What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-08 compared with 2021-05-06 · 110 added, 383 removed, 187 unchanged (73% of the section changed)

12 unchanged sentences

Recent Developments

Agreement to acquire a controlling interest in the Connect Group

On October 31, 2021, we entered into an agreement to acquire a controlling stake in the Connect Group.

Subject to the terms and conditions set forth in the transaction agreement, the sellers will receive consideration 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 and adversely affect our results of operations and stock price.” 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

The COVID-19 pandemic did not impact our South African operations as severely during the three and nine months ended March 31, 2021, compared to the last four months of the year ended June 30, 2020.

South Africa has been at an adjusted Level 1 since March 1, 2021.

On December 28, 2020, the country moved back to Level 3 restrictions which remained in place through to February 28, 2021.

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.

The country went into lockdown (Level 5) towards the end of March 2020 and gradually eased restrictions for the remainder of the 2020 calendar year (to Level 4 from May 1, to Level 3 from June 1, to Level 2 from August 18 and to Level 1 from September 21).

The increase at the end of December 2020 back to Level 3 was in response to a second wave of infections, which was more severe than the first wave.

The South Africa 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.

With the winter months approaching, there are concerns over the potential for a third wave, particularly as there have been several delays in the vaccination program to date.

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 third quarter of fiscal 2021, our operations largely operated as normal.

Most of the impact of the pandemic on our operations resulted from the indirect effect of lower economic activity in the South African economy.

Our loan business has been able to originate loans normally and we have not seen any deterioration in collection levels over the period.

Our insurance business has seen a higher level of benefit claims during the nine months ended March 31, 2021, with marked increases between December 2020 and February 2021, which appear to be directly linked to the second wave of the pandemic.

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.

We 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 in the context of our cost base.

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We believe we have sufficient cash reserves to support us through the next twelve months.

Together with our existing cash reserves, we also believe that our credit facilities are sufficient to fund our ATM network.

We do not believe there will be any further significant adverse effects on our liquidity from the pandemic, unless there is a resumption of the higher level of restrictions seen in April and May 2020 in South Africa.

We believe that our South African insurance business is adequately capitalized and do not expect to have to provide additional funding to the business in the foreseeable future.

Financial position and impairments

Except for the impact on Finbond’s business in the first quarter of fiscal 2021, we do not believe that the pandemic has significantly impacted the carrying value of our long-lived assets and equity method investments to date.

Control environment

We do not expect the pandemic to have a significant impact on our internal control environment.

We believe that our South African insurance business is adequately capitalized to address the higher claim levels it is currently experiencing.

While we have not incurred 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— The COVID-19 pandemic has disrupted our business.

We are unable to ascertain the impact the 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, 2020.

“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.

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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.

The customer additions for the quarter have been disappointing and below our expectations, primarily as we have not yet launched our primary marketing initiatives.

This has been delayed due to some internal management changes as well as an intention to sensitize key stakeholders to these initiatives.

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.

We continue to see delays in the transfer of income for a significant portion of these customers which means we are not seeing the full benefit of this customer growth in our financial performance.

To date only approximately 50% of these gross customer additions have become active and commenced transacting on their account.

We expect to be in a position to launch our new initiatives during the course of the fourth quarter and to then accelerate the growth in the customer base.

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.

We continue to see a steady growth in the number of customers utilizing our ATM infrastructure over the last quarter, though transaction volumes were lower than the previous quarter.

Our B2B operations performed broadly in line with expectations with volumes lower than the previous quarter in line with expected seasonal trends.

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 – MobiKwik continues to experience strong sequential monthly revenue growth, assisted by rapid growth in users of their Buy Now Pay Later product.

The number of reported COVID-19 cases in India has increased significantly since the end of March 2021.

It is difficult to accurately predict the impact of this on MobiKwik’s business.

However, its management expects the impact to be somewhat mitigated by less stringent lockdowns in India compared with calendar 2020 and the availability of COVID-19 vaccines.

During the quarter, MobiKwik raised a further $7.2 million from new external shareholders at a valuation of approximately $480 million.

MobiKwik plans to use these funds to pursue an initial public offering.

We have increased the carrying value of our investment in MobiKwik following this transaction, refer to Note 6 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik.

Disposal of Bank Frick

Bank Frick – In line with our new strategic direction, on February 3, 2021, we entered into a share sale agreement with the Frick Family Foundation, or KFS, to sell our entire interest, or 35%, in Bank Frick to KFS for $30 million.

