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

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

Special Note About Forward-Looking Information

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

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

•economic sanctions imposed by the U.S., UK, EU and other countries against
Russia in response to the ongoing large-scale Russian military action against
Ukraine ("Russia/Ukraine Conflict"), as well as, Russian countersanctions
enacted in response to such economic sanctions;
•general economic and political conditions globally and in the particular
markets where we operate;
•declines in global financial markets;
•trading volumes and demand for brokerage services in our key markets;
•changes in our relationships or arrangements with related parties and third
party service providers;
•the 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 brokerage, market making, banking and insurance businesses;
•fluctuations in interest rates and foreign currency exchange rates;
•failure to protect or enforce our intellectual property rights in our
proprietary technology;
•risks associated with being a "controlled company" within the meaning of the
rules of Nasdaq;
•the loss of key executives or failure to recruit and retain personnel;
•our ability to keep up with rapid technological change;
•information technology, trading platform and other electronic system failures,
cyber security breaches and other disruptions;
•losses caused by non-performance by third parties;
•decreased profitability if loan payment delinquencies in our lending portfolio
increase;
•losses (whether realized or unrealized) on our investments;
•our inability to integrate any businesses we acquire or otherwise adapt to
expansion and rapid growth in our business;
•risks inherent in doing business in Russia and the other developing markets in
which we do business;
•the impact of tax laws and regulations, and their changes, in any of the
jurisdictions in which we operate;
•non-compliance with laws and regulations in each of the jurisdictions in which
we operate, particularly those relating to the securities and banking
industries;
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•the creditworthiness of our trading counterparties, and banking and margin
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, political discord and social unrest;
•risks associated with our insurance businesses, such as inaccuracies in our
modeling and risk assumptions, or inability to obtain or collect on reinsurance;
and
•other factors discussed in this report, as well as in our annual report on Form
10-K for the fiscal year ended March 31 2022, filed with the SEC on May 31,
2022.

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

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

OVERVIEW

Our Business

Freedom Holding Corp. (referred to herein as the "Company, " "FRHC," "we,"
"our," and "us") is a holding company that operates internationally through our
diversified financial services subsidiary businesses. Our subsidiaries engage in
a broad range of activities, including securities dealing, market making, retail
securities brokerage, investment research, investment counseling, investment
banking and underwriting services, commercial banking and insurance. Our
principal executive office is in Almaty, Kazakhstan and we have regional
administrative offices in the United States ("U.S."), Europe, and Russia.

Our securities brokerage subsidiaries are professional participants on the
Kazakhstan Stock Exchange (KASE), Astana International 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 a member of the New York Stock Exchange (NYSE) and Nasdaq
Stock Exchange (Nasdaq). All of our securities broker dealer activities are
subject to extensive regulation in the various jurisdiction where they conduct
business.

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






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Regional Segments

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

Central Asia Segment

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

As of June 30, 2022, our Central Asia segment had 40 securities brokerage
offices, including offices in Kazakhstan, Ukraine, Uzbekistan and Kyrgyzstan,
that provide brokerage and financial services, and investment consulting and
education.

As of June 30, 2022, our Central Asia segment had 11 bank office locations, all
in Kazakhstan, that provide commercial banking services to our customers. We
generate banking service fees by providing services that include lending
operations, deposit services, money transfers, opening and maintaining
correspondent accounts, renting safe deposit boxes, e-commerce money transfer
services for legal entities, tender guarantees, and payment card services.

In May 2022, we concluded the acquisition of two insurance companies with a
total of 55 insurance offices in Kazakhstan. The insurance companies provide
consumer life and general insurance services including life insurance, health
insurance, annuity insurance, accident insurance, obligatory worker emergency
insurance, travel insurance, and general insurance products in property
(including automobile), casualty, civil liability, personal insurance and
reinsurance.

The Central Asia segment accounted for approximately $98.9 million, or 44%, of
our total revenue, net and approximately $82.2 million, or 53% of our total
expense, during the three months ended June 30, 2022.

Europe Segment

Our Cyprus securities brokerage firm, Freedom EU, oversees our Europe segment
operations (Cyprus, the UK, Germany, Spain, Greece, and France). Freedom EU is
licensed to receive, transmit and execute customer orders, establish custodial
accounts, engage in foreign currency exchange services and margin lending.
Through our Cyprus office we provide transaction processing and intermediary
services to our non-U.S. segment customers and to institutional customers that
may seek access to securities markets in the U.S. and Europe. All trading of
U.S. and European exchange traded and OTC securities by our brokerage firms,
excluding our U.S. subsidiary, PrimeEx, are routed to and executed through
Freedom EU. Freedom EU is a member of the Association for Financial Markets in
Europe ("AFME").

