~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~Washington, D.C. 20549~~

~~FORM 10-Q~~

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2017~~

September 30, 2021

☐

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

~~Commission File Number~~ ~~001-33034~~

FREEDOM HOLDING CORP.

(Exact name of registrant as specified in its charter)

Nevada

30-0233726

~~Nevada~~

~~30-0233726~~

(State or other jurisdiction of

~~(I.R.S. Employer~~

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~Office 1704, 4B Building~~

“~~Nurly Tau”~~Esentai Tower” BC,

17 Floor 7 77/7 Al Farabi Ave

Almaty, Kazakhstan

050040

~~Almaty, Kazakhstan~~

~~050059~~

(Address of principal executive offices)

(Zip Code)

~~(801) 355-2227~~

+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	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 ☒ No ☐

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 ☒ No ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

As of November 4, 2021, the registrant had 59,534,712 shares of common stock, par value $0.001, issued and outstanding.

~~for the past 90 days.~~

~~Yes~~

☒

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).~~

~~Yes~~

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one):

~~Large accelerated filer ☐~~

~~Accelerated filer ☐~~

~~Non-accelerated filer ☐ (Do not check if smaller reporting company)~~

~~Smaller reporting company ☑~~

~~Emerging growth company ☐~~

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

~~Exchange Act.)~~

~~Yes~~

☐

☒

~~As of February 14, 2018, the registrant had 52,606,600 shares of common stock, par value $0.001, issued and outstanding.~~

FREEDOM HOLDING CORP.

FORM 10-Q

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION		~~Page~~	Pages

Item 1.	Unaudited Condensed Consolidated Financial Statements		3

	Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~September 30, 2021 and March 31, ~~2017~~2021		3

	Condensed Consolidated Statements of Operations and Statements of Other Comprehensive ~~Income/(Loss)~~Income for the Three and ~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2021 and ~~2016~~2020		4

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2021 and ~~2016~~2020		5

	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended September 30, 2021 and 2020		7

	Notes to Condensed Consolidated Financial Statements	7	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33	37

Item 3.	Qualitative and Quantitative Disclosures About Market Risk	45	56

Item 4.	Controls and Procedures	45	59

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings		60

Item 1A.	Risk Factors		61

Item 6.	Exhibits		62

Signatures			63

Table of Contents

FREEDOM HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

	September 30, 2021			March 31, 2021
ASSETS
Cash and cash equivalents	$	740,425		$	698,828
Restricted cash		359,828			437,958
Trading securities		974,481			736,188
Available-for-sale securities, at fair value		1			1
Brokerage and other receivables, net		317,124			64,801
Loans issued		32,647			11,667
Fixed assets, net		20,506			18,385
Intangible assets, net		9,016			9,785
Goodwill		7,894			7,868
Right-of-use asset		16,471			13,262
Other assets, net		22,066			19,902

TOTAL ASSETS	$	2,500,459		$	2,018,645

LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations	$	537,277		$	426,715
Customer liabilities		1,219,364			1,163,697
Trade payables		51,071			22,304
Current income tax liability		33,964			14,843
Securities sold, not yet purchased – at fair value		14,867			8,592
Loans received		3,456			3,373
Debt securities issued		58,246			68,443
Lease liability		16,298			13,249
Deferred income tax liabilities		5,896			4,385
Deferred distribution payments		8,534			8,534
Other liabilities		8,107			8,839

TOTAL LIABILITIES		1,957,080			1,742,974

Commitments and Contingent Liabilities (Note 20)		0			0

SHAREHOLDERS’ EQUITY
Common stock - $0.001 par value; 500,000,000 shares authorized; 59,534,712 and 58,443,212 shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively		59			58
Additional paid in capital		110,717			104,672
Retained earnings		464,920			208,628
Accumulated other comprehensive loss		(31,816	)		(36,046	)

TOTAL EQUITY ATTRIBUTABLE TO THE COMPANY		543,880			277,312

Non-controlling interest		(501	)		(1,641	)
TOTAL SHAREHOLDERS’ EQUITY		543,379			275,671

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,500,459		$	2,018,645

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


~~Item 1. Legal Proceedings~~	453

~~Item 1A. Risk Factors~~	45Table of 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)
~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~		46

~~Item 6. Exhibits~~		46

~~Signatures~~		47

~~PART I - FINANCIAL INFORMATION~~

~~Item 1 - Unaudited Condensed Consolidated Financial Statements~~

~~FREEDOM HOLDING CORP.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited~~)

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

December 31,
2017

March 31,
2017*

(Recast)

ASSETS

Cash and cash equivalents
$34,847
$22,616
Restricted cash
  14,138
  12,749
Trading securities
  199,207
  81,575
Available-for-sale securities, at fair value
  2
  2
Brokerage and other receivables
  2,922
  514
Loans issued
  250
  65
Deferred tax assets
  325
  1,026
Fixed assets
  2,028
  1,096
Goodwill
  1,856
  981
Other assets
  3,271
  739



TOTAL ASSETS
$258,846
$121,363



LIABILITIES AND STOCKHOLDERS’ EQUITY





Derivative liability
$-
$495
Debt securities issued
  10,625
  3,459
Customer liabilities
  13,911
  7,635
Current income tax liability
  -
  149
Trade payables
  2,218
  545
Deferred distribution payments
  8,534
  8,534
Securities repurchase agreement obligation
  137,436
  56,289
Other liabilities
  599
  370
TOTAL LIABILITIES
  173,323
  77,476



Commitments and Contingencies (Note 17)
  -
  -



STOCKHOLDERS’ EQUITY





Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding
  -
  -
Common stock - $0.001 par value; 500,000,000 shares authorized; 52,606,600 shares outstanding as of December 31, 2017 and 11,213,926 shares outstanding as of March 31, 2017, respectively
  52
  11
Additional paid in capital
  56,533
  34,659
Retained earnings
  38,684
  16,154
Accumulated other comprehensive loss
  (9,746)
  (6,937)
TOTAL STOCKHOLDERS’ EQUITY
  85,523
  43,887



TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$258,846
$121,363

	Three months ended September 30,						Six months ended September 30,
	2021			2020			2021			2020
*Revenue:*

Fee and commission income	$	116,534		$	54,277		$	213,940		$	97,616
Net gain on trading securities		175,252			8,302			185,152			17,386
Interest income		20,063			4,948			38,140			9,197
Net gain on foreign exchange operations		1,622			3,020			434			2,772
Net loss on derivative assets		(656	)		(837	)		(715	)		(846	)

TOTAL REVENUE, NET		312,815			69,710			436,951			126,125

*Expense:*
Fee and commission expense		22,968			20,021			44,832			29,790
Interest expense		16,185			4,699			30,457			8,443
Operating expense		36,569			15,867			66,888			30,293
Provision for impairment losses		366			1,044			659			666
Other expense/(income), net		653			(68	)		664			(95	)

TOTAL EXPENSE		76,741			41,563			143,500			69,097
NET INCOME BEFORE INCOME TAX		236,074			28,147			293,451			57,028

Income tax expense		(31,562	)		(4,584	)		(37,231	)		(9,189	)

NET INCOME		204,512			23,563			256,220			47,839

Less: Net (loss)/income attributable to non-controlling interest in subsidiary		(20	)		(127	)		(72	)		296
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	204,532		$	23,690		$	256,292		$	47,543

OTHER COMPREHENSIVE INCOME/(LOSS)
Reclassification adjustment relating to available-for-sale securities disposed of in the period, net of tax effect		0			0			0			71
Foreign currency translation adjustments, net of tax effect		930			(10,919	)		4,230			(2,286	)

COMPREHENSIVE INCOME BEFORE NON-CONTROLLING INTERESTS	$	205,442		$	12,644		$	260,450		$	45,624

Less: Comprehensive income/(loss) attributable to non-controlling interest in subsidiary		(20	)		(127	)		(72	)		296

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	205,462		$	12,771		$	260,522		$	45,328
BASIC NET INCOME PER COMMON SHARE	$	3.44		$	0.40		$	4.33		$	0.82
DILUTED NET INCOME PER COMMON SHARE	$	3.44		$	0.40		$	4.33		$	0.82
Weighted average number of shares (basic)		59,510,976			58,358,212			59,220,800			58,358,212
Weighted average number of shares (diluted)		59,510,976			58,462,138			59,220,800			58,460,058

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

* See Notes 1 and 3 for information regarding recast4

Table of Contents

FREEDOM HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(All amounts ~~and basis~~in thousands of ~~financial statement presentation.~~

United States dollars, unless otherwise stated)

	For the six months ended
	September 30, 2021			September 30, 2020

Cash Flows (Used In)/From Operating Activities
Net income	$	256,220		$	47,839
Adjustments to reconcile net income from operating activities:
Depreciation and amortization		2,634			1,655
Noncash lease expense		2,221			3,302
Change in deferred taxes		1,458			1,465
Stock compensation expense		6,722			1,055
Unrealized gain on trading securities		(35,616	)		(263	)
Net loss on derivatives		0			885
Net change in accrued interest		(18,187	)		(328	)
Allowances for receivables		659			666
Changes in operating assets and liabilities:
Lease liabilities		(2,355	)		(3,188	)
Derivative assets		0			(2,311	)
Trading securities		(174,133	)		(156,896	)
Brokerage and other receivables		(249,416	)		(48,257	)
Loans purchased from microfinance organization		(19,474	)		0
Loans sold to microfinance organization		2,860			0
Loans issued		(4,259	)		501
Other assets		(863	)		(804	)
Customer liabilities		30,493			361,634
Current income tax liability		19,101			3,847
Trade payables		29,316			84,777
Securities sold, not yet purchased – at fair value		6,695			0
Other liabilities		(217	)		1,457
Net cash flows (used in)/from operating activities		(146,141	)		297,036

Cash Flows (Used In)/From Investing Activities
Purchase of fixed assets		(3,903	)		(2,129	)
Proceeds from sale of fixed assets		160			271
Proceeds from sale of available-for-sale securities, at fair value		0			6,437
Prepayment on acquisition		(3,341	)		(4,170	)
Consideration paid for Zerich Capital Management		0			(7,110	)
Cash, cash equivalents and restricted cash received from acquisitions		0			27,991

Net cash flows (used in)/from investing activities		(7,084	)		21,290

Cash Flows From/(Used In) Financing Activities
Proceeds from securities repurchase agreement obligations	109,016		138,149
Proceeds from issuance of debt securities	0		1,991
Repurchase of debt securities	(10,134	)	(8,196	)
Repayment of loans received	69		0
Exercise of options	119		0
Net cash flows from/(used in) financing activities	99,070		131,944

Effect of changes in foreign exchange rates on cash and cash equivalents		17,622			(28,451	)

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(36,533	)		421,819
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		1,136,786			129,805
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	1,100,253		$	551,624

Table of Contents

~~FREEDOM HOLDING CORP.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME/(LOSS) (Unaudited)~~

FREEDOM HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

	For the six months ended
	September 30, 2021		September 30, 2020

Supplemental disclosure of cash flow information:
Cash paid for interest	$	7,823	$	6,498
Income tax paid	$	23,719	$	3,389

Supplemental non-cash disclosures:
Operating lease right-of-use assets obtained/disposed of in exchange for operating lease obligations during the period, net	$	6,263	$	1,406

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in ~~thousands~~the Condensed Consolidated Statements of ~~United States dollars, unless otherwise stated)~~

Three months ended December 31,

Nine months ended December 31,

2017

2016*

2017

2016*

Revenue:

(Recast)

(Recast)

Fee and commission income
$1,999
$1,116
$6,412
$2,462
Net gain/(loss) on trading securities
  (8,318)
  1,164
  30,825
  4,583
Interest income
  2,853
  724
  6,442
  1,710
Net gain on derivatives
  867
  -
  687
  -
Net gain on sale of fixed assets
  16
  -
  8
  28
Net gain/(loss) on foreign exchange operations
  424
  (138)
  1,957
  296





TOTAL REVENUE, NET
  (2,159)
  2,866
  46,331
  9,079





Expense:




Interest expense
  4,487
  1,120
  9,499
  2,472
Fee and commission expense
  795
  129
  1,474
  216
Operating expense
  5,983
  2,461
  12,113
  6,694
Other expense, net
  105
  141
  131
  267





TOTAL EXPENSE
  11,370
  3,851
  23,217
  9,649

NET INCOME/(LOSS) BEFORE INCOME TAX
  (13,529)
  (985)
  23,114
  (570)





Income tax (expense)/benefit
  403
  413
  (584)
  960





NET INCOME/(LOSS) BEFORE NONCONTROLLING INTERESTS
$(13,126)
$(572)
$22,530
$390





Less: Net income attributable to noncontrolling interest in subsidiary
  -
  -
  -
  7
NET INCOME/(LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
  (13,126)
  (572)
  22,530
  383





OTHER COMPREHENSIVE INCOME




    Change in unrealized gain on investments available-for-sale,
    net of tax effect
  -
  (276)
  -
  (270)
    Foreign currency translation adjustments, net of tax
  1,529
  453
  (2,809)
  1,933





COMPREHENSIVE INCOME/(LOSS) BEFORE NONCONTROLLING INTERESTS
$(11,597)
$(395)
$19,721
$2,053





Less: Comprehensive income attributable to noncontrolling interest in subsidiary
  -
  -
  -
  7





COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
$(11,597)
$(395)
$19,721
$2,046

BASIC AND DILUTED NET INCOME/(LOSS) PER COMMON SHARE (In US Dollars)
$(0.29)
$(0.05)
$0.86
$0.03
Weighted average shares outstanding
  45,018,578
  11,213,926
  26,341,542
  11,213,926

Cash Flows:

	September 30, 2021		September 30, 2020

Cash and cash equivalents	$	740,425	$	443,439
Restricted cash		359,828		108,185
Total cash, cash equivalents and restricted cash shown as in the statement of cash flows	$	1,100,253	$	551,624

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

* See Notes 1 and 3 for information regarding recast amounts and basis of financial statement presentation.

~~FREEDOM HOLDING 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,
2017

December 31,
2016*

(Recast)

Cash Flows From Operating Activities

Net income
$22,530
$390



Adjustments to reconcile net income used in operating activities:


Depreciation and amortization
  198
  156
Change in deferred taxes
  672
  (974)
Stock compensation expense
  792
  -
Unrealized gain on trading securities
  (19,542)
  (2,837)
Net gain on derivative
  (490)
  -
Changes in operating assets and liabilities:


Trading securities
  (105,258)
  (32,179)
Brokerage and other receivables
  (2,161)
  (236)
Loans issued
  (185)
  21
Other assets
  (2,532)
  (7)
Customer liabilities
  6,215
  2,278
Current income tax liability
  (144)
  (50)
Trade payables
  1,381
  64
Securities repurchase agreement obligation
  85,814
  27,121
Other liabilities
  602
  (91)



Net cash flows used in operating activities
  (12,108)
  (6,344)



Cash Flows From Investing Activities


Purchase of fixed assets
  (1,125)
  (145)
Acquisition of Freedom UA, net of cash received
  432
  -
Proceeds from sale of fixed assets
  8
  13
Acquisition of FFIN Bank
  -
  (2,771)
Proceeds on sale of investments available-for-sale
  -
  140
Net cash flows used in investing activities
  (685)
  (2,763)

Cash Flows From Financing Activities

Proceeds from issuance of debt securities
  9,853
  6,618
Repurchase of debt securities
  (2,449)
  (2,425)
Proceeds from issuance of common stock
  -
  6,574
Proceeds from private placement
  11,045
  -
Capital contributions
  8,594
  368



Net cash flows from financing activities
  27,043
  11,135

Effect of changes in foreign exchange rates on cash and cash equivalents
  (630)
  2,182



NET CHANGE IN CASH AND CASH EQUIVALENTS
  13,620
  4,210
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
  35,365
  19,380
CASH AND CASH EQUIVALENTS, END OF PERIOD
$48,985
$23,590

~~FREEDOM HOLDING 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,
2017

December 31,
2016*

(Recast)

Supplemental disclosure of cash flow information:

Cash paid for interest
$8,467
$2,287
Income tax paid
$583
$124

~~Non-cash investing and financing activities:~~

~~Common stock issued for acquisition of Freedom UA~~	$~~1,485~~	$-
~~Assets received from acquisition of Freedom UA~~	$~~1,229~~	$- 6
~~Liabilities assumed from acquisition~~
Table of ~~Freedom UA~~Contents

$~~176~~

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			Retained		Accumulated other comprehensive			Non-controlling
	Shares		Amount		capital			earnings		loss			interest			Total

Balance At June 30, 2021		59,474,712	$	59	$	106,833		$	260,388	$	(32,746	)	$	(1,693	)	$	332,841

Stock based compensation		-		0		4,561			0		0			0			4,561
Sale of Freedom UA shares		-		0		(796	)		0		0			1,212			416
Exercise of options		60,000		0		119			0		0			0			119
Translation difference		-		0		0			0		930			0			930
Net income/(loss)		-		0		0			204,532		0			(20	)		204,512

Balance At September 30, 2021		59,534,712	$	59	$	110,717		$	464,920	$	(31,816	)	$	(501	)	$	543,379

Balance At March 31, 2021		58,443,212	$	58	$	104,672		$	208,628	$	(36,046	)	$	(1,641	)	$	275,671

Stock based compensation		1,031,500		1		6,722			0		0			0			6,723
Sale of Freedom UA shares		-		0		(796	)		0		0			1,212			416
Exercise of options		60,000		0		119			0		0			0			119
Translation difference		-		0		0			0		4,230			0			4,230
Net income/(loss)		-		0		0			256,292		0			(72	)		256,220

Balance At September 30, 2021		59,534,712	$	59	$	110,717		$	464,920	$	(31,816	)	$	(501	)	$	543,379

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		Retained		Accumulated other comprehensive			Non-controlling
	Shares		Amount		capital		earnings		loss			interest			Total

Balance At June 30, 2020		58,358,212	$	58	$	103,415	$	90,188	$	(29,270	)	$	(1,849	)	$	162,542

Stock based compensation		-		0		530		0		0			0			530
Translation difference		-		0		0		0		(10,919	)		0			(10,919	)
Net income/(loss)		-		0		0		23,690		0			(127	)		23,563

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

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

Stock based compensation		-		0		1,055		0		0			0			1,055
Reclassification adjustment relating to available-for-sale investments disposed of in the period, net of tax effect		-		0		0		0		71			0			71
Translation difference		-		0		0		0		(2,286	)		0			(2,286	)
Net income		-		0		0		47,543		0			296			47,839

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

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

* See Notes 1 and 3 for information regarding recast8

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts ~~and basis~~in thousands of ~~financial statement presentation.~~

United States dollars, unless otherwise stated)

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~Note~~

NOTE 1 – ~~Description of Business~~

DESCRIPTION OF BUSINESS

Overview

Freedom Holding Corp. (the “Company” or “FRHC”) is a corporation organized in the United States under the laws of the State of Nevada corporation (“FRHC”). In 2015, FRHC entered into a Share Exchange and Acquisition Agreement with Timur Turlov (the “Acquisition Agreement”) to acquire several businesses owned by Timur Turlov in exchange for controlling interest in FRHC. As the acquisitions are completed these businesses have becomethat through its operating subsidiaries ~~of FRHC. FRHC is building an international~~provides financial services including retail securities brokerage, research, investment counseling, securities trading, market making, retail banking, corporate investment banking and ~~financial~~underwriting services ~~firm to meet~~in Eurasia. The Company is headquartered in Almaty, Kazakhstan, with supporting administrative office locations in Russia, Cyprus and the ~~demand of a growing number of investors~~United States. The Company has retail locations in Russia, Kazakhstan, Ukraine, Uzbekistan, Kyrgyzstan, Azerbaijan and ~~Cyprus that desire financial services integration and greater access to the financial opportunities, relative stability, and integrity of~~Germany. The Company also owns an agency only institutional broker dealer registered with the U.S. ~~securities markets.~~

Pursuant to the Acquisition Agreement, FRHC acquired FFIN Securities, Inc., a Nevada corporation, (“FFIN”) from Timur Turlov and controlling interest in FRHC was transferred to him. FFIN was established to create or acquire a registered broker-dealer in the United States. At the same time, FRHC began upgrading the financial reporting capabilities of its foreign acquisition candidates to meet the regulatory standards imposed upon FRHC as an SEC registrant and pursuing the governmental approvals to permit FRHC ownership of the acquisition candidates.

In June 2017, FRHC closed the acquisition of LLC Investment Company Freedom Finance, a Russian limited liability company (“Freedom RU”) as a wholly owned subsidiary. This acquisition included the acquisition of three wholly owned operating subsidiaries of Freedom RU, including JSC Freedom Finance, a Kazakhstan joint stock company (“Freedom KZ”), LLC First Stock Store, a Russian limited liability company (“Freedom 24”) and LLC FFIN Bank, a Russian limited liability company (“FFIN Bank”). Freedom RU also maintains a representative office in Kazakhstan, referred to herein as “KZ Branch.”

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~On November 1, 2017, FRHC received notification from the Cyprus~~ Securities and Exchange Commission (“~~CySEC”~~SEC”) that it had granted final regulatory approval to allow Timur Turlov to transfer ownership of Freedom CY and the securities brokerage and financial services business conducted by it in Cyprus to FRHC. Receipt of CySEC approval was the final condition necessary to close the acquisition of Freedom CY and the parties closed the acquisition of Freedom CY on November 10, 2017. In exchange for his 100% equity interest in Freedom CY and the securities brokerage and financial services business conducted by it in Cyprus, Mr Turlov was issued 12,758,011 shares of FRHC. The Company’s common stock attrades on the ~~closing~~Nasdaq Capital Market.