Refer to Note 6 for additional information related to this transaction.

Wind-down of IPG and status of Cell C recapitalization

IPG – The process to close our IPG business is well-advanced, with most employees leaving the organization during the second quarter of fiscal 2021.

Most processing activities also ceased during the second quarter of fiscal 2021 and we ended all activities early in the third quarter of fiscal 2021.

We should be largely complete with closure, from a cost perspective, by the end of fiscal 2021.

Cell C – We continued to carry the value of our Cell C investment at $0 (zero) as of March 31, 2021.

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.

Leadership changes

On May 1, 2021, Mr.

Lincoln Mali joined us as CEO of Net1 Southern Africa, a new position within our organization.

On March 15, 2021, Mr.

Nunthakumarin Pillay resigned his position as Managing Director:

Southern Africa after 21 years of service to our company in order to pursue other opportunities.

Pillay’s last day of employment was April 30, 2021.

We have reorganized certain of our internal business reporting lines following the resignation of Mr.

Pillay, but this is not expected to impact our business or processes significantly.

We continue the search for a Group CEO but there were no substantial developments regarding this process during the third quarter of fiscal 2021.

Smith continues in his role of interim Group CEO and will serve in this role until our board of directors finalizes the appointment of a permanent Group CEO.

In order to ensure a smooth transition, our former Group CEO, Mr.

Kotzé, agreed to provide consulting services to us through May 31, 2021.

Restatement of revenue and cost of goods sold, IT processing, servicing and support

In November 2020, we identified an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support during our assessment and systems development of new products.

The error did not impact our operating loss, net loss, balance sheet or cash flows.

We determined that the error impacted our results for the period from July 1, 2018 to November 30, 2020.

The error impacted our reported results and we have restated our unaudited condensed consolidated statement of operations and certain note presentation for the three and nine months ended March 31, 2020, refer to Note 1 to our unaudited condensed consolidated financial statements for additional information.

The table presents the unaudited impact of the restatement on our revenue and related cost of goods sold, IT processing, servicing and support for the first quarter of fiscal 2021, fiscal 2020 and 2019, including each fiscal quarter within those fiscal years:

Revenue (unaudited)

Cost of goods sold, IT processing, servicing and support (unaudited)

Year ended 2020

Year ended 2019

The restatement only impacted revenue allocated to our Processing operating segment.

Refer to “Presentation of quarterly revenue and operating (loss) income by segment for fiscal 2020 and 2019” below for additional information regarding our restated operating segments for fiscal 2020 and 2019, including each fiscal quarter within those fiscal years.

Critical Accounting Policies

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Accounts receivable and allowance for doubtful accounts receivable.

Revenue – variation in transaction price following September 2019 Supreme Court ruling.

Recent accounting pronouncements adopted

We did not adopt any new accounting pronouncement during the third quarter of fiscal 2021.

Recent accounting pronouncements not yet adopted as of March 31, 2021

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

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

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, including the expected dates of adoption and effects on our financial condition, results of operations and cash flows.

Currency Exchange Rate Information

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Three months ended

Nine months ended

September 30,

$ average exchange rate

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dollars on a monthly basis.

Thus, the average rates used to translate this data for the three months ended March 31, 2021 and 2020, vary slightly from the averages shown in the table above.

Thus, the average rates used to translate this data for the three months ended September 30, 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

Nine months ended

September 30,

Income and expense items:

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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.

We disposed of our Korean operation in the third quarter of fiscal 2020 and therefore it has been presented as a discontinued operation for fiscal 2020.

We disposed of FIHRST during the third quarter of fiscal 2020, and deconsolidated CPS in the fourth quarter of fiscal 2020, and therefore their contributions to our reported results are not included in the three and nine months ended March 31, 2021.

We analyze our business and operations in terms of three inter-related but independent operating segments:

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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.

Third quarter of fiscal 2021 compared to third quarter of fiscal 2020

The following factors had a significant impact on our results of operations during the third quarter of fiscal 2021 as compared with the same period in the prior year:

First quarter of fiscal 2022 compared to first quarter of fiscal 2021

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

Lower revenue:

Our revenues decreased 19% in ZAR primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue;

Ongoing operating losses:

Operating costs are largely in line with the prior period in ZAR due to the largely fixed cost nature of the cost base.

