UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from

Commission file number: 000-31203

NET 1 UEPS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida				98-0171860
(State or other jurisdiction				(IRS Employer
of incorporation or organization)				Identification No.)

President Place, 4 Floor, Cnr. Jan Smuts Avenue and Bolton Road,

Rosebank, Johannesburg, 2196, South Africa

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: 27-11-343-2000

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common stock, par value $0.001 per share

UEPS

NASDAQ Global Select Market

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

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

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

☐	Large accelerated filer	☒	Accelerated filer

☐	Non-accelerated filer	☒	Smaller reporting company

		☐	Emerging growth company

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

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

As of ~~November 5, 2021~~May 4, 2022 (the latest practicable date), ~~56,996,214~~59,178,548 shares of the registrant’s common stock, par value $0.001 per share, net of treasury shares, were outstanding.

	Form 10-Q NET 1 UEPS TECHNOLOGIES, ~~INC~~INC. Table of Contents
		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 and June 30, 2021	2
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020 (as restated)~~	3
	Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	4
	Unaudited Condensed Consolidated Statement of Changes in Equity for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3441
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4462
Item 4.	Controls and Procedures	4463
Part II. OTHER INFORMATION
~~Item 1.~~	~~Legal Proceedings~~	45
Item 1A.	Risk Factors	4564
Item 6.	Exhibits	4666
Signatures		4667
EXHIBIT 10.49
EXHIBIT ~~10.40~~10.50
EXHIBIT 10.51
EXHIBIT 10.52
EXHIBIT 10.53
EXHIBIT 10.54
EXHIBIT 10.55
EXHIBIT 10.56
EXHIBIT 10.57
EXHIBIT 10.58

Part I. Financial information

Item 1. Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Unaudited Condensed Consolidated Balance Sheets

						March 31,			June 30,
						2022		2021^(A)
						(In thousands, except share data)
					ASSETS
CURRENT ASSETS
	Cash and cash equivalents					$	183,712	$	198,572
	Restricted cash related to ATM funding and credit facilities (Note 8)						56,336		25,193
	Accounts receivable, net and other receivables (Note 2)						24,435		26,583
	Finance loans receivable, net (Note 2)						22,196		21,142
	Inventory (Note 3)						22,104		22,361
		Total current assets before settlement assets					308,783		293,851
			Settlement assets				364		466
				Total current assets			309,147		294,317
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - March: $37,708 June: $38,535							5,851		7,492
OPERATING LEASE RIGHT-OF-USE (Note 16)							3,375		4,519
EQUITY-ACCOUNTED INVESTMENTS (Note 5)							7,275		10,004
GOODWILL (Note 6)							28,661		29,153
INTANGIBLE ASSETS, NET (Note 6)							298		357
DEFERRED INCOME TAXES							1,066		622
OTHER LONG-TERM ASSETS, including reinsurance assets (Note 5 and 7)							77,992		81,866
TOTAL ASSETS							433,665		428,330

					LIABILITIES
CURRENT LIABILITIES
	Short-term credit facilities for ATM funding (Note 8)						45,678		14,245
	Accounts payable						5,102		7,113
	Other payables (Note 9)						27,187		27,588
	Operating lease liability - current (Note 16)						2,232		2,822
	Income taxes payable						695		256
		Total current liabilities before settlement obligations					80,894		52,024
			Settlement obligations				364		466
				Total current liabilities			81,258		52,490
DEFERRED INCOME TAXES							10,408		10,415
OPERATING LEASE LIABILITY - LONG TERM (Note 16)							1,345		1,890
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 7)							2,695		2,576
TOTAL LIABILITIES							95,706		67,371
REDEEMABLE COMMON STOCK							84,979		84,979

					EQUITY
COMMON STOCK (Note 10)
	Authorized: 200,000,000 with $0.001 par value;
	Issued and outstanding shares, net of treasury - March: 57,921,062 June: 56,716,620						80		80
PREFERRED STOCK
	Authorized shares: 50,000,000 with $0.001 par value;
	Issued and outstanding shares, net of treasury: March: 0 June: 0						-		-
ADDITIONAL PAID-IN-CAPITAL							304,430		301,959
TREASURY SHARES, AT COST: March: 24,891,292 June: 24,891,292							(286,951)		(286,951)
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 11)							(142,465)		(145,721)
RETAINED EARNINGS							377,886		406,613
TOTAL NET1 EQUITY							252,980		275,980
NON-CONTROLLING INTEREST							0		0
TOTAL EQUITY							252,980		275,980

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY						$	433,665	$	428,330

	(A) – Derived from audited financial statements
	See Notes to Unaudited Condensed Consolidated Financial Statements

September 30,

June 30,

2021

2021^(A)

(In thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents
$
188,495

$
198,572

Restricted cash related to ATM funding and credit facilities (Note 8)

61,926

25,193

Accounts receivable, net and other receivables (Note 2)

27,643

26,583

Finance loans receivable, net (Note 2)

20,607

21,142

Inventory (Note 3)

19,613

22,361

Total current assets before settlement assets

318,284

293,851

Settlement assets

466

466

Total current assets

318,750

294,317
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - September: $36,163 June: $38,535

6,718

7,492
OPERATING LEASE RIGHT-OF-USE (Note 16)

3,890

4,519
EQUITY-ACCOUNTED INVESTMENTS (Note 5)

7,607

10,004
GOODWILL (Note 6)

27,619

29,153
INTANGIBLE ASSETS, NET (Note 6)

321

357
DEFERRED INCOME TAXES

934

622
OTHER LONG-TERM ASSETS, including reinsurance assets (Note 5 and 7)

77,916

81,866
TOTAL ASSETS

443,755

428,330

LIABILITIES

CURRENT LIABILITIES

Short-term credit facilities for ATM funding (Note 8)

51,568

14,245

Accounts payable

4,308

7,113

Other payables (Note 9)

28,180

27,588

Operating lease liability - current (Note 16)

2,674

2,822

Income taxes payable

539

256

Total current liabilities before settlement obligations

87,269

52,024

Settlement obligations

466

466

Total current liabilities

87,735

52,490
DEFERRED INCOME TAXES

10,404

10,415
OPERATING LEASE LIABILITY - LONG TERM (Note 16)

1,413

1,890
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 7)

2,477

2,576
TOTAL LIABILITIES

102,029

67,371
REDEEMABLE COMMON STOCK

84,979

84,979

EQUITY

COMMON STOCK (Note 10)

Authorized: 200,000,000 with $0.001 par value;

Issued and outstanding shares, net of treasury - September: 56,996,214 June: 56,716,620

80

80
PREFERRED STOCK

Authorized shares: 50,000,000 with $0.001 par value;

Issued and outstanding shares, net of treasury: September: 0 June: 0

-

-
ADDITIONAL PAID-IN-CAPITAL

302,277

301,959
TREASURY SHARES, AT COST: September: 24,891,292 June: 24,891,292

(286,951)

(286,951)
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 11)

(152,278)

(145,721)
RETAINED EARNINGS

393,619

406,613
TOTAL NET1 EQUITY

256,747

275,980
NON-CONTROLLING INTEREST

0

0
TOTAL EQUITY

256,747

275,980

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
443,755

$
428,330

(A) – Derived from audited financial statements

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Unaudited Condensed Consolidated Statements of Operations

		Three months ended					Nine months ended
			March 31,				March 31,
		2022		2021		2022		2021
		(In thousands, except per share data)				(In thousands, except per share data)

REVENUE (Note 15)		$	35,202	$	28,828	$	100,820	$	96,269

EXPENSE

	Cost of goods sold, IT processing, servicing and support		23,008		23,096		67,795		73,895
	Selling, general and administration		15,184		18,892		53,372		59,517
	Depreciation and amortization		463		1,132		2,084		3,129
	Reorganization costs (Note 1)		5,852		0		5,852		0
	Transaction costs related to Connect Group acquisition		116		0		1,790		0

OPERATING LOSS			(9,421)		(14,292)		(30,073)		(40,272)

CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 4 and 5)			0		10,814		0		25,942

GAIN RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS (Note 4)			6,120		0		3,691		0

LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 5)			346		0		346		13

GAIN ON DISPOSAL OF EQUITY SECURITIES (Note 5)			720		0		720		0

LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT - BANK FRICK (Note 5)			0		472		0		472

INTEREST INCOME			761		606		1,463		1,934

INTEREST EXPENSE			691		744		2,272		2,168

LOSS BEFORE INCOME TAX EXPENSE			(2,857)		(4,088)		(26,817)		(15,049)

INCOME TAX EXPENSE (Note 18)			470		2,171		754		4,549

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS			(3,327)		(6,259)		(27,571)		(19,598)

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 5)			0		55		(1,156)		(20,098)

NET LOSS ATTRIBUTABLE TO NET1		$	(3,327)	$	(6,204)	$	(28,727)	$	(39,696)

Net loss per share, in United States dollars (Note 13):
Basic loss attributable to Net1 shareholders		$	(0.06)	$	(0.11)	$	(0.50)	$	(0.70)
Diluted loss attributable to Net1 shareholders		$	(0.06)	$	(0.11)	$	(0.50)	$	(0.70)

See Notes to Unaudited Condensed Consolidated Financial Statements

Three months ended

September 30,

2021

2020^(A)

(In thousands, except per share data)

REVENUE (Note 15)

$
34,504

$
35,136

EXPENSE

Cost of goods sold, IT processing, servicing and support

24,207

26,460

Selling, general and administration

20,627

18,528

Depreciation and amortization

895

923

OPERATING LOSS

(11,225)

(10,775)

INTEREST INCOME

389

611

INTEREST EXPENSE

816

747

LOSS BEFORE INCOME TAX EXPENSE (BENEFIT)

(11,652)

(10,911)

INCOME TAX EXPENSE (BENEFIT) (Note 18)

186

(1,090)

NET LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS

(11,838)

(9,821)

LOSS FROM EQUITY-ACCOUNTED INVESTMENTS (Note 5)

(1,156)

(19,137)

NET LOSS

$
(12,994)

$
(28,958)

Net loss per share, in United States dollars (Note 13):

Basic loss attributable to Net1 shareholders

$
(0.23)

$
(0.51)
Diluted loss attributable to Net1 shareholders

$
(0.23)

$
(0.51)

(A) Certain amounts have been restated to correct the misstatement discussed in Note 1.
See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

						Three months ended				Nine months ended
						March 31,				March 31,
					2022		2021		2022		2021
						(In thousands)				(In thousands)

Net loss					$	(3,327)	$	(6,204)	$	(28,727)	$	(39,696)

Other comprehensive income (loss), net of taxes
	Movement in foreign currency translation reserve					14,831		(2,470)		3,317		23,675
	Release of foreign currency translation reserve related to disposal of Finbond equity securities (Note 11)					583		0		583		0
	Movement in foreign currency translation reserve related to equity-accounted investments					0		0		(644)		1,688
	Release of foreign currency translation reserve related to disposal of Bank Frick (Note 11)					0		(2,462)		0		(2,462)
			Total other comprehensive (loss) income, net of taxes			15,414		(4,932)		3,256		22,901

		Comprehensive income (loss)				12,087		(11,136)		(25,471)		(16,795)

				Comprehensive income (loss) attributable to Net1	$	12,087	$	(11,136)	$	(25,471)	$	(16,795)

See Notes to Unaudited Condensed Consolidated Financial Statements

Three months ended

September 30,

2021

2020

(In thousands)

Net loss
$
(12,994)

$
(28,958)

Other comprehensive (loss) income, net of taxes

Movement in foreign currency translation reserve

(5,913)

6,142

Movement in foreign currency translation reserve related to equity-accounted investments

(644)

1,688

Total other comprehensive (loss) income, net of taxes

(6,557)

7,830

Comprehensive loss

(19,551)

(21,128)

Add comprehensive loss attributable to non-controlling interest

0

0

Comprehensive loss attributable to Net1
$
(19,551)

$
(21,128)

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Unaudited Condensed Consolidated Statements of Changes in Equity

Net 1 UEPS Technologies, Inc. Shareholders

Number of Shares

Amount

Number of Treasury Shares

Treasury Shares

Number of shares, net of treasury

Additional Paid-In Capital

Retained Earnings

Accumulated other comprehensive loss

Total Net1 Equity

Non-controlling Interest

Total

Redeemable common stock

For the three months ended September 30, 2020 (dollar amounts in thousands)

Balance – July 1, 2020
82,010,217
$
80

(24,891,292)
$
(286,951)

57,118,925
$
301,489
$
444,670
$
(169,075)
$
290,213
$
0
$
290,213
$
84,979

Stock-based compensation charge (Note 12)

-

682

682

682

Reversal of stock-based compensation charge (Note 12)
(480,200)

(480,200)

(283)

(283)

(283)

Stock-based compensation charge related to equity-accounted investment (Note 5)

-

(40)

(40)

(40)

Proceeds from disgorgement of shareholders' short-swing profits

-

98

98

98

Net loss

-

(28,958)

(28,958)

0

(28,958)

Other comprehensive income (Note 11)

7,830

7,830

0

7,830

Balance – September 30, 2020
81,530,017
$
80

(24,891,292)
$
(286,951)

56,638,725
$
301,946
$
415,712
$
(161,245)
$
269,542
$
0
$
269,542
$
84,979

	Net 1 UEPS Technologies, Inc. Shareholders
	Number of Shares		Amount	Number of Treasury Shares		Treasury Shares	Number of shares, net of treasury		Additional Paid-In Capital		Retained Earnings		Accumulated other comprehensive loss		Total Net1 Equity		Non-controlling Interest		Total		Redeemable common stock
	For the three months ended March 31, 2021 (dollar amounts in thousands)
Balance – January 1, 2021	81,505,851	$	80	(24,891,292)	$	(286,951)	56,614,559	$	302,196	$	411,178	$	(141,242)	$	285,261	$	0	$	285,261	$	84,979

Exercise of stock options	11,501		0				11,501		35						35				35

Stock-based compensation charge (Note 12)							-		245						245				245

Reversal of stock-based compensation charge (Note 12)	0						0		0						0				0

Net loss							-				(6,204)				(6,204)		0		(6,204)

Other comprehensive loss (Note 11)													(4,932)		(4,932)		0		(4,932)

Balance – March 31, 2021	81,517,352	$	80	(24,891,292)	$	(286,951)	56,626,060	$	302,476	$	404,974	$	(146,174)	$	274,405	$	0	$	274,405	$	84,979

	For the nine months ended March 31, 2021 (dollar amounts in thousands)

Balance – July 1, 2020	82,010,217	$	80	(24,891,292)	$	(286,951)	57,118,925	$	301,489	$	444,670	$	(169,075)	$	290,213	$	0	$	290,213	$	84,979

Exercise of stock options	17,335		0				17,335		53						53				53

Stock-based compensation charge (Note 12)									1,173						1,173				1,173

Reversal of stock-based compensation charge (Note 12)	(510,200)						(510,200)		(297)						(297)				(297)

Stock-based compensation charge related to equity-accounted investment									(40)						(40)				(40)

Proceeds from disgorgement of shareholders' short-swing profits									98						98				98

Net loss											(39,696)				(39,696)		0		(39,696)

Other comprehensive income (Note 11)													22,901		22,901		0		22,901

Balance – March 31, 2021	81,517,352	$	80	(24,891,292)	$	(286,951)	56,626,060	$	302,476	$	404,974	$	(146,174)	$	274,405	$	0	$	274,405	$	84,979

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Unaudited Condensed Consolidated Statements of Changes in Equity

Net 1 UEPS Technologies, Inc. Shareholders

Number of Shares

Amount

Number of Treasury Shares

Treasury Shares

Number of shares, net of treasury

Additional Paid-In Capital

Retained Earnings

Accumulated other comprehensive loss

Total Net1 Equity

Non-controlling Interest

Total

Redeemable common stock

For the three months ended September 30, 2021 (dollar amounts in thousands)

Balance – July 1, 2021
81,607,912
$
80

(24,891,292)
$
(286,951)

56,716,620
$
301,959
$
406,613
$
(145,721)
$
275,980
$
0
$
275,980
$
84,979

Restricted stock granted (Note 12)
279,594

279,594

-

-

Stock-based compensation charge (Note 12)

344

344

344

Reversal of stock-based compensation charge (Note 12)
-

-

(35)

(35)

(35)

Stock-based compensation charge related to equity-accounted investment (Note 5)

9

9

9

Net loss

(12,994)

(12,994)

0

(12,994)

Other comprehensive loss (Note 11)

(6,557)

(6,557)

0

(6,557)

Balance – September 30, 2021
81,887,506
$
80

(24,891,292)
$
(286,951)

56,996,214
$
302,277
$
393,619
$
(152,278)
$
256,747
$
0
$
256,747
$
84,979

	Net 1 UEPS Technologies, Inc. Shareholders
	Number of Shares		Amount	Number of Treasury Shares		Treasury Shares	Number of shares, net of treasury		Additional Paid-In Capital		Retained Earnings		Accumulated other comprehensive loss		Total Net1 Equity		Non-controlling Interest		Total		Redeemable common stock

	For the three months ended March 31, 2022 (dollar amounts in thousands)

Balance – January 1, 2022	82,548,464	$	80	(24,891,292)	$	(286,951)	57,657,172	$	303,804	$	381,213	$	(157,879)	$	240,267	$	0	$	240,267	$	84,979

Restricted stock granted (Note 12)	257,222						257,222								-				-

Exercise of stock option (Note 12)	6,668		-				6,668		21						21				21

Stock-based compensation charge (Note 12)									619						619				619

Reversal of stock-based compensation charge (Note 12)	0						0		(5)						(5)				(5)

Stock-based compensation charge related to equity-accounted investment (Note 5)									(9)						(9)				(9)

Net loss											(3,327)				(3,327)		0		(3,327)

Other comprehensive income (Note 11)													15,414		15,414		0		15,414

Balance – March 31, 2022	82,812,354	$	80	(24,891,292)	$	(286,951)	57,921,062	$	304,430	$	377,886	$	(142,465)	$	252,980	$	0	$	252,980	$	84,979

	For the nine months ended March 31, 2022 (dollar amounts in thousands)

Balance – July 1, 2022	81,607,912	$	80	(24,891,292)	$	(286,951)	56,716,620	$	301,959	$	406,613	$	(145,721)	$	275,980	$	0	$	275,980	$	84,979

Restricted stock granted	984,921						984,921		-						-				-

Exercise of stock option (Note 12)	249,521		0				249,521		760						760				760

Stock-based compensation charge (Note 12)									1,751						1,751				1,751

Reversal of stock-based compensation charge (Note 12)	(30,000)						(30,000)		(40)						(40)				(40)

Stock-based compensation charge related to equity accounted investment (Note 5)									0						0				0

Net loss											(28,727)				(28,727)		0		(28,727)

Other comprehensive income (Note 11)													3,256		3,256		0		3,256

Balance – March 31, 2022	82,812,354	$	80	(24,891,292)	$	(286,951)	57,921,062	$	304,430	$	377,886	$	(142,465)	$	252,980	$	0	$	252,980	$	84,979

See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Unaudited Condensed Consolidated Statements of Cash Flows

				Three months ended						Three months ended				Nine months ended
				September 30,						March 31,				March 31,
				2021		2020			2022		2021		2022		2021
				(In thousands)						(In thousands)				(In thousands)

Cash flows from operating activities	Cash flows from operating activities						Cash flows from operating activities
	Net loss		$	(12,994)	$	(28,958)	Net loss		$	(3,327)	$	(6,204)	$	(28,727)	$	(39,696)
	Depreciation and amortization			895		923	Depreciation and amortization			463		1,132		2,084		3,129
	Impairment loss			140		0	Impairment loss			(27)		0		198		0
	Movement in allowance for doubtful accounts receivable			386		514	Movement in allowance for doubtful accounts receivable			91		299		1,217		913
	Loss from equity-accounted investments (Note 5)			1,156		19,137	Interest payable			(97)		(25)		(199)		(46)
	Movement in allowance for doubtful loans to equity-accounted investments			0		78	(Gain) Loss related to fair value adjustment to currency options (Note 4)			(2,391)				38
	Fair value adjustment related to financial liabilities			(90)		886	Fair value adjustment related to financial liabilities			(152)		(475)		(476)		1,201
	Interest payable			11		(63)	Gain on disposal of equity securities (Note 5)			(720)				(720)
	Profit on disposal of property, plant and equipment			(165)		(10)	Loss on disposal of equity-accounted investments (Note 5)			346		0		346		13
	Stock-based compensation charge (Note 12)			309		399	Loss on disposal of equity-accounted investment - Bank Frick			0		472		0		472
	Dividends received from equity-accounted investments			137		57	(Earnings) Loss from equity-accounted investments			0		(55)		1,156		20,098
	Decrease (Increase) in accounts receivable and finance loans receivable			1,188		(8,115)	Movement in allowance for doubtful loans to equity-accounted investments			0	��	0		0		739
	Decrease in inventory			1,583		2,359	Change in fair value of equity securities (Note 4 and 5)			0		(10,814)		0		(25,942)
	Decrease in accounts payable and other payables			(431)		(415)	(Profit) Loss on disposal of property, plant and equipment			(1,077)		(142)		(2,598)		600
	Increase (Decrease) in taxes payable			294		(14,917)	Stock-based compensation charge (Note 12)			614		245		1,711		876
	Decrease in deferred taxes			(367)		(1,755)	Dividends received from equity accounted investments			0		0		137		125
		Net cash used in operating activities		(7,948)		(29,880)	(Increase) Decrease in accounts receivable and finance loans receivable			(687)		5,786		(2,966)		4,230
							(Increase) Decrease in inventory			(181)		428		(27)		2,642
							(Decrease) Increase in accounts payable and other payables			(1,913)		(894)		(1,668)		(4,393)
							Increase (Decrease) in taxes payable			395		(160)		444		(15,498)
							(Decrease) Increase in deferred taxes			(112)		2,153		(458)		424
								Net cash used in operating activities		(8,775)		(8,254)		(30,508)		(50,113)

Cash flows from investing activities	Cash flows from investing activities						Cash flows from investing activities
Capital expenditures	Capital expenditures			(698)		(275)	Capital expenditures			(834)		(649)		(1,721)		(3,947)
Proceeds from disposal of property, plant and equipment	Proceeds from disposal of property, plant and equipment			231		16	Proceeds from disposal of property, plant and equipment			1,538		254		3,529		345
Proceeds from disposal of Net1 Korea				0		20,114
Proceeds from disposal of equity securities (Note 5)							Proceeds from disposal of equity securities (Note 5)			720		0		720		0
Proceeds from disposal of equity-accounted investment (Note 5)							Proceeds from disposal of equity-accounted investment (Note 5)			819		0		819		0
Proceeds from disposal of equity-accounted investment - Bank Frick, net of expenses							Proceeds from disposal of equity-accounted investment - Bank Frick, net of expenses			0		18,568		7,500		18,568
Proceeds from disposal of Net1 Korea, net of cash disposed							Proceeds from disposal of Net1 Korea, net of cash disposed			0		0		0		20,114
Proceeds from disposal of DNI as equity-accounted investment	Proceeds from disposal of DNI as equity-accounted investment			0		329	Proceeds from disposal of DNI as equity-accounted investment			0		0		0		6,010
Loan to equity-accounted investment				0		(78)
Loan to equity-accounted investment (Note 5)							Loan to equity-accounted investment (Note 5)			0		0		0		(1,238)
Repayment of loans by equity-accounted investments							Repayment of loans by equity-accounted investments			0		0		0		134
Net change in settlement assets	Net change in settlement assets			0		4,068	Net change in settlement assets			5		745		102		6,190
	Net cash (used in) provided by investing activities			(467)		24,174	Net cash provided by investing activities			2,248		18,918		10,949		46,176

Cash flows from financing activities	Cash flows from financing activities						Cash flows from financing activities
Proceeds from exercise of stock options							Proceeds from exercise of stock options			20		35		759		53
Proceeds from bank overdraft (Note 8)	Proceeds from bank overdraft (Note 8)			138,905		69,146	Proceeds from bank overdraft (Note 8)			95,048		55,280		406,398		261,759
Repayment of bank overdraft (Note 8)	Repayment of bank overdraft (Note 8)			(98,908)		(76,850)	Repayment of bank overdraft (Note 8)			(100,832)		(103,195)		(372,508)		(268,303)
Proceeds from disgorgement of shareholders' short-swing profits	Proceeds from disgorgement of shareholders' short-swing profits			0		98	Proceeds from disgorgement of shareholders' short-swing profits			0		0		0		124
Net change in settlement obligations	Net change in settlement obligations			0		(4,068)	Net change in settlement obligations			(5)		(745)		(102)		(6,190)
	Net cash provided by (used in) financing activities			39,997		(11,674)	Net cash (used in) provided by financing activities			(5,769)		(48,625)		34,547		(12,557)

Effect of exchange rate changes on cash				(4,925)		806
Net increase (decrease) in cash, cash equivalents and restricted cash				26,657		(16,574)
Effect of exchange rate changes on cash and cash equivalents							Effect of exchange rate changes on cash and cash equivalents			12,200		(2,263)		1,295		10,839
Net (decrease) increase in cash, cash equivalents and restricted cash							Net (decrease) increase in cash, cash equivalents and restricted cash			(96)		(40,224)		16,283		(5,655)
Cash, cash equivalents and restricted cash – beginning of period	Cash, cash equivalents and restricted cash – beginning of period			223,765		232,485	Cash, cash equivalents and restricted cash – beginning of period			240,144		267,054		223,765		232,485
Cash, cash equivalents and restricted cash – end of period (Note 14)	Cash, cash equivalents and restricted cash – end of period (Note 14)		$	250,422	$	215,911	Cash, cash equivalents and restricted cash – end of period (Note 14)		$	240,048	$	226,830	$	240,048	$	226,830

See Notes to Unaudited Condensed Consolidated Financial Statements	See Notes to Unaudited Condensed Consolidated Financial Statements						See Notes to Unaudited Condensed Consolidated Financial Statements

NET 1 UEPS TECHNOLOGIES, ~~INC~~INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)

1. Basis of Presentation and Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) andthe rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-Q and include all of the information and disclosures required for interim financial reporting. The results of operations for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ are not necessarily indicative of the results for the full year. The Company believes that the disclosures are adequate to make the information presented not misleading.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the interim periods presented.

References to “Net1” are references solely to Net 1 UEPS Technologies, Inc. References to the “Company” refer to Net1 and its consolidated subsidiaries, collectively, unless the context otherwise requires.

Impact of COVID-19 on the Company’s business

The Company’s business has been, and continues to be, impacted by government restrictions and quarantines related to COVID-19. South Africa operates with a five-level COVID-19 alert system, with Level 1 being the least restrictive and Level 5 being the most restrictive. South Africa ~~is currently~~operated at adjusted Level 1 during its most recent fiscal quarter, which ~~has~~had a limited impact on the Company’s ~~businesses. The~~businesses, and which ceased to be in operation on April 4, 2022. South Africa ~~government commenced its vaccination program in early calendar 2021, with a stated goal of vaccinating 67%~~is subject to limited COVID-19 restrictions following the lifting of the National State of Disaster in South ~~African population by~~Africa on April 5, 2022. These restrictions are expected to have a limited impact on the ~~end of the calendar year.~~Company’s business.

The broader implications of COVID-19 on the Company’s results of operations and overall financial performance continue to remain uncertain. While the Company has not incurred significant disruptions thus far from the COVID-19 outbreak, apart from the two months in April and May 2020 when loan origination was curtailed, the Company is unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties, including the severity and duration of the outbreak, actions that may be taken by governmental authorities, the impact on the Company’s customers and other factors. The Company will continue to evaluate the nature and extent of the impact on its business, consolidated results of operations, and financial condition.

July 2021 civil unrest in South Africa

Two of South Africa’s nine provinces experienced significant civil unrest in July 2021 resulting in mass looting, loss of life, disruption of transport and supply routes, and widespread destruction of property. In total 337 South Africans lost their lives in the unrest - fortunately none of the Company’s employees were injured or harmed. There was widespread damage to bank and ATM infrastructure in the affected provinces. In total approximately 1,800 ATMs and 300 branches were damaged, and the Banking Association of South Africa (“BASA”), estimates that total damage to banking infrastructure amounted to ZAR 1.6 billion. The South African Special Risks Insurance Association (“SASRIA”), a public enterprise and a non-life insurance company that provides coverage for damage caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders, estimates that the total damage to property across South Africa will be in the order of between ZAR 19.0 billion and ZAR 20.0 billion.