As of June 30, 2022, our Europe segment brokerage offices consisted of 7 total
offices, including offices in Cyprus, the UK, Germany, France, Spain and Greece,
that provide securities broker dealer and financial services, and investment
consulting and education. During the quarter ended June 30, 2022, our Europe
segment generated approximately $69.5 million, or 31%, of our total revenue, net
and approximately $26.7 million, or 17%, of our total expense.

U.S. Segment

Our subsidiary PrimeEx is a registered agency-only execution broker-dealer on
the floor of the NYSE. PrimeEx is a member of the NYSE, Nasdaq, the Financial
Industry Regulatory Authority ("FINRA") and the Securities Investor Protection
Corporation ("SIPC"). In January 2022, PrimeEx received regulatory approval from
FINRA to establish an investment banking and equity capital markets arm, which
does business as Freedom Capital Markets ("FCM"). FCM is approved to provide its
corporate and institutional customers with a full array of investment banking,
corporate finance, and capital markets advisory services, with capabilities
including initial and follow-on offerings, PIPEs (Private Investment in Public
Equity), SPACs (Special Purpose Acquisition Company), private placements,
convertible issues, debt capital, mergers and acquisitions, corporate access,
and corporate restructuring. We currently have 2 offices in the U.S. segment,
including PrimeEx and FRHC. During the quarter ended June 30, 2022, the U.S.
region generated approximately $3.6 million, or 2%, of our total revenue, net
and approximately $10.8 million, or 7%, of our total expense.



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Middle East/Caucasus Segment

We entered into the Caucasus market during fiscal year 2022 by establishing
subsidiaries in Azerbaijan and Armenia. In April 2022, we entered into the
Middle East market by establishing a subsidiary in the United Arab Emirates. As
of June 30, 2022, our Middle East/Caucasus region consisted of 3 offices that
provide brokerage and education services. The Middle East/Caucasus region did
not generate revenue and generated minimal expense during the quarter ended June
30, 2022, as we are still in the process of establishing operations in
Azerbaijan, Armenia and the UAE.

Russia Segment

Our Russia segment includes our securities brokerage and complementary banking
operations in Russia. As of June 30, 2022, our Russia segment had 39 offices and
branches. Freedom RU is a member of the Russian National Association of
Securities Market Participants ("NAUFOR"), a statutory self-regulatory
organization with wide responsibility in regulation, supervision and enforcement
of its broker-dealer, investment banking, commercial banking and other member
firms in Russia. Freedom Bank RU is a member of the National Financial
Association in Russia.

During the quarter ended June 30, 2022, the Russia segment generated
approximately $54.7 million, or 24% of our total revenue, net and approximately
$35.6 million, or 23%, of our total expense. Although we continue to operate our
Russian segment, see below under the heading "Divestiture of our Russian
Subsidiaries" for more information on our intention to sell our Russian
subsidiaries.

Credit Ratings

In June 2022 S&P Global Ratings ("S&P") affirmed its "B-/B" rating of FRHC and
its brokerage and banking subsidiaries Freedom KZ, Freedom Bank KZ, Freedom
Europe and Freedom Global and removed them from CreditWatch negative. The
outlook on FRHC is stable and the outlooks for the aforementioned subsidiaries
are positive. S&P also raised the Kazakhstan national scale ratings of Freedom
KZ and Freedom Bank KZ to "kzBB" from "kzBB-". Freedom Life has an S&P Global
Rating of "B" on the international scale and long-term rating on the national
scale of "kzBBB-" with a positive outlook. Freedom Insurance has been assigned a
"B" rating by S&P and a "kzBB+" national scale rating and a stable outlook. As a
result of the Russia/Ukraine Conflict, S&P is no longer rating Russian entities,
including our Russian subsidiaries.

Corporate Restructuring

Currently, our subsidiary Freedom RU owns approximately 90% of our second-tier
subsidiary Freedom KZ, with the remaining interest in Freedom KZ being owned by
FRHC directly. We have determined to undertake a corporate restructuring which
will result in Freedom KZ (together with its wholly owned subsidiaries Freedom
Bank KZ, Freedom Life and Freedom Insurance) being wholly owned by FRHC
directly. The transfer of ownership from Freedom RU to FRHC requires approval by
the Kazakhstan financial sector regulator, and we are in process of making
application for that change of ownership. We are pursuing this restructuring in
an expeditious manner and anticipate completing it during fiscal 2023.