As a result, we continue to experience operating losses because of depressed revenues;

Non-cash increase in fair value of MobiKwik:

We recorded a non-cash fair value gain during the third quarter of fiscal 2021 of $10.8 million related to the change in fair value of MobiKwik;

Our revenues decreased 14% in ZAR primarily due to fewer prepaid airtime and hardware sales and lower transaction fee revenue;

Lower operating losses:

Operating losses have reduced by 9% in ZAR compared with the prior period primarily due to the closure of IPG and lower legal and consulting fees (excluding those related to the Connect Group transaction).

We continue to experience operating losses because of depressed revenues and have embarked on a plan to reduce operating expenses, including closing our mobile payment infrastructure;

Foreign exchange movements:

dollar was 3% weaker against the ZAR during the third quarter of fiscal 2021, which impacted our reported results.

dollar was 13% weaker against the ZAR during the first quarter of fiscal 2022, which impacted our reported results.

Consolidated overall results of operations

3 unchanged sentences

In United States Dollars

Three months ended March 31,

(as restated) (B)

Three months ended September 30,

(as restated) (A)

Cost of goods sold, IT processing, servicing and support

1 unchanged sentence

Depreciation and amortization

Impairment loss

Operating loss

Change in fair value of equity securities

Loss on disposal of equity-accounted investment - Bank Frick

Interest income

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Income tax expense

Net loss before earnings (loss) from equity-accounted investments

Earnings (Loss) from equity-accounted investments

Net loss from continuing operations

Net income from discontinued operations

Gain from disposal of discontinued operations, net of tax

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net (loss) income attributable to us

(A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

(B) 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 .

(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.

In South African Rand

Three months ended March 31,

(as restated) (B)

Three months ended September 30,

(as restated) (A)

Cost of goods sold, IT processing, servicing and support

1 unchanged sentence

Depreciation and amortization

Impairment loss

Operating loss

Change in fair value of equity securities

Loss on disposal of equity-accounted investment - Bank Frick

Interest income

2 unchanged sentences

Income tax expense

Net loss before earnings (loss) from equity-accounted investments

Earnings (Loss) from equity-accounted investments

Net loss from continuing operations

Net income from discontinued operations

Gain from disposal of discontinued operations, net of tax

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net (loss) income attributable to us

(A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

(B) 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 .

(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.

The decrease in revenue was primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue.

The decrease in revenue was primarily due to fewer prepaid airtime and hardware sales and lower transaction fee revenue, which was partially offset by higher lending revenues.

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

In ZAR, the increase in selling, general and administration expense was primarily due to the year-over-year impact of inflationary increases on employee-related expenses and higher consulting fees.

Depreciation and amortization decreased primarily due to lower overall depreciation related to tangible assets that were fully depreciated during the third quarter of fiscal 2021.

During the third quarter of fiscal 2020, we recorded an impairment loss of $5.6 million related to the impairment of a portion of our EasyPay business unit’s allocated goodwill and a $0.7 million impairment loss related to our Maltese e-money license.

Our operating loss margin for the third quarter of fiscal 2021 and 2020 was (49.6%) and (41.1%), respectively.

In ZAR, the decrease in selling, general and administration expense was primarily due to lower IPG-related expenses incurred following its closure and lower legal and consulting fees, which was partially offset by 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 quarter of fiscal 2021.

Our operating loss margin for the first quarter of fiscal 2022 and 2021 was (32.5%) and (30.7%), 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 third quarter of fiscal 2021 represents a non-cash fair value gain related to MobiKwik.

There was no change in the fair value of equity securities during the third quarter of fiscal 2020.

We continue to carry our investment in Cell C at $0 (zero).

Refer to Note 6 to our unaudited condensed consolidated financial statements for the methodology and inputs used in the fair value calculation for MobiKwik and Note 5 for the methodology and inputs used in the fair value calculation for Cell C.

We recorded a loss of $0.5 million related to the disposal of Bank Frick during the third quarter of fiscal 2021, refer to Note 6 to our unaudited condensed consolidated financial statements for additional information regarding this transaction.

In ZAR, interest on surplus cash increased slightly to $0.6 million (ZAR 9.1 million) from $0.6 million (ZAR 8.8 million), primarily due to higher average daily cash balances following the increase in our cash reserves as a result of the disposal of certain business in fiscal 2020, which was partially offset by lower rates of interest earned on surplus cash.

Interest expense decreased to $0.7 million (ZAR 11.1 million) from $1.9 million (ZAR 29.0 million), primarily as a result of lower borrowings, a reduction in South African interest rates and lower utilization of our ATM facilities because we used our cash reserves to fund our ATMs.