The Company 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, an Almaty, Kazakhstan-based securities broker-dealer (“Freedom KZ”);
	·	Freedom Finance Global, PLC, an Astana International Financial Centre-based securities broker-dealer, (“Freedom Global”);
	·	Bank Freedom Finance Kazakhstan JSC, an Almaty, Kazakhstan-based bank (“Freedom Bank KZ”);
	·	Freedom Finance Special Purpose Company LTD, a Nur-Sultan, Kazakhstan-based company (“Freedom SPC”);
	·	Freedom Finance Commercial LLP, a Kazakhstan-based company (“Freedom Commercial”);
	·	Freedom Finance Europe Limited, a Limassol, Cyprus-based broker-dealer (“Freedom EU”);
	·	Freedom Finance Technologies Ltd, a Limassol, Cyprus-based IT development company (“Freedom Technologies”);
	·	Freedom Finance Germany GmbH, a Berlin, Germany-based tied agent of Freedom EU (“Freedom GE”)
	·	UK Prime Limited, a London, United Kingdom-based company tied agent of Freedom EU (“Prime UK”);
	·	LLC Freedom Finance Uzbekistan, a Tashkent, Uzbekistan-based broker-dealer (“Freedom UZ”);
	·	LLC Freedom Finance Azerbaijan, an Azerbaijan-based financial educational center (“Freedom AZ”);
	·	Prime Executions, Inc., a New York City, New York-based agency only institutional brokerage (“PrimeEx”); and
	·	FFIN Securities, Inc., a Nevada corporation (“FFIN”).

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

As of September 30, 2021, the ~~acquisition and Freedom CY became~~Company owned a ~~wholly owned subsidiary of FRHC.~~

~~On November 1, 2017, FRHC entered into a Share Exchange and Acquisition Agreement with BusinessTrain Ltd. to acquire 100% of the outstanding equity~~9% interest ofin LLC Freedom Finance Ukraine, a ~~Ukrainian limited liability company, formerly known as FC Ukranet LLC,~~Kiev, Ukraine-based broker-dealer (“Freedom UA”) ~~and the securities brokerage business conducted by it~~. The remaining 91% interest in Ukraine in exchange for 387,700 shares of restricted common stock of FRHC. Completion of the acquisition required approval of the National Securities and Stock Market Commission of Ukraine, which was received on January 30, 2018.

Freedom RU provides brokerage and financial services in the capital markets in Russia, including maintaining customer accounts, managing investment portfolios, providing financial consulting and engaging in market making activities. Freedom KZ is licensed to provide brokerage and financial services in the capital markets of Kazakhstan, including the right to maintain customer accounts, manage investment portfolios, provide financial consulting, provide underwriting services and engage in market making activities. We formed Freedom 24, as a startup to build and manage the first online securities marketplace for retail customers in Russia. Freedom 24 attracts new brokerage clients to Freedom RU through a proprietary platform and internet portal for individual investors in Russia to establish a brokerage account and buy securities. FFIN Bank is licensed to engage in consumer banking operations in the Russian Federation and focuses on provided banking services to the customers of the Company’s subsidiaries. Freedom CY is licensed in Cyprus to provide brokerage and financial services in Cyprus including receiving, transmitting and executing customer orders, establishing custodial accounts, engaging in foreign currency exchange services and margin lending, and trading its own investment portfolio. Freedom UA is ~~licensed~~owned by Askar Tashtitov, the Company’s president. Due to recent changes to Ukrainian regulations to further restrict foreign ownership of registered Ukrainian broker-dealers, in July 2021 the Company was required to sell 23.88% of its equity interest in Freedom UA to Mr. Tashtitov, reducing the Company’s direct ownership interest in Freedom UA to 9%. In April 2019 the Company entered into a series of contractual arrangements with Freedom UA and Mr. Tashtitov that obligate the Company to guarantee the performance of all Freedom UA obligations and provide Freedom UA sufficient funding to cover all 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 ~~securities brokerage~~Freedom UA the management competence, operational support, and ~~depository services in Ukraine.~~

ongoing access to the Company’s significant assets, necessary technology resources and expertise to conduct the business of Freedom UA. The Company accounts 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.

The Company’s subsidiaries are participants on the Kazakhstan Stock Exchange (KASE), Astana Stock Exchange (AIX), Moscow Exchange (MOEX), Saint-Petersburg Exchange (SPBX), the Ukrainian Exchange (UX), the Republican Stock Exchange of Tashkent (UZSE), the Uzbek Republican Currency Exchange (UZCE) and are members of the New York Stock Exchange (NYSE) and Nasdaq Stock Exchange (Nasdaq).

Unless otherwise specifically indicated or as is otherwise contextually required, FRHC, ~~FFIN,~~ Freedom RU, Freedom Bank RU, Freedom KZ, ~~FFIN~~Freedom Global, Freedom Bank KZ, Freedom ~~CY,~~SPC, Freedom ~~UA,~~Commercial, Freedom 24EU, Freedom Technologies, Freedom GE, Prime UK, Freedom UZ, Freedom AZ, PrimeEx, and ~~KZ Branch~~FFIN are collectively referred to herein as the “Company”.

~~Note~~

NOTE 2 – ~~Summary of Significant Accounting Policies~~

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting principles

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

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

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

Basis of presentation

and principles of consolidation

The Company’s ~~condensed~~ consolidated financial statements present the consolidated accounts of FRHC, ~~FFIN,~~ Freedom RU, Freedom Bank RU, Freedom KZ, Freedom ~~24, FFIN~~Global, Freedom Bank KZ, Freedom ~~CY,~~SPC, Freedom UACommercial, Freedom EU, Freedom Technologies, Freedom GE, Prime UK, Freedom UZ, Freedom AZ, PrimeEx, and ~~KZ Branch.~~FFIN. All significant inter-company balances and transactions have been eliminated from the ~~condensed~~ consolidated financial statements.

~~The accompanying unaudited condensed consolidated financial statements have been prepared~~

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally ~~accepted accounting principles for interim~~entities that lack sufficient equity to finance their activities without additional financial ~~information and with~~support from other parties or whose equity holders lack adequate decision-making ability. VIEs must be evaluated to determine the ~~instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all~~primary beneficiary of the ~~information~~risks and ~~footnotes required by US GAAP for complete financial statements. In the opinion of management~~rewards of the ~~Company, all adjustments (consisting of normal recurring accruals) considered necessary~~VIE. The primary beneficiary is required to consolidate the VIE for ~~a fair presentation have been included.~~

~~These condensed consolidated~~ financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K for the year ended March 31, 2017, which was filed with the Securities and Exchange Commission (the “Commission”) on June 30, 2017. The condensed consolidated financial information as of March 31, 2017, has been derived from the audited consolidated financial statements not included herein. Operating results for the nine-month period ended December 31, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018.

reporting purposes.

Use of estimates

The preparation of financial statements in conformity with USU.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 its financial statements are reasonable and prudent. Actual results could differ from those estimates.

Revenue recognition

Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”), establishes principles for reporting information about the nature, amount, timing and ~~expense recognition~~

uncertainty of revenue and cash flows arising from the 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 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 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 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).

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

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 ~~earns interest and noninterest~~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.

Interest income ~~from its proprietary trading accounts from various sources, including:~~

●

~~Securities, derivatives and foreign exchange activities;~~

●

~~Reverse repurchase agreements; and~~

●

~~Bank deposits.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~Revenue earned~~

Interest income on ~~interest-earning assets, including unearned income and the amortization/ accretion of premiums or discounts recognized on debt securities, bank deposits and~~ loans issued, istrading securities and reverse repurchase agreement obligations are recognized based on the ~~constant effective yield~~contractual provisions of the ~~financial instrument~~ underlying arrangements.

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

Unamortized premiums, discounts and other basis adjustments on ~~other applicable accounting guidance.~~

~~Gains and losses on~~trading securities are generally recognized in interest income over the ~~sale~~contractual lives of the securities ~~and certain derivatives are recognized on a trade-date basis.~~

~~The Company earns fees and commissions from its customers from:~~

●

~~Providing brokerage services;~~

●

~~Providing banking services (money transfers, foreign exchange operations and other); and~~

●

~~Agency fees.~~

~~The Company also earns revenues from investment banking, underwriting, market making, and bondholders’ representation services.~~

~~Service charges on brokerage, banking, agency, investment banking and market making services, are recognized when earned. Brokerage fees are recognized on a trade-date basis.~~

~~The Company recognizes revenue when four basic criteria have been met:~~

●

~~Existence of persuasive evidence that an arrangement exists;~~

●

~~Delivery has occurred or services have been rendered;~~

●

~~The seller’s price to~~using the ~~buyer is fixed and determinable; and~~

●

~~Collectability is reasonably assured.~~

effective interest method.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

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. ~~Derivatives~~

Loans

The Company’s loan portfolio is divided into three portfolio segments: credit card, mortgages and retail banking loans. Credit card consists of loans provided to individuals and businesses through the cards. Mortgage loans consist of loans provided to individuals to purchase real estate, which is used as collateral for the loan. Retail banking loans consist of unsecured loans provided to individuals.

Loans Acquired

All purchased loans are ~~included in assets and liabilities~~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.

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 ~~profit or loss~~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 ~~condensed consolidated~~“Estimate of Incurred Loan Losses” section of this Note.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

Estimate of Incurred Loan Losses.

The allowance represented management’s current estimate of incurred loan losses inherent in the Company’s loan portfolio as of each balance ~~sheet.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands~~sheet date. The provision for credit losses reflected credit losses the Company believed had been incurred and would eventually be recognized over time through charge-offs.

Management performed a quarterly analysis of ~~United States dollars, unless otherwise stated)~~

the 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 ~~purchases foreign currency futures contracts from financial institutions~~applied separate calculations of the allowance 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. Loss given default is calculated based on the collateral coverage of the loans. The Company’s allowance for loan losses consisted of two components that were allocated to ~~minimize~~cover the ~~risk caused by foreign currency fluctuation~~estimated probable losses in each loan portfolio based on the results of the Company’s detailed review and loan impairment assessment process: (i) a component for loans collectively evaluated for impairment; and (ii) an asset-specific component for individually impaired loans.

The component of the allowance related to credit card, mortgages and retail banking loans that the Company collectively evaluated for impairment was based on a statistical calculation and on its ~~foreign currency receivables~~historical loss experience for loans with similar risk characteristics and ~~payables~~consideration of the current credit quality of the portfolio. The asset-specific component of the allowance includes smaller-balance homogeneous credit card and ~~also purchases foreign currency futures contracts for speculative purposes. Futures are traded~~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 measured the asset-specific component of the allowance based on the ~~Kazakhstan Stock Exchange~~difference between the recorded investment of individually impaired loans and ~~represent commitments~~the present value of expected future cash flows. In addition to ~~purchase or sell a particular foreign currency at a future date and at a specific price.~~

~~All gains and~~the allowance, the Company also estimated probable losses on foreign currency contracts were realized during nine months ended December 31, 2017 and are included in net gain on derivatives in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss). The contracts have varying maturities of less than one year.

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 functional currencies are the Russian ruble, ~~Euro,~~European euro, U.S. dollar, Ukrainian hryvnia, ~~and~~Uzbekistani som, Kazakhstani tenge, Kyrgyzstani som, UK pound sterling and the Azerbaijani manat, and its reporting currency is the USU.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 USU.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 monthly rates are used to translate revenues and expenses. ~~Gains and losses~~Translation adjustments arising ~~on translation or settlement~~from the use of ~~foreign currency denominated transactions or balances~~different exchange rates from period to period are included ~~in revenue.~~

as a component of stockholders’ equity as “Accumulated other comprehensive loss”.

Cash and cash equivalents

Cash and cash equivalents are generally comprised of certain highly liquid investments with maturities of three months or less at the date of purchase. Cash and cash equivalents include reverse repurchase agreements 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, 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.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

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 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’ 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 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”) 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 ~~but~~ 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 are included in accumulated ~~in the investments revaluation reserve,~~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, ~~on monetary assets,~~ which are recognized in the Condensed Consolidated Statements of Operations and Statements of other Comprehensive ~~Income/(Loss). Where~~Income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the ~~investments~~investments’ revaluation reserve is then reclassified to ~~profit or loss.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands~~Condensed Consolidated Statements of ~~United States dollars, unless otherwise stated)~~

Operations and Statements of Other Comprehensive Income.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

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~~Other Comprehensive ~~Income/(Loss)~~Income and included in net ~~gain/(loss)~~gain on trading securities. Interest earned and dividend income are recognized in the Condensed Consolidated Statements of Operations and Statements of ~~other~~Other Comprehensive ~~Income/(Loss)~~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~~Other Comprehensive ~~Income/(Loss).~~

Income.

Debt securities issued

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.~~

recognized in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income.

Brokerage and other receivables

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

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

Derecognition of ~~United States dollars, unless otherwise stated)~~

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 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.

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~~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.

Impairment of goodwill

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017, the Company had not recorded any charges for impairment of long-lived assets.~~

~~Impairment of goodwill~~

~~As of December 31, 2017, and March 31, 2017,~~2021, goodwill recorded in the Company’s ~~Condensed~~ Consolidated Balance Sheets totaled ~~$1,856~~$7,894 and ~~$981,~~$7,868, respectively. The Company performs an impairment review at least annually unless indicators of impairment exist in interim periods. The 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 value. If 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 of a reporting ~~unit's~~unit’s goodwill exceeds the implied fair value of its goodwill, an impairment loss is 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 September 30, 2021, increased 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 September 30, 2021, were as follows:

Balance as of March 31, 2021	$	7,868

Foreign currency translation		26

Balance as of September 30, 2021	$	7,894

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

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, 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 will include interest and penalties arising from the underpayment of income taxes in the provision for income ~~taxes.~~taxes (if anticipated). As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, the Company had no accrued interest or penalties related to uncertain tax positions.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

On December 22, 2017, the U.S. bill commonly referred to as the Tax Cuts and Jobs Act (“Tax Reform Act”) was enacted, which significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Tax Reform Act also provided for a one-time deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017.

The Global Intangible Low-Taxed Income ~~("GILTI"~~(“GILTI”) provisions of the Tax 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 ~~may be subject to incremental U.S. tax on GILTI income beginning in 2018, depending upon expense allocations and~~has presented the ~~applicable U.S. foreign tax credit rules. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any~~ deferred tax impacts of GILTI ~~in its condensed consolidated financial statements for the periods ended December 31, 2017.~~

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. The Company has considered the provisional tax impacts related to deemed repatriated earnings and the benefit for the revaluation of deferred tax assets and liabilities, onin its consolidated financial statements ~~for the periods ended December 31, 2017. The final impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations~~as of September 30, 2021 and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. In accordance with SAB 118 the financial reporting impact of the Tax Reform Act will be completed in the fourth quarter of 2018.

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 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.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

Leases

The Company 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 assets and corresponding lease liabilities are recognized on the Company’s Consolidated Balance Sheets. Refer to Note 19 - Leases, within the notes to 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 seven years.

Segment information

The Company operates in ~~thousands of United States dollars, unless otherwise stated)~~

~~Leases~~

~~Rent payable under~~a single operating ~~leases is charged~~segment offering financial services to ~~expense~~its customers in a single geographic region covering Eurasia. The Company’s financial services business provides retail securities brokerage, research, investment counseling, securities trading, market making, corporate investment banking, underwriting, complementary banking services and retail banking services to its customers. The Company generates revenue from customers primarily from fee and commission income and interest income. The Company does not use profitability reports or other information disaggregated on a ~~straight-line~~regional, country or divisional basis ~~over~~for making business decisions.

Recent accounting pronouncements

In June 2016 the ~~term~~FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial 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 Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”. The 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 definition. The Master Glossary of the ~~relevant lease.~~

~~Recent accounting pronouncements~~

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 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.

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

In ~~July 2017,~~January 2021 the FASB issued ASU No. ~~2017-11, “Earnings~~2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that certain optional expedients and exceptions in Table of Contents link 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 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)~~-Distinguishing Liabilities from~~, Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity ~~(Topic 480)-Derivatives and Hedging (Topic 815)”. This ASU addresses narrow issues identified as~~(Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, a ~~result~~consensus of the ~~complexity associated with applying US GAAP~~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 ~~certain financial instruments with characteristics~~modifications or exchanges of ~~liabilities and equity. The amendments in Part I of this update~~freestanding equity-classified written call options that relate to liability or equity classification of financial instruments (or embedded features) affect all entities that issue financial instruments (for example, warrants or convertible instruments) that include down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestandingremain equity classified ~~financial instruments,~~after the ~~amendments require entities~~modification or exchange. This amendment provides that ~~present~~for an entity that presents earnings per share (EPS) in accordance with Topic 260, ~~to recognize~~ the ~~effect~~effects of ~~the down round feature when it~~a modification or an exchange of a freestanding equity-classified written call option that is ~~triggered. That effect is treated~~recognized as a dividend ~~and as a reduction of~~should be an adjustment to net income ~~available to common shareholders~~(or net loss) in the basic ~~EPS. For public business~~EPS calculation. The amended guidance becomes mandatorily effective for all entities ~~the amendments in Part I of this ASU No. 2017-11 are effective~~ for fiscal years ~~and~~beginning after December 15, 2021, including interim periods within those fiscal years, ~~beginning~~and should be applied prospectively to modifications or exchanges occurring on or after ~~December 15, 2018. Early adoption is permitted for all entities.~~the effective date. The Company is currently evaluating the impact ~~of the new guidance~~that ASU 2021-04 will have on its consolidated financial ~~statements.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

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, unless otherwise stated)

In August ~~2017,~~2021 the FASB issued Accounting Standard Update No 2021-06 “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 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, provided that all the amended rules are applied in their entirety from the early compliance date. ASU No. 2017-12, Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities. The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item2021-06 amends SEC material in the ~~financial statements.~~Codification to give effect to Release No. 33-10786. The ~~amendments in this update~~new rules apply to ~~any entity that elects to apply hedge accounting in accordance with current GAAP. For public business entities, the amendments in this Update are effective for~~ fiscal years ~~beginning~~ending on or after December 15, ~~2018, and interim periods within those fiscal years.~~2021 (i.e., calendar-year 2021). Early ~~application~~voluntary compliance is ~~permitted~~allowed. Note that the rescission of Industry Guide 3 is effective on January 1, 2023. ASU No. 2021-06 amends SEC material in ~~any interim period after issuance of~~ the ~~update.~~Codification to give effect to Release No. 33-10835. The Company is currently evaluating the impact ~~of the new guidance~~that ASU 2021-06 will have on its consolidated financial ~~statements.~~

~~In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840),~~statements and Leases (Topic 842). ASU 2017-13 essentially delays the effective date of the revenue recognition and leases standards for a subset of public entities. A public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC would be permitted to adopt (1) ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019, and (2) ASC Topic 842, Leases for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Such an entity would also be permitted to adopt ASC Topic 606 and ASC Topic 842 according to the public business entity effective dates.

In November 2017, the FASB issued ASU No. 2017-14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606). A new Accounting Standards Update (“ASU”) features amendments to select Securities and Exchange Commission (“SEC”) paragraphs under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). Issued as ASU No. 2017-14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606), the standard amends the Accounting Standards Codification to incorporate the SEC guidance.

~~Note~~related disclosures.