Divestiture of our Russian Subsidiaries

In light of the Russia/Ukraine Conflict, and the consequent U.S., UK and EU
economic sanctions and Russian countersanctions, we are seeking to sell our
interests in our two Russian subsidiaries, Freedom RU and Freedom Bank RU. Any
transaction entertained by us to sell our Russian subsidiaries must comply with
U.S. sanctions and related OFAC guidance, as well as Russian countersanctions,
in effect at the time of the sale and any transaction related thereto. On August
5, 2022, Russia introduced a ban restricting the ability of investors from
"unfriendly-states" to exit from investments in businesses in certain Russian
industries, which could impair our ability to sell our Russian subsidiaries.
Until such time as we are approached by a willing and able buyer, in a manner
consistent with U.S. sanctions, we will provide financial support only for
"maintenance" of our investment in our Russian subsidiaries consistent with our
previously established practices and in support of pre-existing projects and
operations in conformity with OFAC guidance concerning such activities. We will
not engage in funding of new projects or expansion of pre-existing projects of
our Russian subsidiaries.




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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 results of operations include: the Russia/Ukraine
Conflict (including but not limited to related sanctions and countersanctions),
and our corporate restructuring and decision to sell our Russian subsidiaries,
as are discussed above; and also the business environment in which we operate,
the growth of retail brokerage activity in our key markets, key relationships,
governmental polices, acquisitions, the impact of COVID-19 and the development
of new products, as are discussed 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 and securities markets, affected interest rates, and negatively
impacted Russian and Ukrainian customer confidence. Additionally, general market
conditions and investor activity are products of many factors, most of which are
generally beyond our control and unpredictable, and which may affect our
clients' financial and investing decisions and resulting use of our services.

Growth of Retail Brokerage Activity In Our Key Markets

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. 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
data provided by the Russian National Association of Securities Market
Participants ("NAUFOR")), the number of retail customer accounts 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.

The growth in these retail markets has contributed, at least in part, to growth
in our customer accounts. Our number of total customer accounts increased from
approximately 290,000 as of March 31, 2021, to approximately 410,000 as of March
31, 2022, to approximately 479,000 as of June 30, 2022. As of June 30, 2022,
more than 55% of those customer 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 June 30, 2022, we
had approximately 88,000 active accounts.

Key Relationships

FFIN Brokerage Services, Inc. ("FFIN Brokerage") is a corporation registered in
and licensed as a broker dealer in Belize to service the investment needs of
customers desiring broader investments options in international securities
markets. FFIN Brokerage was formed in 2014 and is owned personally by Timur
Turlov; it is not part of our group of companies. FFIN Brokerage has its own
brokerage customers, which include individuals, some entities and three
institutional market-makers. FFIN Brokerage holds four transparent omnibus
brokerage accounts with Freedom EU. The majority of the order flow from FFIN
Brokerage relates to customer activities within FFIN Brokerage's omnibus
accounts. We estimate that more than 40% of FFIN Brokerage's customers also hold
brokerage accounts with us through our brokerage subsidiaries. Our cross border
agreement with FFIN Brokerage requires FFIN Brokerage to conduct AML/CTF and
sanctions screening on its individual and business entity customers permitted to
trade through its omnibus accounts at Freedom EU. Our relationship with FFIN
Brokerage has also provided us and our customers with a substantial liquidity
pool for trading. We expect FFIN Brokerage will continue to process brokerage
transactions for its customers through us, so long as such business is not
prohibited by U.S., UK, or EU sanctions or prohibited by Russian counter
sanctions. To date, the government of Belize has not issued any economic
sanctions against Russia or any other jurisdiction.

Fee and commission income generated from FFIN Brokerage accounted for
approximately 45% of our total revenue for the three months ended June 30, 2022,
and approximately 45% of our total revenue for the three months ended June 30,
2021. For additional information regarding transactions with FFIN Brokerage, see
Note 18 Related Party Transactions to the condensed consolidated financial
statements included in this quarterly report on Form 10-Q. Our transactions with
FFIN Brokerage were performed in the ordinary course of our brokerage and
banking businesses and such transactions were made on substantially the same
terms and conditions as those prevailing at the time for comparable transactions
with similarly situated unaffiliated third parties.

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Governmental Policies

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

Acquisitions

Historically we have been active in pursuing inorganic growth through mergers
and acquisitions. We expect this trend to continue in the future.

Previously Disclosed Planned Acquisitions

We continue to pursue our previously disclosed planned acquisition of each of
the following companies: Paybox Technologies LLP and its subsidiaries
("Paybox"); the company that developed and owns the ReKassa PCI Reader
("ReKassa"); and Ticketon Events LLP ("Ticketon"). Paybox developed and owns the
Paybox Payment Platform, which is a dynamically developing project in the field
of aggregation of payment systems services. Paybox is widely used in Kazakhstan
and is actively developing a market in Kyrgyzstan. The ReKassa PCI Reader is a
mobile and web application that replaces traditional cash registers. The ReKassa
PCI Reader is currently available in Kazakhstan. Ticketon is the largest online
ticket sales company in Kazakhstan. While we believe that it is probable that
the above planned acquisitions will be completed in the near future, there can
be no assurance that this will be the case. We do not consider the acquisitions
of Paybox, ReKassa or Ticketon to be material.