Fiscal 2021 tax expense was $2.2 million (ZAR 32.5 million) compared to $0.6 million (ZAR 9.8 million) in fiscal 2020.

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.

Our effective tax rate for fiscal 2020, was impacted by non-deductible impairment losses, on-going losses incurred by IPG and certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding those net operating losses, non-deductible expenses, including transaction-related expenditure, and tax expense recorded by our profitable businesses in South Africa.

DNI was sold in the fourth quarter of fiscal 2020 and was accounted for using the equity method during the third quarter of fiscal 2020.

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 balances during the first quarter of fiscal 2022.

Interest expense increased to $0.8 million (ZAR 11.9 million) from $0.7 million (ZAR 12.5 million), primarily as a result of a higher utilization of our ATM facilities to fund our ATMs.

Fiscal 2022 tax expense was $0.2 million (ZAR 2.7 million) compared to a tax benefit of $(1.1) million (ZAR (18.3) million) in fiscal 2021.

Our effective tax rate for fiscal 2022 was impacted by 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.

Our effective tax rate for fiscal 2021 was impacted by the reversal of the deferred tax liability related to one of our equity-accounted investments following its impairment, which was partially offset by 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.

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:

Three months ended March 31,

Share of net income

Amortization of intangible assets, net of deferred tax

Three months ended September 30,

Share of net loss

Share of net income

Amortization of intangible assets, net of deferred tax

Share of net loss

Total loss from equity-accounted investments

Results of operations by operating segment

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In United States Dollars (1)

Three months ended March 31,

Three months ended September 30,

(as restated)

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Total consolidated operating loss

(1) Consolidated revenue-Processing-All others for the three months ended March 31, 2020 has been restated for the error described in Note 1 to the unaudited condensed consolidated financial statements .

(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.

In South African Rand (1)

Three months ended March 31,

Three months ended September 30,

(as restated)

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Total consolidated operating loss

There was no impact on operating loss as a result of the restatement.

Excluding IPG, segment revenue decreased primarily due to fewer prepaid airtime sales and a reduction in volume-driven transaction fees.

Excluding IPG, Processing’s operating loss has been impacted by lower revenue and by an increase in transaction-based costs.

Our revenue for the three months ended March 31, 2020 was adversely impacted by ZAR 8.2 million ($0.5 million) as a result of the COVID-19 pandemic as we were unable to charge certain cash withdrawal fees to customers as a result of the lockdown during the last few days of March 2020.

Our operating loss for the three months ended March 31, 2020 also includes the impact of the $6.4 million impairment losses.

IPG’s operating loss for the quarter primarily related to the closure of its operations.

Our operating loss margin (calculated as operating (loss) income divided by revenue) for the third quarter of fiscal 2021 and 2020 was (57.7%) and (56.1%), respectively.

Excluding IPG, our operating loss margin for the Processing segment was (39.9%) and (44.1%) during the third quarter of fiscal 2021 and 2020, respectively.

Excluding the impairment losses, our operating loss and operating loss margin for the Processing segment was $6.1 million and (27.4%), respectively, during the third quarter of fiscal 2020.

Excluding IPG, segment revenue decreased primarily due to fewer prepaid airtime sales and a 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.

Our operating loss margin (calculated as operating (loss) income divided by revenue) for the first quarter of fiscal 2022 and 2021 was (33.4%) and (32.4%), respectively.

Excluding IPG, our operating loss margin for the Processing segment was (21.3%) during the first quarter of fiscal 2021.

Financial services

Segment revenue decreased due to lower account fee revenue and a modest reduction in lending revenue, whilst insurance revenues increased compared to the prior period.

The increase in operating loss is primarily due to the lower account fee revenue and the increase in insurance-related claims experienced this quarter attributed to the second wave of the pandemic.

Our operating loss margin for the third quarter of fiscal 2021 and 2020 was (20.7%) and (14.6%), respectively.

Segment revenue decreased significantly due to fewer hardware sales from one product line compared to the prior period, though partially offset by increases in other hardware product lines.

Operating income for the third quarter of fiscal 2021 was directly impacted by the lower revenue compared with fiscal 2020.

Our operating income margin for the Technology segment was 6.5% and 23.4% during the third quarter of fiscal 2021 and 2020, respectively.

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, and an increase in insurance revenues from an increase in business written.

The increase in operating loss 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.

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

Segment revenue decreased due to fewer hardware sales compared to the prior period.