The Company suffered damage at 19 of its branches and to 173 ATMs. The disruption and related closure of branches also impacted the Company’s efforts to grow EPE customer numbers. The Company also saw an impact on transaction volumes through its ATMs with July 2021 volumes 13% lower than June 2021, and August 2021 3% lower than July 2021.

The ~~Company estimates that it will~~Company’s insurance claims to recover the cost of approximately ZAR 40.0 million to repair and replace its branches and ~~damaged~~ ATMs ~~and to replace ATMs that~~ have been ~~destroyed.~~met in full. The Company ~~believes that these losses suffered through destruction of property will be fully covered under its various insurance policies, through~~received ZAR 12.6 million and ZAR 38.6 million from SASRIA during the ~~government backed SASRIA cover.~~three and nine months ended March 31, 2022, respectively.

As a result of the disruption to ATM coverage and availability, BASA and South Africa’s banks agreed that the fee which customers pay to utilize other ~~bank’s~~banks’ ATMs would be waived for August and September 2021. The Company lost transaction fee revenue of approximately ZAR ~~6.0.~~6.0 million ($0.4 million) during the ~~three~~nine months ended ~~September 30, 2021,~~March 31, 2022, as a result of this decision.

~~Restatement~~Basis of ~~financial statements~~Presentation and Summary of Significant Accounting Policies (continued)

~~Related to overstatement of revenue and cost of goods sold, IT processing, servicing and support~~Reorganization charge - financial services restructuring

~~In November 2020,~~The Company has incurred significant losses since its contract to distribute social grants expired in September 2018. A strategic imperative for the Company ~~identified an error with respect~~is to return its South African financial services business to a breakeven position and then profitability as soon as possible. As part of a cost optimization process completed in late calendar 2021, the ~~recognition~~Company performed a review of ~~certain revenue~~its labor structure and determined that a number of its defined employee roles would need to be terminated due to redundancy. The Company embarked on a retrenchment process pursuant to Section 189A of the South African Labour Relations Act (“Labour Act”) on January 10, 2022. The Company incurred cash costs of approximately $6.7 million (ZAR 103.4 million) during the three and nine months ended March 31, 2022, principally consisting of severance and related ~~cost~~payments and the payment of ~~goods sold, IT processing, servicing and support during its assessment and systems development of new products.~~unutilized leave days. The Company ~~incorrectly duplicated the recognition of acquiring fees in revenue and~~has recorded an ~~equal and opposite entry~~expense of $5.9 million in ~~cost of goods sold, IT processing, servicing and support~~the caption reorganization costs in its consolidated statement of operations due to the misinterpretation of certain system reports. The error did not impact on the Company’s operating loss, net loss, balance sheet or cash flows. The Company determined that the error impacted reported results for the period from July 1, 2018 to September 30, 2020. The error impacted the Company’s reported results and the Company has restated its unaudited condensed consolidated statement of operations and certain note presentation, primarily Note 15 (Revenue) and Note 17 (Operating segments) for the three months ended September 30, 2020. Refer Note 25 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021, for additional information regarding the impact of the restatement on the Company’s unaudited condensed consolidated ~~statement~~statements of operations for the three and nine months ended March 31, 2022. The primary difference between the reorganization charge amount and the total cash paid relates to leave pay which was accrued in prior periods.

Impact of events in Russia and Ukraine

The Company does not expect its operations to be significantly impacted by events unfolding in Russia and Ukraine. The Company believes that these events may adversely impact South African gross domestic product and rates of inflation as a result of the recent increases in crude oil prices, which is likely to impact economic activity in South Africa and therefore indirectly affect the Company. It may also lead to higher input prices for certain ~~note presentation.~~of the goods and services the Company procures.

Recent accounting pronouncements adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance regarding Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement. The guidance modifies the disclosure requirements related to fair value measurement. The guidance became effective for the Company beginning July 1, 2021. The adoption of this guidance did not have a material impact on the Company’s financial statements or its footnote disclosures.

In January 2020, the FASB issued guidance regarding Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. The guidance clarifies that an entity should consider observable transactions that require an entity to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with U.S GAAP guidance immediately before applying or upon discontinuing the equity method. The guidance also clarifies that, when determining the accounting for certain forward contracts and purchased options an entity should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The guidance became effective for the Company beginning July 1, 2021. The adoption of this guidance did not have a material impact on the Company’s financial statements or its footnote disclosures.

Recent accounting pronouncements not yet adopted as of ~~September 30, 2021~~March 31, 2022

In June 2016, the FASB issued guidance regarding Measurement of Credit Losses on Financial Instruments. The guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans, and other financial instruments, an entity is required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for the Company beginning July 1, 2023. The Company is currently assessing the impact of this guidance on its financial statements and related disclosures, but does not expect the impact on its financial results to be material.

In November 2019, the FASB issued guidance regarding Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging(Topic 815), and Leases (Topic 842). The guidance provides a framework to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities, including Smaller Reporting Companies. The Company is a Smaller Reporting Company. Specifically, the guidance changes some effective dates for certain new standards on the following topics in the FASB Codification, namely Derivatives and Hedging (ASC 815); Leases (ASC 842); Financial Instruments — Credit Losses (ASC 326); and Intangibles — Goodwill and Other (ASC 350). The guidance defers the adoption date of guidance regarding Measurement of Credit Losses on Financial Instruments by the Company from July 1, 2020 to July 1, 2023. The Company is currently assessing the impact of this guidance on its financial statements and related disclosures, but does not expect the impact on its financial results to be material.

In October 2021, the FASB issued guidance which amends guidance in Business Combinations (Topic 805) regarding the recognition and measurement of contract assets and liabilities in a business combination. These items are recognized at fair value on acquisition under current guidance. The new guidance requires an acquiring entity to apply guidance in Revenue Recognition (Topic 606) to recognize and measure contract assets and contract liabilities in a business combination. This guidance is effective for the Company beginning July 1, 2022. The Company is currently assessing the impact of this guidance on its financial statements and related disclosures, but does not expect the impact on its financial results to be material.

2. Accounts receivable, net and other receivables and finance loans receivable, net

Accounts receivable, net and other receivables

The Company’s accounts receivable, net, and other receivables as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021, are presented in the table below:

September 30,

June 30,

2021

2021

Accounts receivable, trade, net
$

8,037

$

10,493

Accounts receivable, trade, gross

8,402

10,760

Allowance for doubtful accounts receivable, end of period

365

267

Beginning of period

267

253

Reversed to statement of operations

0

(182)

Charged to statement of operations

120

232

Utilized

(3)

(59)

Foreign currency adjustment

(19)

23

Current portion of amount outstanding related to sale of interest in Bank Frick

11,390

7,500

Loans provided to Carbon

0

0

Current portion of total held to maturity investments

0

0

Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes

0

0

Other receivables

8,216

8,590

Total accounts receivable, net and other receivables
$

27,643

$

26,583

		March 31,		June 30,
		2022		2021

Accounts receivable, trade, net		$	10,025	$	10,493
Accounts receivable, trade, gross			10,479		10,760
Allowance for doubtful accounts receivable, end of period			454		267
	Beginning of period		267		253
	Reversed to statement of operations		(60)		(182)
	Charged to statement of operations		251		232
	Utilized		(3)		(59)
	Foreign currency adjustment		(1)		23

Current portion of amount outstanding related to sale of interest in Bank Frick			3,890		7,500
Loans provided to Carbon			0		0
Current portion of total held to maturity investments			0		0
	Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes		0		0
Other receivables			10,520		8,590
	Total accounts receivable, net and other receivables	$	24,435	$	26,583

Current portion of amount outstanding related to sale of interest in Bank Frick represents the amount due byfrom the purchaser related to the sale of Bank Frick. The Company received the first scheduled repayment of $7.5 million in October 2021 and the remaining amount of $3.9 million is due in July 2022.

The loan of $3.0 million provided to Carbon was scheduled to be repaid before June 30, 2020, however, Carbon requested a payment holiday as a result of the impact of the COVID-19 pandemic on its business. The parties had not agreed to new repayment terms as of ~~September 30, 2021.~~March 31, 2022. However, the Company acknowledges the unexpected and ongoing challenges facing Carbon and determined in June 2021 to create an allowance for doubtful loans receivable of $3.0 million due to these circumstances and ongoing ~~consolidated~~operating losses incurred by Carbon.

Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes represents the investment in a note which matures in August 2022. The carrying value as of each of ~~September 30, 2021~~March 31, 2022 and June 30, 2021, respectively was $0 (nil). The note is included in other long-term assets as of June 30, 2021 (refer to Note 5).

Other receivables include prepayments, deposits and other receivables.

Contractual maturities of held to maturity investments

Summarized below is the contractual maturity of the Company’s held to maturity investment as of ~~September 30, 2021:~~March 31, 2022:

			Cost basis		Estimated fair value⁽¹⁾
Due in one year or less		$	0	$	0
Due in one year through five years⁽²⁾			0		0
Due in five years through ten years			0		0
Due after ten years			0		0
	Total	$	0	$	0

(1) The estimated fair value of the Cedar Cellular note has been calculated utilizing the Company’s portion of the security provided to the Company by Cedar Cellular, namely, Cedar Cellular’s investment in Cell C.

(2) The cost basis is zero ($0.0 million).

2. Accounts receivable, net and other receivables and finance loans receivable, net (continued)

Finance loans receivable, net

The Company’s finance loans receivable, net, as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021, isare presented in the table below:

September 30,

June 30,

2021

2021

Microlending finance loans receivable, net
$

20,607

$

21,142

Microlending finance loans receivable, gross

22,897

23,491

Allowance for doubtful finance loans receivable, end of period

2,290

2,349

Beginning of period

2,349

1,858

Reversed to statement of operations

0

(1,004)

Charged to statement of operations

370

2,060

Utilized

(300)

(967)

Foreign currency adjustment

(129)

402

Total accounts receivable, net
$

20,607

$

21,142

		March 31,		June 30,
		2022		2021

Microlending finance loans receivable, net		$	22,196	$	21,142
Microlending finance loans receivable, gross			24,662		23,491
Allowance for doubtful finance loans receivable, end of period			2,466		2,349
	Beginning of period		2,349		1,858
	Reversed to statement of operations		0		(1,004)
	Charged to statement of operations		1,026		2,060
	Utilized		(873)		(967)
	Foreign currency adjustment		(36)		402


	Total finance loans receivable, net	$	22,196	$	21,142

3. Inventory

The Company’s inventory comprised the following categories as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021:

September 30,

June 30,

2021

2020

Finished goods
$
19,613

$
22,361

$
19,613

$
22,361

	March 31,			June 30,
		2022		2021

Finished goods	$	22,104	$	22,361
	$	22,104	$	22,361

As of ~~September 30, 2021~~March 31, 2022, and June 30, 2021, ~~respectively~~ finished goods includes ~~$15.4~~$15.7 million and ~~$ 16.5~~$16.5 million, respectively, of Cell C airtime inventory that was previously classified as finished goods subject to sale restrictions.

In support of Cell C’s liquidity position, the Company has limited the resale of this airtime to its own distribution channels until such time as Cell C’s recapitalisation process is concluded.

4. Fair value of financial instruments

Initial recognition and measurement

Financial instruments are recognized when the Company becomes a party to the transaction. Initial measurements are at cost, which includes transaction costs.

Risk management

The Company manages its exposure to currency exchange, translation, interest rate, customer concentration, credit, and equity price and liquidity risks as discussed below.

Currency exchange risk

The Company is subject to currency exchange risk because it purchases inventories that it is required to settle in other currencies, primarily the euro and U.S. dollar. The Company has used forward contracts in order to limit its exposure in these transactions to fluctuations in exchange rates between the South African rand (“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.

Translation risk

Translation risk relates to the risk that the Company’s results of operations will vary significantly as the U.S. dollar is its reporting currency, but it earns most of its revenues and incurs a significant amount of its expenses in ZAR. The U.S. dollar has fluctuated significantly against the ZAR over the past three years. As exchange rates are outside the Company’s control, there can be no assurance that future fluctuations will not adversely affect the Company’s results of operations and financial condition.

4. Fair value of financial instruments (continued)

Risk management (continued)

Interest rate risk

As a result of its normal borrowing activities, the Company’s operating results are exposed to fluctuations in interest rates, which it manages primarily through regular financing activities. Interest rates in South Africa are trending upwards and the Company expects higher interest rates in the foreseeable future which will increase its cost of borrowing. The Company periodically evaluates the cost and effectiveness of interest rate hedging strategies to manage this risk. The Company generally maintains investments in cash equivalents and held to maturity investments and has occasionally invested in marketable securities.

Microlending credit risk

The Company is exposed to credit risk in its microlending activities, which ~~provide~~provides unsecured short-term loans to qualifying customers. ~~The Company manages this risk by performing~~Credit bureau checks as well as an affordability test ~~for each prospective customer and assigning a “creditworthiness score”,~~are conducted as part of the risk management process, both of which being in line with local regulations. The affordability test takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses.

Credit risk

Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The Company maintains credit risk policies in respect of its counterparties to minimize overall credit risk. These policies include an evaluation of a potential counterparty’s financial condition, credit rating, and other credit criteria and risk mitigation tools as the Company’s management deems appropriate. With respect to credit risk on financial instruments, the Company maintains a policy of entering into such transactions only with South African and European financial institutions that have a credit rating of “B” (or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings.

Equity price and liquidity risk

Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price of equity securities that it holds. The market price of these securities may fluctuate for a variety of reasons and, consequently, the amount that the Company may obtain in a subsequent sale of these securities may significantly differ from the reported market value.

Equity liquidity risk relates to the risk of loss that the Company would incur as a result of the lack of liquidity on the exchange on which those securities are listed. The Company may not be able to sell some or all of these securities at one time, or over an extended period of time without influencing the ~~exchange traded~~exchange-traded price, or at all.

Financial instruments

The following section describes the valuation methodologies the Company uses to measure its significant financial assets and liabilities at fair value.

In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology would apply to Level 1 investments. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. These investments would be included in Level 2 investments. In circumstances in which inputs are generally unobservable, values typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. Investments valued using such techniques are included in Level 3 investments.

Asset measured at fair value using significant unobservable inputs – investment in Cell C

The Company’s Level 3 asset represents an investment of 75,000,000 class “A” shares in Cell C, a significant mobile telecoms provider in South Africa. The Company used a discounted cash flow model developed by the Company to determine the fair value of its investment in Cell C as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021, and valued Cell C at $0.0 (zero) at ~~September 30, 2021,~~March 31, 2022, and June 30, 2021. The Company believes the Cell C business plan utilized in the Company’s valuation is reasonable based on the current performance and the expected changes in Cell C’s business model. The Company incorporates the payments under Cell C’s lease liabilities into the cash flow forecasts and assumes that Cell C’s deferred tax assets would be utilized over the forecast period. The Company utilized the latest revised business plan provided by Cell C management for the period ended December 31, 2025, for the ~~September 30, 2021~~March 31, 2022 valuation, and an earlier version of the business plan for the period ended December 31, 2025 for the June 30, 2021 valuation.

4. Fair value of financial instruments (continued)

Financial instruments (continued)

Asset measured at fair value using significant unobservable inputs – investment in Cell C (continued)

The following key valuation inputs were used as of ~~September 30, 2021~~March 31, 2022 and June 30, 2021:

	Weighted Average Cost of Capital ("WACC"):	Between 18% and 24% over the period of the forecast
	Long term growth rate:	3% (3% as of June 30, 2021)
	Marketability discount:	10%
	Minority discount:	15%
	Net adjusted external debt - ~~September 30, 2021:~~March 31, 2022:⁽¹⁾	ZAR ~~11.5~~11.7 billion ($0.8 billion), no lease liabilities included
	Net adjusted external debt - June 30, 2021:⁽²⁾	ZAR 11.2 billion ($0.8 billion), no lease liabilities included

(1) translated from ZAR to U.S. dollars at exchange rates applicable as of ~~September 30, 2021.~~March 31, 2022.

(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2021.

The following table presents the impact on the carrying value of the Company’s Cell C investment of a ~~4.2%~~3.3% increase and ~~3.2%~~2.5% decrease in the WACC rate and the EBITDA margins respectively used in the Cell C valuation on ~~September 30, 2021,~~March 31, 2022, all amounts translated at exchange rates applicable as of ~~September 30, 2021:~~March 31, 2022:

Sensitivity for fair value of Cell C investment

4.2% increase

3.2% decrease

WACC rate
$
0
$
543

EBITDA margin
$
30
$
0

Sensitivity for fair value of Cell C investment		3.3% increase		2.5% decrease
WACC rate	$	0	$	432
EBITDA margin	$	548	$	0

The fair value of the Cell C shares as of ~~September 30, 2021,~~March 31, 2022, represented 0% of the Company’s total assets, including these shares. The Company expects to hold these shares for an extended period of time and that there will be short-term equity price volatility with respect to these shares particularly given the current situation of Cell C’s business.

Derivative transactions - Foreign exchange contracts

As part of the Company’s risk management strategy, the Company enters into derivative transactions to mitigate exposures to foreign currencies in respect of operational costs using foreign exchange contracts. These foreign exchange contracts are over-the-counter derivative transactions. Substantially all of the Company’s derivative exposures are with counterparties that have long-term credit ratings of “B” (or equivalent) or better. The Company uses quoted prices in active markets for similar assets and liabilities to determine fair value (Level 2). The Company has no derivatives that require fair value measurement under Level 1 or 3 of the fair value hierarchy.

The Company had 0 outstanding foreign exchange contracts as of ~~September 30, 2021.~~March 31, 2022.

The Company’s outstanding foreign exchange contracts as of June ~~30,2021,~~30, 2021, were as follows:

Notional amount ('000)		Strike price		Fair market		Maturity
EUR	5.7	USD	1.1911	USD	1.1859	July 02, 2021

Derivative transactions - Foreign exchange option contracts

The Company held a significant amount of U.S. dollars and intended to use a portion of these funds to settle part of the purchase consideration related to the Connect Group acquisition. The purchase consideration was expected to be settled in ZAR. Accordingly, the Company entered into foreign exchange option contracts with FirstRand Bank Limited acting through its Rand Merchant Bank division (“RMB”) in November 2021 in order to manage the risk of currency volatility and to fix the ZAR amount to be utilized for part of the purchase consideration settlement. These foreign exchange option contracts, also known as synthetic forwards, are over-the-counter derivative transactions (Level 2). RMB’s long-term credit rating is “BB”. The Company uses quoted prices in active markets for similar assets and liabilities to determine fair value of the foreign exchange option contracts (Level 2).

The Company marked-to-market the synthetic forwards as of December 31, 2021, using a Black-Scholes option pricing model which determined the respective fair value of the options utilizing current market parameters, and recorded an unrealized loss of $2.4 million during the three months ended December 31, 2021. These currency options matured on February 24, 2022. The Company generated a realized gain of $3.7 million upon maturity. During the three and nine months ended March 31, 2022, the Company recorded a net gain of $6.1 million (which includes the reversal of the $2.4. million unrealized loss which was previously recorded) and $3.7 million, respectively. The net gain is included in the caption gain related to fair value adjustment to currency options in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2022.

4. Fair value of financial instruments (continued)

The following table presents the Company’s assets measured at fair value on a recurring basis as of ~~September 30, 2021,~~March 31, 2022, according to the fair value hierarchy:

Quoted Price in Active Markets for Identical Assets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Total

Assets

Investment in Cell C
$
0

$
0

$
0

$
0

Related to insurance business:

Cash, cash equivalents and restricted cash (included in other long-term assets)

380

0

0

380

Fixed maturity investments (included in cash and cash equivalents)

1,578

0

0

1,578

Total assets at fair value
$
1,958

$
0

$
0

$
1,958

			Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
					Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Investment in Cell C		$	0	$	0	$	0	$	0
Related to insurance business:
	Cash, cash equivalents and restricted cash (included in other long-term assets)		411		0		0		411
	Fixed maturity investments (included in cash and cash equivalents)		3,090		0		0		3,090
	Total assets at fair value	$	3,501	$	0	$	0	$	3,501

4. Fair value of financial instruments (continued)

The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2021, according to the fair value hierarchy:

				Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
						Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Investment in Cell C			$	0	$	0	$	0	$	0
Related to insurance business
	Cash and cash equivalents (included in other long-term assets)			381		0		0		381
	Fixed maturity investments (included in cash and cash equivalents)			3,158		0		0		3,158
		Total assets at fair value	$	3,539	$	0	$	0	$	3,539

There have been 0 transfers in or out of Level 3 during the three and nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

There was 0 movement in the carrying value of assets measured at fair value on a recurring basis, and categorized within Level 3, during the three and nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and categorized within Level 3, during the ~~three~~nine months ended ~~September 30, 2021:~~March 31, 2022:

Carrying value

Assets

Balance as of June 30, 2021
$
0

Foreign currency adjustment⁽¹⁾

0

Balance as of September 30, 2021
$
0

			Carrying value
Assets
Balance as of June 30, 2021			$	0
	Foreign currency adjustment⁽¹⁾			0
		Balance as of March 31, 2022	$	0

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR and the U.S. dollar on the carrying value.

4. Fair value of financial instruments (continued)

Carrying value

Assets

Balance as at June 30, 2020
$
0

Foreign currency adjustment⁽¹⁾

0

Balance as of September 30, 2020
$
0

			Carrying value
Assets
Balance as of June 30, 2020			$	0
	Foreign currency adjustment⁽¹⁾			0
		Balance as of March 31, 2021	$	0

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR and the U.S. dollar on the carrying value.

Assets measured at fair value on a nonrecurring basis

The Company measures equity investments without readily determinable fair values at fair value on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of the asset exceeds its fair value and the excess is determined to be other-than-temporary. Refer to Note 5 for any impairment charges recorded during the reporting periods presented herein. The Company has no liabilities that are measured at fair value on a nonrecurring basis.

5.Equity-accounted investments and other long-term assets

Refer to Note 8 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021, for additional information regarding its equity-accounted investments and other long-term assets.

Equity-accounted investments

The Company’s ownership percentage in its equity-accounted investments as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021, was as follows:

September 30,

June 30,

2021

2021

Finbond Group Limited (“Finbond”)

31.5
%

31.5
%

Carbon Tech Limited (“Carbon”)

25.0
%

25.0
%

SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)

50.0
%

50.0
%

	March 31,			June 30,
	2022			2021
Finbond Group Limited (“Finbond”)		29.0	%	31.5	%
Carbon Tech Limited (“Carbon”)		25.0	%	25.0	%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)		50.0	%	50.0	%

5.Equity-accounted investments and other long-term assets (continued)

Equity-accounted investments (continued)

Finbond

As of ~~September 30, 2021,~~March 31, 2022, the Company owned ~~268,820,933~~247,438,164 shares in Finbond representing approximately ~~31.5%~~29.0% of its issued and outstanding ordinary shares. Finbond is listed on the Johannesburg Stock Exchange (“JSE”) and its closing price on ~~September 30, 2021,~~March 31, 2022, the last trading day of the month, was ZAR ~~1.40~~0.50 per share. The market value, using the ~~September 30, 2021,~~March 31, 2022, closing price, of the Company’s holding in Finbond on ~~September 30, 2021,~~March 31, 2022, was ZAR ~~376.3~~123.7 million ($~~24.9~~8.5 million translated at exchange rates applicable as of ~~September 30, 2021)~~March 31, 2022).

~~Impairment of investment~~The Company sold 21,382,769 shares in Finbond for cash during the three and nine months ended ~~September 2020~~March 31, 2022, and recorded a loss of $0.3 million in the caption loss on equity-accounted investment in the Company’s unaudited condensed consolidated statements of operations. The following table presents the calculation of the loss on disposal of Finbond shares during the three and nine months ended March 31, 2022:

Finbond published its half-year results to August 2020 in October 2020, which included the financial impact of the COVID-19 pandemic on its reported results during that reporting period. Finbond incurred losses during the six months to August 2020, and experienced a slow-down in its lending activities. Finbond reported that its lending activities had increased again since August 2020, albeit at a slower pace compared with the prior calendar period. Finbond’s share price declined substantially during the period from its fiscal year end (February 2020) to September 30, 2020, and the weakness in its traded share price continued post September 30, 2020. The Company considered the combination of the slow-down in business activity and the lower share price as impairment indicators. The Company performed an impairment assessment of its holding in Finbond as of September 30, 2020. The Company recorded an impairment loss of $16.8 million during the quarter ended September 30, 2020, related to the other-than-temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value (before the impairment). There is limited trading in Finbond shares on the JSE because it has 3 shareholders that own approximately 90% of its issued and outstanding shares between them. The Company calculated a fair value per share for Finbond by applying a liquidity discount of 15% to the September 30, 2020, Finbond closing price of ZAR 1.04.

		Three and nine months ended March 31,
		2022
Loss on disposal of Finbond shares:
Consideration received in cash		$	819
Less: carrying value of Finbond shares sold			(591)
Less: release of foreign currency translation reserve from accumulated other comprehensive loss			(583)
Add: release of stock-based compensation charge related to equity-accounted investment			9
	Loss on sale of Finbond shares	$	(346)

Summarized below is the movement in equity-accounted investments and loans provided to equity-accounted investments during the ~~three~~nine months ended ~~September 30, 2021:~~March 31, 2022:

Finbond

Other⁽¹⁾

Total

Investment in equity

Balance as of June 30, 2021
$
9,822

$
182

$
10,004

Stock-based compensation

9

0

9

Comprehensive loss:

(1,800)

0

(1,800)

Other comprehensive loss

(644)

0

(644)

Equity accounted loss

(1,156)

0

(1,156)

Share of net loss

(1,156)

0

(1,156)

Dividends received

0

(137)

(137)

Foreign currency adjustment⁽²⁾

(464)

(5)

(469)

Balance as of September 30, 2021
$
7,567

$
40

$
7,607

Equity

Loans

Total

Carrying amount as of :

June 30, 2021
$
10,004

$
0

$
10,004

September 30, 2021
$
7,607

$
0

$
7,607

					Finbond		Other⁽¹⁾		Total
Investment in equity
	Balance as of June 30, 2021				$	9,822	$	182	$	10,004
		Stock-based compensation				9		0		9
		Comprehensive loss:				(1,800)		0		(1,800)
			Other comprehensive loss			(644)		0		(644)
			Equity accounted loss			(1,156)		0		(1,156)
				Share of net loss		(1,156)		0		(1,156)
		Dividends received				0		(137)		(137)
		Disposal of Finbond shares				(591)		0		(591)
		Foreign currency adjustment⁽²⁾				(206)		(4)		(210)
	Balance as of March 31, 2022				$	7,234	$	41	$	7,275

					Equity		Loans		Total
Carrying amount as of :
		June 30, 2021			$	10,004	$	0	$	10,004
		March 31, 2022			$	7,275	$	0	$	7,275

(1) Includes Carbon and SmartSwitch Namibia.

(2) The foreign currency adjustment represents the effects of the fluctuations of the ZAR, Nigerian naira and Namibian dollar against the U.S. dollar on the carrying value.

5.Equity-accounted investments and other long-term assets (continued)

Other long-term assets

Summarized below is the breakdown of other long-term assets as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021:

September 30,

June 30,

2021

2021

Total equity investments
$
76,297

$
76,297

Investment in 15% of Cell C, at fair value (Note 4)

0

0

Investment in 12% of MobiKwik

76,297

76,297

Investment in 87.5% of CPS⁽¹⁾

0

0

Total held to maturity investments

0

0

Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes⁽²⁾

0

0

Long-term portion of amount due related to sale of interest in Bank Frick⁽³⁾

0

3,890

Policy holder assets under investment contracts (Note 7)

380

381

Reinsurance assets under insurance contracts (Note 7)

1,239

1,298

Total other long-term assets
$
77,916

$
81,866

		March 31,			June 30,
			2022		2021

Total equity investments		$	76,297	$	76,297
	Investment in 15% of Cell C, at fair value (Note 4)		0		0
	Investment in 10% of MobiKwik (June 30, 2021: 12%)		76,297		76,297
	Investment in 87.5% of CPS⁽¹⁾		0		0
Total held to maturity investments			0		0
	Investment in 7.625% of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625% notes⁽²⁾		0		0
Long-term portion of amount due related to sale of interest in Bank Frick⁽³⁾			0		3,890
Policy holder assets under investment contracts (Note 7)			411		381
Reinsurance assets under insurance contracts (Note 7)			1,284		1,298
	Total other long-term assets	$	77,992	$	81,866

(1) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that CPS be placed into liquidation.

