in foreign exchange rates on cash and cash equivalents	10,593		(2,221)		(1,998)		6,374		—		6,374
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(238,805)	$	18,488	$	(36,463)	$	(256,780)	$	—	$	(256,780)


	December 31, 2022
		Assets measured at amortized cost		Recognized impairment loss in Income Statement		Unrealized gain/(loss) accumulated in other comprehensive income/(loss)		Assets measured at fair value		Maturity Date

Corporate debt		$	154,689	$	(402)	$	2,883	$	157,548	2023 - 2042
Non-US sovereign debt		14,482		—		(1,577)		12,905		2024 - indefinite
U.S. sovereign debt		4,574		—		(701)		3,873		2024 - 2044
Total available-for-sale securities, at fair value		$	173,745	$	(402)	$	605	$	174,326


	March 31, 2022 (Recasted)
	Assets measured at amortized cost		Unrealized loss accumulated in other comprehensive income/(loss)		Assets measured at fair value		Maturity Date

Corporate debt	$	146,112	$	(275)	$	145,837	2022 - 2035
Non-U.S. sovereign debt	13,784		(787)		12,997		2022 - indefinite
U.S. sovereign debt	2,912		(382)		2,530		2044
Total available-for-sale securities, at fair value	$	162,808	$	(1,444)	$	161,364


Debt securities issued by:	December 31, 2022		March 31, 2022
			(Recasted)
Freedom SPC	$	36,799	$	13,203
Freedom Holding Corp.	—		20,499
Accrued interest	393		688
Total debt securities issued	$	37,192	$	34,390


	December 31, 2022		March 31, 2022
Assets:			(Recasted)

Amounts due from policyholders	$	5,615	$	3,500
Claims receivable from reinsurance	897		769
Amounts due from reinsured	52		23
Less provision for impairment losses	(995)		(343)
Insurance and reinsurance receivables:	5,569		3,949

Unearned premium reserve, reinsurers’ share	3,763		143
Reserves for claims and claims’ adjustment expenses, reinsurers’ share	1,911		1,620

Total	$	11,243	$	5,712


	December 31, 2022		March 31, 2022
Liabilities:			(Recasted)

Amounts payable to reinsurers	$	2,405	$	402
Amounts payable to insured	2,305		685
Amounts payable to agents and brokers	2,081		1,981
Insurance and reinsurance payables:	6,791		3,068

Unearned premium reserve	31,103		17,985
Reserves for claims and claims’ adjustment expenses	118,648		98,437

Total	$	156,542	$	119,490


	Three months ended December 31, 2022
	Central Asia		Europe		U.S.		Middle East/Caucasus		Total

Brokerage services	$	19,490	$	47,893	$	1,149	$	—	$	68,532
Bank services	5,507		—		—		—		5,507
Underwriting and market-making services	4,778		—		—		—		4,778
Other fee and commission income	1,473		593		—		—		2,066
Total fee and commission income	$	31,248	$	48,486	$	1,149	$	—	$	80,883


	Three Months Ended December 31, 2022		Three Months Ended December 31, 2021
			(Restated)
Net unrealized gain/(loss) recognized during the reporting period on trading securities still held at the reporting date	$	73,257	$	(33,567)
Net (loss)/gain recognized during the period on trading securities sold during the period	(47,801)		41,230
Net gain recognized during the period on trading securities	$	25,456	$	7,663

	Nine Months Ended December 31, 2022		Nine Months Ended December 31, 2021
			(Restated)
Net unrealized gain recognized during the reporting period on trading securities still held at the reporting date	$	65,684	$	7,903
Net (loss)/gain recognized during the period on trading securities sold during the period	(26,790)		190,044
Net gain recognized during the period on trading securities	$	38,894	$	197,947


	Three months ended December 31, 2022		Three months ended December 31, 2021
Interest income:			(Restated)
Interest income on securities repurchased under reverse repurchase agreements and amounts due from banks	$	4,062	$	280
Interest income on trading securities	44,760		20,745
Interest income on available-for-sale securities	6,727		6,470
Interest income on margin lending (2)	12,379		4,921
Interest income on loans issued	12,327		1,241
Total interest income	$	80,255	$	33,657

Interest expense:
Interest expense on securities repurchase agreement obligations	$	39,958	$	15,671
Interest expense on customer liabilities	11,149		5,732
Interest expense on debt securities issued	842		394
Other interest expense	88		93
Total interest expense	$	52,037	$	21,890

Net interest income	$	28,218	$	11,767


	Shares	Weighted Average Fair Value
Outstanding, at March 31, 2022	1,049,500	$	40,303
Granted	46,284	2,175
Vested	(255,226)	(10,153)
Forfeited/cancelled/expired	(68,000)	(2,602)
Outstanding, at December 31, 2022	772,558	$	29,723


	For The Three Months Ended				For The Nine Months Ended
	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021

Fee and commission income	$	14,230	$	23,147	$	62,290	$	59,596
Net gain/(loss) on trading securities	799		(6,611)		13,898		(9,716)
Net loss on derivative	(43)		—		(43)		—
Interest income	17,599		5,786		47,460		15,574
Net gain/(loss) on foreign exchange operations	19,965		(655)		40,379		(2,889)

TOTAL REVENUE, NET	52,550		21,667		163,984		62,565

Operating expense	29,839		22,253		83,379		53,841
Interest expense	3,124		2,365		13,143		6,824
Fee and commission expense	2,750		2,075		7,000		6,300
Provision for impairment losses	1,594		13		2,176		89
Provision for impairment of discontinued operations	2,509		—		43,973		—
Other (income)/expense, net	(933)		28		(154)		120

TOTAL EXPENSE	38,883		26,734		149,517		67,174

INCOME/(LOSS) BEFORE INCOME TAX	$	13,667	$	(5,067)	$	14,467	$	(4,609)


	December 31, 2022
	Pre-elimination balance		Eliminations		Post-elimination balance

Cash and cash equivalents	582,314		—		582,314
Restricted cash	18,052		—		18,052
Trading securities	112,801		—		112,801
Margin lending, brokerage and other receivables, net	331,682		(91,269)		240,413
Loans issued	17,201		—		17,201
Other assets	34,758		—		34,758

Total assets held for sale	$	1,096,808	$	(91,269)	$	1,005,539

Customer liabilities	820,394		—		820,394
Securities repurchase agreement obligations	30,971		—		30,971
Debt securities issued	63,207		—		63,207
Other liabilities	16,913		—		16,913

Total liabilities held for sale	$	931,485	$	—	$	931,485

Net assets held for sale	$	165,323			$	74,054

Unrealized loss from translation adjustment	18,650
Adjusted net assets held for sale	$	183,973

Expected selling price	140,000
Provision for impairment of discontinued operations	$	(43,973)


	As of December 31, 2022		As of March 31, 2022
			(Recasted)
Unfunded commitments under lines of credits and guarantees	$	18,838	$	11,292
Bank guarantees	4,874		6,384
Total	$	23,712	$	17,676


	Realized Net (Loss)/Gain		Unrealized Net Gain/(Loss)		Net Gain
Three months ended December 31, 2022	$	(47,801)	$	73,257	$	25,456
Three months ended December 31, 2021 (Recasted)	$	41,230	$	(33,567)	$	7,663


	Realized Net (Loss)/Gain		Unrealized Net Gain		Net Gain
Nine months ended December 31, 2022	$	(26,790)	$	65,684	$	38,894
Nine months ended December 31, 2021	$	190,044	$	7,903	$	197,947