LESAKA TECHNOLOGIES INC 10-Q

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 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 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 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 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 April 14, 2022, we announced the closing of the Connect Group acquisition 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 products to consumers (“B2C”) and merchants (“B2B”) across both the formal and informal sectors. 41 There 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 its growth in the 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 products and services to address the needs of the entire spectrum of merchants in South Africa. 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. Refer to Note 20 to our unaudited condensed consolidated financial statements for additional information related to the acquisition. Returning the Consumer business to breakeven We 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 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. 42 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 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 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 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 restructured and refinanced with the purpose of deleveraging its balance sheet, providing it with liquidity with which to operate and grow its businesses and to position itself to achieve long term success for the 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 carrying value of $0 (zero) as of March 31, 2022. 43 Impact of COVID-19 While we have not 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. 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 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 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 Nine months ended Year ended March 31, March 31, June 30, 2022 2021 2022 2021 2021 ZAR : $ average exchange rate 15.2360 14.9650 15.0965 15.8390 15.4146 Highest ZAR : $ rate during period 15.9536 15.4724 16.2968 17.6866 17.6866 Lowest ZAR : $ rate during period 14.4916 14.4689 14.1630 14.4689 13.4327 Rate at end of period 14.5526 14.8278 14.5526 14.8278 14.3010 44 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 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 Nine months ended Year ended Table 2 March 31, March 31, June 30, 2022 2021 2022 2021 2021 Income and expense items: $1 = ZAR 15.6119 14.9575 14.9875 16.1174 15.7162 Balance sheet items: $1 = ZAR 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. 45 We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Consumer, (2) Merchant and (3) 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. Third quarter of fiscal 2022 compared to third quarter of fiscal 2021 The following factors had a significant impact on our results of operations during the third quarter of fiscal 2022 as compared with the same period in the prior year:  Higher revenue: Our revenues increased 27% in ZAR primarily due to 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 sales;  Lower operating losses: Operating losses 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 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 retrenchment process we commenced in January 2022; and  Foreign exchange movements: The U.S. dollar was 4% stronger against the ZAR during the 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 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%) 46 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 increase in revenue was primarily due to 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 sales. The increase in cost of goods sold, IT processing, servicing and support was primarily due to higher costs related to hardware sales and higher expenses related to an increase in merchant transaction processing activities, which was partially offset by the implementation of various cost reduction initiatives in our Consumer business, as well as a lower cost of prepaid airtime. In ZAR, the decrease in selling, general and administration expense was due to both 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 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 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 third quarter of fiscal 2022 and 2021 was (22.9%) and (41.8%), 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 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. 47 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 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 10.8 million) from $0.7 million (ZAR 11.1 million), primarily as a result of a lower utilization of our ATM facilities to fund our ATMs, which decrease was partially offset by higher rates during the third quarter of fiscal 2022. Fiscal 2022 tax expense was $0.5 million (ZAR 7.3 million) compared to $2.2 million (ZAR 32.5 million) in fiscal 2021. 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. Bank Frick was sold in the third quarter of fiscal 2021 and was accounted for using the equity method 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 March 31, 2022 2021 $ % $ ’000 $ ’000 change Bank Frick - 177 nm Share of net income - 177 nm Other - (122) nm Share of net loss - (122) nm Total loss from equity-accounted investments - 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 Three months ended March 31, 2022 % of 2021 % of % change Operating Segment $ ’000 total $ ’000 total 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) 48 Table 7 In South African Rand Three months ended March 31, 2022 % of 2021 % of % change Operating Segment ZAR ’000 total ZAR ’000 total 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) 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 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 has decreased primarily due to the implementation of various cost reduction initiatives. Our EBITDA loss margin (calculated as EBITDA loss divided by revenue) for the third quarter of fiscal 2022 and 2021 was (41.8%) and (46.9%), respectively. 