(2) The note is included in accounts receivable, net and other receivables as of ~~September 30, 2021~~March 31, 2022 (refer to Note 2).

(3) Long-term portion of amount due related to sale of interest in Bank Frick as of June 30, 2021, represents the amount due byfrom the purchaser in July 2022 and is included in accounts receivable, net, and other receivables as of ~~September 30, 2021~~March 31, 2022 (refer to Note 2).

MobiKwik

~~The Company did not identify any observable price changes in orderly transactions for similar or identical equity securities issued by MobiKwik during the three months ended September 30, 2021.~~ In October 2021, the Company converted its 310,781 shares of compulsorily convertible cumulative preferences shares to 6,215,620 equity shares in anticipation of MobiKwik’s initial public offering. The Company’s investment percentage remained unchanged following the conversion. The Company’s investment percentage as of March 31, 2022, was 10.2%. The Company did not identify any observable transactions during the three and nine months ended March 31, 2022, and therefore there was no change in the fair value of MobiKwik during these periods. The Company used a transaction, at a price of $245.50 per share in June 2021, as the basis for a fair value adjustment to its investment in MobiKwik during the fourth quarter of fiscal 2021. This fair value adjustment increased the carrying value of its investment in MobiKwik by $23.4 million from $52.9 million to $76.3 million as of June 30, 2021.

In early November 2020, MobiKwik entered into an agreement to raise additional capital through the issuance of additional shares to a new shareholder at a valuation of $135.54 per share. In mid-March 2021, MobiKwik raised additional capital through the issuance of shares to new shareholders at a valuation of $170.33 per share. The Company considered each of these transactions to be an observable price change in an orderly transaction for similar or identical equity securities issued by MobiKwik. The Company used the November 2020 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $15.1 million from $27.0 million to $42.1 million as of December 31, 2020. The Company used the March 2021 valuation as the basis for its adjustment to increase the carrying value in its investment in MobiKwik by $10.8 million from $42.1 million to $52.9 million as of March 31, 2021. The change in the fair value of MobiKwik for the three and nine months ended March 31, 2021, of $10.8 million and $25.9 million, respectively, is included in the caption “Change in fair value of equity securities” in the unaudited condensed consolidated statement of operations for the three and nine months ended March 31, 2021.

5.Equity-accounted investments and other long-term assets (continued)

Other long-term assets (continued)

Revix

In February 2022, the Company sold its entire interest in Revix UK Limited for cash of $0.7 million because the Company did not consider the investment core to its strategy to operate primarily in Southern Africa. The Company had previously written this investment to $0 (nil) and recognized a gain on disposal of $0.7 million, which is included in the caption gain on disposal of equity securities in the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2022.

Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of ~~September 30, 2021:~~March 31, 2022:

				Cost basis		Unrealized holding		Unrealized holding		Carrying
				Cost basis		gains		losses		value
Equity securities:
	Investment in MobiKwik		$	26,993	$	49,304	$	0	$	76,297
	Investment in CPS			0		0		0		0
Held to maturity:
	Investment in Cedar Cellular notes (Note 2)			0		0		0		0
		Total	$	26,993	$	49,304	$	0	$	76,297

Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of June 30, 2021:

				Cost basis		Unrealized holding		Unrealized holding		Carrying
				Cost basis		gains		losses		value
Equity securities:
	Investment in MobiKwik		$	26,993	$	49,304	$	0	$	76,297
	Investment in CPS			0		0		0		0
Held to maturity:
	Investment in Cedar Cellular notes			0		0		0		0
		Total	$	26,993	$	49,304	$	0	$	76,297

6.Goodwill and intangible assets, net

Goodwill

Summarized below is the movement in the carrying value of goodwill for the ~~three~~nine months ended ~~September 30, 2021:~~March 31, 2022:

Gross value

Accumulated impairment

Carrying value

Balance as of June 30, 2021

$
42,949

$
(13,796)

$
29,153

Foreign currency adjustment ⁽¹⁾

(1,965)

431

(1,534)

Balance as of September 30, 2021

$
40,984

$
(13,365)

$
27,619

				Gross value		Accumulated impairment		Carrying value
Balance as of June 30, 2021			$	42,949	$	(13,796)	$	29,153
	Foreign currency adjustment ⁽¹⁾			(630)		138		(492)
		Balance as of March 31, 2022	$	42,319	$	(13,658)	$	28,661

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR and the U.S. dollar on the carrying value.

Refer to Note 17 for additional information regarding changes to the Company’s reportable segments during the three months ended December 31, 2021. Goodwill has been allocated to the Company’s reportable segments as follows:

Processing

Financial services

Technology

Carrying value

Balance as of June 30, 2021

$
11,967

$
0

$
17,186

$
29,153

Foreign currency adjustment ⁽¹⁾

(609)

0

(925)

(1,534)

Balance as of September 30, 2021

$
11,358

$
0

$
16,261

$
27,619


			Consumer		Merchant		Other		Carrying value
Balance as of June 30, 2021			$	0	$	28,496	$	657	$	29,153
	Foreign currency adjustment ⁽¹⁾			0		(492)		0		(492)
		Balance as of March 31, 2022	$	0	$	28,004	$	657	$	28,661

(1) The foreign currency adjustment represents the effects of the fluctuations between the ZAR and the U.S. dollar on the carrying value.

6.Goodwill and intangible assets, net (continued)

Intangible assets, net

Carrying value and amortization of intangible assets

Summarized below is the carrying value and accumulated amortization of ~~the~~ intangible assets as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021:

As of September 30, 2021

As of June 30, 2021

Gross carrying value

Accumulated amortization

Net carrying value

Gross carrying value

Accumulated amortization

Net carrying value

Finite-lived intangible assets:

Customer relationships
$
9,782

$
(9,782)

$
0

$
10,340

$
(10,340)

$
0

Software and unpatented technology

1,633

(1,633)

0

1,726

(1,726)

0

FTS patent

2,535

(2,535)

0

2,679

(2,679)

0

Trademarks

1,907

(1,586)

321

2,015

(1,658)

357

Total finite-lived intangible assets
$
15,857

$
(15,536)

$
321

$
16,760

$
(16,403)

$
357

		As of March 31, 2022						As of June 30, 2021
			Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Finite-lived intangible assets:
	Customer relationships	$	9,683	$	(9,683)	$	0	$	10,340	$	(10,340)	$	0
	Software and unpatented technology		390		(390)		0		1,726		(1,726)		0
	FTS patent		2,633		(2,633)		0		2,679		(2,679)		0
	Trademarks		1,980		(1,682)		298		2,015		(1,658)		357
	Total finite-lived intangible assets	$	14,686	$	(14,388)	$	298	$	16,760	$	(16,403)	$	357

6.~~Goodwill and intangible assets, net (continued)~~

~~Intangible assets, net (continued)~~

Aggregate amortization expense on the finite-lived intangible assets for each of the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was approximately $0.1 million. Aggregate amortization expense on the finite-lived intangible assets for the nine months ended March 31, 2022 and 2021, was approximately $0.1 million and $0.3 million, respectively.

Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on ~~September 30, 2021,~~March 31, 2022, is presented in the table below. Actual amortization expense in future periods could differ from this estimate as a result of acquisitions, changes in useful lives, exchange rate fluctuations and other relevant factors.

Fiscal 2022

$
68

Fiscal 2023

68

Fiscal 2024

67

Fiscal 2025

67

Fiscal 2026

67

Total future estimated annual amortization expense

$
337

Fiscal 2022		$	71
Fiscal 2023			71
Fiscal 2024			70
Fiscal 2025			70
Fiscal 2026			70
	Total future estimated annual amortization expense	$	352

7.Assets and policyholder liabilities under insurance and investment contracts

Reinsurance assets and policyholder liabilities under insurance contracts

Summarized below is the movement in reinsurance assets and policyholder liabilities under insurance contracts during the ~~three~~nine months ended ~~September 30, 2021:~~March 31, 2022:

Reinsurance Assets⁽¹⁾

Insurance contracts⁽²⁾

Balance as of June 30, 2021
$
1,298

$
(2,011)

Increase in policy holder benefits under insurance contracts

1,016

3,608

Claims and decrease in policyholders’ benefits under insurance contracts

(1,005)

(3,627)

Foreign currency adjustment⁽³⁾

(70)

108

Balance as of September 30, 2021
$
1,239

$
(1,922)

				Reinsurance Assets⁽¹⁾		Insurance contracts⁽²⁾
Balance as of June 30, 2021			$	1,298	$	(2,011)
	Increase in policy holder benefits under insurance contracts			1,612		8,158
	Claims and decrease in policyholders’ benefits under insurance contracts			(1,603)		(8,304)
	Foreign currency adjustment⁽³⁾			(23)		30
		Balance as of March 31, 2022	$	1,284	$	(2,127)

(1) Included in other long-term assets (refer to Note 5);

(2) Included in other long-term liabilities;

(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.

The Company has agreements with reinsurance companies in order to limit its losses from various insurance contracts, however, if the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contract liabilities is based on the best estimate assumptions of future experience plus prescribed margins, as required in the markets in which these products are offered, namely South Africa. The process of deriving the best ~~estimates~~estimate assumptions plus prescribed margins includes assumptions related to claim reporting delays (based on average industry experience).

Assets and policyholder liabilities under investment contracts

Summarized below is the movement in assets and policyholder liabilities under investment contracts during the ~~three~~nine months ended ~~September 30, 2021:~~March 31, 2022:

Assets⁽¹⁾

Investment contracts⁽²⁾

Balance as of June 30, 2021
$
381

$
(381)

Increase in policy holder benefits under investment contracts

132

(132)

Claims and decrease in policyholders’ benefits under investment contracts

(112)

112

Foreign currency adjustment ⁽³⁾

(21)

21

Balance as of September 30, 2021
$
380

$
(380)

			Assets⁽¹⁾		Investment contracts⁽²⁾
Balance as of June 30, 2021			$	381	$	(381)
	Increase in policy holder benefits under investment contracts			11		(11)
	Foreign currency adjustment ⁽³⁾			19		6
		Balance as of March 31, 2022	$	411	$	(386)

(1) Included in other long-term assets (refer to Note 5);

(2) Included in other long-term liabilities;

(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.

The Company does not offer any investment products with guarantees related to capital or returns.

1920

8.Borrowings

Refer to Note 11 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021, for additional information regarding its borrowings.

South Africa

July 2017 Facilities, as amended, comprising long-term borrowings (all repaid) and a short-term facility (Facility E)

Available short-term facility - Facility E

~~On August 2, 2021, Net1 SA and~~As of March 31, 2022, the aggregate amount of the Company’s short-term South African overdraft facility with RMB ~~entered into a Letter of Amendment to increase Facility E from ZAR 1.2 billion to~~was ZAR 1.4 billion ($~~92.6~~96.2 million, translated at exchange rates applicable as of ~~September 30, 2021)~~March 31, 2022). As ~~at September 30, 2021,~~of March 31, 2022, the Company had utilized approximately ZAR ~~0.8~~0.7 billion ($~~51.6~~45.7 million) of this overdraft facility. This overdraft facility may only be used to fund ATMs and therefore the overdraft utilized and converted to cash to fund the Company’s ATMs is considered restricted cash. The interest rate on this facility is equal to the prime rate. The prime rate on ~~September 30, 2021,~~March 31, 2022, was ~~7.0%~~7.75%.

Nedbank facility, comprising short-term facilities

As of ~~September 30, 2021,~~March 31, 2022, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited was ZAR 406.6 million ($~~26.9~~27.9 million). The credit facility comprises an overdraft facility of up to ZAR 250.0 million ($~~16.5~~17.2 million), which may only be used to fund mobile ATMs and indirect and derivative facilities of up to ZAR 156.6 million ($~~10.4~~10.8 million), which include guarantees, letters of credit and forward exchange contracts.

The Company has entered into cession and pledge agreements with Nedbank related to certain of its Nedbank credit facilities (the ~~general banking facility~~indirect and ~~a portion of the indirect~~derivative facility) and the Company has ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted as they may not be withdrawn without the express permission of Nedbank. These funds, of ZAR ~~156.6~~155.1 million ($~~10.4~~10.7 million translated at exchange rates applicable as of ~~September 30, 2021)~~March 31, 2022), are included within the caption restricted cash related to ATM funding and credit facilities to the Company’s unaudited condensed consolidated balance sheet as of ~~September 30, 2021.~~March 31, 2022. As of ~~September 30, 2021,~~March 31, 2022, the interest rate on the overdraft facility was ~~5.9%~~6.60%.

As of ~~September 30, 2021~~March 31, 2022 and June 30, 2021, the Company had utilized approximately ZAR ~~156.6~~155.1 million ($~~10.4~~10.7 million) and ZAR 156.6 million ($10.9 million), respectively, of its indirect and derivative facilities of ZAR 156.6 million (June 30, 2021: ZAR 156.6 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts, in order for the Company to honor its obligations to third parties requiring such guarantees (refer to Note 19).

Movement in short-term credit facilities

Summarized below are the Company’s short-term facilities as of ~~September 30, 2021,~~March 31, 2022, and the movement in the Company’s short-term facilities from as of June 30, ~~2021~~2022 to as of ~~September 30,~~March 31, 2021, as well as the respective interest rates applied to the borrowings as of ~~September 30, 2021:~~March 31, 2022:

South Africa

Total

RMB

Nedbank

Short-term facilities available as of September 30, 2021
$
92,623

$
26,898

$
119,521

Overdraft restricted as to use for ATM funding only

92,623

16,540

109,163

Indirect and derivative facilities

0

10,358

10,358

Interest rate (%), based on South African prime rate

7.00

Interest rate (%), based on South African prime rate less 1.15%

5.85

Movement in utilized overdraft facilities:

Balance as of June 30, 2021

14,245

0

14,245

Utilized

137,558

1,347

138,905

Repaid

(97,586)

(1,322)

(98,908)

Foreign currency adjustment⁽¹⁾

(2,649)

(25)

(2,674)

Balance as of September 30, 2021

51,568

0

51,568

Restricted as to use for ATM funding only

51,568

0

51,568

Movement in utilized indirect and derivative

facilities:

Balance as of June 30, 2021⁽²⁾

0

10,947

10,947

Utilized

0

4,311

4,311

Foreign currency adjustment⁽¹⁾

0

(4,900)

(4,900)

Balance as of September 30, 2021⁽²⁾
$
0

$
10,358

$
10,358

						South Africa				Total
					RMB		Nedbank
Short-term facilities available as of March 31, 2022					$	96,203	$	27,937	$	124,140
	Overdraft restricted as to use for ATM funding only					96,203		17,179		113,382
	Indirect and derivative facilities					0		10,758		10,758

Interest rate (%), based on South African prime rate						7.75
Interest rate (%), based on South African prime rate less 1.15%								6.60

Movement in utilized overdraft facilities:
	Balance as of June 30, 2021					14,245		0		14,245
		Utilized				405,048		1,350		406,398
		Repaid				(371,185)		(1,323)		(372,508)
		Foreign currency adjustment⁽¹⁾				(2,430)		(27)		(2,457)
			Balance as of March 31, 2022			45,678		0		45,678
				Restricted as to use for ATM funding only		45,678		0		45,678

Movement in utilized indirect and derivative facilities:
	Balance as of June 30, 2021					0		10,947		10,947
		Guarantees cancelled				0		(99)		(99)
		Foreign currency adjustment⁽¹⁾				0		(189)		(189)
			Balance as of March 31, 2022⁽²⁾		$	0	$	10,659	$	10,659

(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.

2021

9.Other payables

Summarized below is the breakdown of other payables as of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021:

September 30,

June 30,

2021

2021

Accruals

$
7,813

$
7,501

Provisions

6,444

5,343

Other

12,169

13,288

Value-added tax payable

421

435

Payroll-related payables

1,206

884

Participating merchants' settlement obligation

127

137

$
28,180

$
27,588

	March 31,			June 30,
		2022		2021
Accruals	$	7,915	$	7,501
Provisions		5,291		5,343
Other		11,950		13,288
Value-added tax payable		541		435
Payroll-related payables		1,362		884
Participating merchants' settlement obligation		128		137
	$	27,187	$	27,588

Other includes transactions-switching funds payable, deferred income, client deposits and other payables.

10.Capital structure

The following table presents a reconciliation between the number of shares, net of treasury, presented in the unaudited condensed consolidated statement of changes in equity asduring the nine months ended March 31, 2022 and 2021, respectively, and the number of ~~September 30,~~shares, net of treasury, excluding non-vested equity shares that have not vested during the nine months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively:

September 30,

September 30,

2021

2020

Number of shares, net of treasury:

Statement of changes in equity
56,996,214

56,638,725

Non-vested equity shares that have not vested as of end of period
664,154

324,000

Number of shares, net of treasury, excluding non-vested equity shares that have not vested
56,332,060

56,314,725

		March 31,	March 31,
		2022	2021

Number of shares, net of treasury:
	Statement of changes in equity	57,921,062	56,626,060
	Non-vested equity shares that have not vested as of end of period	1,248,391	294,000
Number of shares, net of treasury, excluding non-vested equity shares that have not vested		56,672,671	56,332,060

11.Accumulated other comprehensive loss

The table below presents the change in accumulated other comprehensive (loss) income per component during the three months ended ~~September 30, 2021:~~March 31, 2022:

Three months ended

September 30, 2021

Accumulated foreign currency translation reserve

Total

Balance as of July 1, 2021

$
(145,721)

$
(145,721)

Movement in foreign currency translation reserve related to equity-accounted investment

(644)

(644)

Movement in foreign currency translation reserve

(5,913)

(5,913)

Balance as of September 30, 2021

$
(152,278)

$
(152,278)

			Three months ended
			March 31, 2022
				Accumulated foreign currency translation reserve		Total
Balance as of January 1, 2022			$	(157,879)	$	(157,879)
	Release of foreign currency translation reserve related to the disposal of Finbond equity securities (Note 5)			583		583
	Movement in foreign currency translation reserve			14,831		14,831
		Balance as of March 31, 2022	$	(142,465)	$	(142,465)

2122

11.Accumulated other comprehensive loss (continued)

The table below presents the change in accumulated other comprehensive (loss) income per component during the three months ended ~~September 30, 2020:~~March 31, 2021:

Three months ended

September 30, 2020

Accumulated foreign currency translation reserve

Total

Balance as of July 1, 2020

$
(169,075)

$
(169,075)

Movement in foreign currency translation reserve related to equity-accounted investment

1,688

1,688

Movement in foreign currency translation reserve

6,142

6,142

Balance as of September 30, 2020

$
(161,245)

$
(161,245)

			Three months ended
			March 31, 2021
				Accumulated foreign currency translation reserve		Total
Balance as of January 1, 2021			$	(141,242)	$	(141,242)
	Release of foreign currency translation reserve related to disposal of Bank Frick			(2,462)		(2,462)
	Movement in foreign currency translation reserve			(2,470)		(2,470)
		Balance as of March 31, 2021	$	(146,174)	$	(146,174)

The table below presents the change in accumulated other comprehensive (loss) income per component during the nine months ended March 31, 2022:

			Nine months ended
			March 31, 2022
				Accumulated foreign currency translation reserve		Total
Balance as of July 1, 2021			$	(145,721)	$	(145,721)
	Release of foreign currency translation reserve related to disposal of Finbond equity securities (Note 5)			583		583
	Movement in foreign currency translation reserve related to equity-accounted investment			(644)		(644)
	Movement in foreign currency translation reserve			3,317		3,317
		Balance as of March 31, 2022	$	(142,465)	$	(142,465)

The table below presents the change in accumulated other comprehensive (loss) income per component during the nine months ended March 31, 2021:

a				Nine months ended
				March 31, 2021
					Accumulated foreign currency translation reserve		Total
	Balance as of July 1, 2020			$	(169,075)	$	(169,075)
		Release of foreign currency translation reserve related to disposal of Bank Frick			(2,462)		(2,462)
		Movement in foreign currency translation reserve related to equity-accounted investment			1,688		1,688
		Movement in foreign currency translation reserve			23,675		23,675
			Balance as of March 31, 2021	$	(146,174)	$	(146,174)

~~There were~~ During the three and nine months ended March 31, 2022, the Company reclassified $00.6 ~~reclassifications~~million from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net ~~(loss) income during~~loss related to the disposal of shares in Finbond. During the three and nine months ended ~~September 30,~~March 31, 2021, ~~and 2020.~~the Company reclassified $2.5 million from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the disposal of Bank Frick.

2223

12.Stock-based compensation

The Company’s Amended and Restated 2015 Stock Incentive Plan and the vesting terms of certain stock-based awards granted are described in Note 16 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021.

Stock option and restricted stock activity

Options

The following table summarizes stock option activity for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Number of shares

Weighted average exercise price
($)

Weighted average remaining contractual term
(in years)

Aggregate intrinsic value
($'000)

Weighted average grant date fair value
($)

Outstanding - June 30, 2021

1,294,832

3.93

7.68

1,624

1.45

Forfeited

(85,000)

3.48

-

-

1.34

Outstanding - September 30, 2021

1,209,832

3.96

7.63

1,445

1.46

Outstanding - June 30, 2020

1,331,651

5.83

7.56

0

2.01

Granted – August 2020

150,000

3.50

3.00

166

1.11

Forfeited

(250,034)

8.79

-

-

2.71

Outstanding - September 30, 2020

1,231,617

4.97

7.56

163

1.76


			Number of shares	Weighted average exercise price ($)	Weighted average remaining contractual term (in years)	Aggregate intrinsic value ($'000)	Weighted average grant date fair value ($)

Outstanding - June 30, 2021			1,294,832	3.93	7.68	1,624	1.45
	Granted - February 2022		137,620	4.87	10.00	235	1.71
	Exercised		(249,521)	3.05	-	470	-
	Forfeited		(188,332)	4.14			1.50
		Outstanding - March 31, 2022	994,599	4.25	6.86	1,884	1.64

Outstanding - June 30, 2020			1,331,651	5.83	7.56	0	2.01
	Granted – August 2020		150,000	3.50	3.00	166	1.11
	Granted – November 2020		560,000	3.01	10.00	691	1.23
	Exercised		(17,335)	3.07	-	35	-
	Forfeited		(466,033)	7.12			2.26
		Outstanding - March 31, 2021	1,558,283	4.24	7.80	2,860	1.59

~~NaN~~The Company awarded 137,620 stock options to employees during the three and nine months ended March 31, 2022.NaN stock options were awarded during the three months ended ~~September 30,~~March 31, 2021. The Company awarded 560,000 stock options to employees during the nine months ended March 31, 2021. On August 5, 2020, the Company granted one of its non-employee directors, Mr. Ali Mazanderani, in his capacity as a consultant to the Company, 150,000 stock options with an exercise price of $3.50. These stock options are subject to the non-employee director’s continuous service through the applicable vesting date, and half of the options vest on each of the first and second anniversaries of the grant date.

Employees forfeited ~~85,000~~94,404 and 10,000 stock options during the three months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively. Employees forfeited 188,332 and 205,999 stock options during the nine months ended March 31, 2022 and 2021, respectively. During the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, the Company’s former chief executive officer forfeited 250,034 stock options with strike prices ranging from $6.20 to $11.23 per share following his separation from the Company.

The fair value of each option is estimated on the date of grant using the Cox Ross Rubinstein binomial model that uses the assumptions noted in the following table. The estimated expected volatility is calculated based on the Company’s 750-day volatility. The estimated expected life of the option was determined based on the historical behavior of employees who were granted options with similar terms.

The table below presents the range of assumptions used to value stock options granted during the ~~three~~nine months ended ~~September 30, 2020:~~March 31, 2022 and 2021:

	~~Three months ended~~
	~~September 30,~~
		~~2020~~
~~Expected volatility~~		62	%
~~Expected life (in years)~~		2
~~Risk-free rate~~		~~0.11~~	%

	Nine months ended
	March 31,
	2022		2021
Expected volatility	50	%	62	%
Expected dividends	0	%	0	%
Expected life (in years)	3		3
Risk-free rate	1.61	%	0.19	%

2324

12.Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Options (continued)

The following table presents stock options vested and expected to vest as of ~~September 30, 2021:~~March 31, 2022:

Number of
shares

Weighted average exercise price
($)

Weighted average remaining contractual term
(in years)

Aggregate intrinsic value
($’000)

Vested and expecting to vest - September 30, 2021

1,209,832

3.96

7.63

1,445

Number of

Weighted average exercise price

($)

Weighted average remaining contractual term

(in years)

Aggregate intrinsic value

($’000)

Vested and expecting to vest - March 31, 2022

994,599

4.25

6.86

1,884

These options have an exercise price range of $3.01 to $11.23.

The following table presents stock options that are exercisable as of ~~September 30, 2021:~~March 31, 2022:

Number of
shares

Weighted average exercise price
($)

Weighted average remaining contractual term
(in years)

Aggregate intrinsic value
($’000)

Exercisable - September 30, 2021

401,677

5.18

6.42

199

Number of

Weighted average exercise price

($)

Weighted average remaining contractual term

(in years)

Aggregate intrinsic value

($’000)

Exercisable - March 31, 2022

464,506

5.37

5.73

220

~~During~~NaN stock options became exercisable during the three months ended ~~September 30,~~March 31, 2022 and 2021. During the nine months ended March 31, 2022 and 2021, respectively, 376,348 and ~~2020, respectively, 231,333 and ,156333~~337,666 stock options became exercisable. The Company issues new shares to satisfy stock option exercises.

Restricted stock

The following table summarizes restricted stock activity for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Number of shares of restricted stock

Weighted average grant date fair value
($’000)

Non-vested – June 30, 2021

384,560

1,123

Granted – July 2021

234,608

963

Granted – August 2021

44,986

192

Non-vested – September 30, 2021

664,154

2,610

Non-vested – June 30, 2020

1,115,500

5,354

Total vested

(311,300)

(1,037)

Vested – August 2020

(244,500)

(812)

Vested – September 2020 - accelerated vesting

(66,800)

(225)

Forfeitures

(480,200)

(1,618)

Non-vested – September 30, 2020

324,000

1,102

				Number of shares of restricted stock	Weighted average grant date fair value ($’000)




Non-vested – June 30, 2021				384,560	1,123
	Total granted			893,831	4,433
		Granted – July 2021		234,608	963
		Granted – August 2021		44,986	192
		Granted – November and December 2021		326,158	1,766
		Granted – December 2021		50,300	269
		Granted – February 2022		29,920	146
		Granted – March 2022		207,859	1,097
	Total granted and vested - November and December 2021			-	-
		Granted - November and December 2021		71,647	393
		Vested - November and December 2021		(71,647)	393
Forfeitures				(30,000)	(160)
		Non-vested – March 31, 2022		1,248,391	5,867

Non-vested – June 30, 2020				1,115,500	5,354
Total vested				(311,300)	(1,037)
		Vested – August 2020		(244,500)	(812)
		Vested – September 2020 - accelerated vesting		(66,800)	(225)
	Forfeitures			(510,200)	(1,766)
			Non-vested – March 31, 2021	294,000	994

2425

12.Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Restricted stock (continued)

On June 30, 2021, the Company entered into employment agreements with Mr. Chris G.B. Meyer, under which Mr. Meyer was appointed Group Chief Executive Officer of the Company effective July 1, 2021. Mr. Meyer was awarded 117,304 shares of restricted stock on July 1, 2021, which were subject to time-based vesting and vest in full on June 30, 2024, subject to Mr. Meyer’s continued service to the Company through June 30, 2024. In addition, under the terms of Mr. Meyer’s engagement, the Company’s Remuneration Committee also awarded Mr. Meyer 117,304 shares of restricted stock which include performance conditions and which only vest on June 30, 2024 if the performance conditions are met and Mr. Meyer remains employed with the Company through June 30, 2024. Vesting of half of these awards, or 58,652 shares of restricted stock, is subject to the Company achieving its three-year financial services plan during the specific measurement period from June 30, 2021, to June 30, 2024, and the other half is subject to share price growth targets, and only vest if the Company’s share price is $8.14 or higher on June 30, 2024. ~~In August 2021,~~On March 1, 2022, the Company awarded ~~44,986~~207,859 shares of restricted stock to ~~an employee~~executive officers and vesting of these awards is subject to the executive’s continuous service through the applicable vesting date, one third of which vests on each of the first, second and third anniversaries of the grant date. In August 2021, December 2021 and February 2022, the Company awarded 44,986, 50,300 and 29,920 shares of restricted stock, respectively, to employees which have ~~time-based~~time and performance-based (market conditions related to share price performance) vesting conditions.