NOTE 3 – ~~Revision of Financial Statement~~

When preparing the condensed consolidated financial statements for the three and nine months ended December 31, 2017, management determined that certain amounts included in the Company’s March 31, 2017, consolidated financial statements required revision, due to closing of the acquisition of Freedom RU on June 29, 2017, and Freedom CY on November 1, 2017, which were deemed to be entities under common control with the Company. The previously issued Consolidated Balance Sheet as of March 31, 2017, and Condensed Consolidated Statement of Operations and Statements of Other Comprehensive Income/(Loss) for the three-month and nine-month periods ended December 31, 2016 have been revised as follows:

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

March 31, 2017

BALANCE SHEETS (RECAST)

As previously reported

Recast

As recasted

ASSETS

Cash and cash equivalents
$51
$22,565
$22,616
Restricted cash
  8,534
  4,215
  12,749
Trading securities
  -
  81,575
  81,575
Available-for-sale securities, at fair value
  -
  2
  2
Brokerage and other receivables
  -
  514
  514
Loans issued
  -
  65
  65
Deferred tax assets
  -
  1,026
  1,026
Fixed assets
  2
  1,094
  1,096
Goodwill
  -
  981
  981
Other assets
  -
  739
  739
TOTAL ASSETS
$8,587
$112,776
$121,363




LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)







Derivative liability
$-
$495
$495
Debt securities issued
  -
  3,459
  3,459
Customer liabilities
  -
  7,635
  7,635
Current income tax liability
  -
  149
  149
Trade payables
  206
  339
  545
Deferred distribution payments
  8,534
  -
  8,534
Securities repurchase agreement obligation
  -
  56,289
  56,289
Other liabilities
  -
  370
  370
TOTAL LIABILITIES
  8,740
  68,736
  77,476




STOCKHOLDERS’ EQUITY/(DEFICIT)







Preferred Stock
  -
  -
  -
Common stock
  280
  (269)
  11
Additional paid in capital
  776
  33,883
  34,659
Retained earnings/Accumulated deficit
  (1,209)
  17,363
  16,154
Accumulated other comprehensive income
  -
  (6,937)
  (6,937)
TOTAL STOCKHOLDERS’ EQUITY/(DEFICIT)
  (153)
  44,040
  43,887




TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
$8,587
$112,776
$121,363

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

For the three months ended December 31, 2016

STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME/(LOSS) (RECAST)

As previously reported

Recast

As recasted

Revenue:

Fee and commission income
$-
$1,116
$1,116
Net gain on trading securities
  -
  1,164
  1,164
Interest income, net
  1
  723
  724
Net loss on foreign exchange operations
  -
  (138)
  (138)




TOTAL REVENUE
  1
  2,865
  2,866




Expense:



Interest expense
  -
  1,120
  1,120
Fee and commission expense
  -
  129
  129
Operating expense
  100
  2,361
  2,461
Other expense, net
  -
  141
  141




TOTAL EXPENSE
  100
  3,751
  3,851




NET LOSS BEFORE INCOME TAX
  (99)
  (886)
  (985)




Income tax benefit
  -
  413
  413




NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
$(99)
$(473)
$(572)




OTHER COMPREHENSIVE INCOME



Change in unrealized gain on investments available-for-sale, net of tax effect
  -
  (276)
  (276)
Foreign currency translation adjustments, net of tax
  -
  453
  453
COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
$(99)
$(296)
$(395)

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

For the nine months ended December 31, 2016

STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME/(LOSS) (RECAST)

As previously reported

Recast

As recasted

Revenue:

Fee and commission income
$-
$2,462
$2,462
Interest income
  3
  1,707
  1,710
Net gain on trading securities
  -
  4,583
  4,583
Net gain on sale of fixed assets
  -
  28
  28
Net gain on foreign exchange operations
  -
  296
  296




TOTAL REVENUE
  3
  9,076
  9,079




Expense:



Interest expense
  -
  2,472
  2,472
Fee and commission expense
  -
  216
  216
Operating expense
  438
  6,256
  6,694
Other expense, net
  -
  267
  267




TOTAL EXPENSE
  438
  9,211
  9,649




NET LOSS BEFORE INCOME TAX
  (435)
  (135)
  (570)




Income tax benefit
  -
  960
  960




NET (LOSS)/INCOME BEFORE NONCONTROLLING INTERESTS
$(435)
$825
$390




Less: Net income attributable to noncontrolling interest in subsidiary
  -
  7
  7
NET (LOSS)/INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
  (435)
  818
  383




OTHER COMPREHENSIVE INCOME



Change in unrealized gain on investments available-for-sale, net of tax effect
  -
  (270)
  (270)
Foreign currency translation adjustments, net of tax
  -
  1,933
  1,933




COMPREHENSIVE INCOME/(LOSS) BEFORE NONCONTROLLING INTERESTS
  (435)
  2,488
  2,053




Less: Comprehensive income attributable to noncontrolling interest in subsidiary
  -
  7
  7




COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
$(435)
$2,481
$2,046

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~Note 4 – Cash and Cash Equivalents~~

December 31, 2017

March 31, 2017 (Recast)

Securities purchased under reverse repurchase agreements
$21,674
$8,376
Current account with commercial banks
  3,982
  9,987
Current account with Central Depository (Kazakhstan)
  3,165
  986
Brokerage accounts
  2,233
  259
Petty cash
  1,414
  1,476
Current account with National Settlement Depository (Russia)
  1,204
  696
Current account with Central Bank (Russia)
  1,015
  645
Current account in clearing organizations
  160
  191



Total cash and cash equivalents
$34,847
$22,616

CASH AND CASH EQUIVALENTS

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, cash and cash equivalents consisted of the following:

	September 30, 2021		March 31, 2021

Current accounts with brokers	$	190,385	$	94,494
Securities purchased under reverse repurchase agreements		164,240		248,946
Accounts with stock exchanges		149,361		98,521
Current accounts with commercial banks		90,886		75,903
Current accounts in clearing organizations		50,312		83,194
Current account with National Bank (Kazakhstan)		37,628		36,726
Current account with National Settlement Depository (Russia)		26,496		28,215
Petty cash in bank vault and on hand		22,970		25,830
Current account with Central Bank (Russia)		7,975		6,930
Current account with Central Depository (Kazakhstan)		172		69
Total cash and cash equivalents	$	740,425	$	698,828

As of September 30, 2021, and March 31, 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.

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, the cash and cash equivalents balance included collateralized securities received under reverse repurchase agreements on the terms presented below:

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

December 31, 2017

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
  10.29%
$1,505
$-
$1,505
Corporate equity
  11.91%
  14,154
  6,015
  20,169





Total

$15,659
$6,015
$21,674

March 31, 2017 (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 equity
  19.56%
$8,346
$25
$8,371
Corporate debt
  24.00%
  5
  -
  5





Total

$8,351
$25
$8,376

	September 30, 2021
	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 equity		0.39	%		141,873		0		141,873
Non-US sovereign debt		1.20	%		11,582		10		11,592
Corporate debt		3.16	%		10,775		0		10,775
Total securities sold under repurchase agreements				$	164,230	$	10	$	164,240

	March 31, 2021
	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
Non-US sovereign debt		1.07	%	$	101,258	$	0		101,258
Corporate debt		4.42	%		94,562		0		94,562
Corporate equity		2.76	%		51,564		0		51,564
US sovereign debt		0.50	%		1,562		0		1,562
Total securities sold under repurchase agreements				$	248,946	$	0	$	248,946

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, 2017~~September 30, 2021, and March 31, ~~2017, is $26,215~~2021, was $181,330 and ~~$8,229,~~$272,586, respectively.

~~Note 5~~

NOTE 4 – RESTRICTED CASH

Restricted ~~Cash~~

~~As of December 31, 2017~~cash for the periods ended September 30, 2021, and March 31, ~~2017,~~2021, consisted of:

	September 30, 2021		March 31, 2021

Brokerage customers’ cash	$	349,097	$	427,233
Deferred distribution payments		8,534		8,534
Reserve with Central Bank of Russia		2,109		1,758
Guarantee deposits		88		433
Total restricted cash	$	359,828	$	437,958

As of September 30, 2021, and March 31, 2021, the Company’s restricted cash ~~consisted~~included the cash portion of ~~deferred distribution payments, cash~~the funds segregated in a special custody account for the exclusive benefit of ~~our~~its brokerage customers, ~~and~~as well as required reserves with the Central Bank of the Russian Federation which represents cash on hand balance requirements. ~~The~~Restricted cash also included a deferred distribution payment amount, which is ~~the~~a reserve held for distribution to shareholders who have not yet claimed their distributions from the 2011 sale of the Company’s oil and gas exploration and production operations of $8,534. This distribution is currently payable, subject to the entitled ~~shareholder~~shareholders completing and submitting to the Company the necessary documentation to claim his, her or its distribution payments. The Company has no control over when, or if, an entitled shareholder will submit the necessary documentation to claim ~~his, her, or its~~their distribution payment. ~~Restricted~~The entire deferred distribution payment amount was held in cash ~~consists of:~~

December 31,
2017

March 31, 2017 (Recast)

Deferred distribution payments
$8,534
$8,534
Brokerage customers’ cash
  5,509
  4,169
Reserve with Central Bank
  95
  46



Total restricted cash
$14,138
$12,749

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~Note 6 – Trading Securities~~

~~As of December 31, 2017~~at September 30, 2021, and March 31, ~~2017,~~2021. A Company shareholder entitled to a portion of the distribution amount died before claiming the distribution. As a result of disputes between the individual’s putative heirs and potential owners of an entity that also claimed through the shareholder, the Company has been unable to determine who is legally entitled to receive the distribution payment. The putative estate asserted claims in Utah state court seeking payment of the distribution. The Company counterclaimed for interpleader and other claims and seeking a determination from the court as to who is rightfully entitled to receive the distribution payment. On October 5, 2021, the court granted the Company’s motion to dismiss, dismissing all claims by both parties without prejudice because plaintiffs failed to follow proper procedures and therefore the court lacked jurisdiction. For additional information regarding this matter see Part II, Item 1 Legal Proceedings of this quarterly report on Form 10-Q.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

NOTE 5 – TRADING AND AVAILABLE-FOR-SALE SECURITIES AT FAIR VALUE

As of September 30, 2021, and March 31, 2021, trading and available-for-sale securities consisted of:

	September 30, 2021		March 31, 2021

Corporate debt	$	618,428	$	334,763
Non-US sovereign debt		261,442		333,619
Corporate equity		70,377		47,340
Exchange traded notes		17,028		9,638
US sovereign debt		7,206		10,828
Total trading securities	$	974,481	$	736,188

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

As of September 30, 2021, the Company held debt securities of two issuers which individually exceeded 10% of the Company’s total trading securities ~~consisted of:~~

December 31,
2017

March 31, 2017 (Recast)

Equity securities
$164,853
$71,697
Debt securities
  32,903
  9,877
Depository notes
  1,192

  -

Mutual investment funds
  259
  1
Total trading securities
$199,207
$81,575

- the Kazakhstan Sustainability Fund JSC (BBB credit rating) in the amount of $417,450 and Ministry of Finance of the Republic of Kazakhstan (BBB- credit rating) in the amount of $199,070. As of March 31, 2021, the Company held debt securities of two issuers 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 $293,451 and $193,677, respectively.

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

The fair value of 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 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.

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

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

The following tables ~~presents trading~~present securities assets in the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements or disclosed in the ~~notes~~Notes to the ~~consolidated financial statements~~Condensed Consolidated Financial Statements at fair value on a recurring basis as of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017:~~

Fair Value Measurements at

December 31, 2017 using

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Significant unobservable units

December 31, 2017

(Level 1)

(Level 2)

(Level 3)

Equity securities
$164,853
$164,853
$-
$-
Debt securities
  32,903
  32,715
  188
  -
Depository notes
  1,192
  1,192
  -
  -
Mutual investment funds
  259
  259
  -
  -
Total trading securities
$199,207
$199,019
$188
$-

Fair Value Measurements at

March 31, 2017 using

Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Significant unobservable units

March 31, 2017 (Recast)

(Level 1)

(Level 2)

(Level 3)

Equity securities
$71,697
$71,697
$-
$-
Debt securities
  9,877
  9,663
  214
  -
Mutual investment funds
  1
  1
  -
  -
Total trading securities
$81,575
$81,361
$214
$-

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

2021:

						Fair Value Measurements at
						September 30, 2021 using
	Weighted Average					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Units
	Interest Rate			Total		(Level 1)		(Level 2)		(Level 3)

Corporate debt		8.3	%	$	618,428	$	618,050	$	0	$	378
Non-U.S. sovereign debt		7.88	%		261,442		259,480		0		1,962
Corporate equity		-			70,377		19,710		50,291		376
Exchange traded notes		-			17,028		17,028		0		0
U.S. sovereign debt		1.6	%		7,206		7,206		0		0

Total trading securities				$	974,481	$	921,474	$	50,291	$	2,716

Equity securities				$	1	$	0	$	0	$	1
Total available-for-sale securities, at fair value				$	1	$	0	$	0	$	1

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

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

Corporate debt		9.22	%	$	334,763	$	334,403	$	0	$	360
Non-U.S. sovereign debt		8.06	%		333,619		333,619		0		0
Corporate equity		-			47,340		28,630		1		18,709
U.S. sovereign debt		1.68	%		10,828		10,828		0		0
Exchange traded notes		-			9,638		9,638		0		0

Total trading securities				$	736,188	$	717,118	$	1	$	19,069

Equity securities		-		$	1	$	0	$	0	$	1
Total available-for-sale securities, at fair value				$	1	$	0	$	0	$	1

The table below presents the valuation techniques and significant level 3 inputs used in ~~thousands~~the valuation as of ~~United States dollars, unless otherwise stated)~~

~~Note 7 – Securities repurchase agreement obligations~~

~~As of December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021. The table is not intended to be all inclusive, but instead captures the significant unobservable inputs relevant to the determination of fair value.

Type	Valuation Technique	FV as of September 30, 2021		FV as of March 31, 2021		Significant Unobservable Inputs	%

Corporate equity	DCF	$	-	$	18,408	Discount rate		10.6	%
						Estimated number of years	9 years
Corporate debt	DCF	$	374	$	360	Discount rate		16.5	%
						Estimated number of years	9 years
Corporate equity	DCF	$	380	$	301	Discount rate		18.5	%
						Estimated number of years	9 years
Non-US sovereign debt	DCF	$	1,030		0	Discount rate		13.3	%
						Estimated number of years	6 months
Non-US sovereign debt	DCF	$	932		0	Discount rate		13.8	%
						Estimated number of years	1 year
Total		$	2,716	$	19,069

As of September 30, 2021, shares of SPBX held by the Company were transferred from level 3 to level 2. During the six months ended September 30, 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 six months ended September 30, 2021, and the year ended March 31, 2021:

	Trading securities			Available-for-sale securities
Balance as of March 31, 2021	$	19,069		$	1
Reclassification to level 2		(18,408	)		0
Purchase of investments that use Level 3 inputs		1,965			0
Revaluation of investments that use Level 3 inputs		90			0
Balance as of September 30, 2021	$	2,716		$	1

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

	Trading securities			Available-for-sale securities
Balance as of March 31, 2020	$	11,259		$	1
Sale of investments that use Level 3 inputs		(2	)		0
Purchase of investments that use Level 3 inputs		834			0
Revaluation of investments that use Level 3 inputs		6,978			0
Balance as of March 31, 2021	$	19,069		$	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 September 30, 2021, and March 31, 2021:

			September 30, 2021
	Assets measured at amortized cost		Unrealized loss accumulated in other comprehensive income/(loss)		Assets measured at fair value

Equity securities	$	1	$	0	$	1

Balance as of September 30, 2021	$	1	$	0	$	1

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

Equity securities	$	1	$	0	$	1

Balance as of March 31, 2021	$	1	$	0	$	1

NOTE 6 – BROKERAGE AND OTHER RECEIVABLES, NET

Brokerage and other receivables as of September 30, 2021, and March 31, 2021, consisted of:

	September 30, 2021			March 31, 2021

Margin lending receivables	$	308,256		$	58,095
Receivables from brokerage clients		4,134			4,199
Long-term installments receivables		1,210			1,280
Receivable from sale of securities		910			484
Receivable for underwriting and market-making services		887			564
Bank commissions receivable		443			767
Dividends accrued		23			1,392
Bonds coupon receivable		3			-
Other receivables		2,702			56

Allowance for receivables		(1,441	)		(2,036	)

Total brokerage and other receivables, net	$	317,124		$	64,801

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

On September 30, 2021, and March 31, 2021, amounts due from a single related party customer were $215,342 and $8,948, respectively or 69% and 14% respectively, of total brokerage and other receivables, net. Based on historical data, the Company considers receivables due from related parties fully collectible. As of September 30, 2021, and March 31, 2021, using historical and statistical data, the Company recorded an allowance for brokerage receivables in the amounts of $1,441 and $2,036, respectively.

NOTE 7 – LOANS ISSUED

Loans issued as of September 30, 2021, consisted of the following:

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

Uncollateralized bank customer loans		13,428	October 2021 - September 2025		12.10	%		0	KZT
Mortgage loans		11,190	October 2021 – September 2036		14.83	%		11,089	KZT
Subordinated loan		5,099	December 2022 - April 2024		4.89	%		0	USD
Bank customer loans		1,520	November 2021-September 2045		12.00	%		1,000	RUB
Subordinated loan		1,392	September 2029		7.00	%		0	UAH
Uncollateralized non-bank loan		18	December 2021		2.00	%		0	EUR
	$	32,647

During the six months ended September 30, 2021, the Company entered into agreements with a related party microfinance organization to purchase uncollateralized consumer retail loans. The agreements provide the Company the ability to sell back to the microfinance organization up to $3,000 of the total loans purchased if such loans become delinquent for more than 20 days.

The Company has determined that it has assumed substantially all of the risks and rewards from the 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.

During the six months ended September 30, 2021, the Company purchased loans in the aggregate amount of $19,474 and sold back loans totaling $2,860 to the microfinance organization.

As of September 30, 2021, the Company held outstanding loans purchased from the microfinance organization totaling $14,615 net of an allowance of $1,187.

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

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

Subordinated loan	$	5,033	December 2022-April 2024		3.69	%		0	USD
Uncollateralized non-bank loan		2,382	January 2022 – February 2022		3.00	%		0	USD
Uncollateralized non-bank loan		1,384	May 2021		13.00	%		0	RUB
Subordinated loan		1,331	September 2029		7.00	%		0	UAH
Bank customer loans		880	March 2024		15.41	%		729	KZT
Bank customer loans		657	July 2021- September 2045		11.27	%		611	RUB
	$	11,667

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

NOTE 8 – DEFFERED TAXES LIABILITIES

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

The tax rates used for deferred tax assets and liabilities as of September 30, 2021, and March 31, 2021, were 21% for the U.S., 20% for the Russian Federation, Kazakhstan, and Kyrgyzstan, 31% for Germany, 12.5% for Cyprus, 18% for Ukraine, 2% for Azerbaijan and 15% for Uzbekistan. Deferred tax assets and liabilities of the Company are comprised of the following:

	September 30, 2021			March 31, 2021

*Deferred tax assets:*
Tax losses carryforward	$	310		$	316
Accrued liabilities		520			236
Depreciation		0			16
Revaluation on trading securities		415			0
Valuation allowance		(310	)		(316	)
Deferred tax assets	$	935		$	252

*Deferred tax liabilities:*
Revaluation on trading securities	$	4,560		$	2,546
Fixed and Intangible Assets		1,769			1,568
Subordinated debt		502			523
Deferred tax liabilities	$	6,831		$	4,637

Net deferred tax liabilities	$	(5,896	)	$	(4,385	)

During the six months ended September 30, 2021, and 2020, the effective tax rate was equal to 13.4% and 16.1%, respectively.

Tax loss carryforwards as of September 30, 2021, and March 31, 2021, were $310 and $316, respectively, and are subject to income tax in the Ukraine and Uzbekistan.

NOTE 9 – SECURITIES REPURCHASE AGREEMENT OBLIGATIONS

As of September 30, 2021, and March 31, 2021, trading securities included collateralized securities subject to repurchase agreements as described in the following table:

December 31, 2017

Interest rates and remaining contractual maturity of the agreements

Average interest rate

Overnight and continuous

Up to 30 days

30-90 days

Total

Securities sold under repurchase agreements

Corporate debt
  10.25%
$-
$21,343
$637
$21,980
Corporate equity
  12.62%
  -
  112,064
  1,116
  113,180
Non-US sovereign debt
  9.59%
  -
  2,276
  -
  2,276
Total securities sold under repurchase agreements

$-
$135,683
$1,753
$137,436

March 31, 2017 (Recast)

Interest rate and remaining contractual maturity of the agreements

Average interest rate

Overnight and continuous

Up to 30 days

30-90 days

Total

Securities sold under repurchase agreements

Corporate debt
  11.83%
$14,484
$10,923
$-
$25,407
Corporate equity
  13.08%
  -
  29,926
  956
  30,882
Total securities sold under repurchase agreements

$14,484
$40,849
$956
$56,289

	September 30, 2021
	Interest rates and remaining contractual maturity of the agreements
	Average interest rate			Up to 30 days		30-90 days		Total

Securities sold under repurchase agreements
Corporate debt		9.21	%	$	376,018	$	5,921	$	381,939
Non-U.S. sovereign debt		8.92	%		153,124		0		153,124
US sovereign debt		0.35	%		2,214		0		2,214
Total				$	531,356	$	5,921	$	537,277

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

	March 31, 2021
	Interest rate and remaining contractual maturity of the agreements
	Average interest rate			Up to 30 days		30-90 days		Total

Securities sold under repurchase agreements
Non-US sovereign debt		9.28	%	$	229,812	$	0	$	229,812
Corporate debt		9.27	%		189,337		0		189,337
Corporate equity		3.78	%		5,757		0		5,757
US sovereign debt		0.40	%		1,809		0		1,809
Total securities sold under repurchase agreements				$	426,715	$	0	$	426,715

The fair value of collateral pledged under repurchase agreements as of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017, is $188,096~~2021, was $550,297 and ~~$68,025,~~$426,669, respectively.

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

~~Note 8~~

NOTE 10 – ~~Deferred Tax Assets~~

~~FRHC~~CUSTOMER LIABILITIES

The Company recognizes customer liabilities associated with funds held by our brokerage and ~~FFIN are subject to taxation in the U.S. Freedom RU, FFIN Bank~~bank customers. Customer liabilities consist of:

	September 30, 2021		March 31, 2021

Brokerage customers	$	1,005,653	$	938,086
Banking customers		213,711		225,611
Total	$	1,219,364	$	1,163,697

As of September 30, 2021, banking customer liabilities consisted of current accounts and ~~Freedom 24 are subject to taxation in the Russian Federation. Freedom KZ~~deposits of $106,800 and ~~KZ Branch are subject to taxation in Kazakhstan. Freedom CY is subject to taxation in Cyprus, Freedom UA is subject to taxation in Ukraine.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands~~$106,911 respectively. As of ~~United States dollars, unless otherwise stated)~~

~~Deferred tax assets~~March 31, 2021, banking customer liabilities consisted of current accounts and ~~liabilities~~deposits of $133,493 and $92,118, respectively.