Operating income for the first quarter of fiscal 2022 was directly impacted by the lower revenue compared with fiscal 2021.

Our operating income margin for the Technology segment was 12.5% and 28.6% during the first quarter of fiscal 2022 and 2021, respectively.

Corporate/Eliminations

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and elimination entries.

Our corporate expenses for fiscal 2020 includes a $0.7 million impairment loss and net unrealized foreign exchange gains of $1.9 million compared with net unrealized foreign exchange gains of $0.6 million recorded in fiscal 2021.

Year to date of fiscal 2021 compared to year to date of fiscal 2020

The following factors had a significant impact on our results of operations during the year to date of fiscal 2021 as compared with the same period in the prior year:

Lower revenue:

Our revenues decreased 19% in ZAR primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue, which was partially offset by higher transaction fees;

Ongoing operating losses:

Operating costs are largely in line with the prior period in ZAR due to the largely fixed cost nature of the costs base.

As a result, we continue to experience operating losses because of depressed revenues;

Non-cash increase in fair value of MobiKwik:

We recorded a non-cash fair value gain during the year to date of fiscal 2021 of $25.9 million related to the change in fair value of MobiKwik.

Consolidated overall results of operations

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

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

dollars and in ZAR:

In United States Dollars

Nine months ended March 31,

(as restated) (B)

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Impairment loss

Operating loss

Change in fair value of equity securities

Gain on disposal of FIHRST

Loss on disposal of equity-accounted investment - Bank Frick

Loss on disposal of equity-accounted investment

Interest income

Interest expense

Loss before income tax expense

Income tax expense

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss from continuing operations

Net income from discontinued operations

Gain from disposal of discontinued operations, net of tax

Net (loss) income attributable to us

(A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

(B) 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.

In South African Rand

Nine months ended March 31,

(as restated) (B)

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Impairment loss

Operating loss

Change in fair value of equity securities

Gain on disposal of FIHRST

Loss on disposal of equity-accounted investment - Bank Frick

Loss on disposal of equity-accounted investment

Interest income

Interest expense

Loss before income tax expense

Income tax expense

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss from continuing operations

Net income from discontinued operations

Gain from disposal of discontinued operations, net of tax

Net (loss) income attributable to us

(A) Refer to Note 21 to the unaudited condensed consolidated financial statements for discontinued operations disclosures.

(B) 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.

The decrease in revenue was primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue, which was partially offset by higher transaction fees.

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

The increase in selling, general and administration expense was primarily due to the year-over-year impact of inflationary increases on employee-related expenses, an allowance on doubtful loans receivable from equity-accounted investments created during the second quarter of fiscal 2021 and an increase in consulting fees.

Depreciation and amortization decreased primarily due to lower overall depreciation related to tangible assets that were fully depreciated during the year to date of fiscal 2021.

During the year to date fiscal 2020, we recorded an impairment loss of $5.6 million related to the impairment of a portion of our EasyPay business unit’s allocated goodwill and a $0.7 million impairment loss related to our Maltese e-money license.

Our operating loss margin for the year to date of fiscal 2021 and 2020 was (41.8%) and (25.9%), 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 of fiscal 2021 represents a non-cash fair value gain related to MobiKwik.

There was no change in the fair value of equity securities during the year to date of fiscal 2020.

We continue to carry our investment in Cell C at $0 (zero).

We recorded a loss of $0.5 million related to the disposal of Bank Frick during the year to date fiscal 2021, refer to Note 6 to our unaudited condensed consolidated financial statements for additional information regarding this transaction.

We recorded a gain of $9.7 million related to the disposal of FIHRST during the year to date of fiscal 2020.

Interest on surplus cash was $1.9 million (ZAR 31.2 million) compared to $2.0 million (ZAR 32.2 million) in the prior period, due primarily to the higher average daily cash balances following the increase in our cash reserves as a result of the disposal of certain business in fiscal 2020, which was more than offset by lower rates of interest earned on surplus cash.

Interest expense decreased to $2.2 million (ZAR 34.9 million) from $6.4 million (ZAR 101.5 million), primarily as a result of lower borrowings, a reduction in South African interest rates and lower utilization of our ATM facilities because we used our cash reserves to fund our ATMs.

Fiscal 2021 tax expense was $4.5 million (ZAR 73.3 million) compared to $2.3 million (ZAR 37.0 million) in fiscal 2020.