~~NaN~~Upon joining the Company, each of Messrs. Meyer and Lincoln C. Mali, were entitled to receive an award of shares of restricted stock which were subject to them purchasing an agreed value of shares (“matching awards”) in the market during a prescribed period of time. However, these executives were unable to purchase shares in the market during that period due to a Company-imposed insider-trading restriction placed on them. On November 15, 2021, the Company amended the terms of these awards in order to put the executives into an economically equivalent position, as follows:

(i) assume that the executives would have purchased their agreed allocation within their first 30 days post commencement of employment had they not been embargoed;

(ii) require the executives to fulfill their agreed allocations within a short period following release of the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2021;

(iii) to the extent that the price per share actually paid is greater than the 30-day volume-weighted average price (“VWAP”) in their respective first months of employment, award the executives a top-up (“top up awards”) which amounts to the after-tax difference between (a) number of shares purchased at the 30-day VWAP in their respective first months of employment and (b) number of shares purchased at the actual share price paid. The top-up will be settled as follows: (a) 55% in shares of the Company’s common stock and (b) 45%, at the election of the executive, as either shares of the Company’s common stock or cash. The top up awards were not subject to any vesting conditions and vested immediately; and

(iv) adjust the initial matching awards to the aggregate number of shares acquired in terms of (ii) and (iii). The matching awards vest ratably over a period of three years commencing on the first anniversary of the grant of the matching awards.

The executives acquired shares during November and December 2021, and the Company granted the executives 326,158 matching awards and 71,647 top up awards.

Except as discussed above, 0 shares of restricted stock vested during the three and nine months ended ~~September 30, 2021.~~March 31, 2022.

During the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, 244,500 shares of restricted stock with time-based vesting conditions vested. In connection with the Company’s former chief executive officer’s separation, the Company agreed to accelerate the vesting of ~~,66800~~66,800 shares of restricted stock which were granted in February 2020, and which were subject to time-based vesting. These shares of restricted stock vested on September 30, 2020.

During the nine months ended March 31, 2022, 30,000 shares of restricted stock were forfeited by an executive officer as the market condition (related to share price performance) was not achieved.

The ~~480,200~~510,200 shares of restricted stock that were forfeited during the ~~three~~nine months ended ~~September 30, 2020, included~~March 31, 2021, includes 375,200 shares of restricted stock forfeited by the Company’s former chief executive officer upon his separation from the ~~Company.~~Company and 30,000 shares of restricted stock forfeited by an executive officer as the market condition (related to share price performance) was not achieved. The March 31, 2021, non-vested shares of restricted stock presented in the table above includes 164,000 shares of restricted stock forfeited by an executive officer following his resignation from the Company on April 30, 2021. The amount of 164,000 shares of restricted stock comprised 107,200 shares of restricted stock with performance (related to agreed return on net asset value) and time-based vesting conditions, 30,000 shares of restricted stock with a market condition (related to share price performance) and time-based vesting conditions, and 26,800 shares of restricted stock with time-based vesting conditions.

12.Stock-based compensation (continued)

~~Stock-based~~Stock option and restricted stock activity (continued)

Restricted stock (continued)

Effective January 1, 2022, the Company agreed to grant an advisor shares in lieu of cash for services provided to the Company during a contract term that will expire on December 31, 2022. The contract may be terminated early if certain agreed events occur. The advisor has agreed to receive 6,481 shares of the Company’s common stock per month as payment for services rendered and is not entitled to receive additional shares if the contract is terminated early due to the occurrence of the agreed events. The 6,481 shares granted per month was calculated using an agreed monthly fee of $35,000 divided by the Company’s closing market price on January 3, 2022, on the Nasdaq Global Select Market. The Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears, on a quarterly basis and that the shares may not be transferred until the earlier of December 31, 2022, or the occurrence of the agreed event. During the three months ended March 31, 2022, the Company recorded a stock-based compensation charge of $0.1 million and ~~unrecognized compensation cost~~included the issuance of 19,443 shares of common stock in its issued and outstanding share count.

The Company recorded a stock-based compensation charge, net during the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ of ~~$0.3~~$0.6 million and ~~$0.4~~$0.2 million, respectively, which comprised:

Total charge

Allocated to cost of goods sold, IT processing, servicing and support

Allocated to selling, general and administration

Three months ended September 30, 2021

Stock-based compensation charge

$
344

$
0

$
344

Reversal of stock compensation charge related to stock options and restricted stock forfeited

(35)

-

(35)

Total - three months ended September 30, 2021

$
309

$
0

$
309

Three months ended September 30, 2020

Stock-based compensation charge

$
682

$
0

$
682

Reversal of stock compensation charge related to stock options and restricted stock forfeited

(283)

0

(283)

Total - three months ended September 30, 2020

$
399

$
0

$
399

			Total charge		Allocated to cost of goods sold, IT processing, servicing and support		Allocated to selling, general and administration
Three months ended March 31, 2022
	Stock-based compensation charge		$	619	$	0	$	619
	Reversal of stock compensation charge related to stock options and restricted stock forfeited			(5)		-		(5)
		Total - three months ended March 31, 2022	$	614	$	0	$	614

Three months ended March 31, 2021
	Stock-based compensation charge		$	245	$	0	$	245
		Total - three months ended March 31, 2021	$	245	$	0	$	245

The Company recorded a stock-based compensation charge, net during the nine months ended March 31, 2022 and 2021, of $1.7 million and $0.9 million respectively, which comprised:

a				Total charge		Allocated to cost of goods sold, IT processing, servicing and support		Allocated to selling, general and administration
	Nine months ended March 31, 2022
		Stock-based compensation charge		$	1,751	$	0	$	1,751
		Reversal of stock compensation charge related to stock options forfeited			(40)		0		(40)
			Total - nine months ended March 31, 2022	$	1,711	$	0	$	1,711

	Nine months ended March 31, 2021
		Stock-based compensation charge		$	1,173	$	0	$	1,173
		Reversal of stock compensation charge related to stock options and restricted stock forfeited			(297)		0		(297)
			Total - nine months ended March 31, 2021	$	876	$	0	$	876

The stock-based compensation charges have been allocated to selling, general and administration based on the allocation of the cash compensation paid to the relevant employees.

12.Stock-based compensation (continued)

As of ~~September 30, 2021,~~March 31, 2022, the total unrecognized compensation cost related to stock options was approximately ~~$0.6~~$0.5 million, which the Company expects to recognize over approximately two years. As of ~~September 30, 2021,~~March 31, 2022, the total unrecognized compensation cost related to restricted stock awards was approximately ~~$2.2~~$4.8 million, which the Company expects to recognize over approximately three years.

As of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021, respectively, the Company recorded a deferred tax asset of approximately ~~$0.4~~$0.3 million and $0.1 million, related to the stock-based compensation charge recognized related to employees of Net1. As of ~~September 30, 2021,~~March 31, 2022, and June 30, 2021, respectively, the Company recorded a valuation allowance of approximately ~~$0.4~~$0.3 million and $0.1 million, related to the deferred tax asset because it does not believe that the stock-based compensation deduction would be utilized as it does not anticipate generating sufficient taxable income in the United States. The Company deducts the difference between the market value on the date of exercise by the option recipient and the exercise price from income subject to taxation in the United States.

13.(Loss) Earnings per share

The Company has issued redeemable common stock which is redeemable at an amount other than fair value. Redemption of a class of common stock at other than fair value increases or decreases the carrying amount of the redeemable common stock and is reflected in basic earnings per share using the two-class method. There were no redemptions of common stock, or adjustments to the carrying value of the redeemable common stock during the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. Accordingly, the two-class method presented below does not include the impact of any redemption. The Company’s redeemable common stock is described in Note 13 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021.

Basic (loss) earnings per share includes shares of restricted stock that meet the definition of a participating security because these shares are eligible to receive non-forfeitable dividend equivalents at the same rate as common stock. Basic (loss) earnings per share has been calculated using the two-class method and basic (loss) earnings per share for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~, reflects only undistributed earnings. The computation below of basic (loss) earnings per share excludes the net loss attributable to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the dilutive impact of these unvested shares of restricted stock from the denominator.

Diluted (loss) earnings per share has been calculated to give effect to the number of shares of additional common stock that would have been outstanding if the potential dilutive instruments had been issued in each period. Stock options are included in the calculation of diluted (loss) earnings per share utilizing the treasury stock method and are not considered to be participating securities, as the stock options do not contain non-forfeitable dividend rights. The Company has excluded employee stock options to purchase 185,902 and 172,113 shares of common stock from the calculation of diluted loss per share during the three and nine months ended March 31, 2022, because the effect would be antidilutive.

The calculation of diluted (loss) earnings per share includes the dilutive effect of a portion of the restricted stock granted to employees in May 2018, September 2018, February 2020, May 2021, July 2021, ~~and~~ August 2021, November 2021, December 2021, February 2022 and March 2022, as these shares of restricted stock are considered contingently returnable shares for the purposes of the diluted (loss) earnings per share calculation and the vesting conditions in respect of a portion of the restricted stock had been satisfied. The vesting conditions for all awards made are discussed in Note 16 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2021.

13.(Loss) Earnings per share (continued)

The following table presents net loss attributable to Net1 and the share data used in the basic and diluted (loss) earnings per share computations using the two-class method:

			Three months ended					Nine months ended
			March 31,					March 31,
			2022			2021		2022		2021
				(in thousands except					(in thousands except
				percent and					percent and
				per share data)					per share data)
Numerator:
	Net loss attributable to Net1		$	(3,327)		$	(6,204)	$	(28,727)	$	(39,696)
	Undistributed loss			(3,327)			(6,204)		(28,727)		(39,696)
	Percent allocated to common shareholders
	(Calculation 1)			98%			99%		99%		99%
	Numerator for loss per share: basic and diluted		$	(3,262)	$		(6,172)	$	(28,299)	$	(39,300)

Denominator
	Denominator for basic (loss) earnings per share:
	weighted-average common shares outstanding			56,660			56,352		56,467		56,236
	Effect of dilutive securities:
		Stock options		0			275		0		92
		Denominator for diluted (loss) earnings per share: adjusted weighted average common shares outstanding and assuming conversion		56,660			56,627		56,467		56,328

Loss per share:
	Basic		$	(0.06)		$	(0.11)	$	(0.50)	$	(0.70)
	Diluted		$	(0.06)		$	(0.11)	$	(0.50)	$	(0.70)

(Calculation 1)
	Basic weighted-average common shares outstanding (A)			56,660			56,352		56,467		56,236
	Basic weighted-average common shares outstanding and unvested restricted shares expected to vest (B)			57,791			56,646		57,322		56,803
	Percent allocated to common shareholders
	(A) / (B)			98%			99%		99%		99%

Three months ended

September 30,

2021

2020

(in thousands except

percent and

per share data)

Numerator:

Net loss attributable to Net1

$
(12,994)

$
(28,958)

Undistributed (loss) earnings

$
(12,994)

$
(28,958)

Percent allocated to common shareholders (Calculation 1)

99

98

Numerator for (loss) earnings per share: basic and diluted

(12,915)

(28,443)

Continuing

(12,915)

(28,443)

Denominator

Denominator for basic (loss) earnings per share:

weighted-average common shares outstanding

56,332

56,104

Denominator for diluted (loss) earnings per share: adjusted weighted average common shares outstanding and assuming conversion

56,463

56,104

(Loss) Earnings per share:

Basic

$
(0.23)

$
(0.51)

Diluted

$
(0.23)

$
(0.51)

(Calculation 1)

Basic weighted-average common shares outstanding (A)

56,332

56,104

Basic weighted-average common shares outstanding and unvested restricted shares expected to vest (B)

56,678

57,119

Percent allocated to common shareholders (A) / (B)

99

98

~~13.(Loss) Earnings per share (continued)~~

Options to purchase ~~270,832~~408,252 shares of the Company’s common stock at prices ranging from ~~$6.20~~$4.87 to ~~$11.23~~$11.23 per share were outstanding during the three and nine months ended ~~September 30, 2021,~~March 31, 2022, respectively, but were not included in the computation of diluted (loss) earnings per share because the options’ exercise price was greater than the average market price of the Company’s common stock. Options to purchase ~~1,231,617~~425,784 shares of the Company’s common stock at prices ranging from ~~$3.07~~$6.20 to ~~$11.23~~$11.23 per share were outstanding during the three and nine months ended ~~September 30, 2020,~~March 31, 2021, respectively, but were not included in the computation of diluted (loss) earnings per share because the options’ exercise price was greater than the average market price of the Company’s common stock. The options, which expire at various dates through ~~November 4, 2030,~~February 3, 2032, were still outstanding as of ~~September 30, 2021.~~March 31, 2022.

14.Supplemental cash flow information

The following table presents supplemental cash flow disclosures for the three and nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Three months ended

September 30,

2021

2020

Cash received from interest

$
382

$
495

Cash paid for interest

$
804

$
908

Cash paid for income taxes

$
11

$
15,406

		Three months ended				Nine months ended
		March 31,				March 31,
		2022		2021		2022		2021

Cash received from interest	$	756	$	537	$	1,444	$	1,746
Cash paid for interest	$	788	$	707	$	2,468	$	2,251
Cash paid for income taxes	$	181	$	211	$	471	$	16,382

14.Supplemental cash flow information (continued)

Disaggregation of cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash included on the Company’s unaudited condensed consolidated statement of cash flows includes restricted cash related to cash withdrawn from the Company’s debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash. Cash, cash equivalents and restricted cash also includes cash in certain bank accounts that have been ceded to Nedbank. As this cash has been pledged and ceded it may not be drawn and is considered restricted as to use and therefore is classified as restricted cash as well. Refer to Note 8 for additional information regarding the Company’s facilities. The following table presents the disaggregation of cash, cash equivalents and restricted cash as of March 31, 2022 and 2021, and June 30, 2021:

			March 31, 2022		March 31, 2021		June 30, 2021
Cash and cash equivalents		$	183,712	$	207,814	$	198,572
Restricted cash			56,336		19,016		25,193
	Cash, cash equivalents and restricted cash	$	240,048	$	226,830	$	223,765

Leases

The following table presents supplemental cash flow disclosure related to leases for the three and nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Three months ended

September 30,

2021

2020

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases

$
925

$
872

Right-of-use assets obtained in exchange for lease obligations

Operating leases

$
504

$
90

		Three months ended March 31,				Nine months ended March 31,
		2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	902	$	1,061	$	2,665	$	2,940

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	290	$	796	$	1,308	$	2,497

15.Revenue recognition

Disaggregation of revenue

The following table presents ~~our~~the Company’s revenue disaggregated by major revenue streams, including a reconciliation to operating segments for the three months ended ~~September 30, 2021:~~March 31, 2022:

Processing

Financial services

Technology

Total

Processing fees
$
15,630

$
464

$
0

$
16,094

South Africa

15,203

464

0

15,667

Rest of world

427

0

0

427

Technology products

604

132

4,349

5,085

Telecom products and services

2,277

0

0

2,277

Lending revenue

0

5,376

0

5,376

Insurance revenue

0

2,193

0

2,193

Account holder fees

0

1,443

0

1,443

Other

1,645

78

313

2,036

Total revenue, derived from the following geographic locations

20,156

9,686

4,662

34,504

South Africa

19,729

9,686

4,662

34,077

Rest of world
$
427

$
0

$
0

$
427

			Consumer		Merchant		Other		Total
Processing fees			$	7,075	$	8,136	$	397	$	15,608
	South Africa			7,075		8,136		0		15,211
	Rest of world			0		0		397		397
Technology products				40		7,877		0		7,917
Telecom products and services				0		1,862		0		1,862
Lending revenue				5,614		0		0		5,614
Insurance revenue				2,169		0		0		2,169
Account holder fees				1,434		0		0		1,434
Other				97		501		0		598
	Total revenue, derived from the following geographic locations			16,429		18,376		397		35,202
		South Africa		16,429		18,376		0		34,805
		Rest of world	$	0	$	0	$	397	$	397

15.Revenue recognition (continued)

Disaggregation of revenue (continued)

Processing

Financial services

Technology

Total

(as restated)

(as restated)⁽¹⁾

Processing fees
$
16,330

$
599

$
0

$
16,929

South Africa⁽¹⁾

14,774

599

0

15,373

Rest of world

1,556

0

0

1,556

Technology products

460

0

6,074

6,534

Telecom products and services

4,422

0

0

4,422

Lending revenue

0

4,200

0

4,200

Insurance revenue

0

1,457

0

1,457

Account holder fees

0

1,183

0

1,183

Other

306

81

24

411

Total revenue, derived from the following geographic locations

21,518

7,520

6,098

35,136

South Africa

19,962

7,520

6,098

33,580

Rest of world
$
1,556

$
0

$
0

$
1,556

			Consumer		Merchant		Other		Total
Processing fees			$	7,179	$	6,810	$	421	$	14,410
	South Africa⁽¹⁾			7,179		6,810		0		13,989
	Rest of world			0		0		421		421
Technology products				87		2,179		0		2,266
Telecom products and services				0		2,945		0		2,945
Lending revenue				5,474		0		0		5,474
Insurance revenue				1,709		0		0		1,709
Account holder fees				1,414		0		0		1,414
Other				373		237		0		610
	Total revenue, derived from the following geographic locations			16,236		12,171		421		28,828
		South Africa		16,236		12,171		0		28,407
		Rest of world	$	0	$	0	$	421	$	421

~~(1) Processing fees South Africa and Total column has been restated~~The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to operating segments for the ~~error described in Note 1.~~nine months ended March 31, 2022:

			Consumer		Merchant		Other		Total
Processing fees			$	22,535	$	24,633	$	1,220	$	48,388
	South Africa			22,535		24,633		0		47,168
	Rest of world			0		0		1,220		1,220
Technology products				252		15,851		0		16,103
Telecom products and services				0		6,169		0		6,169
Lending revenue				16,171		0		0		16,171
Insurance revenue				6,396		0		0		6,396
Account holder fees				4,255		0		0		4,255
Other				623		2,715		0		3,338
	Total revenue, derived from the following geographic locations			50,232		49,368		1,220		100,820
		South Africa		50,232		49,368		0		99,600
		Rest of world	$	0	$	0	$	1,220	$	1,220

The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to operating segments for the nine months ended March 31, 2021:

			Consumer		Merchant		Other		Total
Processing fees			$	23,318	$	20,496	$	2,855	$	46,669
	South Africa⁽¹⁾			23,318		20,496		0		43,814
	Rest of world			0		0		2,855		2,855
Technology products				158		13,723		0		13,881
Telecom products and services				0		10,515		0		10,515
Lending revenue				14,962		0		0		14,962
Insurance revenue				4,779		0		0		4,779
Account holder fees				3,870		0		0		3,870
Other				780		813		0		1,593
	Total revenue, derived from the following geographic locations			47,867		45,547		2,855		96,269
		South Africa		47,867		45,547		0		93,414
		Rest of world	$	0	$	0	$	2,855	$	2,855

16.Leases

The Company has entered into leasing arrangements classified as operating leases under accounting guidance. These leasing arrangements relate primarily to the lease of its corporate head office, administration offices and branch locations through which the Company operates its financial services business in South Africa. The Company’s operating leases have remaining lease terms of between one and five years. The Company also operates parts of its financial services business from locations which it leases for a period of less than one year. The Company’s operating lease expense during ~~each of~~ the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was $0.9 million and $1.1 million, respectively. The Company’s operating lease expense during the nine months ended March 31, 2022 and 2021 was $2.7 million and $2.9 million, respectively. The Company does not have any significant leases that have not commenced as of ~~September 30, 2021~~March 31, 2022.

The Company has also entered into short-term leasing arrangements, primarily for the lease of branch locations and other locations, to operate its financial services business in South Africa. The Company’s short-term lease expense during the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~, was $ 1.3 million and $ ~~1.1~~1.0 million, respectively.

~~16.~~ The Company’s short-term lease expense during the nine months ended March 31, 2022 and 2021~~Leases (continued)~~, was $ 3.9 million and $ 3.1 million, respectively.

The following table presents supplemental balance sheet disclosure related to the Company’s right-of-use assets and its operating lease liabilities as of ~~September 30, 2021~~March 31, 2022 and June 30, 2021:

September 30,

June 30,

2021

2021

Right of use assets obtained in exchange for lease obligations:

Weighted average remaining lease term (years)

3.11

3.94

Weighted average discount rate (percent)

6.3

9.3

	March 31,		June 30,
	2022		2021
Right of use assets obtained in exchange for lease obligations:
Weighted average remaining lease term (years)		3.00		3.94
Weighted average discount rate (percent)		9.3		9.3

The maturities of the Company’s operating lease liabilities as of ~~September 30, 2021,~~March 31, 2022, are presented below:

September 30,

2021

Maturities of operating lease liabilities

2022 (for September 30, 2021 excluding three months to September 30, 2021)

$
2,915.00

2023

907.00

2024

603.00

2025

47.00

2026

0

Thereafter

0

Total undiscounted operating lease liabilities

4,472

Less imputed interest

385

Total operating lease liabilities, included in

4,087

Operating lease liability - current

2,674

Operating lease liability - long-term

$
1,413

Maturities of operating lease liabilities
Year ended June 30,
2022 (excluding nine months to March 31, 2022)	$	917
2023		1,832
2024		861
2025		260
2026		0
Thereafter		0
Total undiscounted operating lease liabilities		3,870
Less imputed interest		293
Total operating lease liabilities, included in		3,577
Operating lease liability - current		2,232
Operating lease liability - long-term	$	1,345

17.Operating segments

Change to internal reporting structure and restatement of previously reported information

During November 2021, the Company’s chief operating decision maker changed the Company’s operating and internal reporting structures following the establishment of a new management team and the Company’s decision to focus primarily on the South African market. The chief operating decision maker has decided to analyze the Company’s operating performance primarily based on operational lines which group financial services provided to customers (consumers) into the Consumer operating segment and goods and services provided to corporate and other juristic entities into the Merchant operating segment.

Reallocation of certain activities among operating segments

During the second quarter of fiscal 2022, the Company reorganized its operating segments by combining financial services provided to consumers (primarily individuals) from the Financial services operating segment with processing activities provided for customers within the Consumer operating segment, and by allocating processing activities performed for merchants (primarily corporate and juristic customers) from the Processing operating segment to the Merchant operating segment. Sales of hardware and licenses to customers (primarily corporate entities) included in the Technology operating segment have been allocated to the Merchant operating segment. Lastly, processing activities performed outside of South Africa have been allocated from the Processing operating segment to the Other operating segment. Segment results for the three and nine months ended March 31, 2022, reflect these changes to the operating segments. Previously reported information has been restated.

17.Operating segments (continued)

Operating segments

The Company discloses segment information as reflected in the management information systems reports that its chief operating decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in which the entity holds material assets or reports material revenues.

The Company currently has three reportable segments: ~~Processing, Financial services~~Consumer, Merchant and ~~Technology. All three segments~~Other. Consumer and Merchant operate mainly within South Africa and certain of ~~our~~the Company’s current and legacy activities outside of South Africa have been allocated to ~~Processing.~~our Other operating segment. The Company’s reportable segments offer different products and services and require different resources and marketing strategies but share the Company’s assets.

The ~~Processing~~Consumer segment includes ~~fees earned by~~activities related to the ~~Company from processing activities performed for its~~provision of financial services to customers, including a bank account, loans and ~~revenue generated from the distribution of prepaid airtime.~~insurance products. The Company ~~provides its customers with transaction processing services that involve the collection, transmittal and retrieval of~~charges monthly administration fees for all ~~transaction data.~~bank accounts. Customers that have a bank account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant point of sale device (“POS”). The Company earns processing fees from transactions processed for these customers. The Company also earns fees on transactions performed by other banks’ customers utilizing its ATM ~~POS~~ or ~~bill payment infrastructure. The Processing segment includes IPG’s processing activities for fiscal 2021 as IPG’s activities were ceased in fiscal 2021.~~

The Financial services segment includes activities related to the provision of financial services to customers, including a bank account, loans and insurance products. The Company charges monthly administration fees for all bank accounts.POS. The Company provides short-term loans to customers in South Africa for which it earns initiation and monthly service fees. The Company writes life insurance contracts, primarily funeral-benefit policies, and policy holders pay the Company a monthly insurance premium.

The ~~Technology~~Merchant segment includes activities related to the provision of goods and services provided to corporate and other juristic entities. The Company earns fees from processing activities performed for its customers and revenue generated from the distribution of prepaid airtime. The Company provides its customers with transaction processing services that involve the collection, transmittal and retrieval of all transaction data. This segment also includes sales of hardware and licenses to customers. Hardware includes the sale of POS devices, SIM cards and other consumables which can occur on an ad hoc basis. Licenses include the right to use certain technology developed by the Company.

The Other segment includes our operations outside South Africa and IPG’s processing activities for the applicable period through to the year ended June 30, 2021.

Corporate/Eliminations includes the Company’s head office cost center and the amortization of acquisition-related intangible assets.

2933

17.Operating segments (continued)

Operating segments (continued)

The reconciliation of the reportable segment’s revenue to revenue from external customers for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ is as follows:

Revenue (as restated)⁽¹⁾

Reportable Segment

Inter-segment

From external customers

Processing
$
21,356

$
1,200

$
20,156

Financial services

10,626

940

9,686

Technology

4,824

162

4,662

Total for the three months ended September 30, 2021
$
36,806

$
2,302

$
34,504

Processing⁽¹⁾
$
22,506

$
988

$
21,518

Financial services

8,265

745

7,520

Technology

6,211

113

6,098

Total for the three months ended September 30, 2020
$
36,982

$
1,846

$
35,136

			Revenue
			Reportable Segment			Inter-segment		From external customers

Consumer			$	16,429	$	0	$	16,429
Merchant				18,478		102		18,376
Other				397		0		397
	Total for the three months ended March 31, 2022		$	35,304	$	102	$	35,202

Consumer			$	16,236	$	0	$	16,236
Merchant				12,171		0		12,171
Other				421		0		421
		Total for the three months ended March 31, 2021	$	28,828	$	0	$	28,828

~~(1) Processing~~The reconciliation of the reportable segment’s revenue to revenue from external customers for the ~~three~~nine months ended ~~September 30, 2020 has been restated for the error described in Note 1.~~March 31, 2022 and 2021, is as follows:

			Revenue
			Reportable Segment			Inter-segment		From external customers

Consumer			$	50,232	$	0	$	50,232
Merchant				49,652		284		49,368
Other				1,220		0		1,220
	Total for the nine months ended March 31, 2022		$	101,104	$	284	$	100,820

Consumer			$	47,867	$	0	$	47,867
Merchant				45,623		76		45,547
Other				2,855		0		2,855
		Total for the nine months ended March 31, 2021	$	96,345	$	76	$	96,269

~~The Company does not allocate interest income, interest expense or income tax expense to its reportable segments.~~ The Company evaluates segment performance based on segment ~~operating~~earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”). The Company does not allocate depreciation and amortization, impairment of goodwill or other intangible assets, certain lease charges (“Lease adjustments”), non-recurring items (including gains or losses on disposal of investments, fair value adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted investments to its reportable segments. The Lease adjustments reflects lease charge excluded from the calculation of Segment Adjusted EBITDA and are therefore reported as a reconciling item to reconcile the reportable segments Segment Adjusted EBITDA to the Company’s loss before ~~acquisition-related intangible asset amortization which represents operating~~ income ~~before acquisition-related intangible asset amortization and expenses allocated to Corporate/Eliminations, all under GAAP.~~tax expense.