NOTE 11 – TRADE PAYABLES

Trade payables of the Company ~~are~~is comprised of the following:

December 31,
2017

March 31,
2017 (Recast)

Deferred tax assets:

Tax losses carryforward
$4,376
$2,398
Accrued liabilities
  38
  20
Revaluation on trading securities
  11
  76
Valuation allowance
  (2,495)
  (1,468)
Deferred tax assets
$1,930
$1,026



Deferred tax liabilities:





Revaluation on trading securities
$1,605
$-



Deferred tax liabilities
  1,605
  -
Net deferred tax assets
$325
$1,026

	September 30, 2021		March 31, 2021

Margin lending payable	$	44,668	$	20,120
Payables to suppliers of goods and services		3,604		1,708
Coupon payable		2,226		0
Trade payable for securities purchased		295		264
Guarantee fee received		30		0
Advances received		1		0
Other		247		212
Total	$	51,071	$	22,304

Table of Contents

FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

On September 30, 2021, and March 31, 2021, trade payables due to a single related party were $44,330 or 87% and $13,810 or 62%, respectively.

NOTE 12 – SECURITIES SOLD, NOT YET PURCHASED – AT FAIR VALUE

As of September 30, 2021, and March 31, 2021, the Company’s securities sold, not yet purchased at fair value was $14,867 and $8,592, respectively.

During the ~~nine~~six months ended ~~December 31, 2017 and 2016,~~September 30, 2021, the ~~effective tax rate was equal to 2.53% and (168.42%), respectively, primarily due to non-taxable gains on trading securities in Freedom KZ~~Company sold shares that were not owned by it in the ~~amounts~~amount of ~~$26,010~~$5,878 and ~~$10,389, respectively.~~closed short positions in the amount of $23. During the ~~nine-months period~~six months ended ~~December 31, 2017,~~September 30, 2021, the Company ~~realized net income before income tax of $23,114, primarily from non-taxable revenues generated from~~recognized a loss on the ~~Company’s Freedom KZ’s trading operations. This resulted~~change in the ~~Company realizing an income tax expense during the nine months ended December 31, 2017~~fair value of $584. During the nine months ended December 31, 2016, the Company realized a net loss before income tax of $570 primarily from non-taxable revenues generated from Freedom KZ’s trading operations resulting in an income tax benefit of $960. During the nine months ended December 31, 2016, the Company did not recognize tax loss carryforwards of $664 on operations of Freedom KZ.

~~Note 9 – Derivative Liability~~

On December 28, 2016, Freedom RU entered into a derivative instrument agreement with a related party that included a call option feature for the purchase of shares held by Freedom RU. This call option was classified as a derivative liabilityfinancial liabilities in the ~~Consolidated Balance Sheets and measured at each reporting period using~~amount of $420 in the ~~Black-Scholes Model. The gain associated with this derivative instrument is recognized as gain on a derivative instrument in the~~Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income. ~~In exchange for a $2,629 premium paid upfront, this derivative instrument granted~~

A short sale involves the ~~holder the right to purchase 11.8 million shares~~sale of a ~~top rated Russian commercial bank - Sberbank on June 14, 2017,~~security that is not owned with the expectation of purchasing the same security (or a security exchangeable) at a ~~strike~~later date at a lower price. A short sale involves the risk of a theoretically unlimited increase in the market price ~~$3.10 per share.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts~~of the security that would result in ~~thousands~~a theoretically unlimited loss.

NOTE 13 – LOANS RECEIVED

Loans received by the Company includes:

Company

Lender

September 30, 2021

March 31, 2021

Interest Rate

Term

Maturity dates

Freedom Holding Corp.

Non-Bank

3,456

3,373

5.00

14 months

12/31/21

Total

3,456

3,373

As of ~~United States~~September 30, 2021, non-bank loans received were unsecured. As of September 30, 2021, and March 31, 2021, accrued interest on the loans totaled $156 and $73, respectively.

NOTE 14 – DEBT SECURITIES ISSUED

Outstanding debt securities of the Company include the following:

	September 30, 2021		March 31, 2021

Debt securities issued denominated in USD	$	50,541	$	60,743
Debt securities issued denominated in RUB		6,872		6,605
Accrued interest		833		1,095
Total	$	58,246	$	68,443

As of September 30, 2021 and March 31, 2021, the Company’s outstanding debt securities had fixed annual coupon rates ranging from 6.5% to 12% and maturity dates ranging from February 2022 to January 2023. The Company’s debt securities include bonds of Freedom RU issued under Russian Federation law, which trade on the MOEX. The Company’s debt securities also include $20,498 of FRHC notes issued from December 2019 to February 2020. The FRHC notes, denominated in U.S. dollars, ~~unless otherwise stated)~~

bear interest at an annual rate of 7.00% and are due in December 2022. The FRHC notes were issued under Astana International Financial Centre law and trade on the AIX. On May 29, 2021, the Company ~~recorded~~retired U.S. dollar denominated 8% Freedom KZ bonds that had a ~~derivative liability~~carrying value of ~~$495~~$10,477 including interest accrued of $274 as of March 31, ~~2017. On June 14, 2017, the derivative instrument expired unexercised by the option holder, and the Company recognized a gain on the derivative instrument of $490.~~

The Company uses foreign currency futures contracts to minimize the risk caused by foreign currency fluctuation on its foreign currency receivables and payables by purchasing futures with financial institutions. The futures are traded on the Kazakhstan Stock Exchange and represent commitments to purchase or sell a particular foreign currency at a future date and at a specific price. During the nine months ended December 31, 2017, Freedom KZ purchased foreign currency futures contracts to sell $25,000 at the weighted average exchange rate of 345.63 Kazakhstani Tenge per US dollar in December 2017 and March 2018. During the nine months ended December 31, 2017, the Company realized a gain of $155 on foreign currency futures contracts.

~~Note 10 – Debt Securities Issued~~

December 31,
2017

March 31,
2017

(Recast)

Debt securities issued
$18,719
$9,530
Debt securities repurchased
  (8,534)
  (6,145)
Accrued interest
  440
  74



Total
$10,625
$3,459

As of December 31, 2017 and March 31, 2017, the Company placed USD indexed bonds of Freedom KZ issued under Kazakhstan law in the amounts of $9,695 and $0, respectively. The bonds have an 8.00% fixed annual coupon rate and a maturity date of June 27, 2020. These bonds are actively traded on the Kazakhstan Stock Exchange. According to the initial placement document (prospectus) the Company has the right to repurchase and resell the Freedom KZ bonds at market value. During the nine months ended December 31, 2017 and 2016, the Company made purchases of these redeemable debt securities in the amounts of $2,225 and $0, respectively. During the nine months ended December 31, 2017 and 2016, the Company sold these repurchased debt securities in the amounts of $1,774 and $0, respectively.

As of December 31, 2017 and March 31, 2017, the Company placed tenge - denominated bonds of Freedom KZ issued under Kazakhstan law in the amount of $9,024 and $9,530, respectively. The bonds have an 11.50% fixed annual coupon rate and a maturity date of January 21, 2019. These bonds are actively traded on the Kazakhstan Stock Exchange. According to the initial placement document (prospectus) the Company has the right to repurchase and resell the Freedom KZ bonds at market value. During the nine months ended December 31, 2017 and 2016, the Company made purchases of these redeemable debt securities in the amounts of $ 2,858 and $0, respectively. During the nine months ended December 31, 2017 and 2016, the Company sold these repurchased debt securities in the amounts of $582 and $0, respectively.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

2021.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs.

NOTE 15 – NET GAIN ON TRADING SECURITIES

Net gain on trading securities is comprised of:

	Three months ended September 30, 2021		Three months ended September 30, 2020

Net gain recognized during the period on trading securities sold during the period	$	143,724	$	5,883
Net unrealized gain/(loss) recognized during the reporting period on trading securities still held at the reporting date		31,528		2,419
Net gain recognized during the period on trading securities	$	175,252	$	8,302

	Six months ended September 30, 2021		Six months ended September 30, 2020

Net gain recognized during the period on trading securities sold during the period	$	149,536	$	17,123
Net unrealized gain/(loss) recognized during the reporting period on trading securities still held at the reporting date		35,616		263
Net gain recognized during the period on trading securities	$	185,152	$	17,386

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, the ~~accrued interest included~~Company held in its proprietary trading portfolio shares of stock of SPBX at fair value of $50,083 and $18,408, respectively.

During the three months ended September 30, 2021, the Company exchanged approximately 11,500 shares of its stock of SPBX for units in the ~~balance~~closed-end unit investment combined fund “SPB fund” (the “SPBX ETF”). In September 2021, the Company sold its SPBX ETF units to approximately 15,000 investors through placement agents for net proceeds of ~~debt securities issued totaled $440 and $74, respectively.~~

~~Note 11 – Customer Liabilities~~

~~The Company recognizes customer liabilities associated with funds held by our brokerage and bank customers. Customer liabilities consist of:~~

December 31,
2017

March 31,
2017 (Recast)

Brokerage customers
$6,796
$4,167
Banking customers
7,115
3,468
Total
$13,911
$7,635

~~Note 12 –Related Party Transactions~~

~~On December 28, 2016, Freedom RU entered into~~$155,673. As a ~~derivative instrument agreement with a related party which included a call option feature. The gain or loss associated with this agreement is recognized as gain on a derivative instrument in~~result, during the Consolidated Statements of Operations and Statements of Other Comprehensive Income/(Loss). The Company recorded a derivative liability of $495 as of March 31, 2017. On June 14, 2017, the derivative instrument expired unexercised by the holder, andthree months ended September 30, 2021, the Company recognized agains on trading securities of $179,015, which included $141,067 of realized gain onand $37,948 of net unrealized gain from revaluation of the ~~derivative instrument of $490.~~

SPBX shares the Company still held at September 30, 2021.

NOTE 16 – RELATED PARTY TRANSACTIONS

During the ~~nine~~three months ended ~~December 31, 2017~~September 30, 2021, and ~~2016,~~2020, the Company earned commission income from related parties in the amounts of ~~$3,103~~$84,444 and ~~$1,061,~~$41,167, respectively. During the six months ended September 30, 2021, and 2020, the Company earned commission income from related parties in the amounts of $150,416 and $71,957, respectively. Commission income earned from related parties is comprised primarily of brokerage commissions and ~~agency fees~~commissions for ~~referrals~~money transfers by brokerage clients.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

During the three months ended September 30, 2021, and 2020, the Company paid commission expense to related parties in the amount of ~~new brokerage clients~~$5,245 and $7,936, respectively. During the six months ended September 30, 2021, and 2020, the Company paid commission expense to ~~other brokers.~~

related parties in the amounts of $10,527 and $10,381, respectively.

During the three months ended September 30, 2021, and 2020, the Company recorded stock-based compensation expense for restricted stock grants to related parties in the amount of $385 and $0, respectively. During the six months ended September 30, 2021, and 2020, the Company recorded stock-based compensation expense for restricted stock grants to related parties in the amount of $566 and $0, respectively.

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, the Company had cash and cash equivalents held in brokerage accounts of related parties totaling $22,890 and ~~other~~$12,256, respectively.

As of September 30, 2021, and March 31, 2021, the Company had bank commission receivables and receivables from brokerage clients from related parties totaling ~~$334~~$268 and ~~$328,~~$962, respectively. Brokerage and other receivables from related parties result principally from commissions receivable on the brokerage operations of related parties.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, the Company had margin lending receivables with related parties totaling $216,171 and $9,886, respectively.

As of September 30, 2021, and March 31, 2021, the Company had margin lending payables to related parties, totaling $44,327 and $13,810, respectively.

As of September 30, 2021, and March 31, 2021, the Company had accounts payable due to a related party totaling $240 and $339, respectively.

As of September 30, 2021, and March 31, 2021, the Company had financial liability with related parties totaling $1,876 and $1,707, respectively.

As of September 30, 2021, and March 31, 2021, the Company had customer liabilities ~~on brokerage accounts and bank accounts of~~to related parties totaling ~~$3,574~~$359,384 and ~~$2,270,~~$327,610, respectively.

As of ~~December 31, 2017~~September 30, 2021, and March 31, ~~2017,~~2021, the Company had restricted customer cash ondeposited in current and brokerage accounts ~~and cash on bank accounts of~~with related parties ~~totaling $2,185~~in the amounts of $248,371 and ~~$2,270, respectively.~~

~~Note 13 – Stockholder’s Equity~~

$156,878.

During the ~~nine~~six months ended ~~December 31, 2017, Mr. Turlov made capital contributions of $670 to~~September 30, 2021, the Company purchased loans from a related party microfinance organization in the aggregate amount of $19,474 and ~~$7,924~~sold back loans totaling $2,860. As of September 30, 2021, and March 31, 2021, the Company held loans purchased from related parties, net of alloances in the amounts of $13,428 and $0.

In July 2021, to ~~Freedom RU. At~~comply with certain foreign ownership restrictions relating to registered Ukrainian broker-dealers, the ~~time such contributions were made, Mr. Turlov was the Chief Executive Officer, Chairman~~Company sold 23.88% of the ~~board, and majority shareholder of the Company.~~

~~On June 29, 2017, the Company and Mr. Turlov agreed to close the acquisition~~outstanding equity interest of Freedom ~~RU. Pursuant~~UA to Askar Tashtitov, the ~~terms~~Company’s president, for $416. For additional information regarding this transaction, see Note 1 – Description of Business.

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 17– STOCKHOLDERS’ EQUITY

During the ~~Acquisition Agreement, Mr. Turlov received~~six months ended September 30, 2021, non-qualified stock options to purchase 60,000 shares were exercised at a strike price of $1.98 per share for total proceeds of ~~24,465,024 shares of restricted common~~$119. During the six months ended September 30, 2020, no outstanding nonqualified stock ~~in exchange for his 100% interest in Freedom RU.~~

options were exercised.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

On ~~October 6, 2017,~~May 18, 2021, the Company awarded restricted stock grants ~~totaling 3,900,000~~totalling 1,031,500 shares of its common stock to 16 employees and ~~awarded nonqualified stock options to purchase an aggregate~~consultants of ~~360,000 shares~~the Company, including two executive officers of ~~its common stock to two employees.~~the Company. Of the ~~3,900,000~~1,031,500 shares awarded pursuant to the restricted stock grant awards, ~~1,200,000~~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, respectively.

On December 30, 2020, the Company awarded restricted stock grants in the amount of 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 ~~2,700,000~~6,000 shares are subject to three-year vesting conditions. ~~All of the nonqualified stock options are subject to three-year vesting conditions.~~

The Company recorded stock-based compensation expense for restricted stock ~~based~~grants in the amount of $4,561 and $6,722 during the three months and six months ended September 30, 2021, respectively. During the three and six months ended September 30, 2020, the Company recorded stock-based compensation expense for restricted stock grants and stock options in the amount of ~~$792 during nine~~$530 and $1,055, respectively.

NOTE 18 – STOCK BASED COMPENSATION

During the six months ended ~~December 31, 2017.~~

As disclosed in Note 1 on November 10, 2017, FRHC issued 12,758,011 shares of restricted Company common stock in exchange for Mr. Turlov 100% equity interest in Freedom CY and Freedom CY became a wholly owned subsidiary of the Company.

As disclosed in Note 1, on November 1, 2017, the Company entered into a Share Exchange and Acquisition Agreement and agreed to issue 387,700 shares of restricted common stock to BusinessTrain Ltd. to acquire 100% of the outstanding equity interest of Freedom UA.

On December 8, 2017, the Company completed a private placement of 3,681,667 shares of its restricted common stock in exchange for an aggregate offering proceeds of $11,045,001. The shares of common stock were sold to three non-U.S. persons pursuant to the exemption from registration provided in Regulation S promulgated under the Securities Act for offers and sales made outside the United States. Arkady Rakhilkin, a Company director, purchased 348,333 of the shares for $1,044,999.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~Note 14 – Stock based compensation~~

As disclosed in Note 13, on October 6, 2017, the Company issued restricted stock awards totaling 3,900,000 shares of its common stock to 16 employees and awarded nonqualified stock options to purchase an aggregate of 360,000 shares of its common stock at a strike price $1.98 per share to two employees. Shares of restricted stock have the same dividend and voting rights as common stock while options do not. All awards are issued at fair value of the underlying shares at the grant date.

~~During the nine months ended December 31, 2017, stock options covering~~September 30, 2021, a total of 360,000 shares of common stock were granted. No options were granted for the nine months ended December 31, 2016. Total compensation expense related to options granted was $51 for the nine months ended December 31, 2017 and $0 for the nine months ended December 31, 2016. As of December 31, 2017, there was total remaining compensation expense of $596 related to stock options, which will be recorded over a weighted average period of approximately 2.8 years.

~~During the nine months ended December 31, 2017 a total of 3,900,000~~1,031,500 restricted shares were ~~awarded. During the nine months ended December 31, 2016 no restricted shares were awarded.~~awarded to key employees. The compensation expense related to restricted stock ~~awards~~grants was ~~$741~~$4,561 during the ~~nine~~three months ended ~~December 31, 2017~~September 30, 2021, and $0$476 during three months ended September 30, 2020. The compensation expense related to restricted stock grants was $6,722 during the ~~nine~~six months ended ~~December 31, 2016.~~September 30, 2021, and $947 during six months ended September 30, 2020. As of ~~December 31, 2017,~~September 30, 2021, there was ~~$7,447~~$33,459 of total unrecognized compensation cost related to ~~nonvested~~non-vested shares of ~~restricted~~common stock granted. The cost is expected to be recognized over a weighted average period of ~~2.5~~4.62 years.

The Company has determined the fair value of restricted shares awarded during the six months ended September 30, 2021 using the Monte Carlo valuation model based on the following key assumptions:

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

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

The table below summarizes the activity for the Company’s restricted stock outstanding during the six months ended September 30, 2021:

	Shares		Weighted Average Fair Value
Outstanding, at March 31, 2021		15,000	$	775
Granted		1,031,500		39,465
Vested		-		0
Forfeited/cancelled/expired		-		0
Outstanding, at September 30, 2021		1,046,500	$	40,240

During the six months ended September 30, 2021 and 2020, no stock options were awarded. Total compensation expense related to outstanding options was $0 for the three months ended September 30, 2021, and $54 for the three months ended September 30, 2020. During the six months ended September 30, 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~~Company’s employee stock options.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

The following is a summary of stock option activity for the ~~nine~~six months ended ~~December 31, 2017:~~

Shares

Weighted Average Exercise Price

Weighted
Average Remaining Contractual Term
(In Years)

Aggregate
Intrinsic Value

Outstanding, beginning of year
  -
$-
  -
$-
Granted
  360,000
  1.98
  2.76
  1,577
Exercised
  -
  -
  -
  -
Forfeited/cancelled/expired
  -
  -
  -
  -
Outstanding, at December 31, 2017
  360,000
$1.98
  2.76
$1,577
Exercisable at December 31, 2017
  -
$-
  -
$-

September 30, 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
Granted		-			0		-		0
Exercised		(60,000	)		1.98		-		3,742
Forfeited/cancelled/expired		-			0		-		0
Outstanding, at September 30, 2021		-			0		-	$	0
Exercisable, at September 30, 2021		-		$	0		-	$	0

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

NOTE 19 – 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 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 table below ~~summarizes~~presents the ~~activity for the Company's restricted stock outstanding during the nine months ended December 31, 2017:~~

Shares

Weighted Average Fair Value

Outstanding, beginning of year
  -
$-
Granted
  3,900,000
  8,190
Vested
  -
  -
Forfeited/cancelled/expired
  -
  -
Outstanding, at December 31, 2017
  3,900,000
$8,190

~~Note 15 – Acquisition~~

~~Acquisition of Freedom UA:~~

~~On November 1, 2017 (the Acquisition Date), FRHC acquired 100% of the outstanding common shares~~lease related assets and voting interest in Freedom UA in exchange for 387,700 shares of restricted common stock of the Company with the fair market value of $1,485. FRHC acquired Freedom UA to expand its existing securities brokerage business to the Ukrainian securities brokerage market.

~~As of the Acquisition Date, the fair value of Freedom UA was $589. For the two months ended December 31, 2017, net income of Freedom UA totaled $8.~~

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~The total purchase price was allocated as follows:~~

	~~Purchase price allocation~~
	~~As of November 1, 2017~~
~~Assets:~~
~~Cash and cash equivalents~~	$~~354~~
~~Restricted cash~~	78
~~Trading securities~~	6
~~Fixed assets~~	88
~~Brokerage and other receivables~~	~~235~~
~~Other assets~~	4
~~Total assets~~	$~~765~~

~~Liabilities:~~
~~Customer liabilities~~	$~~174~~
~~Trade payables~~	1
~~Other liabilities~~	1
~~Total liabilities~~	~~176~~

~~Net assets acquired~~	$~~589~~

~~Goodwill~~	~~896~~

~~Total purchase price~~	$~~1,485~~

~~The Group believes that cash equivalents, brokerage and other receivables customer~~ liabilities ~~approximate fair value due to relatively short-term maturity of these financial instruments.~~

~~Acquisition of Freedom CY~~

The Company agreed to acquire Freedom CY from Mr. Turlov on November 23, 2015, subject to certain closing conditions, including receipt of all required regulatory approvals to transfer ownership of Freedom CY. As disclosed in Note 1, the final condition to closing was completed on November 1, 2017 and on November 10, 2017, the Company issued 12,758,011 shares of restricted common stock to Mr. Turlov in exchange for his 100% equity interest in Freedom CY and the securities brokerage and financial services business conducted by it in Cyprus, and Freedom CY became a wholly owned subsidiary of the Company.