Prior to the outbreak of the Russia/Ukraine Conflict, we had disclosed that we
had agreed to purchase Asset Management Company Vostok-Zapad (East-West)
Limited, an asset management firm operating in Moscow, Russia. As a result of
the Russia/Ukraine Conflict and the resulting sanctions and countermeasures, the
parties agreed not to proceed with the acquisition.

Impact of COVID-19

We continue to monitor conditions surrounding COVID-19, as well as economic and
capital market conditions and their potential impact on our employees, business
and operations. The extent to which developments (such as the duration and
severity of future outbreaks of the same or new strains or variants of the
disease, the effectiveness of vaccines, or new or additional measures
implemented by governments) might impact our customers, employees, business, the
general financial markets, the global economy and the economies of the countries
in which we operate is highly uncertain and cannot be predicted. For further
information on the possible future impact of the COVID-19 pandemic on our
business, results of operations and financial condition, see Part 1A - Risk
Factors of our annual report on Form 10-K for the fiscal year ended March 31,
2022, filed with the SEC on May 31, 2022.
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New Banking Products

Digital Auto Loans

Freedom Bank KZ has successfully developed and launched new digital automobile
finance platform that, similar to our digital mortgage product, which allow
buyers to shop and get their car loans approved online. We anticipate this
platform will create a more transparent and streamlined car-buying process that
eliminates financing obstacles and long wait times, and are building in
safeguards to limit the risk of financial fraud or identity theft. This platform
accelerates the loan process for our customers, with credit approvals that takes
minutes instead of hours or days, and approval notices being delivered to their
smartphones. Through our digital auto loan platform, our customers is also able
to acquire auto insurance, offered through our subsidiary Freedom Insurance, at
the time they apply for their auto loan. We believe this platform will also
allow us to gather additional information about other products and services we
might offer in the future that could be of benefit and interest our customers.
As of June 30, 2022, more than 300 digital auto loans have been approved and
issued in the aggregate amount of $900. Freedom Bank KZ performs the loan
approvals and also services the loans. Since the launch of the digital auto loan
product, nearly 6,000 online assessments have been submitted through Freedom
Bank KZ's digital auto loan portal.

Freedom Box

Freedom Bank KZ has launched its "Freedom Box" product in Kazakhstan. Freedom
Box provides a package of online financial services to small and medium-size
enterprises. Freedom Box allows merchants to use Freedom Bank KZ's point of sale
terminals, gives access to make online payments, provides an overdraft with the
grace period up to 60 days and provides an installment plan and credit
facilities to the clients of the merchant. As of June 30, 2022, about 200
merchants were already subscribed to the services provided by Freedom Box.

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, interest income
and insurance underwriting services. Fee and commission income as a percentage
of our total revenue was 58% and 67% in the three month periods ended June 30,
2022 and 2021, 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 90% and 91% in
the three month periods ended June 30, 2022 and 2021. Fees received for banking
services consist primarily of wire transfer fees, commissions for payment
processing and commissions for currency exchange operations.

Net Gain on Trading Securities

Net gain 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 Condensed Consolidated Statements of
Operations and Statements of Other Comprehensive Income 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 or
the short or long term halting of trading in certain markets, either of which
may result from unpredictable factors such as significant market volatility
stemming from market and economic uncertainty related to global or local events.
Fluctuations might also result from factors within our control, such as when we
elect to close an open securities position, which would have the effect of
reducing our open positions and, thereby potentially reducing or increasing the
amount of unrealized gains or losses we might recognize in a period.
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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 or from one quarter to the next.

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.

Insurance Underwriting Income

Life insurance premiums are recognized as revenue when due; accident and health
insurance premiums are recognized as revenue over the premium paying period and
property and casualty insurance premiums are recognized as revenue over the
period of the contract in proportion to the amount of insurance protection
provided.

Net Loss on Foreign Exchange Operations

Net loss on foreign exchange operations reflects: (i) the change in value
resulting from currency fluctuations of monetary assets and liabilities
denominated in any currency other than the functional currency of the entity
holding such asset or liability; and (ii) purchases and sales of foreign
currency. Fluctuations of foreign currencies is beyond the Company's control,
and the Company may suffer losses as a result of such fluctuations.