17.Operating segments (continued)

Operating segments (continued)

The reconciliation of the reportable segments measures of profit or loss to ~~loss~~income before income ~~tax expense (benefit)~~taxes for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ is as follows:

Three months ended

September 30,

2021

2020

Reportable segments measure of profit or loss
$
(9,526)

$
(7,898)

Operating loss: Corporate/Eliminations

(1,699)

(2,877)

Interest income

389

611

Interest expense

(816)

(747)

Loss before income tax expense (benefit)
$
(11,652)

$
(10,911)

				Three months ended				Nine months ended
				March 31,				March 31,
			2022		2021		2022		2021
Reportable segments measure of profit or loss			$	(5,508)	$	(10,652)	$	(16,567)	$	(25,209)
	Operating loss: Corporate/Eliminations			(2,560)		(1,404)		(8,775)		(8,943)
	Lease adjustments			(890)		(1,104)		(2,647)		(2,991)
	Depreciation and amortization			(463)		(1,132)		(2,084)		(3,129)
	Change in fair value of equity securities			0		10,814		0		25,942
	Gain related to fair value adjustment to currency options			6,120		0		3,691		0
	Gain on disposal of equity securities			720		0		720		0
	Loss on disposal of equity-accounted investment - Bank Frick			0		(472)		0		(472)
	Loss on disposal of equity-accounted investment			(346)		0		(346)		(13)
	Interest income			761		606		1,463		1,934
	Interest expense			(691)		(744)		(2,272)		(2,168)
		Loss before income taxes	$	(2,857)	$	(4,088)	$	(26,817)	$	(15,049)

3035

17.Operating segments (continued)

Operating segments (continued)

The following tables summarize supplemental segment information ~~that is prepared in accordance with GAAP~~ for the three and nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~

Three months ended

September 30,

2021

2020

(as restated)⁽¹⁾

Revenues

Processing
$
21,356

$
22,506

All others

21,356

21,297

IPG

0

1,209

Financial services

10,626

8,265

Technology

4,824

6,211

Total

36,806

36,982

Operating (loss) income

Processing

(7,131)

(7,301)

All others

(7,131)

(4,529)

IPG

0

(2,772)

Financial services

(2,998)

(2,372)

Technology

603

1,775

Subtotal: Operating segments

(9,526)

(7,898)

Corporate/Eliminations

(1,699)

(2,877)

Total

(11,225)

(10,775)

Depreciation and amortization

Processing

594

704

Financial services

90

136

Technology

193

2

Subtotal: Operating segments

877

842

Corporate/Eliminations

18

81

Total

895

923

Expenditures for long-lived assets

Processing

514

246

Financial services

56

28

Technology

128

1

Subtotal: Operating segments

698

275

Corporate/Eliminations

0

0

Total
$
698

$
275

2021:

						Three months ended				Nine months ended
						March 31,				March 31,
						2022		2021		2022		2021
Revenues
	Consumer					$	16,429	$	16,236	$	50,232	$	47,867
	Merchant						18,478		12,171		49,652		45,623
	Other						397		421		1,220		2,855
		Total					35,304		28,828		101,104		96,345

Segment Adjusted EBITDA
	Consumer⁽¹⁾						(6,866)		(7,610)		(20,871)		(19,395)
	Merchant						1,271		273		3,951		4,471
	Other						87		(3,315)		353		(10,285)
		Total Segment Adjusted EBITDA					(5,508)		(10,652)		(16,567)		(25,209)
		Corporate/Eliminations					(2,560)		(1,404)		(8,775)		(8,943)
			Subtotal				(8,068)		(12,056)		(25,342)		(34,152)
				Less: Lease adjustments			890		1,104		2,647		2,991
				Less: Depreciation and amortization			463		1,132		2,084		3,129
					Total operating loss		(9,421)		(14,292)		(30,073)		(40,272)

Depreciation and amortization
	Consumer						226		798		1,377		2,275
	Merchant						207		176		613		487
	Other						13		66		43		106
		Subtotal: Operating segments					446		1,040		2,033		2,868
		Corporate/Eliminations					17		92		51		261
			Total				463		1,132		2,084		3,129

Expenditures for long-lived assets
	Consumer						713		99		1,523		3,343
	Merchant						120		550		196		581
	Other						1		0		2		23
		Subtotal: Operating segments					834		649		1,721		3,947
		Corporate/Eliminations					0		0		0		0
			Total			$	834	$	649	$	1,721	$	3,947

(1) ~~Revenues-Processing-All others~~Consumer Segment Adjusted EBITDA for the three and nine months ended ~~September 30, 2020 have been restated for the error described in~~March 31, 2022, includes reorganization costs of $5.9 million (refer also Note 1.1).

The segment information as reviewed by the chief operating decision maker does not include a measure of segment assets per segment as all of the significant assets are used in the operations of all, rather than any one, of the segments. The Company does not have dedicated assets assigned to a particular operating segment. Accordingly, it is not meaningful to attempt an arbitrary allocation and segment asset allocation is therefore not presented.

18.Income tax

Income tax in interim periods

For the purposes of interim financial reporting, the Company determines the appropriate income tax provision by first applying the effective tax rate expected to be applicable for the full fiscal year to ordinary income. This amount is then adjusted for the tax effect of significant unusual items, for instance, changes in tax law, valuation allowances and non-deductible transaction-related expenses that are reported separately, and have an impact on the tax charge. The cumulative effect of any change in the enacted tax rate, if and when applicable, on the opening balance of deferred tax assets and liabilities is also included in the tax charge as a discrete event in the interim period in which the enactment date occurs.

The South African corporate income tax rate is expected to reduce from 28% to 27% from July 1, 2022. The change in the income tax rate has not been enacted as of March 31, 2022, and accordingly all deferred taxes assets and liabilities related to the Company’s South African operations are still recorded using the enacted corporate income tax rate of 28%.

For the three and nine months ended ~~September 30, 2021,~~March 31, 2022, the Company’s effective tax rate was impacted by the tax expense recorded by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

~~18.Income tax (continued)~~

~~Income tax in interim periods (continued)~~

For the three months ended ~~September 30, 2020,~~March 31, 2021, the Company’s effective tax rate was impacted by the ~~reversal~~tax effect of the ~~deferred~~change in the fair value of our equity securities (refer to Note 5), which is at a lower tax ~~liability related to one of~~rate than the ~~Company’s equity-accounted investments following its impairment, which was partially offset by~~South African statutory rate, the tax expense recorded by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by IPG and certain of the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

For the nine months ended March 31, 2021, the Company’s effective tax rate was impacted by the tax effect of the change in fair value referred to above, tax expense recorded by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by IPG and certain of the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities, which was partially offset by the reversal of the deferred tax liability related to one of the Company’s equity-accounted investments following its impairment.

Uncertain tax positions

The Company had no significant uncertain tax positions during the three months ended ~~September 30, 2021,~~March 31, 2022, and therefore, the Company had no accrued interest related to uncertain tax positions on its balance sheet. The Company does not expect changes related to its unrecognized tax benefits will have a significant impact on its results of operations or financial position in the next 12 months.

The Company has no0 unrecognized tax benefits. The Company files income tax returns mainly in South Africa, Germany, Hong Kong, India, the United Kingdom, Botswana and in the U.S. federal jurisdiction. As of ~~September 30, 2021,~~March 31, 2022, the Company’s South African subsidiaries are no longer subject to income tax examination by the South African Revenue Service for periods before June 30, 2017. The Company is subject to income tax in other jurisdictions outside South Africa, none of which are individually material to its financial position, statement of cash flows, or results of operations.

19.Commitments and contingencies

Guarantees

The South African Revenue Service and certain of the Company’s customers, suppliers and other business partners have asked the Company to provide them with guarantees, including standby letters of credit, issued by a South African bank. The Company is required to procure these guarantees for these third parties to operate its business.

Nedbank has issued guarantees to these third parties amounting to ZAR ~~156.6~~155.1 million ($~~10.4~~10.7 million, translated at exchange rates applicable as of ~~September 30, 2021)~~March 31, 2022) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of between 0.4% per annum to ~~1.94%~~1.82% per annum of the face value of these guarantees and does not recover any of the commission from third parties.

19.Commitments and contingencies (continued)

Guarantees (continued)

The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of ~~September 30, 2021.~~March 31, 2022. The maximum potential amount that the Company could pay under these guarantees is ZAR ~~156.6~~155.1 million ($~~10.4~~10.7 million, translated at exchange rates applicable as of ~~September 30, 2021)~~March 31, 2022). As discussed in Note 8, the Company has ceded and pledged certain bank accounts to Nedbank as security for these guarantees with an aggregate value of ZAR ~~156.6~~155.1 million ($~~10.4~~10.7 million translated at exchange rates applicable as of ~~September 30, 2021)~~March 31, 2022). The guarantees have reduced the amount available under its indirect and derivative facilities in the Company’s short-term credit facility described in Note 8.

Contingencies

The Company is subject to a variety of insignificant claims and suits that arise from time to time in the ordinary course of business. Management currently believes that the resolution of these other matters, individually or in the aggregate, will not have a material adverse impact on the Company’s financial position, results of operations or cash flows.

20. Subsequent events

~~Agreement to acquire a controlling interest in the~~2022 Acquisitions

April 2022 acquisition of Connect ~~Group~~

On October 31, 2021, the Company entered into a Sale of Shares Agreement (the “Sale Agreement”) with the Sellers (as defined in the Sale Agreement), Cash Connect Management Solutions Proprietary Limited (“CCMS”), Ovobix (RF) Proprietary Limited (“Ovobix”), Luxiano 227 Proprietary Limited (“Luxiano”) and K2021477132 (South Africa) Proprietary Limited (“K2021” and together with CCMS, Ovobix and Luxiano, ~~the “Target Companies”~~“Connect”). Pursuant to the Sale Agreement, and subject to its terms and conditions, the Company’s wholly-owned subsidiary, Net1 SA, agreed to acquire, and the Sellers agreed to sell, all of the outstanding equity interests and certain claims in ~~the Target Companies.~~Connect. The transaction closed on April 14, 2022. The Company has ~~guaranteed~~commenced the ~~performance~~purchase price allocation related to this transaction however the process had not been completed as of ~~Net1 SA’s obligations under~~ the ~~Sale Agreement.~~date of filing this Quarterly Report on Form 10-Q on May 10, 2022. The Company expects to include its preliminary allocation of the purchase consideration related to this acquisition in its audited financial statements to be included in its Annual Report on Form 10-K for the year ended June 30, 2022.

~~20.~~ ~~Subsequent events (continued)~~

~~Subject to the terms~~The total purchase consideration was ZAR 3.8 billion ($262.0 million), comprising ZAR 3.5 billion ($238.2 million) in cash and ~~conditions set forth~~ZAR 0.4 billion ($23.9 million) in ~~the Sale Agreement, at the closing~~3,185,079 shares of the transaction, the Sellers shall receive consideration of ZAR 3,683,559,419, after deducting an aggregate amount of ZAR 175,860,000 representing awards to certain members of management, subject to certain adjustments.Company’s common stock. The ~~ZAR 3,683,559,419 includes 3,065,883~~3,185,079 shares of common stock towill be issued in three tranches on each of the first, second and third anniversaries of the ~~closing. The Sale Agreement also includes a purchase price escalator that is intended to reflect an assumed increase in Enterprise Value~~closing and was calculated as ZAR 350.0 million divided by the sum of $7.50 multiplied by the closing date exchange rate (as defined in the Sale Agreement) ~~from March 1, 2021, through closing at the rate~~ of ~~3.05% per annum.~~

$1:ZAR 14.65165

The Sale Agreement includes customary covenants from the Sellers, including (i) to conduct the business in the ordinary course during the period between the execution of the Sale Agreement and the closing of the transactions contemplated thereby, and (ii) not to engage in certain kinds of transactions during such period..

The closing of the transaction iswas subject to customary closing conditions, including (i) approval from the competition authorities of South Africa, Namibia and Botswana, (ii) exchange control approval from the financial surveillance department of the South African Reserve Bank, and (iii) obtaining certain third-party consents. In addition, the closing of the transaction iswas subject to entry into definitive financing agreements by each of Net1 SA and CCMS for an aggregate of ZAR 2.35 billion in debt financing ~~to be~~ provided by Rand Merchant Bank and satisfying the conditions precedent for funding ~~thereunder.~~thereunder, of which ZAR 1.1 billion relates to the financing agreements described below and ZAR 1.25 billion related to finance agreements signed between CCMS and RMB. Of the ZAR1.25 billion related to CCMS, ZAR 250 million related to new debt as part of the funding of the acquisition. The definitive loan agreements became effective upon closing the transaction.

The South African competition authorities approved the transaction subject to certain public interest conditions relating to employment, increasing the spread of ownership by historically disadvantaged people (“HDPs”) and workers, and investing in supplier and enterprise development. Further to increasing the spread of ownership by HDPs, Net1 is required to establish an employee share ownership scheme (“ESOP”) within 24 months of the implementation of the Connect acquisition, that complies with certain design principles for the benefit of the workers of the merged entity to receive a shareholding in Net1 equal in value to at least 3% of the issued shares in Net1 at the date of the Connect acquisition. If within 24 months of the implementation date of the transaction, Net1generates a positive net profit for three consecutive quarters, the ESOP shall increase to 5% of the issued shares in Net1 at the date of the Connect acquisition. The final structure of the ESOP is contingent on Net1 shareholder approval and relevant regulatory and governance approvals. The ESOP had not been established as of May 10, 2022.

The Company ~~signed non-binding~~believes that the acquisition significantly advances its vision to transform into the leading fintech platform for underserved consumers and merchants in South Africa. The combination is strategically important because it combines complementary product offerings to drive stronger unit economics, facilitates expansion of the addressable market to informal MSMEs, Connect has an attractive financial profile with strong and profitable growth, merges highly skilled teams with complementary expertise and allows the combined group to better serve the underserved in South Africa through the provision of dignified financial services to people and businesses who are underserved by the financial system.

20. Subsequent events (continued)

New borrowings – South Africa

July 2017 Facilities, as amended, comprising long-term borrowings (Facility G and Facility H) and a short-term facility (Facility E)

Long-term facilities - Facility G and Facility H

The Company, through Net1 SA, entered into a Fourth Amendment and Restatement Agreement, which includes, among other agreements, an Amended and Restated Common Terms Agreement, a Senior Facility G Agreement and a Senior Facility H Agreement (collectively, the “Loan Documents”) with RMB and Main Street 1692 (RF) Proprietary Limited (“Debt Guarantor”), a South African company incorporated for the sole purpose of holding collateral for the benefit of the Lenders and acting as debt guarantor, and certain other parties. The Loan Documents were further amended through letter agreements, which form part of the Loan Documents, in March 2022 and the disclosure in this note includes the amended terms. Net1 agreed to guarantee the obligations of Net1 SA to the Lenders. The Loan Documents became effective upon closing the transaction and the Company drew down on the facilities on April 14, 2022.

The Loan Documents contain customary covenants that require Net1 SA to maintain a specified total asset cover ratio, maintain group cash balances (as defined in the Loan Documents) above ZAR 300.0 million, and restrict the ability of Net1, Net1 SA, and certain of its subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make investment above specified levels, engage in certain business combinations and engage in other corporate activities. The group cash balances may go below ZAR 300 million to the extent equivalent credit support is provided by the VCP Investment Fund and/ or VCP Investment Portfolios (“VCP Investors”), and such support exceeds ZAR 350 million, but such reduction below ZAR 300 million is limited by a further ZAR 80 million to ZAR 220 million.

Pursuant to the Senior Facility G Agreement, Net1 SA may borrow up to an aggregate of ZAR 768.975 million (“Facility G”) for the sole purposes of funding the acquisition of the Target Companies and paying transaction costs. Facility G is required to be repaid on the date which is 18 months after the first utilization of Facility G. Interest on Facility G is payable quarterly in arrears based on the 3-month Johannesburg Interbank Agreed Rate (“JIBAR”) in effect from time to time plus a margin of (i) 3.00% per annum for the first nine months occurring after the effective date (as defined in the Loan Documents); and then (ii) from the date after the nine month period in (i), (x) 2.50% per annum if the Facility G balance outstanding is less than or equal to ZAR 250.0 million, or (y) 3.00% per annum if the Facility G balance is between ZAR 250.0 million to ZAR 450.0 million, or (z) 3.50% per annum if the Facility G balance is greater than ZAR 450.0 million. The interest rate shall increase by a further 2.00% per annum in the event of default (as defined in the Loan Documents). Net1 SA paid a non-refundable deal origination fee of ZAR 11.25 million to the Lenders related to Facility G on closing.

Pursuant to the Senior Facility H Agreement, Net1 SA may borrow up to an aggregate of ZAR 350.0 million (“Facility H”) for the sole purposes of funding the acquisition of the Target Companies and paying transaction costs. Facility H is required to be repaid on the date which is 18 months after the first utilization of Facility H. Interest on Facility H is payable quarterly in arrears based on JIBAR in effect from time to time plus a margin of 2.00% per annum which increases by a further 2.00% per annum in the event of default (as defined in the Loan Documents). Net1 SA paid a non-refundable deal origination fee of ZAR 5.25 million to the Lenders related to Facility H on closing.

Facility G and Facility H are secured by a pledge of certain of the Company’s bank accounts, and the cession of Net1’s shareholding in certain of its subsidiaries.

The Facility H Agreement provides the Lenders with a right to discuss the capitalization of the Net1 group with its management and Value Capital Partners Proprietary Limited (“VCP”) if Net1’s market capitalization on the NASDAQ Global Select Market (based on the closing price on the NASDAQ Global Select Market) on any day falls below the USD equivalent of ZAR 3.250 billion (or such other amount agreed by the parties). VCP is required to maintain an asset cover ratio above 5.00:1.00, calculated as the total VCP investment fund net asset value (as defined in the Facility H agreement) divided by the Facility H borrowings outstanding, measured as of March, June, September and December each year (as applicable) (each a “Measurement Date”). The Lenders require Net1 SA to deliver a compliance certificate procured from VCP as of each applicable Measurement Date, which shows the computation of the asset cover ratio.

20. Subsequent events (continued)

Connect’s borrowing

The Company, through CCMS, entered into a Facilities Agreement (the “CCMS Facilities Agreement”) with RMB in January 2022. The CCMS Facilities Agreement was further amended through letter agreements, which form part of the CCMS Facilities Agreement, in March and April 2022, respectively, and the disclosure in this note includes the amended terms. The CCMS Facilities Agreement became effective upon closing the transaction.

The CCMS Facilities Agreement provides for total facilities of ZAR 1.3 billion comprising a Facility A term ~~sheets for~~loan of ZAR 700 million (“Facility A Loan”), a ~~ZAR 2.35 billion ($154.4 million) debt package with Rand Merchant Bank. These include a credit enhancement mechanism~~Facility B term loan of ZAR 350 million ~~($23.0 million)~~(“Facility B Loan”), ~~which~~and a general banking facility of ZAR 205.0 million. The amount available under the general banking facility will ~~be provided by investment funds managed by~~reduce to ZAR 125.0 million on March 23, 2023. CCMS paid a non-refundable structuring fee of approximately ZAR 4.8 million in April 2022. Interest on the ~~Company’s largest shareholder, Value Capital Partners (Pty) Ltd,~~loans is payable quarterly based on ~~commercially agreed terms, which include~~JIBAR plus a ~~contingent subscription for new shares.~~margin in effect from time to time.

~~If certain conditions~~On April 14, 2022, the CCMS utilized the entire amount of Facility A and Facility B and approximately ZAR 211.0 million of the general banking facility to repay its existing borrowings and to settle obligations under the Sales Agreement. Principal repayments related to the Facility A Loan and the Facility B Loan are due at the end of each of the Company’s fiscal quarters. The table below presents payments due within the twelve months ended March 31, for each of the periods specified:

		Facility A Loan		Facility B Loan
		ZAR '000		ZAR '000
Total facility		ZAR	700,000	ZAR	350,000
Repayments due within the twelve months ended:
	March 31, 2023		0		(56,250)
	March 31, 2024		0		(75,000)
	March 31, 2025		0		(93,750)
	March 31, 2026		0		(118,750)
	March 31, 2027		(137,500)		(6,250)
	March 31, 2028	ZAR	(562,500)	ZAR	0

Borrowings under the CCMS Facilities Agreement are secured by a pledge by CCMS of, among other things, all of its equity shares, its entire equity interests in equity securities it owns and any claims outstanding. The CCMS Facilities Agreement contains customary covenants that require CCMS to maintain a specified debt service and interest cover and leverage ratio.

Interest on the Facility A Loan and the Facility B Loan is payable quarterly in arrears based on the Johannesburg Interbank Agreed Rate (“JIBAR”) in effect from time to time for the interest period (as defined in the CCMS Facilities Agreement) plus a margin of (i) 4.00% per annum while the leverage ratio is greater than or equal to 3.50 times; (ii) 3.75% per annum while the leverage ratio is between 2.50 times and 3.50 times, or (iii) 3.40% per annum while the leverage ratio is less than or equal to 2.50 times.

VCP Securities Purchase Agreement

On March 22, 2022, Net1 ~~SA’s debt financing are not satisfied by their respective due dates~~and Net1 SA entered into a Securities Purchase Agreement (the “VCP Agreement”) with Value Capital Partners Proprietary Limited (“VCP”) whereby VCP will procure that one or more funds under its management (the “Purchasing Funds”) will subscribe for, ~~fulfilment for any reason,~~and Net1 will have the obligation to issue and sell to the Purchasing Funds, ZAR 350.0 million of common stock of Net1 if (i) an event of default occurs under Facility G or Facility H, (ii) Net1 SA fails to pay all outstanding amounts in respect of Facility H on the maturity date of such facility, or (iii) the market capitalization of Net1 on the Nasdaq Global Select Market (based on the closing price on such exchange) falls and remains below the U.S. dollar equivalent of ZAR 2.6 billion on more than one day. The VCP Agreement contains customary representations and warranties from Net1 and VCP and covenants from Net1 and Net1 SA. In connection with the VCP Agreement, Net1 SA agreed to pay ~~to the Sellers~~VCP a commitment fee in an amount ofequal to ZAR 50,000,000. If certain undertakings by the Sellers are not completed by their respective due dates for fulfilment for any reason and the Sale Agreement is terminated, the Seller responsible for such failure will pay to Net1 SA an amount of ZAR 50,000,000.5.25 million.

~~The Sale~~Additionally, Net1, Net1 SA and VCP entered into a Step-In Rights Letter on March 22, 2022 with RMB, which provides RMB with step in rights to perform the obligations or enforce the rights of Net1 and Net1 SA under the VCP Agreement ~~may be terminated under certain customary and limited circumstances at any time prior~~ to the ~~closing~~extent that Net1 and Net1 SA fail to do so and do not remedy such failure within two business days of ~~the transactions contemplated thereby.~~notice of such failure.

Grant of shares of restricted stock to Connect employees

On ~~October 29, 2021,~~April 14, 2022, the ~~USD/ZAR exchange rate was $1.00 / ZAR 15.22.~~Company granted 1,250,486 shares of restricted stock to employees of Connect pursuant to the Sale Agreement. The award includes an equalization mechanism to maintain a return of $7.50 per share of restricted stock upon vesting through the issue of restricted stock units. The conversion of restricted stock units to shares cannot exceed 50% under the terms of the award. The Company has not finalized the accounting for the grant of these equity awards and expects to conclude this matter together with its purchase accounting process referenced above.

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

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended June 30, 2021, and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 10-Q.

Forward-looking statements

Some of the statements in this Form 10-Q constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, implied or inferred by these forward-looking statements. Such factors include, among other things, those listed under Item 1A.—“Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2021. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms and other comparable terminology.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether we can achieve positive future results, levels of activity, performance, or goals. Actual events or results may differ materially. We undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements to reflect the occurrence of unanticipated events, except as required by applicable law.

You should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto and thereto and which we have filed with the United States Securities and Exchange Commission completely and with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Recent Developments

~~Agreement~~Adopting a new brand and identity

As we embarked on creating a world class financial technology platform and repositioning ourselves for growth, it became evident we required a new identity that would resonate with our customers and employees. It was important for our new identity to ~~acquire~~authentically express our commitment to the local communities we serve and our ambition to drive financial inclusion by giving ordinary people and small businesses access to essential financial services.

For thousands of years livestock have been seen as a ~~controlling interest~~symbol of security, community and wealth and protecting one’s livestock was central to preserving the dignity and pride of a community. To ensure the best possible protection, an enclosure commonly known as a “kraal” in South Africa, was built in the ~~Connect Group~~center of the community. A kraal is seen as the social and economic heart of a village and only the most reliable people are entrusted with its care and protection. The word Lesaka means Kraal in Setswana and Sesotho, two of South Africa’s official languages, and it was agreed by our shareholders that the existing company name Net1, should change to Lesaka, which aptly represents our new group and its vision.

As Lesaka, we are on a mission to build and protect the financial wellbeing of our communities and our intention is to protect the vulnerable and underserved, by providing widespread access to essential financial services.

Update on our strategic focus areas

In the prior quarter we communicated the following four key pillars, that remain critical to the successful transformation of our company, to becoming a leading South African full-service fintech platform:

Growing the existing merchant business;

Returning the consumer business to breakeven;

Transforming our organization into a world class fintech platform; and

Strengthening our relationships with key stakeholders.

Focused effort throughout the third quarter to deliver on each of these pillars delivered positive momentum, repositioning the business to capture the long-term growth opportunities across both our merchant and consumer businesses.

Growing the existing Merchant business

On ~~October 31, 2021,~~April 14, 2022, we ~~entered into an agreement to acquire a controlling stake in~~announced the ~~Connect Group. Subject to the terms and conditions set forth in the transaction agreement, the sellers will receive consideration~~closing of ZAR 3,683,559,419, which includes 3,065,883 shares of common stock to be issued in three tranches on each of the first, second and third anniversaries of the closing. The transaction also includes a purchase price escalator that is intended to reflect an assumed increase in Enterprise Value (as defined in the agreement) from March 1, 2021, through closing at the rate of 3.05% per annum.

The transaction agreement includes customary covenants from the sellers and closing conditions, including obtaining regulatory approvals, and will be settled using a combination of cash, shares of our common stock as noted above, and external debt. We have signed non-binding term sheets for a ZAR 2.35 billion ($154.4 million) debt package with Rand Merchant Bank, a division of FirstRand Bank Limited. These include a credit enhancement mechanism of ZAR 350 million ($23.0 million), which will be provided by investment funds managed by our largest shareholder, Value Capital Partners (Pty) Ltd, on commercially agreed terms, which include a contingent subscription for new shares. If certain conditions related to our debt financing are not satisfied by their respective due dates for fulfilment for any reason, we have agreed to pay to the Sellers an amount of ZAR 50,000,000. If certain undertakings by the sellers are not completed by their respective due dates for fulfilment for any reason and the transaction agreement is terminated, the seller responsible for such failure will pay us an amount of ZAR 50,000,000.

~~Refer to the discussion under “Part II—Item 1A.—Risk Factors— Failure to complete, or delays in completing,~~ the Connect Group acquisition ~~could materially~~for a consideration of ZAR 3.8 billion ($264.0 million). This transformational acquisition positions the Group as a leading fintech company, offering a broad range of financial services and ~~adversely affect our results of operations~~products to consumers (“B2C”) and ~~stock price.”~~merchants (“B2B”) across both the formal and ~~“We may not realize some or all of the anticipated benefits from the Connect Group acquisition.” for risks related to transaction.~~

~~Impact of COVID-19~~

We do not believe the COVID-19 pandemic has had a significant impact our South African operations since the initial lockdown period which occurred between March 2020 and June 2020. South Africa operates with a five-level COVID-19 alert system, with Level 1 being the least restrictive and Level 5 being the most restrictive and is currently in adjusted Level 1. The South African government commenced its vaccination program in early calendar 2021, with a stated goal of vaccinating 67% of the South African population by the end of the calendar year. At the end of October around 38% of the adult population had been vaccinated, indicating that the goal is unlikely to be achieved. Expectations are that a fourth wave will affect the country in the coming months.

~~Business and operations~~

During the quarter our operations largely operated as normal though there is an indirect impact from the lower economic activity in the South African economy. Our insurance business is the only operation seeing a clear impact from a higher level of benefit claims which continues to persist.informal sectors.

3441

WeThere are approximately 1.4 million informal and approximately 700,000 formal micro, small and medium enterprises (“MSME”) in South Africa. With market leading affordable products and technologies, the Connect Group is well positioned to continue ~~to incur direct expenditure on the purchase of sanitizers, masks and gloves for our employees and for the use of customers in our branches, but this is not significant~~its growth in the ~~context~~MSME sector. The Connect Group’s MSME offering, combined with our EasyPay platform targeting the larger merchants, and our point-of-sale business, provides a suite of ~~our cost base.~~products and services to address the needs of the entire spectrum of merchants in South Africa.

~~Employees~~Mr. Steve Heilbron, CEO of the Connect Group, joined our board on April 14, 2022, and will be responsible for heading up our Merchant business. Integrating the Connect Group will be a focus area for us for the remainder of the fiscal year, to ensure we capitalize on the growth opportunity delivered by this acquisition.