~~FREEDOM HOLDING CORP.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)~~

~~(All amounts in thousands of United States dollars, unless otherwise stated)~~

~~Note 16 – Reverse Stock Split~~

On September 6, 2017, the Company effected a one-share-for-twenty-five-shares reverse stock split of its common stock. All share and earnings per share information has been retroactively adjusted to reflect the stock split. The effect of this stock splitrecorded on the Company’s ~~earnings per share is~~consolidated balance sheets as ~~follows:~~

Three months ended December 31,

Nine months ended December 31,

2017

2016

2017

2016*

(Recast)

(Recast)

Basic and diluted net income per common share:

From continuing operations
$(13,126)
$(572)
$22,530
$390





Net income per common share - basic and diluted (in US dollars)
$(0.29)
$(0.05)
$0.86
$0.03
Shares used in the calculation of net income per common share:




Basic and diluted
  45,018,578
  11,213,926
  26,341,542
  11,213,926

~~Note 17 – Commitments and Contingent Liabilities~~

~~The table below shows approximate lease commitments and other contingent liabilities~~of September 30, 2021:

	Classification on Balance Sheet	September 30, 2021
Assets
Operating lease assets	Right-of-use assets	$	16,471
Total lease assets		$	16,471

Liabilities
Operating lease liability	Operating lease obligations	$	16,298
Total lease liability		$	16,298

Lease obligations at September 30, 2021, consisted of the ~~Company~~following:

Twelve months ending March 31,
2022 - remaining after September 30	$	4,291
2023		7,618
2024		3,511
2025		2,110
2026		1,327
Thereafter		330
Total payments		19,187
Less: amounts representing interest		(2,889	)
Lease liability, net	$	16,298
Weighted average remaining lease term (in months)		26
Weighted average discount rate		12	%

Lease commitments for short term operating leases as of ~~December 31, 2017:~~

Contractual obligations

Total

Less than 1 year

2-3 years

After 3 years

Office lease(1)
$7,289
$3,826
$2,504
$959
TOTAL
$7,289
$3,826
$2,504
$959

~~(1)~~

~~The Company has number of lease agreements for office spaces in different locations. In general, all agreements~~September 30, 2021, are ~~made for a one year period with extension or termination provisions, except two lease agreements with longer lease terms.~~

approximately $626. The Company’s rent expense for office space was ~~$818~~$653 and ~~$313~~$769 for the three and six months ended ~~December 31, 2017~~September 30, 2021, and ~~2016,~~$70 and $171 for the three and six months ended September 30, 2020, respectively.

NOTE 20 – 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 credit evaluation of the counterparty. The Company’s ~~rent expense for office space was $1,647~~maximum exposure to credit loss is represented by the contractual amount of these commitments.

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FREEDOM HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All amounts in thousands of United States dollars, unless otherwise stated)

Unfunded commitments under lines of credit

Unfunded commitments under lines of credit include commercial, commercial real estate, home equity and ~~$ 917 for~~consumer lines of credit to existing customers. These commitments may mature without being fully funded.

Bank guarantees

Bank guarantees are conditional commitments issued by the ~~nine months ended December 31, 2017 and 2016, respectively.~~

~~Note 18~~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 at September 30, 2021, were as follows:

	As of September 30, 2021
Bank guarantees	$	7,089
Unfunded commitments under lines of credit		6,250
Total	$	13,339

NOTE 21 – ~~Subsequent Events~~

SUBSEQUENT EVENTS

The Company ~~evaluated all material~~has performed an evaluation of subsequent events ~~and transactions that occurred after December 31, 2017~~ through ~~February 14, 2018. Other than as disclosed below, during~~the time of filing this quarterly report on Form 10-Q with the SEC. During this period the Company did not have any additional material recognizable subsequent events.

On February 9, 2018, FRHC formed LLC Freedom Finance (“Freedom UZ”) in Uzbekistan as a wholly owned subsidiary of FRHC. Freedom UZ plans to apply to become a licensed securities broker dealer in Uzbekistan.

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

The following discussion is intended to assist you in understanding our results of operations and our present financial condition. Our unaudited condensed consolidated financial statements and the accompanying notes included in this ~~Quarterly Report~~quarterly report on Form 10-Q contain additional information that should be referred to when reviewing this material and this document should be read in conjunction with our financial statements and the related notes contained elsewhere in this report and in our other filings with the ~~U.S. Securities and Exchange Commission (the “Commission”)~~SEC including our annual report on Form 10-K filed with the ~~Commission~~SEC on June ~~30, 2017.~~

15, 2021.

Special Note About Forward-Looking Information

Certain information included ~~herein contains statements that may be considered forward-looking~~here in and the documents incorporated by reference in this quarterly report on Form 10-Q, if any, contain statements within the meaning of ~~Section 27A~~the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of ~~1933, as amended (the “Securities Act”), and Section 21E~~1995. All statements other than statements of ~~the Securities Exchange Act of 1934, as amended (the “Exchange Act”) such as~~historical fact are statements relating to our anticipated revenues and operating results, estimates used in the preparation of our financial statements, future performance, plans for future expansion, analyses, prospects, strategies, capital spending, sources of liquidity, and financing sources. Forward-looking information involves important risks and uncertainties that could ~~significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking~~be forward-looking. You can recognize these statements ~~made herein. These forward-looking statements can sometimes be recognized by the~~through our use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “will,” “would,” other similar expressions and ~~similar expressions. Such~~their negatives.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, ~~including~~many of which may be beyond our control, that could cause actual results to differ materially from any future results, expressed or implied, in forward looking statements. Such factors include but are not limited to, the ~~meaningful~~following:

	·	general economic and political conditions globally and in the particular markets where we operate;
	·	declines in global financial markets;
	·	the 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;
	·	the inability to meet regulatory capital or liquidity requirements;
	·	increased competition, including downward pressures on commissions and fees;
	·	risks inherent to the electronic brokerage, banking and market making 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 system failures, cyber security threats and other disruptions;
	·	losses caused by non-performance by third parties;

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	·	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;
	·	the creditworthiness of our trading counterparties, and banking and margin customers;
	·	litigation and regulatory liability;
	·	unforeseen or catastrophic events, including the emergence of pandemics, terrorist attacks, extreme weather events or other natural disasters, military conflict and political discord; and
	·	other factors discussed in this report, as well as in our annual report on Form 10-K filed with the SEC on June 15, 2021.

Moreover, we operate in a very competitive and ~~important risks~~rapidly changing environment. New risk factors emerge from time to time and ~~uncertainties discussed~~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 ~~this report. These~~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. These statements include, among other things:~~

●

~~the ability of our current management to effectively execute our business strategy;~~

●

~~our capability to compete with financial services companies and banks that have greater experience, financial resources and competitive advantages in the markets where we operate;~~

●

~~Timur Turlov owns the controlling interest in our common stock and therefore has the ability to direct our business with his reasonable business judgment without approval of other shareholders;~~

●

the capacity of our subsidiaries to comply with the extensive, pervasive and ever evolving regulatory and oversight requirements in the various jurisdictions where they operate, the failure of which could prevent us from conducting our business;

●

~~volatility in the domestic and international capital markets and general economic conditions;~~

●

~~our ability to attract and retain key~~ management and ~~other properly licensed and experienced personnel to satisfy applicable regulatory standards and operate our business profitably; and~~

●

apply only as of the ~~ability~~date of ~~our broker dealer subsidiaries to properly manage~~this report or the ~~market and customer risks that arise~~respective dates of the documents from ~~our proprietary trading.~~

Although we have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause the forward-looking statements not to be accurate as described in this report. These forward-looking statements are only predictions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially.

You should not rely on forward-looking statements as predictions of future events. While we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance and achievements. Moreover, neitherwhich they incorporate by reference. Neither we nor any other person assumes any responsibility for the accuracy ~~and~~or completeness of ~~these~~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 ~~undertakes any obligation to revise these forward-looking statements to reflect events~~otherwise.

Overview

Freedom Holding Corp. is a holding company. Our operating subsidiaries provide financial services including full-service retail securities brokerage, banking services, investment education, securities trading, investment banking, retail banking, underwriting services and ~~circumstances after the date of this report or to reflect the occurrence of unanticipated events.~~

~~The following should be read~~market making activities in ~~conjunction~~Eurasia. We are headquartered in Almaty, Kazakhstan, with ~~our financial statements~~supporting administrative offices in Russia, Cyprus and the ~~related notes contained elsewhere in this report~~United States of America.

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Our subsidiaries are participants on the Kazakhstan Stock Exchange (KASE), Astana Stock Exchange (AIX), Moscow Exchange (MOEX), Saint-Petersburg Exchange (SPBX), the Ukrainian Exchange (UX), the Republican Stock Exchange of Tashkent (UZSE), the Uzbek Republican Currency Exchange (UZCE) and inare members of the New York Stock Exchange (NYSE) and Nasdaq Stock Exchange (Nasdaq). Our Cyprus office provides our ~~other filings~~clients with operations support and access to the ~~Commission.~~

~~Overview~~

~~We are pursuing a strategy to become a regional leader in~~investment opportunities, relative stability, and integrity of the ~~financial services industry, serving individuals desiring enhanced market~~U.S., European and Asian securities markets, which under the regulatory regimes of many jurisdictions where we operate, provide only limited or no direct investor access to international ~~capital markets using state~~securities markets.

Our business is directed toward providing an array of the art technology platforms for their brokerage and banking needs. Under the existing regulatory regimes in Russia, Kazakhstan and Ukraine, Freedom RU, Freedom KZ and Freedom UA are limited in their ability to grant their customers direct access to the U.S. securities markets. Currently, many of the customers of Freedom RU, Freedom KZ and Freedom UA access the U.S. securities markets through Freedom CY.

~~Our customers are attracted~~financial services to our ~~strategy~~target retail audience which is individuals, businesses and ~~the prospect of market access without trading through omnibus clearing accounts that are disfavored by regulators and U.S.~~ financial institutions, ~~and diversifying~~including other broker-dealers, seeking to diversify their investment portfolios to ~~address~~manage economic risk ~~management~~ associated with political, regulatory, currency, banking, and national ~~economic risks~~uncertainties. Clients are provided online tools and ~~uncertainties.~~

~~Our business strategy includes proprietary~~retail locations to establish accounts and conduct securities trading ~~activities for~~on transaction-based pricing. We market to our ~~own accounts in targeted market segments and~~customer demographic through a ~~limited~~ number of ~~issuers in those markets.~~

~~We carry out~~channels, including telemarketing, training seminars and investment conferences, print and online advertising, social media, our ~~business activities through our wholly-owned subsidiaries Freedom RU, Freedom CY~~mobile app and ~~Freedom UA,~~search engine optimization.

All dollar amounts reflected under the headings “Executive Summary,” “Results of Operations,” “Liquidity and the wholly owned subsidiaries of Freedom RU, including Freedom KZ, Freedom 24 and FFIN Bank. We also own FFIN. On November 1, 2017, we entered into an agreement to acquire Freedom UA, and in January, 2018, we received final regulatory approval from the National Securities and Stock Market Commission of Ukraine (“NSSMC”) of that acquisition.

~~Freedom RU~~

Freedom RU provides financial services in the capital markets in Russia, including maintaining customer accounts, managing investment portfolios, providing financial consulting and engaging in market making activities under its open-ended licenses for brokerage, dealer, depository operations and asset management activities. Freedom RU is a professional participant of the Moscow and Saint Petersburg Stock Exchanges and 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 RU has 20 branch offices in various cities across Russia.

~~Freedom KZ~~

Freedom KZ is licensed to provide financial services in the capital markets of Kazakhstan, including the right to maintain customer accounts, manage investment portfolios, provide financial consulting, provide underwriting services and engage in market making activities. Freedom KZ has been a professional participant of the Kazakhstan Stock Exchange since 2006, which enables it to manage investment portfolios for its clients. Freedom KZ has 14 branch offices throughout Kazakhstan and one branch office in Kyrgyzstan.

~~Freedom 24~~

Freedom 24 built and manages the first online securities marketplace for retail customers in Russia. Freedom 24 attracts new brokerage clients to Freedom RU through a proprietary platform and internet portal for individual investors in Russia to establish a brokerage account and buy securities. We consider Freedom 24 to be one of the most dynamic financial technology projects currently available to Russian investors. Freedom 24 is also based in Moscow, Russia.

~~FFIN Bank~~

FFIN Bank is licensed to engage in banking operations in rubles and foreign currencies for individuals and legal entities. FFIN Bank provides banking services, including money transfers, foreign currency exchange operations, interbank lending, deposits, settlements and escrow services. FFIN Bank is also licensed to provide broker-dealer, asset management and custodial services. Currently, FFIN Bank’s operation is principally focused on servicing our brokerage customers. FFIN Bank is an authorized Visa/MasterCard issuer, and a participant in the Mir payment system in Russia. FFIN Bank has introduced internet banking and mobile applications for Android/iOS for companies and individuals. In addition FFIN Bank has completed development of several investment and structured banking products (insured deposits with option feature and currency risk hedging products). FFIN Bank plans to expand its product offerings and to extend its geographical footprint to complement the Freedom RU branch locations. FFIN Bank’s has five offices. We plan to open up to 25 new branch locations in Russia in the next 15 months.

~~Freedom CY~~

Freedom CY is licensed in Cyprus to receive, transmit and execute customer orders, establish custodial accounts, engage in foreign currency exchange services and margin lending, and trade its own investment portfolio. Freedom CY provides transaction handling and intermediary services to Freedom RU, Freedom KZ and Freedom UA through which our customers access international securities markets. Freedom CY has one office location.

~~Freedom UA~~

~~Freedom UA is licensed to provide securities brokerage and depository services in Ukraine. Freedom UA has a single office location.~~

~~FFIN~~

FFIN was established to create or acquire a registered broker-dealer in the United States. However, in 2017 we decided to delay application for broker-dealer registration in the United States until such time as we complete integration of our foreign operating subsidiaries.

~~Freedom UZ~~

In February 2018 formed LLC Freedom Finance (“Freedom UZ”) in Uzbekistan as a wholly owned subsidiary of FRHC. Freedom UZ plans to apply to become a licensed securities broker dealer in Uzbekistan.

We currently have approximately 31,400 brokerage customer accounts in Kazakhstan and 7,900 brokerage customer accounts in Russia. FFIN Bank has approximately 1,500 customer accounts, with total deposits of approximately $7.2 million. Our brokerage customers range from retail traders that frequently execute large transactions to relatively small, inactive accounts that hold securities positions long-term. Our brokerage customers principally invest in exchange-traded securities. The customers of FFIN Bank are generally individuals.

~~Throughout this report, unless otherwise indicated by the context, references herein to “we,” our,~~Capital Resources,” and ~~“us” means Freedom Holding Corp., a Nevada corporation, and its subsidiaries and predecessors. Throughout~~“Cash Flows” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~all amounts~~(“MD&A”) are ~~stated~~presented in thousands of U.S. dollars unless ~~otherwise indicated.~~

the context indicates otherwise.

Executive Summary

Customer Base

We service more than 340,000 client accounts. As of September 30, 2021, more than 60% of those client accounts 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 September 30, 2021, we had approximately 100,000 active accounts.

In addition to organic customer acquisition, we have accelerated our growth through several strategic acquisitions which has enabled us to expand our market reach, increase our client base and provide our clientele the convenience of both a state-of-the-art proprietary electronic trading platform, Tradernet, and 103 retail brokerage and financial services offices located across Kazakhstan (32), Kyrgyzstan (1), Russia (43), Uzbekistan (8), Ukraine (14), Cyprus (1), Germany (2), Azerbaijan (1), UK(1) and USA (1) that provide an array of financial services, and investment consulting and education. In Russia, 30 of our brokerage and financial services offices also provide banking services to firm customers.

Significant events

During the quarter ended September 30, 2021, we exchanged approximately 11,500 shares of stock in the SPBX we held in our proprietary trading account for units in the closed-end unit investment combined fund “SPB fund” (the “SPBX ETF”). In September 2021 we sold all our SPBX ETF units to approximately 15,000 investors for total consideration of $155,673.

S&P Rating

On August 2, 2021, S&P Global Ratings (“S&P”) assigned its “B/Stable/B” issuer credit rating to each of Freedom EU and Freedom Global and on October 29, 2021, S&P upgraded to “B/Stable/B” from “B-/Stable/B” its issuer credit rating to Freedom Bank KZ and upgraded its Kazakhstan national scale rating of Freedom Bank KZ to “kzBB+” from “kzBB”.

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New Banking Products

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 September 30, 2021, 312 digital mortgage loans have been approved and issued in the aggregate amount of $11,079. Approval of all loans is carried out by the Freedom Bank KZ. Since the launch of the digital mortgage product, nearly 12,000 online assessments have been submitted through the Freedom Bank KZ’s digital mortgage portal.

Invest card

Freedom Bank KZ continues to develop its Invest card and has issued more than 3,000 limited cards for testing to select customer. 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 the outstanding balance on the card.

Impact of COVID-19

The COVID-19 pandemic has affected the global financial markets. The pandemic has resulted in unprecedented global market conditions that has led to significant growth in our 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 workforce to work remotely, with only essential employees working in the office. Where dictated by local health mandates, or as seems prudent to local management, this practice continues. There have been no material disruptions to our business or processes to date as a result of these changes.

While the overall impact of COVID-19 was largely positive for our business during the quarters ended September 30, 2021 and 2020, its future impacts on our business, operational and financial performance is uncertain. Developments such as the duration and severity of future outbreaks of the same or different strains of the disease, such as the delta variant, the effectiveness of vaccines or new or additional measures implemented by governments, might impact our customers and employees, the financial markets, the global economy and the economies of the countries in which we operate. Because of these uncertainties, we cannot determine the future impacts of the pandemic on our business.

Financial Results

During the three months ended September 30, 2021, we realized net income of approximately $204.5 million and basic and diluted earnings per share of $3.44. During the six months ended September 30, 2021, we realized net income of approximately $256.2 million and basic and diluted earnings per share of $4.33. During the three months ended September 30, 2020, we realized net income of approximately $23.6 million and basic and diluted earnings per share of $0.40. During the six months ended September 30, 2020, we realized net income of approximately $47.8 million and basic and diluted earnings per share of $0.82.

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Results of Operations

Three months ended ~~December 31, 2017,~~September 30, 2021, compared to the three months ended ~~December 31, 2016~~

September 30, 2020

The following second fiscal quarter to second fiscal quarter comparison of our financial results is not necessarily indicative of future results.

	Three months ended						Three months ended
	September 30, 2021						September 30, 2020
	Amount			%*			Amount			%*
Revenues:
Fee and commission income	$	116,534			37	%	$	54,277			78	%
Net gain on trading securities		175,252			56	%		8,302			12	%
Interest income		20,063			6	%		4,948			7	%
Net gain on foreign exchange operations		1,622			1	%		3,020			4	%
Net loss on derivative		(656	)		0	%		(837	)	(1		%)
Total revenue, net		312,815			100	%		69,710			100	%

Expenses:

Fee and commission expense		22,968			7	%		20,001			29	%
Interest expense		16,185			5	%		4,699			7	%
Operating expense		36,569			12	%		15,867			23	%
Provision for impairment losses		366			0	%		1,044			1	%
Other expense/(income), net		653			0	%		(68	)		0	%
Total expense		76,741			24	%		41,563			60	%

Net income before income taxes		236,074			76	%		28,147			40	%
Income tax expense		(31,562	)	(10		%)		(4,584	)	(7		%)
Net income	$	204,512			66	%	$	23,563			34	%

Less: Net loss attributable to non-controlling interest in subsidiary		(20	)		0	%		(127	)		0	%
Net income attributable to common shareholders	$	204,532			66	%	$	23,690			34	%

Other comprehensive income
Foreign currency translation adjustments, net of tax effect		930			0	%		(10,919	)	(16		%)
Comprehensive income before non-controlling interests		205,442			66	%		12,644			18	%
Less: Comprehensive loss attributable to non-controlling interest in subsidiary		(20	)		0	%		(127	)		0	%
Comprehensive income attributable to common shareholders	$	205,462			66	%	$	12,771			18	%

^*Reflects percentage of total revenues, net.

Revenue

We derive revenue primarily from fee and commission income earned from our retail brokerage and banking clients and from investment banking services, interest income and proprietary trading activities.

	Three months ended						Three months ended
	September 30, 2021						September 30, 2020						Change
	Amount			%			Amount			%			Amount			%
Fee and commission income	$	116,534			37	%	$	54,277			78	%	$	62,257			115	%
Net gain on trading securities		175,252			56	%		8,302			12	%		166,950		2,011		%
Interest income		20,063			6	%		4,948			7	%		15,115			305	%
Net gain on foreign exchange operations		1,622			1	%		3,020			4	%		(1,398	)	(46		%)
Net loss on derivatives		(656	)		0	%		(837	)	(1		%)		181			22	%
Total revenue, net	$	312,815			100	%	$	69,710			100	%	$	243,105			349	%

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During the three months ~~December 31, 2017 and 2016,~~ended September 30, 2021, we realized total revenue, net of ~~($2,159) and $2,866, respectively. Revenue during these periods was primarily realized from~~$312,815, a 349% increase compared to three months ended September 30, 2020. As discussed in more detail below under “Net Gain on Trading Securities” $175,252 of total revenue, net ~~gain/(loss) on trading securities, interest income, fee and commission income and net gain on foreign exchange operations. Revenue~~ during the three months ended ~~December 31, 2017,~~September 30, 2021, was ~~significantly lower than during~~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 September 30, 2021. We consider the sale of 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. Fee and commission income consisted principally of broker fees from customer trading, related banking services, underwriting and market making and consulting services. During the three months ended ~~December 31, 2016, due~~September 30, 2021, fee and commission income increased by $62,257, a 115% increase over the three months ended September 30, 2020. This increase was primarily attributable to a ~~realizing a net loss on trading securities during the period ended December 31, 2017, compared~~$57,318 increase in fees and commission from brokerage services and related banking services.

