FREEDOM HOLDING CORP. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with, and is
qualified in its entirety by, our consolidated financial statements and the
related notes thereto contained in Part II Item 8 as well as the information set
forth in Part I Item 1 "Business" of this annual report. This discussion
contains certain forward-looking statements that involve known and unknown
risks, uncertainties, and other factors as described under the heading "Special
Note about Forward-Looking Information" in this annual report. Actual results
could differ materially from those projected in any forward-looking statements.
For additional information regarding these risks and uncertainties, see the
disclosure under the heading "Risk Factors" in Part I Item 1A of this annual
report.

This discussion summarizes the significant factors affecting our consolidated
operating results, financial condition, liquidity and capital resources during
fiscal 2022, 2021 and 2020. All dollar amounts presented in this MD&A are
presented in thousands of U.S. dollars unless the context indicates otherwise.

OVERVIEW

Historically, we have operated the Company as a single operating segment. With
the decision to divest our Company of our Russian subsidiaries, we have elected
to restructure our operations have been organized into five geographic regions:
Kazakhstan, Europe, the U.S., Middle East/Caucasus and Russia. Within these
regions, through our subsidiaries, we engage in a broad range of activities in
the securities industry, including securities dealing, market making, retail
securities brokerage, investment research, investment counseling, investment
banking and underwriting services, and in Kazakhstan and Russia we have operated
commercial banking services that complement our other financial services.
Subsequent to our March 31, 2022, year end we concluded the acquisition of two
insurance companies operating in Kazakhstan and have determined to divest our
interests in Russia. For additional information see Note 1 "Description of
Business" and Note 28 "Segment Information" in the Notes to our consolidated
financial statements contained in Part II Item 8 and "Business" in Part I Item 1
of this annual report.

Subsequent Events

Acquisitions

In May 2022 we completed the acquisition of two insurance companies in
Kazakhstan: (1) Freedom Life, which sells products including life insurance,
health insurance, annuity insurance, accident insurance, obligatory worker
emergency insurance, travel insurance and reinsurance, and (2) Freedom
Insurance, a direct insurance carrier, that sells general insurance products in
property (including automobile), casualty, civil liability, personal insurance
and reinsurance. The acquisition of these two insurance companies will allow us
to broaden our product and service offerings to our customers in Kazakhstan and
will give us access to the insurance companies' customers to offer them other
products and services we sell in Kazakhstan. For additional information
regarding Freedom Life and Freedom Insurance, see "Insurance" in "Business" in
Part I Item 1 of this annual report.

We have additional planned acquisitions of PayBox, Ticketon and ReKassa, which
are technology companies that we plan to integrate into our financial services
technology platform. We do not consider these planned acquisitions to be
material. For additional information regarding these planned acquisitions, see
"Planned Information Technology Acquisitions" in "Business" in Part I Item 1 of
this annual report.

Planned Divestiture of our Russian Subsidiaries

As a result of the Russia/Ukraine Conflict, the economic climate in Russia has
experienced significant volatility of the ruble, currency controls, materially
increased interest rates and inflation and a potential contraction in consumer
spending, as well as the withdrawal of foreign businesses from the Russian
market. This has and may continue to have a significant negative impact on the
Russian economy. This also negatively impacted our business and operations in
Russia as well as Ukraine. For additional information see "Recent Events" in
"Business" in Part Item 1 of this annual report.

After careful consideration, we have decided to divest our interests in our two
Russian subsidiaries, Freedom RU and Freedom Bank RU. The divestiture will be
made to our chairman, chief executive officer and controlling shareholder, Timur
Turlov. We believe the planned divestiture of our Russian subsidiaries is not
subject to approval from the CBR, however, given the evolving nature of the
Russian countersanctions and their implementation, we cannot assure that such
approval will not be required.

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Following the divestiture, Mr. Turlov has indicated that he in turn intends to
pursue the resale of the two entities to certain members of the current
management teams operating the Russian brokerage and bank, or to some other
suitable buyer, subject to the qualification of any potential purchaser under
Russian law and any required governmental or commercial consents. As part of
this plan the two entities will be renamed and rebranded immediately after their
divestiture from the Company and Mr. Turlov will not hold any position as an
officer or director or be involved in the day-to-day operations of either
entity. We currently anticipate that the sale of the two entities to Mr. Turlov
will be completed as soon as practicable, the completion of which, however, is
uncertain and subject to factors beyond our control, but we expect it to be
completed before the end of the third fiscal quarter of our 2023 fiscal year.
Following the divestiture, Mr. Turlov intends to dispose of the Russian entities
within the next 12-18 months, this timing, however, is also uncertain and
subject to factors beyond our control. For additional information see "Planned
Divestiture of our Russian Subsidiaries" in "Business" in Part I Item 1 of this
annual report.

At March 31, 2022 and 2021, our Russia segment accounted for 28% and 37% of our
total assets, respectively and 32% and 38% of our total liabilities,
respectively. As of March 31, 2022, our Russian subsidiaries had 43 offices and
branches, which represented approximately 40% of our total offices and branches,
and 1,717 employees, which represented approximately 50% of our total employee
count. The table below reflects the percentage of the total that certain Russia
segment operating results contributed to our total operating results for the
fiscal years ended March 31, 2022, 2021 and 2020.

                                        For the years ended March 31,
                                          2022                  2021      2020
Fee and commission income                             19  %     19  %      28  %
Total Revenue, Net                                     -  %     25  %      32  %
Operating Expenses                                    45  %     54  %      57  %
Total Expenses                                        30  %     32  %      43  %
Net Profit/(Loss)                                    (40) %     15  %     (11) %


For additional details regarding our segment results of operations for each of
our segments for the fiscal years ended March 31, 2022, 2021 and 2020, see Note
28 "Segment Reporting" to our consolidated financial statements contained in
Part II Item 8 of our annual report.

At this time, we do not know what the outcome will be of the Russia/Ukraine
Conflict or its long-term impact on the economy of Russia or our Russian
subsidiaries. Similarly, we cannot forecast with any certainty the potential
impacts the fluid and evolving Russia-related sanctions and ad hoc corporate
actions may have on businesses operating in Russia, including our Russian
subsidiaries. The divestiture of our Russian subsidiaries will result in
significant contraction in the overall size of our Company. Because of the
significant uncertainty surrounding the Russia/Ukraine Conflict, it is less
clear what impacts the divestiture of our Russian subsidiaries will have on our
results of operations and financial condition in the short-term and the
long-term. We believe, however that divestiture of our Russian subsidiaries is
in the best interest of our Company and shareholders. Going forward we will be
focused on completing our corporate restructuring, the divestiture and growing
our business operations in Central Asia, Europe, the U.S., and Middle
East/Caucasus.

Corporate Restructuring

As of the fiscal year end Freedom RU owned approximately a 90% interest in
Freedom KZ with the remaining ownership held by FRHC. Freedom KZ owns a 100%
interest in Freedom Bank KZ, Freedom Insurance and Freedom Life. Prior to the
divestiture of our Russian entities, we will undertake a corporate restructuring
to transfer legal ownership of Freedom KZ and its subsidiaries to FRHC as a
direct subsidiary. For additional information regarding our corporate
restructuring, see "Corporate Restructuring" in "Business" in Part I Item 1 of
this annual report.

Summary of Results of Operations

Historically, we have operated as a single operating segment offering financial
services to our customers in a single Eurasian geographic region. In conjunction
with the decision to divest our Russian subsidiaries and the corporate
restructure, coupled with our continued expansion, we have also elected to
restructure our operations geographically into five regional segments: Central
Asia, Europe, the U.S., Middle East/Caucasus and Russia (until completion of our
planned divestiture). Moving forward after completion of the divestiture of our
Russian subsidiaries, we will manage our operations in four regional segments.