Our effective tax rate for fiscal 2020, was impacted by the tax neutral disposal of FIHRST, non-deductible impairment losses, the on-going losses incurred by IPG and certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding those net operating losses, non-deductible expenses, including transaction-related expenditure, and the tax expense recorded by our profitable businesses, primarily in South Africa.

DNI was sold in the fourth quarter of fiscal 2020 and was accounted for using the equity method during the year to date of fiscal 2020.

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:

Nine months ended March 31,

Share of net income

Amortization of intangible assets, net of deferred tax

Share of net income

Amortization of intangible assets, net of deferred tax

Share of net (loss) income

Share of net loss

Refer to Note 6 to our unaudited condensed consolidated financial statements for additional information related to the impairment of Finbond and our other equity-accounted investments.

Results of operations by operating segment

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

In United States Dollars (1)

Nine months ended March 31,

(as restated)

Operating Segment

Consolidated revenue:

Financial services

Operating segments

Corporate/Eliminations

Total consolidated revenue

Consolidated operating (loss) income:

Financial services

Operating segments

Corporate/eliminations

Total consolidated operating loss

(1) Consolidated revenue-Processing-All others for the nine months ended March 31, 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.

In South African Rand (1)

Three months ended March 31,

(as restated)

Operating Segment

Consolidated revenue:

Financial services

Operating segments

Corporate/Eliminations

Total consolidated revenue

Consolidated operating (loss) income:

Financial services

Operating segments

Corporate/eliminations

Total consolidated operating loss

There was no impact on operating loss as a result of the restatement.

Excluding IPG, segment revenue decreased primarily due to fewer prepaid airtime sales, which was partially offset by higher volume-driven transaction fees.

Excluding IPG, Processing operating loss has been impacted by lower revenue and by an increase in transaction-based costs.

Our operating loss for the nine months ended March 31, 2020 also includes the impact of the $6.4 million impairment losses.

IPG incurred an operating loss but is in the process of being closed down.

Our operating loss margin for the year to date of fiscal 2021 and 2020 was (46.5%) and (31.5%), respectively.

Excluding IPG, our operating loss margin for the Processing segment was (29.8%) and (21.5%) during the year to date of fiscal 2021 and 2020, respectively.

Excluding the impairment losses, our operating loss and operating loss margin for the Processing segment was $17.4 million and (23.1%), respectively, during the third quarter of fiscal 2020.

Financial services

Segment revenue decreased due to lower account fee revenue and a modest reduction in lending revenue, whilst insurance revenues increased compared to the prior period.

The segment incurred an operating loss compared with fiscal 2020 primarily due to the reduction in account fee revenue as well as higher employee-related costs and an increase in insurance claims experience.

Our operating loss margin for the year to date of fiscal 2021 and 2020 was (19.7%) and (6.8%), respectively.

Segment revenue was lower than in fiscal 2021 due to fewer hardware sales.

Operating income for the year to date of fiscal 2021 improved compared with fiscal 2020 due to improved margins on the sale of various product lines within the segment.

Our operating income margin for the Technology segment was 23.2% and 16.6% during the year to date of fiscal 2021 and 2020, respectively.

Corporate/Eliminations

Our corporate expenses increased primarily due to an allowance on doubtful loans receivable from equity-accounted investments created during the year to date of fiscal 2021, and higher legal and consulting fees, which were partially offset by lower audit fees and an unrealized foreign exchange gain recognized in year to date fiscal 2020.

Presentation of quarterly revenue and operating (loss) income by segment for fiscal 2020 and 2019

The tables below present quarterly revenue and operating (loss) income generated by our three reportable segments for fiscal 2020 and 2019, 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:

Fiscal 2020 (1)

In United States Dollars

Financial services

Technology and Other

Operating segments

Corporate/Eliminations

Operating (loss) income

Financial services

Technology and Other

Operating segments

Corporate/Eliminations

Income and expense items:

(1) Revenues-Processing-All others 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.

Fiscal 2019 (1)

In United States Dollars

Financial services

Technology and Other

Operating segments

Corporate/Eliminations

Operating (loss) income

Financial services

Technology and Other

Operating segments

Corporate/Eliminations

Income and expense items:

(1) Revenues-Processing-All others 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.

Our corporate expenses for fiscal 2022 decreased compared with fiscal 2021 due to lower legal and consulting fees incurred.

We expect to incur additional expenses related to the Connect Group transaction in the second quarter of fiscal 2022.