Growth in fees and commissions from brokerage services and related banking services was primarily attributable to a ~~net~~growth in client accounts through acquisitions and organic growth, increased client brokerage and banking activity, expansion of our retail financial advisers and increases in the volume of analysts’ reports made available to our customer base.

Net gain on trading ~~securities during the period ended December 31, 2016.~~

~~Net gain/(loss) on trading securities~~.securities. Net gain ~~or loss~~ on trading securities reflects the gains and losses from trading activities in our proprietary trading ~~accounts.~~account. Net gains or losses are comprised of realized and unrealized gains and losses. Gains or losses are realized when we close a position in a security and realize a gain or a loss on that position. Accounting principles generally accepted in the United States (“U.S. ~~GAAP requires~~GAAP”) require that we reflect in our financial statements unrealized gains and losses on all our securities trading positions that remain open as of the end of each period. ~~Unrealized gains or losses reflect the value of our open securities positions at the end of the periods reported.~~ Fluctuations in unrealized gains or losses from one period to another may 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 in a period. ~~Fluctuations~~Changes in unrealized gains and losses from period to period may also occur as a result of factors beyond our control, such as fluctuations in the market prices of the open securities positions we hold. This may adversely affect the ultimate value we realize from these investments. Unrealized gains or losses in a particular period may or may not be indicative of the gain or loss we will realize on a securities position when the position is closed.

~~During the three months ended December 31, 2017,~~ As a result, we ~~recognized a net loss~~may realize significant swings in gains and losses realized on our trading securities year-over-year and quarter-to-quarter. You should not assume that a gain or loss in any particular period is indicative of ~~$8,318, which included $205~~a trend or of ~~realized~~the gain or loss we may ultimately realize when we close a position.

See the following table for information regarding our net ~~loss~~gains and $8,113 of unrealized net loss compared to a net gain of $1,164, which included $1,493 of net realized loss and $2,655 of unrealized net gain on trading securities for three months ended December 31, 2016. By comparison,losses during the three months ended September 30, ~~2017, we recognized a net gain on trading securities of $32,134, which included $5,028 of realized net gain~~2021 and ~~$27,106 of unrealized net gain. The primary contributing factor to this change~~2020:

	Realized Net Gain		Unrealized Net Gain		Net Gain
Quarter ended September 30, 2021	$	143,724	$	31,528	$	175,252
Quarter ended September 30, 2020	$	5,883	$	2,419	$	8,302

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As described above, during the ~~three months ended December 31, 2017, compared to the three months~~quarter ended September 30, ~~2017, was a decrease~~2021, we exchanged approximately 11,500 shares of stock in the ~~share price of JSC Kcell – Kazakhstan’s largest cellular service provider –~~SPBX we held in our proprietary trading account ~~which contributed $9,870~~for units in the SPBX ETF. The main contributing factors to ~~net loss on trading securities during~~ the ~~three months ended December 31, 2017. The primary contributing factor to our $1,164~~increase in net gain on trading securities during the three months ended ~~December 31, 2016 was share price~~September 30, 2021, were the sale of those SPBX ETF units and an increase in unrealized net gain resulting from the revaluation of ~~JSC KEGOC – Kazakhstan’s largest electricity grid company~~securities held in our proprietary trading account at September 30, 2021. We do not consider the significant increases in realized and ~~KazTransOil – Kazakhstan’s largest oil pipeline company – which contributed $1,905 and $1,623, respectively, to~~unrealized net gain on trading securities ~~for the three months ended December 31, 2016.~~

~~Included in the~~to be indicative of a trend toward higher net ~~gain on trading securities is $1,715 related to unrealized~~ gains on trading securities ~~recorded~~ in ~~FRHC accounting records. FRHC has a brokerage account and started proprietary trading as part of overall group’s liquidity management strategy.~~

the future.

Interest ~~income~~.income. During the three months ended ~~December 31, 2017~~September 30, 2021, and ~~2016,~~September 30, 2020, we ~~recorded~~recognized a $15,115, or 305% increase in interest income. We earned interest income from several ~~sources: interest income on~~sources including trading securities, ~~and interest income on cash and cash equivalents,~~ reverse repurchase transactions, and ~~amounts due from banks.~~ loans to customers.

Interest income on trading securities consisted of interest earned from investments in debt securities and dividends earned on equity securities held in our proprietary trading ~~accounts.~~

~~During~~account. We recognized a $14,017, or 316% increase in interest income from trading securities during the three months ended ~~December 31, 2017,~~September 30, 2021, because we increased (i) the total size of our trading portfolio and (ii) the percentage of our investments in bonds.

We realized $706, or 538% increase in interest income from loans to customers as a result of ~~$2,853 compared to $724 for the three months ended December 31, 2016. This increase was primarily due to an~~new loans issued by Freedom Bank KZ.

We also recognized a $414, or 150% increase in interest income from reverse repurchase transactions ~~in the amount of $611~~ as a result of ~~our~~an increased volume of ~~reverse repurchase~~such transactions ~~and an increase in interest income on trading securities of $1,348.~~

during the three months ended September 30, 2021.

Net ~~gain/(loss) on foreign exchange operations~~~~. Net gain or~~ loss on foreign exchange operations ~~result from the revaluation of~~. Under U.S. GAAP, we are required to revalue assets and liabilities denominated in foreign currencies ~~other than Russian rubles. Gains and~~into our reporting currency, the U.S. dollar, which can result in gains or losses ~~are realized based~~ on ~~the fluctuation in value between the currencies being revalued.~~foreign exchange operations. During the three months ended ~~December 31, 2017~~September 30, 2021, we realized a net gain on foreign exchange operations of ~~$424~~$1,622 compared to ~~$138~~a net ~~loss on foreign exchange operations. This increase is attributable mainly to a $172~~ gain inof $3,020 during the ~~revaluation of JSC Kcell securities denominated in Kazakhstani tenge to Russian rubles due to a rise in~~three months ended September 30, 2020.

During the three months ended September 30, 2021, the value of the Russian ruble appreciated by 1% and Kazakhstani tenge depreciated by 1% against the ~~Kazakhstani tenge~~U.S. dollar, respectively. We realized a net gain on foreign exchange operations affected by the purchase and sale of foreign currency of $1,686 as a result of higher volume of currency exchange transactions.

Expense

	Three months ended					Three months ended
	September 30, 2021					September 30, 2020						Change
	Amount		%*			Amount			%*			Amount			%*

Fee and commission expense		22,968		30	%		20,001			48	%		2,947			15	%
Interest expense		16,185		21	%		4,699			11	%		11,486			244	%
Operating expense		36,569		48	%		15,867			38	%		20,702			130	%
Provision for impairment losses		366		0	%		1,044			3	%		(678	)	(65		%)
Other expense/(income), net		653		1	%		(68	)		0	%		721			1,060	%
Total expense	$	76,741		100	%	$	41,563			100	%	$	35,178			85	%

^*Reflects percentage of total expense, net.

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During the three months ended September 30, 2021, we incurred total expenses of $76,741, an 85% increase compared to three months ended September 30, 2020. Expenses increased with the increase of interest expense and 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 $2,947, or 15%, during the three months ended ~~December 31, 2017. Another reason that contributed~~September 30, 2021. This included increases in brokerage commissions to ~~the net gain on foreign operations was $209 gain on revaluation~~our prime brokers of ~~corporate bonds indexed to United States dollar issued by Freedom KZ due to appreciation on Kazakhstani tenge against United States dollar.~~

~~Fee~~$1,571, commissions paid for bank services of $946, and exchange and clearing services of $521.

The increases in fee and commission ~~income~~. expense were the result of both growth in our customer base and increased transaction volume from our customers. 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 three months ended ~~December 31, 2017, fee~~September 30, 2021, we incurred a 244% increase in interest expense. The increased expense is primarily attributable to an $8,691 increase in volume of short-term financing through securities repurchase agreements, and ~~commission income~~a $2,704 increase in interest on customer deposits.

We increased ~~$883~~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 customer deposits. The increase was partially offset by a decrease in interest expense on debt securities issued totaling $135.

Operating expenses. Operating expenses during the three months ended September 30, 2021, totaled $36,569, a $20,702 increase compared to the three months ended ~~December 31, 2016.~~September 30, 2020. This increase ~~resulted principally from increased commissions~~was primarily attributable to a $7,953 increase in payroll and fees for bank and brokerage services and increased market making services. During the three months ended December 31, 2017, fees and commissions associated with bank services increased by $464. This increase primarily resulted from FFIN Bank commencing active operations at the beginningbonus expense as a result expansion of our ~~current fiscal year. In contrast,~~workforce through acquisition and hiring, a $4,031 increase in stock compensation expense resulting from issuing restricted stock grants to key employees in May 2021, a $2,497 increase in advertising expenses, and a $1,352 increase in professional services as a result of expansion of our business.

Income tax expense

We recognized net income before income tax of $236,074 and $28,147 during the three months ended ~~December 31, 2016, FFIN Bank was in the process of moving, opening new offices, arranging its capital requirements~~September 30, 2021, and preparing to commence active operations. Fees for bank services consisted primarily of wire transfer fees, commissions for payment processing and commissions for currency exchange operations. During the three months ended December 31, 2017 comparing to three months ended December 31, 2016, we experienced increases in commissions and fees for brokerage services of $439 and decreases in market-making services of $38. Brokerage service commissions and fees are realized from the provision of brokerage services to our customers. The increase resulted from both the growth of our customer base and increases in our client transaction volume.

~~Net gain on trading of futures~~. During the three months ended December 31, 2017, Freedom KZ purchased foreign currency futures contracts to sell $25,000 at the weighted average exchange rate of 345.63 KZT/USD in December 2017 and March 2018. As a result of the increase in the KZT/USD exchangeSeptember 30, 2020, respectively. Our effective tax rate during the three months ended ~~December 31, 2017, we recognized a $155 gain on the trading of futures during the three month ended December 31, 2017. The Company uses foreign currency futures contracts~~September 30, 2021, decreased to minimize the risk caused by foreign currency fluctuation on its foreign currency receivables and payables by purchasing futures with financial institutions. The futures contracts are traded on the Kazakhstan Stock Exchange and represent commitments to purchase or sell a particular foreign currency at a future date and at a specific price.

~~Expenses~~

During the three months ended December 31, 2017 and 2016, we incurred total expenses of $11,370 and $3,851, respectively. Expenses during the December 31, 2017 period was higher primarily as a result of higher operating expenses, fee and commission expense and interest expense as we continued to expand and grow our business.

~~Operating expenses~~. During the three months ended December 31, 2017, operating expenses totaled $5,983 compared to operating expenses of $2,461 for the three months ended December 31, 2016. The increase was primarily attributable to higher general and administrative expenses related to growth in our operations, including a $792 increase in stock compensation expense, $653 increase in payroll expenses, a $451 increase in rent expense, a $176 increase in professional services fees, a $168 increase in office repair expenses, $106 increase in advertising expenses, $134 increase in business trip expenses, $303 increase in office equipment expenses and a $291 increase in expenses for communication services, trainings and conferences, charity, IT services fees, insurance fees and expenses for taxes, other than income tax.

~~Fee and commission expenses.During the three months ended December 31, 2017, we recognized fee and commission expense of $795, compared to fee and commission expense of $129~~13.4%, from 16.3% during the three months ended ~~December 31, 2016. The increase was mainly associated~~September 30, 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.

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Noncontrolling interest

As of September 30, 2021, we owned a 9% interest in Freedom UA, the remaining 91% interest is owned by Askar Tashtitov, our president. In July 2021, as a result of further restrictions in Ukraine on foreign ownership of Ukrainian broker-dealers, we transferred an additional 23.88% of our interest in Freedom UA to Mr. Tashtitov. Through a series of agreements entered into with ~~an increase~~Freedom UA and Mr. Tashtitov in ~~custody bank services fee~~February 2019, we are obligated to guarantee the performance of ~~$462~~all Freedom UA obligations, provide Freedom UA adequate funding to cover its operating losses and ~~increased commission fees paid~~net capital requirements, provide management competence and operational support and ongoing access to ~~the Central Depository, stock exchanges~~our significant assets, technology resources and ~~brokerage fees to other brokers~~expertise in exchange for 90% of ~~$60. The higher custody bank service fees resulted from~~all net profits of Freedom UA after tax, we account for Freedom UA as a ~~significant increase~~variable interest entity. We reflect our ownership of Freedom UA as a noncontrolling interest in our ~~position~~consolidated statements of financial condition, consolidated statements of comprehensive income, consolidated statements of changes in ~~the shares~~equity and consolidated statements of ~~Kcell which~~cash flows. As a result, we ~~purchased on international stock markets.~~

~~Interest expense.During the~~recognized net loss attributable to noncontrolling interest of $20 during three months ended December 31, 2017, we recognized total interest expense of $4,487, compared to total interest expense of $1,120 during the three months ended December 31, 2016. The increase in interest expense was primarily attributable to higher amounts of short-term financing attracted by means of securities repurchase agreements, totaling $2,942, and the issuance of debt securities by Freedom KZ and related interest expense totaling $194.

~~Income tax (expense)/benefit~~

We recognized a net loss before income tax of $13,529 during the three months ended December 31, 2017 and $985 during the 2016 period, resulting in an income tax benefit for the three months ended December 31, 2017 of $403 and a benefit from income tax of $413 during the three months ended December 31, 2016.

~~Net income before non-controlling interest~~

~~For the reasons discussed above, during the three months ended December 31, 2017, we realized a net loss of $13,126~~September 30, 2021, compared to a net loss ~~of $572 for the three months ended December 31, 2016.~~

~~Comprehensive income~~ attributable to ~~common shareholders~~

noncontrolling interest of $127 during September 30, 2020.

Comprehensive income

The functional currencies of our operating subsidiaries are the Russian ruble, ~~Euro,~~Kazakhstani tenge, European euro, U.S. dollar, Ukrainian hryvnia, Uzbekistani som, Kyrgyzstani som, UK pound sterling and ~~the Kazakhstani tenge.~~Azerbaijani manat. Our reporting currency is the USU.S. dollar. ~~As a result~~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 depreciation of ~~fluctuations in~~ the value of Russian ruble by nearly 1% and ~~the~~appreciation on Kazakhstani tenge by nearly 1%, respectively against the USU.S. dollar during the periods covered in this report, we realized a foreign currency translation gain of ~~$1,529~~$930 during the three months ended ~~December 31, 2017,~~September 30, 2021, compared to a foreign currency translation ~~gain~~loss of ~~$453~~$10,919 during the three months ended December 31, 2016. As a results, during the three-month period ended December 31, 2017, we realized comprehensive loss attributable to common shareholders of $11,597, compared to a comprehensive loss attributable to common shareholders of $395 during the threeSeptember 30, 2020.

Six months ended ~~December 31, 2016.~~

~~Nine months ended December 31, 2017,~~September 30, 2021, compared to the ~~nine~~six months ended ~~December 31, 2016~~

September 30, 2020

The following second fiscal quarter to second fiscal quarter comparison of our financial results is not necessarily indicative of future results.

	Six months ended						Six months ended
	September 30, 2021						September 30, 2020
	Amount			%*			Amount			%*
Revenues:
Fee and commission income	$	213,940			49	%	$	97,616			77	%
Net gain on trading securities		185,152			42	%		17,386			14	%
Interest income		38,140			9	%		9,197			7	%
Net gain on foreign exchange operations		434			0	%		2,772			2	%
Net loss on derivative		(715	)		0	%		(846	)		0	%
Total revenue, net	$	436,951			100	%	$	126,125			100	%

Expenses:
Fee and commission expense		44,832			10	%		29,790			24	%
Interest expense		30,457			7	%		8,443			7	%
Operating expense		66,888			15	%		30,293			24	%
Provision for impairment losses		659			0	%		666			1	%
Other expense/(income), net		664			0	%		(95	)		0	%
Total expense		143,500			33	%		69,097			55	%

Net income before income taxes		293,451			67	%		57,028			45	%
Income tax expense		(37,231	)	(8		%)		(9,189	)	(7		%)
Net income		256,220		(59		%)		47,839			38	%

Less: Net loss attributable to non-controlling interest in subsidiary		(72	)		0	%		296			0	%
Net income attributable to common shareholders		256,292			59	%		47,543			38	%

Other comprehensive income
Reclassification adjustment relating to available-for-sale securities disposed of in the period, net of tax effect		-			0	%		71			0	%
Foreign currency translation adjustments, net of tax effect		4,230			1	%		(2,286	)	(2		%)
Comprehensive income before non-controlling interests		260,450			60	%		45,624			36	%
Less: Comprehensive loss attributable to non-controlling interest in subsidiary		(72	)		0	%		296			0	%
Comprehensive income attributable to common shareholders		260,522			60	%		45,328			36	%

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Revenue

	Six months ended						Six months ended
	September 30, 2021						September 30, 2020						Change
	Amount			%			Amount			%			Amount			%
Fee and commission income	$	213,940			49	%	$	97,616			77	%	$	116,324			119	%
Net gain on trading securities		185,152			42	%		17,386			14	%		167,766			965	%
Interest income		38,140			9	%		9,197			7	%		28,943			315	%
Net gain on foreign exchange operations		434			0	%		2,772			2	%		(2,338	)	(84		%)
Net loss on derivatives		(715	)		0	%		(846	)		0	%		131			15	%
Total revenue, net	$	436,951			100	%	$	126,125			100	%	$	310,826			246	%

During the ~~nine~~six months ended ~~December 31, 2017 and 2016,~~September 30, 2021, we realized total net revenue of ~~$46,331~~$436,951, a 246% increase compared to six months ended September 30, 2020. As discussed in more detail below under “Net Gain on Trading Securities” $185,152 of total revenue, net during the six months ended September 30, 2021, was realized from the sale of certain securities held in our proprietary trading portfolio and ~~$9,079, respectively. Revenue during these periods~~from revaluation of securities we continued to hold in our portfolio at September 30, 2021. We consider the sale of 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.Fee and commission income consisted principally of broker fees from customer trading, related banking services, underwriting and market making and consulting services. During the six months ended September 30, 2021, fee and commission income increased by $116,324, a 119% increase over the six months ended September 30, 2020. This increase was primarily ~~realized~~attributable to a $107,986 increase in fees and commission from ~~net~~brokerage services and related banking services.

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Growth in fees and commissions from brokerage services and related banking services was primarily attributable to a growth in client accounts through acquisitions and expansion of our retail financial advisers and increases in the volume of analysis' reports made available to our customer base.

Net gain on trading securities. Net gain on trading securities ~~interest income, fee~~reflects the gains and ~~commission income, derivative~~losses from trading activities in our proprietary trading account. Net gains or losses are comprised of realized and unrealized gains and losses. Gains or losses are realized when we close a position in a security and realize a gain or a loss on that position. U.S. GAAP require that we reflect in our financial statements unrealized gains and losses on all our securities trading positions that remain open as of the end of each period. Fluctuations in unrealized gains or losses from one period to another may 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 in a period. Changes in unrealized gains and losses from period to period may also occur as a result of factors beyond our control, such as fluctuations in the market prices of the open securities positions we hold. This may adversely affect the ultimate value we realize from these investments. Unrealized gains or losses in a particular period may or may not be indicative of the gain or loss we will realize on a securities position when the position is closed. As a result, we may realize significant swings in gains and losses realized on our trading securities year-over-year and quarter-to-quarter. You should not assume that a gain or loss in any particular period is indicative of a trend or of the gain or loss we may ultimately realize when we close a position.

See the following table for information regarding our net ~~gain on foreign exchange operations. Revenue~~gains and losses during the ~~nine~~six months ended ~~December 31, 2017, was significantly higher than during~~September 30, 2021 and 2020:

Realized

Net Gain

Unrealized Net

Gain

Net Gain

Quarter ended September 30, 2021

149,536

35,616

185,152

Quarter ended September 30, 2020

17,123

263

17,386

The primary contributing factors to the ~~nine months ended December 31, 2016, due to a significant~~ increase in net gain on trading ~~securities.~~

~~Net gain on trading~~ securities~~. During~~ during the ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2021, was the sale of SPBX ETF units we ~~recognized~~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 September 30, 2021. As noted above, we do not consider the significant increase in realized net gain on trading securities resulting from the sale of ~~$30,825, which included $11,263 of realized net gain~~SPBX ETF units and ~~$19,562 of~~the increase in unrealized net gain ~~compared~~from revaluation of securities held in our portfolio at September 30, 2021, to be indicative of a trend toward higher net ~~gain of $4,583, which included $948 of realized net gain and $3,635 of unrealized net gain,~~gains on trading securities ~~for nine~~in the future.

Interest income. During the six months ended ~~December 31, 2016. There were two main factors that contributed~~September 30, 2021, and September 30, 2020, we recognized a $28,943, or 315% increase in interest income. We earned interest income from trading securities, reverse repurchase transactions and loans to ~~this increase. The first was the share price increases of JSC Kcell and JSC KEGOC which contributed $18,355 and $1,181, respectively, to net gain~~customers.