Fee and Commission Expense

We incur fee and commission expense in our brokerage, banking, and insurance
activities. Fee and commission expense consists of expenses related to
brokerage, banking, stock exchange, clearing, depository and agent services.
Generally, we expect fee and commission expense from brokerage and banking
activities to increase and decrease corresponding to increases and decreases in
fee and commission income. For our life insurance operations, fee and commission
expense arises from the deferral and subsequent amortization of the costs of
acquiring business, which are referred to as "deferred acquisition costs"
(principally commissions, premium taxes, and other incremental direct costs of
issuing policies). Deferred acquisition costs ("DAC") are amortized over the
estimated premium-paying period of the related policies. DAC for property and
casualty insurance and short-duration health insurance is amortized over the
effective period of the related insurance policies.

Interest Expense

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

Operating Expense

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

Insurance Claims Incurred, Net of Reinsurance

Insurance claims incurred are expenses directly associated with our insurance
activity, and represent actual amounts paid or to be paid to policyholders when
insurable events occur, minus any amounts we receive from reinsurers related to
the insurable event. This amount is adjusted for changes in loss reserves,
including claims reported but not settled (RBNS), claims incurred but not
reported (IBNR) and not incurred claims reserve (NIC).






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Foreign Currency Translation Adjustments, Net of Tax

The functional currencies of our operating subsidiaries are the Russian ruble,
European euro, U.S. dollar, Ukrainian hryvnia, Uzbekistani som, Kazakhstan
tenge, Kyrgyzstani som, Azerbaijani manat, Armenian dram, Great British pound
and United Arab Emirates dirham. 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 Condensed
Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and
Statements of Other Comprehensive Income, Condensed Consolidated Statements of
Cash Flows and Condensed Consolidated Statements of Shareholders' Equity.

All dollar amounts reflected in "Results of Operations", "Liquidity and Capital
Resources", "Contractual Obligations" and "Critical Accounting Policies" of this
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") are presented in thousands of U.S. dollars unless the
context indicates otherwise.

RESULTS OF OPERATIONS

Comparison of the Three-month Periods Ended June 30, 2022 and 2021

The following comparison of our financial result for the three-month periods
ended June 30, 2022 and 2021, is not necessarily indicative of future results.

Revenue

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

Three months ended June 30, 2021

                                  Three months ended June 30, 2022                       (Recast)                                 Change
                                     Amount                 %*                  Amount                 %*               Amount                %
Fee and commission income        $    131,641                  57  %       $      97,383                  67  %       $ 34,258                  35  %
Net gain on trading securities         15,582                   7  %              10,741                   7  %          4,841                  45  %
Net realized loss on investments
available for sale                       (593)                  -  %                 (31)                  -  %           (562)              1,813  %
Interest income                        49,453                  22  %              24,662                  17  %         24,791                 101  %
Insurance underwriting income          24,241                  11  %              14,076                  10  %         10,165                  72  %
Net gain/(loss) on foreign
exchange operations                     5,019                   2  %              (1,024)                 (1) %          6,043                (590) %
Net gain/(loss) on derivative           1,265                   1  %                 (60)                  -  %          1,325              (2,208) %
Total revenue, net               $    226,608                 100  %       $     145,747                 100  %       $ 80,861                  55  %

* Percentage of total revenue, net.

For the three months ended June 30, 2022, we realized total revenue, net of
$226,608, an $80,861 increase compared to three months ended June 30, 2021.
Revenue during the three months ended June 30, 2022, was significantly higher
than the three months ended June 30, 2021, primarily due to increased fee and
commission income, interest income, insurance underwriting income and net gain
on trading securities.




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Fee and commission income

The following table presents our fee and commission income as a percentage of
our total revenue by type for the periods presented.

                                                                 Quarter ended June 30,
                                    2022               2021 (Recast)           Amount Change               % Change
Retail brokerage fee and       $    118,256          $       88,277          $       29,979                          34  %
commission income
Investment banking fee and            1,847                   2,621                    (774)                        (30) %
commission income
Commission from bank services        10,784                   3,834                   6,950                         181  %
Other fee and commission                754                   2,651                  (1,897)                        (72) %
income
Total fee and commission
income                         $    131,641          $       97,383          $       34,258                          35  %


                                                                        Three months ended June 30,
                                                                  2022                      2021 (Recast)
                                                                         (as a % of total revenue)
Retail brokerage fee and commission income                               90  %                             91  %
Investment banking fee and commission income                              1  %                              3  %
Commission from bank services                                             8  %                              4  %
Other fee and commission income                                           1  %                              2  %

Total fee and commission income as a percentage of total
revenue

                                                                 100  %                            100  %


During the three months ended June 30, 2022, fee and commission income was
$131,641, an increase of $34,258, or 35%, as compared to fee and commission
income of $97,383 for the three months ended June 30, 2021. This increase in fee
and commission income was primarily attributable to a $29,979 increase in fees
and commission from brokerage services and commissions from forward contracts.
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.