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 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 an increase in hardware sales and processing fees, which was partially offset by fewer prepaid airtime sales. The increase in segment EBITDA is primarily due to the increase in hardware sales. Our EBITDA margin for the third quarter of fiscal 2022 and 2021 was 6.9% and 2.2%, respectively. 49 Other Other includes the activities of IPG in fiscal 2021 and our other business outside South Africa, principally Botswana. Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during the third quarter of fiscal 2022 following the closure of our loss-making activities performed through IPG. Our EBITDA (loss) margin for the Other segment was 21.9% and (787.4%) during the 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; 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; elimination entries; and 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. 50 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 ZAR during 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%) 51 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 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. 52 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%) 53 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 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) 54 Table 13 In South African Rand Nine months ended March 31, 2022 % of 2021 % of % change Operating Segment ZAR ’000 total ZAR ’000 total 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 higher consulting fees 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 acquisition. 55 Presentation of quarterly revenue and Segment Adjusted EBITDA by segment for fiscal 2021 and 2020 During the third quarter of fiscal 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 56 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 March 31, 2022, our cash and cash equivalents were $183.7 million and comprised of U.S. dollar-denominated balances of $11.3 million, ZAR-denominated balances of ZAR 2.5 billion ($169.9 million), and other currency deposits, primarily Botswana pula, of $2.4 million, all amounts translated at exchange rates applicable as of March 31, 2022. The decrease in our unrestricted cash balances from June 30, 2021 was primarily due to utilization of cash reserves to fund our 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. 57 Available short-term borrowings Summarized below are our short-term facilities available and utilized as of March 31, 2022: Table 16 RMB Nedbank $ ’000 ZAR ’000 $ ’000 ZAR ’000 Total short-term facilities available, comprising: Overdraft restricted as to use (1) 96,203 1,400,000 17,179 250,000 Total overdraft 96,203 1,400,000 17,179 250,000 Indirect and derivative facilities (2) - - 10,758 156,552 Total short-term facilities available 96,203 1,400,000 27,937 406,552 Utilized short-term facilities: Overdraft restricted as to use (1) 45,678 664,728 - - Indirect and derivative facilities (2) - - 10,659 155,110 Interest rate, based on South African prime rate 7.75% Interest rate, based on South African prime rate less 1.15% 6.60% (1) Overdraft may only be used to fund 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 March 31, 2022, includes restricted cash of approximately $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 March 31, 2022, includes restricted cash of approximately $10.7 million that has been ceded and pledged. 58 Cash flows from operating activities Third quarter Net cash used in operating activities during the third quarter of fiscal 2022 was $8.8 million (ZAR 137.0 million) compared to $8.3 million (ZAR 123.5 million) during the third quarter of 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 third quarter of fiscal 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 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 $15.3 million in other tax jurisdictions, primarily in the U.S. 59 Taxes paid during the year to date fiscal 2022 and 2021 were as follows: Table 18 Nine months ended March 31, 2022 2021 2022 2021 $ $ ZAR ZAR ‘000 ‘000 ‘000 ‘000 First provisional payments 585 853 9,142 12,680 Taxation paid related to prior years - 205 - 3,423 Tax refund received (218) (12) (3,239) (205) Total South African taxes paid 367 1,046 5,903 15,898 Foreign taxes paid 104 15,336 1,574 256,366 Total tax paid 471 16,382 7,477 272,264 Cash flows from investing activities Third quarter Cash used in investing activities for the 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 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, 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 year to date fiscal 2021 included capital expenditures of $3.9 million (ZAR 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 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. We also extended loan funding of $1.0 million to V2 and $0.2 million to Revix. Cash flows from financing activities Third quarter During the third quarter of fiscal 2022 , we utilized approximately $95.0 million from our South African overdraft facilities to fund our ATMs and repaid $100.8 million of these facilities. 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. 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. 60 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. Capital Expenditures We expect capital spending for the fourth quarter of fiscal 2022 to primarily include limited investments into our ATM infrastructure and branch network in South Africa as well as IT equipment, and through Connect, spending for POS devices, vehicles, computer and office equipment. Our capital expenditures for the 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 March 31, 2022, of $0.1 million. We expect to fund these expenditures through internally generated funds and available facilities. 61