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Interest income on trading ~~securities. The second factor was $8,373 income realized during the nine months ended December 31, 2017,~~securities consists of interest earned from ~~selling shares of Astana Bank~~investments in debt securities and dividends earned on equity securities held in our proprietary trading ~~accounts.~~

~~Interest~~account. We recognized a $27,079, or 328% increase in interest income~~. During~~ from trading securities during the ~~nine~~six months ended ~~December 31, 2017~~September 30, 2021 because we increased (i) the total size of our trading portfolio and ~~2016, we realized interest income~~(ii) the percentage of ~~$6,442 and $1,710, respectively. This~~our investments in bonds.

We recognized a $1,065, or 214% increase ~~was primarily due to increased~~in interest income from reverse repurchase transactions because we engaged in a larger volume of ~~$1,669 and increased~~such transactions during the six months ended September 30, 2021.

We also recognized a $778, or 270% increase in interest income from ~~investments in trading securities~~loans to customers as a result of ~~$2,660.~~

new loans issued by Freedom Bank KZ.

Net ~~gain~~loss on foreign exchange operations.D~~uring~~Under U.S. GAAP, we are required to revalue assets and liabilities denominated in foreign currencies into our reporting currency, the ~~nine~~U.S. dollar, which can result in gains or losses on foreign exchange operations. During the six months ended ~~December 31, 2017 and 2016,~~September 30, 2021, we realized a net gain on foreign exchange operations of ~~$1,957 and $296, respectively. The increase is attributable mainly~~$434 compared to a ~~$757~~net gain ~~realized on~~of $2,772 during the ~~revaluation of JSC Kcell securities denominated in Kazakhstani tenge to Russian rubles due to a rise in~~six months ended September 30, 2020.

During the six months ended September 30, 2021, the value of the Russian ruble appreciated nearly by 4% against the U.S. dollar. The value of Kazakhstani tenge ~~during~~depreciated by approximately 0.2% against the U.S. dollar. Due to a large balance of USD denominated net assets held in our ~~first three fiscal quarters 2018. Additionally, for the same reason~~subsidiary Freedom RU, we ~~realized~~recognized a ~~$365 gain~~net loss on foreign exchange operations of $1,726. Our subsidiary Freedom KZ also recognized a foreign currency exchange loss on USD denominated trading securities in the ~~revaluation~~amount of $547. Further, due to higher volume of cash operations, we recognized a $2,641 gain on purchases and ~~cash equivalents denominated in Kazakhstani tenge during~~sales of foreign currency.

Expense

	Six months ended					Six months ended
	September 30, 2021					September 30, 2020						Change
	Amount		% *			Amount			% *			Amount			% *
Fee and commission expense	$	44,832		31	%	$	29,790			43	%	$	15,042			50	%
Interest expense		30,457		21	%		8,443			12	%		22,014			261	%
Operating expense		66,888		47	%		30,293			44	%		36,595			121	%
Provision for impairment losses		659		0	%		666			1	%		(7	)	(1		%)
Other expense/(income),net		664		0	%		(95	)		0	%		759		(798		%)
Total expense	$	143,500		100	%	$	69,097			100	%	$	74,403			108	%

*Reflects percentage of total expense, net.

During the ~~nine~~six months ended ~~December 31, 2017.~~

~~Fee and commission income.~~During the nine months ended December 31, 2017, fee and commission income increased $3,950 compared to the nine months ended December 31, 2016. This increase resulted principally from increased commissions and fees for bank and brokerage services, and increased underwriting and market making services. During the nine months ended December 31, 2017, we realized a $1,292 increase in fees and commissions associated with bank services. As noted above, this increase primarily resulted from FFIN Bank commencing active operations at the beginning of fiscal 2017. During the nine months ended December 31, 2017, we experienced a $1,468 increase in commissions and fees for brokerage services. During the nine months ended December 31, 2017, we engaged in significantly more underwriting and market making activities than during the nine months ended December 31, 2016, resulting in a $1,040 increase in fees and commissions realized from underwriting and market making services.

~~Net gain on trading of futures~~. As noted above, because of the increase in the KZT/USD exchange rate during the nine months ended December 31, 2017, we realized a $155 gain on trading of foreign currency futures contracts during the nine months ended December 31, 2017.

~~Expenses~~

~~During the nine months ended December 31, 2017 and 2016,~~September 30, 2021, we incurred total expenses of ~~$23,217~~$143,500, a 108% increase compared to the six months ended September 30, 2020. Expenses increased with the growth of our business primarily in connection with increases in administrative costs and ~~$9,649, respectively. Expenses~~fees from the growth in our revenue generating activities and integrating our acquisition targets.

Fee and commission expense. Fee and commission expense increased by $15,042, a 50% increase, during the ~~period~~six months ended ~~December 31, 2017, was higher primarily as a result~~September 30, 2021. This included increases in brokerage commissions to our prime brokers of ~~higher operating expenses,~~$11,190, commissions paid to bank services of $2,321 and exchange and clearing services of $1,395.

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The increases in fee and commission expense were the result of both growth in our customer base and ~~interest~~increased transaction volume from our customers. Generally, we expect fee and commission expense ~~as we continued~~ to ~~expand~~increase and ~~grow our business.~~

~~Operating expenses~~. decrease in correspondence with increases and decreases in fee and commission income.

Interest expense. During the ~~nine~~six months ended ~~December 31, 2017, operating~~September 30, 2021, we incurred a 261% increase in interest expense. The increased expense was primarily attributable to a $16,389 increase in volume of short-term financing through securities repurchase agreements and a $5,415 increase in interest on customer deposits.

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 customer deposits.

Operating expenses. Operating expenses during the six months ended September 30, 2021, totaled ~~$12,113~~$66,888, a $36,595 increase compared to ~~operating expenses of $6,694 for~~ the ~~nine~~six months ended ~~December 31, 2016.~~September 30, 2020. This increase was primarily attributable to ~~higher general~~a $15,117 increase in payroll and ~~administrative expenses related to growth in~~bonus expense as a result expansion of our ~~operations, including~~workforce through acquisition and hiring, a ~~$792~~$5,668 increase in stock compensation expense ~~$1,387~~resulting from issuing restricted stock grants to key employees in May 2021, an increase of $4,511 in ~~payroll~~advertising expenses and a ~~$607 increase in rent expense, a $544~~$3,017 increase in professional services fees, a $369 increase in office repair expenses, $140 increase in advertising expenses, $134 increase in business trip expenses, $303 increase in office equipment expenses and a $313 increase in expenses for communication services, trainings and conferences, charity, IT services fees, insurance fees and expenses for taxes, other than income tax.

~~Fee and commission expenses.During the nine months ended December 31, 2017, we recognized fee and commission~~ expense of $1,474, compared to fee and commission expense of $216 during the nine months ended December 31, 2016. The increase was mainly associated with an increase in custody bank service fee for $785 during the nine months ended December 31, 2017, and increased commission fees paiddue to the ~~Central Depository, stock exchanges and brokerage fees to other brokers of $198. The increase in custody bank service fee resulted from the significant increase~~growth of our ~~position in the shares of Kcell which we purchased on international stock markets.~~

~~Interest expense.~~During the nine months ended December 31, 2017, we recognized total interest expense of $9,499, compared to total interest expense of $2,472 during the nine months ended December 31, 2016. The increase in interest expense was primarily attributed to higher amounts of short-term financing attracted by means of repurchase agreements, totaling $6,261, and the issuance of debt securities by Freedom KZ and related interest expense totaling $470.

business.

Income tax ~~(expense)/benefit~~

expense. We recognized net income before income tax of ~~$23,114~~$293,451 and $57,028 during the ~~nine~~six months ended ~~December 31, 2017, resulting in an income~~September 30, 2021, and September 30, 2020, respectively. Our effective tax ~~expense~~rate during the ~~period of $584. During the nine~~six months ended ~~December 31, 2016, we realized a net loss before income taxes of $570, resulting in an income tax benefit~~September 30, 2021, decreased to 12.7%, from 16.1% during the ~~period of $960.~~

~~Net income before non-controlling interests~~

~~For the reasons discussed above, during the nine~~six months ended ~~December 31, 2017, we realized net income of $22,530 compared to net income of $390 for the nine months ended December 31, 2016.~~

~~Comprehensive income attributable to common shareholders~~

AsSeptember 30, 2020, as a result of ~~fluctuations~~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.

Comprehensive income. The functional currencies of our operating subsidiaries are the Russian ruble, ~~Euro,~~Kazakhstani tenge, European euro, U.S. dollar, Ukrainian hryvnia, Uzbekistani som, Kyrgyzstani som, UK pound sterling and Azerbaijani manat. Our reporting currency is the ~~Kazakhstan~~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 depreciation of the value of Russian ruble by nearly 4% and depreciation on Kazakhstani tenge by nearly 0.2%, respectively against the USU.S. dollar during the periods covered in this report, we realized a foreign currency translation ~~loss~~gain of ~~$2,809~~$4,230 during the ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2021, compared to a foreign currency translation ~~gain~~loss of ~~$1,933~~$2,286 during the ~~nine~~six months ended December 31, 2016. During the nine months ended December 31, 2017, we realized comprehensive income attributable to common shareholders of $19,721, compared to a comprehensive income attributable to common shareholders of $2,046 during the nine months ended December 31, 2016.

Because we are growing and expanding our operations, we expect to continue to realize higher revenues, expenses and net income year-over-year in upcoming fiscal periods. We anticipate, however, that the quarter-over-quarter financial results may vary. As noted above, as a result of significant decreases in the prices of the Kcell and KEGOC shares we hold in our proprietary trading account, we recognized a significant net loss on our trading securities in the third fiscal quarter 2017, most of which is unrealized. During the nine months ended December 31, 2017, we also realized significant fees and commissions and trading profits from our involvement in the Astana Bank IPO. We continue to work on potential underwriting engagements, but currently do not have any engagements to provide underwriting services in upcoming periods, so we expect fee and commission income to be lower in upcoming periods until we are able to successfully underwrite additional securities offerings.

September 30, 2020.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet our potential cash requirements for general business purposes. AsDuring the three months ended September 30, 2021 and 2020, our operations were primarily funded through a combination of ~~December 31, 2017, we had~~existing cash ~~and~~on hand, cash equivalents of $34,847, compared to cash and cash equivalents of $22,616, as of March 31, 2017. At December 31, 2017, we had total current assets (less restricted cash) of $240,249 and total current liabilities of $162,698, resulting in working capital of $77,551. By comparison, at March 31, 2017, we had total current assets (less restricted cash) of $105,446 and total current liabilities of $74,017, resulting in working capital of $31,429.

~~At December 31, 2017, we held trading securities in~~generated from operations, returns generated from our proprietary trading ~~account~~and proceeds from the sale of ~~$199,207. Of this amount, $137,436 were subject to securities repurchase obligations. Of our $34,847 in cash~~bonds and ~~cash equivalents at December 31, 2017, $21,674 was subject to reverse repurchase agreements.~~ other borrowings.

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We regularly monitor and manage our leverage and liquidity risk through various committees and processes we have 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 ~~their~~ cash and cash equivalents not invested in our operating business). While we are confident in the risk management monitoring and ~~management~~ processes we have in place, a significant portion of our trading securities and cash and cash equivalents are subject to collateralization ~~agreements, which potentially increases~~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.

~~Regulatory requirements applicable~~ 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. As of September 30, 2021, and March 31, 2021, we had:

	As of
	September 30, 2021		March 31, 2021
Cash and cash equivalents⁽¹⁾	$	740,425	$	698,828
Trading securities	$	974,481	$	736,188
Total assets	$	2,500,459	$	2,018,645
Net liquid assets⁽²⁾	$	2,054,096	$	1,519,719

_________

⁽¹⁾

Of the $740,425 in cash and cash equivalents we held at September 30, 2021, $164,240, or approximately 22%, were subject to reverse repurchase agreements. By comparison, at March 31, 2021, we had cash and cash equivalents of $698,828, of which $248,946, or approximately 36%, were subject to reverse repurchase agreements. The amount of cash and cash equivalents is subject to minimum levels set by regulatory bodies to comply with required rules and regulations, including adequate capital and liquidity level for each entity.

⁽²⁾

Consists of cash and cash equivalents, trading securities, brokerage and other receivable and other assets.

As of September 30, 2021, and March 31, 2021, we had total liabilities of $1,957,080 and $1,742,974, respectively, including customer liabilities of $1,219,364 and $1,163,697, respectively.

We financed our operating activity primarily from cash flows from operations and short-term and long-term financing arrangements.

Cash Flows

The following table presents our cash flows for the six months ended September 30, 2021 and 2020:

	For the six months ended September 30, 2021			For the six months ended September 30, 2020

Net cash flows (used in)/from operating activities	$	(146,141	)	$	297,036
Net cash flows (used in)/from investing activities		(7,084	)		21,290
Net cash flows from financing activities		99,070			131,944
Effect of changes in foreign exchange rates on cash and cash equivalents		17,622			(28,451	)

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	$	(36,533	)	$	421,819

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Net cash used in operating activities during the six months ended September 30, 2021, was comprised of net income adjusted for non-cash movements (changes in deferred taxes, unrealized gain on trading securities, net change in accrued interest) and net cash used in operating activities. Net cash used in operating activities resulted primarily from changes in operating assets and liabilities. Such changes included:

	Six months ended September 30, 2021			Six months ended September 30, 2020

Increases in trading securities	$	174,133	⁽¹⁾	$	156,896
Increases in customer deposits	$	30,493	⁽²⁾	$	361,634
Increases in brokerage and other receivables	$	249,416	⁽³⁾	$	48,257
Increases in trade payables	$	29,316	⁽⁴⁾	$	84,777

_________

⁽¹⁾	Resulted from increased purchases of securities held in our proprietary account.
⁽²⁾	Resulted from increased deposits from new and existing customers.
⁽³⁾	Resulted from larger amounts of margin receivables.
⁽⁴⁾	Resulted from larger amounts of margin payables.

During the six months ended September 30, 2021, net cash used in investing activities was $7,084 compared to net cash from investing activities of $21,290 during the six months ended September 30, 2020. During the six months ended September 30, 2021, cash used in investing activities was used for the purchase of fixed assets, net of sales, in the amount of $7,084. Cash from investing activities during the six months ended September 30, 2020, included $27,991 received in the Zerich acquisition and $6,437 from proceeds on the sale of investments available for sale, which was partially offset with consideration paid for the Zerich acquisition of $7,110, prepayment toward the Freedom Bank KZ acquisition of $4,170 and the purchase of fixed assets, net of sales of $1,858.

Net cash from financing activities for the six months ended September 30, 2021, consisted principally of proceeds from securities repurchase agreement obligations in the amount of $109,016, partially offset by net cash used in the repurchase of outstanding Freedom KZ debt securities in the amount of $10,134. Net cash from financing activities during the six months ended September 30, 2020, consisted principally of the proceeds from securities repurchase agreement obligations in the amount of $138,149, which was partially offset with the repurchase of $8,196 of outstanding Freedom KZ bonds.

Financing Arrangements

Short-term

Securities Repurchase Arrangements - Our short-term financing is primarily obtained through securities repurchase arrangements. We use repurchase arrangements, among other things, to finance our inventory positions. As of September 30, 2021, $537,277, or 55%, of the trading securities held in our proprietary trading account were subject to securities repurchase obligations compared to $426,715 or 58%, as of March 31, 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 9 to our consolidated financial statements.

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Long-term

FRHC Notes - As of September 30, 2021, we had outstanding $20,498 in principal amount of FRHC 7.000% notes (the “FHRC Notes”). The FRHC Notes provide for semi-annual interest payments in June and December and include customary events of default relating to the disposition of Company assets outside the ordinary course of business, defaults on other Company 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. The FRHC Notes mature in December 2022.

Freedom RU USD Bonds - As of September 30, 2021, we had outstanding $30,043 in principal amount of Freedom RU U.S. dollar denominated 6.5% bonds (the “Freedom RU USD Bonds”). The Freedom RU USD Bonds have a term of three years, with a quarterly coupon payment. The Freedom RU USD Bonds were issued in denominations of U.S. $1,000, with a minimum purchase requirement of 1.4 million Russian rubles. Freedom RU is authorized to place up to a maximum of 40,000 of these Freedom RU USD Bonds. The Freedom RU USD Bonds are listed on the MOEX and are governed by the “Exchange Bond Terms and Conditions in the Framework of the Exchange Bonds Program”. The Freedom RU USD Bonds mature in January 2023.

Freedom RU RUB Bonds - As of September 30, 2021, we had outstanding $6,872 in principal amount of Freedom RU RUB denominated 12% bonds (the “Freedom RU RUB Bonds”). The Freedom RU RUB Bonds have a term of three years, with a semiannual coupon payment. The Freedom RU RUB Bonds were issued in denominations of RUB 1,000. The Freedom RU RUB Bonds are listed on the MOEX and mature in February 2022.

Freedom KZ USD Bonds – During the quarter ended June 30, 2021, we retired U.S. dollar denominated 8% Freedom ~~CY, Freedom UA~~KZ USD bonds that had a carrying value of $10,477 including interest accrued of $274 as of March 31, 2021.

Net Capital Requirements

We are required to maintain net capital in certain regulated subsidiaries within a number of jurisdictions, which is partially maintained by retaining cash and ~~FFIN Bank require them~~cash equivalent investments in those subsidiaries or jurisdictions. 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.

These minimum net capital requirements range from approximately $5 to $23,490 and fluctuate depending on various factors. At September 30, 2021, the aggregate net capital requirements of our subsidiaries was approximately $30,095. Each of our subsidiaries that are subject to net capital requirements exceeded the minimum required amount at September 30, 2021. Although our subsidiaries operate with a level of net capital substantially greater than the minimum established thresholds, in the event a subsidiary fails to maintain minimum net capital, ~~levels. Their primary sources~~it may be subject to fines and penalties, suspension of ~~funds for~~operations, revocation of licensure and disqualification of its management from working in the industry. Our subsidiaries are also subject to various other rules and regulations, including liquidity ~~have historically consisted~~and capital adequacy ratios. Our operations that require the intensive use of ~~existing cash balances (i.e., available liquid~~ capital ~~not invested in their operating businesses), capital contributions from Mr. Turlov, gains from their proprietary trading accounts, fees and commissions, and interest income.~~

~~During~~would be limited to the ~~nine months ended~~ ~~December 31, 2017, Mr. Turlov contributed $8,594~~extent necessary to ~~capital. We have no agreements with Mr. Turlov to provide additional capital contributions and he is under no obligation to continue to provide us capital. In December~~meet all our regulatory requirements.

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Over the past several years, we completed a private placement of our equity securities raising net proceeds $11,045. During the nine months ended December 31, 2017 we also realized proceeds from issuance of debt securities of $9,853, of which, $2,449 was used to repurchase Company debt securities.

We have pursued an aggressive growth strategy ~~during the past several years,~~both through acquisitions and organic growth efforts. During fiscal 2022 we anticipate continuing efforts to ~~rapidly~~ expand the footprint of our ~~brokerage, banking and financial services~~ business ~~in Russia, Kazakhstan, Ukraine, Cyprus and other markets.~~on a scale similar to fiscal 2021. While this strategy has led to revenue growth it also results in increased expenses and greater need for capital resources. ~~Further~~Additional growth and e~~xpansion~~expansion may require greater capital resources than we currently possess, which could require us to pursue additional equity or debt financing from outside sources.

~~Cash Flows~~

We cannot assure 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.

Contractual Obligations

The following table ~~presents~~sets forth information related to our ~~cash flows for the nine months ended December 31, 2017 and 2016:~~

Nine months ended
December 31, 2017

Nine months ended
December 31, 2016

Net cash used in operating activities
$(12,108)
$(6,344)
Net cash used in investing activities
  (685)
  (2,763)
Net cash from financing activities
  27,043
  11,135
Effect of changes in foreign exchange rates on cash and cash equivalents
(630)
  2,182



NET CHANGE IN CASH AND CASH EQUIVALENTS
$13,620
$4,210

Net cash used in operating activities during the nine months ended December 31, 2017, was higher compared to the nine months ended December 31, 2016, primarily because of changes in operating liabilities, which were comprised primarily of a $85,814 increase in securities repurchase agreement obligations, a $6,215 increase in customer liabilities and changes in operating assets, which were comprised principally of a $105,258 increase in trading securities and a $2,161 increase in brokerage and other receivables.

~~During the nine months ended December 31, 2017, net cash used by investing activities was $685 compared to $2,763 during the nine months ended December 31, 2016.~~During the nine months ended December 31, 2016, we acquired the remaining 90.72% interest in FFIN Bank for $2,771. Cash used in investing activities during the nine months ended December 31, 2017, was primarily to purchase fixed assets.

Net cash from financing activities consisted principally of capital contributions to the Company by Mr. Turlov in the amount of $8,594, private placement proceeds in amount of $11,045, proceeds from issuance of debt securities in the amount of $9,853 and the repurchase of debt securities in amount of $2,449.

~~Contractual Obligations and Contingencies~~

~~See Note 17 -Commitments and Contingent Liabilitiesfor information regarding our significant~~ contractual obligations ~~and contingencies at December 31, 2017.~~

as of September 30, 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	$	19,813	$	4,917	$	11,129	$	3,437	$	330
Outstanding bonds and notes		62,909		10,672		52,237		-		-

TOTAL	$	87,722	$	15,589	$	63,366	$	3,437	$	330

Off-Balance Sheet Financing Arrangements

For a discussion of ~~December 31, 2017, we had no~~ off-balance sheet financing ~~arrangements.~~

arrangements of the Company as of September 30, 2021, please see Note 20 to our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

~~For a discussion~~

The preparation of ~~critical~~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 revenue and expenses during the reporting 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.