Net gain on trading securities

Net gain on trading securities was $15,582, an increase of $4,841, for the three
months ended June 30, 2022, as compared to $10,741 for the three months ended
June 30, 2021. See the following table for information regarding our net gains
and losses during the three months ended June 30, 2022 and 2021:
                                                    Realized Net        Unrealized Net
                                                        Gain                 Gain               Net Gain
Quarter ended June 30, 2022                        $     7,701          $      7,881          $  15,582
Quarter ended June 30, 2021 (Recast)               $     5,030          $   

5,711 $ 10,741

During the three months ended June 30, 2022, we sold securities, excluding SPBX
shares, for a realized gain of $37,104. This realized gain was partially offset
by a $29,403 loss on the sale of SPBX shares, which consisted of $3,920 of
realized loss on the sale of SPBX shares during the three months ended June 30,
2022, and, in accordance with U.S. GAAP, $25,483 of unrealized loss recognized
during previous periods that was reclassified to realized net loss during the
quarter ended June 30, 2022, when the SPBX shares were sold. In accordance with
U.S. GAAP, this reclassification also resulted in a corresponding $25,483
increase in unrealized net gain during the quarter ended June 30, 2022.
Securities positions we continued to hold at June 30, 2022, appreciated $1,057.
This unrealized net gain, plus the effect of the U.S. GAAP required
reclassification, was partially offset from recognizing an unrealized net loss
on SPBX shares held in our portfolio at June 30, 2022, in the amount of $18,659.
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Interest income

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

                                                                       Three months ended June 30,
                                                                                                                      %
                                              2022              2021 (Recast)           Amount Change              Change

Interest income on reverse repurchase $ 4,169 $ 1,041 $ 3,128

                     300  %
agreements and amounts due from banks
Interest income on loans to customers          4,886                     229                   4,657                   2,034  %
Interest income on trading securities         40,398                  23,127                  17,271                      75  %
Interest income from dividends                     -                     265                    (265)                   (100) %
Total interest income                     $   49,453          $       24,662          $       24,791                     101  %



                                                                     Three months ended June 30,
                                                               2022                      2021 (Recast)
                                                                  (as a % of total interest income)
Interest income on reverse repurchase agreements and                   8  %                               4  %
amounts due from banks
Interest income on loans to customers                                 10  %                               1  %
Interest income on trading securities                                 82  %                              94  %
Interest income from dividends                                         -  %                               1  %
Total interest income as a percentage of total revenue               100  %                             100  %



During the three months ended June 30, 2022, we recognized a $24,791, or 101%
increase in interest income. 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. In
addition, we recognized a $4,657 or 2,034% increase in interest income from new
loans issued to customers of Freedom Bank KZ.

Insurance underwriting income

During the three months ended June 30, 2022, we recognized a $10,165, or 72%,
increase in insurance underwriting income as compared to the three months ended
June 30, 2021. We recognized a $12,855, or 83%, increase in insurance
underwriting income from written insurance premiums for the three months ended
June 30, 2022, as compared to the three months ended June 30, 2021, due to the
expansion of operations. This increase in income from written insurance premiums
was partially offset by a $2,827, or 238%, decrease in income from insurance
activities due to the unearned premium reserve for the three months ended June
30, 2022, as compared to the three months ended June 30, 2021.

                                           June 30, 2022       June 30, 2021
                                                                  (Recast)
Written insurance premiums                $       28,316      $       15,461
Reinsurance premiums ceded                           (61)               (198)
Change in unearned premium reserve, net           (4,014)             (1,187)
Insurance underwriting income             $       24,241      $       14,076








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Expense

The following table sets out the information on our total expense for the
periods presented.

                                                                                Three months ended June 30, 2021
                                      Three months ended June 30, 2022                      (Recast)                                 Change
                                         Amount                 %*                 Amount                 %*               Amount               %
Fee and commission expense           $     25,241                  16  %       $     23,260                  28  %       $  1,981                  9  %
Interest expense                           45,829                  29  %             16,495                  20  %         29,334                178  %
Insurance claims incurred, net of
reinsurance                                16,692                  11  %             11,296                  13  %          5,396                 48  %
Operating expense                          65,467                  42  %             33,244                  39  %         32,223                 97  %
Provision for impairment losses             2,798                   2  %                293                   -  %          2,505                855  %
Other (income)/expense, net                  (527)                  -  %                125                   -  %           (652)              (522) %
Total expense                        $    155,500                 100  %       $     84,713                 100  %       $ 70,787                 84  %

* Percentage of total expense.

