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Discontinued Operations | 6 Months Ended
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Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued operations | ASSETS AND LIABILITIES HELD FOR SALE In the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022, the Company announced its plans to divest its interests in its Russian securities brokerage and complementary banking operations in Russia ("Russian Segment"). On October 17, 2022, the Company entered into an agreement with Maxim Povalishin for the sale of 100% of the share capital of its Russian segment. Maxim Povalishin, the purchaser, is currently the Deputy General Director and a member of the Board of Directors of Freedom RU. The transaction is subject to the approval of the Central Bank of the Russian Federation and is expected to be completed within the next fiscal quarter. The consideration for the purchase of the Russian Subsidiaries consists of the following: •Mr. Povalishin will be assigned the Company’s obligation to Freedom RU under an outstanding deferred payment in the amount of approximately RUB 6.6 billion (at foreign exchange rate on the reporting date approximately $115 million) (the “Deferred Payment Obligation”) which resulted from the purchase by the Company of 90.43% of the share capital of Freedom RU’s Kazakhstan subsidiary Freedom Finance JSC (“Freedom KZ”) (with its subsidiaries) from Freedom RU as part of a corporate restructuring, as a result of which the Company will become the 100% direct owner of Freedom KZ. The agreement for the purchase of Freedom KZ was entered on September 13, 2022. The transaction was approved by regulatory body and is expected to be finalized during November 2022; and •Mr. Povalishin will pay cash in an amount equal to (x) $140 million less (y) the amount of the Deferred Payment Obligation as translated into U.S. dollars at the official exchange rate on the closing date. The Company has classified the Russia Segment as discontinued operations as of September 30, 2022 and for the three and six months ended September 30, 2022, because the subsidiaries to be disposed of in this transaction met the held for sale criteria as of September 30, 2022. The cumulative translation adjustment attributable to the Russian Segment of $642 is included within Accumulated Other Comprehensive Income within the Condensed Consolidated Balance Sheet as of September 30, 2022. In light of the Russia/Ukraine Conflict, and the consequent U.S., UK and EU economic sanctions and Russian countersanctions, we were seeking to sell our interests in our three Russian subsidiaries that resulted in a non-cash $41,464 impairment charge, which was recorded as of September 30, 2022, within the line item Net income from discontinued operation on the Condensed Consolidated Statements of Operations. The Company will continue to evaluate the Russian Segment for changes in the valuation until it is sold. In accordance with US GAAP, the Company has reported separately the discontinued operations in the condensed consolidated financial statements. As of September 30, 2022 and March 31, 2022, the major classes of assets and liabilities from discontinued operations included the following:
| September 30, 2022 |  | March 31, 2022
Cash and cash equivalents | $ | 712,116 |  |  | $ | 428,480 |
Restricted cash | 19,040 |  |  | 28,406 |
Trading securities | 120,162 |  |  | 122,497 |
Brokerage and other receivables, net | 249,980 |  |  | 210,087 |
Loans issued | 14,464 |  |  | 2,395 |
Other assets | 41,317 |  |  | 33,554 |
Less: valuation allowance | (41,464) |  |  | — |
Total assets held for sale | $ | 1,115,615 |  |  | $ | 825,419 |
Customer liabilities | $ | 966,869 |  |  | $ | 701,584 |
Securities repurchase agreement obligations | 30,961 |  |  | 32,469 |
Debt securities issued | 64,647 |  |  | 64,637 |
Other liabilities | 27,403 |  |  | 13,788 |
Total liabilities held for sale | 1,089,880 |  |  | 812,478 |
The results of operations for discontinued operations for the three and six months ended September 30, 2022, and 2021, consist of the following:
| For The Three Months Ended |  | For The Six Months Ended
| September 30, 2022 |  | September 30, 2021 |  | September 30, 2022 |  | September 30, 2021
Fee and commission income | $ | 29,585 |  |  | $ | 21,179 |  |  | $ | 66,867 |  |  | $ | 39,346 |