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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 uncollectibility of an account receivable balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates ~~please see~~the allowance balance required using past accounts receivable loss experience, the nature and volume of accounts receivable, information about specific counteragent situation 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 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 the most recent period of time, typically three to five years, which management reviews periodically.

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, 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 judgment to evaluate these assets for impairment. Our processes and accounting policies for evaluating impairments are further described in Note 2 to our ~~Condensed Consolidated Financial Statements.~~

consolidated financial statements. As of September 30, 2021, the Company had goodwill of $7,894. The results of the 2021 annual goodwill impairment testing of all our reporting units indicated no goodwill impairment.

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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 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 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 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 the likelihood of tax assessments based on current and prior years’ examinations, and unrecognized tax benefits related to potential losses that may arise from tax audits are 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

For details of applicable new accounting standards refer to Recent accounting pronouncements in Note 2of ourfinancial statements accompanying this quarterly report on Form 10-Q.

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Item 3. Qualitative and Quantitative Disclosures about Market Risk

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

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. 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 Kazakhstani and Russian interest rates. Changes in Kazakhstani and Russian interest rates may have significant effect on the fair value of our securities.

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. 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 shift in the yield curve. Based on investment positions as of September 30, 2021, and March 31, 2021, a hypothetical 100 basis point increase in interest rates across all maturities would have resulted in $36,584 and $31,055 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 rates across all maturities would have resulted in a $39,562 and $32,906 incremental rise in the fair market value of the portfolio, respectively.

Foreign currency exchange risk

We have business operations in the Kazakhstan, Russia, Cyprus, Ukraine, Uzbekistan, Germany, Kyrgyzstan, United States and Azerbaijan. The activities and accumulated earnings in our foreign 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 to mitigate foreign currency exposures associated with certain existing assets and liabilities, firmly committed transactions and forecasted future cash flows.

An analysis of our September 30, 2021, and March 31, 2021, balance sheets estimates the net impact of a one percent adverse change in the value of the U.S. dollar relative to all other currencies, would have resulted in a reduction of net income before income tax in the amount of $1,242 and $5,907, respectively.

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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 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 September 30, 2021, and March 31, 2021, our exposure to equity investments at fair value was $70,377 and $47,340, respectively. An analysis of the September 30, 2021, and March 31, 2021, balance sheets estimates a decrease of 10% in the equity price would have reduced the value of the equity securities or instrument we held by approximately $7,038 and $4,734, 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 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. Depending on the jurisdiction of our subsidiary issuing margin loans, our margin lending is subject to various regulatory requirements, including those of the Markets in Financial Instruments Directive (“MiFID”) (Cyprus), the Central Bank of Russian Federation (Russia) and Astana Financial Services Authority (AFSA) (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 ~~a smaller reporting company~~not sufficient to fully cover losses that customers may incur and those customers fail to satisfy their obligations. As of September 30, 2021, we had $308,256 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 potential significant and 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 required margin requirements.

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We have a comprehensive policy implemented in accordance with regulatory standards to ~~provide~~assess and monitor the suitability of investors to engage in various trading activities. To mitigate our risk, we also continuously monitor customer 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.

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 ~~required~~under the heading “Risks Related to Information Technology and Cyber Security” in Item 1A of our annual report on Form 10-K filed with the SEC on 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-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. Such non-compliance could result in the imposition of legal or regulatory sanctions, material financial loss, including fines, penalties, judgments, damages and/or settlements, or loss to 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.

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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 requirements, sales and trading practices, potential conflicts of interest, anti-money laundering, 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 ~~this Item.~~

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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of ~~December 31, 2017,~~the end of the period covered by this quarterly report, 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 this evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) our principal executive officer and principal financial officer concluded that as of September 30, 2021, our disclosure controls and procedures were ~~effective as of the end of the period covered by this quarterly~~effective. Disclosure controls and procedures enable us to record, process, summarize and report ~~in timely alerting them to~~ information required to be included in our Exchange Act filings within the required time period. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the periodic ~~filings~~reports filed with the ~~Commission.~~

SEC is accumulated and communicated to our management, including our principal executive, financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~There were~~

During the three months ended September 30, 2021, no changes ~~in our internal control over financial reporting during the three and nine months ended~~ ~~December 31, 2017,~~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 ~~normal~~financial services industry, including 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. We are also subject to periodic regulatory audits and inspections.

From time to time, we or our subsidiaries may be party to various routine legal proceedings, claims, and regulatory inquiries arising out of the ordinary course of their business. Management believes that the ~~businesses of our subsidiary companies’ lawsuits and claims may be brought against them and us. While the ultimate outcome~~results of these routine legal proceedings, ~~cannot be predicted with certainty, our management, after consultation with legal counsel representing us in these proceedings, does~~claims, and regulatory matters will not ~~expect that the resolution of these proceedings will~~ have a material adverse effect on our financial condition, ~~results~~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 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 ~~operations or cash flows.~~

~~Item 1A. Risk Factors~~

~~We believe there are no additions to the risk factors~~Toleush Tolmakov Litigation

As previously disclosed in our annual report on Form 10-K filed with the SEC on June 15, 2021, Freedom Holding Corp., and its subsidiary FFIN were sued and filed a counterclaim in the Third Judicial District Court of Salt Lake County, State of Utah. The Company was served with a summons and complaint on May 6, 2021. On May 20, 2021, the Company filed a motion to dismiss the complaint and filed a motion for interpleader and other motions. On October 5, 2021, the ~~year ended March 31, 2017,~~Third Judicial District Court granted the Company’s motion to dismiss, dismissing all claims by both parties without prejudice because the plaintiffs failed to follow proper procedures and therefore the Court lacked jurisdiction. The plaintiffs have indicated that they intend to file a new complaint. However, the parties have agreed to mediate and attempt to resolve the dispute amicably. The mediation is currently scheduled to occur in November 2021.

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Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the “Risk Factors” in our annual report on Form 10-K filed with the Commission on June ~~30, 2017.~~

~~Item 2. Unregistered Sales of Equity Securities~~15, 2021, and ~~Use of Proceeds~~

~~Except as reported~~our other public filings, which could materially affect our business, financial condition or future results. Other than the risk factor below, we believe there has been no material changes from risk factors previously disclosed in ~~Current Reports~~“Risk Factors” in our annual report on Form ~~8-K we~~10-K filed with the Commission on ~~November 1, 2017,~~June 15, 2021.

We may experience increased loan payment delinquencies in our lending portfolios which may lead to decreases in profitability.

We face the risk that our customers will not repay their loans. A customer’s ability and ~~December 11, 2017,~~willingness to repay us can be adversely affected by a number of unpredictable factors. We may fail to identify such risks when qualifying customers for loans or to reduce our exposure to customers that we ~~did not sell any unregistered shares~~have identified as likely to default on their payment obligations. Our ability to manage credit risk may also be affected by applicable laws and regulations, competitors’ actions and consumer behavior, payment and other terms we can obtain in our loan agreements, and the effectiveness of our ~~equity securities during~~collections staff, techniques, and models.

Rising loan repayment losses or leading indicators of such losses (such as increased loan repayment delinquencies, increases in nonperforming loans, increased bankruptcy rates, lower collateral values, elevated unemployment rates or changing interest rate market terms) may require us to increase our reserve against credit losses, which may degrade our profitability if we are unable to raise revenue or reduce costs to compensate for higher losses. In particular, the ~~quarter ended December 31, 2017.~~

following factors are particularly influential on credit losses and the ability to adequately provide reserves for such losses:

	·	Missed Payments: Our customers may miss payments. Loan charge-offs (including from bankruptcies) are generally preceded by missed payments or other indications of worsening financial condition for our customers. Historically, customers are more likely to miss payments during an economic downturn or prolonged periods of slow economic growth. In addition, we face the risk that consumer and commercial customer behavior may change (for example, an increase in the unwillingness or inability of customers to repay debt, which may be heightened by increasing interest rates or levels of consumer debt), causing a long-term rise in delinquencies and charge-offs.

	·	Incorrect Estimates of Expected Losses: The credit quality of our portfolio can have an impact on our earnings. We allow for and reserve against credit risks based on our assessment of expected credit losses in our loan portfolios. This process, which is critical to our financial condition and results of operations, requires complex judgments, including forecasts of economic conditions. We may underestimate our expected losses and fail to hold an allowance for credit losses sufficient to account for these losses. Incorrect assumptions could lead to material underestimations of expected credit losses and an inadequate allowance for credit losses.

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Item 6. Exhibits

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

Exhibit No.*	Exhibit Description ~~of Exhibit~~	~~Location~~

~~Item 31~~	~~Rule 13a-14(a)/15d-14(a) Certifications~~
31.01	Certification of ~~Principal~~the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	~~Attached~~^*
31.02	Certification of ~~Principal~~Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	~~Attached~~^*
~~Item 32~~	~~Section 1350 Certifications~~
32.01	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	~~Attached~~^*
~~Item~~ 101	~~Interactive Data File~~
~~101~~	The following Freedom Holding ~~Corp,~~Corp. financial information for the periods ended ~~June~~September 30, ~~2017,~~2021, formatted in inline XBRL (eXtensive Business Reporting Language): (i) the Cover Page; (ii) the Condensed Consolidated Balance Sheets, ~~(ii)~~(iii) the Condensed Consolidated Statements of Operations, ~~and~~(iv) the Condensed Consolidated Statements of ~~Other Comprehensive Income, (iii)~~stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and ~~(iv)~~(vi) the Notes to the ~~Unaudited~~ Condensed Consolidated Financial Statements.^*
104	Cover page formatted in inline XBRL (included in Exhibit 101).^*

* Filed herewith.

~~Attached~~62

Table of Contents

All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document.

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:	November 5, 2021	/s/ Timur Turlov
		Timur Turlov Chief Executive Officer

Date:	November 5, 2021	/s/ Evgeniy Ler
		Evgeniy Ler Chief Financial Officer


			63


~~Date:~~	~~February 14, 2018~~	~~/s/ Timur Turlov~~
		~~Timur Turlov~~ ~~Chief Executive Officer~~


~~Date:~~	~~February 14, 2018~~	~~/s/ Evgeniy Ler~~
		~~Evgeniy Ler~~ ~~Chief Financial Officer~~

	December 31, 2017	March 31, 2017*
		(Recast)
ASSETS
Cash and cash equivalents	$34,847	$22,616
Restricted cash	14,138	12,749
Trading securities	199,207	81,575
Available-for-sale securities, at fair value	2	2
Brokerage and other receivables	2,922	514
Loans issued	250	65
Deferred tax assets	325	1,026
Fixed assets	2,028	1,096
Goodwill	1,856	981
Other assets	3,271	739

TOTAL ASSETS	$258,846	$121,363

LIABILITIES AND STOCKHOLDERS’ EQUITY

Derivative liability	$-	$495
Debt securities issued	10,625	3,459
Customer liabilities	13,911	7,635
Current income tax liability	-	149
Trade payables	2,218	545
Deferred distribution payments	8,534	8,534
Securities repurchase agreement obligation	137,436	56,289
Other liabilities	599	370
TOTAL LIABILITIES	173,323	77,476

Commitments and Contingencies (Note 17)	-	-

STOCKHOLDERS’ EQUITY

Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding	-	-
Common stock - $0.001 par value; 500,000,000 shares authorized; 52,606,600 shares outstanding as of December 31, 2017 and 11,213,926 shares outstanding as of March 31, 2017, respectively	52	11
Additional paid in capital	56,533	34,659
Retained earnings	38,684	16,154
Accumulated other comprehensive loss	(9,746)	(6,937)
TOTAL STOCKHOLDERS’ EQUITY	85,523	43,887

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$258,846	$121,363

	Three months ended December 31,		Nine months ended December 31,
	2017	2016*	2017	2016*
Revenue:		(Recast)		(Recast)

Fee and commission income	$1,999	$1,116	$6,412	$2,462
Net gain/(loss) on trading securities	(8,318)	1,164	30,825	4,583
Interest income	2,853	724	6,442	1,710
Net gain on derivatives	867	-	687	-
Net gain on sale of fixed assets	16	-	8	28
Net gain/(loss) on foreign exchange operations	424	(138)	1,957	296

TOTAL REVENUE, NET	(2,159)	2,866	46,331	9,079

Expense:
Interest expense	4,487	1,120	9,499	2,472
Fee and commission expense	795	129	1,474	216
Operating expense	5,983	2,461	12,113	6,694
Other expense, net	105	141	131	267

TOTAL EXPENSE	11,370	3,851	23,217	9,649
NET INCOME/(LOSS) BEFORE INCOME TAX	(13,529)	(985)	23,114	(570)

Income tax (expense)/benefit	403	413	(584)	960

NET INCOME/(LOSS) BEFORE NONCONTROLLING INTERESTS	$(13,126)	$(572)	$22,530	$390

Less: Net income attributable to noncontrolling interest in subsidiary	-	-	-	7
NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	(13,126)	(572)	22,530	383

OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect	-	(276)	-	(270)
Foreign currency translation adjustments, net of tax	1,529	453	(2,809)	1,933

COMPREHENSIVE INCOME/(LOSS) BEFORE NONCONTROLLING INTERESTS	$(11,597)	$(395)	$19,721	$2,053

Less: Comprehensive income attributable to noncontrolling interest in subsidiary	-	-	-	7

COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$(11,597)	$(395)	$19,721	$2,046
BASIC AND DILUTED NET INCOME/(LOSS) PER COMMON SHARE (In US Dollars)	$(0.29)	$(0.05)	$0.86	$0.03
Weighted average shares outstanding	45,018,578	11,213,926	26,341,542	11,213,926

	For the nine months ended
	December 31, 2017	December 31, 2016*
		(Recast)
Cash Flows From Operating Activities
Net income	$22,530	$390

Adjustments to reconcile net income used in operating activities:
Depreciation and amortization	198	156
Change in deferred taxes	672	(974)
Stock compensation expense	792	-
Unrealized gain on trading securities	(19,542)	(2,837)
Net gain on derivative	(490)	-
Changes in operating assets and liabilities:
Trading securities	(105,258)	(32,179)
Brokerage and other receivables	(2,161)	(236)
Loans issued	(185)	21
Other assets	(2,532)	(7)
Customer liabilities	6,215	2,278
Current income tax liability	(144)	(50)
Trade payables	1,381	64
Securities repurchase agreement obligation	85,814	27,121
Other liabilities	602	(91)

Net cash flows used in operating activities	(12,108)	(6,344)

Cash Flows From Investing Activities
Purchase of fixed assets	(1,125)	(145)
Acquisition of Freedom UA, net of cash received	432	-
Proceeds from sale of fixed assets	8	13
Acquisition of FFIN Bank	-	(2,771)
Proceeds on sale of investments available-for-sale	-	140
Net cash flows used in investing activities	(685)	(2,763)

Cash Flows From Financing Activities
Proceeds from issuance of debt securities	9,853	6,618
Repurchase of debt securities	(2,449)	(2,425)
Proceeds from issuance of common stock	-	6,574
Proceeds from private placement	11,045	-
Capital contributions	8,594	368

Net cash flows from financing activities	27,043	11,135

Effect of changes in foreign exchange rates on cash and cash equivalents	(630)	2,182

NET CHANGE IN CASH AND CASH EQUIVALENTS	13,620	4,210
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	35,365	19,380
CASH AND CASH EQUIVALENTS, END OF PERIOD	$48,985	$23,590

	March 31, 2017
BALANCE SHEETS (RECAST)	As previously reported	Recast	As recasted

ASSETS
Cash and cash equivalents	$51	$22,565	$22,616
Restricted cash	8,534	4,215	12,749
Trading securities	-	81,575	81,575
Available-for-sale securities, at fair value	-	2	2
Brokerage and other receivables	-	514	514
Loans issued	-	65	65
Deferred tax assets	-	1,026	1,026
Fixed assets	2	1,094	1,096
Goodwill	-	981	981
Other assets	-	739	739
TOTAL ASSETS	$8,587	$112,776	$121,363

LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)

Derivative liability	$-	$495	$495
Debt securities issued	-	3,459	3,459
Customer liabilities	-	7,635	7,635
Current income tax liability	-	149	149
Trade payables	206	339	545
Deferred distribution payments	8,534	-	8,534
Securities repurchase agreement obligation	-	56,289	56,289
Other liabilities	-	370	370
TOTAL LIABILITIES	8,740	68,736	77,476

STOCKHOLDERS’ EQUITY/(DEFICIT)

Preferred Stock	-	-	-
Common stock	280	(269)	11
Additional paid in capital	776	33,883	34,659
Retained earnings/Accumulated deficit	(1,209)	17,363	16,154
Accumulated other comprehensive income	-	(6,937)	(6,937)
TOTAL STOCKHOLDERS’ EQUITY/(DEFICIT)	(153)	44,040	43,887

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)	$8,587	$112,776	$121,363

	For the three months ended December 31, 2016
STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME/(LOSS) (RECAST)	As previously reported	Recast	As recasted

Revenue:
Fee and commission income	$-	$1,116	$1,116
Net gain on trading securities	-	1,164	1,164
Interest income, net	1	723	724
Net loss on foreign exchange operations	-	(138)	(138)

TOTAL REVENUE	1	2,865	2,866

Expense:
Interest expense	-	1,120	1,120
Fee and commission expense	-	129	129
Operating expense	100	2,361	2,461
Other expense, net	-	141	141

TOTAL EXPENSE	100	3,751	3,851

NET LOSS BEFORE INCOME TAX	(99)	(886)	(985)

Income tax benefit	-	413	413

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$(99)	$(473)	$(572)

OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect	-	(276)	(276)
Foreign currency translation adjustments, net of tax	-	453	453
COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$(99)	$(296)	$(395)

	December 31, 2017	March 31, 2017 (Recast)

Securities purchased under reverse repurchase agreements	$21,674	$8,376
Current account with commercial banks	3,982	9,987
Current account with Central Depository (Kazakhstan)	3,165	986
Brokerage accounts	2,233	259
Petty cash	1,414	1,476
Current account with National Settlement Depository (Russia)	1,204	696
Current account with Central Bank (Russia)	1,015	645
Current account in clearing organizations	160	191

Total cash and cash equivalents	$34,847	$22,616

	December 31, 2017
	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	10.29%	$1,505	$-	$1,505
Corporate equity	11.91%	14,154	6,015	20,169

Total		$15,659	$6,015	$21,674

		Fair Value Measurements at
		December 31, 2017 using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant unobservable units
	December 31, 2017	(Level 1)	(Level 2)	(Level 3)

Equity securities	$164,853	$164,853	$-	$-
Debt securities	32,903	32,715	188	-
Depository notes	1,192	1,192	-	-
Mutual investment funds	259	259	-	-
Total trading securities	$199,207	$199,019	$188	$-

		Fair Value Measurements at
		March 31, 2017 using
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant unobservable units
	March 31, 2017 (Recast)	(Level 1)	(Level 2)	(Level 3)

Equity securities	$71,697	$71,697	$-	$-
Debt securities	9,877	9,663	214	-
Mutual investment funds	1	1	-	-
Total trading securities	$81,575	$81,361	$214	$-

	March 31, 2017 (Recast)
	Interest rate and remaining contractual maturity of the agreements
	Average interest rate	Overnight and continuous	Up to 30 days	30-90 days	Total

Securities sold under repurchase agreements
Corporate debt	11.83%	$14,484	$10,923	$-	$25,407
Corporate equity	13.08%	-	29,926	956	30,882
Total securities sold under repurchase agreements		$14,484	$40,849	$956	$56,289

	December 31, 2017	March 31, 2017 (Recast)

Deferred tax assets:

Tax losses carryforward	$4,376	$2,398
Accrued liabilities	38	20
Revaluation on trading securities	11	76
Valuation allowance	(2,495)	(1,468)
Deferred tax assets	$1,930	$1,026

Deferred tax liabilities:

Revaluation on trading securities	$1,605	$-

Deferred tax liabilities	1,605	-
Net deferred tax assets	$325	$1,026

	December 31, 2017	March 31, 2017
		(Recast)
Debt securities issued	$18,719	$9,530
Debt securities repurchased	(8,534)	(6,145)
Accrued interest	440	74

Total	$10,625	$3,459

	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Outstanding, beginning of year	-	$-	-	$-
Granted	360,000	1.98	2.76	1,577
Exercised	-	-	-	-
Forfeited/cancelled/expired	-	-	-	-
Outstanding, at December 31, 2017	360,000	$1.98	2.76	$1,577
Exercisable at December 31, 2017	-	$-	-	$-

	Shares	Weighted Average Fair Value
Outstanding, beginning of year	-	$-
Granted	3,900,000	8,190
Vested	-	-
Forfeited/cancelled/expired	-	-
Outstanding, at December 31, 2017	3,900,000	$8,190

Contractual obligations	Total	Less than 1 year	2-3 years	After 3 years
Office lease(1)	$7,289	$3,826	$2,504	$959
TOTAL	$7,289	$3,826	$2,504	$959

	Nine months ended December 31, 2017	Nine months ended December 31, 2016

Net cash used in operating activities	$(12,108)	$(6,344)
Net cash used in investing activities	(685)	(2,763)
Net cash from financing activities	27,043	11,135
Effect of changes in foreign exchange rates on cash and cash equivalents	(630)	2,182

NET CHANGE IN CASH AND CASH EQUIVALENTS	$13,620	$4,210