For the three months ended June 30, 2022, we incurred total expenses of
$155,500, a $70,787, increase as compared to the three months ended June 30,
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.

Fee and commission expense

Fee and commission expense increased by $1,981, or 9%, for the three months
ended June 30, 2022, as compared to the three months ended June 30, 2021. This
included increases in agency fee from insurance activities of $5,313, increase
of bank services fees of $2,751, increases in exchange and clearing services
fees of $619, increases in underwriting and market services fees of $225, and a
decrease in brokerage services fees of $7,076 due to us using a new prime broker
and different composition of order flow transactions, which were charged at
lower rates.

Interest expense

During the three months ended June 30, 2022, we incurred a $29,334, or 178%,
increase in interest expense as compared to the three months ended June 30,
2021. The increase in interest expense was primarily attributable to a $23,180,
or 203%, increase in the volume of short-term financing through securities
repurchase agreements, and a $5,880, or 164%, increase in interest on customer
deposits. During the three months ended June 30, 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 a growth of customer deposit accounts.

Insurance claims incurred, net of reinsurance

During the three months ended June 30, 2022, we recognized a $5,396, or 48%,
increase in expenses from insurance activities as compared to the three months
ended June 30, 2021. We recognized a $1,744 or 22%, increase in expenses for
insurance reserve, a $1,610 or 72%, increase in expenses for claims, and a
$2,042 or 200%, increase in other expenses for the three months ended June 30,
2022, as compared to the three months ended June 30, 2021, due to the expansion
of operations of our insurance companies.

Operating expenses

Operating expenses during the three months ended June 30, 2022 and
2021, totaled $65,467 and $33,244, respectively, a $32,223 increase compared to
the three months ended June 30, 2021. This increase was primarily attributable
to the following increases: $12,832 in payroll and bonus expense as a result
expansion of our workforce through hiring; $6,924 in advertising expense;
$3,891 in charity and sponsorship expense; $1,749 in professional services
expense; $1,535 in stock compensation expense; $1,366 in software support
expense; $840 in rent expense; $838 in representation expense; and $1,102 in
other expenses.


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Income tax expense

We recognized net income before income tax of $71,108 and $61,034 during the
three months ended June 30, 2022, and June 30, 2021, respectively. Our effective
tax rate during the three months ended June 30, 2022, increased to 16.9%, from
9.3% during the three months ended June 30, 2021, as a result of changes in the
composition of the revenues we realized from our operating activities, the tax
treatment of those revenues in the various foreign jurisdictions where our
subsidiaries operate, and the incremental U.S. GILTI tax.

Net income

As a result of the foregoing factors, for the three months ended June 30, 2022,
we realized net income of $59,073 compared to $55,370 for the three months ended
June 30, 2021, an increase of 7%.

Non-controlling interest

We reflect our ownership of Freedom UA as a non-controlling interest in our
Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of
Operations and Statements of Other Comprehensive Income, Condensed Consolidated
Statements of Shareholders' Equity and Condensed Consolidated Statements of Cash
Flows. We recognized a net loss attributable to non-controlling interest of
$1,994 for the three months ended June 30, 2022, as compared to a net loss
attributable to non-controlling interest of $52 for the three months ended
June 30, 2021. This increase in net loss was largely as a result of the
Russia/Ukraine Conflict and its impacts on the securities markets where Freedom
UA held most of its open securities positions. We recognized an unrealized net
loss on open trading positions of $1,800 in Freedom UA.

Foreign currency translation adjustments, net of tax

Due to a nearly 39% appreciation of the Russian ruble and an almost 2%
appreciation of the Kazakhstan tenge against the U.S. dollar for the three
months ended June 30, 2022, as compared to the three months ended June 30, 2021,
we realized a foreign currency translation gain of $21,977 for the three months
ended June 30, 2022, compared to a foreign currency translation gain of $3,022
for the three months ended June 30, 2021.

Segment Results of Operations

We have organized our operations geographically into five regional segments:
Central Asia, Europe, United States, Russia and Middle East/Caucasus. The total
revenue, net associated with our segments is summarized in the following table:

                                              Three months ended June 30,
                              2022         2021 (Recast)       Amount Change       % Change
Central Asia               $  98,872      $       51,569      $       47,303           92  %
Europe                        69,476              72,068              (2,592)          (4) %
U.S.                           3,611                 678               2,933          433  %
Russia                        54,659              21,432              33,227          155  %
Middle East/Caucasus             (10)                  -                 (10)        (100) %
Total revenue, net         $ 226,608      $      145,747      $       80,861           55  %


During the three months ended June 30, 2022, total revenue, net increased across
each of our regional operating segments, except Europe and Middle East/Caucasus.
The increase in total net revenues for the three months ended June 30, 2022,
compared to the three months ended June 30, 2021, was driven by the following:

•Total revenue, net in our Central Asia segment increased 92% for the quarter
ended June 30, 2022. This increase was driven by an increase in interest income,
as a result of growth in interest received from securities held in our trading
portfolio and an increase in interest accrued from loans issued. This segment
was also significantly affected by an increase in income from insurance
activities, caused by expansion of our insurance business. The increase of
revenue was also due to a rise in net gain on trading securities, related to
growth of our trading portfolio and an increase in interest income from
securities held in our trading portfolio.