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We are focused on growing our business in our four regional segments: Central
Asia, Europe, the U.S., and Middle East/Caucasus. Refer to Note 28 "Segment
Information", of the Notes to our consolidated financial statements contained in
Part II Item 8 of this annual report for further discussion. Depending upon the
region, this may include securities brokerage, capital markets/investment
banking, commercial banking and insurance. See "Our Regional Segments" in
"Business" in Part I Item 1 of this annual report for a further discussion of
the services we currently offer in each region.

For the fiscal year ended March 31, 2022, we had total revenues, net of $564,663
as compared to $352,551 and $121,902 for the fiscal years ended March 31, 2021
and 2020, respectively. For the fiscal year ended March 31, 2022, we had net
income of $211,369 as compared to $142,924 and $22,130 for the fiscal years
ended March 31, 2021 and 2020, respectively.

Our number of total client accounts increased from approximately 140,000 as of
March 31, 2020 to approximately 290,000 as of March 31, 2021, to approximately
410,000 as of March 31, 2022. As of March 31, 2022, more than 55% 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 fiscal year ended March 31, 2022, we had approximately
94,000 active accounts. Our total assets increased to $2,921,009 as of March 31,
2022 from $2,018,645 as of March 31, 2021 and $453,523 as of March 21, 2020. In
addition, during the year ended March 31, 2022, we had a net gain recognized on
trading securities of $77,671, primarily due to our disposal in the quarter
ended September 30, 2021 of stock we owned in the SPBX. The growth in our
revenue and net income resulting from the recognized net gain on the sale of
SPBX shares should not be considered indicative of future performance. By
comparison, during the fiscal years ended March 31, 2021 and March 31, 2020, we
recognized net gain on trading securities of $46,186 and $14,923, respectively.

Key Factors Affecting Our Results of Operations

Our operations have been, and may continue to be, affected by certain key
factors as well as certain historical events and actions. The key factors
affecting our business and the results of operations include, in particular: the
Russia/Ukraine Conflict (including but not limited to related sanctions and
countersanctions), the planned divestiture of our Russian subsidiaries and
corporate restructuring discussed above, the business environment in which we
operate, the growth of retail brokerage activity in our key markets, the impact
of COVID-19, governmental polices, and acquisitions. Each of these factors is
discussed in more detail below.

Business Environment

Financial services industry performance is closely correlated to economic
conditions and financial market activity. The Russia/Ukraine Conflict which
began in our fourth fiscal quarter has caused significant disruption in the
currency market, affected interest rates, securities markets, and negatively
impacted Russian and Ukrainian customer confidence. Additionally, broader market
conditions and investor activity are a product of many variables, most of which
are generally beyond our control and unpredictable.

For example, during the period from January 1, 2022 to March 31, 2022, we
recognized a decrease in net gain on trading securities of $107,883 as a result
of revaluation of securities in our proprietary investment accounts. Despite the
impact of the Conflict on the economies and securities markets where we operate,
we realized a net gain on trading securities of $77,671 for fiscal 2022, as
compared to $46,186 for fiscal 2021 and $14,923 for fiscal 2020. The net gain on
trading securities of $77,671 was composed of $179,216 of realized net gain and
$101,545 of unrealized net loss on securities positions that remained open at
March 31, 2022. For additional information regarding net gains and losses on
trading securities see "Net Gain/(Loss) on Trading Securities" below in this
Item 7.

Similarly, the significant fluctuations in the value of the Russian ruble and
the Kazakhstan tenge leading up to and following the beginning of the Conflict
in February 2022, resulted in us recognizing a $38,578 net loss on foreign
exchange operations during our fourth fiscal quarter 2022 and a net loss on
foreign exchange operations of $37,693 for the 2022 fiscal year. From April 1,
2022, through the date of this annual report, the USD/RUB exchange rate has
decreased by 25% (from 84.09 to 63.10) and USD/KZT exchange rate decreased by 8%
(from 465.46 to 427.39). Given the fluid and unpredictable nature of the
Conflict and sanctions and countersanctions, there is no assurance this trend
will continue. However, we expect this strengthening of the Russian ruble and
the Kazakhstan tenge against the U.S. dollar to positively impact our foreign
exchange operations in our first fiscal 2023. For additional information
regarding net losses and gains on foreign exchange operations, see "Net
(Loss)/Gain on Foreign Exchange Operations" below in this Item 7

Despite the negative effects of the fourth fiscal quarter discussed above, we
realized total revenue, net during fiscal 2022 of $564,663, including $431,938
of fee and commission income, and a net gain of trading securities of $77,671
and total net income of $211,369, compared to total net income of $142,924 and
$22,130, respectively, during fiscal 2021 and 2020.
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Growth of Retail Brokerage Activity

The retail brokerage markets in Kazakhstan and Russia, have grown rapidly in
recent years. This growth has had a significant positive effect on our results
of operations in recent periods. According to data from the KASE, the number of
active accounts of retail investors on the KASE equity market increased from
approximately 150.2 thousand in March 31, 2021 to 218.3 thousand in March 31,
2022. According to the MOEX (based on data provided by NAUFOR), the number of
retail customers on the MOEX increased from approximately 11.1 million as of
March 31, 2021 to 16.8 million as of March 31, 2022. There is no assurance that
such growth rates will continue in future periods.

Impact of COVID-19

The COVID-19 pandemic affected the global financial markets and resulted in
unprecedented global market conditions that led to significant growth in our
customer accounts, as well as increased activity from our existing customers,
resulting in higher fee and commission income. We believe that the interventions
from banks and governments in response to the COVID-19 pandemic and increased
time people spent at home during the pandemic, led to an opportunity and
optimism in opening investment accounts and investing in financial markets
worldwide, particularly in the U.S. capital markets, and in the non-U.S. markets
where we operate. The increased levels of customer activity combined with
greater market volatility led to significant growth in our customer accounts,
trading volume, fee and commission income, gains in our proprietary trading and
net income during the fiscal year ended March 31, 2022 and 2021.

While the overall impact of COVID-19 has been largely positive for our business
during the fiscal years ended March 31, 2022 and 2021, its future impacts on our
business, operational and financial performance is uncertain. We expect a return
to more traditional levels of customer interest in investing as we enter into a
less critical endemic period.

Governmental Policies

Our earnings are and will be affected by the monetary, fiscal and foreign
policies of the governments of Kazakhstan, Cyprus, and Russia. The monetary
policies of these countries may have a significant effect upon our operating
results. It is not possible to predict the nature and impact of future changes
in monetary and fiscal policies.

Related Party Transactions with FFIN Brokerage

A significant part of our brokerage business has consisted of providing
brokerage services indirectly to brokerage clients of FFIN Brokerage, which is
owned personally by Timur Turlov, our controlling shareholder, chairman and
chief executive officer, and is not part of our group of companies. FFIN
Brokerage has its own brokerage customers, which include individuals and
market-maker institutions. A large portion of our fee and commission income is
derived from the customer relationship between Freedom EU and FFIN Brokerage.
See "Legacy Operations and Key Relationships" in "Business" of Item 1, Part I of
this annual report.