Net gain/(loss) on trading securities | 1,950 |  |  | (5,164) |  |  | 13,099 |  |  | (3,105) |
Interest income | 5,250 |  |  | 3,367 |  |  | 11,054 |  |  | 6,892 |
Net gain/(loss) on foreign exchange operations | 19,989 |  |  | (3) |  |  | 20,414 |  |  | (2,235) |
TOTAL REVENUE, NET | 56,774 |  |  | 19,379 |  |  | 111,434 |  |  | 40,898 |
Fee and commission expense | 2,324 |  |  | 2,159 |  |  | 4,250 |  |  | 4,226 |
Interest expense | 4,261 |  |  | 2,210 |  |  | 10,019 |  |  | 4,459 |
Operating expense | 26,072 |  |  | 17,764 |  |  | 53,540 |  |  | 31,587 |
Provision for impairment losses | 212 |  |  | 50 |  |  | 582 |  |  | 76 |
Provision for impairment of discontinued operations | 41,464 |  |  | — |  |  | 41,464 |  |  | — |
Other expense/(income), net | 743 |  |  | (25) |  |  | 779 |  |  | 92 |
TOTAL EXPENSE | 75,076 |  |  | 22,158 |  |  | 110,634 |  |  | 40,440 |
INCOME/(LOSS) BEFORE INCOME TAX | $ | (18,302) |  |  | $ | (2,779) |  |  | $ | 800 |  |  | $ | 458 |
The net cash flows from/(used in) operating and investing activities for discontinued operations for the six months ended September 30, 2022, and 2021, consist of the following:
| For the Six Months Ended September 30,
| 2022 |  | 2021*
|  |  | (Recasted)
Cash Flows From Operating Activities |  |  |
Net income from discontinued operations | $ | (6,080) |  |  | $ | 449 |
Adjustments to reconcile net income used in operating activities: |  |  |
Depreciation and amortization | 1,143 |  |  | 993 |
Noncash lease expense | 3,289 |  |  | 2,453 |
Change in deferred taxes | 6,234 |  |  | (929) |
Stock compensation expense | 3,220 |  |  | 3,358 |
Unrealized loss/(gain) on trading securities | (20,382) |  |  | 4,228 |
Net change in accrued interest | 682 |  |  | (1,203) |
Provision for impairment of discontinued operations | 41,464 |  |  | — |
Allowances for receivables | 155 |  |  | — |
Changes in operating assets and liabilities: |  |  |
Trading securities | 81,229 |  |  | (24,850) |
Brokerage and other receivables | 56,513 |  |  | (59,162) |
Other assets | 360 |  |  | (843) |
Securities sold, not yet purchased – at fair value | 244 |  |  | (24) |
Customer liabilities | (142,647) |  |  | 81,632 |
Current income tax liability | — |  |  | (582) |
Trade payables | 93 |  |  | 2,725 |
Lease liabilities | (3,721) |  |  | (2,603) |
Other liabilities | 7,787 |  |  | (37) |
Net cash flows used in operating activities from discontinued operations | 29,583 |  |  | 5,605 |
Cash Flows Used In Investing Activities |  |  |
Purchase of fixed assets | (2,560) |  |  | (1,066) |
Proceeds from sale of fixed assets | 750 |  |  | — |
Loans issued | (10,263) |  |  | 595 |
Net cash flows used in investing activities from discontinued operations | (12,073) |  |  | (471) |
The following table presents reconciliation of anticipated provision for impairment from sale of net assets held for sale as of disposal date:
| September 30, 2022
| Pre-elimination balance |  | Eliminations |  | Post-elimination balance
Cash and cash equivalents | $ | 712,116 |  |  | $ | — |  |  | $ | 712,116 |
Restricted cash | 19,040 |  |  | — |  |  | 19,040 |
Trading securities | 120,162 |  |  | — |  |  | 120,162 |
Brokerage and other receivables, net | 249,980 |  |  | — |  |  | 249,980 |
Loans issued | 14,464 |  |  | — |  |  | 14,464 |
Other assets | 41,363 |  |  | (46) |  |  | 41,317 |
Investment in subsidiaries | 114,957 |  |  | (114,957) |  |  | — |
Total assets held for sale | $ | 1,272,082 |  |  | $ | (115,003) |  |  | $ | 1,157,079 |
Customer liabilities | $ | 966,869 |  |  | $ | — |  |  | $ | 966,869 |
Securities repurchase agreement obligations | 30,961 |  |  | — |  |  | 30,961 |
Debt securities issued | 64,647 |  |  | — |  |  | 64,647 |
Other liabilities | 27,499 |  |  | (96) |  |  | 27,403 |
Total liabilities held for sale | $ | 1,089,976 |  |  | $ | (96) |  |  | $ | 1,089,880 |
Net assets held for sale | $ | 182,106 |  |  |  |  | $ | 67,199 |
Unrealized gain from cumulative translation adjustment | (642) |  |  |  |  |
Adjusted net assets held for sale | $ | 181,464 |  |  |  |  |
Expected selling price | 140,000 |  |  |  |  |
Provision for impairment of discontinued operations | $ | (41,464) |  |  |  |  |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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