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•Total revenue, net in our Europe segment decreased 4% for the quarter ended
June 30, 2022. This decrease was driven by a decrease in net gain on trading
securities due to the revaluation of our trading portfolio. This decrease was
partially offset by growth in fee and commission income as a result of an
increase in the number of customers and the volume of transactions those
customer made.

•Total revenue, net in our U.S. segment increased 433% during the three months
ended June 30, 2022. This increase was driven mainly by the growth of interest
income on the bonds in our trading portfolio.

•We did not recognize revenue in our Middle East/Caucasus segment during the
three months ended June 30, 2022, as our Azerbaijani, Armenian and UAE
subsidiaries are relatively new and are not yet engaged in revenue generating
activities.

•Total revenue, net in our Russia segment increased 155% during the quarter
ended on June 30, 2022. This increase was mainly driven by increased fee and
commission income and net gain on trading securities. Fee and commission income
increased primarily as a result of commissions on currency forward contracts.
Net gain on trading securities increased because our Russia segment sold
securities and recognized realized net gain on trading securities from the sale.

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

                                              Three months ended June 30,
                               2022         2021 (Recast)       Amount Change       % Change
Central Asia                   82,075              37,526      $       44,549          119  %
Europe                         26,690              24,985               1,705            7  %
U.S.                           10,818               5,319               5,499          103  %
Russia                         35,553              16,848              18,705          111  %
Middle East/Caucasus              364                  35                 329          940  %
Total expense, net         $  155,500      $       84,713      $       70,787           84  %


During the three months ended June 30, 2022, total expense increased across each
of our regional operating segments compared to the three months ended June 30,
2021. The increase in total expenses for the three months ended June 30, 2022,
was driven by the following:

•Total expense in our Central Asia segment increased by 119% for the three
months ended June 30, 2022. This increase was primarily recognized by Freedom
Bank KZ and was driven by an increase in interest expense primarily from growth
in interest paid on securities repurchase agreements and growth in customer
deposits. This segment also experienced an increase in operating expenses due to
growth in payroll and bonuses.

•Total expense in our Europe segment increased 7% for the quarter ended June 30,
2022. This increase was driven by the growth of operating expense, mainly due to
payroll and bonuses, marketing expense and professional services. This increase
was partially offset by lower commission expense due to change of our prime
broker and different composition of order flow transactions, which were charged
at lower rates.

•Total expense in our U.S. segment increased by 103% during the three months
ended June 30, 2022. This increase was driven by the growth of interest expense
on securities repurchase agreement obligations.

•Total expense in our Middle East/Caucasus segment increased by 940% during the
three months ended June 30, 2022, mainly due to the increase in payroll
expenses.

•Total expense in our Russia segment increased by 111% during the quarter ended
on June 30, 2022. This increase in operating expenses resulted from growth in
payroll and bonuses, advertising expense and interest expense from accruing
interest on customers' accounts.

LIQUIDITY AND CAPITAL RESOURCES

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

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

                                  June 30, 2022       March 31, 2022
                                                         (Recast)
Cash and cash equivalents(1)     $      905,685      $       626,363
Trading securities               $    1,420,481      $     1,280,874
Total assets                     $    3,797,194      $     3,177,492
Net liquid assets(2)             $    2,886,721      $     2,298,333


______________
(1)Of the $905,685 in cash and cash equivalents we held at June 30, 2022,
$319,799, or approximately 35%, was subject to reverse repurchase agreements. By
comparison, at March 31, 2022, we had cash and cash equivalents of $626,363, of
which $278,685, or approximately 44%, were subject to reverse repurchase
agreements. The amount of cash and cash equivalents we hold is subject to
minimum levels set by regulatory bodies in relation to compliance with
applicable rules and regulations, including capital adequacy and liquidity
requirements for each entity.
(2)Consists of cash and cash equivalents, trading securities, brokerage and
other receivable and other assets.

As of June 30, 2022, and March 31, 2022, we had total liabilities of $3,190,278
and $2,630,884, respectively, including customer liabilities of $1,652,643 and
$1,416,954, respectively.

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