~~Where possible, we have continued~~Refer to ~~provide~~Note 20 to our unaudited condensed consolidated financial statements for additional information related to the necessary facilities (computer equipment, data cards, etc.) for our employees to operate remotely and continue to encourage them to do so where this is practical and effective. We continue to provide the necessary protective equipment and sanitization facilities for those employees that operate within our offices and operating locations.acquisition.

~~Cash resources and liquidity~~Returning the Consumer business to breakeven

We ~~believe~~have made significant progress in returning the Consumer segment to break-even and are encouraged with the Segment Adjusted EBITDA loss of $6.9 million (which includes reorganization costs of $5.9 million), or $1.0 million after adjusting for the $5.9 million of reorganization costs related to Project Spring. However, transforming the business and culture, from one which was focused on the logistics of efficiently distributing grant to over ten million grant recipients each month, to a sales focused organization remains a challenge we are focused on. We have ~~sufficient~~commenced the work on training and building our sales force, but this will take time. We continue to work towards achieving a monthly Segment Adjusted EBITDA break-even position for our consumer business by the end of the fourth quarter, however certain elements may take longer than originally anticipated.

The Consumer segment continues to show considerable improvement in performance from a year ago and positive momentum was achieved during the third quarter of fiscal 2022, through focusing on the three levers previously communicated:

Increasing active EPE account numbers, through driving customer acquisition;

Improving ARPU, underpinned by increased cross selling; and

Optimizing the cost structure, in line with a focus on customer centricity.

Progress on driving customer acquisition

We grew our total customer base by approximately 38,300 net active customers of which around 9,700 were EPE lite customers and around 28,600 were EPE customers, ending the quarter with just over 1.1 million active customers. This active account growth is slower than what we had anticipated. We did, however, register 136,000 gross account openings during the quarter, and have initiated a workstream focusing on improving account activation and utilization. This included the introduction of a dedicated call center focused on assisting customers with activating their accounts and proactively resolving any issues they may be facing during the activation process. Additionally, our salesforce is now incentivized on account activations and not account openings.

Utilizing improved data analytics and ongoing market research, we continue to gain better insights into our customers and their needs, allowing us to develop effective marketing campaigns and incentives to drive customer growth. A promotional campaign was launched late March 2022, which had a positive impact on new account openings and activations, and we expect this momentum to continue into the fourth quarter of fiscal 2022.

Progress on cross selling

ARPU remains broadly in line with our targeted ARPU range. We had approximately 415,000 active loans at the end of the quarter, representing a 38% penetration of our active EPE customer base, with a total loan book of ZAR 359 million ($24.7 million) as of March 31, 2022, up 6% in ZAR compared with March 2021. Despite the average loan size growing to R1,417, up 10% year on year, the portfolio loss ratio, calculated as the loans written off during the period as a percentage of the total loan book, remains encouragingly low at around 1.0% for the quarter, as a result of our ongoing application of prudent credit scoring and a culture of responsible lending.

Our funeral insurance product provides an important growth opportunity for our cross-selling strategy, with penetration levels averaging 18% of the active account base. Over 5,500 new standalone policies were initiated during the quarter, growing the total number of active policies to approximately 247,300, up 3.8% compared with March 2021.

A delivery of fifty-two ATMs were received during the quarter. These ATMs will provide additional cross-selling opportunities as the year progresses, as they are enabled to include the added functionality of selling value added services, loans and insurance. Their “through the wall” installations allow them to be deployed in locations which are accessible to customers 24/7.

Progress on cost optimization

In order to optimize the overall cost base and to move the business towards a sales-focused and client solution driven financial services organization, we launched Project Spring during the 2022 financial year. Project Spring focused on the restructuring of our financial services business and the rationalization of the distribution network. Pursuant to Project Spring, a detailed review of the distribution network was performed, to identify underperforming branches and optimize our points of presence, while a significant exercise is underway to ensure our ATM footprint meets the needs of our customer base. We also embarked on a retrenchment process pursuant to Section 189A of the South African Labour Relations Act (“Labour Act”). The Section 189A process requires an employer, before retrenching, to consult with any person affected by the retrenchment process for 60 days. We commenced this process on January 10, 2022, and completed the process during March 2022, recording a total charge during the third quarter of fiscal 2022 of $5.9 million. Please refer to Note 1 to our unaudited condensed consolidated financial statements for additional information.

The Section 189A process, which is now complete, was a difficult and uncertain time for many employees.

Significant progress has been made on optimizing the cash ~~reserves~~distribution and ATM network. Our large fleet of mobile ATMs and the associated distribution and security costs have been eliminated. Following a review of the ATM placements, over 50% of our ATM network are now positioned in retailers, providing greater footfall and longer operating hours compared to ~~support us~~our branches.

We estimate that the aggregate annualized cost saving for Project Spring is over ZAR 300.0 million.

Transforming our organization into a world class fintech platform

Building a world class fintech platform requires highly talented people, an environment where they can outperform and a clear vision and strategy, where everyone is aligned and understands their role in achieving that vision.

On March 1, 2022, Mr. Naeem Kola joined our board and became our Group CFO. On the same date, Mr. Alex Smith stepped down as CFO, resigned from our board and took up his new role as Chief Accounting Officer. During this quarter, we also successfully recruited a head of Legal and Company Secretarial, Verna Douman. Verna is a qualified seasoned attorney, with over 25 years experience in corporate, banking and finance sectors.

The majority of the new senior leadership team has been finalized and have all now commenced their employment contracts. The leadership team has deep and relevant experience to deliver on the mission of the Company, with the necessary governance structures in place.

Further to the South African Competition Tribunal’s approval of the Connect Group acquisition, their approval was subject to the company implementing an employee share transaction (“ESOP”) of at least 3% of the issued shares of the company, to increase the spread of ownership by historically disadvantaged people and workers. If within 24 months of the implementation date of the Connect Group transaction, the company generates a positive net profit for 3 consecutive quarters, the ESOP shall increase to 5% of the issued shares. The final structure of the ESOP is contingent on shareholder approval and relevant regulatory and governance approvals.

Improving stakeholder engagements

We continue to build our relationship with SASSA, through proactive engagement at a local, provincial and national level, to gain a better understanding of their needs and how we can help and improve the ~~next twelve months. We do not believe there~~delivery of social grants to over 12 million grant recipients. Good progress has been made in this regard during the quarter.

Investments

There has been no change to the carrying value of our investment in MobiKwik during this quarter. MobiKwik filed its draft red herring prospectus in July 2021, with the original intention of completing its initial public offering in November 2021. MobiKwik decided to delay its initial public offering given prevailing market conditions and will reassess their options as market conditions change. MobiKwik has been focusing on its buy now pay later (BNPL) offering and has seen significant growth in that area in the last year.

On March 15, 2022, Blue Label Telecoms Limited, the largest shareholder in Cell C, announced that it has concluded a non-binding term sheet (“Umbrella Restructure Term Sheet”) with Cell C and various Cell C financial stakeholders. In terms of the Umbrella Restructure Term Sheet, Cell C will be ~~any further significant adverse effects on our~~restructured and refinanced with the purpose of deleveraging its balance sheet, providing it with liquidity ~~from~~with which to operate and grow its businesses and to position itself to achieve long term success for the ~~pandemic, unless there~~benefit of its customers, employees, creditors, shareholders, and other stakeholders. The long form agreements, which will be binding, are currently in process of preparation and will incorporate the terms and conditions contained in the Umbrella Restructure Term Sheet. Our investment in Cell C is held at a ~~resumption~~carrying value of ~~the higher level~~$0 (zero) as of ~~restrictions seen in April and May 2020 in South Africa. We believe that our South African insurance business is adequately capitalized to address the higher claim levels it is currently experiencing.~~March 31, 2022.

Impact of COVID-19

While we have not ~~incurred~~experienced significant disruptions thus far from the COVID-19 outbreak, we are unable to accurately predict the impact that COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact on our customers and other factors identified in Part I, Item 1A. “Risk Factors— We are unable to ascertain the full impact the COVID-19 pandemic will have on our future financial position, operations, cash flows and stock price” in our Annual Report on Form 10-K for the year ended June 30, 2021. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

~~Financial Services Activities in South Africa~~

We continue to focus our South African financial inclusion activities on a business-to-consumer, or B2C, model. We believe our EPE bank account, known in the communities it serves as ‘the green card’, has a strong brand position in our target market and benefits from significant loyalty. We have been working on enhancing its presence through localized marketing which, when combined with some of the challenges of other service providers into this market, we expect to result in a return to growing customer numbers.

During the last quarter the focus has been on upskilling and refocusing our employees on customer acquisition and cross-selling of our various products. This is a significant initiative that is being driven by a new team of provincial heads who have the necessary experience of implementing and managing a sales driven culture. Many of these new provincial heads only joined the business during the last quarter and while we are already seeing improvements in sales activity, the real benefits will only be seen in the coming months.

Gross customer additions for the quarter were approximately 124,000 compared to the 43,000 of the previous quarter, while net additions amounted to 102,000 customers compared to the 33,000 of the previous quarter. This improvement was despite the impact of the social unrest experienced in parts of South Africa during July, with a number of branches damaged. This constrained some of our sales activities but the impact was short term. Based on historic data, our expectation is for 45% to 50% of these accounts to become active within three months of opening.

~~Processing Activities in South Africa~~

Our processing activities in South Africa are focused around our ATM network, which largely services a consumer base, and our transaction processing for businesses, anchored around our EasyPay offering.

Transaction volumes in our ATM business were down by 12% on the previous quarter and by 10% on the prior year, but this was largely due to the impact of the social unrest – volumes had largely recovered in September 2021. This part of our business was affected by the social unrest with over 10% of our ATMs destroyed. While we now have a smaller ATM fleet, our focus is on improving transaction volumes to compensate for this, with a focus on expanding the presence of our ATMs in various retailers.

As articulated in respect of our revised strategy, we aim to grow our business to business, or B2B, operations through the servicing of small and micro enterprises. Our B2B operations performed broadly in line with expectations with throughput growing by 4% compared to the previous quarter and transaction volumes by 11%. Opportunities related to the expansion of the processing business into the small and micro enterprises space have been identified and are being progressed.

~~International Activities~~

~~India~~ – In July 2021, MobiKwik filed its draft red herring prospectus with the appropriate Indian regulator related to its proposed initial public offering process. We did not identify any observable price changes in orderly transactions for similar or identical equity securities issued by MobiKwik during the first quarter of fiscal 2022 and therefore did not change the carrying value of our investment.

~~Status of Cell C recapitalization~~

~~Cell C~~ – We continued to carry the value of our Cell C investment at $0 (zero) as of September 30, 2021. Cell C remains focused on its recapitalization and implementing various initiatives to improve its operational performance. While it remains in default on its various lending arrangements, Cell C and its lenders continue to work constructively and are making steady progress towards its recapitalization.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities, including the ongoing uncertainty in the current economic environment due to the outbreak of COVID-19. As future events and their effects cannot be determined with absolute certainty, the determination of estimates requires management’s judgment based on a variety of assumptions and other determinants such as historical experience, current and expected market conditions and certain scientific evaluation techniques.

Critical accounting policies are those that reflect significant judgments or uncertainties and may potentially result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies that are described in more detail in our Annual Report on Form 10-K for the year ended June 30, 2021:

 Valuation of investment in Cell C;

 Recoverability of equity-accounted investments and other equity securities;

 Business combinations and the recoverability of goodwill;

 Intangible assets acquired through acquisitions;

 Deferred taxation;

 Stock-based compensation; and

 Accounts receivable and allowance for doubtful accounts receivable.

Recent accounting pronouncements adopted

Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of accounting pronouncements adopted, including the dates of adoption and the effects on our unaudited condensed consolidated financial statements.

Recent accounting pronouncements not yet adopted as of ~~September 30, 2021~~March 31, 2022

Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting pronouncements not yet adopted as of ~~September 30, 2021,~~March 31, 2022, including the expected dates of adoption and effects on our financial condition, results of operations and cash flows.

Currency Exchange Rate Information

Actual exchange rates

The actual exchange rates for and at the end of the periods presented were as follows:

Table 1	Three months ended		Year ended	Three months ended		Nine months ended		Year ended
	September 30,		June 30,	March 31,		March 31,		June 30,
	2021	2020	2021	2022	2021	2022	2021	2021
ZAR : $ average exchange rate	14.6246	16.9080	15.4146	15.2360	14.9650	15.0965	15.8390	15.4146
Highest ZAR : $ rate during period	15.3110	17.6866	17.6866	15.9536	15.4724	16.2968	17.6866	17.6866
Lowest ZAR : $ rate during period	14.1630	16.2165	13.4327	14.4916	14.4689	14.1630	14.4689	13.4327
Rate at end of period	15.1150	16.8344	14.3010	14.5526	14.8278	14.5526	14.8278	14.3010

3644

Translation exchange rates for financial reporting purposes

We are required to translate our results of operations from ZAR to U.S. dollars on a monthly basis. Thus, the average rates used to translate this data for the three and nine months ended ~~September 30,~~March 31, 2022 and 2021, vary slightly from the averages shown in the table above. The translation rates we use in presenting our results of operations are the rates shown in the following table:


	Three months ended		Year ended	Three months ended		Nine months ended		Year ended
Table 2	September 30,		June 30,	March 31,		March 31,		June 30,
	2021	2020	2021	2022	2021	2022	2021	2021
Income and expense items: $1 = ZAR	14.6129	16.7738	15.7162	15.6119	14.9575	14.9875	16.1174	15.7162
Balance sheet items: $1 = ZAR	15.1150	16.8344	14.3010	14.5526	14.8278	14.5526	14.8278	14.3010

Results of Operations

The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed consolidated financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in U.S. dollars, as presented in the unaudited condensed consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the entities which contribute the majority of our revenue and is the currency in which the majority of our transactions are initially incurred and measured. Due to the significant impact of currency fluctuations between the U.S. dollar and the ZAR on our reported results and because we use the U.S. dollar as our reporting currency, we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to understand the changes in the underlying trends of our business.

Our operating segment revenue presented in “—Results of operations by operating segment” represents total revenue per operating segment before intercompany eliminations. A reconciliation between total operating segment revenue and revenue presented in our unaudited condensed consolidated financial statements is included in Note 17 to those statements. Our CODM evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”). We do not allocate depreciation and amortization, impairment of goodwill or other intangible assets, certain lease charges (“Lease adjustments”), non-recurring items (including gains or losses on disposal of investments, fair value adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted investments to our reportable segments. The Lease adjustments reflect lease charges excluded from the calculation of Segment Adjusted EBITDA and are therefore reported as a reconciling item to reconcile the reportable segments’ Segment Adjusted EBITDA to the Company’s loss before income tax expense. A reconciliation of this Segment Adjusted EBITDA to the nearest GAAP measure (net income (loss) before income tax) is included in Note 17 to our unaudited condensed consolidated financial statements. Unless otherwise stated, reference to EBITDA in the discussion below relates to Segment Adjusted EBITDA.

We analyze our business and operations in terms of three inter-related but independent operating segments: (1) ~~Processing,~~Consumer, (2) ~~Financial services~~Merchant and (3) ~~Technology.~~Other. In addition, corporate and corporate office activities that are impracticable to allocate directly to any of the other operating segments, as well as any inter-segment eliminations, are included in Corporate/Eliminations.

~~First~~Third quarter of fiscal 2022 compared to ~~first~~third quarter of fiscal 2021

The following factors had a significant impact on our results of operations during the ~~first~~third quarter of fiscal 2022 as compared with the same period in the prior year:

 ~~Lower~~Higher revenue: Our revenues ~~decreased 14%~~increased 27% in ZAR primarily due to ~~fewer~~an increase in hardware sales, an increase in merchant transaction processing fees, and moderate increases in lending and insurance revenues, which was partially offset by lower prepaid airtime ~~and hardware sales and lower transaction fee revenue;~~sales;

 Lower operating losses: Operating losses ~~have reduced by 9%~~decreased, delivering an improvement of 31% in ZAR compared with the prior period primarily due to an increase in revenue, the closure of the loss-making IPG operations and ~~lower legal and consulting fees (excluding those~~the implementation of various cost reduction initiatives in our Consumer business. During the quarter, we recorded a reorganization charge of $5.9 million related to the ~~Connect Group transaction). We continue to experience operating losses because of depressed revenues~~retrenchment process we commenced in January 2022; and ~~have embarked on a plan to reduce operating expenses, including closing our mobile payment infrastructure;~~

 Foreign exchange movements: The U.S. dollar was ~~13% weaker~~4% stronger against the ZAR during the ~~first~~third quarter of fiscal 2022, which impacted our reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:

Table 3
In United States Dollars

Three months ended September 30,

2021

2020

(as restated)^(A)

$ ’000

$ ’000
change
Revenue
34,504

35,136

(2%)
Cost of goods sold, IT processing, servicing and support
24,207

26,460

(9%)
Selling, general and administration
20,627

18,528

11%
Depreciation and amortization
895

923

(3%)
Operating loss
(11,225)

(10,775)

4%
Interest income
389

611

(36%)
Interest expense
816

747

9%
Loss before income tax expense
(11,652)

(10,911)

7%
Income tax expense
186

(1,090)

nm
Net loss before loss from equity-accounted investments
(11,838)

(9,821)

21%
Loss from equity-accounted investments
(1,156)

(19,137)

(94%)
Net (loss) income attributable to us
(12,994)

(28,958)

(55%)

~~(A) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1~~ ~~to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.~~

Table 3	In United States Dollars
	Three months ended March 31,
	2022	2021
	$ ’000	$ ’000	change
Revenue	35,202	28,828	22%
Cost of goods sold, IT processing, servicing and support	23,008	23,096	(0%)
Selling, general and administration	15,184	18,892	(20%)
Depreciation and amortization	463	1,132	(59%)
Reorganization costs	5,852	-	nm
Transaction costs related to Connect Group acquisition	116	-	nm
Operating loss	(9,421)	(14,292)	(34%)
Change in fair value of equity securities	-	10,814	nm
Gain related to fair value adjustment to currency options	6,120	-	nm
Loss on disposal of equity-accounted investment	346	-	nm
Gain on disposal of equity securities	720	-	nm
Loss on disposal of equity-accounted investment - Bank Frick	-	472	nm
Interest income	761	606	26%
Interest expense	691	744	(7%)
Loss before income tax expense	(2,857)	(4,088)	(30%)
Income tax expense	470	2,171	(78%)
Net loss before earnings from equity-accounted investments	(3,327)	(6,259)	(47%)
Earnings from equity-accounted investments	-	55	nm
Net loss attributable to us	(3,327)	(6,204)	(46%)

3846

Table 4
In South African Rand

Three months ended September 30,

2021

2020

(as restated)^(A)

ZAR ’000

ZAR ’000
change
Revenue
504,204

589,364

(14%)
Cost of goods sold, IT processing, servicing and support
353,734

443,835

(20%)
Selling, general and administration
301,420

310,785

(3%)
Depreciation and amortization
13,079

15,482

(16%)
Operating loss
(164,029)

(180,738)

(9%)
Interest income
5,684

10,249

(45%)
Interest expense
11,924

12,530

(5%)
Loss before income tax expense
(170,269)

(183,019)

(7%)
Income tax expense
2,718

(18,284)

nm
Net loss before loss from equity-accounted investments
(172,987)

(164,735)

5%
Loss from equity-accounted investments
(16,893)

(321,000)

(95%)
Net (loss) income attributable to us
(189,880)

(485,735)

(61%)

~~(A) Revenue and cost of goods sold, IT processing, servicing and support have been restated for the error described in Note 1 to the~~ ~~unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.~~

Table 4	In South African Rand
	Three months ended March 31,
	2022	2021
	ZAR ’000	ZAR ’000	change
Revenue	549,571	431,195	27%
Cost of goods sold, IT processing, servicing and support	359,199	345,458	4%
Selling, general and administration	237,051	282,577	(16%)
Depreciation and amortization	7,228	16,932	(57%)
Reorganization costs	91,361	-	nm
Transaction costs related to Connect Group acquisition	1,811	-	nm
Operating loss	(147,079)	(213,772)	(31%)
Change in fair value of equity securities	-	161,750	nm
Gain related to fair value adjustment to currency options	95,545	-	nm
Loss on disposal of equity-accounted investment	5,402	-	nm
Gain on disposal of equity securities	11,241	-	nm
Loss on disposal of equity-accounted investment - Bank Frick	-	7,060	nm
Interest income	11,881	9,064	31%
Interest expense	10,788	11,128	(3%)
Loss before income tax expense	(44,602)	(61,146)	(27%)
Income tax expense	7,338	32,473	(77%)
Net loss before earnings from equity-accounted investments	(51,940)	(93,619)	(45%)
Earnings from equity-accounted investments	-	823	nm
Net loss attributable to us	(51,940)	(92,796)	(44%)

The ~~decrease~~increase in revenue was primarily due to ~~fewer prepaid airtime and~~an increase in hardware sales, an increase in merchant transaction processing fees, and ~~lower transaction fee revenue,~~moderate increases in lending and insurance revenues, which was partially offset by ~~higher lending revenues.~~lower prepaid airtime sales.

The ~~decrease~~increase in cost of goods sold, IT processing, servicing and support was primarily due to ~~lower cost of prepaid airtime~~higher costs related to hardware sales and ~~hardware sales,~~higher expenses related to an increase in merchant transaction processing activities, which was partially offset by ~~higher costs related to transaction fees and an increase~~the implementation of various cost reduction initiatives in ~~insurance-related claims experience.~~our Consumer business, as well as a lower cost of prepaid airtime.

In ZAR, the decrease in selling, general and administration expense was ~~primarily~~ due to both lower IPG-related expenses incurred following its closure and ~~lower legal and consulting fees,~~some benefits from our cost reduction initiatives, which ~~was~~were partially offset by higher employee-related expenses related to the growth in our senior management team, and the year-over-year impact of inflationary increases on employee-related expenses.

Depreciation and amortization decreased primarily due to lower overall depreciation related to tangible assets that were fully depreciated during the ~~first~~last 12 months.

We embarked on a retrenchment process on January 10, 2022, and incurred reorganization expenses of $5.9 million during the third quarter of fiscal ~~2021.~~2022.

Transaction costs related to the Connect Group acquisition include fees paid to external service providers for various advisory services procured.

Our operating loss margin for the ~~first~~third quarter of fiscal 2022 and 2021 was ~~(32.5%~~(22.9%) and ~~(30.7%~~(41.8%), respectively. We discuss the components of operating loss margin under “—Results of operations by operating segment.”

Interest on surplus cash decreased to $0.4 million (ZAR 5.7 million) from $0.6 million (ZAR 10.2 million), primarily due to lower average daily cash balances and lower average interest rates applied to daily cash balancesThe change in fair value of equity securities during the ~~first~~third quarter of fiscal 2021, represents a non-cash fair value adjustment gain related to MobiKwik. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 5 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik and Note 4 for the methodology and inputs used in the fair value calculation for Cell C.

Gain related to fair value adjustment to currency options represents the net mark-to-market adjustments to foreign exchange option contracts entered into in November 2021 in order to manage the risk of currency volatility and to fix the USD amount to be utilized for part of the Connect Group purchase consideration settlement. The foreign exchange option contract matured on February 24, 2022. Refer to Note 4 to our unaudited condensed consolidated financial statements for additional information related to these currency options.

We recorded a gain of $0.7 million related to the disposal of our entire interest in an equity security during the third quarter of fiscal 2022. Refer to Note 5 to our unaudited condensed consolidated financial statements for additional information regarding this gain.

We recorded a loss of $0.3 million related to the disposal of a minor portion of our investment in Finbond during the third quarter of fiscal 2022. Refer to Note 5 to our unaudited condensed consolidated financial statements for additional information regarding this disposal.

We recorded a loss of $0.5 million related to the disposal of Bank Frick during the third quarter of fiscal 2021.

Interest ~~expense~~on surplus cash increased to $0.8 million (ZAR 11.9 million) from $0.6 million (ZAR 9.1 million), primarily due to higher average ZAR denominated cash balances and higher interest rates during the third quarter of fiscal 2022. The higher ZAR denominated cash balances arose as we converted dollar funds into ZAR in anticipation of the Connect Group acquisition closing.

Interest expense decreased to $0.7 million (ZAR ~~12.5~~10.8 million) from $0.7 million (ZAR 11.1 million), primarily as a result of a ~~higher~~lower utilization of our ATM facilities to fund our ~~ATMs.~~ATMs, which decrease was partially offset by higher rates during the third quarter of fiscal 2022.

Fiscal 2022 tax expense was ~~$0.2~~$0.5 million (ZAR ~~2.7~~7.3 million) compared to ~~a tax benefit of $(1.1)~~$2.2 million (ZAR ~~(18.3)~~32.5 million) in fiscal 2021. Our effective tax rate for fiscal 2022 was impacted by the tax ~~charge related to~~expense recorded by our profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

Our effective tax rate for fiscal 2021 was impacted by the ~~reversal of~~tax effect on the ~~deferred tax liability related to one~~change in the fair value of our ~~equity-accounted investments following its impairment,~~equity securities, which ~~was partially offset by~~is at a lower tax rate than the South African statutory rate, the tax charge related to our profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

Bank Frick was sold in the third quarter of fiscal 2021 and was accounted for using the equity method ~~during the first quarter of fiscal 2021.~~up until disposal. Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first quarter and its annual results during our fourth quarter. The table below presents the relative (loss) earnings from our equity accounted investments:

Table 5	Three months ended September 30,			Three months ended March 31,
	2021	2020	$ %	2022	2021	$ %
	$ ’000	$ ’000	change	$ ’000	$ ’000	change
Finbond	(1,156)	(19,461)	(94%)
Share of net loss	(1,156)	(2,617)	(56%)
Impairment	-	(16,844)	nm
Bank Frick	-	481	nm	-	177	nm
Share of net income	-	481	nm	-	177	nm
Other	-	(157)	nm	-	(122)	nm
Share of net loss	-	(157)	nm	-	(122)	nm
Total loss from equity-accounted investments	(1,156)	(19,137)	(94%)	-	55	nm

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating (loss) income are illustrated below:

Table 6

In United States Dollars⁽¹⁾

Three months ended September 30,

2021

% of

2020

% of

% change

(as restated)

Operating Segment
$ ’000
total
$ ’000
total
Consolidated revenue:

Processing

21,356

62%

22,506

64%

(5%)
All others

21,356

62%

21,297

61%

0%
IPG

-

-

1,209

3%

nm
Financial services

10,626

31%

8,265

24%

29%
Technology

4,824

14%

6,211

18%

(22%)
Subtotal: Operating segments

36,806

169%

36,982

170%

(0%)
Corporate/Eliminations

(2,302)

(69%)

(1,846)

(70%)

25%
Total consolidated revenue

34,504

100%

35,136

100%

(2%)
Consolidated operating (loss) income:

Processing

(7,131)

64%

(7,301)

68%

(2%)
All others

(7,131)

64%

(4,529)

42%

57%
IPG

-

-

(2,772)

26%

nm
Financial services

(2,998)

27%

(2,372)

22%

26%
Technology

603

(5%)

1,775

(16%)

(66%)
Subtotal: Operating segments

(9,526)

150%

(7,898)

142%

21%
Corporate/eliminations

(1,699)

(50%)

(2,877)

(42%)

(41%)
Total consolidated operating loss

(11,225)

100%

(10,775)

100%

4%

Table 6	In United States Dollars
	Three months ended March 31,
	2022	% of	2021	% of	% change
Operating Segment	$ ’000	total	$ ’000	total	% change
Consolidated revenue:
Consumer	16,429	47%	16,236	56%	1%
Merchant	18,478	52%	12,171	42%	52%
Other	397	1%	421	1%	(6%)
Subtotal: Operating segments	35,304	100%	28,828	99%	22%
Corporate/Eliminations	(102)	-	-	1%	nm
Total consolidated revenue	35,202	100%	28,828	100%	22%
Segment Adjusted EBITDA:
Consumer	(6,866)	85%	(7,610)	63%	(10%)
Merchant	1,271	(16%)	273	(2%)	366%
Other	87	(1%)	(3,315)	27%	nm
Total Segment Adjusted EBITDA	(5,508)	68%	(10,652)	88%	(48%)
Corporate/eliminations	(2,560)	32%	(1,404)	12%	82%
Subtotal	(8,068)	100%	(12,056)	100%	(33%)
Less: Lease adjustments	890		1,104
Less: Depreciation and amortization	463		1,132
Total consolidated operating loss	(9,421)		(14,292)

~~(1) Consolidated revenue-Processing-All others for the three months ended September 30, 2020 has been restated for the error described in Note 1~~ ~~to the unaudited condensed consolidated financial statements. There was no impact on operating loss as a result of the restatement.~~

4048

Table 7

In South African Rand⁽¹⁾

Three months ended September 30,

2021

% of

2020

% of

% change

(as restated)

Operating Segment
ZAR ’000
total
ZAR ’000
total
Consolidated revenue:

Processing

312,073

62%

377,511

64%

(17%)
All others

312,073

62%

357,232

61%

(13%)
IPG

-

-

20,279

3%

nm
Financial services

155,277

31%

138,635

24%

12%
Technology

70,493

14%

104,182

18%

(32%)
Subtotal: Operating segments

537,843

169%

620,328

170%

(13%)
Corporate/Eliminations

(33,639)

(69%)

(30,964)

(70%)

9%
Total consolidated revenue

504,204

100%

589,364

100%

(14%)
Consolidated operating (loss) income:

Processing

(104,205)

64%

(122,466)

68%

(15%)
All others

(104,205)

64%

(75,969)

42%

37%
IPG

-

-

(46,497)

26%

nm
Financial services

(43,809)

27%

(39,787)

22%

10%
Technology

8,812

(5%)

29,773

(16%)

(70%)
Subtotal: Operating segments

(139,202)

150%

(132,480)

142%

5%
Corporate/eliminations

(24,827)

(50%)

(48,258)

(42%)

(49%)
Total consolidated operating loss

(164,029)

100%

(180,738)

100%

(9%)

Table 7	In South African Rand
	Three months ended March 31,
	2022	% of	2021	% of	% change
Operating Segment	ZAR ’000	total	ZAR ’000	total	% change
Consolidated revenue:
Consumer	256,488	47%	242,850	56%	6%
Merchant	288,477	52%	182,048	42%	58%
Other	6,198	1%	6,297	1%	(2%)
Subtotal: Operating segments	551,163	100%	431,195	99%	28%
Corporate/Eliminations	(1,592)	-	-	1%	nm
Total consolidated revenue	549,571	100%	431,195	100%	27%
Segment Adjusted EBITDA:
Consumer	(107,191)	85%	(113,827)	63%	(6%)
Merchant	19,843	(16%)	4,083	(2%)	386%
Other	1,358	(1%)	(49,584)	27%	nm
Total Segment Adjusted EBITDA	(85,990)	68%	(159,328)	88%	(46%)
Corporate/eliminations	(39,966)	32%	(21,000)	12%	90%
Subtotal	(125,956)	100%	(180,328)	100%	(30%)
Less: Lease adjustments	13,895		16,513
Less: Depreciation and amortization	7,228		16,932
Total consolidated operating loss	(147,079)		(213,773)

~~(1) Consolidated revenue-Processing-All others for~~

Consumer

Segment revenue increased primarily due to higher lending and insurance revenues and moderately higher account holder fees. We embarked on a retrenchment process during the ~~three months ended September 30, 2020 has been restated for~~third quarter of fiscal 2022 and recorded an expense of $5.9 million which is included in the ~~error described in~~Segment EBITDA loss, refer to Note 1 to ~~the~~our unaudited condensed consolidated financial statements~~. There was no impact on operating~~ for additional information regarding this process. Segment EBITDA loss ~~as a result of the restatement.~~

~~Processing~~

~~Excluding IPG, segment revenue~~has decreased primarily due to ~~fewer prepaid airtime sales and a~~the implementation of various cost reduction in volume-driven transaction fees, including as a result of the South African banking industry’s decision to waive fees charged to customers for utilizing other banks’ ATMs in August and September 2021. Excluding IPG, Processing’s operating loss has been impacted by the lower revenue.initiatives.

Our ~~operating~~EBITDA loss margin (calculated as ~~operating (loss) income~~EBITDA loss divided by revenue) for the ~~first~~third quarter of fiscal 2022 and 2021 was ~~(33.4%~~(41.8%) and ~~(32.4%~~(46.9%), respectively. ~~Excluding IPG, our operating loss margin for the Processing segment was (21.3%) during the first quarter of fiscal 2021.~~

~~Financial services~~The table below presents EBITDA for our Consumer operating segment and illustrates EBITDA for the third quarter of fiscal 2022 including and excluding the reorganization costs:

Table 8	In South African Rand
	Three months ended March 31,
	2022	2021	% change
Operating Segment	ZAR ’000	ZAR ’000	% change
EBITDA:
Consumer	(107,191)	(113,827)	(6%)
Reorganization costs	91,361	-	nm
Consumer excluding reorganization costs	(15,830)	(113,827)	(86%)
EBITDA margin:
Consumer	(42%)	(47%)
Consumer excluding reorganization costs	(6%)	(47%)

Merchant

Segment revenue increased due to ~~higher account fee revenue following~~ an increase in ~~the number of EPE accounts, an increase in lending revenue as a result of improved lending activity,~~hardware sales and ~~an increase in insurance revenues from an increase in business written.~~processing fees, which was partially offset by fewer prepaid airtime sales. The increase in ~~operating loss~~segment EBITDA is primarily due to the increase in ~~insurance-related claims experienced this quarter attributed to the COVID-19 pandemic as well as higher employee costs compared with the prior period.~~hardware sales.

Our ~~operating loss~~EBITDA margin for the ~~first~~third quarter of fiscal 2022 and 2021 was ~~(28.2%)~~6.9% and ~~(28.7%)~~2.2%, respectively.

~~Technology~~

Other

Other includes the activities of IPG in fiscal 2021 and our other business outside South Africa, principally Botswana.

Segment revenue decreased due to ~~fewer hardware sales compared to~~lower revenue following the ~~prior period. Operating income for~~closure of IPG in fiscal 2021. We recorded an EBITDA contribution during the ~~first~~third quarter of fiscal 2022 ~~was directly impacted by~~following the ~~lower revenue compared with fiscal 2021.~~closure of our loss-making activities performed through IPG.

Our ~~operating income~~EBITDA (loss) margin for the ~~Technology~~Other segment was ~~12.5%~~21.9% and ~~28.6%~~(787.4%) during the ~~first~~third quarter of fiscal 2022 and 2021, respectively.

Corporate/Eliminations

Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; ~~expenditure~~expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; certain employee and executive bonuses; stock-based compensation; legal fees; audit fees; directors and officer’s insurance premiums; ~~telecommunications expenses;~~elimination entries; and ~~elimination entries.~~from fiscal 2022 our group CEO’s compensation.

Our corporate expenses for fiscal 2022 increased compared with the prior period due to higher employee costs, an increase in director and officer’s insurance premiums, and higher stock-based compensation charges. Fiscal 2021 includes an unrealized foreign exchange gain of $0.6 million which also impacts comparability. Our corporate expenses for fiscal 2022 includes transaction related expenses of $0.1 million (ZAR 1.8 million) related to the Connect Group acquisition. We expect to incur additional expenses related to the Connect Group transaction in the fourth quarter of fiscal 2022.

Year to date fiscal 2022 compared to year to date fiscal 2021

The following factors had a significant impact on our results of operations during the year to date fiscal 2022 as compared with the same period in the prior year:

Lower revenue: Our revenues decreased 3% in ZAR, primarily due to lower prepaid airtime sales, which was partially offset by increase in hardware sales, an increase in merchant transaction processing fees, and moderate increases in lending and insurance revenues;

Lower operating losses: Operating losses decreased, delivering an improvement of 31% in ZAR compared with the prior period primarily due to the closure of the loss-making IPG operations and the implementation of various cost reduction initiatives in our Consumer business. During the year to date fiscal 2022, we recorded a reorganization charge of $5.9 million related to the retrenchment process we commenced in January 2022;

Significant transaction costs: We expensed $1.8 million of transaction costs related to the Connect Group acquisition; and

Foreign exchange movements: The U.S. dollar was 4% weaker against the ZARduring the year to date fiscal 2022, which impacted our reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:

Table 9	In United States Dollars
	Nine months ended March 31,
	2022	2021
	$ ’000	$ ’000	change
Revenue	100,820	96,269	5%
Cost of goods sold, IT processing, servicing and support	67,795	73,895	(8%)
Selling, general and administration	53,372	59,517	(10%)
Depreciation and amortization	2,084	3,129	(33%)
Reorganization costs	5,852	-	nm
Transaction costs related to Connect Group acquisition	1,790	-	nm
Operating loss	(30,073)	(40,272)	(25%)
Change in fair value of equity securities	-	25,942	nm
Gain related to fair value adjustment to currency options	3,691	-	nm
Loss on disposal of equity-accounted investment	346	13	2,562%
Gain on disposal of equity securities	720	-	nm
Loss on disposal of equity-accounted investment - Bank Frick	-	472	nm
Interest income	1,463	1,934	(24%)
Interest expense	2,272	2,168	5%
Loss before income tax expense	(26,817)	(15,049)	78%
Income tax expense	754	4,549	(83%)
Net loss before loss from equity-accounted investments	(27,571)	(19,598)	41%
Loss from equity-accounted investments	(1,156)	(20,098)	(94%)
Net loss attributable to us	(28,727)	(39,696)	(28%)

Table 10	In South African Rand
	Nine months ended March 31,
	2022	2021
	ZAR ’000	ZAR ’000	change
Revenue	1,511,040	1,551,606	(3%)
Cost of goods sold, IT processing, servicing and support	1,016,078	1,190,996	(15%)
Selling, general and administration	799,912	959,260	(17%)
Depreciation and amortization	31,233	50,431	(38%)
Reorganization costs	87,706	-	nm
Transaction costs related to Connect Group acquisition	26,828	-	nm
Operating loss	(450,717)	(649,081)	(31%)
Change in fair value of equity securities	-	418,118	nm
Gain related to fair value adjustment to currency options	55,319	-	nm
Loss on disposal of equity-accounted investment	5,186	210	2,370%
Gain on disposal of equity securities	10,791	-	nm
Loss on disposal of equity-accounted investment - Bank Frick	-	7,607	nm
Interest income	21,927	31,171	(30%)
Interest expense	34,052	34,943	(3%)
Loss before income tax expense	(401,918)	(242,552)	66%
Income tax expense	11,301	73,318	(85%)
Net loss before loss from equity-accounted investments	(413,219)	(315,870)	31%
Loss from equity-accounted investments	(17,326)	(323,928)	(95%)
Net loss attributable to us	(430,545)	(639,798)	(33%)

The decrease in revenue was primarily due to lower prepaid airtime sales, which was partially offset by increase in hardware sales, an increase in merchant transaction processing fees, and moderate increases in lending and insurance revenues.

The decrease in cost of goods sold, IT processing, servicing and support was primarily due to the implementation of various cost reduction initiatives in our Consumer business, lower cost of prepaid airtime sales, which was partially offset by an increase in the cost of hardware sales, higher costs related to transaction fees and an increase in insurance-related claims experience.

In ZAR, the decrease in selling, general and administration expenses was primarily due to lower IPG-related expenses incurred following its closure and some benefits from our cost reduction initiatives, which were partially offset by higher employee-related expenses related to the growth in our senior management team, and the year-over-year impact of inflationary increases on employee-related expenses.

Depreciation and amortization decreased primarily due to lower overall depreciation related to tangible assets that were fully depreciated during the last twelve months.

Transaction costs related to Connect Group acquisition includes fees paid to external service providers associated with the contract drafting and negotiations; legal, financial and tax due diligence activities performed; warranty and indemnity insurance related to the transaction; and other advisory services procured; as well as our portion of the fees paid to competition authorities related to the regulatory filings made in various jurisdictions.

Our operating loss margin for the year to date fiscal 2022 and 2021 was (25.1%) and (35.5%), respectively. We discuss the components of operating loss margin under “—Results of operations by operating segment.”

The change in fair value of equity securities during the year to date fiscal 2021, represents a non-cash fair value adjustment gain related to MobiKwik. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 5 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik and Note 4 for the methodology and inputs used in the fair value calculation for Cell C.

Gain related to fair value adjustment to currency options represents the realized gain related to foreign exchange option contracts entered into in November 2021 in order to manage the risk of currency volatility and to fix the USD amount to be utilized for part of the Connect Group purchase consideration settlement. The foreign exchange option contract matured on February 24, 2022. Refer to Note 4 to our unaudited condensed consolidated financial statements for additional information related to these currency options.

We recorded a loss of $0.5 million related to the disposal of Bank Frick during the year to date fiscal 2021.

Interest on surplus cash decreased to $1.5 million (ZAR 21.9 million) from $1.9 million (ZAR 31.2 million), primarily due to lower average daily cash balances.

Interest expense increased to $2.3 million (ZAR 34.1 million) from $2.2 million (ZAR 34.9 million), primarily as a result of a higher utilization of our ATM facilities to fund our ATMs.

Fiscal 2022 tax expense was $0.8 million (ZAR 11.3 million) compared to $4.5 million (ZAR 73.3 million) in fiscal 2022. Our effective tax rate for fiscal 2022 was impacted by the tax expense recorded by our profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities.

Our effective tax rate for fiscal 2021 was impacted by the tax effect on the change in the fair value of our equity securities, which is at a lower tax rate than the South African statutory rate, the tax charge related to our profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities, which was partially offset by the reversal of the deferred tax liability related to one of our equity-accounted investments following its impairment.

Bank Frick was sold in the third quarter of fiscal 2021 and was accounted for using the equity method during the year to date fiscal 2021 up until it was disposed. Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first quarter and its annual results during our fourth quarter. The table below presents the (loss) earnings from our equity accounted investments:

Table 11	Nine months ended March 31,
	2022	2021	$ %
	$ ’000	$ ’000	change
Finbond	(1,156)	(20,267)	(94%)
Share of net loss	(1,156)	(2,617)	(56%)
Impairment	-	(17,650)	nm
Bank Frick	-	1,156	nm
Share of net income	-	1,156	nm
Other	-	(987)	nm
Share of net loss	-	(439)	nm
Impairment	-	(548)	nm
	(1,156)	(20,098)	(94%)

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating (loss) income are illustrated below:

Table 12	In United States Dollars
	Nine months ended March 31,
	2022	% of	2021	% of	% change
Operating Segment	$ ’000	total	$ ’000	total	% change
Consolidated revenue:
Consumer	50,232	50%	47,867	50%	5%
Merchant	49,652	49%	45,623	47%	9%
Other	1,220	1%	2,855	3%	(57%)
Subtotal: Operating segments	101,104	100%	96,345	100%	5%
Corporate/Eliminations	(284)	-	(76)	-	274%
Total consolidated revenue	100,820	100%	96,269	100%	5%
Segment Adjusted EBITDA:
Consumer	(20,871)	82%	(19,395)	57%	8%
Merchant	3,951	(16%)	4,471	(13%)	(12%)
Other	353	(1%)	(10,285)	30%	nm
Total Segment Adjusted EBITDA	(16,567)	65%	(25,209)	74%	(34%)
Corporate/eliminations	(8,775)	35%	(8,943)	26%	(2%)
Subtotal	(25,342)	100%	(34,152)	100%	(26%)
Less: Lease adjustments	2,647		2,991
Less: Depreciation and amortization	2,084		3,129
Total consolidated operating loss	(30,073)		(40,272)

Table 13	In South African Rand
	Nine months ended March 31,
	2022	% of	2021	% of	% change
Operating Segment	ZAR ’000	total	ZAR ’000	total	% change
Consolidated revenue:
Consumer	752,852	50%	771,492	50%	(2%)
Merchant	744,159	49%	735,324	47%	1%
Other	18,285	1%	46,015	3%	(60%)
Subtotal: Operating segments	1,515,296	100%	1,552,831	100%	(2%)
Corporate/Eliminations	(4,256)	-	(1,225)	-	247%
Total consolidated revenue	1,511,040	100%	1,551,606	100%	(3%)
Segment Adjusted EBITDA:
Consumer	(312,804)	82%	(312,597)	57%	0%
Merchant	59,216	(16%)	72,060	(13%)	(18%)
Other	5,291	(1%)	(165,768)	30%	nm
Total Segment Adjusted EBITDA	(248,297)	65%	(406,305)	74%	(39%)
Corporate/eliminations	(131,515)	35%	(144,138)	26%	(9%)
Subtotal	(379,812)	100%	(550,443)	100%	(31%)
Less: Lease adjustments	39,672		48,207
Less: Depreciation and amortization	31,233		50,431
Total consolidated operating loss	(450,717)		(649,081)

Consumer

The underlying decrease in revenue was primarily due to lower processing fees, partially offset by higher insurance and lending revenue and account holder fees. We embarked on a retrenchment process during the third quarter of fiscal 2022 and recorded an expense of $5.9 million which is included in the Segment EBITDA loss, refer to Note 1 to our unaudited condensed consolidated financial statements for additional information regarding this process. Segment EBITDA loss, excluding the reorganization charge, has decreased primarily due to the implementation of various cost reduction initiatives, which was partially offset by an increase in insurance-related claims experience and an increase in our allowance for doubtful finance loans receivable recorded.

Our EBITDA loss margin for the year to date fiscal 2022 and 2021 was (41.5%) and (40.5%), respectively.

Merchant

Segment revenue increased due to an increase in hardware sales and processing fees, which was partially offset by fewer prepaid airtime sales. The decrease in segment EBITDA is primarily due to higher costs related to transaction fees and higher employee-related expenses.

Our EBITDA margin for the year to date fiscal 2022 and 2021 was 8.0% and 9.8%, respectively.

Other

Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during the year to date fiscal 2022 following the closure of our loss-making activities performed through IPG.

Our EBITDA (loss) margin for the Other segment was 28.9% and (360.2%) during the year to date fiscal 2022 and 2021, respectively.

Corporate/Eliminations

Our corporate expenses for fiscal 2022 decreased compared with fiscal 2021 due to ~~lower legal and~~higher consulting fees ~~incurred. We expect to incur additional~~incurred in fiscal 2021 and the inclusion of an allowance on doubtful loans receivable from equity-accounted investments of $0.7 million in fiscal 2021. Our corporate expenses for fiscal 2022 includes transaction related expenses of $1.8 million (ZAR 26.8 million) related to the Connect Group ~~transaction in~~acquisition.

Presentation of quarterly revenue and Segment Adjusted EBITDA by segment for fiscal 2021 and 2020

During the ~~second~~third quarter of fiscal ~~2022.~~2022, our chief operating decision maker changed our operating and internal reporting structures following the establishment of a new management team and our decision to focus primarily on the South African market. We have restated previously reported segment information. The tables below present quarterly revenue and EBITDA generated by our three reportable segments for fiscal 2021 and 2020, and reconciliations to consolidated revenue and operating (loss) income, as well as the U.S. dollar/ ZAR exchange rates applicable per fiscal quarter and year:

Table 14	Fiscal 2021
	In United States Dollars
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	F2021
	$ '000	$ '000	$ '000	$ '000	$ '000
Consolidated revenue:
Consumer	15,372	16,259	16,236	18,282	66,149
Merchant	18,246	15,206	12,171	15,855	61,478
Other	1,556	878	421	463	3,318
Subtotal: Operating segments	35,174	32,343	28,828	34,600	130,945
Corporate/Eliminations	(38)	(38)	-	(83)	(159)
Total consolidated revenue	35,136	32,305	28,828	34,517	130,786

Segment Adjusted EBITDA:
Consumer	(6,571)	(5,214)	(7,610)	(6,908)	(26,303)
Merchant	2,971	1,227	273	257	4,728
Other	(2,631)	(4,339)	(3,315)	(89)	(10,374)
Total Segment Adjusted EBITDA	(6,231)	(8,326)	(10,652)	(6,740)	(31,949)
Corporate/eliminations	(2,796)	(4,743)	(1,404)	(4,485)	(13,428)
Subtotal	(9,027)	(13,069)	(12,056)	(11,225)	(45,377)
Less: Lease adjustments	825	1,062	1,104	1,157	4,148
Less: Depreciation and amortization	923	1,074	1,132	1,218	4,347
Total consolidated operating loss	(10,775)	(15,205)	(14,292)	(13,600)	(53,872)

Income and expense items: $1 = ZAR	16.7738	15.4653	14.9575	14.1687	15.7162

Table 15	Fiscal 2020
	In United States Dollars
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	F2020
	$ '000	$ '000	$ '000	$ '000	$ '000
Consolidated revenue:
Consumer	21,674	18,618	18,491	12,215	70,998
Merchant	23,564	19,502	14,677	10,916	68,659
Other	1,199	850	1,564	1,428	5,041
Subtotal: Operating segments	46,437	38,970	34,732	24,559	144,698
Corporate/Eliminations	(221)	(52)	(118)	(8)	(399)
Total consolidated revenue	46,216	38,918	34,614	24,551	144,299

Segment Adjusted EBITDA:
Consumer	(2,784)	(2,809)	(3,889)	(4,507)	(13,989)
Merchant	2,778	1,471	1,710	(783)	5,176
Other	(1,969)	(2,979)	(3,043)	(4,024)	(12,015)
Total Segment Adjusted EBITDA	(1,975)	(4,317)	(5,222)	(9,314)	(20,828)
Corporate/eliminations	(2,304)	(3,931)	(510)	(2,028)	(8,773)
Subtotal	(4,279)	(8,248)	(5,732)	(11,342)	(29,601)
Less: Lease adjustments	833	998	991	842	3,664
Less: Depreciation and amortization	1,324	1,174	1,153	996	4,647
Less: Impairments	-	-	6,336	-	6,336
Total consolidated operating loss	(6,436)	(10,420)	(14,212)	(13,180)	(44,248)

Income and expense items: $1 = ZAR	14.7520	14.6022	15.3667	17.2810	17.5686

Liquidity and Capital Resources

At ~~September 30, 2021,~~March 31, 2022, our cash and cash equivalents were ~~$188.5~~$183.7 million and comprised of U.S. dollar-denominated balances of ~~$162.5~~$11.3 million, ZAR-denominated balances of ZAR ~~0.4~~2.5 billion ($~~23.7~~169.9 million), and other currency deposits, primarily Botswana pula, of ~~$2.3~~$2.4 million, all amounts translated at exchange rates applicable as of ~~September 30, 2021.~~March 31, 2022. The decrease in our unrestricted cash balances from June 30, 2021 was primarily due to ~~weak trading activities and~~ utilization of cash reserves to fund our ~~operations.~~operations and payment of reorganization costs, which was partially offset by the receipt of $7.5 million related to the sale of Bank Frick in fiscal 2021 and a $3.7 million gain on the foreign currency options.

We generally invest any surplus cash held by our South African operations in overnight call accounts that we maintain at South African banking institutions, and any surplus cash held by our non-South African companies in U.S. dollar-denominated money market accounts.

Historically, we have financed most of our operations, research and development, working capital, and capital expenditures, as well as acquisitions and strategic investments, through internally generated cash and our financing facilities. When considering whether to borrow under our financing facilities, we consider the cost of capital, cost of financing, opportunity cost of utilizing surplus cash and availability of tax efficient structures to moderate financing costs.

We closed the acquisition of Connect in April 2022 as described in Note 20 to our unaudited condensed consolidated financial statements. The total purchase consideration was ZAR 3.8 billion ($262.0 million), comprising ZAR 3.5 billion ($238.2 million) in cash and ZAR 0.4 billion ($23.9 million) in 3,185,079 shares of our common stock. The cash component was funded through ZAR 2.1 billion of our cash, the utilization of new Net1 banking facilities of ZAR 1.1 billion, and an increase in Connect’s debt of ZAR 0.3 billion in April 2022.

Available short-term borrowings

Summarized below are our short-term facilities available and utilized as of ~~September 30, 2021:~~March 31, 2022:

Table 8	RMB		Nedbank
Table 16					RMB		Nedbank
	$ ’000	ZAR ’000	$ ’000	ZAR ’000	$ ’000	ZAR ’000	$ ’000	ZAR ’000
Total short-term facilities available, comprising:
Overdraft restricted as to use⁽¹⁾	92,623	1,399,995	16,540	250,000	96,203	1,400,000	17,179	250,000
Total overdraft	92,623	1,399,995	16,540	250,000	96,203	1,400,000	17,179	250,000
Indirect and derivative facilities⁽²⁾	-	-	10,358	156,561	-	-	10,758	156,552
Total short-term facilities available	92,623	1,399,995	26,898	406,561	96,203	1,400,000	27,937	406,552

Utilized short-term facilities:
Overdraft restricted as to use⁽¹⁾	51,568	779,451	-	-	45,678	664,728	-	-
Indirect and derivative facilities⁽²⁾	-	-	10,358	156,556	-	-	10,659	155,110

Interest rate, based on South African prime rate		7.00%				7.75%
Interest rate, based on South African prime rate less 1.15%				5.85%				6.60%

(1) Overdraft may only be used to fund ~~mobile~~ ATMs and upon utilization is considered restricted cash.

(2) Indirect and derivative facilities may only be used for guarantees, letters of credit and forward exchange contracts to support guarantees issued by Nedbank to various third parties on our behalf.

Long-term borrowings

We obtained long-term borrowings of ZAR 1.1 billion to partially fund the acquisition of Connect. In contemplation of the Connect transaction, Connect obtained total facilities of ZAR 1.3 billion which were utilized to repay its existing borrowings and to settle obligations under the Sales Agreement. Our total long-term borrowings following the acquisition of Connect are ZAR 2.2 billion, comprising the ZAR 1.1 billion and ZAR 1.1 billion of Connect’s total facilities of ZAR 1.3 billion. Refer to Note 20 to our unaudited condensed consolidated financial statements for additional information related to these borrowings.

Restricted cash

We have credit facilities with RMB and Nedbank in order to access cash to fund our ATMs in South Africa. Our cash, cash equivalents and restricted cash presented in our unaudited condensed consolidated statement of cash flows as of ~~September 30, 2021,~~March 31, 2022, includes restricted cash of approximately ~~$51.6~~$45.7 million related to cash withdrawn from our various debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash on our unaudited condensed consolidated balance sheet.

We have also entered into cession and pledge agreements with Nedbank related to certain of our Nedbank credit facilities and we have ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted as they may not be withdrawn without the express permission of Nedbank. Our cash, cash equivalents and restricted cash presented in our unaudited condensed consolidated statement of cash flows as of ~~September 30, 2021,~~March 31, 2022, includes restricted cash of approximately ~~$10.4~~$10.7 million that has been ceded and pledged.

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Cash flows from operating activities

~~First~~Third quarter

Net cash used in operating activities during the ~~first~~third quarter of fiscal 2022 was ~~$7.9~~$8.8 million (ZAR ~~116.1~~137.0 million) compared to ~~$29.9~~$8.3 million (ZAR ~~501.2~~123.5 million) during the ~~first~~third quarter of fiscal 2021. Excluding the impact of income taxes, our cash used in operating activities during the ~~first~~third quarter of fiscal 2022 was impacted by the utilization of cash ~~losses incurred~~reserves to fund certain of our operations and payment of the reorganization costs, which was partially offset by the ~~majority~~$3.7 million gain on the foreign currency options and profits realized by certain of our ~~continuing~~ operations.

~~There were no significant tax payments made or refunds received during~~During the ~~first~~third quarter of fiscal ~~2022.~~2022, we paid our first provisional South African tax payments of $0.1 million (ZAR 2.2 million) related to our 2022 tax year and received tax refunds of $0.0 million (ZAR 0.0 million). During the ~~first~~third quarter of fiscal 2021, we paid our first provisional South African tax payments of $0.2 million (ZAR 2.6 million) related to our 2021 tax year.

Taxes paid during the third quarter of fiscal 2022 and 2021 were as follows:

Table 17	Three months ended March 31,
	2022	2021	2022	2021
	$	$	ZAR	ZAR
	‘000	‘000	‘000	‘000
First provisional payments	148	176	2,209	2,596
Tax refund received	(1)	-	(12)	-
Total South African taxes paid (received)	147	176	2,197	2,596
Foreign taxes paid	34	35	509	525
Total tax paid	181	211	2,706	3,121

Year to date

Net cash used in operating activities during the year to date fiscal 2022 was $30.5 million (ZAR 457.2 million) compared to $50.1 million (ZAR 807.7 million) during the year to date fiscal 2021. Excluding the impact of income taxes, our cash used in operating activities during the third quarter of fiscal 2022 was impacted by the utilization of cash reserves to fund certain of our operations and payment of the reorganization costs, which was partially offset by the $3.7 million gain on the foreign currency options and profits realized by certain of our operations.

During the year to date fiscal 2022, we paid our first provisional South African tax payments of $0.6 million (ZAR 9.1 million) related to our 2022 tax year and received tax refunds of $0.2 million (ZAR (3.2) million). During the year to date fiscal 2021, we paid our first provisional South African tax payments of $0.9 million (ZAR 12.7 million) related to our 2021 tax year. During the year to date fiscal 2021, we paid South African tax of $0.2 million (ZAR 3.4 million) related to our 2020 tax year. We also paid taxes totaling ~~$15.2~~$15.3 million in other tax jurisdictions, primarily in the U.S.

Taxes paid during the ~~first quarter of~~year to date fiscal 2022 and 2021 were as follows:

Table 9	Three months ended September 30,
Table 18					Nine months ended March 31,
	2021	2020	2021	2020	2022	2021		2022		2021
	$	ZAR	$	ZAR
	‘000		‘000
First provisional payments					585	853		9,142		12,680
Taxation paid related to prior years	-		205		-	3,423	-		205		-	3,423
Tax refund received	(25)		(12)		(376)	(205)	(218)		(12)		(3,239)	(205)
Total South African taxes paid (received)	(25)	193	(376)	3,218
Total South African taxes paid					367	1,046		5,903		15,898
Foreign taxes paid	36	15,213	525	254,450	104	15,336		1,574		256,366
Total tax paid	11	15,406	149	257,668	471	16,382		7,477		272,264

Cash flows from investing activities

~~First~~Third quarter

Cash used in investing activities for the ~~first~~third quarter of fiscal 2022 included capital expenditures of $0.8 million (ZAR 13.0 million), primarily due to the acquisition of ATMs. During the third quarter of fiscal 2022, we received proceeds of $1.5 million from sale of property, plant and equipment, and $0.8 million and $0.7 million, respectively, related to the sale of minor positions in Finbond and from the disposal of our entire interest in Revix.

Cash used in investing activities for the third quarter of fiscal 2021 included capital expenditures of $0.6 million (ZAR ~~10.2~~9.7 million), primarily due to the acquisition of computer equipment. During the third quarter of fiscal 2021 we disposed of our investment in Bank Frick and received $18.6 million of the $30.0 million sales proceeds.

Year to date

Cash used in investing activities for the year to date fiscal 2022 included capital expenditures of $1.7 million (ZAR 25.8 million), primarily due to the roll out of our new express ~~branches.~~branches, acquisitions of ATMs and the acquisition of computer equipment. During the year to date fiscal 2022, we received a scheduled payment of $7.5 million related to the sale of Bank Frick in fiscal 2021, proceeds from sale of property, plant and equipment of $3.5 million, and proceeds of $0.8 million and $0.7 million, respectively, related to the sale of minor positions in Finbond and from the disposal of our entire interest in Revix.

Cash used in investing activities for the ~~first quarter of~~year to date fiscal 2021 included capital expenditures of ~~$0.3~~$3.9 million (ZAR ~~4.6~~63.6 million), primarily due to the acquisition of motor vehicles, which largely comprised a fleet of customized mobile ATMs used to deliver a service to rural communities, computer equipment and leasehold improvements in South Africa. We received $20.1 million related to the sale of our Korean business ~~in March 2020~~ following the successful refund application of the amounts withheld and paid to the South Korean tax authorities pursuant to that transaction. We ~~also~~ received $18.6 million related to the ~~first~~disposal of Bank Frick and the ~~eighteen scheduled repayments~~amount due on the deferred sale proceeds related to the April 2020 sale of DNI. We also extended loan funding of $1.0 million to V2 and $0.2 million to Revix.

Cash flows from financing activities

~~First~~Third quarter

During the ~~first~~third quarter of fiscal 2022, we utilized approximately ~~$138.9~~$95.0 million from our South African overdraft facilities to fund our ATMs and repaid ~~$98.9~~$100.8 million of these facilities.

During the ~~first~~third quarter of fiscal 2021, we utilized approximately ~~$69.1~~$55.3 million from our South African overdraft facilities to fund our ATMs and repaid ~~$76.9~~$103.2 million of these facilities.

Year to date

During the year to date fiscal 2022, we received $0.8 million from the exercise of stock options, and utilized approximately $406.4 million from our South African overdraft facilities to fund our ATMs and repaid $372.5 million of these facilities.

During the year to date of fiscal 2021, we utilized approximately $261.8 million from our South African overdraft facilities to fund our ATMs and repaid $268.3 million of these facilities.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Capital Expenditures

We expect capital spending for the ~~second~~fourth quarter of fiscal 2022 to primarily include limited investments into our ATM infrastructure and branch network in South ~~Africa.~~Africa as well as IT equipment, and through Connect, spending for POS devices, vehicles, computer and office equipment. Our capital expenditures for the ~~first~~third quarter of fiscal 2022 and 2021 are discussed under “—Liquidity and Capital Resources—Cash flows from investing activities.” All of our capital expenditures for the past three fiscal years were funded through internally generated funds. We had outstanding capital commitments as of ~~September 30, 2021,~~March 31, 2022, of ~~$1.0~~$0.1 million. We expect to fund these expenditures through internally generated funds and available facilities.

4361

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In addition to the tables below, see Note 4 to the unaudited condensed consolidated financial statements for a discussion of market risk.

We have short-term borrowings which attract interest at rates that fluctuate based on changes in the South African prime interest rate. The following table illustrates the effect on our annual expected interest charge, translated at exchange rates applicable as of ~~September 30, 2021,~~March 31, 2022, as a result of changes in the South African prime interest rate, assuming hypothetical short-term borrowings of ZAR 1.0 billion as of ~~September 30, 2021.~~March 31, 2022. The effect of a hypothetical 1% (i.e. 100 basis points) increase and a 1% decrease in the South African prime interest rate as of ~~September 30, 2021,~~March 31, 2022, are shown. The selected 1% hypothetical change does not reflect what could be considered the best or worst case scenarios.

Table 10	As of March 31, 2021
Table 19				As of March 31, 2022
	Annual expected interest charge ($ ’000)	Hypothetical change in interest rates	Estimated annual expected interest charge after hypothetical change in interest rates ($ ’000)	Annual expected interest charge ($ ’000)	Hypothetical change in interest rates	Estimated annual expected interest charge after hypothetical change in interest rates ($ ’000)
Interest on South Africa overdraft (South African prime interest rate)	4,631	1%	5,293	4,810	1%	5,497
					1%	4,123

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our group chief executive officer and our group chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of ~~September 30, 2021.~~March 31, 2022. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, the group chief executive officer and the group chief financial officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting during the fiscal quarter ended ~~September 30, 2021,~~March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4463

Part II. Other Information

~~Item 1. Legal Proceedings~~

~~Resolution of NCR application for the cancelation of Moneyline’s registration as a credit provider~~

In September 2014, the NCR applied to the South African National Consumer Tribunal, or Tribunal, to cancel the registration of our subsidiary, Moneyline, for breach of the NCA based on an investigation concluded by it. We raised a number of procedural points in defense and argument on these points was heard on November 27, 2015, before three tribunal members. Two ruled against us and one upheld our points. We appealed the majority ruling to the High Court. This matter was heard on December 4, 2018, by a full bench of the Pretoria High Court. In opposing this appeal, the NCR contended that our appeal had no basis and they raised, as a procedural point, that we should have joined the Tribunal as a party to the appeal proceedings. On August 30, 2019, it was ordered that the Tribunal be included in the appeal proceedings and this appeal was scheduled to be heard on October 27, 2021.

The parties settled the matter out of court in mid-October 2021. The settlement process included the NCR withdrawing its application to cancel our NCA registration with the Tribunal and we agreed to withdraw our appeal with the High Court. The settlement was made an order of the High Court on October 27, 2021. The parties agreed to pay their own costs related to this matter.

Item 1A. Risk Factors

See “Item 1A RISK FACTORS” in Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, for a discussion of risk factors relating to (i) our business, (ii) operating in South Africa and other foreign markets, (iii) government regulation, and (iv) our common stock. Except as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

~~Failure~~We may not be able to ~~complete, or delays in completing, the Connect Group acquisition, could materially and adversely affect~~successfully integrate Connect’s operations with our ~~results of operations and stock price.~~business.

On April 14, 2022, we announced the closing of our ZAR 3.8 billion ($262.0 million) investment to acquire a 100% interest in Connect. The ~~completion~~acquisition of Connect is strategically important for us because we believe that (i) the combination of complementary product offerings will assist to drive stronger unit economics, (ii) the transaction facilitates expansion of the addressable market in the informal MSMEs sector, (iii) Connect ~~Group acquisition is subject~~has an attractive financial profile with strong and profitable growth, (iv) we have merged highly skilled teams with complementary expertise, and (v) will be able to ~~a number of conditions precedent, including receipt of regulatory approvals, certain third-party consents and~~better serve the ~~completion of financing arrangements. Some of these conditions are outside our control.~~underserved.

~~To complete~~Integrating Connect into our company will require significant attention from our senior management which may divert their attention from our day-to-day business. The difficulties of integration may be increased by cultural differences between our two organizations and the ~~acquisition, we must make certain filings with~~necessity of retaining and ~~obtain certain consents~~integrating personnel, including Connect Group’s key employees and ~~approvals from various governmental and regulatory authorities.~~management team. The ~~regulatory approval processes may take a lengthy period~~services of ~~time to complete, and there can~~these individuals will be ~~no assurance as~~important to the ~~outcome~~continued growth and success of Connect’s business and to our ability to integrate Connect with us. If we were to lose the ~~approval processes, including the undertakings~~services of these key employees or fail to sufficiently integrate them, our ability to operate Connect successfully would likely be materially and ~~conditions that may~~adversely impacted.

As such, if we are unable to successfully integrate Connect’s operations into our business we could be required ~~for approval, or whether the regulatory approvals will be obtained at all.~~to record material impairments, and as a result, our financial condition, results of operations, cash flows and stock price could suffer.

We ~~signed non-binding term sheets for a ZAR 2.35 billion ($154.4 million) debt package with RMB. The finalization~~may not achieve the expected benefits from our recent acquisition of binding lending agreements may take some time to complete, and there can be no assurance as to the outcome, including abiding with the undertakings and conditions included in the non-binding term sheets. Furthermore, we have agreed that if certain conditions related to our debt financing are not satisfied by their respective due dates for fulfilment for any reason, we have agreed to pay to the Connect Group sellers an amount of ZAR 50,000,000.Connect.

~~As we expect to finance~~Our expectations regarding Connect’s business and prospects may not be realized, including as a ~~significant portion~~result of changes in the financial condition of the ~~acquisition price using~~markets that Connect serves. In addition, there are risks associated with Connect’s product and service offerings or results of operations, including the ~~debt package we expect~~risk of reduced cash settlements through Connect’s vault infrastructure or higher cash losses, lower than expected growth in Connect’s value-added services, lower than expected levels of loan advances or higher credit losses and slower than expected growth in card transactions. Furthermore, attempting to combine and integrate service offerings may be disruptive to us or unsuccessful, and our customers may not use our combined services to the extent that we ~~will~~hope they will. Any such failure could adversely impact our own business as well as Connect’s, which could then reduce the value of our investment and adversely impact our other business and operational relationships.

Our inability to achieve the expected synergies from the Connect transaction may have a material adverse effect on our business, results of operations or financial condition. For example, our revenues and operating income may be adversely affected and we could be required to ~~provide~~impair all, or a part of, our investment. If some or all of the aforementioned or other risks materialize, our ability to realize the anticipated benefits of the Connect Group could be materially impaired, and as a result, our financial condition, results of operations, cash flows and stock price could suffer.

We have a significant amount of indebtedness that requires us to comply with restrictive and financial covenants. If we are unable to comply with these covenants, we could default on this debt, which would have a material adverse effect on our business and financial condition.

We financed our recent investment in Connect through South African bank borrowings of ZAR 1.1 billion ($71.7 million, translated at closing date exchange rate (as defined in the Sale Agreement) of $1:ZAR 14.65165). The borrowings are secured by a pledge of certain of our ~~assets as security against~~bank accounts, and the ~~debt package. The final financing agreements are also expected to~~cession of Net1’s shareholding in certain of its subsidiaries. These borrowings contain customary covenants that ~~that will~~ require usNet1 SA to maintain a specified total asset cover ratio, maintain group cash balances (as defined in the Loan Documents) above ZAR 300.0 million, and restrict the ability of Net1, Net1 SA, and certain ~~specified financial ratios and may place restrictions on our ability~~of its subsidiaries to make certain distributions ~~from the target group,~~with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make ~~capital expenditures~~investment above specified levels, engage in certain business combinations and engage in other corporate activities. ~~These security arrangements~~The group cash balances may go below ZAR 300 million to the extent credit support is provided by the VCP Investment Fund and/ or VCP Investment Portfolios (“VCP Investors”), and ~~covenants may reduce our operating flexibility or our ability~~such support exceeds ZAR 350 million, but such reduction below ZAR 300 million is limited to engage in other transactions that may be beneficial to us. If we are unable to comply with these covenants, we could be in default under the financing agreements and the indebtedness negotiated thereunder could be accelerated. Furthermore, we may not be able to service scheduled debt or interest repayments, or both, as a result of our inability to generate sufficient future cash flows, which may place us in contravention of the terms of the financing agreements and which may result in an event of default. If any of these events were to occur, we might not be able to obtain waivers of default or to refinance the debt with another lender and as a result, our business and financial condition would suffer.ZAR 80 million.

The ~~non-binding term sheets~~loan agreements also include a credit enhancement mechanism of ZAR 350 million ($~~23.0 million)~~23.9 million, translated at closing date exchange rate), which ~~will be~~has been provided by investment funds managed by Net1’s largest shareholder, Value Capital Partners (Pty) Ltd (“VCP”), on commercially agreed terms, which include a contingent subscription for new shares. There can be no assurance that VCP will perform under the commercially agreed terms and failure by it to fulfil its obligation under the credit enhancement mechanism may put our funding or future repayments at risk.

In addition, the completion of the acquisition is conditional on, among other things, no action or circumstance occurring that would result in a material adverse effect on the Connect Group’s business operations or financial results.

4564

We ~~cannot provide~~have also obtained total facilities through the Connect acquisition of ZAR 1.3 billion comprising a Facility A term loan of up to ZAR 750 million (“Facility A Loan”), a Facility B term loan of up to ZAR 350 million (“Facility B Loan”), and a general banking facility of ZAR 206.0 million. The amount available under the general banking facility will reduce to ZAR 125.0 million on March 23, 2023. These borrowings are secured by a pledge of, among other things, CCMS entire equity interests in equity securities it owns and any ~~assurance regarding if or when all conditions precedent~~claims outstanding. These borrowings contain customary covenants that require CCMS to the acquisition will be satisfied or waived. If, for any reason, the acquisition is not completed, its completion is materially delayed and/or the share purchase agreement is terminated, the market price of our common stock may be materiallymaintain specified debt service, interest cover and ~~adversely affected.~~leverage ratios.

~~In addition, if~~These security arrangements and covenants may reduce our operating flexibility or our ability to engage in other transactions that may be beneficial to us. If we are unable to comply with the ~~acquisition is not completed for any reason, there are risks that the announcement of the acquisition~~covenants, we could be in default and the ~~dedication~~indebtedness could be accelerated. If this were to occur, we might not be able to obtain waivers of ~~management’s attention~~default or to refinance the debt with another lender and ~~other of~~as a result, our ~~resources to the completion thereof could have a negative impact on our relationships with our stakeholders~~business and ~~could have a material adverse effect on our current and future operations,~~ financial condition ~~and prospects.~~would suffer.

We ~~may~~will likely not ~~realize some or all of the anticipated benefits from the~~include Connect ~~Group acquisition.~~in our internal control certification and attestation for fiscal 2022.

~~Even if we complete the~~As noted above, integrating Connect Group acquisition, we may experience unforeseen events, changes or circumstances that may adversely affect us. For example, we may incur unexpected costs, charges or expenses resulting from the transaction, including charges to future earnings if the Connect Group’s business does not perform as expected. Our expectations regarding the Connect Group’s business and prospects may not be realized, including as a result of changes in the financial condition of the markets that the Connect Group serves. In addition, there are risks associated with the Connect Group’s product and service offerings or results of operations, including the risk of reduced cash settlements through Connect Group’s vault infrastructure or higher cash losses, lower than expected growth in Connect Group’s value-added services, lower than expected levels of loan advances or higher credit losses and slower than expected growth in card transactions. Further, there are numerous challenges, risks and costs involved with integrating the operations of Connect Group with ours. For example, Integrating the Connect Group into our company will require significant attention from our senior management which may divert their attention from our ~~day-to-day~~day to day business. The difficulties of integration may be increased by cultural differences between our two organizations and the necessity of retaining and integrating personnel, including Connect Group’s key employees. Furthermore, ourOur management certification and auditor attestation regarding the effectiveness of our internal control over financial reporting as of June 30, 2022, will likely exclude the operations of the Connect Group. If ~~some~~we are unable to successfully integrate Connect’s operations into our internal control over financial reporting, our internal control over financial reporting may not be effective.

Geopolitical conflicts, including the conflict between Russia and Ukraine, may adversely affect our business and results of operations.

The current conflict between Russia and Ukraine is creating substantial uncertainty about the future impact on the global economy. Countries across the globe are instituting sanctions and other penalties against Russia. The retaliatory measures that have been taken, and could be taken in the future, by the U.S., NATO, and other countries have created global security concerns that could result in broader European military and political conflicts and otherwise have a substantial impact on regional and global economies, any or all of ~~the aforementioned or other risks materialize,~~which could adversely affect our ~~ability to realize the anticipated benefits of the Connect Group could be materially impaired, and as a result, our financial condition, results of operations, cash flows and stock price could suffer~~.business.

While the broader consequences are uncertain at this time, the continuation and/or escalation of the Russian and Ukraine conflict, along with any expansion of the conflict to surrounding areas, create a number of risks that could adversely impact our business, including:

increased inflation and significant volatility in the macroeconomic environment;

disruptions to our technology infrastructure, including through cyberattacks, ransom attacks or cyber-intrusion;

adverse changes in international trade policies and relations;

disruptions in global supply chains;

constraints, volatility or disruption in the credit and capital markets; and

exacerbating the other risks disclosed in our Annual Report on Form 10-K.

All of these risks could materially and adversely affect our business and results of operations. We are continuing to monitor the situation in the Ukraine and globally and assess its potential impact on our business.

Item 6. Exhibits

The following exhibits are filed as part of this Form 10-Q:

Incorporated by Reference Herein
Exhibit No.

Description of Exhibit
Included Herewith
Form
Exhibit
Filing Date

10.40

Letter of Amendment, dated August 2, 2021, among Net1 Applied Technologies South Africa Proprietary Limited and FirstRand Bank Limited (acting through its Rand Merchant Bank division), as lender, related to the amendment to the Senior Facility E Agreement
X
8-K
10.1
August 2, 2021
31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act
X

31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act
X

32

Certification pursuant to 18 USC Section 1350
X

101.INS

XBRL Instance Document
X

101.SCH

XBRL Taxonomy Extension Schema
X

101.CAL

XBRL Taxonomy Extension Calculation Linkbase
X

101.DEF

XBRL Taxonomy Extension Definition Linkbase
X

101.LAB

XBRL Taxonomy Extension Label Linkbase
X

101.PRE

XBRL Taxonomy Extension Presentation Linkbase
X

			Incorporated by Reference Herein
Exhibit No.	Description of Exhibit	Included Herewith	Form	Exhibit	Filing Date

10.49	Fourth Amendment and Restatement Agreement, dated January 24, 2022, between Net1 Applied Technologies South Africa Proprietary Limited (as borrower), with Net 1 UEPS Technologies, Inc. Holdco), arranged by FirstRand Bank Limited (acting through its Rand Merchant Bank division) (the Arranger), and FirstRand Bank Limited (acting through its Rand Merchant Bank division) (as Original Senior Lender), with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (as facility agent), and Main Street 1692 (RF) Proprietary Limited (as Debt Guarantor)		8-K	10.1	January 28, 2022
10.50	Senior Facility G Agreement, dated January 24, 2022, R750,000,000 Senior Term Facility Agreement for Net1 Applied Technologies South Africa Proprietary Limited (as borrower), provided by FirstRand Bank Limited (acting through its Rand Merchant Bank division) (as lender), with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (as facility agent)		8-K	10.2	January 28, 2022
10.51	Senior Facility H Agreement, dated January 24, 2022, R350,000,000 Senior Term Facility Agreement for Net1 Applied Technologies South Africa Proprietary Limited (as borrower), provided by FirstRand Bank Limited (acting through its Rand Merchant Bank division) (as lender), with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (as facility agent)		8-K	10.3	January 28, 2022
10.52	Letter Agreement to amend the CTA and Senior Facility G Agreement, dated March 22, 2022, between Net1 Applied Technologies South Africa Proprietary Limited and FirstRand Bank Limited (acting through its Rand Merchant Bank division), as facility agent		8-K	10.1	March 28, 2022
10.53	Letter Agreement to amend the CTA and Senior Facility H Agreement, dated March 22, 2022, between Net1 Applied Technologies South Africa Proprietary Limited and FirstRand Bank Limited (acting through its Rand Merchant Bank division), as facility agent		8-K	10.2	March 28, 2022
10.54	Securities Purchase Agreement, dated March 22, 2022, among Net1 UEPS Technologies, Inc., Net1 Applied Technologies South Africa Proprietary Limited and Value Capital Partners Proprietary Limited		8-K	10.3	March 28, 2022
10.55	Facilities Agreement, dated 24 January 2022, between Cash Connect Management Solutions Proprietary Limited (as Borrower), arranged by FirstRand Bank Limited (acting through its Rand Merchant Bank Division) (as Mandated Lead Arranger) and FirstRand Bank Limited (acting through its Rand Merchant Bank Division) (as Facility Agent)	X
10.56	Letter Agreement to amend Cash Connect Management Solutions Proprietary Limited Facilities Agreement, dated March 22, 2022, between Cash Connect Management Solutions Proprietary Limited Facilities and FirstRand Bank Limited (acting through its Rand Merchant Bank Division) (in its capacity as Facilities Agent)	X

10.57	Second Letter Agreement to amend Cash Connect Management Solutions Proprietary Limited Facilities Agreement, dated April 12, 2022, between Cash Connect Management Solutions Proprietary Limited Facilities and FirstRand Bank Limited (acting through its Rand Merchant Bank Division) (in its capacity as Facilities Agent)	X
10.58	Securities Purchase Agreement, dated March 22, 2022, among Net1 UEPS Technologies, Inc., Net1 Applied Technologies South Africa Proprietary Limited and Value Capital Partners Proprietary Limited	X
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act	X
32	Certification pursuant to 18 USC Section 1350	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase	X
101.LAB	XBRL Taxonomy Extension Label Linkbase	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	X
104	Cover page formatted as Inline XBRL and contained in Exhibit 101

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on ~~November 8, 2021.~~May 10, 2022.

NET 1 UEPS TECHNOLOGIES, INC.

By: /s/ Chris G.B. Meyer

Chris G.B. Meyer

Group Chief Executive Officer

By: /s/ ~~Alex M.R. Smith~~Naeem E. Kola

~~Alex M.R. Smith~~Naeem E. Kola

Group Chief Financial Officer, Treasurer and Secretary

4767

Sensitivity for fair value of Cell C investment		4.2% increase		3.2% decrease
WACC rate	$	0	$	543
EBITDA margin	$	30	$	0

			Carrying value
Assets
Balance as at June 30, 2020			$	0
	Foreign currency adjustment⁽¹⁾			0
		Balance as of September 30, 2020	$	0


				Processing		Financial services		Technology		Carrying value
Balance as of June 30, 2021			$	11,967	$	0	$	17,186	$	29,153
	Foreign currency adjustment ⁽¹⁾			(609)		0		(925)		(1,534)
		Balance as of September 30, 2021	$	11,358	$	0	$	16,261	$	27,619

		As of September 30, 2021						As of June 30, 2021
			Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Finite-lived intangible assets:
	Customer relationships	$	9,782	$	(9,782)	$	0	$	10,340	$	(10,340)	$	0
	Software and unpatented technology		1,633		(1,633)		0		1,726		(1,726)		0
	FTS patent		2,535		(2,535)		0		2,679		(2,679)		0
	Trademarks		1,907		(1,586)		321		2,015		(1,658)		357
	Total finite-lived intangible assets	$	15,857	$	(15,536)	$	321	$	16,760	$	(16,403)	$	357

			Three months ended
			September 30, 2021
				Accumulated foreign currency translation reserve		Total
Balance as of July 1, 2021			$	(145,721)	$	(145,721)
	Movement in foreign currency translation reserve related to equity-accounted investment			(644)		(644)
	Movement in foreign currency translation reserve			(5,913)		(5,913)
		Balance as of September 30, 2021	$	(152,278)	$	(152,278)

			Three months ended
			September 30, 2020
				Accumulated foreign currency translation reserve		Total
Balance as of July 1, 2020			$	(169,075)	$	(169,075)
	Movement in foreign currency translation reserve related to equity-accounted investment			1,688		1,688
	Movement in foreign currency translation reserve			6,142		6,142
		Balance as of September 30, 2020	$	(161,245)	$	(161,245)

			Revenue (as restated)⁽¹⁾
			Reportable Segment			Inter-segment		From external customers

Processing			$	21,356	$	1,200	$	20,156
Financial services				10,626		940		9,686
Technology				4,824		162		4,662
	Total for the three months ended September 30, 2021		$	36,806	$	2,302	$	34,504

Processing⁽¹⁾			$	22,506	$	988	$	21,518
Financial services				8,265		745		7,520
Technology				6,211		113		6,098
		Total for the three months ended September 30, 2020	$	36,982	$	1,846	$	35,136

Table 6	In United States Dollars⁽¹⁾

	Three months ended September 30,
	2021	% of	2020	% of	% change
			(as restated)
Operating Segment	$ ’000	total	$ ’000	total
Consolidated revenue:
Processing	21,356	62%	22,506	64%	(5%)
All others	21,356	62%	21,297	61%	0%
IPG	-	-	1,209	3%	nm
Financial services	10,626	31%	8,265	24%	29%
Technology	4,824	14%	6,211	18%	(22%)
Subtotal: Operating segments	36,806	169%	36,982	170%	(0%)
Corporate/Eliminations	(2,302)	(69%)	(1,846)	(70%)	25%
Total consolidated revenue	34,504	100%	35,136	100%	(2%)
Consolidated operating (loss) income:
Processing	(7,131)	64%	(7,301)	68%	(2%)
All others	(7,131)	64%	(4,529)	42%	57%
IPG	-	-	(2,772)	26%	nm
Financial services	(2,998)	27%	(2,372)	22%	26%
Technology	603	(5%)	1,775	(16%)	(66%)
Subtotal: Operating segments	(9,526)	150%	(7,898)	142%	21%
Corporate/eliminations	(1,699)	(50%)	(2,877)	(42%)	(41%)
Total consolidated operating loss	(11,225)	100%	(10,775)	100%	4%

Table 7	In South African Rand⁽¹⁾

	Three months ended September 30,
	2021	% of	2020	% of	% change
			(as restated)
Operating Segment	ZAR ’000	total	ZAR ’000	total
Consolidated revenue:
Processing	312,073	62%	377,511	64%	(17%)
All others	312,073	62%	357,232	61%	(13%)
IPG	-	-	20,279	3%	nm
Financial services	155,277	31%	138,635	24%	12%
Technology	70,493	14%	104,182	18%	(32%)
Subtotal: Operating segments	537,843	169%	620,328	170%	(13%)
Corporate/Eliminations	(33,639)	(69%)	(30,964)	(70%)	9%
Total consolidated revenue	504,204	100%	589,364	100%	(14%)
Consolidated operating (loss) income:
Processing	(104,205)	64%	(122,466)	68%	(15%)
All others	(104,205)	64%	(75,969)	42%	37%
IPG	-	-	(46,497)	26%	nm
Financial services	(43,809)	27%	(39,787)	22%	10%
Technology	8,812	(5%)	29,773	(16%)	(70%)
Subtotal: Operating segments	(139,202)	150%	(132,480)	142%	5%
Corporate/eliminations	(24,827)	(50%)	(48,258)	(42%)	(49%)
Total consolidated operating loss	(164,029)	100%	(180,738)	100%	(9%)