Liquidity and Capital Resources

At March 31, 2021, our cash and cash equivalents were $207.8 million and comprised of U.S.

dollar-denominated balances of $171.2 million, ZAR-denominated balances of ZAR 0.5 billion ($34.1 million), and other currency deposits, primarily Botswana pula, of $2.4 million, all amounts translated at exchange rates applicable as of March 31, 2021.

The decrease in our unrestricted cash balances from June 30, 2020, was primarily due to the payment of Federal income taxes, weak trading activities and an increase in our lending book, which was partially offset by the receipt of the outstanding proceeds related to the sale of our Korean business, receipt of proceeds related to the disposal of Bank Frick and the receipt of the outstanding loan related to the disposal of our remaining interest in DNI.

At September 30, 2021, our cash and cash equivalents were $188.5 million and comprised of U.S.

dollar-denominated balances of $162.5 million, ZAR-denominated balances of ZAR 0.4 billion ($23.7 million), and other currency deposits, primarily Botswana pula, of $2.3 million, all amounts translated at exchange rates applicable as of September 30, 2021.

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.

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.

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Available short-term borrowings

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

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

Total short-term facilities available, comprising:

12 unchanged sentences

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 March 31, 2021, includes restricted cash of approximately $11.4 million related to cash withdrawn from our various debt facilities to fund ATMs.

Our cash, cash equivalents and restricted cash presented in our unaudited condensed consolidated statement of cash flows as of September 30, 2021, includes restricted cash of approximately $51.6 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.

1 unchanged sentence

The funds included in these bank accounts are restricted as they may not be withdrawn without the express permission of Nedbank.

Cash flows from operating activities

Third quarter

Net cash used in operating activities during the third quarter of fiscal 2021 was $8.3 million (ZAR 123.5 million) compared to $4.2 million (ZAR 64.5 million) during the third quarter of fiscal 2020 .

Excluding the impact of income taxes, our cash used in operating activities during the third quarter of fiscal 2021 was impacted by the cash losses incurred by the majority of our continuing operations and the payment of a $3.6 million settlement (refer to Note 6).

Our net cash provided by operating activities during the third quarter of fiscal 2020 includes the contribution from our Korean operations for January and February 2020 of $4.4 million (refer to Note 21).

Our cash used in operating activities during the third quarter of fiscal 2020 was also impacted by the pandemic because we were unable to originate loans towards the end of March 2020 due to the temporary COVID-19 restrictions imposed on our lending activities in late March 2020.

This had a positive result on net cash used in operating activities during the third quarter of fiscal 2020.

Our operating cash flows for the third quarter of fiscal 2020 were also adversely impacted by the purchase of additional Cell C prepaid airtime that was subject to sale restrictions.

During the 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.

During the third quarter of fiscal 2020, we paid our first provisional South African tax payments of $0.1 million (ZAR 0.9 million) related to our 2020 tax year.

We also paid taxes totaling $1.9 million in other tax jurisdictions, primarily South Korea.

Taxes paid during the third quarter of fiscal 2021 and 2020 were as follows:

Three months ended March 31,

First provisional payments

Second provisional payments

Tax refund received

Total South African taxes paid (received)

Foreign taxes paid

Total tax paid

Net cash used in operating activities during the year to date of fiscal 2021 was $50.1 million (ZAR 807.7 million) compared to $18.1 million (ZAR 289.1 million) during the year to date of fiscal 2020 .

Excluding the impact of income taxes, our cash used in operating activities during the year to date of fiscal 2021 was impacted by the cash losses incurred by the majority of our continuing operations and the payment of a $3.6 million settlement (refer to Note 6).

Our net cash used in operating activities during the year to date of fiscal 2020 includes the contribution from our Korean operations for eight months of $14.6 million (refer to Note 21).

During the year to date of 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 of fiscal 2021, we paid South African tax of $0.2 million (ZAR 3.4 million) related to our 2020 tax year.

First quarter

Net cash used in operating activities during the first quarter of fiscal 2022 was $7.9 million (ZAR 116.1 million) compared to $29.9 million (ZAR 501.2 million) during the first quarter of fiscal 2021 .

Excluding the impact of income taxes, our cash used in operating activities during the first quarter of fiscal 2022 was impacted by the cash losses incurred by the majority of our continuing operations.

There were no significant tax payments made or refunds received during the first quarter of fiscal 2022.

During the first quarter of 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 million in other tax jurisdictions, primarily in the U.S.

During the year to date of fiscal 2020, we paid our first provisional South African tax payments of $0.8 million (ZAR 11.5 million) related to our 2020 tax year.