Fee and commission income generated from FFIN Brokerage accounted for
approximately 54% of our total revenue for the year ended March 31, 2022, as
compared to approximately 55% of our total revenue for the year ended March 31,
2021, and 62% of our total revenue for the year ended March 31, 2020. As of
March 31, 2022, 2021 and 2020, amounts due from FFIN Brokerage were $102,680,
$8,948, and $90,696, respectively or 29%, 14%, and 80%, respectively, of total
brokerage and other receivables, net. We consider our receivables due from
related parties as at these respective dates to be fully collectible. All of our
transactions with FFIN Brokerage are conducted in the ordinary course of
business. Such transactions are conducted on substantially the same terms as
those prevailing at the time for comparable transactions with similarly situated
unaffiliated third parties.

Acquisitions

Historically we have been active in pursuing non-organic growth through mergers
and acquisitions. We expect this trend to continue in the future, including the
planned acquisitions discussed in "Acquisitions" above in this Item 7.





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Key Income Statement Line Items

Revenue

We derive revenue primarily from fee and commission income earned from our
retail brokerage and banking customers, fee and commission income from
investment banking services, our proprietary trading activities and interest
income. Fee and commission income as a percentage of our total revenue was 77%,
77% and 76% in the fiscal year ended March 31, 2022, 2021 and 2020,
respectively.

Fee and Commission Income

Fee and commission income consists principally of brokerage fees from customer
trading, including fees charged for providing margin lending and related banking
services, and fees for underwriting, market making and consulting services. A
substantial portion of our revenue is derived from commissions from customers
through accounts with transaction based pricing. Brokerage commissions are
charged on investment products in accordance with a schedule we have formulated
that aligns with local practices. Retail brokerage service fee and commission
income as a percentage of our total fee and commission income was 91%, 90% and
89% in the fiscal years ended March 31, 2022, 2021 and 2020, respectively. Fees
received for banking services consist primarily of wire transfer fees,
commissions for payment processing and commissions for currency exchange
operations.

Net Gain/(Loss) on Trading Securities

Net gain/(loss) on trading securities reflects the change in value of the
securities held in our proprietary trading portfolio each period. A net gain or
loss is comprised of both realized and unrealized gains and losses during the
period being presented. Realized gains or losses are recognized when we close an
open position in a security and recognize a gain or a loss on that position.
U.S. GAAP requires that we also reflect in our financial statements any
unrealized gain or loss on each open securities positions as of the end of each
period based on whether the value of the open position is higher or lower at the
period end than it was at either: (i) the beginning of the period, if the
position was held for the full period; or (ii) at the time the position was
opened, if the position was opened during the period. Fluctuations in unrealized
gains or losses from one period to another can occur as a result of factors
beyond our control, such as fluctuations in the market prices of the open
securities positions we hold resulting from market and economic uncertainty
arising from global or local events that cause significant market volatility, or
even halting of trading in certain markets, all of which occurred as a result of
the Russia/Ukraine Conflict. Fluctuations might also result from factors within
our control, such as when we elect to close an open securities position, which
would have the effect of reducing our open positions and, thereby potentially
reducing or increasing the amount of unrealized gains or losses in a period.
These fluctuations can adversely affect the ultimate value we realize from our
proprietary trading activities. Unrealized gains or losses in a particular
period may or may not be indicative of the gain or loss we will ultimately
realize on a securities position when the position is closed. As a result, we
might realize significant swings in net gains and losses realized on our trading
securities year-over-year and quarter-to-quarter.

Interest Income

We earn interest income from trading securities, reverse repurchase
transactions, and loans to customers. Interest income on trading securities
consists of interest earned from investments in debt securities and dividends
earned on equity securities held in our proprietary trading account.

Fee and Commission Expense

We incur fee and commission expense for operations within our brokerage and
banking activities. Fee and commission expense consists of expenses related to
brokerage, banking, stock exchange, clearing, and depository services.
Generally, we expect fee and commission expense to increase and decrease
corresponding to increases and decreases in fee and commission income.

Interest Expense

Interest expense includes the expenses associated with our short-term and
long-term financing, which consist of interest on securities repurchase
agreement obligations, customer accounts and deposits, debt securities issued,
and loans received.

Operating Expense

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Operating expense includes payroll and bonuses, advertising expenses, lease
cost, professional expenses, depreciation and amortization, communication
services, software support, stock compensation expense, representative expenses,
business trip expenses, utilities, charity, and other expenses.

Foreign Currency Translation Adjustments, Net of Tax

The functional currencies of our operating subsidiaries are the Russian ruble,
the Kazakhstan tenge, the euro, the U.S. dollar, the Ukrainian hryvnia, the
Uzbekistani som, the Kyrgyzstani som, the UK pound sterling, the Azerbaijani
manat and the Armenian dram. Our reporting currency is the U.S. dollar. Pursuant
to U.S. GAAP we are required to revalue our assets from our functional
currencies to our reporting currency for financial reporting purposes.

Net Income/(Loss) Attributable to Non-controlling Interest

We own a 9% interest in Freedom UA. The remaining 91% interest is owned by Askar
Tashtitov, the president of our Company. Through a series of agreements entered
into with Freedom UA that obligate us to guarantee the performance of all
Freedom UA obligations, provide Freedom UA adequate funding to cover its
operating losses and net capital requirements, provide the management competence
and operational support and ongoing access to our significant assets, technology
resources and expertise in exchange for 90% of all net profits of Freedom UA
after tax, we account for Freedom UA as a variable interest entity. We reflect
our ownership of Freedom UA as a non-controlling interest in our Consolidated
Statements of Financial Condition, Consolidated Statements of Comprehensive
Income, Consolidated Statements of Changes in Equity and Consolidated Statements
of Cash Flows.

All dollar amounts reflected in "Results of Operations," "Liquidity and Capital
Resources," "Contractual Obligations," and "Critical Accounting Policies" of
this MD&A are presented in thousands of U.S. dollars unless the context
indicates otherwise.

Results of Operations

Comparison of Years Ended March 31, 2022, 2021 and 2020

The following comparison of our financial results for the year ended March 31,
2022, 2021 and 2020, is not necessarily indicative of future results. Certain
prior period presentations and disclosures, while not required to be recast,
were reclassified to ensure comparability with current period classifications.

Revenue

The following table sets out information regarding our total revenue, net for
the periods presented.

                                                                                     Year ended March 31,
                               2022               2021             Amount Change                %                   2020              Amount                %
                                                                                              Change                                  Change              Change
Fee and commission income  $ 431,938          $ 271,939          $      159,999                     59  %       $  92,668          $ 179,271                  193  %
Net gain on trading
securities                    77,671             46,186                  31,485                     68  %          14,923             31,263                  209  %
Interest income               91,801             30,873                  60,928                    197  %          12,134             18,739                  154  %
Net (loss)/gain on foreign
exchange operations          (37,693)             3,428                 (41,121)                (1,200) %           2,315              1,113                   48  %
Net gain/(loss) on
derivatives                      946                125                     821                    657  %            (138)               263                 (191) %
Total revenue, net         $ 564,663          $ 352,551          $      212,112                     60  %       $ 121,902          $ 230,649                  189  %


                                                              Year ended March 31,
                                                           2022             2021       2020
Fee and commission income                                         77  %      77  %      76  %
Net gain on trading securities                                    14  %      13  %      12  %
Interest income                                                   16  %       9  %      10  %
Net (loss)/gain on foreign exchange operations                    (7) %       1  %       2  %
Net gain/(loss) on derivatives                                     -  %       -  %       -  %
Total revenue, net                                               100  %     100  %     100  %



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During fiscal 2022, we realized total net revenue of $564,663, a 60% increase
compared to fiscal 2021. Revenue during fiscal 2022 was higher than fiscal 2021
primarily due to increased fee and commission income, net gain on trading
securities and interest income, which was partially offset by a net loss on
foreign exchange operations.

During fiscal 2021 we realized total net revenue of $352,551, a 189% increase
compared to fiscal 2020. Revenue during fiscal 2021 was significantly higher
than fiscal 2020 primarily due to increases in all revenue categories during
fiscal 2021.

Fee and commission income

The following tables set forth information regarding our fee and commission
revenues for the periods presented.

                                                                                   Year ended March 31,
                              2022               2021             Amount Change               %                 2020              Amount                %
                                                                                            Change                                Change              Change

Retail brokerage fee and
commission income $ 391,996 $ 245,913 $ 146,083

                   59  %       $ 82,800          $ 163,113                  197  %
Investment banking fee
and commission income         8,705              8,345                     360                    4  %          2,360              5,985                  254  %
Commission from bank
services                     23,274             12,403                  10,871                   88  %          7,240              5,163                   71  %
Other fee and commission
income                        7,963              5,278                   2,685                   51  %            268              5,010                 1869  %
Total fee and commission
income                    $ 431,938          $ 271,939          $      159,999                   59  %       $ 92,668          $ 179,271                  193  %


                                                                               Year ended March 31,
                                                                  2022                 2021                 2020
                                                                   (as a % of total fee and commission income)
Retail brokerage fee and commission income                            91  %                90  %                89  %
Investment banking fee and commission income                           2  %                 3  %                 3  %
Commission from bank services                                          5  %                 5  %                 8  %
Other fee and commission income                                        2  %                 2  %                 -  %
Total fee and commission income                                      100  %               100  %               100  %



During fiscal 2022 fee and commission income was $431,938, an increase of
$159,999, or 59%, as compared to fee and commission income of $271,939 for
fiscal 2021. This increase in fee and commission income was primarily
attributable to a $146,083 increase in fees and commission from brokerage
services. The increase in fee and commission income from brokerage services was
attributable to growth in client accounts through organic efforts including
expansion of fee and commission generating activities such as an increase in the
number of clients, an increase in number of active clients, and more trades by
clients.

During fiscal 2021 fee and commission income increased by $179,271, a 193%
increase over fiscal 2020. This increase was the result of a $163,113 increase
in fees and commission from brokerage services primarily as a result of growth
in client accounts through non-organic and organic efforts including expansion
of our retail financial advisers and increases in the volume of analysts'
reports made available to our customer base, and significantly increased trading
volume and client activity stemming from government and bank interventions and
other events in response to the COVID-19 pandemic and the resulting increased
market volatility and economic uncertainty. During fiscal 2021 we also realized
a $5,163 increase in related banking service fees, and a $5,985 increase in fees
for underwriting services.

The increase in fees from underwriting services was driven mainly by increases
in the volume and size of debt capital market transactions arranged by
Kazakhstan brokerage companies, and the unique market opportunities created by
the COVID-19 pandemic.
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Net gain on trading securities

Net gain on trading securities was $77,671 for fiscal 2022 as compared to
$46,186 for fiscal 2021. See the following table for information regarding our
net gains and losses during fiscal 2022 and 2021:

See the following table for information regarding our net gains and losses
during fiscal 2022, 2021 and 2020:

                                        Unrealized Net
                Realized Net Gain         Gain/(Loss)        Net Gain on Trading Securities
Fiscal 2022    $          179,216      $      (101,545)     $                        77,671
Fiscal 2021    $           39,267               $6,919      $                        46,186
Fiscal 2020    $           22,770      $        (7,847)     $                        14,923


During fiscal 2022 we exchanged approximately 12.5 million shares of stock in
the SPBX we held in our proprietary trading account for units in the SPBX ETF.
The main contributing factors to the increase in realized net gain on trading
securities during fiscal 2022, compared to fiscal 2021, was the sale of those
SPBX ETF units and other SPBX shares we held. As a result, in fiscal 2022 we
recognized realized net gain on trading securities sold of $179,216. Largely as
a result of the Russia/Ukraine Conflict and its impacts on the securities
markets we had unrealized net losses on open trading positions of $101,545. As a
result of the foregoing, during fiscal 2022 we recognized a net gain on trading
securities of $77,671 as shown in the table above.

The main contributing factors to the increase in net gain on trading securities
in fiscal 2021 compared to fiscal 2020 included the increased size of our
trading portfolio, favorable market conditions, increased use and success of
intraday algorithmic trading and market-making activities on the SPBX outside of
regular U.S. market hours.

Interest income

The following tables set forth information regarding our revenue from interest
income for the periods presented.

Year ended March 31,

                            2022              2021             Amount Change               %                 2020             Amount                %
                                                                                         Change                               Change              Change
Interest income on
reverse repurchase
agreements and amounts
due from banks           $  6,172          $  3,428          $        2,744                   80  %       $  1,586          $  1,842                  116  %
Interest income on loans
to customers             $  4,927          $    579          $        4,348                  751  %       $    572          $      7                    1  %
Interest income on
trading securities       $ 80,702          $ 26,866          $       53,836                  200  %       $  9,976          $ 16,890                  169  %
Total interest income    $ 91,801          $ 30,873          $       60,928                  197  %       $ 12,134          $ 18,739                  154  %



                                                                              Year ended March 31,
                                                                 2022                 2021                 2020
                                                                       (as

a % of total interest income)
Interest income on reverse repurchase agreements and
amounts due from banks

                                                7  %                11  %                13  %
Interest income on loans to customers                                 5  %                 2  %                 5  %
Interest income on trading securities                                88  %                87  %                82  %
Total interest income                                               100  %               100  %               100  %



During fiscal 2022 we recognized a $60,928, or 197% increase in interest income
as compared to fiscal 2021. This increase in interest income was the result of
an increase in the total size of our trading portfolio and an increase in the
amount of bonds we held as a percentage of our total trading portfolio. During
fiscal 2022 we shifted more of our portfolio from equity to debt to take
advantage of a profitable bond market. In addition, we recognized a $4,348 or
751% increase in interest income from new loans issued to customers of Freedom
Bank KZ. We also realized a $2,744, or 80% increase in interest income due from
banks and from reverse repurchase transactions during fiscal 2022 as compared to
fiscal 2021.

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During fiscal 2021 we realized a $16,890, or 169% increase in interest income
from trading securities compared to fiscal 2020 because we increased the total
size of our trading portfolio and the percentage of our investments in bonds. We
also realized a $1,842, or 116% increase in interest income due from banks that
resulted primarily from increased overnight deposit transactions during fiscal
2021 and from reverse repurchase transactions because we engaged in an increased
volume of such transactions during fiscal 2021. We also realized increased
interest income due from banks of $461 that resulted primarily from increased
overnight deposit transactions during fiscal 2021.

Net gain/(loss) on foreign exchange operations

Under U.S. GAAP, we are required to revalue monetary assets and liabilities
denominated in any currency other than the functional currency of the entity
holding such asset or liability to the functional currency of that entity.
During the year ended March 31, 2022, we realized a net loss on foreign exchange
operations of $37,693 compared to a net gain of $3,428 during the year ended
March 31, 2021. The primary reason for this net loss was the 11% decrease in the
value of the Russian ruble against the U.S. dollar stemming from the
geopolitical turmoil that began in early 2022. Due to large amounts of USD
denominated net liabilities held in our subsidiary Freedom RU, we recognized a
net loss on foreign exchange operations of $21,532. Further, we realized a net
loss on foreign exchange operations affected by the purchase and sale of foreign
currency of $12,378 as a result of higher volume of currency exchange
transactions.

During fiscal 2021 we recognized a $1,113 increase in net gain on foreign
exchange operations compared to fiscal 2020 as the value of Kazakhstan tenge and
Russian ruble appreciated by 4.8% and 2.6%, respectively against U.S. dollar.

Expense

The following tables set forth information regarding our total expense for the
periods presented.

                                                                                        Year ended March 31,
                                    2022               2021             Amount Change               %                 2020             Amount                %
                                                                                                  Change                               Change              Change
Fee and commission expense      $  81,231          $  73,100          $        8,131                   11  %       $ 21,936          $ 51,164                  233  %
Interest expense                   75,899             27,366                  48,533                  177  %         12,399            14,967                  121  %
Operating expense                 161,593             77,434                  84,159                  109  %         59,990            17,444                   29  %
Provision for impairment
losses/(recoveries)                 2,985              1,561                   1,424                   91  %         (1,164)            2,725                 (234) %
Other expense, net                  6,061                 68                   5,993                 8813  %            609              (541)                 (89) %
Total expense                   $ 327,769          $ 179,529          $      148,240                   83  %       $ 93,770          $ 85,759                   91  %


                                                           Year ended March 31,
                                                        2022             2021       2020
Fee and commission expense                                     25  %      41  %      23  %
Interest expense                                               23  %      15  %      13  %
Operating expense                                              49  %      43  %      64  %
Provision for impairment losses/(recoveries)                    1  %       1  %      (1) %
Other expense, net                                              2  %       -  %       1  %
Total expense                                                 100  %     100  %     100  %


For fiscal 2022 we incurred total expenses of $327,769, an 83% increase as
compared to total expense of $179,529 for fiscal 2021. 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.

During fiscal 2021 we incurred total expenses of $179,529, a 91% increase
compared to fiscal 2020. Expenses increased with the growth of our business
during fiscal 2021 primarily in connection with corresponding administrative
costs and fees from the growth in our revenue generating activities and
integrating our acquisition targets.

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Fee and commission expense

Fee and commission expense increased by $8,131, or 11%, during fiscal 2022 as
compared with fiscal 2021. This included increases in commissions paid for bank
services of $5,894 and commission fees paid for clearing and exchange services
of $1,185.

Fee and commission expense increased by $51,164, or 233% during fiscal 2021
compared to fiscal 2020. This included increases in brokerage commissions to our
prime brokers of $44,425, commissions paid for bank services of $3,796 and
commission fees paid to Central Depositories and stock exchanges of $879.

These increases in fee and commission expense were the result of both growth in
our client base and increased transaction volume from our clients. Generally, we
expect fee and commission expense to increase and decrease in correspondence
with increases and decreases in fee and commission income.

Interest expense

For fiscal 2022 we incurred a $48,533, or 177% increase in interest expense as
compared to fiscal 2021. The increase in interest expense is primarily
attributable to a $36,929, or 253% increase in the volume of short-term
financing through securities repurchase agreements, and a $11,327 increase in
interest on customer deposits. During fiscal 2022 we increased our volume of
short-term financing through securities repurchase agreements primarily in order
to fund our investment portfolio. The increase in interest on customer deposits
was a result of the growth of customer deposit accounts.

For fiscal 2021 we incurred a $14,967 or 121% increase in interest expense over
fiscal 2020. The increased interest expense is primarily attributable to a
$7,434 increase in volume of short-term financing through securities repurchase
agreements, a $5,671 increase in interest on client deposits, and a $1,914
increase in interest expense on debt securities issued. 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 client
deposits was a result of a growth of customer deposits. The increase of interest
expense on debt securities was due to increased interest payments paid on the
FRHC Notes issued in December 2019 and February 2020.

Operating expenses

Operating expenses for fiscal 2022 was $161,593, a 109% increase compared to
fiscal 2021. This increase was primarily attributable to a $36,949 increase in
payroll and bonuses expense as a result of expansion of our workforce through
hiring, a $14,599 increase in stock compensation expense from issuing restricted
stock grants to key employees in May 2021, a $10,247 increase in advertising
expenses, an $8,448 increase in professional services as a result of expansion
of our business, a $2,311 increase in software support, and a $1,695 in lease
depreciation.

Operating expenses for fiscal 2021 totaled $77,434, a $17,444, or 29% increase
compared to fiscal 2020. This increase was primarily attributable to a $14,015
increase in payroll and bonus expense as a result expansion of our workforce
through acquisition and hiring.

Other expense

During fiscal 2022, we incurred an 8,813% increase of other expense, net as
compared to fiscal 2021. This was due to economic uncertainty during our fourth
fiscal quarter stemming from the Russia/Ukraine Conflict, where we recognized a
$2,300 impairment losses on goodwill of Freedom Bank RU, Zerich, and Freedom UA.
Other expense, net during fiscal 2022 also included write-off expenses of client
base that was recognized with the acquisition of Zerich in the amount of $3,126.

Income tax expense

We recognized net income before income tax of $236,894, $173,022 and $28,132
during fiscal 2022, 2021 and 2020, respectively. Our effective tax rate during
fiscal 2022 decreased to 10.8%, from 17.4% during fiscal 2021 as a result of
changes in the composition of the revenues we realized from our operating
activities and the tax treatment of those revenues in the various foreign
jurisdictions where our subsidiaries operate along with the incremental U.S. tax
on GILTI. Despite the decrease in our effective tax rate, as a result in the
increase of our net income before income tax by $63,872, our income tax expense
increased by $4,573 during the fiscal 2022.

Net income

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As a result of the foregoing factors, for fiscal 2022 we had net income of
$211,369 as compared to $142,924 for fiscal 2021, an increase of 48%. For fiscal
2020 we had net income of $22,130.

Non-controlling interest

We reflect our ownership of Freedom UA as a non-controlling interest in our
Consolidated Statements of Financial Condition, Consolidated Statements of
Comprehensive Income, Consolidated Statements of Changes in Equity and
Consolidated Statements of Cash Flows. We recognized a net loss attributable to
non-controlling interest of $6,566 for the fiscal year 2022 as compared to a net
income attributable to non-controlling interest of $631 for the fiscal year
2021. Largely as a result of the Russia/Ukraine Conflict and its impacts on the
securities markets where Freedom UA held most of its open securities positions,
we recognized an unrealized net loss on open trading positions of $5,471.

We own a 9% interest in Freedom UA. The remaining 91% interest is owned by Askar
Tashtitov, the president of our Company. Through a series of agreements entered
into with Freedom UA that obligate us to guarantee the performance of all
Freedom UA obligations, provide Freedom UA adequate funding to cover its
operating losses and net capital requirements, provide the management competence
and operational support and ongoing access to our significant assets, technology
resources and expertise in exchange for 90% of all net profits of Freedom UA
after tax, we account for Freedom UA as a variable interest entity. We reflect
our ownership of Freedom UA as a non-controlling interest in our Consolidated
Statements of Financial Condition, Consolidated Statements of Comprehensive
Income, Consolidated Statements of Changes in Equity and Consolidated Statements
of Cash Flows.

Foreign currency translation adjustments, net of tax

Due to the depreciation of the Russian ruble by 11% against the U.S. dollar and
depreciation of Kazakhstan tenge by 9.4% against the U.S. dollar for fiscal year
2022 as compared to fiscal year 2021, we realized a foreign currency translation
loss of $17,245 for fiscal year 2022, compared to a foreign currency translation
gain of $1,857 for fiscal year 2021. During fiscal 2020, we realized a foreign
currency translation loss of $14,851 as a result of the depreciation of the
Russian ruble by 20% and the Kazakhstan tenge by 18% against the U.S. dollar.

Segment Results of Operations

We have historically operated as a single operating segment. With the planned
restructuring of our operations and divestiture of our Russian subsidiaries,
coupled with our continued expansion, we have elected to reorganize our
operations geographically into five regional segments: Central Asia, Europe,
United States, Middle East/Caucasus, and Russia (until completion of the planned
divestiture). Moving forward after completion of the divestiture of our Russian
subsidiaries, we will manage our operations in four regional segments. These
operating segments are based on how our CODM will be making decisions about
allocating resources and assessing performance. The total revenue, net
associated with our segments is summarized in the following table:

                                                                                            Year ended March 31,
                                                                          Amount Change               %                                    Amount                 %
                                      2022               2021                                       Change               2020              Change              Change
Central Asia                        118,067             55,722          $       62,345                  112  %       $  19,221          $  36,501                   190  %
Europe                              437,706            201,188                 236,518                  118  %          63,781            137,407                   215  %
U.S.                                  9,139              9,086                      53                    1  %             236              8,850                 3,750  %
Russia                                 (249)            86,555                 (86,804)                (100) %          38,664             47,891                   124  %
Middle East/Caucasus                      -          $       -                       -                    -  %               -                  -                     -  %
Total revenue, net                $ 564,663          $ 352,551          $      212,112                   60  %       $ 121,902          $ 230,649                   189  %



During fiscal 2022 total revenue, net increased across each of our regional
operating segments, except Russia. During fiscal 2021 total revenue, net
increased across each of our regional operating segments. The increase in total
net revenues for fiscal 2022 compared to fiscal 2021, and fiscal 2021 compared
to fiscal 2020, was driven by the following:

•Total revenue, net in our Central Asia segment increased $62,345, or 112%, to
118,067 for fiscal 2022, as compared to $55,722 during fiscal 2021. This
increase was mainly driven by the increase of interest income. This increase of
interest income was primarily impacted by growth of interest received from
securities held in our trading portfolio and an increase in interest accrued
from loans issued. Moreover, this segment was significantly affected by the
increase in commission fees from brokerage and banking services during the year
caused by the expansion of our brokerage and banking business.
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Total revenue, net in our Central Asia segment increased $36,501, or 190%, to
$55,722 for fiscal 2021, as compared to $19,221 during fiscal 2020. This
increase was mainly driven by the increase of commission income. During fiscal
2022 growth of commission income was caused by the opening and rapid growth of
brokerage services by Freedom Global. Furthermore, we had growth of income on
brokerage services and growth of commission from underwriting services. The
increase of revenue was also due to the rise of net gain on trading securities,
related to growth of our trading portfolio and an increase in interest income
from securities held in our trading portfolio.

•Total revenue, net in our Europe segment increased $236,518, or 118%, to
$437,706 for fiscal 2022, as compared to $201,188 during fiscal 2021. This
increase was driven by an increase in fee and commission income due to an
increase in the number of clients and the volume of transactions they made.
There was also a large increase in revenue due to the growth of net gain on
trading securities as a result of realized gain from the sale of the SPBX ETF
and SPBX shares for our investment portfolio. Total revenue, net in our Europe
segment increased $137,407, or 215%, to $201,188 for fiscal 2021, as compared to
$63,781 during fiscal 2020. This growth was driven by an increase in commission
income for the year due to an increase in the size of our customer base and the
volume of transactions they make.

•Total revenue, net in our U.S. segment was stable during fiscal 2022 and
increased only by $53 or 1% as compared to fiscal year 2021. Total revenue, net
in our U.S. segment increased by $8,850 or 3,750%, to $9,086 for fiscal year
2021, as compared to $236 during fiscal year 2020. This increase was driven by
positive revaluation of the SPBX shares and acquisition of PrimeEx in addition
to its earned fee and commission income.

•We did not recognize revenue in our Middle East/Caucasus segment during fiscal
2021 and 2020 as none of our Azerbaijani, Armenian or UAE subsidiaries existed
in those periods. During fiscal 2022 we began the process of forming our
Azerbaijani and Armenian subsidiaries and establishing their operations. We did
not form our UAE subsidiary until April 2022 and are still in process of
establishing its operations.

•Total revenues, net in our Russia segment decreased by $86,804, or 100%,
generating negative net revenue of ($249) for fiscal year 2022, as compared to
$86,555 during fiscal year 2021. This decrease in total revenue, net was driven
by a net loss on trading securities from negative revaluation of certain
securities, and a net loss on foreign currency exchange operations from an 11%
depreciation of the Russian ruble against the U.S. dollar. These decreases were
partially offset by growth in fee and commission income as a result of an
increase the volume of customer transactions and expansion of the customer base
in our Russia segment. Total revenue, net in our Russia segment increased by
$47,891, or 124% during fiscal 2021, to $86,555, as compared to$38,664 during
fiscal year 2020. During fiscal 2021, net revenues increased as a result of
overall expansion our business in our Russia segment, both in the size of its
customer base and its trading portfolio.

The total expenses associated with our segments is summarized in the following
table:

                                                                                           Year ended March 31,
                                      2022               2021             Amount Change                %                 2020             Amount                %
                                                                                                    Change                                Change              Change
Central Asia                        112,316             34,632          $       77,684                   224  %         26,927          $  7,705                   29  %
Europe                              101,078             79,176                  21,902                    28  %         22,432            56,744                  253  %
U.S.                                 17,134              7,642                   9,492                   124  %          4,423             3,219                   73  %
Russia                               96,961             58,064                  38,897                    67  %         39,988            18,076                   45  %
Middle East/Caucasus                    280                 15                     265                 1,767  %              -                15                    -  %
Total expense, net                $ 327,769          $ 179,529          $      148,240                    83  %       $ 93,770          $ 85,759                   91  %



During fiscal 2022, total expense increased across each of our regional
operating segments. During fiscal 2021, total expense increased in our Central
Asia, Europe, U.S and Russia segments as compared to fiscal 2020. The increase
in total expenses for fiscal 2022 compared to fiscal 2021, and fiscal 2021
compared to fiscal 2020, was driven by the following:

•Total expense in our Central Asia segment increased by $77,684, or 224%, to
$112,316 for fiscal 2022, as compared to $34,632 during fiscal 2021. This
increase was driven by the increase in interest expense. This increase of
interest expense was primarily impacted by growth of interest paid on securities
repurchase agreements and customer deposits. Moreover, this segment was
significantly affected by the increase in operating expenses due to the growth
of payroll and bonuses and administrative expenses. Total expense in our Central
Asia segment increased by $7,705, or 29%, to $ 34,632 for fiscal 2021, as
compared to $26,927 during fiscal 2020.
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This increase was driven by the increase in interest expense. During the fiscal
2021, growth of interest expense was caused by the acquisition of Freedom Bank
KZ, and its rapid growth of securities repurchase agreements and payments for
customer deposits. The increase of expenses was also caused by an increased
expenses associated with provisions for impairment losses due to estimates of
uncollectible receivables.

•Total expense in our Europe segment increased $21,902, or 28%, to $101,078 for
fiscal 2022 as compared to $79,176 during fiscal 2021. This increase was driven
by the growth of operating expense, mainly due to payroll and bonuses, marketing
expense, and professional services. Total expense in our Europe region increased
$56,744, or 253%, to $79,176 for fiscal 2021 as compared to $22,432 during
fiscal 2020. This increase was driven by the growth of fee and commission
expense from an increase in our customer base and related transaction volume
increase, and by an increase in operating expense related to the growth of our
business in this region.

•Total expense in our U.S. segment increased $9,492, or 124%, to $17,134 for
fiscal 2022 as compared to $7,642 during fiscal 2021. This increase was driven
by the growth of stock compensation expense and an increase of professional
services. Total expenses in our U.S. segment increased by $3,219 or 25%, to
$7,642 for fiscal 2021 compared to $4,423 during fiscal 2020 due to the growth
of stock compensation expenses.

•Total expense in our Russia segment increased $38,897, or 67%, to $96,961 for
fiscal 2022 as compared $58,064 during fiscal 2021. This increase was mostly due
to the increase of operating expenses for payroll and bonuses, advertising,
lease cost and representative expenses. Total expenses in our Russia segment
increased by $18,076, or 45% to $58,064 during fiscal 2021 as compared to
$39,988 during fiscal 2020. This increase was driven mostly due to the increase
of fee and commission expense, interest expense and operating expenses from the
expansion our business in our Russia segment.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet our potential cash
requirements for general business purposes. During the periods covered in this
report our operations were primarily funded through a combination of existing
cash on hand, cash generated from operations, returns generated from our
proprietary trading and proceeds from the sale of bonds and other borrowings.

We regularly monitor and manage our leverage and liquidity risk through various
committees and processes we have established to maintain compliance with net
capital and capital adequacy requirements imposed on securities brokerages and
banks in jurisdictions where we do business. We assess our leverage and
liquidity risk based on considerations and assumptions of market factors, as
well as other factors, including the amount of available liquid capital (i.e.,
the amount of cash and cash equivalents not invested in our operating business).
While we are confident in the risk management monitoring and processes we have
in place, a significant portion of our trading securities and cash and cash
equivalents are subject to collateralization agreements. This significantly
enhances our risk of loss in the event financial markets move against our
positions. When this occurs our liquidity, capitalization and business can be
negatively impacted. Certain market conditions can impact the liquidity of our
assets, potentially requiring us to hold positions longer than anticipated. Our
liquidity, capitalization, projected return on investment and results of
operations can be significantly impacted by market events over which we have no
control, and which can result in disruptions to our investment strategy for our
assets.

We maintain a majority of our tangible assets in cash and securities that are
readily convertible to cash, including governmental and quasi-governmental debt
and highly liquid corporate equities and debt. Our financial instruments and
other inventory positions are stated at fair value and should generally be
readily marketable in most market conditions. The following sets out certain
information regarding our assets as of the dates presented:

                                        As of March 31,
                                     2022             2021
Cash and cash equivalents(1)     $   625,547      $   698,828
Trading securities               $ 1,203,479      $   736,188
Total assets                     $ 2,921,009      $ 2,018,645
Net liquid assets(2)             $ 2,212,300      $ 1,519,719


(1)Of the $625,547 in cash and cash equivalents we held at March 31, 2022,
$278,463, or approximately 45%, 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 36%, were subject to reverse repurchase agreements.
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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 levels for each entity.

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

During fiscal year 2022 and 2021, we had total liabilities of $2,413,334 and
$1,742,974, respectively, including customer liabilities of $1,417,937 and
$1,163,697, respectively.

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

Cash Flows

The following table presents our cash flows for fiscal 2022, 2021 and 2020:

                                                              Year ended               Year ended             Year ended
                                                            March 31, 2022           March 31, 2021         March 31, 2020

Net cash flows (used in)/from operating activities $ (347,988)

        $       565,299          $     44,271
Net cash flows (used in)/from investing activities                 (8,703)                  97,040               (10,854)
Net cash flows from financing activities                          453,684                  348,411                33,109
Effect of changes in foreign exchange rates on cash               (54,552)                  (3,769)              (25,141)

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ 42,441

$ 1,006,981 $ 41,385

Net Cash Flows (Used In)/From Operating Activities

Net cash used in operating activities during fiscal 2022 was comprised of net
cash used in operating activities and net income adjusted for non-cash movements
(depreciation and amortization, noncash lease expense, changes in deferred
taxes, stock compensation expense, unrealized gain on trading securities, net
change in accrued interest and allowance form receivables). Net cash used in
operating activities resulted primarily from changes in operating assets and
liabilities. Such changes included those set out in the following table:

                                                             Year ended               Year ended             Year ended
                                                           March 31, 2022           March 31, 2021         March 31, 2020

Increases in trading securities                          $       654,027    (1)   $       507,493          $     22,870
Increases in customer liabilities                        $       352,533    (2)   $       860,438          $    115,844
Increases/(decreases) in brokerage and other receivables $       313,687    (3)   $       (49,303)         $     47,089
Increases in loans purchased from microfinance
organization                                             $        59,839    (4)   $             -          $          -
Increases in loans issued                                $        44,270    (5)   $           850          $      7,787

(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 increased volume of margin lending receivables.

(4)Resulted from the purchase of uncollateralized consumer retail loans from
FFIN Credit.

(5)Resulted from launching a first-in-market digital mortgage product by our
subsidiary Freedom Bank KZ.

The net cash outflow during fiscal 2022 was primarily attributable to an
increase in brokerage and other receivables over that period, which resulted
from larger amounts of margin receivables. Margin lending balances fluctuate on
a daily basis during the normal course of business and depend on various
factors, including trading activity of customers.
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Net Cash Flows (Used In)/From Investing Activities

During the fiscal year 2022 net cash used in investing activities was $8,703
compared to net cash from investing activities of $97,040 during the fiscal year
2021 and cash used in investing activities of $10,854 during the fiscal year
2020. During the fiscal 2022 cash used in investing activities was used for the
purchase of fixed assets, net of sales, in the amount of $8,703. Cash from
investing activities during the fiscal 2021 included $157,382 received in the
acquisition of Zerich, Freedom Bank KZ and PrimeEx and $6,437 from proceeds on
the sale of investments available-for-sale, which was partially offset by
consideration paid for the Freedom Bank KZ acquisition of $53,097, the Zerich
acquisition of $7,110, the PrimeEx acquisition of $2,500 and the purchase of
fixed assets, net of sales of $4,072. During the fiscal year 2020 cash used in
investing activities was mostly used for the purchase of investments
available-for-sale securities and fixed assets, net of sales, the amount of
$6,508 and $4,346, respectively.

Net Cash Flows From Financing Activities

Net cash from financing activities for fiscal year 2022 consisted principally of
proceeds from securities repurchase agreement obligations in the amount of
$401,468, proceeds from issuance of debt securities of $47,200, and capital
contributions of $21,600, partially offset by net cash used in the repurchase of
outstanding Freedom KZ and Freedom RU debt securities in the amount of $16,703.
Net cash from financing activities during fiscal 2021 consisted principally of
proceeds from securities repurchase agreement obligations in the amount of
$349,717, which was partially offset with net cash used in repurchase of
outstanding Freedom KZ debt securities in the amount of $8,350. Net cash from
financing activities during fiscal 2020 consisted principally of proceeds from
issuance of debt securities in the amount of $62,970, which was partially offset
with net cash used in payment of securities repurchase agreement obligations of
$16,730, and repurchase of Freedom KZ debt securities in the amount of $9,578.

Dividends

We have not declared or paid a cash dividend on our common stock during the past
three fiscal years. We currently intend to retain any future earnings to fund
the operation, development and expansion of our business, and therefore we do
not anticipate paying any cash dividends on common stock in the foreseeable
future. Any payment of cash dividends on stock in the future will be at the
discretion of our board of directors and will depend upon our results of
operations, earnings, capital requirements, financial condition, future
prospects, contractual and legal restrictions and other factors deemed relevant
by our board of directors.

Indebtedness

Short-term

Securities Repurchase Arrangements. Our short-term financing is primarily
obtained through securities repurchase arrangements entered into with the KASE.
We use repurchase arrangements, among other things, to finance our inventory
positions. As of March 31, 2022, $769,627, or 64% of the trading securities held
in our proprietary trading account were subject to securities repurchase
obligations compared to $426,669, 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 12
"Securities Repurchase Agreement Obligations" to our consolidated financial
statements contained in Part II Item 8 of our annual report.

Long-term

FRHC 7.00% Notes due December 2022. As of March 31, 2022, we had outstanding
$20,500 in principal amount of FRHC 7.00% notes due December 2022, which are
listed on the AIX. These notes provide for semi-annual interest payments in June
and December and include customary events of default relating to the disposition
of our assets outside the ordinary course of business, defaults on other
liabilities and obligations, corporate reorganizations, initiation of bankruptcy
proceeding, termination of the AIX listing by us, and substitution of the
principal debtor without requisite approval. These notes mature in December
2022.

Freedom RU USD 6.50% Bonds. As of March 31, 2022, we had outstanding $30,043 in
principal amount of Freedom RU U.S. dollar denominated 6.50% bonds (the "Freedom
RU USD 6.50% Bonds"). The Freedom RU USD 6.50% Bonds have a term of three years,
with a quarterly coupon payment. The Freedom RU USD 6.50% Bonds were issued in
denomination of U.S. $1, 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 6.50% Bonds. The Freedom RU USD 6.50% 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 6.50% Bonds mature
in January 2023.
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Freedom RU USD 5.50% Bonds. As of March 31, 2022, we had outstanding $34,000 in
principal amount of Freedom RU U.S. dollar denominated 5.50% bonds (the "Freedom
RU USD 5.50% Bonds"). The Freedom RU USD 5.50% Bonds have a term of five years,
with a quarterly coupon payment. The Freedom RU USD 5.50% Bonds were issued in
denomination of U.S. $1, with a minimum purchase requirement of 1.4 million
Russian rubles. Freedom RU is authorized to place up to a maximum of 34,000 of
these Freedom RU USD 5.50% Bonds. The Freedom RU USD 5.50% Bonds are listed on
the MOEX. The Freedom RU USD 5.50% Bonds are governed by the Securities
Placement Terms and Conditions and the Resolution to Issue Securities. The
Freedom RU USD 5.50% Bonds mature in November 2026.

Freedom SPC Bonds. On November 16, 2021, Freedom SPC commenced a best efforts
underwritten public offering of up to US $66,000 aggregate principal amount of
its 5.50% US dollar denominated bonds due October 21, 2026 (the "Freedom SPC
Bonds"), which are listed on the AIX. As of March 31, 2022, there were
outstanding $13,200 in principal amount of the Freedom SPC Bonds. The offering
may continue for a period of up to one year from the date of the commencement of
the offering. The Freedom SPC Bonds are guaranteed by FRHC and the proceeds from
the issuance of the Freedom SPC Bonds have been and will be, as the case may be,
transferred to FRHC pursuant to an intercompany loan agreement that bears
interest at a rate of 5.50% per annum. The Freedom SPC Bonds are governed by the
Offer Terms of the 5.5% Coupon US $66,000,000 Bonds Due October 21, 2026. The
Freedom SPC Bonds mature in October 2026.

Freedom RU RUB Bonds. During the quarter ended December 31, 2021, we repaid in
full at maturity our RUB denominated 12.00% Freedom RU RUB Bonds that had a
carrying value of $7,042 including interest accrued of $312 as of December 31,
2021.

  Freedom KZ USD Bonds. During the quarter ended June 30, 2021, we repaid in
full at maturity our U.S. dollar denominated 8% Freedom KZ USD bonds that had a
carrying value of $10,477 including interest accrued of $447 as of March 31,
2021.

Net Capital Requirements

A number of our subsidiaries are required to satisfy minimum net capital and
capital adequacy requirements to conduct their brokerage, banking and insurance
operations in the jurisdictions in which they operate. This is partially
maintained by retaining cash and 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 and capital adequacy requirements range from
approximately $22 to $21,480 and fluctuate depending on various factors. At
March 31, 2022, the aggregate net capital requirements of our subsidiaries was
approximately $27,585. Each of our subsidiaries that are subject to net capital
or capital adequacy requirements exceeded the minimum required amount at March
31, 2022. Although we operate with levels of net capital and capital adequacy
substantially greater than the minimum established thresholds, in the event we
fail to maintain minimum net capital or capital adequacy levels, we may be
subject to fines and penalties, suspension of operations, revocation of
licensure and disqualification of our management from working in the industry.
Our subsidiaries are also subject to other various rules and regulations,
including liquidity and capital adequacy ratios. Our operations that require the
intensive use of capital would be limited to the extent necessary to meet all
our regulatory requirements.

Over the past several years, we have pursued an aggressive growth strategy both
through acquisitions and organic growth efforts. During fiscal 2022 we
anticipate continuing efforts to expand the footprint of our business on a scale
similar to fiscal 2021, while at the same time divesting our Russian
subsidiaries. While our active growth strategy has led to revenue growth it also
results in increased expenses and greater need for capital resources. Additional
growth and expansion, or the costs associated with divestiture of our Russian
subsidiaries and the impacts of that action, may require greater capital
resources than we currently possess, which could require us to pursue additional
equity or debt financing from outside sources. We cannot assure 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 ability to raise additional capital will be
sufficient to meet our present and anticipated financing needs.

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Off-Balance Sheet Financing Arrangements

For a discussion of off-balance sheet financing arrangements of the Company as
of March 31, 2022, see Note 27 "Commitments and Contingencies" to our
consolidated financial statements contained in Part II Item 8 of our annual
report.

Contractual Obligations

The following table sets forth information related to our contractual
obligations as of March 31, 2022:

                                                          Payment Due by Period
                                                 Less than                                    More than
Contractual Obligations             Total         1 year        Years 2-3      Years 4-5       5 years
                                                              (in thousands)
Operating lease obligations      $  18,531      $   8,582      $   7,299      $   2,379      $      271
Outstanding bonds and notes        113,389         56,516          5,170         51,703               -

TOTAL                            $ 131,920      $  65,098      $  12,469      $  54,082      $      271

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of 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.

Allowance for accounts receivable

Allowance for accounts receivable is a valuation allowance for probable incurred
credit losses. Loan losses are charged against the allowance when management
believes the collectability of an account receivable balance is doubtful.
Subsequent recoveries, if any, are credited to the allowance. Management
estimates the allowance balance required using past accounts receivable loss
experience, the nature and volume, 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,
mostly 3-5 years, which management reviews periodically.

Goodwill

We have accounted for our acquisitions using the acquisition method of
accounting. The acquisition method requires us to make significant estimates and
assumptions, especially at the acquisition date as we allocate the purchase
price to the estimated fair values of acquired tangible and intangible assets
and the liabilities assumed. We also use our best estimates to determine the
useful lives of the tangible and definite-lived intangible assets, which impact
the periods over which depreciation and amortization of those assets are
recognized. These best estimates and assumptions are inherently uncertain as
they pertain to forward looking views of our businesses, customer behavior, and
market conditions. In our acquisitions, we have also recognized goodwill at the
amount by which the purchase price paid exceeds the fair value of the net assets
acquired.

Our ongoing accounting for goodwill and the tangible and intangible assets
acquired requires us to make significant estimates and assumptions as we
exercise judgement to evaluate these assets for impairment. Our processes and
accounting policies for evaluating impairments are further described in Note 2
"Summary of Significant Accounting Policies" to our consolidated financial
statements contained in Part II Item 8 of our annual report. As of March 31,
2022, the Company had goodwill of $5,388.
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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 2 "Summary of Significant Accounting Policies" of our
financial statements contained in Part II Item 8 of this annual report.

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 result in rising
interest rates and has adverse impacts upon securities markets, it may adversely
affect our results of operations and financial condition.