During the year to date of fiscal 2020 , we paid South African tax of $0.8 million (ZAR 11.6 million) related to our 2019 tax year.

We also paid taxes totaling $4.3 million in other tax jurisdictions, primarily South Korea.

Taxes paid during the year to date of fiscal 2021 and 2020 were as follows:

Nine months ended March 31,

First provisional payments

Second provisional payments

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

Three months ended September 30,

Taxation paid related to prior years

Tax refund received

Total South African taxes paid

Total South African taxes paid (received)

Foreign taxes paid

1 unchanged sentence

Cash flows from investing activities

Third quarter

Cash used in investing activities for the third quarter of fiscal 2021 included capital expenditures of $0.6 million (ZAR 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, the remainder of which will be received in fiscal 2022 and 2023.

Cash used in investing activities for the third quarter of fiscal 2020 included capital expenditures of $1.0 million (ZAR 16.0 million), primarily due to the acquisition of computer equipment in South Korea to maintain operations and leasehold improvements in Malta.

During the third quarter of fiscal 2020, we received a net $192.6 million from the sale of Net1 Korea and paid transaction costs of $7.5 million related to this disposal.

We also invested a further $1.3 million in V2 Limited.

Cash used in investing activities for the year to date of fiscal 2021 included capital expenditures of $3.9 million (ZAR 63.6 million), primarily due to the acquisition of motor vehicles, which largely comprises 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 following the successful refund application of the amounts withheld and paid to the South Korean tax authorities pursuant to that transaction.

We received $18.6 million related to the disposal of Bank Frick and the amount due on the deferred sale proceeds related to the April 2020 sale of DNI, which has now been paid in full.

We also extended loan funding of $1.0 million to V2 and $0.2 million to Revix.

Cash used in investing activities for the year to date of fiscal 2020 included capital expenditures of $4.5 million (ZAR 71.7 million), primarily due to the acquisition of ATMs and computer equipment in South Africa, leasehold improvements in Malta and processing equipment in South Korea to maintain operations.

During the year to date fiscal 2020, we received a net $192.6 million from the sale of Net1 Korea, paid transaction costs of $7.5 million related to this disposal, received $10.9 million from the sale of FIHRST and received $4.3 million from DNI related to the settlement of a ZAR 60.0 million loan outstanding.

We also made a further equity contribution of $2.5 million to V2 and extended loan funding of $0.7 million to Revix.

First quarter

Cash used in investing activities for the first quarter of fiscal 2022 included capital expenditures of $0.7 million (ZAR 10.2 million), primarily due to the roll out of our new express branches.

Cash used in investing activities for the first quarter of fiscal 2021 included capital expenditures of $0.3 million (ZAR 4.6 million), primarily due to the acquisition of 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 the first of the eighteen scheduled repayments due on the deferred sale proceeds related to the April 2020 sale of DNI.

Cash flows from financing activities

Third quarter

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

During the third quarter of fiscal 2020, we utilized approximately $184.7 million from our South African overdraft facilities, primarily to fund our ATMs, and repaid $203.8 million of these facilities.

We also utilized $9.0 million of our Bank Frick overdraft to fund our operations and repaid $22.9 million towards this facility, including the final payment to settle the facility in full.

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.

During the year to date fiscal 2020, we utilized approximately $567.9 million from our South African overdraft facilities, primarily to fund our ATMs, and repaid $578.3 million of these facilities.

We utilized approximately $14.8 million of our borrowings to fund the purchase of Cell C prepaid airtime that is subject to sale restrictions.

We prepaid approximately $11.3 million of these borrowings (Facility F) utilizing the proceeds received from the disposal of FIHRST.

We also repaid $26.9 million of our Bank Frick overdraft and utilized $17.4 million of this overdraft to fund our operations.

First quarter

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

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

Off-Balance Sheet Arrangements

1 unchanged sentence

Capital Expenditures

We expect capital spending for the fourth quarter of fiscal 2021 to primarily include limited investments into our vehicle fleet, our ATM infrastructure and branch network in South Africa.

Our capital expenditures for the third quarter of fiscal 2021 and 2020 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 March 31, 2021, of $0.1 million.

We expect capital spending for the second quarter of fiscal 2022 to primarily include limited investments into our ATM infrastructure and branch network in South Africa.

Our capital expenditures for the first 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, of $1.0 million.

We expect to fund these expenditures through internally generated funds and available facilities.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis