UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended
June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from
To
Commission file number:
000-31203
LESAKA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Florida
98-0171860
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
7 Parks Boulevard
,
Oxford Parks
,
1st Floor
,
Dunkeld, Johannesburg
,
2196
,
South Africa
(Address of principal executive offices, including zip code)
Registrant’s telephone number,including area code: +
27
-
11
-
343-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.001 per share
LSAK
NASDAQ
Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
Indicate by checkmark if theregistrant is awell-known seasoned issuer, asdefined in Rule405 of theSecurities
Act.Yes
☐
No
☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act.Yes
☐
No
☒
Indicate by check mark whetherthe registrant (1) has filedall reports required to befiled by Section 13 or15(d)
oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthatthe
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive DataFile required
tobesubmittedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12
months (or for such shorter period that the registrant was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, smallerreporting companyor anemerging growthcompany. See thedefinitions of“large acceleratedfiler,”
“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule 12b-2ofthe
Exchange Act (check one):
☐
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
If anemerginggrowth company,indicate bycheck markif theregistrant haselected notto usethe extended
transition periodfor complyingwith anynew orrevised financialaccounting standardsprovided pursuantto
Section 13(a) of the Exchange Act.
☐
Indicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagement’s
assessmentoftheeffectivenessofitsinternalcontroloverfinancialreportingunderSection404(b)ofthe
Sarbanes-Oxley Act(15U.S.C.7262(b)) bythe registeredpublicaccounting firmthat preparedorissued its
audit report.
☒
If securitiesare registeredpursuant toSection 12(b)of theAct, indicateby checkmark whetherthe financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
☒
Indicate by check markwhether any of thoseerror corrections are restatementsthat required arecovery analysis
ofincentive-basedcompensationreceivedbyanyoftheregistrant’sexecutiveofficersduringtherelevant
recovery period pursuant to §240.10D-1(b).
☐
Indicate bycheck markwhether theregistrant isa shellcompany (asdefined inRule 12b-2of theExchange
Act). Yes
☐
No
☒
Theaggregatemarketvalueoftheregistrant’scommonstockheldbynon-affiliatesoftheregistrantasof
December 31,2025(thelastbusiness dayofthe registrant’smostrecently completedsecond fiscalquarter),
based upon the closing price of the common stock as reported by The NASDAQ Global Select Market on such
date, was $
252,144,046
. This calculationdoes not reflecta determination thatpersons are affiliatesfor any other
purposes.
As of September 9,2026,
85,824,094
shares of the registrant’scommon stock, par value$0.001 per share, net
of treasury shares, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
CertainportionsofthedefinitiveProxyStatementforour2026AnnualMeetingofShareholdersare
i
ncorporated by reference into Part III of this Form 10-K.
2
PARTI
FORWARDLOOKING STATEMENTS
In addition to historical information,this Annual Report on Form 10-K(“Annual Report”) contains forward-lookingstatements
that involve risks and uncertainties that could cause our actual results to differmaterially from those projected, anticipated or implied
in theforward-lookingstatements. Factorsthat mightcause orcontributeto suchdifferencesinclude,but arenot limitedto, those
discussed inItem 1A—“RiskFactors.” Insome cases,you canidentify forward-lookingstatements byterminology suchas “may,”
“will,”“should,”“could,”“would,”“expects,”“plans,”“intends,”“anticipates,”“believes,”“estimates,”“predicts,”“potential”or
“continue” orthe negative ofsuch terms andother comparable terminology.Youshould not placeundue reliance onthese forward-
looking statements, which reflectour opinions onlyas of thedate of thisAnnual Report. We undertake noobligation to releasepublicly
anyrevisionsto theforward-lookingstatements afterthe dateof thisAnnualReport.Youshouldcarefullyreview therisk factors
describedin otherdocuments wefile fromtime totime withthe SecuritiesandExchange Commission(the “SEC”),includingthe
Quarterly Reports on Form 10-Q to be filed by us during our 2027fiscal year, which runs from July 1, 2026 to June 30,2027.
Allreferencesto“theCompany,”“we,”“us,”or“our”arereferencestoLesakaTechnologies,Inc.anditsconsolidated
subsidiaries, collectively, and all references to “Lesaka” are to Lesaka Technologies, Inc. only, except as otherwise indicated or where
the context indicates otherwise.
ITEM 1.BUSINESS
Overview
Lesaka provides financial technology solutions to underserviced consumers,merchants and enterprises, improving the way they
manage their dailyfinancial activities andincreasing financial inclusionin the marketsin which weoperate. In plainterms,we help
our customers
pay, receive,borrow,insure andgrow
: we enablethem to makeand accept payments,receive incomesuch as wages
and welfare grants, access credit, protect their familiesand assets through insurance, and grow their businessesand financial lives. We
deliver these capabilitiesthrough three businessdivisions: Merchant, whichprovides payment acceptance,software, cashmanagement,
lending and alternative digital productsolutions to merchants across our twochannels; Community and Corporate. Consumer,which
provides banking,lending andinsurance solutionsto consumers,principally recipientsof social welfaregrants inSouth Africa; and
Enterprise, which provides payment processing, prepaid solutions andbill payment infrastructure connecting enterprises to consumers
and businesses.
Webring thesecustomer communitiestogether withina singleecosystem byenabling themto engageand transactwith each
other.For example,an enterprisebiller connectedto our proprietarybiller networkcan collect paymentfrom aconsumer whopays
their bill at anearby merchant usingcash withdrawn witha debit card linkedto a transactional accountwe provide to thatconsumer
to receivetheir welfaregrant orwages withthe merchant,in turn,digitizing thecash receivedthrough oneof ourcloud-connected
cashvaults.EachparticipantinthischainisaLesakacustomer,andeachinteractiondeepensourdatainsightandourcross-sell
opportunity. As of June 30, 2026,we served approximately 132,000active merchants and approximately2.1 million activeconsumers,
and our Enterprise division connected a network of more than 650 billers and over50 corporate clients across South Africa.
To build and maintainour ecosystem, we have approximately 3,900 employees operating on theground in five countries: South
Africa (our primarymarket), Namibia, Botswana,Zambia and Kenyaas of June 30,2026. Lesaka was createdin 2022, and wehave
sincecombinedorganicgrowthwithacquisitionsincludingtheConnectGroup(April2022),Adumo(October2024),Recharger
(March 2025), and theproposed acquisition of BankZero (agreement signed June2025, and closing subjectto achievement of relevant
conditionprecedents) to assemble an integrated fintech platform, unifiedunder a single Lesaka brand in fiscal 2026. For a discussion
of specific developments duringfiscal 2026, see Item 7“Management’s Discussionand Analysis of Financial Conditionand Results
of Operations–Developments during Fiscal 2026”.
Weservealargeandstructurallyunderpenetratedmarket.Cashremainsthedominantpaymentinstrumentacrossmuchof
SouthernAfrica,and amaterial portionof consumersand smallbusinesses remainoutside, oronly partiallyserved by,the formal
financialsystem.Acrossourfootprintandadjacentmarketsaccessiblethroughstrategicpartnerships,weserveamarketof
approximately 250 million people with an estimated serviceable addressable market of approximately ZAR 416 billion in net revenue
by 2030as ofthe dateof thisAnnual Report.This estimateis derivedfrom managementanalysis usinga rangeof externalsources
including but not limited to: Population ReferenceBureau, IMF Database, Global Findex Report - 2025, GlobalData Analytics – SA
Card andPayments Opportunitiesand Risksto 2028;July 2024,BDO –Unlocking potentialFintech inAfrica; June2024, Boston
Consulting Group – Reimagining the Future of Finance; May 2023, combined with internal data, assumptions and management’s best
estimates.
3
Our Go-
To
-Market Model
Our go-to-market model describes how we serve and grow customer relationships in practice. It has fiveelements:
1.
Wide breadth of solutions
– Our solutions span the five things wehelp customers do – pay, receive, borrow, insure and grow
– and wewin a customerrelationship with asingle critical financialservice at arelatively stable customeracquisition cost,
expandingtherelationshipfromthere.Forexample,acommunitymerchantwilloftenfirstadoptoursupplier-enabled
payments productto payfor inventorydigitally,and subsequentlyadd ourcash vaults,card acquiringor amerchant cash
advance as their business grows. Similarly,a consumer typically joins us by openinga transactional account to receive their
monthlysocialsecuritygrantandmayovertimetakeupashort-termloanorafuneralinsurancepolicy.Thisapproach
increases customerlifetime valuewith littleincrementalacquisition cost.As ofJune 30,2026, approximately51% ofour
active consumers and approximately 46% of our active merchants usedtwo or more of our products;
2.
Differentiated reach
– Rather than relyingon online-only salesor expensive branch networks,we deploy on-the-ground sales
teamssupportedbycost-efficientbranchesandcommunityservicecentersintheruralandperi-urbanareaswhereour
customers live andtransact, including closeto the locations wheregrant payments aredisbursed. Our merchantcommunity
channel is built on the same principle, acquiring merchants through direct, face-to-facesales with rapid conversion cycles;
3.
Digital engagement
– After theinitial in-personsale, we steercustomers to digitalchannels to servethem more efficiently
and deepen their use of our solutions.For consumers, this includes our bankingapp and unstructured supplementary service
data (“USSD”) channels thatwork in real time onany mobile phone, includingbasic feature phones withoutinternet access
– while merchants manage their deposits, settlements and supplierpayments through our digital merchant account;
4.
Proprietary access todata
– Our solutionsgive us unique visibilityinto the transactionflows of consumersand merchants,
which we believeis rarein ourmarkets, particularly amongthe underserviced. We putthis datato work directly:our consumer
lending is underwrittenusing our view of themoney flowing in andout of a consumer’saccount, and our merchantlending
is underwritten using our visibility into a merchant’sdaily card and cash turnover; and
5.
A unified brand
– In November 2025, we relaunched our businesses under a single Lesaka brand, and during fiscal 2026 we
consolidatedourbrandidentity,includingaconsistentarticulationacrossallthreesegments–ofwhatweenableour
customers to do:pay, receive, borrow, insure and grow. We believe a unifiedbrand and aconsistent expression of ouroffering
buildtrust,supportcustomerawarenessandacquisitionacrossdivisionsandfacilitatetheroll-outandadoptionofnew
solutions.
Our Business Segments
We operate andreport through three business segments: Merchant, Consumerand Enterprise.
1. Merchant
Our Merchant Market
We manageour Merchant operations through two distinct channels:
Community:
serves local, high-growth businesses ranging from kiosks and spaza shops (corner stores) to taverns, marketplaces
and the sole proprietorsand suppliers that servethem acquired through direct,face-to-face sales with rapidconversion cycles. These
merchantsoperate ina largelycash-based environment,and webelieve theywill increasinglyadopt digitalpayment solutionsand
complementary services as the secular shift from cash to digital paymentsprogresses.
Corporate:
serveslarger,moreformalbusinessesfromsmalllocalretailerstomulti-lanestores,franchisesandlarge-scale
organizations that require customized, multi-productsolutions sold through a strategic, longer-term sales process.
As of June 30, 2026, we served approximately 132,000 active merchants.
Merchant Solutions
Our merchant solutionsserve merchants ofall sizes,helping them acceptpayments, manage anddigitize cash, runtheir operations
and access working capital. Our merchant solutions and products comprise:
•
Merchant Acquiring:
card acceptance and payment processing solutions for merchants;
•
Software:
integratedpoint-of-sale(“POS”)softwareandhardware,principallyservingtherestaurantindustry,including
Unity, our cloud-based POS offering, whichenables easier integration ofour software andacquiring propositions into asingle
bundle;
4
•
Cash Management:
instant
cash digitalizationsolutions in amerchant’sstore through cloud-connectedcash vaults, paired
with digital accounts through which merchants can track deposits and paysuppliers;
•
Lending:
access to working capital through merchant cash advancesand business credit, underwritten using our proprietary
visibility into merchants’ transaction activity; and
•
Alternative Digital Products(“ADP”):
prepaid solutions (airtime,data, electricity andgaming), bill payments,and supplier-
enabled payments, which allow community merchants todigitize payments to their suppliers atcompetitive pricing and serve
as an entry point into the broader Lesaka merchant ecosystem.
We are dependent on a limited number of software and hardware suppliers. Refer to “Item 1A. Risk Factors” included herein for
more information.
The proposed acquisition of Bank Zero, which is subjectto conditions precedent described herein, primarily deepens, rather than
widens, our merchant proposition. Our merchant product suite doesnot change; instead, we expect the banking license will enable us
to enhanceit inways previouslyunavailable tous asa non-bankincluding same-daysettlement foracquiring, integratedmerchant
bankaccounts,savingsaccountsandremittanceproducts,strengtheningthecompetitivenessandcompletenessofourofferingto
existing and prospective merchants.
Merchant Competitive Landscape
Weestimate an addressablerevenue pool ofapproximately ZAR 130billion as ofthe date ofthis Annual Report,of which we
believe we have approximately 3% marketshare. This estimate isderived from management analysis using arange of external sources
including but not limited to: Population ReferenceBureau, IMF Database, Global Findex Report - 2025, GlobalData Analytics – SA
Card andPayments Opportunitiesand Risksto 2028;July 2024,BDO –Unlocking potentialFintech inAfrica; June2024, Boston
Consulting Group– Reimaginingthe Futureof Finance;May 2023),peer companypublic quarterlyresults combinedwith internal
data,assumptionsandmanagement’sbestestimates.Wedifferentiateourselvesbybeingacustomer-led,ratherthanproduct-led,
provider.Theindustryremainshighlyfragmented,withmostcompetitorsprovidingoneortwoproducts,whileweprovidean
integrated suite of solutions; we believe no single competitor offers the rangeof solutions we provide. We accordingly face a different
competitive universein each productarea: traditional SouthAfrican banks arethe principal competitorsin core merchantacquiring,
while software, cash management and alternative digital products arecontested by a fragmented set ofspecialist vendors ranging from
traditional banks, digital lenders, payment service providers and fintechs.
2. Consumer
Consumer Market
Consumer focuses onindividuals who have historicallybeen excluded from, orunderserviced by,traditional financial services.
Althoughourproductsaredesignedforconsumersatthelowersocioeconomicendofthemarket,theinfrastructureandproduct
offering allow for a frictionless move upstream to a wider market ofconsumers.
Thereareapproximately12.0millionpermanentgrantbeneficiariesinSouthAfrica,andapproximately8.0millionpeople
receive a Social Relief of Distress (“SRD”) grant each month, according to the South African Social Security Agency (“SASSA”). As
of June 30, 2026, we had approximately 2.1 million active consumers of which approximately 89%are permanent grant beneficiaries
and approximately 174,000 activepayouts cardholders. We believe that forconsumers receiving welfare grantsfrom the SouthAfrican
government, noother provideroffers atransactional account,lending andinsurance productwithin oneecosystem. Ourproposition
includes a distinctive “last mile” distribution model: we take our services to rural and peri-urban communities across the country,and
throughdigitallyenabledonboardingsupportedbyBonngwe,ourproprietarycustomerrelationshipmanagementengine.Our
consultants can open an account and issue a physical card at the point of applicationin under five minutes.
The acquisitionof BankZero, whichis subjectto conditionsprecedentdescribed herein,is expectedto materiallywidenthe
consumermarketwecanaddress.Ourtraditionaladdressablemarketcomprisestheapproximately12milliongrantbeneficiaries
described above. Bank Zero’sdigital banking platform and licenseenable us to increase this addressablemarket to approximately 24
million people, throughthe unlock of afurther approximately 12million salaried individuals,a segment positionedabove our grant-
beneficiary base on the income pyramid and for which Bank Zero’s low-cost, digital-first banking proposition is well suited. This is a
targeted expansion, based on the product offeringwe intend to launch for this segment. Our existing consumer productsuite does not
change as a result; rather, the banking licenseand Bank Zero’s deposit-taking capabilities allow us to extendour transactional, lending
and insurance offerings to this broader population over time.
5
Consumer Solutions
Our consumer solutions provide banking,credit and insurance capabilitiesthat anchor our relationshipwith a consumer andgrow
with their needs over time. Our consumer product offeringincludes:
•
Transactional accounts:
our low-cost transactional account, accessible via card, mobile application, web and USSD. USSD
is animportant channelfor consumerswith limitedor nodata connectivity.Consumers usea linkeddebit cardand mobile
app towithdraw cash,make purchasesand paybills, formingthe anchorrelationshipfrom whichwe cross-selladditional
financial services
•
Lending:
short-term, unsecuredpersonal loansto qualifyingconsumers, underwrittenusing ourvisibility ofcash flowsof
their accounts. For many of our consumers, we provide their first access to regulatedcredit;
•
Insurance:
funeralinsurancepoliciesthathelpourconsumersprotecttheirfamiliesandassets,cross-soldthroughour
distributionnetworkandBonngweengine.Duringfiscal2026wealsolaunchedafuneralinsuranceofferingforgrant
beneficiaries outside the Lesaka consumer base; and
•
Payouts:
secure payout solutions forcorporate employees who receiveemployment-related payments from theiremployers
through us.
We do not have a South Africanbanking license and, therefore, we provide our banking offering throughan arrangement with a
third-party bank. Through the acquisition of Bank Zero,however, we expect to move our sponsorship arrangement fromAfrican Bank
to Bank Zero. Refer to “Item 1A. Risk Factors” included herein for more information.
Consumer Competitive Landscape
TheconsumermarketweaddresstodayisfocusedonSouthAfricangrantbeneficiariesandotherpayoutcardholders.We
estimate an addressablerevenue pool ofapproximately ZAR 43billion as of thedate of this AnnualReport, of which webelieve we
have approximately 5% market share. This estimate is derived from management analysis using a range ofexternal sources including
but not limited to: South African National Treasury Database 2025/2026, SASSA Statistical Database, peer company public quarterly
results combinedwith internaldata, assumptionsand management’sbest estimates.Weface adifferentset ofcompetitors ineach
productarea:banksaretheprincipalcompetitorsfortransactionalaccounts,thelendingmarketisdominatedbymicro-finance
companies and the insurance market by insurance companies.
3. Enterprise
Enterprise Market
Enterprise serves clients withlarge ecosystems of billpayers,tenants, employees or constituents, providingtargeted solutions that
facilitate paymentsbetween consumersand businesses.Our networkcomprises morethan 650billers andover 50corporate clients
across South Africa as of June30, 2026, with deep integrations acrossmunicipal councils, utility providers, banks and mobile network
operators who leverage our technology to create readily scalable solutions.
Enterprise Solutions
Our Enterprise product offering is focused across three core verticals:
•
ADP:
integrationtechnologyenablingcustomersacrossSouthAfricatopurchaseprepaidsolutions(suchasairtime,
electricityorgaming)andpaybillsthroughchannelssuchasretailerdistributionnetworksanddigitalbankingapps.
Following the acquisition of MobileMart ProprietaryLimited (“MobileMart”) in February 2026, we have directintegrations
into the fourprimary mobile networkoperators in SouthAfrica, providing accessto preferentialrates and supplieravailability.
Our ADPofferingalso includes4All, amulti-store-of-valuevoucher developedby internalteams, whichis redeemableat
more than 40 partners;
•
Utilities:
a prepaid electricity submetering platform thatenables tenants to purchase andtop up prepaid electricity metersand
allows landlords to managetenant electricity usage without postpaidrisk. This is a low-churn,annuity-style revenue model,
serving approximately 382,000 active meters as of June 30, 2026, and;
•
Payments:
thegroup’sproprietarypaymenttechnology,includingourpaymentswitch,whichenablesustoinsource
componentsofthe paymentsvaluechain,createefficienciesandreducethird-partydependencies,togetherwithancillary
security and tokenization services offered to enterprise clients.
Enterprise also increasingly acts as the group’s central procurement engine for prepaid products: the bulk of merchant electricity
volumesarenowprocessedviatheenterprisesegment,reducingrelianceonthird-partyproviders,andweexpecttomigratethe
r
emaining ADP volumes offered in merchant to the enterprise segment.
6
TheacquisitionofBankZero,whichissubjecttoconditionsprecedentdescribedherein,isexpectedtoextendEnterprise’s
addressable product set into alliance bankingwhich provides banking capabilities andinfrastructure to third-party partners, avertical
thatwas previouslyunavailabletouswithoutabankinglicense. AlliancebankingleveragesBankZero’sexistingdigitalbanking
platform and our enterprise integration capabilities and is consistent with the division’scapital-light operating model.
Enterprise Competitive Landscape
Weestimate anaddressable revenuepool ofapproximately ZAR12 billionas ofthe dateof thisAnnual Report,of whichwe
believe we have approximately 9% marketshare. This estimate isderived from management analysis using arange of external sources
including but notlimited to: Electrum –The State of Value-Added Services in SouthAfrica; 2024, South AfricanNational Treasury
Database2025/2026,peercompanypublicquarterlyresultscombinedwithinternaldata,assumptionsandmanagement’sbest
estimates. As in Merchant and Consumer, we face competitors within each coreproduct; at the ADP product offering, our competitors
aretypicallyValue-AddedServices(“VAS”)aggregatorsandpaymentinfrastructureproviderswhereaswithinLesakaUtilities
Proprietary Limited, formerlyknown as RechargerProprietary Limited (“Utilities”),our competitors arethe prepaid electricityvendors
who area fragmentedcollection ofprivate companies.However,we believeno singlecompetitor participatesacross theintegrated
suite of products offered by our Enterprise Division.
Intellectual Property
We rely on a combination of trademark and copyright lawsand trade secret protections in SouthAfrica, as well as confidentiality
procedures and contractual provisions, to protect the intellectual propertyrights in our products and services.
In South Africa, we have registered intellectual propertyrights in respect of our tradingname (“Lesaka”, and derivatives thereof)
and certain productnames and devices(logos). In Setswanaand Sesotho (bothcommon languages spokenin certain Africancountries),
the word “Lesaka”means “kraal”, whichis an enclosureor pen typicallyused for livestock.Given the generalmeaning of theterm,
other businesses use the word in their names and trademarks as well. We may thus have difficulty protectingour use of the word. The
same applies to our decision to use the image of a foot and foot print as ourlogo.
Being a technology-drivencompany, ouremployees develop intellectualproperty used in theconduct of our business.Wealso
contractwithexternalserviceprovidersandconsultantstoassistinthedevelopmentofintellectualproperty.Whererelevant,the
contract concluded with therelevant employee / service provider/ consultant includes provisions forthe assignment of ownershipof
the intellectual property so created to us, as well as other contractual protectionsin relation to such intellectual property.
The industriesin whichwe competerely onthe useof technology,and anenhanced /improved technologyoffering canbe a
competitive advantage. There is no assurance that our intellectualproperty rights will not be challenged, invalidated, or circumvented;
that others will not assert intellectual propertyrights to technologies that are relevant tous; or that our rights willgive us a competitive
advantage. Inaddition, thelaws ofcertain countriesmay notprotect ourproprietary rightsto thesame extentas thelaws ofSouth
Africa.For additionalinformationregarding someof therisks relatingto ourintellectual propertysee Item1A—“RiskFactors —
Risks Relating to Our Business—
Defending our intellectual propertyrights or defending ourselves in infringementsuits that may be
brought against us is expensive and time-consumingand may not be successful
”.
Human Capital Resources
Our strong leadershiphelps enable usto take ontransformational projects, including ourfocus on buildingOne Lesaka, consistent
with our core values. Shifting our culture to enable our growth ambitions are a keyfocus area for us.
Our core values:
Integrity
— Go barefoot on the straight and narrow
Collective Wisdom
— We dance bettertogether
Entrepreneurial Spirit
— Blaze new trails
Ownership
— Call for the ball
Bias to Action
— Walk slow,run fast
Resilience
— Put one foot in front of the other
Empathy
— Walk in someone else’sshoes
Customer First
— Stand for your customer
Efficiency
— Every step counts
Meritocracy
— Recognize results, not roles
These are our values that underpin our mission to make financial inclusiona reality for all who have been underserviced.
7
Employee training and skills development
Investingin skillsdevelopmentis keyfor usto ensurethat wegrowthe besttalent.Our employeetraining anddevelopment
programs ensure that we have the required available skills and helps us to unlock talent. Offering development and career progression
is a key aspectof our employee valueproposition. Weoffer the followingdevelopment programs toenhance employee performance
and skills:
•
training programs;
•
formal training programs for people with disabilities;
•
leadership development programs;
•
unemployed and employed learnerships;
•
internships;
•
financial assistance to pursue further studies and obtain formal qualifications;
•
other in-house and cross-functional training to aid with career advancement;and
•
succession planning – training interventions to address scarce and critical skills.
Equal opportunity
Our equalopportunity approach hasnot changed, providinga conducivework environmentwhere talentfrom any background
can thrive is important tous. Having an inclusive anddiverse workforce which reflects our economicallyactive population and society
in general,is crucial forhelping the organizationattract and retaintalent and isimportant for long-term organizationalsuccess. Our
human capital team inpartnership with our leadersdrive recruiting and retaininga talented and diverse workforcewith special focus
on hiring previously disadvantaged groups whenever possible. We are committed to hiring qualified candidates without regard totheir
personal status,while takinginto accountthe uniquecircumstances affectingour operationsin SouthAfrica andthe needto uplift
previously disadvantaged groups. This commitment extends to all levels of ourorganization, including within senior management and
our board of directors.
As of June 30, 2026, the composition of our workforce was:
•
54% female and 46% male;
•
39.8% between 18 and 34 years old, 54.6% between 35 and 54 years old,and 5.6% over 55 years old; and
•
67% Black, 10% two or more races, 10% Indian and 13% White.
Wecontinueto striveto builda moreinclusive workforceand toenhance ourpay structuresby takingmeasures toeliminate
potential remuneration discriminationand to help close gender pay gapsto progress towards gender equalityat work. Wehave taken
positive strides towards a rewards philosophy that rewards high performanceand focuses on equal pay for work of equal value.
Employee compensation programs
Weare committedtoensuringthatallouremployeesarepaidfairandcompetitiveremuneration. Tothatend,weoffer the
following to our employees:
•
Access to a comprehensive medical, dental, and vision plan that our employeeshave the option to join;
•
Access to a defined contribution retirement plan that our employees havethe option to join;
•
Participation in our Lesaka Employee Share Ownership Plan for qualifyingemployees;
•
Paid sick, study, annualand family responsibility leave;
•
Maternity and paternity benefits;
•
Life and disability insurance coverage;
•
Financial aid to fund tertiary education for children of employees;
•
Employee assistance programs; and
•
Product discounts.
Annualincreasesandincentivecompensationarebasedonmerit,whichiscommunicatedtoemployeesatonboardingand
documented as part of our annual remuneration review process.
8
Our numberof employeesallocatedon asegmentalandgroupbasis asof theyears endedJune 30,2026,2025 and2024,is
presented in the table below:
Number of employees
2026
2025
2024
Consumer
(1)
1,514
1,542
1,333
Merchant
(1)
1,883
1,957
1,059
Enterprise
(1)
279
213
130
Total segments
3,676
3,712
2,522
Group
(1)
185
16
9
Total
3,861
3,728
2,531
(1)Fiscal2026includesoneexecutiveofficerinEnterpriseandfourexecutiveofficersinGroup.Fiscal2025includesfive
executive officers in Group. Fiscal 2024 includes one executive officer in each of Consumer and Merchant and two executive officers
in Group.
On afunctional basis,as ofJune 30,2026, 5of ouremployees wereour namedexecutive officers,13 seniormanagers, 1,544
wereemployedinsalesandmarketing,700wereemployedinfinanceandadministration,423wereemployedininformation
technology and development and 1,176 were employed in operations.
Health and safety laws and regulations
Wearesubjectto variousSouthAfricanlaws andregulationsthat regulatethe healthandsafety ofourSouth African-based
workforce, includingthose laws monitoredby theSouth AfricanDepartment ofEmployment andLabour whichstipulates thelegal
framework withinwhich weneed tofunction. Thisframework comprisesthe Compensationfor OccupationalInjuries andDiseases
Act, No. 130 of 1993;the Occupational Health andSafety Act, No. 85of 1993; the BasicConditions of EmploymentAct, No. 75 of
1997; the Labour RelationsAct, No. 66 of 1995;the National Minimum WageAct, No. 9 of 2018;the Employment Equity Act,No.
55 of1998; the UnemploymentInsurance Act,63 of2001 and theUnemployment InsuranceContributions Act,No. 4 of2002; and
the Broad-BasedBlack EconomicEmpowerment Act,No. 53of 2003.Wehave implementedand regularlyupdate humancapital-
related policies that are designed to ensure compliance with applicableSouth African laws and regulations.
9
Our Executive Officers
The table below presents our executive officers, theirages and their titles:
Name
Age
Title
Ali Mazanderani
44
Executive Chairman and Director
Dan Smith
54
Group Chief Financial Officer and Director
Naeem E. Kola
53
Group Chief Operating Officer and Director
Lincoln Mali
58
Chief Executive Officer: Southern Africa and Director
Steven Heilbron
61
Head of Corporate Development and Director
Ali Mazanderani
has been our ExecutiveChairman since February 1,2024. He is a fintechinvestor and entrepreneur.He is the
co-founderandchairmanof Teya,a pan-Europeanfintech. Heis alsoa non-executivedirectoron theboard ofseveral companies
including Thunes (Singapore basedprivate fintech), Kushki (LatinAmerican payments company) andis the presidentof The European
Digital Payments Industry Alliance(EDPIA). He was previouslyon the board ofseveral other leading paymentscompanies globally
includingStoneCo(Nasdaq:STNE)inBrazilandNetworkInternationalHoldingsPlc(LSE:NETW)intheMiddleEast.Hewas
formerly a Partner at Actis, a London-based emerging market private equity firm, wherehe led multiple landmark fintech investments
globally. Prior to his career at Actis, Mr.Mazanderani advised private equity and corporate clients for OC&C Strategy Consultants in
LondonandservedasleadstrategyconsultantforFirstNationalBankbasedinJohannesburg.Heholdspostgraduatedegreesin
Economics fromthe University ofPretoria, Oxford Universityand the LondonSchool of Economics,an MBA fromINSEAD and a
Masters in Business Law from the University of St Gallen.
Dan Smith
has been our Group Chief Financial Officer since October 1, 2024. He has held various roles in the financial services
sectorsinSouthAfricaandtheUnitedKingdom.Mr.SmithisadirectorofADvTECHLimited(JSE:ADH).HefoundedDLS
Advisors in2020 andwas itsCEO untiljoining VCPin 2021,where hewas employeduntil September2024. Priorto that,he was
employed by StandardBank South Africafor a numberof years wherehe accumulated vastcorporate financeexperience, including
heading theMergers &Acquisitions investmentbanking team.He holdsa Bachelorof Commerce,a Bachelorof Accountingand a
Higher Diploma in TaxationLaw from the University ofWitwatersrand andis a Chartered Accountant (SA).He is a Graduate of the
Oxford FintechProgramme fromthe SaïdBusinessSchool, UniversityofOxford. HealsohasanAdvancedValuation
Techniques certification fromthe Gordon Instituteof Business Scienceand a Diplomain Strategic ClientManagement fromthe UCT
Graduate School of Business.
Naeem E. Kola
has been ourGroup Chief OperatingOfficer since October 1,2024, and waspreviously our GroupChief Financial
Officer from March 1, 2022 until September 30, 2024. Mr. Kola has progressively held senior finance roles in Dubai, most notablyas
Chief Financial Officer of the EmergingMarkets Payments Group (“EMP”), a high-growthfintech business that grew materially and
successfully concluded and integratedfive acquisitions duringMr. Kola’s six-year tenure as ChiefFinancial Officer. Prior to becoming
Chief Financial Officer, Mr. Kolawas Senior Vice Presidentfor Investments, Strategyand Business Planningat Network International.
Since the acquisitionof EMP byNetwork International in2017, Mr.Kola had been anOperations Director andStrategic Advisor to
the emerging market private equity firmActis, where he again focused on fintech businesses.He is a qualified Chartered Accountant
(SA) and a member of the South African Institute of Chartered Accountants.
Lincoln Mali
has been our ChiefExecutive Officer: Southern Africa sinceMay 1, 2021.Mr. Mali is a financialservices executive
with over 25 yearsin the industry.Until April 2021, hewas the Head ofGroup Card and Paymentsat Standard BankGroup, having
served in many different roleswithin that organization since 2001. Mr. Mali chairedthe board of directorsof Diners Club SouthAfrica
until April 2021, andwas a member of theCentral and Eastern Europe,Middle East and Africa BusinessCouncil for Visa.Mr. Mali
holdsBachelorofArts(BA)andBachelorofLaws(LLB)degreesfromRhodesUniversity,anMBAfromHenleyManagement
College,variousdiplomasandattendedanAdvancedManagementProgramatHarvardBusinessSchool.In2026,Mr.Maliwas
awarded an honorarydegree in HumanServices from UrbanCollege of Boston,a certificate ofrecognition from theCity of Boston
for his global contributions to philanthropy, youth development and community empowerment,as well as the 2026 Legacy Award, an
official citation from the Massachusetts Senate.
StevenHeilbron
joinedusfollowingtheacquisitionof Connectin2022.Mr.Heilbronhas twodecadesoffinancialservices
experience,havingspent19yearsworkingforInvestecinSouthAfricaandtheUK,whereheservedasGlobalHeadofPrivate
Banking and Joint Chief Executive Officer of Investec Bank plc. He led a private consortium that acquired Lesaka Cash Management
ProprietaryLimited,formerly CashConnectManagementSolutionsProprietaryLimited, in2013.Mr.Heilbron haspresided over
significantorganicgrowthin therebrandedConnectGroup,aswellasspearheadingthesuccessfulacquisitionandintegrationof
Kazang and EFTpos acquired fromthe Paycorp Group in February2020. He is a member ofthe South African Institute ofChartered
Accountants.
10
Financial Information about Geographical Areas and OperatingSegments
RefertoNote21toourauditedconsolidatedfinancialstatementsincludedinthisAnnualReport,whichcontainsdetailed
financial information about ouroperating segments for fiscal 2026, 2025and 2024. Revenues based onthe geographic location from
which the saleoriginated and geographiclocation wherelong-lived assets areheld forthe years endedJune 30, arepresented inthe
table below:
Revenue
(1)
Long lived assets
2026
2025
2024
2026
2025
2024
$'000
$'000
$'000
$'000
$'000
$'000
South Africa
679,021
624,846
537,594
403,085
392,098
286,700
India (MobiKwik)
-
-
-
-
-
76,297
Rest of the world
42,533
34,855
26,628
8,609
3,055
2,548
Total
721,554
659,701
564,222
411,694
395,153
365,545
(1)Refer toNote 16to ouraudited consolidatedfinancial statementsincludedin thisAnnual Reportwhich containsdetailed
financial information about our revenue for fiscal 2026, 2025 and 2024.
Government Regulation
Wearesubjecttoawiderangeoflaws,regulations,andlegalrequirementsglobally,includingthosethatmayapplytothe
products andservices offeredby ourbusinesses, andthose thatapply moregenerally tocompanies operatingin eachjurisdiction in
whichweareincorporatedand/oroperate,includingrequirementsrelatedto(amongothers)privacy,datastorageandprotection,
advertising, employment relations. These requirements are continually evolving, and they can be unclear and varysignificantly across
jurisdictions.Wemonitormaterialregulatorydevelopmentsinthejurisdictionsinwhichweoperateandmaintainproceduresand
controls designedto supportcompliance withapplicable legaland regulatoryrequirements. Anumber ofthe productsand services
offeredbyourbusinessesaresubjecttoregulationbycertainregulatoryauthorities/governmentbodies,andrequireustohave
appropriate licences, approvals, registrations, authorizations orregulatory approvals.
South Africa
Our South African operations are subject to the oversight of several regulatoryauthorities, including the following:
The Prudential Authority, which is housed within the South African Reserve Bank, is responsible for supervisingthe soundness,
governance, risk management and capitaladequacy of financial institutions. Our insurancebusiness, Lesaka Life Limited,is a licensed
life insurerand subjectto prudentialsupervisionand oversightby thePrudential Authority.The PrudentialAuthority exercisesits
functions under theFinancial Sector RegulationAct, 2017 andapplicable sector laws.The Act establishesSouth Africa's "Twin Peaks"
regulatory frameworkand createsthe PrudentialAuthority andthe FinancialSector ConductAuthority (discussedbelow). TheAct
grants the Prudential Authority extensive supervisory,inspection, enforcement and information-gathering powers.
Lesaka LifeLimited isalso subjectto regulationunder theInsurance Act,2017 andLong-term InsuranceAct, 1998(together
with the applicable subordinated legislation). The Insurance Act is the primary prudential statute governinglicensed insurers. For life
insurers suchas LesakaLife Limited,the Actregulates: licensingand ongoingauthorization requirements;requirements regarding
capital adequacy,solvency andfinancial soundness;governance, riskmanagement andinternal controlframeworks; fitand proper
requirements for directors,key persons and significantowners; regulatory reportingand disclosure obligations; andcompliance with
prudential standards issued by the Prudential Authority.
RemainingoperativeprovisionsoftheLong-termInsuranceActareaimedatconductofbusinesspolicyholderprotection.
Togetherwith thePolicyholder ProtectionRules, theAct regulatesmatters suchas: policyterms andcontractual requirements;fair
treatmentofpolicyholders;premiumcollection,claimshandlingandsettlementprocesses;restrictionsoncommissionsand
intermediary remuneration; and certain conduct-related requirements.
The National Payment System Department is a department within the SouthAfrican Reserve Bank responsible for the regulation
of South Africa's NationalPayment System. Afew of our groupcompanies participate inthe National PaymentSystem, either asan
authorized system operator(an SO) or aregistered third-party paymentsprovider (a TPPP).These entities aresubject to compliance
with the National Payment System Act, 1998 (together withthe applicable directives published thereunder). TPPPs (which are subject
to regulation interms of Directive 1of 2007) are requiredto ensure that paymentsto third personsare processed inaccordance with
the applicableregulatory frameworkand thatproceeds ofpayment instructionsare handledin asecure andcontrolled manner.SOs
(which are subjectto regulation in termsof Directive 2 of2007) are requiredto ensure the reliable,secure and efficientoperation of
payment infrastructure that supports payment clearing and settlement activities. Both TPPPs and SOs are subject toongoing oversight
by theNational PaymentSystem Departmentand mustcomply withdirectives relatingto, amongother matters,conduct withinthe
National PaymentSystem, operationalresilience, cyber-riskmanagement, reportingobligations andany conditionsattached totheir
registration or authorization.
11
TheNationalPaymentSystemDepartmentiscurrentlyreviewingandmodernisingtheregulatoryframeworkapplicableto
payment system participants (which includes TPPPs and SOs) andhave issued drafts of the proposed newdirective, which is expected
to introduce a more comprehensive authorization and oversight framework for payment service providers. The proposedreforms have
notyetbeenfinalised.Accordingly,affectedgroupentitiescontinuetocomplywiththeexistingregulatoryframeworkwhile
monitoring developments in the proposed reforms.
Governance of the national payments system isalso undergoing a significant transformation as part ofthe South African Reserve
Bank’s ongoing work to strengthenthe regulatory, supervisory, oversight and operational architecture neededto support safe,efficient,
transparent andresilient payments inSouth Africa.With effectfrom September2, 2026, theSouth AfricanReserve Bank withdrew
its recognitionof thePaymentsAssociationofSouthAfrica asthe paymentsystemmanagement bodyandintroduced transitional
arrangementsrelatingtoexistingsystemoperatorauthorizationsandthird-partypaymentproviderregistrations.Existing
arrangements, rules, agreements and authorizations remain in force unlessotherwise determined by the South African Reserve Bank.
Furthermore, certain entities are authorized financial services providers (“FSPs”) under the Financial Advisory and Intermediary
Services Act, 2002. The Act regulates the rendering offinancial advice and intermediary services to clients and establisheslicensing,
fit-and-proper,conduct and supervisoryrequirements forfinancial servicesproviders and theirrepresentatives. AuthorizedFSPs are
subject to ongoing supervision and enforcement by the Financial Sector Conduct Authority (under thepurview of the Financial Sector
Regulation Act, 2017). Authorized FSPs are required to conduct their business honestly,fairly, with due skill, care and diligence, and
in the interests of their customers while maintaining compliance with applicableconduct standards and regulatory requirements.
Our consumer lending business, operated by Lesaka Financial Services Proprietary Limited, is a registered credit provider under
the National CreditAct, 2005,which serves toregulate theprovision ofcredit, protectconsumers, promoteresponsible lendingand
prevent over-indebtedness.The Act requires registeredcredit providers to conductaffordability assessments beforeextending credit,
prohibits recklesslending andunfair creditpractices, regulatescredit marketingand disclosures,limits or prescribesmaximum fees
and interest charges, and grantsconsumers extensive rights relatingto information, privacy and fairtreatment. The Act also provides
mechanismsfordebtreviewanddebtreorganisationwhereconsumersbecomeover-indebted,andestablishestheNationalCredit
Regulator and National Consumer Tribunal tosupervise compliance and enforce the legislation.
Further,boththelifeinsurerandthefinancialservicesprovidersarealsosubjecttocompliancewithFinancialInstitutions
(Protection of Funds)Act, 2001, whichseeks toregulate the integrity, safety, andproper administration ofclient funds heldby financial
institutions. The Act imposes duties on financial institutionsand relevant persons concerning the custody,investment, administration
and protection of money and other property entrusted to them.
The FinancialIntelligenceCentre Act,2001 establishesSouthAfrica's anti-moneylaundering,counter-terroristfinancing and
counter-proliferationfinancingframeworkandimposesarangeofobligationsonentitiesclassifiedasaccountableinstitutions.A
number ofthe groupentities alsoqualify asaccountable institutions.The Actrequires accountableinstitutions toimplement arisk-
based compliance framework; conduct customer due diligence and beneficial ownership verification; screen against targeted financial
sanctions; monitor and reportprescribed transactions and suspiciousactivities; maintain appropriate recordsand training; and establish
appropriategovernanceandoversightofcompliancewiththerequirementsoftheAct.TheFinancialIntelligenceCentre isSouth
Africa’sfinancialintelligenceunit,mandatedtoassistinidentifyingtheproceedsofcrime,andincombatingmoneylaundering,
terrorist financingand thefinancing ofproliferation ofweapons ofmass destructionthrough itssupervision ofcompliance withthe
Act.
As a customer-focused business operating in the consumerdomain, we are also subject to(i) the Consumer Protection Act, 2008,
which regulates the supply of goods and services to consumers; and (ii) the Protection of Personal Information Act, 2013 which seeks
to protectpersonal informationrelating toidentifiable naturaland juristic persons,where applicableand regulatehow organisations
collect, use, store, share and delete, destroy or de-identify that information.
Outside of South Africa
In Botswana, the key legislation is the Electronic PaymentServices Regulations, 2019 and the Financial IntelligenceAct, 2022.
In this regard, Lesaka PaymentServices Botswana Proprietary Limitedholds an electronic paymentsservices (EPS) provider licence
issued by the Bank of Botswana and qualifies as an accountable institution under the Financial Intelligence Act, 2022. The Electronic
PaymentServicesRegulationsrequirelicenseestomaintainappropriategovernancestructures,internalcontrols, riskmanagement
frameworks, technological infrastructure, capital adequacy and liquidityarrangements. They also impose requirements relating to the
safeguardingofcustomerfunds;executionofpaymenttransactions;recordretention;outsourcingarrangements;andregulatory
reporting. TheFinancial IntelligenceAct, togetherwith therelevant regulations/ guidelines,regulates themeasures tobe takento
preventand/oridentifymoneylaundering,terroristfinancingandproliferationfinancing.InBotswana,theFinancialIntelligence
Agency, is mandated to request, receive and disseminate information to investigatory,supervisory and other competent authorities, as
well as comparable bodies, to support the prevention, detection,investigation and prosecution of financial offences, includingmoney
laundering, terrorist financing andthe financing of proliferation of weaponsof mass destruction, and toassist supervisory authorities
in carrying out their functions under the Act.
We are also subject to (i) the Consumer Protection Act, 2018, which regulates the provision of goods and services to consumers;
and (ii) Data Protection Act, 2024 which seeks to protect individuals’ personal data and regulate how organisations collect, use, store,
d
isclose and destroy that data.
12
In Namibia,the keyregulationis thePaymentSystem ManagementAct, 2023(together withthe applicabledeterminations/
notices published thereunder). In thisregard, two of our entities, LesakaOnline Namibia (Proprietary) Limitedand Lesaka Merchant
TechnologiesNamibia (Proprietary)Limited, are licensedpayment service providers,subject to regulationby the Bankof Namibia.
The Act regulates the licensing and ongoing supervision ofpayment service providers, the authorization of payment system operators,
safeguarding and trust-account arrangementswhere applicable, operational andtechnical requirements, consumerprotection, reporting
and the Bank of Namibia’sinspection and enforcement powers.
In Kenya, privacylaw is primarily governedby the Data ProtectionAct No. 24 of 2019,which applies to allpublic and private
organisations.In the course of conducting our business in Kenya, we are obliged to comply with theprovisions of the Act in relation
to the collection, processing, storage and transfer of all personal data.
The above focusses onthose jurisdictions inwhich we have separatelyincorporated entities.In jurisdictions wherewe operate
but do not have incorporatedentities, we comply with allapplicable legal and regulatoryrequirements that apply to theproducts and
services offered by our businesses.
For more information on therisks relating to our regulatory environment,see the section titled Item 1A—“RiskFactors—Risks
Relating to Government Regulation.”
Corporate history
Lesaka was incorporatedin Florida inMay 1997 asNet 1UEPS Technologies, Inc. andchanged its nameto Lesaka Technologies,
Inc. on May 12, 2022. In 2004, Lesaka acquired Net1 Applied TechnologyHoldings Limited (“Aplitec”), a public company listed on
the JohannesburgStock Exchange(“JSE”). In2005, Lesakacompleted aninitial publicofferingand listedon theNASDAQ Stock
Market. In2008, Lesakalisted onthe JSEin asecondary listing,which enabledthe formerAplitec shareholders(as wellas South
African residents generally) to hold Lesaka common stock directly.
Available information
Wemaintain a websiteat www.lesaka.tech.Our Annual Report,Quarterly Reports onForm 10-Q, CurrentReports on Form 8-
K, and amendments to those reports, as well as our proxy statements, are available free of charge through the “SEC filings” portion of
our website, as soon as reasonably practicable after they are filedwith the SEC. The information contained on, or accessible through,
our website is not incorporated into this Annual Report.
The SECmaintains awebsite atwww.sec.govthat containsreports, proxyand informationstatements, andother information
r
egarding issuers that file electronically with the SEC.
13
ITEM 1A. RISK FACTORS
OUR OPERATIONSAND FINANCIALRESULTSARE SUBJECTTO VARIOUSRISKS ANDUNCERTAINTIES,
INCLUDINGTHOSEDESCRIBEDBELOW,THATCOULDADVERSELYAFFECTOURBUSINESS,FINANCIAL
CONDITION, RESULTSOF OPERATIONS,CASH FLOWS, AND THE TRADING PRICE OF OUR COMMON STOCK
Risks Relating to Our Business
Toachieve our mission, ourstrategy is to buildand operate the leadingSouth African full-servicefintech platform offering
cash management,payment andfinancial services.Our futuresuccess, andour abilityto sustainprofitability andpositive cash
flow, is substantially dependent on our ability to completethe implementation of this strategy successfully.
Our board conducted an extensivereview of our business strategyand operations in July 2020,and decided to focus onour South
Africanoperationsand otherbusiness opportunitiesin SouthAfrica and,to alesser extent,the restof theAfrican continent.Over
recent years, we have pursued strategic acquisitions, technology investments, businessintegration initiatives, and the expansion of our
financial services offering. Thesehave included the integrationof Lesaka CashManagement Pty Ltd, Adumo(RF) Pty Ltd,and Lesaka
Utilities PtyLtd, aswell asgrowth acrossthe Group’sConsumer,Merchant, andEnterprise divisions.The proposedacquisition of
Bank Zero described herein remains subject to the fulfilment or waiverof applicable conditions precedent. The successful realization
of anticipatedbenefits remainssubject tovarious internaland externalfactors, includingmarket conditions,competitive pressures,
regulatory developments, technology advancements, integration execution, and customeradoption of products and services.However,
we cannot assure you that we will be able to complete our strategy successfullyand sustain profitability and positive cash flow.
Even where we areprofitable, achieving net incomedoes not necessarily ensurepositive cash flow.Failure to effectively execute
on our strategy, achievetargeted synergies, sustain revenuegrowth, manage costs,or maintain positivecash generation couldadversely
impactfinancialperformance,strategicobjectives,andlong-termshareholdervalue.Wethereforecannotassureyouthatwewill
sustain or increase profitability in the future and if we do not, our business will be materiallyand adversely affected.
Wehave a significantamount of indebtednessthat requires usto complywith restrictive andfinancial covenants.If we are
unable to comply with these covenants,we could default on this debt,which would have a material adverse effecton our business
and financial condition.
As of June 30,2026, we hadaggregate borrowings outstandingof ZAR 3.5 billion($210.7 million translatedat exchange rates
as of June30, 2026). We partially fundedcertain of ouracquisitions through SouthAfrican bank borrowings.We, together with Lesaka
Technologies ProprietaryLimited (“Lesaka SA”) and the majority of Lesaka SA’sdirectly and indirectly wholly-owned subsidiaries,
haveagreedto guaranteethe obligationsof LesakaSA andof theotherborrowersunder certainof theborrowingsto thelenders.
Certain of these borrowings contain customary covenantswhich include a requirement for Lesaka SA to maintainspecified Net Debt
to EBITDA and InterestCover Ratios (as definedin the lending agreements)and restricts the abilityof Lesaka SA, and certainof its
subsidiaries to make certain distributions with respect to their capital stock,prepay other debt, encumber their assets, incur additional
indebtedness,makeinvestmentabovespecifiedlevels,engageincertainbusinesscombinationsandengageinothercorporate
activities.
The borrowings through our merchant lending operations, through Lesaka Capital Proprietary Limited (formerly known as Cash
Connect CapitalProprietary Limited)(“Lesaka Capital”)and LesakaFuel ProprietaryLimited (formerlyknown asK2020 Connect
Proprietary Limited) (“Lesaka Fuel”), include a ZAR 400 million revolving creditfacility agreement. This facility contains customary
covenants that require theborrowing parties tocollectively maintain aspecified capital adequacy ratio,restrict the ability ofthe entities
to make certaindistributions with respectto their capitalstock, encumber theirassets, incur additionalindebtedness, make investments,
engage in certain business combinations and engage in other corporate activities.
These security arrangements and covenants mayreduce our operating flexibility orour ability to engage inother transactions that
maybebeneficialtous.Ifweareunabletocomplywiththecovenants,wecouldbeindefaultandtheindebtednesscouldbe
accelerated. If this were to occur, we might not be able to obtain waivers of default or to refinance the debt with another lender and as
a result, our business, financial condition and stock price would suffer.
Failure to complete,or delays in completing,the Bank Zero acquisition,could materially and adverselyaffect our resultsof
operations and stock price.
Thecompletionof theBankZeroacquisitionis subjecttoanumberofconditionsprecedent,includingreceiptofregulatory
approvals and certain third-party consents. Some of these conditions areoutside our control.
Tocompletetheacquisition,wemustmakecertainfilingswith,andobtaincertainconsentsandapprovalsfrom,various
governmental and regulatory authorities.The regulatory approval processes maytake a lengthy period of time to complete,and there
can be no assuranceas to the outcomeof the approval processes,including the undertakingsand conditions thatmay be required for
approval, or whether the regulatory approvals will be obtained at all.
In addition,the completionof theacquisition isconditionalon, amongother things,no actionor circumstanceoccurring that
w
ould result in a material adverse effect on the Bank Zero’sbusiness operations or financial results.
14
We cannotprovide any assurance regarding if orwhen all conditions precedent to the acquisitionwill be satisfied or waived. If,
for any reason, the acquisition isnot completed, or its completion ismaterially delayed and/or the transaction agreement is terminated,
the market price of our common stock may be materially and adverselyaffected.
In addition, if the acquisition is not completed for any reason, there are risks that (i) the announcement of the acquisition and (ii)
the dedicationof management’sattention and otherof our resourcesto the completionthereof, could havea negative impacton our
relationships with our stakeholdersand could have a materialadverse effect onour current and future operations,financial condition
and prospects.
Wemay not realizesome or allof the anticipatedbenefits from theBank Zero acquisitionor we mayfail to realizesome or
all of the expected benefits of certain recently integrated acquisitions, including Adumoand Utilities
EvenifwecompletetheBankZeroacquisition,wemayexperienceunforeseenevents,changesorcircumstancesthatmay
adversely affect us. Forexample, we mayincur unexpected costs,charges or expenses resultingfrom the transaction,including charges
tofutureearningsifBankZero’sbusinessdoesnotperformasexpected.OurexpectationsregardingBankZero’sbusinessand
prospectsmay notbe realized,includingas aresult ofchanges inthe financialcondition ofthe marketsthat BankZero serves.In
addition, there are risks associated with Bank Zero’s product and service offerings orresults of operations, including the risk of failing
to comply with certain regulatory rules required to operate its business.
Further,thereare numerouschallenges, risksandcosts involvedwith integratingthe operationsof BankZero withours. For
example, integratingBank Zerointo ourcompany willrequire significantattention fromour seniormanagement whichmay divert
their attention from our day-to-day business. The difficulties ofintegration may also be increased by cultural differences between our
two organizations and the necessity of retaining and integratingpersonnel, including Bank Zero’skey employees.
Our Sarbanes-OxleyAct of2002 (“Sarbanes”)management certificationand auditorattestation regardingthe effectivenessof
our internalcontrol over financialreporting as ofJune 30, 2026,includes the operationsof Adumo andUtilities as theseentities are
now in scopefor this attestation.However, theaforementioned entities arestill in the processof becoming SOXcompliant. Refer to
Item 9A for furtherdetail. The requirement toevaluate and report on ourinternal controls also applies tocompanies that we acquire,
includingBankZero.The futureintegrationofBankZero intoourinternalcontrolover financialreportingis expectedtorequire
significant time and resources fromour management and other personneland is expected to increaseour compliance costs. If wefail
tosuccessfullyintegratetheoperationsofBankZerointoourinternalcontroloverfinancialreporting,ourinternalcontrolover
financial reporting may not be effective.
As such, if some orall of the aforementionedrisks materialize, our ability tosuccessfully integrate Bank Zero’soperations into
our businessand realizethe associatedbenefits ofthat acquisitioncould beadversely impacted.This couldlead tothe recordingof
material impairments, and as a result, our financial condition, results ofoperations, cash flows and stock price could suffer.
We may undertakeacquisitions that could increase our costs or liabilities or be disruptive to our business.
Acquisitions arean integral partof our newgrowth strategyas we seekto expand ourbusiness and deployour technologiesin
new marketsin SouthernAfrica. However,we maynot beable tolocate suitableacquisitioncandidates atprices thatwe consider
appropriate.Ifwedoidentify anappropriateacquisitioncandidate,wemaynot beable tosuccessfullynegotiatethetermsofthe
transaction, finance itor, if thetransaction occurs, integrate thenew business intoour existing business.These transactions mayrequire
debt financing or additional equity financing, resulting in additional leverageor dilution of ownership.
Acquisitions of businessesor other materialoperations and theintegration of theseacquisitions or theirbusinesses will require
significant attentionfrom membersof our seniormanagement team,which maydivert theirattention fromour day-to-daybusiness.
The difficultiesof integrationmay beincreased bythe necessityof integratingpersonnel withdisparate businessbackgroundsand
combiningdifferentcorporate cultures.Wealso maynot beable toretain keyemployees orcustomersof anacquired businessor
realizecostefficienciesorsynergiesorotherbenefitsthatweanticipatedwhenselectingouracquisitioncandidates.Acquisition
candidates may have liabilities or adverse operating issues that we fail todiscover through due diligence prior to the acquisition.
Wemayneedto recordwrite-downsfrom futureimpairments ofgoodwill orother intangibleassets, whichcould reduceour
future reported earnings.
WemayidentifyadditionalerrorsrelatedtoourValueAddedTax(VAT)processes,indirecttaxpositions,orsimilar
transaction-level tax matters, which could require future adjustments toour financial statements.
Duringthesecondquarteroffiscal2026,weidentifiederrorsinthehistoricalVATtreatmentofcertaingamingvoucher
transactions within our Merchant business. Although wehave completed an initial review of the matter anddetermined to correct the
identified errors through revisions to our previously issued financial statements, our review is ongoing. Refer to Note 1 to our audited
consolidated financialstatements foradditional information.The errorarose fromthe incorrectapplication ofindirect taxrules, the
configuration of underlying systems, and operational practices involvingdownstream vendors.
15
While we haveimplemented remedial actions,including enhancing oursystem of internalcontrol and conductingfurther analyses
with our externaladvisors, there isa risk thatwe have notidentified all errorsassociated with thismatter.Additional issuesmay be
discoveredaswecontinuetoevaluatehistoricalperiods,refineourtechnicaltaxconclusions,orfrominadequateupdatestoour
systems. Moreover,similar errorscould existin accountingand reportingfor otherindirect taxtransactions particularlywhereour
businessinvolvescomplexmulti-partyarrangements,voucherproducts,commissions,oractivitiesinvolvingnon-registeredVAT
vendors.
Identificationofadditionalerrorsmayrequireustorecordfurtheradjustments,amendorrestatepreviouslyissuedfinancial
statements, update our tax filings,make additional payments of tax,penalties, or interest, ormake further enhancements to our internal
control processes. Any such developments could result in increased compliance costs,additional administrative burdens, diversion of
managementattention,orinvestorperceptionsofweaknessesinourfinancialreportingortaxcomplianceprocesses.Ifmaterial,
additional errors couldalso adversely affectour financial condition,results of operations,liquidity,or internal controlover financial
reporting.
Geopolitical conflicts,including theconflict betweenRussia andUkraine andin the MiddleEast, mayadversely affectour
business and results of operations.
Global economic and geopoliticalconditions continue to influencethe environment in whichwe operate. Heightened geopolitical
tensions, including the conflict between Russia and Ukraine and ongoing conflicts in the Middle East,have contributed to volatility in
global financialmarkets and increasedmacroeconomic uncertainty.Wehave no directoperations, assets orrevenue exposurein the
affected regions. However, the indirect effects of these developments may adversely impact the South African operatingenvironment,
ourprimarymarket,includingthroughforeignexchangevolatility,inflationarypressures,tighterexternalfundingconditions,and
reducedconsumer affordability.While wedo notcurrently believethese developmentshave hada materialeffect onour financial
position,resultsof operationsorcash flows,geopoliticalconditionsremainfluidandtheir broaderconsequencesare uncertain.
A
continuationor escalationof theseconflicts,or theirexpansion tosurroundingareas, couldadverselyaffectour business,andany
material changes to our risk profile or financial position will be disclosed inaccordance with applicable regulatory requirements.
A prolonged economic slowdown or lengthy or severe recession in SouthAfrica or elsewhere could harm our operations.
A prolonged economicdownturn or recessionin South Africacould materiallyimpact our resultsfrom operations, particularly
in lightof electricitydisruptions, asignificantly weakUSD/ ZARexchange ratecompared withprevious periods,and ourstrategic
decision tofocus onour SouthAfrican operations.In October2025, SouthAfrica exitedthe FinancialAction TaskForce greylist
after completingthe requiredreforms. Theremoval fromthe greylist was widelyviewed aspositive forinvestor sentiment,capital
flows, funding costs, and international business confidence in South Africa.However, economic confidence in South Africa, our main
operating environment, has been historically low and, as a result, there is a risk of a prolonged economic downturn, which could have
a negative impacton merchants andretailers; mobile phoneoperators; our accountholders; the levelof transactions weprocess; the
take-up ofthe financialservices weoffer andthe abilityof ourcustomers torepay ourloans orto paytheir insurancepremiums. If
financialinstitutionsandretailersexperiencedecreaseddemandfortheirproductsandservices,ourhardware,software,related
technology sales and processing revenue could decrease.
Our consumer microlendingloan book andmerchant lending bookexpose us tocredit risk andour allowance fordoubtful
finance loans receivable may not be sufficient to absorb future write-offs.
All of our microfinance loans made are for a period of nine months or less and all of our merchantlending is for a period of less
than12months.Wehavecreatedanallowancefordoubtfulfinanceloansreceivablerelatedtothesebooks.Whencreatingthe
allowance, management considered factors including the periodof the finance loan outstanding, creditworthinessof the customers and
the past paymenthistory of the borrower.Weconsider this policyto be appropriateas it takes intoaccount factors suchas historical
bad debts, currenteconomic trends andchanges in our customerpayment patterns. However,additional allowances maybe required
should the ability of our customers to makepayments when due deteriorate in the future. Asignificant amount of judgment is required
to assess the ultimate recoverability of these microfinance loan receivables.
Wemay face competitionfrom other companiesthat offer innovativepayment technologies andpayment processing, which
could resultin theloss ofour existingbusiness andadversely impactour abilityto successfullymarket additionalproducts and
services.
Our primary competitors inthe payment processingmarket include other independentprocessors, as wellas financial institutions,
independentsalesorganizations,newdigitalandfintechentrantsand,potentiallycardnetworks.Manyofourcompetitorsare
companies whoare largerthan weare andhave greaterfinancial andoperational resourcesthan wehave. Thesefactors mayallow
them to offer better pricingterms or incentives to customers, whichcould result in a loss of our potentialor current customers and/or
force us to lower our prices. Either of these actions could have a significant effecton our revenues and earnings.
16
Our future success will depend in parton our ability to attract, integrate, retainand incentivize key personnel and a sufficient
number of skilled employees, particularly in the technical, sales and senior managementareas.
We believe our management team has the right experienceand skills to execute on our strategy. However,in order to succeed in
our productdevelopment andmarketing efforts,we mayneed to identifyand attract newqualified technicaland sales personnel,as
well as motivate and retain ourexisting employees. As a result, aninability to hire and retain suchemployees would adversely affect
our ability toachieve our strategicgoals and maintainour technological relevance.We may face difficulty inassimilating, transitioning
and integratingnewly-hiredpersonnel ormanagement ofany futureacquisitions intoour existingmanagement team,and thismay
adversely affectour business. Competitorsmay attemptto recruitour topmanagement andemployees. Inorder toattract and retain
personnel ina competitivemarketplace, wemust providecompetitive paypackages, includingcash and equity-based compensation
andthevolatilityinourstockpricemayfromtimetotimeadverselyaffectourabilitytorecruitor retainemployees.Wedonot
maintainany“keyperson”lifeinsurancepolicies.Ifwefailtoattract,integrate,retainandincentivizekeypersonnelandskilled
employees, our ability to manage and grow ourbusiness could be harmed and our productdevelopment and marketing activities could
be negatively affected.
Cybersecurity breaches and other system disruptions pose a significant threat to businessoperations.
As a fintech organization reliant on digital infrastructure, weare highly susceptible to cybersecurity incidents involving sensitive
datasuchas personallyidentifiableinformation(“PII”),paymentcardinformation(“PCI”),andproprietarybusiness records.Our
exposureincludestheriskof databreaches,ransomware,denial-of-serviceattacks,andunauthorisedsystemaccess.Althoughwe
follow the National Instituteof Standards andTechnology (“NIST”) Cybersecurity Framework in oursecurity controls, evolving cyber
threats meanno systemis invulnerable.A successfulcybersecuritybreach,especiallywith increasedadoptionof AItechnologies,
could result infinancial losses, regulatorypenalties, reputational damage, operationalinterruptions, and legalconsequences. Prolonged
orfrequentbreachesorsystemdisruptionsmaydiminishcustomertrust,potentiallyleadingcustomerstoconsideroursystems
unreliable, which could impactadoption and harm brandreputation. Addressing breaches or systemdisruptions can significantly strain
staff resources and delay new service launches. Furthermore, if customers rely on ourproducts for critical transactions, a breach could
disrupt theirbusinesses andlead toclaims forcompensation. Evenif unsuccessful,this typeof claimcould betime-consuming and
costly for us to address.
Although certain of our systemshave been designed to reducedowntime in the event ofoutages or catastrophic occurrences, they
remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunicationfailures, terrorist attacks,
computer viruses, computer denial-of-service attacks and similar events. Some ofour systems are not fullyredundant, and our disaster
recovery planning may not be sufficient for all eventualities.
Protection against fraud is of keyimportance to the purchasers and endusers of our solutions. Weincorporate security features,
including encryptionsoftware, biometricidentification andsecure hardware,into our solutionsto protectagainst fraud inelectronic
transactions and to provide for the privacy and integrity ofcardholder data. Our solutions and systems may be vulnerable tobreaches
in security due todefects in the security mechanisms,the operating system, applicationsor the hardware platformas well as through
risk introducedinto ourenvironment throughthird partysuppliers, whichthe grouprelies heavilyon. Securityvulnerabilities could
jeopardize the security ofinformation transmitted using our solutions.If the security of oursolutions is compromised, ourreputation
and marketplace acceptance ofour solutions may beadversely affected, which would causeour business tosuffer, and we may become
subject to damages claims. Wehave not yet experienced any significant security breaches affectingour business.
Despiterobustmeasures,unforeseencyberincidentsor naturaldisasterscouldtriggerlengthyserviceinterruptions.Existing
business interruption insurance may not adequately compensate for losses stemmingfrom cybersecurity failures.
Our use of artificialintelligence (“AI”) maypresent risks that couldadversely affect ourbusiness, results of operationsand
reputation.
While our use of AI is not currently material, we may increasingly incorporate AI technologies intoour systems, operations and
product offerings. The development,deployment and use of AI presenta number of risks and uncertainties.AI systems may produce
inaccurate, unreliableor otherwise flawedoutputs, includingas a resultof limitationsin modeldesign, trainingdata quality,bias or
other technical constraints. Any such issues could impair the effectivenessof our products and services or expose us to liability.
The use of AI is expectedto increase cybersecurity,privacy, intellectualproperty and operational risks. For example,the use of
AI is likelyto involve theprocessing of sensitivedata, reliance onthird-party tools,or the generationof outputs thatare misused or
misinterpreted. In addition, AI technologies are expected to introduce new or evolving vulnerabilities that could be exploited, and our
risk management processes may not be effective in identifyingor mitigating all such risks.
The legal and regulatory landscape relating to AI is rapidly evolving and uncertain. Wemay be subject to existing and emerging
laws, regulations and regulatoryexpectations in the United Statesand other jurisdictions (includingSouth Africa) relating to,among
other things, data protection,consumer protection, intellectualproperty and the useof automated decision-making.Compliance with
such requirementsmay increase ourcosts, limit theuse or effectivenessof AI inour business, orrequire changes toour productsor
operations. Failure to comply withapplicable requirements, or the perceptionthat our use ofAI is inappropriate or controversial,could
r
esult in regulatory scrutiny,litigation, reputational harm or competitive disadvantage.
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As AI technologiescontinue to develop,we may notbe able toanticipate or effectivelymanage allassociated risks, especially
cybersecurity related risks. If any of these risks were to materialize, theycould have a material adverse effect on our business, results
of operations and financial condition.
Defendingour intellectualpropertyrights ordefendingourselves ininfringementsuitsthatmaybe broughtagainst usis
expensive and time-consuming and may not be successful.
Litigation to enforce our trademarks or other intellectual property rights orto protect our trade secrets could result in substantial
costsandmaynotbesuccessful.Anylossof,orinabilitytoprotect,intellectualpropertyinourtechnologycoulddiminishour
competitiveadvantage andalso seriouslyharm ourbusiness. Inaddition,the lawsof certainforeigncountries maynot protectour
intellectual property rights to the same extent as do the laws in countries where we currently have protection. Our means of protecting
our intellectual property rights in countries where we currently have protection, or any other country in which we operate, may not be
adequate tofully protectour intellectualproperty rights.Similarly,if thirdparties claimthat weinfringe theirintellectualproperty
rights, wemay berequired toincur significantcosts anddevote substantialresources tothe defenseof suchclaims, todiscontinue
using andselling anyinfringing technologyand services,to expendresources todevelop non-infringingtechnology orto purchase
licenses or pay royaltiesfor other technology.In addition, if weare unsuccessful indefending any such third-partyclaims, we could
suffer costly judgments and injunctions thatcould materially adversely affect our business,results of operations or financialcondition.
We may incur material lossesin connection with our movement of cash through our infrastructure in South Africa.
In our merchantbusiness we collectand process largevolumes of cashfrom our customers,assuming therisk of lossfrom the
moment that cash isdeposited into our vaults.We are then responsible for itscollection and transportation toprocessing centers, which
we outsource to various cash-in-transit service providers. These services extendacross all areas of South Africa.
South Africa suffersfrom high levelsof crime andin particular cash-in-transitheists. Wecannot insure againstcertain risks of
loss or theftof cash fromour delivery andcollection vehicles, andwe will thereforebear the fullcost of certainuninsured lossesor
theft inconnection withthe cashhandling process.Such lossescouldmaterially andadversely affectour financialcondition, cash
flows and results of operations. Wehave not incurred any material lossesresulting from cash distribution in recentyears, but there is
no assurance that we will not incur any such material losses in the future.
Wedepend uponthird-party suppliers,making usvulnerable tosupply shortagesand pricefluctuations, whichcould harm
our business.
Weobtainoursmartcards,electronicpaymentandPOSdevices,componentsforourvaults,componentstorepairtheISV
(independentsoftware vendor)division’sPOS hardware,and theother hardwarewe usein ourbusiness froma limitednumber of
suppliers, and do not manufacturethis equipment ourselves. Wegenerally do not have long-termagreements with our manufacturers
or component suppliers.If our suppliersbecome unwilling orunable to provideus with adequatesupplies of partsor products when
we need them,or if theyincrease their prices,we may notbe able tofind alternativesources in atimely mannerand could befaced
with a critical shortage. Thiscould harm our ability to meet customerdemand and cause our revenuesto decline. Even if we areable
to secure alternative sources in a timely manner,our costs could increase as a result of supply or geopolitical shocks, whichmay lead
to anincrease inthe pricesof goodsand servicesfrom thirdparties. Asupply interruption,such asthe previousglobal shortageof
semiconductors, oran increasein demandbeyond currentsuppliers’ capabilitiescould harmour abilityto distributeour equipment
and thus toacquire new customerswho use ourtechnology. Anyinterruption in thesupply of thehardware necessary tooperate our
technology, or our inability to obtain substitute equipment at acceptable prices in a timelymanner, could impair our ability to meet the
demand of our customers, which would have an adverse effect onour business.
Our Lesaka Life business exposes us to risks typically experienced by life assurance companies.
Lesaka Life Limited(formerly known asEasyPay Insurance Limited)(“Lesaka Life”) isa life insurancecompany and exposes
us to risks typically experienced by life assurance companies. Some of these risks includethe extent to which we are able to continue
to reinsure ourrisks at acceptablecosts, reinsurercounterparty risk, maintainingregulatory capitaladequacy,solvency and liquidity
requirements, our ability toprice our insuranceproducts appropriately, the risk thatactual claims experiencemay exceed ourestimates,
the ability to recoverpolicy premiums fromour customers andthe competitiveness ofthe South African insurancemarket. If weare
unable to maintainour desired level ofreinsurance at prices thatwe consider acceptable,we would haveto either accept anincrease
in our risk exposure or reduce our insurance writings. If our reinsurers are unable to meet theircommitments to us in a timely manner,
or at all, we may beunable to dischargeour obligations under ourinsurance contracts. As such,we are exposed tocounterparty risk,
including credit risk, of these reinsurers.
Ourproductpricingincludeslong-termassumptionsregardinginvestmentreturns,mortality,morbidity,persistencyand
operatingcostsandexpensesofthebusiness.Usingthewrongassumptionstopriceourinsuranceproductscouldmateriallyand
adversely affect our financialposition, results ofoperations and cash flows.If our actualclaims experience ishigher than ourestimates,
our financial position, results ofoperations and cash flows could beadversely affected. Finally,the South African insurance industry
ishighlycompetitive.Manyofourcompetitorsarewell-established,representednationallyandmarketsimilarproductsandwe
therefore may not be able to effectively penetrate the SouthAfrican insurance market.
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Risks Relating to Operating in South Africa and Other ForeignMarkets
Operating inSouthern andEast Africa, bothemerging markets,subjects us togreater risksthan thosewe would faceif we
operated in more developed markets.
Emerging markets such asSouthern Africa are subjectto greater risksthan more developed markets.While we focusour business
primarilyonemergingmarketsbecausethatiswhereweperceivethegreatestopportunitiestomarketourproductsandservices
successfully, thepolitical, economic and market conditionsin these markets present risks thatcould make it more difficultto operate
our business successfully.
Some of these risks include:
•
Political, legal and economic instability,including higher rates of inflation and currency fluctuations;
•
High levels of corruption, including bribery of public officials;
•
Loss due to civil strife, acts of war or terrorism, guerrilla activities and insurrection;
•
A lackof well-developed legalsystems which couldmake itdifficult for usto enforce ourintellectual property andcontractual
rights;
•
Logistical, utilities (including electricity and water supply) and communicationschallenges;
•
Potential adverse changes in laws and regulatorypractices, including import and export license requirementsand restrictions,
tariffs, legal structures and tax laws;
•
Difficulties in staffing and managing operationsand ensuring the safety of our employees;
•
Restrictions on the right to convert or repatriate currency or export assets;
•
Greater risk of uncollectible accounts and longer collection cycles;
•
Indigenization and empowerment programs;
•
Exposure to liability under the UK Bribery Act; and
•
Exposure to liability under U.S. securities and foreign trade laws, including the Foreign Corrupt Practices Act, or FCPA, and
regulations established by the U.S. Department of Treasury’sOffice of Foreign Assets Control, or OFAC.
If we do not achieve applicableBroad-Based Black Economic Empowermentobjectives in our South African businesses,we
maybesubjecttofinesandwerisklosingourgovernmentand/orprivatecontracts.Inaddition,itispossiblethatwemaybe
requiredtoincreasethe Blackshareholdingof ourcompanyin amanner thatcould diluteyourownershipand/orchangethe
companies from which we purchase goods or procure services (to companies with a betterBEE Status Level).
The legislative framework for the promotion of Broad-Based Black Economic Empowerment (“BEE”) in South Africa has been
established throughthe Broad-BasedBlack EconomicEmpowermentAct, No.53 of2003, asamended fromtime totime, andthe
AmendedBEECodesofGoodPractice,2013,orBEECodes,andanysector-specificcodesofgoodpractice,orSectorCodes,
published pursuantthereto. SectorCodes arefully bindingbetween andamong businessesoperating ina sectorfor whicha Sector
Code has beenpublished. Achievementof BEE objectivesis measured bya scorecard whichestablishes a weightingfor the various
elements. Scorecardsare independentlyreviewed byaccredited BEEverification agencieswhich issuea verificationcertificate that
presents anentity’sBEE StatusLevel. ThisBEE verificationprocess mustbe conductedon anannual basis,and theresultant BEE
verification certificate is only valid for aperiod of 12 months fromthe date of issue. Underour consolidated scorecard, which includes
all South African businesses, we currently hold a BEE Status Level 3.
Two of our South African businesses, being Lesaka Financial Services (Pty) Ltd, formerly known as EasyPay Financial Services
Proprietary Limited, (“LFS”) and Lesaka Life, are subject tothe Amended Financial Sector Code, or the FSSector Code, and all other
businesses are consolidated under the Department of Trade and Industry(DTI) Generic Codes. The FS SectorCode has been amended
and alignedwith thenew BEECodes andwere promulgatedin December2017. Licensingand/or regulatoryauthorities overseeing
these South African businesses may set minimum adherence requirements to BEE standards as a condition for an operatinglicense to
trade. Theminimum requirementunder theFinancial SectorCode is Level8. Wecurrently havea BEE StatusLevel 2for LFS and
BEE Status Level 4 for Lesaka Life.
The BEE scorecard includesa component relating to managementcontrol, which serves to determinethe participation of Black
people in the board, aswell as at variouslevels of management within ameasured entity (including, inter alia,Executive Management,
Senior Management,Middle Managementand JuniorManagement). TheBEE Codesand/or SectorCodes definethe terms"Senior
Management", "MiddleManagement" and"Junior Management"as those occupationalcategories as determinedin accordancewith
theEmploymentEquityRegulations,withspecificemphasisonimprovingparticipationinproportiontothedemographicsofthe
EconomicallyActivePopulationofSouthAfrica,as publishedbyStatistics SouthAfrica,fromtimetotime.EmploymentEquity
legislation seeks todrive the alignmentof the workforcewith the racialcomposition of theeconomically active populationof South
Africaandacceleratetheachievementofemploymentequitytargets,introducingmonetaryfinesfornon-compliancewiththe
Employment Equity legislation and misrepresented submissions. Annexure EEA9 to the EmploymentEquity Regulations sets out the
various occupational levels which are determined in accordance with the relevant grading systems applied by the measured entity and
referred to in said Annexure.
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During fiscal 2026, we made cash contributions to 61 community-based organizations and enterprises to enable them topromote
growthand strengthentheir capacityto developinnovative platformsor provideservices tothe marketstheyserve. Wewere also
involved in disaster relief efforts for 601 families who were affectedby disasters such as floods and fires.
However, itis possible that theseand other actionsmay not be sufficientto enable us toachieve the applicableBEE objectives
set out for specific financial years. In that event, in order to maintain competitiveness in the South African marketplace, we may have
to seek toincrease compliance through other means,including by selling orplacing additional sharesof Lesaka orof our South African
subsidiaries to BlackSouth Africans (either directlyor indirectly), overand above what has alreadybeen approved, and/orchanging
to suppliers thathave higher BEE StatusLevels. Such salesor placements ofshares could have adilutive impact onyour ownership
interest, which could cause the market price of our stock to decline.
We expectthat our BEE Status Levelwill be important in orderfor us to remaincompetitive in the SouthAfrican marketplace.
We continually seekways to improve our BEE Status Level, especially the ownership (so-called “equity”) and procurement elements
thereof.
Wemaynotbe abletoeffectivelyandefficientlymanage thedisruptiontoour operationsasaresult oferraticelectricity
supply in South Africa, which could adversely affect our,financial position, cash flows and future growth.
Our businesses inSouth Africa aredependent on electricitygenerated and suppliedby the state-ownedutility,Eskom, in order
to operate, and,in recent years, Eskomhas been unable toconsistently generate andsupply the amount ofelectricity required bythe
SouthAfricaneconomywhichhasresultedinsignificantandoftenunpredictableelectricitysupplydisruptions.Eskomhas
implementeda numberof short-andlong-termmitigationplanstocorrecttheseissues, butsupplydisruptionscontinuedto occur
regularly and with no predictability, although consistency of electricity supply has improved significantly since April 2024. As part of
ourbusiness continuityprograms, wehaveinstalled back-updiesel generatorsin orderforus tocontinueto operateourcore data
processingfacilitiesintheeventofintermittentdisruptionstoourelectricitysupply.Wehavetoperformregularmonitoringand
maintenance of thesegenerators and alsosource and managediesel fuel levels.Wemay also berequired to replacethese generators
on a more frequent basis due to the additional burden placed on them.
Our results of operations, financial position, cash flowsand future growth could be adversely affected if Eskom isunable to raise
sufficient funding to operateand/or commission new electricity-generatingpower stations in accordance with itsplans, or at all, or if
we are unable to effectively and efficiently test, maintain,source fuel for, and replace, our generators.
Fluctuations in the value of the South African rand have had, and willcontinue to have, a significant impact on our reported
results ofoperations, whichmay makeit difficultto evaluateour business performancebetween reportingperiods andmay also
adversely affect our stock price.
The SouthAfrican rand,or ZAR,is theprimary operatingcurrency forour businessoperations whileour financialresults are
reported in U.S. dollars. Therefore, any depreciation inthe ZAR against the U.S. dollar, would negatively impactour reported revenue
and netincome. TheU.S. dollar/ZARexchange ratehas historicallybeen volatileand weexpect thisvolatility tocontinue (referto
Item7—“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—CurrencyExchangeRate
Information.”).DuetothesignificantfluctuationinthevalueoftheZARanditsimpactonourreportedresults,youmayfindit
difficult tocompare our resultsof operations betweenfinancial reporting periodseven though weprovide supplemental information
about ourresults ofoperations determinedon aZAR basis.Similarly,depreciation inthe ZARmay negativelyimpact theprices at
which our stock trades.
We generally do not engage in any currency hedgingtransactions intended to reduce theeffect of fluctuations in foreign currency
exchange rates on our results ofoperations, other than economic hedgingusing forward contracts relating toour inventory purchases
which are settled in U.S.dollars or euros. Wecannot guarantee that we willenter into hedging transactionsin the future or,if we do,
that these transactions will successfully protect us against currency fluctuations.
South Africa’shigh levels ofpoverty, unemploymentand crime mayincrease our costsand impair ourability to maintain a
qualified workforce.
While South Africa has a highly developed financial and legal infrastructure, it also has high levels of crime and unemployment,
relative to peercountries in Africaand other emergingeconomies, and thereare significant differencesin the levelof economic and
social development among its people,with large parts of the population,particularly in rural areas, having limitedaccess to adequate
education, healthcare, housing and otherbasic services, including waterand electricity. In addition, South Africa hasa high prevalence
ofHIV/AIDSandtuberculosis,theimpactofwhichmaybeexacerbatedintheshort-termbythediscontinuationoftheU.S.
government’s funding of certain HIV/AIDSresearch and outreach programs.
Government policiesaimed atalleviating andredressing thedisadvantages sufferedby the majorityof citizensunder previous
governments mayincrease ourcosts andreduce ourprofitability,all ofwhich couldnegatively affectour business.These problems
may promptemigration ofskilled workers,hinder investmentinto SouthAfrica andimpede economicgrowth. Asa result,we may
have difficulties attracting and retaining qualified employees.
20
TheeconomyofSouthAfricaisexposedtohighratesofinflation,interestandcorporatetax,whichcouldincreaseour
operating costsand therebyreduce ourprofitability.Furthermore, theSouth Africangovernment requiresadditional incometo
fund future governmentexpenditures andmay be required,among otherthings, to increaseexisting income taxrates, including
the corporate income tax rate, amend existing tax legislation or introduce additionaltaxes.
The economy ofSouth Africa in thepast has been, andin the future maycontinue to be, characterizedby rates of inflationand
interest thatare substantiallyhigher thanthose prevailingin the UnitedStates andother highly-developedeconomies. Highrates of
inflation could increase our South African-based costs and decrease our operating margins. High interest rates increase the cost of our
debt financing, though conversely, they alsoincrease the amountof income weearn on anycash balances. TheSouth African corporate
income tax rate, of 27%, is higher than theU.S. federal income tax rate, of 21%. Anyincrease in the effective South African corporate
income tax rate would adversely impact our profitability and cash flow generation.
Risks Relating to Government Regulation
We are required to comply with certain laws and regulations, including economic and trade sanctions, which could adversely
impact our future growth.
Wearesubjectto U.S.andothertradecontrols,economic sanctionsandsimilarlaws andregulations,includingthose inthe
jurisdictionswhereweoperate.Ourfailuretocomplywiththeselawsandregulationscouldsubjectustocivil,criminaland
administrativepenaltiesandharmourreputation.Theselaws andregulationsplacerestrictionsonouroperations,tradepractices,
partnersandinvestmentdecisions.In particular,our operationsare subjectto U.S.andforeigntradecontrol lawsandregulations,
including various export controls and economic sanctions programs, such as those administered by OFAC. We monitor compliance in
accordance withthe 10principles asset outin theUnited NationsGlobal CompactPrinciples, theOrganisationfor EconomicCo-
operation andDevelopment recommendationsrelating tocorruption, andthe InternationalLabor OrganizationProtocol interms of
certain of the items to bemonitored. As a result of doing businessin foreign countries and with foreignpartners, we are exposed to a
heightened risk of violating trade control laws as well as sanctions regulations.
Violationsoftradecontrollaws andsanctionsregulationsarepunishableby civilpenalties,includingfines,denialof export
privileges,injunctions,asset seizures,debarmentfromgovernmentcontractsand revocationsor restrictionsof licenses,aswellas
criminal fines and imprisonment.We havedeveloped policies and procedures aspart of a company-wide complianceprogram that is
designed toassist our compliancewith applicableU.S. and internationaltrade control lawsand regulations,including trade controls
and sanctions programs administeredby OFAC,and provide regular trainingto our employees to create awarenessabout the risks of
violations of tradecontrol laws andsanctions regulations andto ensure compliancewith these lawsand regulations.However, there
can be no assurance that all of our employees, consultants,partners, agents or other associated persons will not act in violationof our
policies and these laws and regulations, or that our policies andprocedures will effectively prevent us from violating these regulations
in every transaction in which we may engage or provide a defense toany alleged violation. In particular, we may be held liable for the
actions that our local, strategicor joint venture partners take insideor outside of the United States,even though our partners maynot
be subject tothese laws. Sucha violation, even ifour policies prohibit it,could materially and adverselyaffect our reputation, business,
results of operations and financial condition. Any expansion into developingcountries, and our development of new partnerships and
joint venture relationships, could increase the risk of OFACviolations in the future.
In addition,our paymentprocessing andfinancial servicesactivities aresubject toextensive regulation.Compliance withthe
requirements under the variousregulatory regimes may causeus to incur significantadditional costs and failureto comply with such
requirements could result in the shutdown ofthe non-complying facility, the imposition of liens, fines and/or civil orcriminal liability.
Wearerequiredtocomplywithanti-corruptionlawsandregulations,includingtheFCPAandUKBriberyAct,inthe
jurisdictions in which we operate our business, which could adversely impactour future growth.
The FCPA prohibitsus from providing anything of value to foreignofficials for the purposes of obtaining or retaining business,
orsecuringanyimproperbusinessadvantage,andrequiresustokeepbooksandrecordsthataccuratelyandfairlyreflectour
transactions.As partofourbusiness,wemaydealwithstate-ownedbusinessenterprises,theemployeesofwhichareconsidered
foreignofficialsforpurposes ofthe FCPA.The UKBriberyAct includesprovisionsthat extendbeyond briberyof foreignpublic
officials and also apply totransactions with individuals not employedby a government andthe act is alsomore onerous than the FCPA
in a number of other respects, includingjurisdiction, non-exemption of facilitationpayments and penalties. Some of the international
locations in which we operate or have investments lack a developedlegal system and have higher than normal levels of corruption.
Anyfailurebyustoadoptappropriatecomplianceproceduresandensurethatouremployees,agentsandbusinesspartners
comply withthe anti-corruptionlaws andregulations couldsubject usto substantialpenalties, andthe requirementthat wecomply
with these laws couldput us at acompetitive disadvantage againstcompanies that are notrequired to comply.For example, in many
emergingmarkets,theremay besignificantlevelsof officialcorruption,andthus, briberyof publicofficialsmaybea commonly
accepted costof doingbusiness. Ourrefusal toengage inillegal behavior,such aspaying bribes,may resultin us notbeing ableto
obtain business that wemight otherwise have been ableto secure or possiblyeven result in unlawful,selective or arbitrary action being
t
aken against us.
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Violations of anti-corruption laws and regulations are punishable by civil penalties, including fines, as well as criminal fines and
imprisonment. Wehave developed policiesand procedures as partof a company-widecompliance program thatis designed to assist
our compliance with applicable U.S.,South African and other internationalanti-corruption laws and regulations,and provide regular
training to ouremployees to complywith these lawsand regulations. However,there can beno assurance thatall of ouremployees,
consultants, partners, agents or other associated persons will not take actions in violation of our policies or these lawsand regulations,
or that ourpolicies and procedureswill effectively preventus from violatingthese regulations in everytransaction in whichwe may
engage, orprovide a defenseto any allegedviolation. Inparticular,we may beheld liablefor the actionsthat ourlocal, strategicor
joint venturepartners take insideor outsideof the UnitedStates, even thoughour partners maynot be subjectto theselaws. Sucha
violation,evenifourpoliciesprohibitit,couldmateriallyandadverselyaffectourreputation,business,resultsofoperationsand
financial condition.
Wedo nothave a SouthAfrican bankinglicense and,therefore, we provideour bankingoffering throughan arrangement
with a third-party bank, which limits ourcontrol over this business and the economic benefitwe derive from it. If thisarrangement
were to beterminated, we would notbe able tooperate our LesakaEasyPay business withoutalternate means ofaccess to abanking
license. We are also required to comply withthe requirements of payment schemes, including VISAand Mastercard. Furthermore,
we provide certainof our servicesunder partnershipswith South Africanbanks. Wewill be unableto provide ourpayments and
card-acquiring businesses if wefail to comply with paymentscheme rules, and/or failto maintain certain regulatorylicenses and
registrations, and/ orif wewere unable tocontinue to partnerwith South Africanbanks to provideour payments andcard acquiring
services.
The SouthAfrican retailbanking marketis highly regulated.Under currentlaw andregulations, ourLesaka EasyPaybusiness
activities require usto be registeredas a bankin South Africaor to haveaccess to anexisting banking license.Weare not currently
soregistered,butwehaveanagreementwithAfricanBankLimited(“AfricanBank”),thatenablesustoimplementourLesaka
EasyPay program in compliance with the relevant laws and regulations. If this agreement wereto be terminated, we would not be able
to operate these servicesunless we were able to obtainaccess to a banking licensethrough alternate means. Furthermore,we have to
complywiththeSouthAfricanFinancialIntelligenceCentreAct,2001andmoneylaunderingandterroristfinancingcontrol
regulations, when we open new bankaccounts for our customers and whenthey transact. Failure to effectively implement andmonitor
responses to the legislation and regulations may result in significant finesor prosecution of African Bank and ourselves.
The South African Financial Advisory and Intermediary Services Act, 2002, requires persons who act as intermediaries between
financial product suppliers and consumers inSouth Africa to register asfinancial service providers. Lesaka Life and LFSwere granted
a Financial Service Provider(“FSP”) licenses on June9, 2015, and July11, 2017, respectively.If our FSP licenses arewithdrawn or
suspended, wemay bestopped fromcontinuing ourfinancial servicesbusinesses inSouth Africaunless weare ableto enterinto a
representative arrangement with a third party FSP.
Furthermore,theConductofFinancialInstitutionsBill(“COFIBill”)willoverhaulthecurrentregulatoryandlegislative
framework by replacingthe rules-based approachwith anoutcomes-driven and principles-basedmodel, and theadoption ofan activity-
based licensing andauthorization regime. Itaims to establish asingle, modern conductarchitecture aligned toemerging risks across
the financial servicessector, and embedfair outcomes acrossthe value chain,thereby simplifying andrationalizing existing fragmented
conduct rules, and strengtheninggovernance, culture and accountability.While the COFI Bill isexpected to significantlychange the
manner inwhich we operateour business, includingthe conversion ofexisting licenses forthe relevantLesaka subsidiariesthrough
transitional arrangements and otherfinancial services activities whichmay require licensing, itis also likely to substantiallyincrease
operationalcosts aswe seekto meetregulatory expectations.Althoughtiming remainsuncertain, theCOFI Billwas introducedin
Parliament in April 2026.
Weare requiredto complywith therequirements ofpayment schemes,including VISAand Mastercard.Wehave deployeda
significant number of devices, and anymandatory compliance upgrades to our deployed POSdevices would require significant capital
expenditure and/orbe disruptiveto our customerbase. Failureto complywith thepayment schemes’rules mayresult insignificant
fines and/or a loss of license to participate in the scheme(s).
We provide card acquiring servicesto our customersby partnering withNedbank Limited andABSA Bank Limited,and payment
processing servicesin partnershipwith thelargest banksin SouthAfrica. Ifthese agreementswere tobe terminated,certain ofour
business wouldnot beable tooperatetheir paymentservices unlesstheywere ableto enteralternativecard acquiringor payment
processing agreements with otherpartners or obtain a directdesignation license with theschemes and regulatorybodies. In addition,
any loss of or failure to renew our current authorizations would result inan inability to operate its payment services.
Compliance with the requirements under these various regulatory regimes maycause us to incur significant additional costs and
failure tocomply withsuch requirementscould resultin theshutdown ofthe non-complyingfacility,the impositionof liens,fines
and/or civil or criminal liability.
22
Proposed regulatory changes to the national payments system are expected to have a substantial impact on the South African
payments industry.It may changethe manner inwhich we conductbusiness andlikely leadto increased operatingcosts for our
business as we work to ensure compliance with the new legislativeand regulatory framework, which may have a materialadverse
effect on our business.
On March3, 2025,the SouthAfrican ReserveBank (“SARB”)publishedcertain draftregulatory documentsfor commentary
thatareexpectedto havea substantialimpacton howwe conductourbusiness namely:(i)a draftdirectiveentitled“Directivein
respectof specificpaymentactivities withinthenationalpaymentsystem”(the “Directive”);(ii) adraftexemptionnoticeentitled
“Designation by thePrudential Authority ofspecific activities conductedin the nationalpayment system whichshall be deemednot
to constitute‘the businessof abank’ underparagraph (cc)in section1(1) ofthe BanksAct, 1990”(the “ExemptionNotice”); and
(iii) theNationalPaymentSystemBill(“NPSBill”),whichseekstoreplacetheexistingNationalPaymentSystemAct,1998.
Following the initialpublication of theproposed regulations, forwhich we submitteddetailed comments throughour industry body,
the Associationof SouthAfrican PaymentProviders (“ASAPP”),revised versionsof theDirective andthe ExemptionNotice were
published for commentary on May 20, 2026, and detailed comments were submittedto ASAPP.
The key objectives of the proposed regulations are toclarify the mandate and objectives of theSARB with respect to the national
paymentsystem(“NPS”);andestablisharobustregulatory,oversight,andsupervisoryframeworkfortheNPS.Theproposed
regulations also aimto promote financialinclusion, competition, theprevention of financialcrime, and thefair treatment andprotection
ofcustomers,whileintroducinganactivity-basedlicensingandauthorizationregime.Inthisregard,theDirectivedefinesseven
“paymentactivities”andprovidesthataperson,whichcanbeabankoranon-bank,providinga“paymentactivity"mustobtain
authorisation from theSARB to undertakesuch activity.Under the ExemptionNotice, certain paymentactivities are exemptedfrom
the definition of ‘the business of a bank’. Prior to theExemption Notice, these activities could only be undertaken by a bank. Pursuant
to theExemptionNotice, theseactivities canbe undertakenby non-banks,subject tocertain conditions.Certain ofour businesses
currently undertakeactivities whichwould qualifyas “paymentactivities” underthe Directiveand theNPS Bill. Underthe current
regulatoryframework,these activitiesare undertakenin partnershipwith asponsoringbank andthe sponsoringbank issubject to
regulation by the SARB.In other words, thebusiness undertaking the “paymentactivity” is notsubject to directregulation with respect
to such payment activities.
It isuncertain ifand whenthe proposedregulations willenter intoeffect andthe extentto whichwe asa non-bankmay elect
whether to conduct an exemptedpayment activity by partnering witha bank to do so, or on its own,if it is authorised by theSARB -
i.e. whether both options will be available to a non-bank. Shouldour businesses be subject to direct regulation under this new regime
(i.e., if our current sponsorshipmodel is no longer available), weexpect that we will incur significant operatingcosts to comply with
the new requirements, and toobtain authorization with respect thereto.Furthermore, while some requirements may alreadyexist under
other currentregulatory frameworksfor certainof our businesses,we will likelyneed to investin additionalresources, systemsand
processes to satisfythe regulatory requirementscontemplated in theproposed regulations, whichmay also leadto increasedoperational
costs, which may have a material adverse effect on our business.
We may be subjectto regulations regarding privacy, data use and/or security,which could adversely affect our business.
Weare subject to regulationsin a number ofthe countries in whichwe operate relating tothe processing (which includes,inter
alia, the collection, use, retention, security and transfer) of personal information about the people (whether natural or juristic) who use
our productsand services.The interpretationand applicationof userdata protectionlaws arein astate offlux. Theselaws maybe
interpretedandappliedinconsistentlyfromcountrytocountryandourcurrentdataprotectionpoliciesandpracticesmaynotbe
consistent with those interpretations and applications.Complying with these varying requirements could cause us toincur substantial
costs orrequire usto changeour businesspractices ina manneradverse toour business.Any failure,or perceivedfailure, byus to
comply with any regulatory requirements orinternational privacy or consumer protection-related laws and regulationscould result in
proceedingsoractionsagainstusbygovernmentalentitiesorothers,subjectustosignificantpenaltiesandnegativepublicity.In
addition, asnoted above,we aresubject tothe possibilityof securitybreaches, whichthemselves mayresult ina violationof these
laws.
AmendmentstotheNCAweresignedintolaw inSouthAfricainAugust2019.Compliancewiththeseamendmentsmay
adversely impact our micro-lending operations in South Africa.
In August 2019, the National Credit Amendment Bill, or debt-relief bill, was signed into law in South Africa.The effective date
of the debt-reliefbill has notyet been announcedand has beensignificantly delayed.Webelieve that thedebt-relief bill willrestrict
the ability of financial services providers to provide lendingproducts to certain low-income earners and will increase thecost of credit
totheseconsumers.As aresult,compliancewiththe debt-reliefbillmayadverselyimpactourmicro-lendingoperationsinSouth
Africa. Furthermore, we expect that it will take us, and other credit providers, some time to fully understand, interpret and implement
this new legislationin our lending processesand practices. Non-compliancewith the provisions ofthis new legislation mayresult in
financial loss and penalties, reputational loss or other administrative punishment.
23
Risks Relating to our Common Stock
Our failure to prepareand timely fileour periodic reportswith the SEC limitsour access tothe public marketsto raise debt
or equity capital.
Form S-3 permits eligibleissuers to conduct registeredofferings using a shortform registration statement thatallows the issuer
to incorporateby reference itspast and futurefilings and reportsmade under theSecurities ExchangeAct of 1934,as amended(the
“Exchange Act”).In addition,Form S-3enables eligibleissuers toconduct primaryofferings “offthe shelf”under Rule415 ofthe
SecuritiesActof1933,asamended(the“SecuritiesAct”).Theshelfregistrationprocess,combinedwiththeabilitytoforward
incorporate information, allows issuers to avoid delays andinterruptions in the offering process and to access the capital marketsin a
more expeditiousand efficientmanner thanraising capitalin astandard registeredoffering pursuantto aRegistration Statementon
Form S-1. The ability to register securities for resale may also be limited as a resultof the loss of Form S-3 eligibility.
Wedidnotfileour2025Form10-KwithinthetimeframerequiredbytheSEC;thus,wehavenotremainedcurrentinour
reporting requirementswith theSEC. Althoughwe regainedstatus asa currentfiler byfiling ourForm 10-K/Ato amendour 2025
Form 10-K,as ofthe dateof thisAnnual Report,we areineligible tofile newshort formregistration statementson FormS-3 and,
absent awaiver ofthe FormS-3 eligibilityrequirements, weare nolonger permittedto useour existingregistration statementson
Form S-3. Ifwe wishto pursuean offering now, wewould berequired to conductthe offering onan exemptbasis, suchas inaccordance
with Rule144A, orfile aregistration statementon FormS-1. Usinga FormS-1 registrationstatement fora publicofferingwould
likely takesignificantly longerthan usinga registrationstatement onForm S-3and increase ourtransaction costs,and could,to the
extentwearenotabletoconductofferingsusingalternativemethods,adverselyimpactourabilitytoraisecapitalorcomplete
acquisitions of other companies in a timely manner.
Our stock price has been and may continue to be volatile.
Our stock price has periodically experienced significant volatility. During the 2026 fiscalyear, our stock price ranged from a low
of $3.62 to a high of $5.54. Weexpect that the trading price of our common stock maycontinue to be volatile as a result of a number
of factors, including, but not limited to the following:
•
Any adverse developments in litigation or regulatory actions in which we areinvolved;
•
Fluctuations in currency exchange rates, particularly the U.S. dollar/ZAR exchangerate;
•
Announcement of additional BEEtransactions, especially one involvingthe issuance orpotential issuance of equitysecurities
or dilution or sale of our existing business in South Africa;
•
Quarterly variations in our operating results;
•
Significant fair value adjustments or impairment in respect of investmentsor intangible assets;
•
Announcements of acquisitions or disposals;
•
The timing of, or delays in the commencement, implementation or completionof major projects;
•
Large purchases or sales of our common stock; and
•
General conditions in the markets in which we operate.
Additionally,shares ofour commonstock canbe expectedto besubject tovolatility resultingfrom purelymarket forcesover
which we have no control.
The put right we granted to the IFC Investorson the occurrence of certain triggering events may have adverse impacts on us.
In May 2016, we issued an aggregate of 9,984,311 shares of our common stock to the IFC Investors. Certain IFC Investors were
also investors in Adumo and on October 1, 2024, we issued an aggregate of 1,989,162 additional shares of our common stock to these
IFC Investors pursuant to theAdumo transaction agreement. As ofJune 30, 2026, theIFC Investors held 8,430,676 shares.We granted
the IFC Investors certain rights, including theright to require us torepurchase any share held by theIFC Investors pursuant to the May
2016 andOctober 2024transactions uponthe occurrenceof specifiedtriggering events,which werefer toas a“put right.”The put
price pershare willbe thehigher ofthe priceper sharepaid tous bythe IFCInvestors andthe volume-weightedaverage priceper
share prevailing for the 60 trading days preceding the triggering event, exceptthat with respect to a put right triggered by rejection of
a bonafide offer,the putprice pershare willbe thehighest priceofferedby theofferor.If aput triggeringevent occurs,it could
adversely impactour liquidityand capitalresources. Inaddition, theexistence ofthe putright couldalso affectwhether oron what
terms athirdpartymightin thefutureofferto purchaseourcompany.Our responseto anysuch offercould alsobe complicated,
delayed or otherwise influenced by the existence of the put right.
Approximately 29% of our outstanding common stock is owned by two shareholders. The interests of these shareholders may
conflict with those of our other shareholders.
There is a concentration of ownershipof our outstanding common stock becauseapproximately 29% of our outstanding common
stock is owned by twoshareholders. Based on their mostrecent SEC filings disclosingownership of our shares, Value Capital Partners
(Pty) Ltd, or VCP,and IFC Investors, beneficially own approximately 19% and 10% of our outstanding commonstock as of June 30,
2026, respectively.
24
The interests ofVCP and theIFC Investors maybe differentfrom or conflictwith the interestsof our othershareholders. As a
result ofthe significantcombined ownershipby VCPand theIFC Investors,they maybe able,if theyact together,to significantly
influence thevoting outcomeof allmatters requiringshareholder approval.This concentrationof ownershipmay havethe effectof
delaying or preventinga change of control ofour company,thus depriving shareholdersof a premium fortheir shares, or facilitating
a change of control that other shareholders may oppose.
Wemay seekto raiseadditional financingby issuingnew securitieswith termsor rightssuperior tothose ofshares ofour
common stock, which could adversely affect the market price ofsuch shares.
Wemay requireadditional financingto fund futureoperations, includingexpansion incurrent and newmarkets, programming
development and acquisition,capital costs andthe costs of anynecessary implementation oftechnological innovations oralternative
technologies, or to fund acquisitions. We may also wish to raise additional equity funding toreduce the amount of debt funding on our
balance sheet. Because of the exposure to market risks associatedwith economies in emerging markets, we may notbe able to obtain
financing on favorable terms or at all.If we raise additional funds byissuing equity securities, the percentage ownership ofour current
shareholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of
common stock,which couldadversely affectthe marketprice andvoting powerof sharesof commonstock. Ifwe raiseadditional
funds by issuing debt securities, the holders of these debt securities would similarly have some rights seniorto those of theholders of
shares of common stock, and the terms of these debt securities could impose restrictions on operations andcreate a significant interest
expense for us.
Issuances of significant amounts of stock in thefuture could potentially dilute your equity ownership and adversely affect the
price of our common stock.
Webelieve thatit is necessaryto maintaina sufficientnumber ofavailable authorizedshares of ourcommon stockin orderto
provideuswiththe flexibilitytoissue sharesforbusinesspurposesthatmayarisefrom timetotime.For example,wecouldsell
additional shares to raisecapital to fund ouroperations, to reduce debtor to acquire otherbusinesses, issue shares ina BEE transaction,
issue additional shares under our stock incentive plan or declare a stock dividend. Our board may authorizethe issuance of additional
shares of common stock without notice to, or furtheraction by, our shareholders, unless shareholder approval is required by law or the
rules of the NASDAQ StockMarket. The issuance of additionalshares could dilute the equityownership of our current shareholders
and any such additional shares would likely be freely tradable, which couldadversely affect the trading price of our common stock.
We have identifiedmaterial weaknesses in our internal control over financial reporting which, if not timelyremediated, may
adversely affectthe accuracyand reliabilityof ourfinancial statements,and ourreputation, businessand stockprice, aswell as
lead to a loss of investor confidence in us.
As describedunder Item9A—“Controls andProcedures.”, weconcluded thatour disclosurecontrols andprocedures werenot
effectiveas ofJune 30,2026, andthat wehad, asof suchdate, materialweaknesses inour internalcontrol overfinancial reporting
related to:
●
OurConsumerlending,ConsumerinsuranceandGrouppayrollprocesses,specificallyinsufficientriskassessmentand
monitoringactivitiesrelatingtochangesinormigrationofsystemsandprocesses,insufficientcontrolsoverinternal
informationandinformationfromserviceorganizations,andinsufficientdesignandimplementationofInformation
TechnologyGeneralControls(“ITGCs”),controlsoverserviceorganizationsandprocesslevelcontrols,resultingin
ineffective process level controls, including alack of validation ofthe completeness and accuracyof information used within
the process;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls includinginsufficient controlsover informationresulting inineffective processlevel controlsincluding alack of
validation of thecompleteness of thejournal entry populationand inadequate validationof the completenessand accuracy
of information used within the process;
●
The failureof ourUtilities, LesakaHospitality ProprietaryLimited (formerlyknown asGAAP-Point-Of-SaleProprietary
Limited) (“LesakaHospitality”),Lesaka MerchantTechnologiesand LesakaPayments businessesto complywith theour
Sarbanesprogram,specificallyinsufficientriskassessmentandmonitoringactivitiesrelatingtosystemsandprocesses,
insufficientcontrolsoverinternalinformationandinformationfromserviceorganizations,andinsufficientdesignand
implementationofITGCs controlsoverserviceorganizationsandprocesslevelcontrols,resultinginineffectiveprocess
level controls, including a lack of validation of the completeness and accuracyof information used within the process;
●
An insufficient number of experienced and trained resources to executeon their internal control responsibilities resulting in
inadequateriskassessment,ineffectivedesign,implementationandoperatingeffectivenessofprocesslevelcontrolsfor
processesin the scope of our internal control over financial reporting evaluation.
25
A material weakness is a deficiency,or a combination of deficiencies, in internal control over financial reporting such that there
isareasonablepossibilitythatamaterialmisstatementofourannualorinterimconsolidatedfinancialstatementswouldnotbe
preventedordetectedonatimelybasis.ThematerialweaknessesidentifiedinItem9A—“ControlsandProcedures.”,resultedin
immaterial misstatements of prior period amounts, which havebeen corrected through revision of theprior period financial statements
as describedin Note 1to our consolidatedfinancial statements, andin a correctedimmaterial current periodmisstatement relatedto
revenue; they did not require amendment of any previously filed report.
Weintend to remediatethese material weaknesses.While we believethe steps wetake to remediatethese material weaknesses
will improvethe effectivenessof ourinternalcontrol overfinancialreportingand willremediate theidentified deficiencies,if our
remediationeffortsareinsufficienttoaddress thematerialweaknessorwe identifyadditionalmaterialweaknesses inourinternal
control over financial reporting in the future, our abilityto analyze, record and report financial informationaccurately, to prepare our
financial statements withinthe time periodsspecified by the rulesand forms of theSEC and to otherwisecomply with ourreporting
obligationsunderthe federalsecuritieslaws maybeadverselyaffected.The occurrenceof,or failureto remediate,these material
weaknesses and any future material weaknesses in our internal control over financial reporting may adversely affectthe accuracy and
reliability of our financialstatements and have otherconsequences that couldmaterially and adversely affectour business, including
anadverseimpactonthemarketpriceofourcommonstock,potentialactionsorinvestigationsbytheSECorotherregulatory
authorities, shareholder lawsuits, a loss of investor confidence anddamage to our reputation.
Failure to maintain effective internal control over financial reporting in accordancewith Section 404 of the Sarbanes-Oxley
Act, especially over companies that we may acquire, could have a materialadverse effect on our business and stock price.
UnderSection404ofSarbanes,wearerequiredtofurnishamanagementcertificationandauditorattestationregardingthe
effectiveness of ourinternal control overfinancial reporting. Weare required toreport, among other things,control deficiencies that
constitutea“materialweakness”orchangesin internalcontrolthat materiallyaffect,or arereasonablylikely tomateriallyaffect,
internal control over financial reporting.
A “materialweakness” isa deficiency,or acombination ofdeficiencies, ininternal controlover financialreporting suchthat
there is a reasonable possibility thata material misstatement of annual orinterim financial statements will not bepreventedor detected
on a timely basis.
The requirement to evaluate and report on our internal controlsalso applies to companies that we acquire. While we continueto
dedicate resourcesand managementtime toensuring thatwe have effectivecontrols overfinancial reporting,failure to achieveand
maintain an effective internal control environment could have a material adverse effect onthe market’s perception of our business and
our stock price.
The restatement of our priorquarterly financial statements may affect shareholder andinvestor confidence in us orharm our
reputation, and may subject usto additional risks and uncertainties, including increased costsand the increased possibility of legal
proceedings and regulatory inquiries, sanctions or investigations.
WeidentifiedmaterialmisstatementsintheoriginalfilingsofourQuarterlyReportonForm10-Qforthequartersended
September 30, 2024, December 31, 2024 and March 31, 2025 (“Original Filings”) and withdrew reliance on these Original Filings on
September 10, 2025. We filed amended quarterly reports on November 5, 2025 whichinclude restatement(s), refer to the section titled
“Restatement” in Note 1 to theunaudited condensed consolidated financial statements in each ofthe amended filings on Form 10-Q/A
forthequartersendedSeptember30,2024,December31,2024andMarch31,2025,foradditionalinformationregardingthe
restatement(s).Managementalsoidentifiedmaterialweaknessesinourinternalcontroloverfinancialreportingspecifictothe
evaluation of information that was known or knowable at the time of the transaction or event included in the OriginalFilings, refer to
Item 9A—“Controls and Procedures.”
As a result of the restatementdescribed above, we haveincurred, and may continue toincur, unanticipated costsfor accounting
andlegalfeesinconnectionwith,orrelatedto,suchrestatement.Inaddition,suchrestatementcouldsubjectustoanumberof
additional risks and uncertainties, including the increased possibility of legal proceedings and inquiries, sanctions or investigations by
the SECor otherregulatory authorities.Any ofthe foregoingmay adverselyaffectour reputation,the accuracyand timingof our
financialreporting,orourbusiness,resultsofoperations,liquidityandfinancialcondition,orcauseshareholders,investorsand
customers to lose confidence in the accuracy and completenessof our financial reports or cause the market price ofour common stock
to decline.
26
You may experience some difficulties ineffecting service of legalprocess, enforcing U.Sand/or foreign judgmentsor bringing
original actions based upon U.S. laws,including federal securities laws or other foreignlaws, against us or certain ofour directors
and officers and experts.
While Lesaka is incorporatedin the state ofFlorida, United States, substantiallyall of the company’sassets are located outside
the UnitedStates. Forthis reason,the majorityof Lesaka’sdirectors andall itsofficers resideoutside ofthe UnitedStates andthe
majority of our experts, including our independent registered public accountants,are based in South Africa.
As aresult, eventhough youcould effectservice oflegal processupon Lesaka,as aFlorida corporation,in theUnited States,
you may not be ableto collect any judgment obtainedagainst Lesaka in the UnitedStates, including any judgment basedon the civil
liability provisions of U.S. federal securities laws, because substantially all ofour assets are located outside the United States.
Any legal processes initiating action in the United States against Lesaka's directors, officers, and experts who arelocated outside
of the United States, will need to be served on them in that country, in accordance with the procedures prescribed by the relevant U.S.
court. SouthAfrica isnot aparty toany treatiesregarding theenforcement offoreign commercialjudgments. Inorder tobe ableto
enforce a foreign judgment,it is required forthe South African courts tofirst "recognize" the U.S. judgment– in the absence ofthis,
theforeignjudgmenthas noautomaticextraterritorialeffect.The foreignjudgmentconstitutes a"causeof action"whichmaybe
recognized and enforced by South African courts. In order toachieve this, legal proceedings must be commenced in theSouth African
courts.
South Africais a partyto the NewYorkConvention onthe Recognitionand Enforcementof ForeignArbitral Awards,and its
InternationalArbitrationAct15of2017providesthatforeignarbitralawardsmustberecognisedandenforcedinSouthAfrica.
However, applicationmust still be madeto the South AfricanHigh Court in orderfor the award tobe recognised andenforceable in
South Africa.
Additional,practical,considerationsrelatingtothe enforcementof foreignjudgmentsand arbitrationawards inSouthAfrica
include the following:
●
If a foreign judgment is enforced by a South African court,the approval of the SARB (or an Authorised Dealer ofSARB) is
required(i) beforeadefendantresidentinSouthAfricamaypaymoneytoanon-residentplaintiff;and(ii) tosettlethe
judgement in a currency other than South African Rand; and
●
A plaintiff who is not residentin South Africa may be requiredto provide security for costswhen initiating court proceedings
i
n South Africa (including for the enforcement of foreign judgments andawards).
27
ITEM 1B.UNRESOLVEDSTAFF COMMENTS
None.
ITEM 1C.CYBERSECURITY
WeoperateintheSouthernAfricanfintechindustry,whichissubjecttocybersecurityrisksthatcouldadverselyaffectour
business, financialcondition andresults ofoperations,including intellectualproperty theft,fraud,extortion, harmto employeesor
customers, violations of privacy laws, litigation and legal risk, regulatoryscrutiny and reputational harm.
Wehave
implemented
a risk-based approachto assessing, identifyingand managing cybersecuritythreats that couldaffect our
business, information systemsand data. Theseprocesses are integratedinto our broaderenterprise risk managementframework, and
cybersecurity risks are assessedand prioritized alongside ourother principal enterprise risks.Our cybersecurity programis informed
byrecognizedstandardsandregulatoryrequirementsapplicabletoourbusiness,includingPCIDSS,theNISTCybersecurity
Framework, SARB / Prudential Authority requirements applicable to cybersecurityand cyber-resilience within the National Payment
System, andthe CISCritical Controls.During theyear,we continuedto matureour cybersecurityprogram, includingthrough our
transitiontoNISTCSF2.0,furtherdevelopmentofcyberriskgovernanceprocesses,andcontinuedexecutionofdivisional
cybersecurity roadmaps.
Weperiodically conduct
third
-party securityrisk assessmentsto
assess
the potentialimpact andlikelihood ofcyber scenarios
andto informappropriate mitigationstrategies andcontrols. Weuse acombination oftechnical, administrativeand organizational
controls to manage cybersecurity risk, includingendpoint and network monitoring, security operations monitoring,identity and access
controls, data protection tools,vulnerability management, penetration testing, threatintelligence, backup and recoveryprocedures, and
cyber awarenessand trainingprograms. Wealso conductperiodic phishingsimulations andcrisis simulationsto supportworkforce
preparedness and incident-response readiness.
We maintain incident-response processes designed to provide a consistent basis for the identification, escalation, assessmentand
responsetocybersecurityincidents.Duringtheyear,weissuedanupdatedGroupIncidentResponsePlantosupportdivisional
incident-response playbooks.
Wealsomaintainprocessestooverseecybersecurityrisksassociatedwiththird-partyserviceprovidersthathaveaccessto
personal, confidentialor proprietaryinformation orsupport significantbusiness processes.During theyear,we enhancedour third-
party risk management processes, including additional due diligence and assurance requirementsfor certain service providers and the
establishment of across-functional working group involvingprocurement, finance, risk andcompliance, legal andinformation security
personnel to support vendor risk oversight.
Management,ledbyour
Group
ChiefInformationSecurityOfficer(“
CISO
”)
andsupportedbyinformationsecurity,risk,
compliance,legalandfinancepersonnel,isresponsibleforassessingandmanagingcybersecurityrisks.
Managementreceives
information regarding cybersecurity risks through security monitoring, risk assessments, vulnerability assessments, incident-response
processes,third-partyriskreviewsandreportsfrominternalandexternalsecurityproviders.Materialcybersecuritymattersare
escalated to senior management and, where appropriate, to the Audit Committeeand Board.
The Board oversees cybersecurityrisk through the AuditCommittee.
The Audit Committee receivesquarterly reports fromthe
Group CISO regardingcybersecurity posture, complianceactivities, progress againstthe Group cybersecuritystrategy and roadmap,
third-party risk,and materialcybersecurity incidents,if any,and relatedremediation.
The GroupCISO isa qualifiedcybersecurity
professionalwithover25yearsofexperienceandholdsaMaster’sinInformationSecurityfromRoyalHolloway,Universityof
London.
The Audit Committee reports to the Board on cybersecurity matters.
Ourbusinessdependsonthe availability,reliabilityandsecurityofourinformationsystems,networks,dataandintellectual
property. Any disruption, compromise or breach of our systems or data due to a cybersecurity threat or incident could adversely affect
ouroperations,customerservice,productdevelopmentandcompetitiveposition.Suchaneventcouldalsoresultinbreachof
contractualobligationsorlegaldutiestoprotecttheprivacyandconfidentialityofstakeholdersandcouldexposeustobusiness
interruption,lostrevenue,remediationcosts,liabilitiestoaffectedparties,cybersecurityprotectioncosts,lostassets,litigation,
regulatory scrutiny and actions, reputational harm, customer dissatisfaction, harmto vendor relationships or loss of market share.
As of the date ofthis Annual Report, we do
not
believe that risks from cybersecurity threats, including asa result of any previous
cybersecurityincidents,havemateriallyaffectedorarereasonablylikelytomateriallyaffecttheCompany,includingitsbusiness
strategy,results of operations orfinancial condition.
This Item 1C shouldbe read in conjunctionwith Item 1A, “RiskFactors,” for a
c
omprehensive understanding of the risks and uncertainties related to our businessand operations.
28
ITEM 2.PROPERTIES
Weleaseourcorporateheadquartersfacilitywhichconsistsofapproximately90,880squarefeetinDunkeld,Johannesburg,
SouthAfrica.WealsoleasepropertiesthroughoutSouthAfrica,including217financialservicesbranches,17financialservice
community sites andeight sites to supportour integrated POSsoftware and hardwareto the hospitalityindustry operations. Wealso
lease additional office space in Johannesburg, Cape Town,and Durban, South Africa; Gaborone, Botswana; WindhoekNamibia; and
Nairobi, Kenya.These leasesexpire atvarious datesthrough 2036,assuming theexercise ofoptions toextend. Webelieve thatwe
have adequate facilities for our current business operations.
ITEM 3.LEGAL PROCEEDINGS
Litigation related to CPS
Lesaka SA was party to proceedings in the Constitutional Court of SouthAfrica involving its former subsidiary, Cash Paymaster
Services Proprietary Limited (“CPS”), which is inliquidation. The key objective ofthese proceedings was to procure anorder for CPS
to beordered topay to theSouth AfricanSocial Security Agency(“SASSA”) the profitgenerated by CPSfrom an agreementconcluded
between SASSA and CPS, following SASSA awardinga tender to CPS. Thisarose from prior court proceedings whichconcluded that
the tender shouldnot have beenawarded to CPS(for technical reasons notrelated to anymisconduct by CPS). LesakaSA was included
in these proceedings to provide information relevant to determining the profit so made by CPS. The Constitutional Court delivered its
ruling onApril 8,2026. TheCourt orderedCPS to refundcertain adjustedcertified profitsto SASSA.The Courtdid notmake any
adverse order against Lesaka SA. The Court’sruling concluded the matter.
General
We are, fromtime to time, subject to claims and suits, or threats of claims or suits, relatingto our business, including claims for
damages for personal injuries,breach of contract andemployment related claims. Incertain of these actions,plaintiffs request payment
for damages, including punitive damages, which may not be covered by insurance or may otherwise have a material adverse effect on
our business or results ofoperations. In the opinionof management, we arenot currently a party toany proceedings that wouldhave
a material adverse effect on our business, financial condition,or results of operations.
ITEM 4.MINE SAFETY DISCLOSURES
N
ot applicable.
29
PARTII
ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY,RELATED STOCKHOLDERMATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market information
Our common stock is listed on The NASDAQ Global Select Market, or Nasdaq, in the United States underthe symbol “LSAK”
and on the JSE in South Africa under the symbol “LSK.” The Nasdaq isour principal market for the trading of our common stock and
we have a secondary listing on the JSE.
Our transferagent inthe UnitedStates isComputershare ShareownerServices LLC,480 WashingtonBlvd, JerseyCity,New
Jersey,07310. Accordingto therecords ofour transferagent, asof September7, 2026,there were6 shareholdersof recordof our
common stock.Webelieve thata substantiallygreater numberof beneficialowners ofour commonstock holdtheir sharesthough
banks, brokers,and other financialinstitutions (i.e. “streetname”). Our transferagent in SouthAfrica is JSEInvestor Services (Pty)
Ltd, One Exchange Square, 2 Gwen Lane, Sandown, Sandton, 2196, SouthAfrica.
Dividends
Wehave notpaid anydividends onshares of ourcommon stockduring ourlast twofiscal yearsand presentlyintend toretain
future earnings to finance the expansion ofthe business. We do not anticipate paying any cash dividends inthe foreseeable future. The
future dividend policy will depend on our earnings, capital requirements, debt commitments, expansion plans, financial condition and
other relevant factors.
Issuer purchases of equity securities
On September 2, 2025, our board of directors approved a share repurchase authorization to repurchase up to an aggregate of $15
million of ourcommon stock. Theauthorization has noexpiration date. Thisshare purchase authorizationreplaces our $100million
share repurchase authorization.
The tablebelow presentsinformation relatingto purchasesof sharesof ourcommon stockduring thefourth quarterof fiscal
2026:
Period
(a)
Totalnumber of
shares purchased
(b)
Average price
paid per share ($)
(c)
Totalnumber of shares
purchased as part of
publicly announced
plans or programs
(d)
Maximum dollar value
of shares that may yet
be purchased under the
plans or programs ($)
April 2026
0
-
-
15,000,000
May 2026
(1)
5,625
4.93
-
15,000,000
June 2026
0
-
-
15,000,000
Total
5,625
-
(1) Relates to the delivery of shares of our commonstock to us by certain of our employees to settle their incometax liabilities.
These shares do not reduce the repurchase authority under our current$15 million share repurchase program.
form10kp32i0
30
Share performance graph
The chartbelow comparesthe five-yearcumulative return,assuming thereinvestment ofdividends, whereapplicable, onour
common stock with that of the S&P 500 Index and the NASDAQ Industrial Index. This graph assumes$100 was invested on June 30,
2021, in each of our common stock, the companies in the S&P 500 Index, and the companies in theNASDAQ Industrial Index.
ITEM 6.[RESERVED]
31
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND
RESULTSOF OPERATIONS
The followingdiscussion andanalysis shouldbe readin conjunctionwith Item8—“Financial Statementsand Supplementary
Data.” Inadditionto historicalconsolidatedfinancialinformation,the followingdiscussionandanalysis containsforward-looking
statements that involve risks, uncertainties and assumptions. See Item 1A—“Risk Factors” and “Forward Looking Statements.”
U.S. securities lawsrequire that whenwe publish anynon-GAAP measures, wedisclose the reasonfor using thesenon-GAAP
measuresandprovidereconciliationstothemostdirectlycomparableGAAPmeasures.Wediscusswhyweconsideritusefulto
present these non-GAAPmeasures and thematerial risks andlimitations of thesemeasures, as wellas a reconciliationof these non-
GAAP measuresto themost directlycomparable GAAPfinancial measurebelow at“—Results of Operations—Use of Non-GAAP
Measures” below.
Overview
Weofferanintegratedandholistic multiproductplatformthatprovidestransactionalaccounts,lending,insurance,merchant
acquiring,cashmanagement,softwareandADP.Targetedsolutionsandintegrationsfacilitatepaymentsbetweenconsumersand
businesses. By providing a full-service fintech platform in our connected ecosystem, we facilitate the digitization of commercein our
markets.
Sources of Revenue
We generate revenue through a diversified portfolio of financial, payment, software, and technology solutions,structured across
three reportable segments: Merchant, Consumer,and Enterprise.
Merchant
Revenues in Merchant are derived from a combination of transaction-basedfees and an ad valorem pricing model.
●
Merchant acquiring:
Weearn revenuefrom merchantacquiring on anad valorem basis,based on apercentage of thetotal
transaction value processed through our network. Wealso earn revenue from transaction fees charged to merchants.
●
Software:
Revenueis generatedfromprovidinglicensingsoftwareandtechnologyservicesandthroughsellinghardware
(such as POS devices) to merchants.
●
Cash:
We earn revenue on an ad valorem basis,based on a percentage ofthe total cash settlementsprocessed through our cash
vaulting network. Wealso earn transaction fees when customers utilize our ATMnetwork.
●
Lending:
We generate interest revenue from qualifying merchant customers who are able to access short-term businessloans.
This revenue stream includes interest charged on outstandingloan balances.
●
ADP:
We alsooffer merchant customers access toplatforms through which we (a) generaterevenue from the sale of prepaid
airtime andgenerate feesfrom distributionof ADP,including prepaidsolutions (airtime,data, electricityand gaming),and
supplierenabledpayments(billpayments,internationalmoneytransfersandsupplierpayments).Thesefeesarelargely
charged on an ad valorem basis.
Consumer
Revenues in Consumer are generated from transactional banking fees, interest income, insurance premiums and card transaction
processing fees.
●
TransactionalFees:
Weearnrevenuebychargingamonthlyfeeandchargefeesonanadvalorembasisforgoodsand
services purchased.Transactionalfees associatedwith ourconsumeraccounts includemonthlyaccount servicefees, ATM
withdrawal fees, and other fees based on usage.
●
Lending:
Revenuefromourlendingproductsisderivedfromacombinationoforiginationfees,monthlyintereston
outstanding loan balances and monthly service fees.
●
Insurance:
Revenue from our insurance offerings is earned monthlyand includes premiums paid by policyholders.
Enterprise
Like Merchant, Enterprise generates revenue from a combination of transaction-basedfees and an ad valorem pricing model.
●
ADP:
Revenue from ourADP offeringfor Enterprise clientsis primarily basedon a fixedfee per transaction.A secondary
pricing model is on an ad valorem basis, depending on the specific digital productbeing sold.
●
Utilities:
Our utilities vertical generates revenue predominantly through an annuity-based model, with fees charged on an ad
valorem basisbased onthe totalvalue ofelectricity vendedthrough ourplatform. Ad-hochardware salesof utilitymeters
also an additional contribution to revenue which are sold on a fixed price basis.
●
Other:
Our payment solutions enablepayment acceptance for usand external enterprises,on which we earna fixed fee per
transaction processed.
32
Developments during Fiscal 2026
Thisitemdiscussesourfiscal2026resultsacrossourthreereportablesegments:Merchant,Consumer,andEnterprise.
Discussions of ourfiscal 2025 resultscompared to ourfiscal 2024 resultscan be foundwithin our AnnualReport on Form10-K for
the year ended June 30, 2025.
Group Level:
1.
Merchant
Fiscal 2026marks apivotal yearof transformationand consolidationfor Merchant.Following theacquisitions ofthe Adumo
Group in fiscal 2025, the division has been undertaking adeliberate, multi-faceted integration designed to eliminate duplication, unify
ourbrandgo-to-marketapproach,andbuildasingle,multi-productplatformservingmerchantsacrossallsegments.This
transformation alsoincluded bolsteringoperational analytics,which nowaligns theMerchant revenuedrivers toa number ofactive
merchants andARPU (AverageRevenue PerUser) basis,akin toConsumer.New leadershipwas appointedto drivethe integration
executingagainsta clearset ofpriorities:integratingour Communityand CorporateMerchantchannels undera unifiedoperating
model, rationalizing cost and infrastructure and deepening product penetrationacross our merchant base.
2.
One Lesaka: Unification of Group Branding
In November2025, welaunched arefreshed Lesakamaster brand,accelerating therealignment ofall merchant-facingbrands
including Kazang,Adumo, GAAP,Card Connect,and Capital Connectunder asingle “One Lesaka”identity.Weexpect fullbrand
alignment tobe substantiallycomplete bythe end ofcalendar 2026,with certainbrands alreadytransitioned. Thisunification isnot
merely cosmeticbut itreflects theconsolidationof ouroperating infrastructure,sales force,and distributionchannels intoa single
integrated model. Coupledwith the branding change,we have consolidated ourJohannesburg officefootprint into a single hub,with
similar exercises close to completion inboth Cape Town and Durban. As aresult of these unification actions, wehave incurred Lesaka
brand refreshexpenses (treatedas aonce-off item)and increasedintangible assetamortization chargesdue tothe shorteningof the
deemed useful lives of certain brand trademark assets in fiscal 2026,and recorded right-of-use lease impairments.
3.
Deleveraging: Approaching Our Medium-TermCapital Structure Target
Ourcapitalstructurehascontinuedtostrengthenmateriallyoverthecourseoffiscal2026,buildingonthedebtrefinancing
actions in fiscal2025 and 2026.Net debt toGroup Adjusted EBITDAhas reduced progressivelythrough the year,from 2.9 times at
the startof thefiscal yearto 1.9times bythe endof thefiscal year,achieving ourmedium termtarget of2.0 timesor lower.This
deleveraging has been achieved alongside continued investment in growth,including in our lending books, and reflects the combined
benefit of thelower funding costssecured through ourfiscal 2025 and2026 refinancing, thecash generation ofthe underlying business,
anddisciplinedcapitalallocationacrosstheGroup.WeexpecttheproposedBankZerotransaction,oncecompleted,tosupporta
further step-changein our fundingprofile by enablingLesaka to fundlending growthincreasingly throughcustomer deposits rather
thanwholesaledebt,representingfurtherstructuralimprovementtotheGroup'sfundingprofileandanadditional,significant
deleveraging event at the Group level.
4.
Portfolio Rationalization and Exit of Non-CoreActivities
During fiscal 2026,we have continuedto simplify theGroup. Inthe third quarter, wemade thedecision to exitour ATM business,
whichwehadconcludedwasstructurallyloss-makingandimmaterialinscale,recognizinganimpairmentandonce-offcostsof
approximatelyZAR 27millioninconnectionwiththewind-down.In thesame quarter,wesunsetSwitchPayProprietaryLimited
(“SwitchPay”),alegacybuy-now-pay-laterproduct,recognizinganimpairmentof$0.4million(ZAR6.5million).Wealso
deregistered Masterpayment GmbH (“Masterpayment”),a legacy offshore entity, recognizing a gain of $0.9 million (ZAR 14 million)
on deregistration, andreversed a $1.5million (ZAR 25 million)receivables allowance followingthe successful collectionof monies
owed inrespect ofa legacyinvestment. Earlierin fiscal2026, wefinalized theliquidation ofCPS, releasingprovisions ofZAR 65
million,anddisposedofour remainingstakeinCell-Cforproceedsof $3.9million(ZAR 50million).Theseactions collectively
representthesubstantialcompletionofthenon-coreportfoliorationalizationthathasbeenundertakensincefiscal2023,allowing
managementtofocuscapitalandattentiononourscalable,digitally-ledgrowthplatformswithabalancesheetrepresentativeof
present-day Lesaka and no material legacy investments.
5.
Proposed Acquisition of Bank Zero: RegulatoryProgress
OurproposedacquisitionofBankZeroMutualBank,announcedonJune26,2025,hasprogressedthroughkeyregulatory
milestonesduringfiscal2026.InNovember2025,theSouthAfricanCompetitionCommissionrecommendedapprovalofthe
transaction,and theCompetition Tribunalsubsequently grantedits approvalin thesecond quarterof fiscal2026, asignificant step
forward in the transaction timeline. We continue to engage withthe Prudential Authority of theSouth African Reserve Bank regarding
its finalapproval,whichremains outstandingalongsideSouthAfricanExchangeControlapproval.As theseremainingregulatory
consents are still being procured, on June 11, 2026 we agreed with the Bank Zerosellers’ representatives to extend the long-stop date
for fulfilment or waiver of remaining conditions precedent from August 6, 2026to January 31, 2027. We do not believe this extension
s
ignals any impediment to closing; rather,it reflects the ordinary pace of the outstanding Prudential Authority process.
33
Once completed, thetransaction is expectedto deliver meaningfulfunding and balancesheet benefits, includinga reduction in
gross debt of more than ZAR 1 billion, whereby Lesaka can fund lending growth through Bank Zero, supporting further deleveraging
and improved cash conversion.
Operating Segment Level:
Merchant
We manage our Merchant operations through two distinctchannels: Community, which focuses on local, high-growth businesses
acquiredthrough direct,face-to-facesales andrapidconversion cycles;andCorporate, whichserves large-scale organizationsand
franchises requiring customized, multi-product solutions througha strategic, long-term sales process.
In the secondquarter of fiscal2026, we introduceda refinedreporting framework forthe Merchant divisionto better represent the
primarydriversofourrevenueandperformance.Developedthroughacomprehensivereviewofouroperationalanalytics,this
frameworkalignsourMerchantmetrics, specificallyactivemerchantcountandblendedARPU withourConsumerdivision
to provide a holistic viewofourecosystem.Wearetreatingthisupdatedapproachasabaselineforfuturecomparisonstoensure
consistent reporting across ourchannels; as such,this transition mayresult in non-material inconsistencieswith certain legacy metrics.
Our definitionof an activemerchant is anymerchant that hasmade a voluntarytransaction (debit and/orcredit) within thelast
90 days. Previously, we reportedon a pointof presence basis,which was morefocused on ourdevice estate. Thisupdated methodology
of an active merchant reflects the revenue generatingengagement of our entire Merchant base and more accuratelytracks our current
and future monetizationstrategy for thedivision. ARPU excludesonce-off and non-recurringrevenue such ashardware and installation
costs as well as revenue from non-South African subsidiaries.
The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related Key
Performance Indicators (“KPI’s”) are shown below.
2026
2025
2026 vs
2025
Merchant
Active Merchants
131,545
127,588
3%
Merchant ARPU
(1)
(ZAR per month)
1,784
1,884
(5%)
Product Penetration Rate: 2 or more products
46%
46%
0%
Product Penetration Rate: 3 or more products
7%
10%
(29%)
Merchant: Acquiring
Active Merchants
73,714
70,294
5%
Total Payment Volume(“TPV”) (ZAR billions)
43.7
34.5
27%
Merchant: Software
Active Merchants
9,738
9,755
(0%)
Merchant: Cash Management
Active Merchants
4,942
4,837
2%
TPV (ZAR billions)
119.0
114.8
4%
Merchant: Lending
Lending Origination (ZAR millions)
844
847
(0%)
Net Lending Portfolio Outstanding (ZAR millions)
463
402
15%
Merchant: Alternative Digital Products
Active Merchants
101,659
98,222
3%
TPV (ZAR billions)
54.8
41.7
31%
TPV - Prepaid Solutions (ZAR billions)
23.5
20.9
12%
TPV - Supplier Enabled Payments (ZAR billions)
31.2
20.8
50%
Notes:
(1) ARPU is calculated on a revenue peractive merchant basis based on a 3-month rolling average for thequarter ended June 30,
2026.
34
Notable developments within Merchant:
Within Merchant Acquiring: Year-on-year comparison of TPV are not meaningfulas fiscal 2025 only included Adumo for nine
months, which isin the Corporatechannel. In theCommunity channel it iscomparable and TPVattributable to the Communitychannel
increased to ZAR 15.7billion representing 15% year-on-yeargrowth. This was drivenprimarily from the continuedstrategy to offer
a multi-product offeringfocused on cash managementsolutions and ADP,particularly Supplier EnabledPayments, to attract greater
merchant acquiring volumes in this segment.
WithinSoftware: Continuedfocus ondeploying Unity,our cloud-basedpoint-of-sale (POS)software offeringto existingand
new merchants. Unity has a lower monthly cost than on-premises solutions, the increase in client numbers was offset by a decrease in
average revenue per user,resulting in core revenueremaining flat. Migration toUnity enables easier integrationof our Software and
Acquiring propositions into one holistic bundle. Approximately 17%of our Software base currently use the Unity offering.
WithinCash: Ourbusiness isexperiencing differingsecular trendsin itstwo distinctmarkets. Atthe Corporatechannel, cash
continuestoexperienceadownwardtrendofgrowthasdigitalpaymentadoptionprogressivelyincreasesinthissector.Atthe
Community channel,we continue tosee growth forour cash managementsolutions, with cashTPV growthtotaling to 55%year-on
year. The Community channelnow accounts for20% of allprocessed cash TPVprocessed. This signalsrapid growth amongmerchants
within this segment aiming to digitize their cash holdings.
WithinLending:Lendingoriginationsremainedflatyear-over-year,primarilyreflectingtheongoingproductrefinementand
distribution strategy forthis specific productwithin the Corporatechannel.Weexperienced a modestincrease in aggregate portfolio
duration over the period.
Within ADP: Core to our device placement strategy is the decisionto focus on quality business and optimizing our existingfleet.
This can beseen through theTPV growth whichis primarily drivenby our SupplierEnabled Payment product,delivering 50% year
on-yeargrowth.ThisenablesCommunityMerchantstodigitizetheirrequiredpaymentstosuppliersatcompetitivepricingand
introducesthem tothe LesakaMerchant ecosystem.Withinthe PrepaidSolutions product,TPV processeddelivered 12%year-on-
year growth. Although wecontinue to see sustained marginpressures from wholesale providersof airtime, we haveseen an offset in
TPV processed for other prepaid products such as electricity and vouchers.
Consumer
Our consumer base includes South African grant beneficiaries and otherLesaka Payouts cardholders.
Our grant beneficiary base includes both permanent andnon-permanent grant beneficiaries. As Consumer has evolved, both sub-
categories of consumers are revenue generating and hence the combined consumer base metrics shown below are most appropriateto
measure the performance of the division financially and operationally.Although historically we have shown these metrics separately,
it is maintained that approximately 89% of the active consumer baseare permanent grant beneficiaries.
Our definition of anactive consumer is anyconsumer that has madea voluntary transaction (debitand/or credit) within thelast
90 days. Consumers who may becharged a monthly banking feebut have not made a voluntary transactionin the last 90 days would
not be considered an active consumer.
The definition ofan active consumerreflects the revenuegenerating engagement ofour entire consumerbase and moreaccurately
tracks our current and future monetization strategy forthe division. We will continue to show the Lesaka Payouts separatelygiven this
follows a different monetization model.
35
TheunderlyingdriversofARPU performancearebasedoncross-sellproductpenetrationandtheindividualproductrelated
KPI’s are shown below.
2026
2025
2026 vs
2025
Consumer
Active Consumers (millions)
2.08
1.88
11%
ARPU
(1)
(ZAR per month)
94
82
15%
Product Penetration Rate: 2 or more products
51%
45%
11%
Product Penetration Rate: 3 products
20%
16%
23%
Consumer: Transactional Accounts
Active Consumers (millions)
2.08
1.88
11%
Net Activations (thousands)
202
349
(42%)
Consumer: Lending
Number of Loans Originated (thousands)
1,523
1,299
17%
Lending Origination (ZAR millions)
3,769
2,500
51%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,396
997
40%
Consumer: Insurance
Number of Insurance Policies Written (thousands)
278
215
29%
Active Insurance Policies (thousands)
753
563
34%
Gross Written Premium (ZAR millions)
528
376
41%
Consumer: Lesaka Payouts
Approximate number of active cardholders (thousands)
174
213
(18%)
Approximate load value for the period (ZAR millions)
770
604
27%
Notes:
(1) ARPU iscalculated ona revenueper active consumerbasis whereby anactive consumercan be botha permanent andnon
permanent grant. ARPU is a monthly figure based on a 3-month rollingaverage for the quarter ended June 30, 2026.
(2) Gross loan book, before provisions.
Notable developments within Consumer:
WithinTransactionalAccounts:Growthinactiveconsumerswasdrivenprimarilybycontinuedproductandtechnology
innovation, including Bonngwe (our proprietary Customer Relationship Management (“CRM”) engine). These improvements to sales
consultantandconsumerexperiencehavedrivenhighercross-sellpenetrationforbothourexistingbaseandnewlyonboarded
consumers.Aswegrowourdistributionfootprint,furthergrowthinactiveconsumershascomefromproductaugmentation,an
examplebeingPushaManje,ourUSSD-focused,direct-to-consumerADP platform,whichallowsconsumerstopurchase airtime,
electricity, and otherproducts directly from a mobile phone.
Within Lending: Wehave continued to see strong growth in our lending products, with credit loss ratios tracking below ourrisk
appetite.Reflectingtherealizedlossexperiencethathasconsistentlycomeinbelowprovisioninglevels,andsupportedby
enhancements to assessmentcriteria e.g. affordability, we haveadjusted our provisioningfrom 6.5%to 5.5% ofthe outstanding lending
portfolio. The revised rate reflects management's current best estimate of expected credit losses and remains subject to regular review
as the book evolves.
WithinInsurance: Our insuranceproduct sawcontinued growthin GrossWrittenPremiums writtenwhich hasbeen drivenby
continued adoptionof our Bonngweengine, enablingsales consultantsto cross-sellan insurancepolicy inan efficientmanner. We
have launched our open market insurance offering which allows for consumers outside of the Lesaka base to purchase apolicy, which
represents a key growth vector for the product offering.
36
Enterprise
Our EnterpriseDivision primarilyconsists ofour ADPoffering(which includesprepaid solutionsand billpayments) andthe
Utilities offering.
The underlying drivers ofperformance are primarily basedon TPV processed. Individualproduct related KPI’s are shown below.
2026
2025
2026 vs
2025
Enterprise: ADP
TPV (ZAR billions)
48.0
40.9
17%
Enterprise: Utilities
Active Meters (thousands)
382
345
11%
TPV (ZAR millions)
1,934
771
151%
Notable developments within Enterprise:
Within ADP: Wecontinue to seeincreased TPV forbill payments drivenfrom increased usage fromour existing bankchannel
partners,whichgrewprimarilyfromtargetedmarketingcampaignsaswellasnewlyonboardedchannelpartnersacrossbanking,
fintech and retail. Thelaunch of our “4All” product,a multi-store of value voucherwhich can be redeemed at40+ partners, has seen
continued growth in TPV at higher take ratesthan bill payments, despite still being in earlydevelopment. We have now migrated 95%
of all other subproducts of ADP TPV offered in Merchant viathe Enterprise division, reducing reliance on external partners.
WithinUtilities: Wedelivered resultsconsistent withthe stable,recurring natureof thebusiness, underpinnedby transaction-
basedrevenuecoupledwithcontinuedgrowthinthenumberofconnectedmetersandsustaineddemandforprepaidelectricity
vouchers. Year-over-year comparisons for the vertical are not meaningful, as the business was consolidated into our results only from
the third quarter of fiscal2025 and therefore contributeda partial period in the prioryear against a full twelvemonths in fiscal 2026.
Performanceover theperiod reflectedthe product’score strengthsof predictable,annuity-likerevenue streamsand steadyvolume
growth.
Critical Accounting Policies
Our audited consolidatedfinancial statements havebeen prepared in accordancewith U.S. GAAP,which requires management
tomakeestimatesandassumptionsaboutfutureeventsthataffectthereportedamountofassetsandliabilitiesanddisclosureof
contingent assets and liabilities.As future events andtheir effects cannot bedetermined with absolute certainty,the determination of
estimates requiresmanagement’sjudgment basedon avariety ofassumptions andother determinantssuch ashistorical experience,
currentandexpectedmarketconditionsandcertainscientificevaluationtechniques.Managementbelievesthatthefollowing
accounting policiesare critical dueto the degreeof estimation requiredand the impactof these policieson the understanding of the
results of our operations and financial condition.
Recoverability of Goodwill
A significant componentof our growthstrategy is to acquireand integrate businessesthat complementour existing operations.
The purchaseprice ofan acquiredbusiness isallocated tothe tangibleand intangibleassets acquiredand liabilitiesassumedbased
upon their estimatedfair value at thedate of purchase.The difference betweenthe purchase price andthe fair value ofthe net assets
acquired isrecorded as goodwill.In determiningthe fair valueof assets acquiredand liabilities assumedin a businesscombination,
we use variousrecognized valuation methods, includingpresent value modeling.Further, we make assumptionsusing certain valuation
techniques, including discount rates and timing of future cash flows.
Wereview thecarrying valueof goodwillannually (June30) ormore frequentlyif circumstancesindicating impairmenthave
occurred.For instance, we performed interim impairment testing as of March 31,2026, related to goodwill allocated to our Switchpay
reportingunitwithinourMerchantsegmentastriggeringeventswereidentifiedoutsideoftheannualimpairmenttestdate.In
performing this review,we are required to estimatethe fair value of goodwill thatis implied from a valuation ofthe reporting unit to
which the goodwillhas been allocatedafter deducting thefair values ofall the identifiableassets and liabilitiesthat form partof the
reporting unit. The determination of thefair value of areporting unit requires us tomake significant judgments and estimates.Changes
in these judgements andestimates may impacton the outcomeof the impairment test.For instance, thefair value of theLesaka Payouts
reporting unit included inour Consumer segment exceededthe carrying value of thereporting unit as of June30, 2026, by 15.8%.If
we had useda weighted averagecost of capital(“WACC”)rate that was2% higher,we would haverecorded an impairmentof $0.4
million, and if the WACCrate was 2% lower, the headroom wouldhave increased from 15.8% to 45.3%.
37
In determining the fair value ofreporting units for fiscal 2026and fiscal 2025, we consideredkey judgements related to reporting
unit revenue growth rates, the weighted-average cost of capital applicable to peer and industry comparables of the reporting units and
the forecast period to be used. In determining the fair value of reportingunits for fiscal 2024, our key judgements related to reporting
unit revenue growth rates and the weighted-average cost of capital applicable to peer and industry comparables of the reporting units.
We base our estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. In addition, we
make judgmentsand assumptionsin allocatingassets andliabilities toeach ofour reportingunits. Referto Note10 toour audited
consolidated financial statements for a summary of the key judgements used inour impairment testing.
The results of our impairment tests during fiscal 2026 and 2025 indicated that the fair value of our reporting units exceeded their
carrying values, with theexception of the$0.4 million (relatedto the SwitchPayreporting unit) and$17.0 million (relatedto the Lesaka
Cash Management,Lesaka MT,LesakaPayoutsandLesaka AlternativeDigitalProductsProprietaryLimited(formerlyknownas
EasyPay ProprietaryLimited) (“LesakaADP”) reportingunits), respectively,of goodwillimpaired duringfiscal 2026and 2025,as
discussed in Note 10 to our audited consolidated financial statements. The results of our impairment tests during fiscal 2024indicated
that the fair value of our reporting units exceeded their carrying values and so did notrequire impairment.
Intangible Assets Acquired Through Acquisitions
Thefair valuesof theidentifiableintangibleassets acquiredthroughacquisitionswere determinedby managementusingthe
purchase methodof accounting.Wecompletedthe acquisitionof AtomOperations ProprietaryLimited (“Atom”)and MobileMart
during fiscal 2026where we identified and recognized intangible assets. Wecompleted the acquisition of Adumo and Utilities during
fiscal 2025where we identifiedand recognizedintangible assets. Wedid notidentify anysignificant intangibleassets related tothe
LesakaInsightsProprietaryLimited(formerlyknownas TouchsidesProprietaryLimited)(“LesakaInsights”)acquisitionin fiscal
2024. Weused therelief fromroyalty methodto valueidentified brandsidentified inthe Adumoacquisition, andthe multi-period
excess earnings method tovalue identified customer relationshipsand the replacement costapproach to value theidentified technology
assetsrelatedtoAtom,MobileMart,AdumoandUtilities.Wehaveusedtherelieffromroyaltymethod,themulti-periodexcess
earnings method, the income approachand the cost approach to value otherhistoric acquisition-related intangible assets. Inso doing,
we made assumptions regarding expected futurerevenues and expenses to develop theunderlying forecasts, applied contributory asset
charges, WACCrates, and useful lives.
The valuations were based on information available at thetime of the acquisition and the expectations andassumptions that were
deemed reasonable by us. No assurance can be given, however,that the underlying assumptions or events associated with such assets
will occur asprojected. For thesereasons, among others,the actual cashflows may varyfrom forecasts offuture cash flows.Tothe
extent actual cash flowsvary, revisionsto the useful lifeor impairment of intangibleassets may be necessary.Management assesses
the useful life ofthe acquired intangible assetsupon initial recognition and revisionsto the usefullife or impairment ofthese intangible
assets may be necessary in the future.
For instance, during earlycalendar 2025, our executiveconsidered the unification ofour merchant segments operationsand the
realignment ofour brandsunder themaster brand“Lesaka”.
We
have identifiedthe stepsand timingto realignthe affectedbrands
under the masterbrand and expectto have completealignment by February2027, with certainbrands alreadyaligned by December
2025. The change in brandshas resulted in a changein the useful lives of certainof our brand and trademarkintangible assets which
has resulted in an increase (excluding the impact on “Adumo” and “GAAP” brands) in amortization expense of $6.3 million and $2.6
million duringthe yearsended June 30,2026 and 2025,respectively,compared withthe comparativeperiods assumingthe original
useful lives.Furthermore, werecorded animpairment lossof $1.8million relatedto LesakaMT intangibleassets whichwere fully
impairedduringtheyearendedJune30,2025.RefertoNote10ofourauditedconsolidatedfinancialstatementsforadditional
information.
Revenue recognition – principal versus agent considerations
We generaterevenue from the provision of transaction-processingservices through our various platformsand service offerings.
We use these platforms to (a) sell prepaid airtimevouchers that are held asinventory and (b) distribute ADP, including prepaid airtime
vouchers (which we do not hold as inventory), prepaid electricity, gaming vouchers, and other services, to end consumers through our
platforms. The determination of whether we act as a principalor as an agent when providing these services usingguidance contained
in
AccountingStandardsCodification(“ASC”)606RevenuefromContractswithCustomers
requiresasignificantamountof
judgement. Whenwe are theprincipal ina transaction,revenue is reportedon a grossbasis. Whenwe are anagent ina transaction,
revenueis recognizedbased onthe amountthatwe arecontractuallyentitled toreceiveforperformingthe distributionservice on
behalf of our customers.
38
Finance Loans Receivable and Allowance for Credit Losses
Merchant lending
The allowance for credit losses related to Merchant finance loans receivables is calculated by multiplying the expected write-off
rate fordoubtful or legaldebt with thetotal actual receivablesin defaultplus multiplying theexpected lossrate with themonth-end
outstanding lending book. Our risk management procedures include adhering to our proprietary lending criteria which uses an online-
system loan applicationprocess, obtainingnecessary customertransaction-history dataand credit bureauchecks. Weconsider these
procedures tobe appropriatebecause ittakes intoaccount avariety offactors suchas thecustomer’s creditcapacity andcustomer-
specific risk factors when originating a loan.
Weuse historical defaultexperience over thelifetime of loansgenerated thusfar in orderto calculatean expected lossrate for
the lending book.In addition,management determines theexpected write-off ratefor doubtfulor legaldebt basedon historicalrecovery
trends fordefaulted receivables.The allowancefor creditlosses related tothese merchantfinance loansreceivables iscalculated by
multiplying the expectedwrite-off rate fordoubtful or legaldebt withthe totalactual receivables indefault plus multiplyingthe lifetime
loss rate with the month-end outstanding lending book. The expected loss rate as of June 30,2026 and June 30, 2025, was 3.21% and
1.14%,respectively.The performing component (that is,outstanding loan payments notin arrears), under-performing component (that
is,outstandingloanpaymentsthatareinarrears)andnon-performingcomponent(thatis,outstandingloansforwhichpayments
appeared to have ceased) ofthe book represents approximately 92%,7% and 1%, respectively,of the outstanding lending bookas of
June30,2026.Theperformingcomponent,under-performingcomponentandnon-performingcomponentofthebookrepresents
approximately 95%, 4% and 1%, respectively,of the outstanding lending book as of June 30, 2025.
Consumer microlending
The allowance for credit losses related to Consumer finance loans receivables is calculated by multiplying the expected loss rate
with the month-end outstanding lending book, excluding upfront initiation fees.Loans to customers havea tenor of upto nine months,
with the majority of loans originated having a tenor of six months. Credit bureauchecks as well as an affordability test are conducted
as part ofthe origination process,both of whichare in line withlocal regulations. Weconsider this policyto be appropriatebecause
the affordability test it performs takes into account a variety of factors such as other debts and total expenditures onnormal household
andlifestyleexpenses.Additionalallowancesmayberequiredshouldtheabilityofitscustomerstomakepaymentswhendue
deteriorate in the future. Whilethe allowance for creditlosses is primarily determined utilizinga provisioning model, there is stillan
element of judgmentrequired to assess theultimate recoverability ofthese finance loan receivables,including ongoing evaluationof
the creditworthiness of each customer.
Wehave operated thislending book formore than fiveyears and usehistorical default experienceover the lifetimeof loans in
order to calculate a expected lossrate for the lending book. We analyze this lending bookas a single portfolio because theloans within
the portfoliohave similar characteristicsand managementuses similar processesto monitorand assess thecredit risk ofthe lending
book. The allowance for credit lossesrelated to these microlending finance loans receivablesis calculated by multiplying the expected
loss rate withthe monthend outstandinglending book, excludingupfront initiationfees. The expectedloss rate asof June 30,2026
and 2025,was 5.50% and6.50%, respectively.The performingcomponent (thatis, outstandingloan payments notin arrears) ofthe
book exceeds more than 99.0% and 98.0% of outstanding lending bookas of June 30, 2026 and 2025, respectively.
Recent Accounting Pronouncements
Recent accounting pronouncements adopted
RefertoNote2 ofouraudited consolidatedfinancialstatements fora fulldescriptionof recentaccountingpronouncements,
including the dates of adoption and effects on financialcondition, results of operations and cash flows.
Recent accounting pronouncements not yet adopted as of June 30,2026
Refer to Note 2of our audited consolidatedfinancial statements for afull description of recentaccounting pronouncements not
yet adopted as of June 30, 2026, including the expected dates of adoptionand effects on financial condition, results of operations and
cash flows.
form10kp41i0
39
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented wereas follows:
Table 1
June 30,
2026
2025
2024
ZAR : $ average exchange rate
16.9074
18.1644
18.7070
Highest ZAR : $ rate during period
18.1650
19.6350
19.4568
Lowest ZAR : $ rate during period
15.7392
17.1144
17.6278
Rate at end of period
16.4072
17.7554
18.1808
Translation Exchange Rates
Wehavetranslatedthe resultsof operationsandoperating segmentinformationfor theyearended June30, 2026,2025,and
2024, provided in the tablesbelow using the actual averageexchange rates per month betweenthe USD and ZAR. Thus,the average
rates used to translate thisdata for the yearsended June 30, 2026, 2025and 2024, vary slightlyfrom the averages shown inthe table
above.
40
Results of operations
The discussionof ourconsolidated overallresults ofoperations isbased onamountsas reflectedin ouraudited consolidated
financial statements which are prepared in accordancewith U.S. GAAP.We analyze ourresults of operations both in U.S. dollars, as
presented in the audited consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the
entities which contribute the majority of our results and is the currency in whichthe majority of our transactions are initially incurred
andmeasured.PresentationofourreportedresultsinZARisanon-GAAPmeasure.Duetothesignificantimpactofcurrency
fluctuations betweenthe U.S. dollarand ZAR onour reportedresults andbecause weuse theU.S. dollar asour reportingcurrency,
we believe thatthe supplemental presentationof our resultsof operations inZAR is usefulto investors tounderstand the changesin
the underlying trends of our business.
Ouroperatingsegmentrevenuepresentedin“—Resultsofoperationsbyoperatingsegment”representstotalrevenueper
operating segment before intercompanyeliminations. A reconciliation betweentotal operating segment revenue andrevenue, as well
as the reconciliation between our segment performance measureand net income (loss) before tax expense(benefit),is presented in our
audited consolidated financialstatements in Note21 tothose statements.Our chief operatingdecision maker isour ExecutiveChairman
and heevaluates segmentperformance basedon segmentearnings beforeinterest, tax,depreciation andamortization (“EBITDA”),
adjusted foritems mentionedin thenext sentence(“Segment AdjustedEBITDA”) foreach operatingsegment. Wedo notallocate
once-off items(as definedbelow), stock-basedcompensation charges,impairment ofother intangibleassets, otheritems (including
gains or losseson disposalof investments, fairvalue adjustments toequity securities), interestincome, interestexpense, incometax
expenseorearningsfromequity-accountedinvestmentstoourreportablesegments.Wehaveincludedanintercompanyinterest
expense in ourConsumer Segment AdjustedEBITDA for fiscal2025. Once-off itemsrepresent non-recurring expenseitems, including
costs relatedtoacquisitionsandtransactionsconsummatedorultimatelynotpursued.The Stock-basedcompensationadjustments
reflect stock-based compensation expense and are both excludedfrom the calculation of Segment Adjusted EBITDAand are therefore
reported asreconciling itemsto reconcilethe reportablesegments’ SegmentAdjusted EBITDAto ourincome (loss)before income
tax expense.
GroupAdjustedEBITDArepresentsSegmentAdjustedEBITDAafterdeductinggroupcosts.Referalso“Resultsof
Operations—Use of Non-GAAP Measures” below.
In fiscal 2026 we closed the acquisitions of Atom andMobileMart and have integrated their businesses into ours from December
2025andFebruary2026,respectively.In fiscal2025 weclosed theacquisitionsofAdumo andUtilities andhaveintegratedtheir
businesses into ours. Our fiscal 2025 financial results include Adumo from October 1, 2024 and Utilities fromMarch 3, 2025, and do
not includeAtom andMobileMart. Referalso toNote 3to theaudited consolidatedfinancial statementsfor additionalinformation
regarding these transactions. Atom, MobileMart, Adumo and Utilities are notincluded in our financial results for fiscal 2024.
Weanalyze ourbusiness andoperationsin termsof threeinter-relatedbut independentoperating segments:(1) Merchant(2)
Consumer and (3) Enterprise.In addition, corporate activitiesthat are impracticable toallocate directly to theoperating segments, as
well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are includedin Eliminations.
Fiscal 2026 Compared to Fiscal 2025
The following factors hada significant influence onour results ofoperations during fiscal 2026as compared withthe same period
in the prior year:
●
Higher revenue:
Our revenues increased by 9.4% in U.S. dollar and 1.7% in ZAR, primarily due to the inclusion of Utilities
and MobileMart,as wellas highertransaction, insuranceand lendingrevenues inConsumer,which waspartially offsetby
lower prepaid airtime revenue;
●
Operatingincomeincrease:
OperatingincomeincreasedprimarilyduetostrongperformancebyConsumerandthe
contributionfromUtilitiesinEnterprise,whichwaspartiallyoffsetbyanincreaseinamortizationofacquisition-related
intangible assets;
●
Lower netinterest charge:
Net interestchargedecreased to$15.6 million(ZAR 264.6million) from$19.2 million(ZAR
349.5 million) primarilydue to a lowerinterest expense followinglower interest rates andthe exclusion of interestexpense
incurred under our borrowing arrangementsrelated to our Consumer lendingbook in fiscal 2026 compared with2025. On a
comparable basis theequivalent interest expenserelated to theConsumer lending bookfor fiscal2025 was included ininterest
expense from July 2024 to February 2025; and
●
Foreign exchange movements:
The U.S. dollar was 6.9% weaker against the ZAR during fiscal2026compared to the prior
period, which positively impacted our U.S. dollar reported results.
41
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 2
In U.S. Dollars
Yearended June 30,
2026
2025
$ %
$ ’000
$ ’000
change
Revenue
721,554
659,701
9%
Cost of goods sold, IT processing, servicing and support
(A)
490,834
487,186
1%
Selling, general and administration
(A)(1)
166,269
131,738
26%
Depreciation and amortization
47,346
33,721
40%
Impairment loss
4,035
18,863
(79%)
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
389
16,159
(98%)
Operating income (loss)
12,681
(27,966)
nm
Change in fair value of equity securities
2,593
(59,828)
nm
Loss on impairment or disposal of equity-accounted investment
584
161
263%
Reversal of allowance for doubtful loan receivable
1,500
-
nm
Loss on disposal of equity securities
730
-
nm
Other income
3,883
-
nm
Interest income
2,889
2,596
11%
Interest expense
(A)
18,506
21,824
(15%)
Income (Loss) before income tax expense (benefit)
3,726
(107,183)
nm
Income tax expense (benefit)
(A)
1,429
(15,982)
nm
Net income (loss) before earnings from equity-accounted investments
2,297
(91,201)
nm
Earnings from equity-accounted investments
215
114
89%
Net income (loss)
2,512
(91,087)
nm
Add net loss attributable to non-controlling interest
246
130
89%
Net income (loss) attributable to us
2,758
(90,957)
nm
(A)InordertocorrecttheerrorsdiscussedinNote1totheconsolidatedstatementofoperations,Costofgoodssold,IT
processing, servicingand supportincreased by$0.6 million,Selling, generaland administrationexpense increasedby $0.2million,
Operating incomedecreased by $0.9million, Interest expenseincreased by$0.4 million, incometax expense (benefit)decreased by
$2.2 million,and the subtotalcaptions fromIncome (Loss) beforeearnings (loss) fromequity-accounted investments toNet income
(loss) attributable to Lesaka decreased by $3.4 million for fiscal 2025.
(1) Selling, general and administration includes allowance for credit losses.
42
Table 3
In South African Rand
Yearended June 30,
2026
2025
ZAR %
ZAR ’000
ZAR ’000
change
Revenue
12,180,962
11,980,399
2%
Cost of goods sold, IT processing, servicing and support
(A)
8,289,867
8,845,530
(6%)
Selling, general and administration
(A)(1)
2,806,221
2,392,857
17%
Depreciation and amortization
802,598
612,298
31%
Impairment loss
67,116
334,929
(80%)
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
6,664
291,358
(98%)
Operating income (loss)
208,496
(496,573)
nm
Change in fair value of equity securities
43,957
(1,089,871)
nm
Loss on impairment or disposal of equity-accounted investment
10,342
2,886
258%
Reversal of allowance for doubtful loan receivable
25,132
-
nm
Loss on disposal of equity securities
12,286
-
nm
Other income
65,353
-
nm
Interest income
48,621
47,108
3%
Interest expense
(A)
313,258
396,649
(21%)
Income (Loss) before income tax expense (benefit)
55,673
(1,938,871)
nm
Income tax expense (benefit)
(A)
23,583
(289,008)
nm
Net income (loss) before earnings from equity-accounted investments
32,090
(1,649,863)
nm
Earnings from equity-accounted investments
3,593
2,035
77%
Net income (loss)
35,683
(1,647,828)
nm
Add net loss attributable to non-controlling interest
4,155
2,307
80%
Net income (loss) attributable to us
39,838
(1,645,521)
nm
(A) In orderto correct theerror discussed inNote 1 tothe consolidated statement ofoperations, Cost ofgoods sold, ITprocessing,
servicingandsupport increasedbyZAR11.6million,Selling,generalandadministrationexpenseincreasedby ZAR4.1million,
OperatingincomedecreasedbyZAR15.7million,InterestexpenseincreasedbyZAR6.8million,incometaxexpense(benefit)
decreasedbyZAR39.3million,andthesubtotalcaptionsfromIncome(Loss)beforeearnings(loss)fromequity-accounted
investments to Net income (loss) attributable to Lesaka decreased byZAR 61.7 million for fiscal 2025.
(1) Selling, general and administration includes allowance for creditlosses.
Revenue increased by $61.9 million (ZAR 0.2 billion)or 9.4% (in ZAR, 1.7%).The increase was primarily due to the inclusion
of Utilities and MobileMart, the impact of an increase in certain issuing fee base prices year-over-year,and transaction activity in our
issuing business,andan increasein insurancepremiumscollected andlending revenues(includinginterest) followinghigherloan
originations,whichwaspartiallyoffsetbythedecreaseinthevolumeofprepaidairtimesold.Refertodiscussionaboveat“—
Developments during Fiscal 2026” for a description of key trends impacting ourrevenue this fiscal year.
Cost ofgoods sold,IT processing,servicing andsupport increasedby $3.6 million(or0.7%)and inZAR decreasedby ZAR
0.6 billion (or 6.3%). The decrease in ZAR is primarilydue to the decrease in the prepaid airtime costs,which was partially offset by
an increasein lendingrelated expenditures(including interestexpense), higherinsurance-relatedclaims andthird partytransaction
fees and the inclusion of Utilities and MobileMart.
Selling, generaland administration expensesincreased by $34.5million (ZAR 413.4million), or 26.2%(in ZAR, 17.3%).The
increase was primarily due to theinclusion of Adumo and Utilities;higher marketing costs relatedto the Lesaka rebrand, an increase
in the allowancefor credit lossesas a resultof higherlending activities byConsumer and Merchant,higher consultingfees, and the
year over-yearimpact ofinflationary increaseson certainexpenses, whichwas partiallyoffsetby lowerstock-based compensation
charges.
Depreciationandamortizationexpenseincreasedby$13.63million(ZAR190.3million),or40.4%(inZAR,31.1%).The
increase was dueto the change toa shorter useful lifefor certain of ourbrand and trademarkintangible assets (refer toNote 10), the
inclusion of acquisition-related intangible asset amortization related to intangible assetsidentified pursuant to the Adumo and Utilities
acquisitions.
43
Impairment loss for fiscal 2026 includes an impairment loss of $2.6 million (ZAR43.6 million) related to right-of-use assets and
$1.0million(ZAR16.5million)relatedtoleaseholdimprovementsrecordedinproperty,plantandequipmentforourexisting
operating lease arrangements ascertain of our leasedfacilities will nolonger be utilized asoriginally intended as aresult of theplanned
transitiontoournewcorporateheadoffice,animpairmentlossof$0.7million(ZAR11.5million)relatedtoATMsrecordedin
property,plant and equipment asa result of theexit of the ATMbusiness, and an impairmentloss of $0.4 million(ZAR 6.5 million)
related to goodwill allocated to our SwitchPay reportingunit within the Merchant segment. Refer toNote 8 and Note 10of our audited
consolidated financial statements for additional information regardingthese impairment losses.
Transactioncosts relatedto Adumo,Utilities andBank Zeroacquisitions andcertain compensationcosts includesfees paidto
external serviceproviders associatedwith legaland advisoryservices procuredto closethe Adumotransaction onOctober 1, 2024,
andtheUtilitiestransactioninMarch2025,aswellaspost-combinationcompensationchargesrecognizedrelatedtotheUtilities
acquisitionof$13.6million(ZAR245.7million)anddecreasedprimarilyduetothesepost-combinationcompensationcharges
expensed in fiscal 2025. This caption also includes transaction costs related to the proposed acquisition of Bank Zero. Refer to Note 3
to our audited consolidated financial statements for additional information.
Our operating income (loss) marginin fiscal 2026and 2025 was 1.8% and(4.2%), respectively.
We
discuss the components of
operating loss margin under “—Results of operationsby operating segment.”
We
recordedan increasein thefair valueof CellC of$3.0 million(ZAR 50million) duringfiscal 2026(refer toNote 6for
additional information),partially offsetby anon-cash changein fairvalue ofequity securitiesof $0.4million.
We
recorded anon-
cashchangeinfair valueof equitysecuritiesof $59.8millionduringfiscal2025 relatedtoafair valueadjustmentloss relatedto
MobiKwik.
We
recentlyenteredintodiscussionswithVantageAfricaLimited(“VantagePay”)regardingstepstorecover$1.5million
outstanding from them.
We
believe that there is sufficient evidence tosupport the recoverability of the amount due fromVantagePay
and recorded a reversal ofthe allowance for credit losses of $1.5million previously recognized duringthe year ended June 30, 2026.
Refer to Note 4 for additional information.
We
recordedalossof$0.7million(ZAR12.3million)relatedtothedisposalofHumbleSoftwareProprietaryLimited
(“Humble”) during the year ended June 30, 2026. Refer to Note 3for additional information.
In December 2025, we determinedthat the liquidation of CPS isat an advanced stageand released an accrual raisedat the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income.
Interest on surplus cash increased to $2.9 million (ZAR 48.6 million) from $2.6 million (ZAR 47.1 million), due to the inclusion
of Adumo and increased cash balances, which was partially offsetby lower interest rates.
Interestexpense decreasedto $18.5million (ZAR313.3 million)from $21.8million (ZAR396.6million). Thedecrease was
primarily due tolower interest rates andthe partial exclusionof interest expenseincurred under ourborrowing arrangements related
to our Consumer lending bookin fiscal 2026 compared withfiscal 2025. On a comparablebasis the equivalent interest expense related
to the Consumer lending book for fiscal 2025 was included in interest expensefrom July 2024 to February 2025.
Fiscal 2026income tax expense was $1.4 million (ZAR 23.6 million) compared to an income tax benefitof $16.0 million (ZAR
289.0 million) in fiscal 2025. Our effectivetax rate for fiscal 2026 was impacted by the tax expenserecorded by our profitable South
African operations,non-taxable income(primarily relatedto thedisposal ofCell C andother income)and non-deductibleexpenses
(includingtransaction-relatedexpendituresandthe goodwillimpairment).The incometax expensewas alsoimpacted bya higher
deferred taxbenefit as aresult ofthe reductionin the usefullives of certainof ourbrand andtrademark intangibleassets which has
resultedinanincreaseinamortizationexpenseduringfiscal2026andthereleaseof$12.3millionrelatedtocertainvaluation
allowancescreatedinprioryearsfollowinganimprovementinprofitabilityofcertainoftheCompany’ssubsidiaries,whichwas
partiallyoffsetby therecognitionof avaluationallowancerelatedto anoperatingloss carryforwardandother deferredtax assets
totalling $9.9 million following a determination by the management, after consideringboth positive and negative evidence, that these
deferred tax assets would not be realized in future years.
Oureffectivetax rateforfiscal2025was impactedbydeferredtaximpactrelatedtothe fairvalueadjustmenttoour equity
securities, the reversal of $12.8million related to certain valuation allowancescreated in prior years following (i)an improvement in
profitability of certain of our subsidiaries and (ii) a change in judgment on the need for a valuation allowance of $11.4 million related
toanentitywhichwebelievehasachievedsustainableprofitability,thetaxexpenserecordedbyourprofitableSouthAfrican
operations, a deferred tax benefit related to acquisition-related intangible asset amortization,non-deductible expenses (in transaction-
related expenses),the on-goinglosses incurredby certainof ourSouth Africanbusinesses andthe associatedvaluation allowances
created related tothe deferred tax assetsrecognized regardingnet operating losses incurredby these entities.Our income tax benefit
for fiscal 2025 also includes a $2.2 million income tax expense related to thecorrection of the error discussed in Note 1.
44
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities toGroup Adjusted EBITDA are illustrated below:
Table 4
In U.S. Dollars
Yearended June 30,
2026
% of
2025
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
509,335
71%
526,600
80%
(3%)
Consumer
142,631
20%
96,008
15%
49%
Enterprise
74,730
10%
42,554
6%
76%
Subtotal: Operating segments
726,696
101%
665,162
101%
9%
Eliminations
(5,142)
(1%)
(5,461)
(1%)
(6%)
Totalconsolidated revenue
721,554
100%
659,701
100%
9%
Group Adjusted EBITDA:
Merchant
(A)(1)
35,533
47%
35,329
70%
1%
Consumer
(1)
46,193
61%
23,949
48%
93%
Enterprise
(1)
8,119
11%
1,287
3%
531%
Group costs
(14,103)
(19%)
(10,743)
(21%)
31%
Group Adjusted EBITDA (non-GAAP)
(2)
75,742
100%
49,822
100%
52%
(A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDA and Group Adjusted EBITDA decreased by $0.9 million forfiscal 2025.
(1) SegmentAdjusted EBITDAfor fiscal2026, includesreorganizationand retrenchmentcosts forMerchant of$0.8 million,
Enterprise of$0.1 million,and Consumerof $0.4million. SegmentAdjusted EBITDAfor fiscal2025, includesreorganizationand
retrenchment costs for Merchant of $0.8 million, Enterprise of $0.8 million, andConsumer of $0.1 million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at“—Results of Operations—Use ofNon-
GAAP Measures”.
Table 5
In South African Rand
Yearended June 30,
2026
% of
2025
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
8,609,898
71%
9,562,360
80%
(10%)
Consumer
2,401,720
20%
1,744,429
15%
38%
Enterprise
1,255,617
10%
773,057
6%
62%
Subtotal: Operating segments
12,267,235
101%
12,079,846
101%
2%
Eliminations
(86,273)
(1%)
(99,447)
(1%)
(13%)
Totalconsolidated revenue
12,180,962
100%
11,980,399
100%
2%
Group Adjusted EBITDA:
Merchant
(A)(1)
601,573
47%
641,509
70%
(6%)
Consumer
(1)
775,027
61%
435,193
48%
78%
Enterprise
(1)
136,164
11%
23,724
3%
474%
Group costs
(238,176)
(19%)
(193,853)
(21%)
23%
Group Adjusted EBITDA (non-GAAP)
(2)
1,274,588
100%
906,573
100%
41%
(A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDA and Group Adjusted EBITDA decreased by ZAR 15.7million for fiscal 2025.
(1)SegmentAdjustedEBITDAforfiscal2026,includesreorganizationandretrenchmentcostsforMerchantofZAR14.0
million,EnterpriseofZAR1.1million,andConsumerof ZAR7.1million.SegmentAdjustedEBITDAforfiscal2025,includes
reorganizationand retrenchmentcosts forMerchant ofZAR 15.7million, EnterpriseZAR 13.6million, andConsumer ofZAR 1.5
million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at“—Results of Operations—Use ofNon-
GAAP Measures”.
45
Merchant
Segment revenuedecreased dueto fewerprepaid airtimesales whichwas partiallyoffset bythe inclusionof Adumo,a higher
volume of ADPprovided (Pinless Airtime andgaming). In ZAR,the decrease inSegment Adjusted EBITDA isprimarily due to higher
operating expenses incurred,which was partiallyoffset by the inclusionof Adumo forthe entire periodcompared with theprior period.
Our Segment Adjusted EBITDA margin (calculated asSegment Adjusted EBITDA divided by revenue) forfiscal 2026and 2025
was 7.0% and 6.7%, respectively.
Consumer
Segment revenueincreased primarilydue tohigher transactionfees generatedfrom thehigher EPEaccount holdersbase, the
impactofanincreaseincertainissuingfeebasepricesyear-over-year,andtransactionactivityinourissuingbusiness,insurance
premiums collected, lending revenues following anincrease in loan originations. Thisincrease in revenue hastranslated into improved
profitability,which waspartially offsetby a higherallowance forcredit losses followingan increasein loan originationsduring the
year,higher insurance-relatedclaims, interestexpense (ofZAR 88.5million) incurredto fundour lendingbook andthe year-over-
year impact of inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for fiscal 2026and 2025 was 32.4% and 24.9%, respectively.
Enterprise
Segment revenueincreased primarily dueto the inclusionof Utilities andMobileMart andorganic revenuegrowth due tonew
ADP customers acquired.In ZAR, the significant increase in Segment Adjusted EBITDA is primarily due tothe inclusion of Utilities.
Our Segment Adjusted EBITDA margin for fiscal 2026and 2025 was 10.9% and 3.0%, respectively.
Group costs
Our groupcosts primarilyinclude employeerelated costsin relationto employeesspecifically hiredfor grouproles andcosts
related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes; non-employee directors’ fees;
legal fees; group and US-listed related audit fees; and directors’ and officers’insurance premiums.
Our group costsfor fiscal 2026increased compared withthe prior perioddue to higheremployee related costs,consulting fees
and compliance related expenditure.
Fiscal 2025Compared to Fiscal 2024
The following factors hada significant influence onour results ofoperations during fiscal2025 as compared withthe same period
in the prior year:
●
Higher revenue:
Our revenues increased by16.9% in U.S.dollar and 13.5%in ZAR, primarilydue to theinclusion of Adumo
andUtilities,anincreaseinvalue-addedservicesactivityinMerchant,higherPinnedAirtimesales,aswellashigher
transaction, insurance and lending revenues in Consumer, which was partially offset by a lower contribution from our legacy
Enterprise businesses;
●
Operatingincomeincrease,beforetransactioncosts:
Operatingincome,beforetransactionandrelatedcosts,increased
significantly primarily due to contributions from Adumo fromOctober 1, 2024 and Utilities from March3, 2025, which were
partiallyoffsetbyincreasedcostsandanincreaseinamortizationofacquisition-relatedintangibleassetsrelatedtothe
acquisition of Adumo and Utilities;
●
Non-cash fair value adjustment related to equity securities:
We recorded a non-cash fair value loss of $59.8 million during
fiscal 2025 related to the disposal of our investment in MobiKwik;
●
Higher net interest charge:
The net interest charge increased to$19.2 million (ZAR 349.5 million) from$16.9 million (ZAR
315.6 million) primarilyhigher overall borrowings,which was partially offsetby an increase ininterest received asa result
of the inclusion of Adumo; and
●
Foreign exchange movements:
The U.S. dollar was 4.2% weaker against the ZAR duringfiscal 2025compared to the prior
period, which positively impacted our U.S. dollar reported results.
46
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 ofoperations, both in U.S. dollars and in ZAR:
Table 6
In U.S. Dollars
Yearended June 30,
2025
2024
$ %
$ ’000
$ ’000
change
Revenue
659,701
564,222
17%
Cost of goods sold, IT processing, servicing and support
(A)
487,186
443,293
10%
Selling, general and administration
(A)
131,738
92,185
43%
Depreciation and amortization
33,721
23,665
42%
Impairment loss
18,863
-
nm
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
16,159
2,325
595%
Operating (loss) income
(27,966)
2,754
nm
Change in fair value of equity securities
(59,828)
-
nm
Reversal of allowance for doubtful loan receivable
-
250
nm
Loss on disposal of equity-accounted investment
161
-
nm
Interest income
2,596
2,294
13%
Interest expense
(A)
21,824
19,171
14%
Loss before income tax (benefit) expense
(107,183)
(13,873)
673%
Income tax (benefit) expense
(A)
(15,982)
3,363
nm
Net loss before earnings (loss) from equity-accounted investments
(91,201)
(17,236)
429%
Earnings (loss) from equity-accounted investments
114
(1,279)
nm
Net loss
(91,087)
(18,515)
392%
Add net loss attributable to non-controlling interest
130
-
nm
Net loss attributable to us
(90,957)
(18,515)
391%
(A) In orderto correct theerror discussed inNote 1 tothe consolidated statementof operations forfiscal 2025 and2024, Cost
ofgoodssold,ITprocessing,servicingandsupportincreasedby$0.6millionand$0.6 million,respectively,Selling, generaland
administration expense increased by $0.2 million and$0.2 million, respectively,Operating income decreased by $0.9 million and$0.8
million, respectively,Interest expenseincreased by$0.4 millionand $0.2million, respectively,for fiscal2025, incometax expense
(benefit) decreased by $2.2 million, and the subtotalcaptions for fiscal 2025 and 2024 fromIncome (Loss) before earnings (loss) from
equity-accounted investments to Net income (loss) attributable to Lesaka decreasedby $3.4 million and $1.1 million, respectively.
(1) Selling, general and administration includes allowance for credit losses.
47
Table 7
In South African Rand
(US GAAP)
Yearended June 30,
2025
2024
ZAR %
ZAR ’000
ZAR ’000
change
Revenue
11,980,399
10,553,233
14%
Cost of goods sold, IT processing, servicing and support
(A)(A)
8,845,530
8,291,826
7%
Selling, general and administration
(A)
2,392,857
1,724,039
39%
Depreciation and amortization
612,298
442,570
38%
Impairment loss
334,929
-
nm
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and
certain compensation costs
291,358
43,154
575%
Operating (loss) income
(496,573)
51,644
nm
Change in fair value of equity securities
(1,089,871)
-
nm
Reversal of allowance for doubtful loan receivable
-
4,741
nm
Loss on disposal of equity-accounted investment
2,886
-
nm
Interest income
47,108
42,896
10%
Interest expense
(A)
396,649
358,510
11%
Net loss before income tax (benefit) expense
(1,938,871)
(259,229)
648%
Income tax (benefit) expense
(A)
(289,008)
62,616
nm
Net loss before earnings (loss) from equity-accounted investments
(1,649,863)
(321,845)
413%
Earnings (loss) from equity-accounted investments
2,035
(24,298)
nm
Net loss
(1,647,828)
(346,143)
376%
Add net loss attributable to non-controlling interest
2,307
-
nm
Net loss attributable to us
(1,645,521)
(346,143)
375%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations for fiscal 2025 and 2024, Cost of
goods sold, ITprocessing, servicingand support increasedby ZAR 11.6million and ZAR8.8 million, respectively,Selling, general
and administrationexpense increasedby ZAR4.1 millionand ZAR3.1 million,respectively,Operating incomedecreased byZAR
15.7 millionand ZAR 11.9million, respectively,Interest expense increasedby ZAR 6.8million andZAR 6.8 million,respectively,
for fiscal 2025, income tax expense (benefit) decreased by ZAR 39.3 million, and the subtotal captions for fiscal 2025 and 2024 from
Income (Loss) before earnings(loss) from equity-accounted investmentsto Net income(loss) attributable to Lesakadecreased by ZAR
61.7 million and ZAR 22.4 million, respectively.
(1) Selling, general and administration includes allowance for creditlosses.
Revenue increasedby $95.5 million(ZAR 1.4 billion),or 16.9% (inZAR, 13.5%). Theincrease in ZARwas primarily dueto,
the inclusionof Adumo,an increasein thevolume ofvalue-addedservices provided(Pinless Airtimeandgaming), anincreasein
Pinned Airtime sales, an increase incertain issuing fee base prices andtransaction activity in our issuing business,and an increase in
insurance premiums collected and lending revenues following higher loanoriginations.
Cost of goods sold, IT processing, servicing and support increased by $43.9 million (ZAR0.6 billion), or 9.9% (in ZAR, 6.7%),
primarily dueto theinclusion ofAdumo, highercommissions paidrelated toADP revenuegenerated, andhigher insurance-related
claims and third-party transaction fees, which was partially offsetby the decrease in Pinned Airtime sales.
Selling, generaland administration expensesincreased by $39.6million (ZAR 668.8million), or 42.9%(in ZAR, 38.8%).The
increase was primarilydue to the inclusionof Adumo; higheremployee-related expenses(including annual salaryincreases); higher
stock-based compensationcharges, consultingfees and audit fees;and the year-over-yearimpact of inflationaryincreases on certain
expenses.
Depreciationandamortizationexpenseincreasedby$10.06 million(ZAR169.7million),or42.5%(inZAR,38.4%).The
increase was due to the inclusion of acquisition-related intangible asset amortization relatedto intangible assets identified pursuant to
the Adumo and Utilities acquisitions and an increase in depreciationexpense related to additional POS devices deployed.
During fiscal2025, we recordedan impairmentloss which includesan impairmentof goodwill of$17.0 million relatedto the
impairment of goodwill allocated to each of Merchant, Consumer and Enterprise as well as an impairment of intangible assets of $1.8
million. Refer toNote 10 ofour audited consolidatedfinancial statementsfor additional informationregarding these impairmentlosses.
48
Transactioncosts relatedto Adumo,Utilities andBank Zeroacquisitions andcertain compensationcosts includesfees paidto
external serviceproviders associatedwith legaland advisoryservices procuredto closethe Adumotransaction onOctober 1,2024,
andtheUtilitiestransactioninMarch2025,aswellaspost-combinationcompensationchargesrecognizedrelatedtotheUtilities
acquisition of $13.6 million(ZAR 245.7 million) andincreased primarily due tothese post-combination compensationcharges. This
caption also includestransaction costs relatedto the proposedacquisition of BankZero. Refer toNote 3 toour audited consolidated
financial statements for additional information.
Our operating (loss) income marginin fiscal 2025and 2024 was(4.2%) and 0.5%, respectively.
We
discuss the components of
operating loss margin under “—Results of operationsby operating segment.”
The change in fair value of equity securities of $59.8 million during fiscal 2025 represents a non-cashfair value adjustment loss
related to MobiKwik. Wedid not record any changesin the fair value ofequity interests in MobiKwik duringthe fiscal 2024, orany
fair value adjustments for Cell C during fiscal 2025 or 2024, respectively.We carried our investmentin Cell C at $0 (zero) as of June
30, 2025.
Interest on surplus cash increased to $2.6 million (ZAR 47.1 million) from $2.3 million (ZAR 42.9 million), primarily due to the
inclusion of Adumo and higher overall average cash balances on deposit duringfiscal 2025 compared with 2024.
Interest expense increasedto $21.8 million (ZAR 396.6million) from $19.2 million (ZAR 358.5million). In ZAR, the increase
was primarilyas a resultof higheroverall borrowingsduring fiscal 2025compared withthe comparableperiod in theprior quarter,
which was partially offset by lower overall interest rates.
Fiscal 2025income taxbenefit was$16.0million (ZAR289.0 million)compared toan incometax expenseof $(3.4)million
(ZAR (62.6) million) in fiscal 2024. Our effective tax rate forfiscal 2025 was impacted by deferred tax impact related tothe fair value
adjustment to our equitysecurities, the reversal of$12.8 million related tocertain valuation allowances createdin prior yearsfollowing
(i) an improvementin profitability ofcertain of oursubsidiaries and (ii)a change injudgment on theneed for a valuationallowance
of $11.4 million related to an entitywhich we believe has achievedsustainable profitability, the tax expense recorded by our profitable
South African operations,a deferred taxbenefit related toacquisition-related intangibleasset amortization, non-deductibleexpenses
(in transaction-related expenses), the on-going losses incurred by certain of our South African businesses and the associated valuation
allowances created related tothe deferred tax assets recognizedregarding net operating losses incurredby these entities. Ourincome
tax benefit for fiscal 2025 also includes a $2.2 million income tax expense relatedto the correction of the error discussed in Note 1.
Our effectivetax ratefor fiscal2024 wasimpacted bythe taxexpense recordedby ourprofitable SouthAfrican operations,a
deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses, the on-going losses incurred
by certain of ourSouth African businesses andthe associated valuation allowancescreated related to thedeferred tax assets recognized
regarding net operating losses incurred by these entities.
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities toGroup Adjusted EBITDA are illustrated below:
Table 8
In U.S. Dollars
Yearended June 30,
2025
% of
2024
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
526,600
80%
459,790
81%
15%
Consumer
96,008
15%
69,211
12%
39%
Enterprise
42,554
6%
46,897
8%
(9%)
Subtotal: Operating segments
665,162
101%
575,898
101%
15%
Eliminations
(5,461)
(1%)
(11,676)
(1%)
(53%)
Totalconsolidated revenue
659,701
100%
564,222
100%
17%
Group Adjusted EBITDA:
Merchant
(A)(1)
35,329
70%
28,334
78%
25%
Consumer
(1)
23,949
48%
12,679
35%
89%
Enterprise
(1)
1,287
3%
2,931
8%
(56%)
Group costs
(10,743)
(21%)
(7,844)
(21%)
37%
Group Adjusted EBITDA (non-GAAP)
(2)
49,822
100%
36,100
100%
38%
(
A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
49
EBITDA and Group Adjusted EBITDA for fiscal 2025 and fiscal 2024decreased by $0.9 million and $0.8 million, respectively.
(1) SegmentAdjusted EBITDAfor fiscal2025, includesreorganizationand retrenchmentcosts forMerchant of$0.8 million,
Enterprise of $0.8 million, and Consumer of $0.1million. Segment Adjusted EBITDA for fiscal 2024, includes retrenchment costsfor
Merchant $0.3 million and Consumer of $0.2 million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at“—Results of Operations—Use ofNon-
GAAP Measures”.
Table 9
In South African Rand
Yearended June 30,
2025
% of
2024
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
9,562,360
80%
8,599,450
81%
11%
Consumer
1,744,429
15%
1,294,632
12%
35%
Enterprise
773,057
6%
877,317
8%
(12%)
Subtotal: Operating segments
12,079,846
101%
10,771,399
101%
12%
Eliminations
(99,447)
(1%)
(218,166)
(1%)
(54%)
Totalconsolidated revenue
11,980,399
100%
10,553,233
100%
14%
Group Adjusted EBITDA:
Merchant
(A)(1)
641,509
70%
529,861
78%
21%
Consumer
(1)
435,193
48%
237,362
35%
83%
Enterprise
(1)
23,724
3%
54,924
8%
(57%)
Group costs
(193,853)
(21%)
(146,815)
(21%)
32%
Group Adjusted EBITDA (non-GAAP)
(2)
906,573
100%
675,332
100%
34%
(A) Inorder tocorrect theerror discussedin Note1 tothe consolidatedstatement ofoperations, MerchantSegment Adjusted
EBITDAandGroupAdjustedEBITDAforfiscal2025andfiscal2024decreasedbyZAR15.7millionandZAR11.9million,
respectively.
(1)SegmentAdjustedEBITDAforfiscal2025,includesreorganizationandretrenchmentcostsforMerchantofZAR15.7
million,EnterpriseZAR13.6million,andConsumerofZAR1.5million.SegmentAdjustedEBITDAforfiscal2024,includes
retrenchment costs for Merchant of ZAR 4.9 million and Consumer of ZAR 3.5 million.
(2) Group Adjusted EBITDAis a non-GAAP measure, referto reconciliation below at“—Results of Operations—Use ofNon-
GAAP Measures”.
Merchant
Segment revenue primarily increased due to the inclusionof Adumo, and a higher volumeof ADP provided (Pinless Airtime and
gaming) andan increasein fewer PinnedAirtime sales.In ZAR,the increasein SegmentAdjusted EBITDAis primarilydue tothe
inclusion of Adumo, which was partially offset by higher operating expenses incurred, including employment-related expenditures, to
expandouroffering,anincreaseintheallowanceforcreditlossesfollowinghigherloanoriginationsandreorganizationand
retrenchment costs incurred during fiscal 2025.
Our Segment Adjusted EBITDA margin (calculated asSegment Adjusted EBITDA divided by revenue) forfiscal 2025 and 2024
was 6.7% and 6.2%, respectively.
Consumer
Segmentrevenueincreasedprimarilydueto highertransactionfeesgeneratedfromthe higherEPEaccount holdersbase,an
increaseincertainissuingfeebasepricesandtransactionactivityinourissuingbusiness,insurancepremiumscollected,lending
revenues following an increase in loan originations and the inclusion ofAdumo. This increase in revenue has translated into improved
profitability, which was partially offsetby a higher allowance for credit losses following an increase in loan originations during fiscal
2025,higher insurance-relatedclaims, interestexpense (ofZAR 61.4million)incurred tofund ourlending book,higher computer
software license costs, and theyear-over-year impact of inflationary increases on certain expenses.We have included an intercompany
interest expense in our Consumer Segment Adjusted EBITDA for fiscal 2025compared with fiscal 2024.
Our Segment Adjusted EBITDA margin for fiscal 2025and 2024was 24.9% and 18.3%, respectively.
50
Enterprise
Segment revenuedecreased primarilydue tofewer adhoc hardwaresales as wellas lowerrevenue generatedfrom thesale of
prepaid airtime vouchers, whichwas partially offset bythe inclusion of Utilities.In ZAR, the significantdecrease in Segment Adjusted
EBITDA is primarily due to the impact of few sales, which was partially offsetby the inclusion of Utilities.
Our Segment Adjusted EBITDA margin in fiscal 2025and 2024was 3.0% and 6.2%, respectively.
Group costs
Our group costs for fiscal2025 increased compared with the priorperiod due to higher employee costsresulting from an increase
in the number of individuals allocated to group costs and base salary adjustments,higher bonus expense, travel, audit, consulting and
legal fees.
Use of Non-GAAP Measures
U.S. securities lawsrequire that whenwe publish anynon-GAAP measures, wedisclose the reasonfor using thesenon-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA
isanon-GAAPmeasure.Weprovidethisnon-GAAPmeasuretoenhanceourevaluationandunderstandingofourfinancial
performanceandtrends.Webelievethatthismeasureishelpfultousersofourfinancialinformationunderstandkeyoperating
performance andtrendsin our businessbecause itexcludes certainnon-cash expenses(including depreciationand amortizationand
stock-based compensation charges) and incomeand expenses that we consider once-off in nature.
Non-GAAP Measures
GroupAdjustedEBITDAisearningsbeforeinterest,tax,depreciationandamortization(“EBITDA”),adjustedfornon-
operationaltransactions(includinglossondisposalofequity-accountedinvestments,changeinfairvalueofequitysecurities),
(earnings)lossfromequity-accountedinvestments,stock-basedcompensationchargesandonce-offitems.Weincludedan
intercompany interest expense inour Consumer Segment Adjusted EBITDAfor eight months to February28, 2025. Wecommenced
utilizing ourFebruary 2025lending facilitiesto funda portionof ourConsumer lendingbook fromMarch 1,2025. Once-offitems
represents non-recurring income andexpense items, includingcosts related toacquisitions and transactions consummatedor ultimately
not pursued.
51
The table below presents thereconciliation between GAAP net income (loss)attributable to Lesaka to Group AdjustedEBITDA:
Table 10
Yearsended June 30,
2026
2025
2024
$ ’000
$ ’000
$ ’000
Income (Loss) attributable to Lesaka - GAAP
(A)
2,758
(90,957)
(18,515)
Add net loss attributable to non-controlling interest
246
130
-
Net income (loss)
2,512
(91,087)
(18,515)
(Earnings) loss from equity accounted investments
(215)
(114)
1,279
Net income (loss) before earnings from equity-accounted investments
2,297
(91,201)
(17,236)
Income tax expense (benefit)
(A)
1,429
(15,982)
3,363
Income (loss) before income tax expense
3,726
(107,183)
(13,873)
Interest expense
(A)
18,506
21,824
19,171
Interest income
(2,889)
(2,596)
(2,294)
Reversal of allowance for doubtful loan receivable
(1,500)
-
(250)
Loss on disposal of equity securities
730
-
-
Net loss on impairment/ disposal of equity-accounted investment
584
161
-
Other income
(3,883)
-
-
Change in fair value of equity securities
(2,593)
59,828
-
Operating income (loss)
12,681
(27,966)
2,754
Impairments
(1)
3,347
18,863
-
PPA amortization(amortization of acquired intangible assets)
30,441
21,384
14,419
Depreciation and amortization
16,905
12,337
9,246
Stock-based compensation charges
6,969
9,550
7,911
Interest adjustment
-
(2,195)
-
Once-off items
(2)
5,452
17,826
1,853
Unrealized (gain) loss FV for currency adjustments
(53)
23
(83)
Group Adjusted EBITDA - Non-GAAP
(A)
75,742
49,822
36,100
(A)
Loss attributable to Lesaka – GAAPand all subtotal captions to Income (Loss) before earnings(loss) from equity-accounted
investments for fiscal2025 and fiscal2024 have beendecreased by $3.4million and $1.1million, respectively,as a result
of the correction discussedin Note 1.Income tax expense (benefit)for fiscal 2025has been decreased by2.2 million. Interest
expense for fiscal 2025and fiscal 2024 has beenincreased by $0.4million and $0.2 million,respectively,as a result of the
correction discussed in Note1. Operating income andGroup Adjusted EBITDA- Non-GAAP for fiscal2025 and fiscal 2024
have been decreased by $0.9million and $0.8million, respectively, as a resultof the correction discussed in Note 1.
Loss attributable toLesaka – GAAP andall subtotal captionsto Loss beforeincome tax expense forfiscal 2026 have been
decreased by$0.4 million,as aresult ofthe correction,as discussedin Note1. Interestexpense forfiscal 2026has been
increased by $0.1 million as a result of the correction,as discussed in Note 1, to the amount included in the captionInterest
expense for the three months ended September 30, 2025. Operating income and Group Adjusted EBITDA - Non-GAAP for
fiscal 2026 have been decreasedby $0.2 million, as aresult of the correction, asdiscussed in Note 1,to the amountsincluded
in the caption Cost ofgoods sold, IT processing,servicing and support andSelling, general and administrationexpense for
the three months ended September 30, 2025.
(1)
Impairments excludes an amount of $0.7 million which is included in the caption exitof ATM business in the table below.
(2)
The table below presents the components of once-off items forthe periods presented:
Table 11
Yearsended June 30,
2026
2025
2024
$ ’000
$ ’000
$ ’000
Lesaka brand refresh
3,001
-
-
Exit of ATMbusiness
1,599
-
-
Transaction costs
1,103
1,794
480
Transaction costs related to Adumo, Utilities andBank Zero acquisitions and certain
compensation costs
389
16,159
2,325
Income recognized related to closure of legacy businesses
(579)
-
(952)
Indirect taxes provision
(61)
(127)
-
Total once-offitems
5,452
17,826
1,853
52
Once-off items are non-recurring in nature, however, certainitems may be reported inmultiple quarters. For instance, transaction
costs include costs incurred related to acquisitions andtransactions consummated or ultimately not pursued. The transactions can span
multiple quarters, for instance in fiscal 2025 we incurred significant transaction costsrelated to the acquisition of Adumo and Utilities
over a number of quarters, and the transactions are generally non-recurring.
Rebrandrelatestocosts incurredrelatedto Lesaka’snew brandlaunchedinNovember2025,we expectthat itwill takethe
remainder of the 2026 calendaryear to roll outthe refreshed brand throughout theorganization. These are non-recurring costs incurred
as a necessary step in a set of strategic initiatives designed to create a “OneLesaka” identity for our customers and our employees.
Exit of ATMbusiness includes expenses incurred toexit our ATMbusiness and the impairment of ATMsrecorded in property,
plant and equipment (refer to Note 10 to our audited consolidated financialstatements for additional information).
Income recognizedrelated toclosure oflegacy businessesrepresents (i)gains recognizedrelated tothe releaseof theforeign
currency translation reserveon deconsolidation ofa subsidiaryand (ii) costsincurred related tosubsidiaries which weare in theprocess
of deregistering/ liquidation and therefore we consider these costs non-operationaland ad hoc in nature.
Indirect taxprovision releaserelates tothe reversalof anon-recurring indirecttax provisioncreated infiscal 2023which was
resolved in fiscal 2025 following settlement of the matter with the tax authority.
Liquidity and Capital Resources
At June 30,2026, our unrestrictedcash and cashequivalents were $81.4million and comprisedof ZAR-denominatedbalances
of ZAR 1.3 billion($76.9 million), U.S. dollar-denominatedbalances of $2.6 million,and other currency deposits,primarily Botswana
pula,of $2.0million, allamounts translatedat exchangerates applicableas ofJune 30,2026. Theincrease inour unrestrictedcash
balances from June 30,2025, was primarily dueto positive contribution fromour operating segments, andthe utilization of ourgeneral
bankingfacilitiesto partiallyfundthe growthin ourConsumerlending book,whichwas partiallyoffsetbythe applicationof the
proceeds received fromthe disposal of MobiKwikto reduce our generalbanking facilities utilized,the utilization of cashreserves to
fund certain scheduled repaymentsof our borrowings, acquisitionof property,plant and equipment and intangibleassets, to fund the
increase in our Consumer lending book and to settle amounts due to the sellers of Utilities and other entities acquired during the year.
We generallyinvest any surplus cash held by ourSouth African operations in overnightcall accounts that we maintain atSouth
African banking institutions,and any surpluscash held byour non-South Africancompanies inU.S. dollar-denominated money market
accounts.
Historically,we have financedmost of ouroperations, research anddevelopment, working capital,and capital expenditures,as
wellasacquisitionsandstrategicinvestments,throughinternallygeneratedcashandourfinancingfacilities.Whenconsidering
whether to borrow under our financingfacilities, we consider the costof capital, cost of financing, opportunity costof utilizing surplus
cash and availability of taxefficient structures to moderatefinancing costs. Refer to Note 12to our consolidated financial statements
for the year ended June 30, 2026, for additional information related to ourborrowings.
Our ability to make payments on our indebtedness and tofund our operations may be dependent upon the operatingincome and
the distributionof fundsfrom oursubsidiaries. However,as local lawsand regulationsand/or theterms of ourindebtedness restrict
certainofoursubsidiariesfrompayingdividendsandtransferringassetstous,thereis noassurancethatoursubsidiarieswillbe
permitted to provide us with sufficient dividends, distributionsor loans when necessary.
We are required to make a scheduled debt repayment of ZAR 200 million ($12.2 million) inMarch 2027. We expect to pay ZAR
100.0 million ($6.1 million) on closing of the Bank Zero transaction. All amountstranslated at exchange rates as of June 30, 2026.
53
Available short-termborrowings
Summarized below are our short-term facilities available and utilized as ofJune 30, 2026:
Table 12
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Totalshort-term facilities available, comprising:
Total overdraft
67,702
1,110,808
-
-
-
-
Indirect and derivative facilities
(1)
-
-
5,534
90,793
9,542
156,556
Totalshort-term facilities available
67,702
1,110,808
5,534
90,793
9,542
156,556
Utilized short-term facilities:
Overdraft
20,671
339,156
-
-
-
-
Indirect and derivative facilities
-
-
4,279
70,199
129
2,114
Totalshort-term facilities available
20,671
339,156
4,279
70,199
129
2,114
Interest rate, based on South African prime rate
10.00%
N/A
N/A
(1)Otherfacilitiesincludeindirectandderivativefacilitiesmayonlybeusedforguarantees,lettersofcreditandforward
exchange contracts to support guarantees issued by RMB and Nedbankto various third parties on our behalf.
The facilities under theRestated GBF Agreement wereavailable for utilizationfrom March 30, 2026,and are subject to annual
review by RMB.
In terms ofa commitment providedto the lenderunder the CTAentered into onFebruary 27, 2025,we have undertakennot to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We haveaggregate long-term borrowingoutstanding of ZAR 3.5 billion($210.7 million translated atexchange rates as ofJune
30, 2026)as described inNote 12. Theseborrowings include outstandinglong-term borrowingsobtained by LesakaSA of ZAR2.8
billion, whichwas usedto refinanceour previouslong-term borrowings.Wehave utilizedall ofthese long-termborrowings. Asof
September 9, 2026, we also have a revolving credit facility,of ZAR 400.0 million which is utilized to fund a portionof our merchant
finance loans receivablebook and an assetbacked facility of ZAR214.5 million whichis utilized to partiallyfund the acquisition of
POS devices and vaults.
Restricted cash
We havealso entered into cession and pledgeagreements with Nedbank related toour Nedbank indirect credit facilitiesand we
have ceded and pledgedcertain bank accounts toNedbank. The funds includedin these bank accountsare restricted as theymay not
be withdrawn without the expresspermission of Nedbank. Our cash,cash equivalents and restrictedcash presented in ourconsolidated
statement of cash flows as of June 30, 2026, includes restricted cash of $0.1 millionthat has been ceded and pledged.
Arrangement with African Bank to fund our ATMs
InSeptember2024,weentered intoanarrangementwith AfricanBank Limited(“AfricanBank”)andcertaincash-in-transit
serviceproviderstofundourATMs.Underthisarrangement,AfricanBankuseditscashresourcestofundourATMsanditis
specifically recorded that the cash in our ATMs was African Bank’sproperty. Therefore, as we had not utilized a facility to obtain the
cash, and did notown or control thecash for an extendedperiod of time, wedid not record cashor cash equivalents andborrowings
in our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers were
settled through the interbank settlement system from the ATMusers bank account to African Bank’s bank accounts. Wepaid African
Bank a monthly fee for the service provided whichwas calculated based on the cumulative daily outstandingbalance of cash utilized
multiplied by theSouth African primeinterest rate less 1%.Wewere exposed tothe risk ofcash lost while itwas in ourATMs(i.e.
from theft) and were required to repay African Bank for any shortages. Weintend to cancel this arrangement as part of the process of
winding down our ATMbusiness.
Cash flows from operating activities
Net cash providedby operating activitiesduring fiscal 2026 was$52.4 million (ZAR951.6 million) comparedto net cash used
by operating activitiesof $9.1million (ZAR 163.3million) during fiscal2025. Excluding theimpact of incometaxes, ourcash provided
byoperatingactivitiesduringfiscal2026waspositivelyimpactedbythepositivecontributionfromouroperatingsegmentsand
positive working capital movements, whichwas partially offset by cashutilized for the significantnet growth in ourConsumer finance
loans receivable.
54
Net cash used in operating activities during fiscal 2025 was $9.1 million (ZAR 163.3 million) compared to net cash provided by
operating activities of $28.8 million(ZAR 537.9 million) duringfiscal 2024. Excluding the impactof income taxes, our cashused in
operating activities during fiscal 2025 includescash utilized for the settlementof working capital movements within ourMerchant and
Enterprise businesses related to quarter-end transaction processing activities and which were settled in the following week (our fourth
quarter of fiscal 2024 closed ona Sunday), and the net growth in ourConsumer and Merchant finance loansreceivable books, which
was partially offset by the positive contribution from ourMerchant and Consumer businesses.
During fiscal 2026,we paid ourfirst provisional SouthAfrican tax paymentsof $4.0 million(ZAR 66.8 million)related to our
2026tax year. During fiscal 2026, wealso made our secondprovisional South African taxpaymentsof $4.8 million (ZAR79.6 million
related to our 2026tax year and receivedtax refunds of $0.06million (ZAR 1.1 million).Wealso paid taxes totaling$1.1 million in
other tax jurisdictions, primarily in Botswana and Namibia.
During fiscal 2025,we paid ourfirst provisional SouthAfrican tax paymentsof $4.2 million(ZAR 76.1 million)related to our
2025tax year. During fiscal 2025, wealso made our secondprovisional South African taxpayments of $2.2 million(ZAR 39.3 million
related to our2025 tax yearand receivedtax refunds of$0.4 million (ZAR7.2 million).Wealso paid taxestotaling $0.3million in
other tax jurisdictions, primarily in the Botswana and Namibia.
During fiscal 2024,we paid ourfirst provisional SouthAfrican tax paymentsof $2.7 million(ZAR 49.5 million)related to our
2024tax year. During fiscal 2024, wealso made our secondprovisional South African taxpaymentsof $2.9 million (ZAR52.7 million
related to our2024 tax yearand receivedtax refunds of$0.0 million (ZAR0.8 million).Wealso paid taxestotaling $0.4million in
other tax jurisdictions, primarily in Botswana.
Taxes paid duringfiscal 2026, 2025 and 2024 were as follows:
Table 13
Yearended June 30,
2026
2025
2024
2026
2025
2024
$
$
$
ZAR
ZAR
ZAR
‘000
‘000
‘000
‘000
‘000
‘000
First provisional payments
3,969
4,182
2,663
66,795
76,118
49,534
Second provisional payments
4,830
2,198
2,861
79,579
39,279
52,721
Taxation paid relatedto prior years
506
225
641
8,818
4,081
12,187
Tax refund received
(64)
(438)
(38)
(1,110)
(7,173)
(768)
Dividend withholding taxes paid
91
-
-
1,526
-
-
Total South Africantaxes paid
9,332
6,167
6,127
155,608
112,305
113,674
Foreign taxes paid
1,100
314
379
18,412
5,738
7,063
Totaltax paid
10,432
6,481
6,506
174,020
118,043
120,737
We expect to make additional provisionalincome tax payments in South Africa related to our 2026 tax year in the first quarter of
fiscal 2027, however, the amount was not quantifiableas of the date of the filing of this Annual Report.
Cash flows from investing activities
Cash usedin investingactivities forfiscal 2026included capitalexpenditures of$20.6 million(ZAR 374.6million), primarily
due to the acquisition of vaults and POS devices.We also incurred capital expendituresof $4.4 million (ZAR 79.9 million), primarily
relatedtothecapitalizationofdevelopmentcosts,duringfiscal2026.Duringfiscal2026,wealsoreceived$3.0millionfromthe
disposal of Cell C. Duringfiscal 2026, we paid$11.1 million relatedto acquisition of certain businesses,including $10.4 millionfor
the finaltranche ofthe Utilitiesacquisition, $0.3million forMobileMart and$0.3 millionfor Atom.Wealso invested$4.6 million
related to the acquisition ofmutual funds by our insurancebusiness in order toobtain a higher yield onfunds invested by thisbusiness.
Cash usedin investingactivities forfiscal 2025included capitalexpenditures of$17.2 million(ZAR 307.9million), primarily
due to the acquisition of vaults and POS devices.We also incurred capital expendituresof $3.9 million (ZAR 69.8 million), primarily
related to the capitalization of development costs, during fiscal 2025. Duringfiscal 2025, we paid $12.9 million related to acquisition
of certain businesses, including Adumo and Utilities. We also received $16.4 million relatedto the sale of ourentire equity investment
in MobiKwik in June 2025.
Cash usedin investingactivities forfiscal 2024included capitalexpenditures of$12.7 million(ZAR 236.6million), primarily
duetotheacquisitionofvaultsandPOSdevices.Duringfiscal2024,wereceivedproceedsof$3.5millionrelatedtothesale of
remaining interest in Finbond and $0.25 million related to the second (and final) tranche from thedisposal of our entire equity interest
in Carbon.
55
Cash flows from financing activities
During fiscal 2026, weutilized $123.7 million from ourSouth African general banking facilitiesto partially fund thegrowth of
our Consumer lendingbook, and repaid$129.4 million. Weutilized $6.9 millionof our long-termborrowings to fundour Merchant
lendingbookandtofinancetheacquisitionofPOSdevicesandvehicles.Werepaid$13.7millionoflong-termborrowingsin
accordance withour FacilityB repaymentschedule andunder ourasset-based facilitiesrepayment schedule.Wepaid feesof $0.03
million related to the September 2025 refinance of ourfacility to fund the growth of Merchant lending book.We paid $3.5 millionto
purchase Lesaka Hospitality non-controlling interests. We also paid $0.3 million to repurchase shares from employees in order for the
employees to settle taxes due related to the vesting of shares of restrictedstock.
Duringfiscal2025,weutilized$98.6millionfromourSouthAfricanoverdraftfacilitiestofundourATMsandourcash
management business through Merchant as well as to partially fund the acquisition of Utilities and for the February 2025 refinance of
certain ofour facilities.Werepaid $89.2million ofthose facilities,includingtowards ourrefinanced facilities.Weutilized $190.1
million of our borrowingsto settle a portionof the Adumo purchaseconsideration, pay certain transactionexpenses, repay Adumo’s
borrowings,repurchasesharesofourcommonstock,fundtheacquisitionofcertaincapitalexpenditures,forworkingcapital
requirementsandfortheFebruary2025refinanceofcertainofourfacilities.Werepaid$131.2millionoflong-termborrowings
towards our refinanced facilities and in accordance with our repayment schedule, paid$7.2 million to settle Adumo’s borrowings, and
settled a portionof our revolving creditfacility utilized. We also paid anorigination fee of $1.0million to secureadditional borrowings
as well as paid dividends to the non-controlling interest of $0.4 million.
During fiscal 2024, we utilized approximately $183.0 millionfrom our South African overdraft facilities to fund our ATMsand
repaid$199.6millionofthese facilities.Weutilized$23.7millionofourlong-termborrowingstofundtheacquisitionofcertain
capitalexpendituresandforworkingcapitalrequirements.Werepaid$20.1millionoftheselong-terminaccordancewithour
repayment schedule aswell as to settlea portion ofour revolving creditfacility utilized. Wereceived $0.1 millionfrom the exercise
of stock options. We also paid $1.5 million to repurchase shares from employees in order for the employees to settle taxes due related
to the vesting of shares of restricted stock.
Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2026:
Table 14
Payments due by Period, as of June 30, 2026 (in $ ’000s)
Total
Less than 1
year
2-3 years
3-5 years
Thereafter
Short-term credit facilities
(A)
20,671
20,671
-
-
-
Long-term borrowings
Principal repayments
(A)(B)
210,711
16,114
194,295
302
-
Interest payments
(A)(B)
29,537
10,750
18,771
16
-
Operating lease liabilities, including imputed interest
(C)
34,460
6,946
9,106
6,012
12,396
Purchase obligations
5,720
5,720
-
-
-
Capital commitments
633
633
-
-
-
Other long-term obligations reflected on our balance
sheet
(D)(E)
3,988
-
-
-
3,988
Total
305,720
60,834
222,172
6,330
16,384
(A) – Refer to Note 12 to our audited consolidated financial statements.
(B) – Long-termborrowings principalrepayments for the3-5 year periodincludes all unamortizedfees as ofJune 30, 2026.
Interest payments based onapplicable interest rates as ofJune 30, 2026, and expectedoutstanding long-term borrowings over
the period. All amounts converted from ZAR to USD using the June 30, 2026,USD/ ZAR exchange rate.
(C) – Refer to Note 8 to our audited consolidated financial statements.
(D) –Includes policyholder liabilities of $3.7 million related to our insurance business. All amounts are translated at exchange
rates applicable as of June 30, 2026.
(E) –Wehave excludedcross-guarantees inthe aggregateamount of$0.1 millionissued asof June30, 2026,to RMBand
Nedbankto secureguarantees ithas issuedto thirdparties onour behalfas theamounts thatwill besettled incash arenot
known and the timing of any payments is uncertain.
56
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Capital Expenditures
Capital expenditures for the years ended June 30, 2026, 2025 and 2024were as follows:
Table 15
2026
2025
2024
2026
2025
2024
$
$
$
ZAR
ZAR
ZAR
’000
’000
’000
’000
’000
’000
Merchant
19,581
18,117
11,202
355,297
324,350
209,302
Consumer
2,890
1,500
1,317
52,439
26,855
24,607
Enterprise
2,578
1,482
146
46,778
26,532
2,728
Total
25,049
21,099
12,665
454,514
377,737
236,637
Our capital expendituresfor fiscal 2026,2025 and 2024,are discussed under“—Liquidity and CapitalResources—Cash flows
from investing activities.”
All of our capital expendituresfor the past three fiscalyears were funded throughinternally-generated funds, exceptfor certain
capital expendituresof POSdevices andvaults, madethrough ourMerchant businesswhich werefunded throughthe utilizationof
asset-backed borrowings.Wehad outstandingcapital commitments asof June 30,2026, of $0.6million. In additionto these capital
expenditures,weexpectthatcapitalspendingforfiscal2027willincludeacquisitionofPOSdevices,vaults,computersoftware,
computer and office equipment, as well as for our ATM infrastructure and branch network in South Africa.Acquisition of these assets
w
ill be funded through the use of internally-generated funds and availablefacilities.
57
ITEM 7A.QUANTITATIVEAND QUALITATIVEDISCLOSURES ABOUT MARKET RISK
We seek to manage our exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price and
liquidity risks as discussed below.
Currency Exchange Risk
We are subject to currency exchange risk because we purchase components for vaults, that we assemble, and inventories that we
are requiredto settlein othercurrencies, primarilythe euro,renminbi, andU.S. dollar.Wehave usedforward contractsin orderto
limit our exposurein these transactionsto fluctuations inexchange rates betweenthe South Africanrand (“ZAR”), onthe one hand,
and the U.S. dollar and the euro, on the other hand.
We
had no outstanding foreign exchange contracts as of June 30,2026 and 2025.
Translation Risk
Translation risk relates to the risk that ourresults of operations will vary significantly asthe U.S. dollar is ourreporting currency,
but we earn a significant amount of our revenues andincur a significant amount of our expenses in ZAR. The U.S. dollarto the ZAR
exchange rate hasfluctuated significantly overthe past threeyears. As exchange ratesare outside ourcontrol, there canbe no assurance
that future fluctuations will not adversely affect our resultsof operations and financial condition.
Interest Rate Risk
As a result ofour normal borrowing activities, our operating resultsare exposed to fluctuations in interestrates, which we manage
primarily through our financing activities. The ongoing conflict in theMiddle East has contributed to higher oil and commodity prices
and increased global market volatility,resulting in increased inflationary pressures.
In May 2026,the South AfricanReserve Bank (“SARB”)increased the repurchaserate by 25basis points to 7.00%in response
to heightened inflation risks.The SARBsubsequently maintained the repurchaserate at 7.00%in July 2026.While the outlook remains
uncertain, continued pressure on oil and other input prices presents an upsiderisk to inflation and, consequently,interest rates.
We periodically evaluate the costand effectiveness ofinterest rate hedgingstrategies tomanage our exposureto changesin interest
rates.Wegenerallymaintainsurpluscashincashequivalentsandheld-to-maturityinvestments andhaveoccasionallyinvestedin
marketable securities.
We haveshort and long-term borrowings in SouthAfrica as described in Note 12to our consolidated financial statements which
attractinterestatratesthatfluctuatebasedonchangesintheSouthAfricanprimeandSouthAfricanOvernightIndexAverage
(“ZARONIA”) interest rates.The following tableillustrates the effecton our annual expectedinterest charge, translatedat exchange
rates applicableas ofJune 30, 2026, as aresult ofchanges inthe SouthAfrican primeand SouthAfrican OvernightIndex Average
(“ZARONIA”) interest rates, usingour outstanding short and long-term borrowings as of June 30,2026. The effect ofa hypothetical
1% (i.e. 100 basis points) increase and a 1% decrease in the interest rates applicable to theborrowings as of June 30, 2026, are shown.
The selected 1% hypothetical change does not reflect what could be consideredthe best- or worst-case scenarios.
Table 16
As of June 30, 2026
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Impact of
hypothetical
change in
interest rates
($ ’000)
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South Africa borrowings
23,567
1%
2,322
25,889
(1%)
(2,322)
21,245
Credit Risk
Credit riskrelates tothe risk ofloss that wewould incuras aresult of non-performanceby counterparties.
We
maintain credit
riskpoliciesinrespectofourcounterpartiestominimizeoverallcreditrisk.Thesepoliciesincludeanevaluationofapotential
counterparty’sfinancialcondition,creditrating,andothercreditcriteriaandriskmitigationtoolsasourmanagementdeems
appropriate.Withrespect tocredit riskon financialinstruments,we maintaina policyof enteringinto suchtransactions onlywith
South African and European financial institutions that have a credit ratingof “B” (or its equivalent) or better, as determinedby credit
rating agencies such as Standard & Poor’s, Moody’sand Fitch Ratings.
58
Consumer microlending credit risk
We are exposedto credit risk in our Consumer microlending activities, which provides unsecured short-term loansto qualifying
customers. Credit bureau checks as well as an affordability test are conducted as part of the origination process, both ofwhich are line
with local regulations.
We
consider this policy to be appropriate because the affordability test we perform takes into account a variety
offactorssuchasotherdebtsandtotalexpendituresonnormalhouseholdandlifestyleexpenses.Additionalallowancesmaybe
required should theability of our customersto make payments whendue deteriorate inthe future. A significantamount of judgment
is required to assess the ultimate recoverability of thesefinance loan receivables, including ongoing evaluation of the creditworthiness
of each customer.
Merchant lending
We
maintain an allowancefor doubtful financeloans receivable relatedto its Merchantservices segment withrespect to short-
term loansto qualifyingmerchant customers.Our riskmanagement proceduresinclude adheringto ourproprietary lendingcriteria
which uses an online-system loanapplication process, obtaining necessary customer transaction-history data andcredit bureau checks.
We
consider these procedures to be appropriate because ittakes into account a variety offactors such as the customer’s credit capacity
and customer-specific risk factors when originating a loan.
Equity Securities Price Risk
Equity price risk relates to the riskof loss that we would incur asa result of the volatility in the exchange-traded price of equity
securities that we hold. As of June 30, 2026, we did not have any equity securities thatwere exchange-traded and held as available for
sale. Historically, exchange-traded equity securities held as available for sale were expected to be held for an extended period of time
and we werenot concerned withshort-term equity price volatilitywith respect tothese securities provided thatthe underlying business,
economic and management characteristics of the company remainedsound.
The market price of these exchange-traded equity securities may fluctuate for a variety of reasonsand, consequently, the amount
we may obtain in a subsequent sale of these securities may significantly differfrom the reported market value.
Equity Securities Liquidity Risk
Equity liquidity riskrelates to therisk of lossthat we wouldincur as aresult of thelack of liquidityon the exchangeon which
those securities arelisted.
We
may notbe able tosell some orall of thesesecurities at onetime, or overan extended periodof time
without influencing the exchange-traded price, or at all.
We monitor these investments for impairment and make appropriate reductions in carrying value when an impairment is deemed
t
o be other-than-temporary.As of June 30, 2026, we did not own any exchange-traded equity securities.
59
ITEM 8.FINANCIAL STATEMENTSAND SUPPLEMENTARYDATA
Our auditedconsolidated financialstatements, togetherwith thereportsof our independentregistered publicaccounting firms,
a
ppear on pages F-1 through F-95 of this Annual Report.
60
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controlsand procedures
Under thesupervision andwith theparticipation ofour management,including ourExecutive Chairmanand ourGroup Chief
Financial Officer, we conducted an evaluation of our disclosure controls and procedures, assuch term is defined under Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our Executive Chairman and
Group ChiefFinancial Officerconcluded thatour disclosurecontrols andprocedures werenot effectiveas of June30, 2026,due to
the material weaknesses in internal control over financial reporting as describedbelow.
Internal Control over Financial Reporting
Internal control over financial reportingis a process designedby, or under the supervision of, ourExecutive Chairman and Group
ChiefFinancialOfficer,orpersonsperformingsimilarfunctions,andeffectedbyourboardofdirectors,management,andother
personnel, to providereasonable assurance regardingthe reliability offinancial reporting andthe preparation offinancial statements
for external purposes in accordance with U.S. GAAP.
Internal control over financial reporting includesthose policies and procedures that(1) pertain to themaintenance of records that,
in reasonable detail, accurately and fairlyreflect the transactions and dispositions ofour assets; (2) provide reasonableassurance that
transactions are recorded asnecessary to permit preparation offinancial statements in accordancewith U.S. GAAP,and that receipts
and expenditures of the company are being made only in accordance with authorizations of our officers and directors; and (3) provide
reasonable assurance regarding preventionor timely detection of unauthorizedacquisition, use or dispositionof our assets that could
have a material effect on our audited consolidated financial statements.
Inherent Limitations in Internal Controlover Financial Reporting
Internal control over financial reporting cannot provide absolute assurance of achievingfinancial reporting objectives because of
its inherentlimitations.Internalcontroloverfinancial reportingis aprocess thatinvolveshumandiligenceandcomplianceandis
subjecttolapsesinjudgment andbreakdownsresultingfrom humanfailures.Internalcontrol overfinancialreportingalsocanbe
circumvented by collusion or impropermanagement override. Because of suchlimitations, there is a risk thatmaterial misstatements
may notbe preventedor detectedon atimely basisby internalcontrol overfinancial reporting.However,these inherentlimitations
are known features of the financial reportingprocess. Therefore, it is possible to design safeguards intothe process to reduce, though
not eliminate, this risk.
Management’sReport on Internal Control Over Financial Reporting
Management,includingourExecutiveChairmanandourGroupChiefFinancialOfficer,isresponsibleforestablishingand
maintainingadequateinternalcontroloverourfinancialreporting.Managementconductedanevaluationoftheeffectivenessof
internal control over financial reporting based on criteria established in Internal Control – Integrated Framework(2013) issued by the
Committeeof SponsoringOrganizationsof theTreadwayCommission(COSO). Basedon thisevaluationand asdescribedbelow,
management concluded that our internal control over financial reporting was noteffective as of June 30, 2026.
A materialweakness isa deficiency,or acombination ofdeficiencies, ininternal controlover financialreporting, suchthat a
reasonablepossibilityexists thatamaterialmisstatementofourannualorinterimfinancial statementswouldnotbepreventedor
detected on a timely basis.
As of June 30, 2026, we identified material weaknesses related to:
●
OurConsumerlending,ConsumerinsuranceandGrouppayrollprocesses,specificallyinsufficientriskassessmentand
monitoringactivitiesrelatingtochangesinormigrationofsystemsandprocesses,insufficientcontrolsoverinternal
information and information from serviceorganizations, and insufficient design and implementationof ITGCs, controls over
service organizations and process level controls, resulting in ineffective process level controls,including a lack of validation
of the completeness and accuracy of information used within the processes;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls includinginsufficient controlsover informationresulting inineffective processlevel controlsincluding alack of
validation of thecompleteness of thejournal entry populationand inadequate validationof the completenessand accuracy
of information used within the process;
●
The failure of our Utilities, Lesaka Hospitality,Lesaka Merchant Technologiesand Lesaka Payments businesses to comply
withourSarbanesprogram,specificallyinsufficientriskassessmentandmonitoringactivitiesrelatingtosystemsand
processes, insufficient controls over internal informationand information from service organizations, andinsufficient design
a
nd implementation of ITGCs, controlsover service organizations and processlevel controls, resulting in ineffective process
61
level controls, including a lack of validation of the completeness and accuracyof information used within the process;
●
An insufficient number of experienced and trained resources to executeon their internal control responsibilities resulting in
inadequateriskassessment,ineffectivedesign,implementationandoperatingeffectivenessofprocesslevelcontrolsfor
processesin the scope of our internal control over financial reporting evaluation.
Of thematerial weaknessesdescribed above,the materialweaknesses relatedto thejournal entryprocess andthe insufficient
numberof experiencedandtrainedresourcesto executeon theirinternalcontrol responsibilitiesresultedincorrectedpriorperiod
misstatementsrelatedtotheunderstatementofcostandaccumulateddepreciationforcomputerequipmentandthecorrectionof
deferredtax assetincludedin deferredincometaxesdueto correctionofintercompanytransactionsas describedinNote1tothe
consolidated financial statements.
Additionally, of the material weaknesses described above,the material weakness relatedto an insufficient numberof experienced
and trained resources toexecute on their internalcontrol responsibilities also resultedin corrected prior periodmisstatements related
to the understatement of costof goods sold, IT processing,servicing and support due toincorrect claim of indirect taxesand correction
of number of sharesand amounts used for commonstock and treasury shares andamounts for additional paid-incapital as described
in Note 1 to theconsolidated financial statements. Thematerial weakness also resultedin a corrected immaterialmisstatement in the
current period related to revenue.
Allothermaterialweaknessesdidnotresultinanycorrectedmaterialorimmaterialmisstatements;however,areasonable
possibility existsthat materialmisstatements inour consolidatedfinancial statementsmay notbe preventedor detectedon atimely
basis.
Lesaka’s independent registered public accountingfirm, KPMG Inc, who audited the consolidated financial statements included
in this AnnualReport, has expressedan adverse reporton the operatingeffectiveness of ourinternal control overfinancial reporting
as of June 30, 2026, which appears in Part II, Item 9A of this Annual Report.
Remediation of Newly Identified Material Weaknesses
To address the material weaknesses, our management,including our Information Technology(“IT”) team, has commenced with
remediation of these materialweaknesses including, but notlimited to: (1) developingand implementing a comprehensiveremediation
plan that includes specific actions aimed at enhancing theunderstanding of control owners related to the operation andimportance of
internalcontrolsoverfinancialreporting,includingthe principlesandrequirementsofeach control,witha focusonthe impacted
processesincludingcontrolsoverserviceorganizations,ITGCs,andotherprocesslevelcontrols;(2)mandatingimprovedrisk
assessment procedures withgovernance requirements upon implementingnew or migratingexisting systems withinthe Group together
with the design, implementation and monitoringof control activities; (3) the recruitmentof additional appropriately skilled resources
acrosstheFinanceandRiskandCompliancedisciplinescoupledwiththefurtherupskillingandtrainingofexistingresources
responsiblefortheexecutionofkeycontrolsaswellasafocusonagreaterdegreeofautomationofcontrolsthroughoutthe
organization, (4) the embedding of controls compliancein the key performance indicators of senior executives as well as process and
control owners across the business and (5) collaborating closely with internal and external assurance partners to ensure the robustness
of our remediation plan.
While we are actively taking stepsto implement our remediation plan, the material weaknesseswill not be deemed resolved until
the enhanced controlsoperate for asufficient period oftime and managementhas confirmed through testingthat the sameare operating
effectively.Wewill continue tomonitor the remediationplan's effectivenessand adjustour effortsas needed. Aswe assess andtest
our internal control over financial reporting, we may identify the need for additionalmeasures or modifications to the plan.
Remediation of Previously Identified Material Weaknesses
Managementhasmadeprogressinremediatingthematerialweaknessesidentifiedinthepreviousfiscalyearrelatedtothe
insufficientdesignandimplementationofcontrolsandpoliciesandproceduresrelatedtothegoodwillimpairmentassessment,
business combinations process and revenue recognitionmatters. Revised procedures have been implementedrelated to the validation
of completeness and accuracy of the data used in the goodwill impairment model together with additional procedures implementedto
enhance theprecision levelsin evaluating keyassumptions utilizedin thismodel. These havebeen adequatelydocumented through
management review controls. The implementation of robust revenue recognition controls for the review of new contracts and product
offerings hasmitigated keyrisks of potentialmaterial misstatementwithin therevenue process. Thishas beenachieved throughthe
thorough assessment and documentationof the relevantaccounting considerations, ensuring theaccurate classification and recognition
of revenue. Furthermore,the enhanced processesand procedures relatingto business combinationsoperated effectivelywith respect
to the acquisitions completedduring the year; as nosignificant business combination occurredduring the period, we willcontinue to
evaluate these controls as they operate over future significant transactions.
Changes in Internal Control over Financial Reporting
Except as described above,there were no changesin our internal control overfinancial reporting during thequarter ended June
30, 2026, that have materially affected, or are reasonablylikely to materially affect, our internal control over financial reporting.
62
REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM
To the shareholdersand Board of Directors of Lesaka Technologies,Inc.
Opinion on Internal Control Over Financial Reporting
We have auditedLesaka Technologies, Inc.and subsidiaries’ (the Company) internal control over financial reporting as of June
30, 2026,based oncriteria establishedin
Internal Control– IntegratedFramework (2013)
issued bythe Committeeof Sponsoring
Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the
achievement of the objectivesof the controlcriteria, the Company hasnot maintained effective internalcontrol over financial reporting
as ofJune 30,2026, basedon criteriaestablishedin
Internal Control– IntegratedFramework (2013)
issued bythe Committeeof
Sponsoring Organizations of the TreadwayCommission.
Wealso haveaudited, inaccordance withthe standardsof thePublic CompanyAccounting OversightBoard (UnitedStates)
(PCAOB),theconsolidatedbalancesheetsoftheCompanyasofJune30,2026and2025,therelatedconsolidatedstatementsof
operations, comprehensive (loss) income,changes in equity,and cash flows for eachof the years in the three-yearperiod ended June
30, 2026, and the related notes (collectively, the consolidated financial statements), and our report dated September 9, 2026expressed
an unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility thata material misstatement of thecompany’s annualor interim financial statements willnot be prevented
ordetectedonatimelybasis.Materialweaknessesrelatedtoinsufficientriskassessment,insufficientexperiencedandtrained
resources, insufficient design, implementation and operating effectiveness of control activities, insufficient controls overinformation,
and insufficient monitoringactivities have been identifiedand included in management’sassessment. The material weaknesseswere
considered in determiningthe nature, timing,and extent ofaudit testsapplied in ouraudit ofthe 2026 consolidatedfinancial statements,
and this report does not affect our report on those consolidatedfinancial statements.
Basis for Opinion
TheCompany’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforits
assessment ofthe effectivenessof internalcontrol overfinancial reporting,included inthe accompanyingManagement’sReport on
Internal Control over Financial Reporting. Ourresponsibility is to expressan opinion on the Company’s internal control over financial
reporting basedon ouraudit. Weare apublic accountingfirm registeredwith thePCAOB andare requiredto beindependent with
respect to theCompany in accordancewith the U.S. federalsecurities laws andthe applicable rulesand regulations ofthe Securities
and Exchange Commission and the PCAOB.
We conductedour audit in accordance withthe standards of the PCAOB. Thosestandards require that we planand perform the
audit toobtain reasonableassurance aboutwhether effectiveinternal controlover financialreporting wasmaintained inall material
respects. Ouraudit of internalcontrol over financialreporting includedobtaining an understandingof internal controlover financial
reporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperatingeffectivenessof
internal controlbased on theassessed risk. Ouraudit also includedperforming such otherprocedures as weconsidered necessaryin
the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthe
reliability of financialreporting and thepreparation of financialstatements for externalpurposes in accordance withgenerally accepted
accounting principles. A company’s internalcontrol over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally acceptedaccounting principles, and thatreceipts and expenditures ofthe company are being madeonly in
accordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregarding
prevention or timely detection ofunauthorized acquisition, use, or dispositionof the company’s assets that could havea material effect
on the financial statements.
Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.
/s/ KPMG Inc.
Johannesburg, Republic of South Africa
September 9, 2026
63
ITEM 9B.OTHER INFORMATION
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the SecuritiesExchange Act of 1934 (the “Exchange Act”),
may from time to timeenter into plans for thepurchase or sale of ourcommon stock that areintended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) of the Exchange Act. During thequarter ended June 30, 2026, no officers or directors, as defined inRule
16a-1(f),
adopted
,
modified
,or
terminated
a“Rule10b5-1
trading
arrangement”ora“non-Rule10b5-1tradingarrangement,”as
defined in Item 408 of Regulation S-K.
ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
64
PARTIII
ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE
InformationaboutourexecutiveofficersissetoutinPartI,Item1underthecaption“OurExecutiveOfficers.”Theother
information requiredby thisItem is incorporatedby referenceto thesections ofour definitiveproxy statementfor our2026 annual
meeting of shareholders entitled “Board of Directors and CorporateGovernance” and “Additional Information.”
ITEM 11.EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the sections of our definitive proxystatement for our 2026
annual meeting of shareholders entitled“Executive Compensation,” “Board ofDirectors and Corporate Governance—Compensation
of Directors” and “—Remuneration Committee Interlocks and Insider Participation.”
ITEM 12.SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDERMATTERS
The information required by this Item is incorporated by reference to the sections of our definitive proxystatement for our 2026
annualmeetingofshareholdersentitled“SecurityOwnershipofCertainBeneficialOwnersandManagement”and“Equity
Compensation Plan Information.”
ITEM 13.CERTAINRELATIONSHIPSAND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item is incorporated by reference to the sections of our definitive proxystatement for our 2026
annualmeetingofshareholdersentitled“CertainRelationshipsandRelatedTransactions”and“BoardofDirectorsandCorporate
Governance.”
ITEM 14.PRINCIPAL ACCOUNTANTFEES AND SERVICES
The information required by this Item is incorporated by reference to the sections of our definitive proxystatement for our 2026
a
nnual meeting of shareholders entitled “Audit and Non-Audit Fees.”
65
PARTIV
ITEM 15.EXHIBITS AND FINANCIAL STATEMENTSCHEDULES
a)The following documents are filed as part of this report
1. Financial Statements
The following financial statements are included on pagesF-1 through F-95.
Report of the Independent Registered Public Accounting Firm–
KPMG, Inc.
(PCAOB Firm ID
1025
)
Consolidated statements of operations for the years ended June 30, 2026,2025 and 2024
1
2. Financial Statement Schedules
Financial statement schedules have beenomitted since they areeither not required, notapplicable, or theinformation is otherwise
included.
(b) Exhibits
Incorporated by Reference Herein
Exhibit
No.
Description of Exhibit
Included
Herewith
Form
Exhibit
Filing Date
2.1
8-K
10.1
November 2, 2021
2.2
8-K
10.1
May 7, 2024
2.3
8-K
2.2
October 2, 2024
2.4
8-K
2.1
July 2, 2025
3.1
8-K
3.1
May 17, 2022
66
3.2
8-K
3.2
May 17, 2022
4.1
10-K
4.1
September 9, 2022
4.2
X
10.1*
10-Q
10.49
February 7, 2023
10.2*
10-Q
10.50
February 7, 2023
10.3*
10-Q
10.51
February 7, 2023
10.4*
10-K
10.4
September 11, 2024
10.5*
10-K
10.5
August 24, 2017
10.6*
14A
A
September 30, 2022
10.7*
14A
B
April 22, 2024
10.8*
14A
A
October 28, 2025
10.9*
8-K
10.1
July 30, 2026
10.10*
8-K
10.2
July 30, 2026
10.11*
14A
A
April 22, 2024
10.12*
14A
A
July 2, 2026
10.13*
8-K
10.1
February 11, 2021
10.14*
8-K
10.2
February 11, 2021
10.15*
8-K
10.1
December 10, 2021
10.16*
8-K
10.2
December 10, 2021
10.17*
8-K
10.3
December 10, 2021
10.18*
8-K
10.4
December 10, 2021
10.19*
10-Q
10.52
May 9, 2023
10.20*
10-Q
10.53
May 9, 2023
10.21*
10-Q
10.53
May 7, 2025
10.22*
10-Q
10.54
May 7, 2025
67
10.23*
10-Q
10.55
May 7, 2025
10.24
10-Q
10.56
May 7, 2025
10.25
8-K
10.32
April 12, 2016
10.26
10-Q
10.43
February 5, 2025
10.27
8-K
10.1
May 14, 2020
10.28
8-K
10.1
December 10, 2020
10.29
10-K
10.32
September 9, 2022
10.30
10-Q
10.58
May 10, 2022
10.31
8-K
10.3
March 22, 2023
10.32
8-K
10.40
October 1, 2024
10.33
14A
A
October 2, 2024
10.34
14A
B
October 2, 2024
10.35
ProprietaryLimited,asTerm/RCF
Borrower, FirstRand
10-Q
10.51
May 6, 2026
10.36
10-Q
10.52
May 6, 2026
68
10.37
10-Q
10.47
May 7, 2025
10.38
10-Q
10.48
May 7, 2025
10.39
10-Q
10.49
May 7, 2025
10.40
10-Q
10.50
May 7, 2025
10.41
10-Q
10.51
May 7, 2025
10.42
10-Q
10.52
May 7, 2025
10.43
10-Q
10.53
May 6, 2026
10.44
8-K
10.27
December 19, 2013
10.45
8-K
10.50
December 9, 2016
69
10.46
8-K
10.1
September 9, 2025
14
X
19
X
21
X
23.1
X
31.1
X
31.2
X
32
X
97
X
101.INS
XBRL Instance Document
X
101.SCH
XBRL TaxonomyExtension Schema
X
101.CAL
XBRL TaxonomyExtension Calculation Linkbase
X
101.DEF
XBRL TaxonomyExtension Definition Linkbase
X
101.LAB
XBRL TaxonomyExtension Label Linkbase
X
101.PRE
XBRL TaxonomyExtension Presentation Linkbase
X
104
Cover Page Interactive Data File (formatted as inline
XBRL and continued in Exhibit 101)
X
* Indicates a management contract or compensatory plan or arrangement.
ITEM 16.FORM 10-K SUMMARY
N
one.
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LESAKA TECHNOLOGIES, INC.
By: /s/ Ali Mazanderani
Ali Mazanderani
Executive Chairman and Director
Date: September 9, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this reporthas been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
NAME
TITLE
DATE
/s/ Kuben Pillay
Lead Independent Director and Director
September 9, 2026
Kuben Pillay
/s/ Ali Mazanderani
Executive Chairman and Director (Principal Executive
Officer)
September 9, 2026
Ali Mazanderani
/s/ Dan Smith
Group Chief Financial Officer and Director (Principal
Financial and Accounting Officer)
September 9, 2026
Dan Smith
/s/ Antony Ball
Director
September 9, 2026
Antony Ball
/s/ Nonkululeko Gobodo
Director
September 9, 2026
Nonkululeko Gobodo
/s/ Steven Heilbron
Director
September 9, 2026
Steven Heilbron
/s/ Lincoln Mali
Director
September 9, 2026
Lincoln Mali
/s/ VenessaNaidoo
Director
September 9, 2026
VenessaNaidoo
/s/ Ekta Singh-Bushell
Director
September 9, 2026
Ekta Singh-Bushell
/s/ Dean Sparrow
Director
September 9, 2026
Dean Sparrow
F-2
REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM
To the shareholdersand Board of Directors of Lesaka Technologies,Inc.
Opinion on the Consolidated Financial Statements
Wehave auditedthe accompanyingconsolidated balancesheets ofLesaka Technologies,Inc. and subsidiaries(the Company)
as of June 30, 2026 and 2025, the related consolidated statements of operations, comprehensive(loss) income, changes in equity,and
cash flowsfor eachof theyears inthe three-yearperiod endedJune 30,2026, andthe relatednotes (collectively,the consolidated
financial statements). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, thefinancial position
of the Company as of June 30,2026 and 2025, and the results ofits operations and its cash flowsfor each of the years in thethree-year
period ended June 30, 2026, in conformity with U.S. generally acceptedaccounting principles.
Wealso haveaudited, inaccordance withthe standardsof thePublic CompanyAccountingOversight Board(United States)
(PCAOB), the Company’s internal controlover financial reporting asof June 30,2026, based oncriteria established inInternal Control
– Integrated Framework(2013) issued bythe Committee ofSponsoring Organizationsof the TreadwayCommission, and ourreport
dated September 9, 2026 expressedan adverse opinion on theeffectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidatedfinancial statementsare theresponsibility ofthe Company’smanagement. Ourresponsibility isto express
an opinion on theseconsolidated financial statements based onour audits. We are a public accountingfirm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and thePCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards requirethat we plan and perform the
audit toobtain reasonableassurance aboutwhether theconsolidated financialstatements arefree ofmaterial misstatement,whether
duetoerrororfraud.Ouraudits includedperformingprocedurestoassesstherisksofmaterialmisstatementoftheconsolidated
financial statements, whetherdue to error orfraud, and performingprocedures that respondto those risks. Suchprocedures included
examining, ona test basis,evidence regardingthe amountsand disclosuresin theconsolidated financialstatements. Ouraudits also
included evaluatingthe accounting principlesused and significantestimates made bymanagement, as wellas evaluatingthe overall
presentation of the consolidated financial statements. Webelieve that our audits provide a reasonable basis for our opinion
Critical Audit Matters
Thecriticalauditmattercommunicatedbelowis amatterarisingfromthecurrentperiod auditoftheconsolidatedfinancial
statementsthatwascommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat:(1)relatestoaccountsor
disclosuresthatarematerialtotheconsolidatedfinancialstatementsand(2)involvedourespeciallychallenging,subjective,or
complex judgments. The communication of a criticalaudit matter does not alter in any way our opinionon the consolidated financial
statements, takenas a whole,and we arenot, by communicatingthe critical auditmatter below,providing a separateopinion onthe
critical audit matter or on the accounts or disclosures to which it relates.
Assessment of goodwill impairment test for certain reporting units
As discussed in Notes 2 and 10to the consolidated financial statements,the Company recorded goodwillof $215,298 thousand
as of June 30, 2026.The Company tests for impairmentof goodwill on an annualbasis and at anyother time if eventsor circumstances
changethat couldtrigger animpairmenttest. TheCompany usesa discountedcash flowmodel toestimate thefair valuefor each
reportingunit,whichrequirestheCompanytomakesignificantestimatesandcertainassumptionsrelatedtothereportingunits’
revenue growth rates, terminal revenue growth rates, forecast period forcertain reporting units and weighted average cost of capital.
Weidentified theassessment ofthe Company’sgoodwill impairmenttest forcertain reportingunits asa criticalaudit matter.
Subjectiveauditorjudgementandspecializedskillsandknowledgewererequiredtoevaluatecertainassumptionsusedinthe
discountedcashflowmodel.Specifically,reportingunits’ revenuegrowthrates,terminal revenuegrowthrates, forecastperiodfor
certain reporting units andthe weighted average cost of capital.Changes in these assumptionscould have a significant impacton the
fair value of the reporting units.
The following are the primary procedures we performed to address this critical auditmatter:
•
Weevaluatedtherevenuegrowthratesbycomparingtherevenuegrowthratesagainsthistoricperformance,approved
budgets and challenged management on the expected future performancebased on reporting unit specific factors.
•
We performed sensitivity analyses over revenue growth rates and theforecast period of certain reportingunits to assess their
impact on the Company’s determinationof the fair values in respect to the reporting units.
•
We involvedvaluation professionals with specialized skills and knowledge who assisted in:
o
independently recalculatingthe terminal revenuegrowth rates for thereporting units consideringindustry,product
and country specific information;
o
e
valuating the weighted average cost of capital, by developing an independent estimate of weighted average cost of
F-3
capital range andcomparing it tothe weighted averagecost of capitalselected by theCompany for eachreporting
unit; and
o
performing a sensitivityand scenario typeanalysis on terminalrevenue growth ratesand weighted averagecost of
capital to assess the impact of changes in thoseassumptions on the Company’sdetermination of fair value for each
reporting unit.
/s/
KPMG Inc.
We have servedas the Company’s auditor since 2024.
Johannesburg, Republic of South Africa
September 9, 2026
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
as of June 30, 2026 and 2025
F-4
June 30,
June 30,
2026
2025
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
81,409
$
76,520
Restricted cash related to short-term credit facilities (Note 12)
129
119
Accounts receivable, net and other receivables (Note 4)
43,765
42,525
Finance loans receivable, net (Note 4)
103,810
74,110
Inventory (Note 5)
20,113
23,551
Total current assets before settlement assets
249,226
216,825
Settlement assets
18,504
27,098
Total current assets
267,730
243,923
PROPERTY,PLANT AND EQUIPMENT, NET (Note 1 and Note 7)
50,212
44,924
OPERATING LEASE RIGHT-OF-USE (Note 8)
20,161
9,691
EQUITY-ACCOUNTED INVESTMENTS(Note 9)
295
199
GOODWILL (Note 10)
215,298
199,395
INTANGIBLE ASSETS, NET (Note 10), including integrated platform - 2026: $
73,211
; 2025: $
79,343
123,425
139,215
DEFERRED TAX ASSETS, NET
(A)
12,470
10,338
OTHER LONG-TERM ASSETS, including equity securities (Note 9 and 11)
9,697
3,809
TOTAL ASSETS
699,288
651,494
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 12)
20,671
24,469
Accounts payable
23,986
19,867
Other payables (Note 13)
(A)
83,262
76,035
Operating lease liability - current (Note 8)
4,408
4,007
Current portion of long-term borrowings (Note 12)
16,114
11,956
Income taxes payable
1,691
1,400
Total current liabilities before settlement obligations
150,132
137,734
Settlement obligations
18,530
26,695
Total current liabilities
168,662
164,429
DEFERRED TAX LIABILITIES, NET
28,379
33,921
OPERATING LEASE LIABILITY - LONG TERM (Note 8)
19,338
6,129
LONG-TERM BORROWINGS (Note 12)
194,597
188,813
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 11)
3,988
2,991
TOTAL LIABILITIES
414,964
396,283
REDEEMABLE COMMON STOCK (Note 14)
78,972
88,957
EQUITY
COMMON STOCK (Note 14)
Authorized:
200,000,000
with $
0.001
par value;
Issued and outstanding shares, net of treasury - 2026:
83,306,794
; 2025:
81,249,097
(A)
84
84
PREFERRED STOCK
Authorized shares:
50,000,000
with $
0.001
par value;
Issued and outstanding shares, net of treasury:2026:
-
; 2025:
-
-
-
ADDITIONAL PAID-IN CAPITAL
(A)
152,554
135,505
TREASURY SHARES, ATCOST: 2026:
2,548,472
; 2025:
3,999,049
(A)
(234)
(7,059)
ACCUMULATED OTHERCOMPREHENSIVE LOSS (Note 15)
(A)
(166,319)
(185,626)
RETAINED EARNINGS
(A)
219,267
216,509
TOTAL LESAKA EQUITY
205,352
159,413
NON-CONTROLLING INTEREST
-
6,841
TOTAL EQUITY
205,352
166,254
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
699,288
$
651,494
(A) Amounts for June 30, 2025 revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTSOF OPERATIONS
for the years ended June 30, 2026, 2025 and 2024
F-5
2026
2025
2024
(In thousands, except per share data)
REVENUE (Note 16)
$
721,554
$
659,701
$
564,222
Services rendered
630,377
613,201
529,818
Loan-based fees received
65,696
37,344
29,948
Sale of goods
10,158
9,157
4,456
Income from rentals
15,323
-
-
EXPENSE
Cost of goods sold, IT processing, servicing and support, exclusive of depreciation and
amortization shown separately below
(A)
490,834
487,186
443,293
Selling, general and administration, exclusive of depreciation and amortization shown
separately below
(A)
153,473
123,727
87,027
Movement in allowance for credit losses (Note 4)
(B)
12,796
8,011
5,158
Depreciation and amortization
47,346
33,721
23,665
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and certain
compensation costs (Note 3)
389
16,159
2,325
Impairment loss (Note 10)
4,035
18,863
-
OPERATING INCOME (LOSS)
12,681
(27,966)
2,754
CHANGE IN FAIR VALUEOF EQUITY SECURITIES (Note 6 and 9)
2,593
(59,828)
-
OTHER INCOME (Note 13)
3,883
-
-
REVERSAL OF ALLOWANCE FORDOUBTFUL LOAN RECEIVABLE(Note 4
and
Note
9)
1,500
-
250
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTEDINVESTMENT/ LOSS ON
DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT(Note 9)
584
161
-
LOSS ON DISPOSAL OF EQUITY SECURITIES (Note 3)
730
-
-
INTEREST INCOME
2,889
2,596
2,294
INTEREST EXPENSE
(A)
18,506
21,824
19,171
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
3,726
(107,183)
(13,873)
INCOME TAX EXPENSE (BENEFIT) (Note 18)
(A)
1,429
(15,982)
3,363
INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED
INVESTMENTS
2,297
(91,201)
(17,236)
EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 9)
215
114
(1,279)
NET INCOME (LOSS)
2,512
(91,087)
(18,515)
ADD NET LOSS ATTRIBUTABLETO NON-CONTROLLING INTEREST
246
130
-
NET INCOME (LOSS) ATTRIBUTABLETO LESAKA
$
2,758
$
(90,957)
$
(18,515)
Net earnings (loss) per share, in United States dollars
(Note 19):
Basic earnings (loss) attributable to Lesaka shareholders
(A)
$
0.03
$
(1.19)
$
(0.29)
Diluted earnings (loss) attributable to Lesaka shareholders
(A)
$
0.03
$
(1.19)
$
(0.29)
(A) Revised to correct the errors discussed in Note 1.
(B) Movement in allowance for credit losses for the years ended June 30, 2025, and 2024, were previously included in selling, general and
administration.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTSOF COMPREHENSIVE (LOSS) INCOME
for the years ended June 30, 2026, 2025 and 2024
F-6
2026
2025
2024
(In thousands)
Net income (loss)
(A)
$
2,512
$
(91,087)
$
(18,515)
Other comprehensive income (loss), net of taxes:
Movement in foreign currency translation reserve
(A)
20,037
2,412
6,209
Movement in foreign currency translation reserve related to equity-accounted
investments (Note 15)
-
-
489
Release of foreign currency translation reserve related to disposal/ impairmentof
equity-accounted investments (Note 9 and Note 15)
550
-
1,543
Release of foreign currency translation reserve related to disposal/ liquidationof
subsidiaries (Note 15)
(520)
6
(952)
Total other comprehensiveincome, net of taxes
20,067
2,418
7,289
Comprehensive income (loss)
22,579
(88,669)
(11,226)
(Less) Add comprehensive (income) loss attributable to
non-controlling interest
(518)
313
-
Comprehensive income (loss) attributable to Lesaka
$
22,061
$
(88,356)
$
(11,226)
(A) Revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Consolidated Statements of Changes in Equity for the year ended June 30, 2024 (dollar amounts in thousands)
F-7
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1,2023
(A)
63,640,246
$
64
-
$
-
63,640,246
$
47,477
$
325,981
$
(195,516)
$
178,006
$
-
$
178,006
$
79,429
Treasury shares repurchased
(A)
(319,522)
-
-
-
(319,522)
(1,495)
(1,495)
(1,495)
Shares issued (Note 17)
194,454
-
194,454
-
-
-
Restricted stock granted
1,002,241
1,002,241
-
-
-
Exercise of stock options
54,287
54,287
165
165
165
Stock-based compensation charge (Note
17)
8,045
8,045
8,045
Reversal of stock-based compensation
charge (Note 17)
(299,463)
(299,463)
(134)
(134)
(134)
Stock-based compensation charge
related to equity-accounted investment
(Note 9)
(133)
(133)
(133)
Net loss
(A)
(18,515)
(18,515)
-
(18,515)
Other comprehensive income (Note
15)
(A)
7,289
7,289
-
7,289
Balance – June 30, 2024
(A)
64,272,243
$
64
-
$
-
64,272,243
$
53,925
$
307,466
$
(188,227)
$
173,228
$
-
$
173,228
$
79,429
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Consolidated Statements of Changes in Equity for the year ended June 30, 2025 (dollar amounts in thousands)
F-8
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1,2024
(A)
64,272,243
$
64
-
$
-
64,272,243
$
53,925
$
307,466
$
(188,227)
$
173,228
$
-
$
173,228
$
79,429
Treasury shares repurchased
(A)
(371,187)
-
(5,091,410)
(11,929)
(5,462,597)
(1,731)
(13,660)
(13,660)
Shares issued (Note 14) (Note 17)
19,960,181
19
19,960,181
73,237
73,256
73,256
9,528
Gain recognized related to issue of
shares included in treasury shares (Note
3)
-
-
1,092,361
4,870
1,092,361
408
5,278
5,278
Restricted stock granted
1,499,610
1,499,610
-
-
-
Exercise of stock options
38,011
1
38,011
116
117
117
Stock-based compensation charge (Note
17)
9,639
9,639
9,639
Reversal of stock-based compensation
charge (Note 17)
(150,712)
(150,712)
(89)
(89)
(89)
Adumo non-controlling interest
acquired (Note 3)
-
-
7,586
7,586
Net loss
(A)
(90,957)
(90,957)
(130)
(91,087)
Dividends paid to non-controlling
interests
-
(432)
(432)
Other comprehensive income (loss)
(Note 15)
(A)
2,601
2,601
(183)
2,418
Balance – June 30, 2025
(A)
85,248,146
$
84
(3,999,049)
$
(7,059)
81,249,097
$
135,505
$
216,509
$
(185,626)
$
159,413
$
6,841
$
166,254
$
88,957
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Consolidated Statements of Changes in Equity for the year ended June 30, 2026 (dollar amounts in thousands)
F
-9
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1,2025
(A)
85,248,146
$
84
(3,999,049)
$
(7,059)
81,249,097
$
135,505
$
216,509
$
(185,626)
$
159,413
$
6,841
$
166,254
$
88,957
Treasury shares repurchased
(84,758)
-
-
-
(84,758)
(339)
(339)
(339)
Gain recognized related to issue of
shares included in treasury shares (Note
3)
1,757,344
8,036
1,757,344
(51)
7,985
-
7,985
Restricted stock granted
1,081,595
1,081,595
-
-
-
Exercise of stock options
21,196
-
21,196
63
63
63
Stock-based compensation charge (Note
17)
7,271
7,271
7,271
Reversal of stock-based compensation
charge (Note 17)
(410,913)
(410,913)
(302)
(302)
(302)
Deconsolidation of Humble (Note 14)
(306,767)
(1,211)
(306,767)
-
(1,211)
(43)
(1,254)
Transfer from redeemable common
stock to additional paid-in-capital (Note
14)
9,985
9,985
-
9,985
(9,985)
Lesaka Hospitality non-controlling
interest acquired (Note 14)
-
422
422
(7,312)
(6,890)
Net income (loss)
2,758
2,758
(246)
2,512
Dividends paid to non-controlling
interests
-
-
-
Other comprehensive income (Note 15)
19,307
19,307
760
20,067
Balance – June 30, 2026
85,855,266
$
84
(2,548,472)
$
(234)
83,306,794
$
152,554
$
219,267
$
(166,319)
$
205,352
$
-
$
205,352
$
78,972
(A) Revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTSOF CASHFLOWS
for the years ended June 30, 2026, 2025 and 2024
F
-10
2026
2025
2024
(In thousands)
Cash flows from operating activities
Net income (loss)
(A)
$
2,512
$
(91,087)
$
(18,515)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Depreciation and amortization
47,346
33,721
23,665
Impairment loss (Note 10)
4,035
18,863
-
Movement in allowance for credit losses
12,796
8,011
5,158
Fair value adjustment related to financial liabilities
(238)
(120)
(853)
Change in fair value of equity securities (Note 6 and 9)
(2,593)
59,828
-
Other income
(3,883)
-
-
Loss on disposal of equity securities (Note 3)
730
-
-
Loss on impairment/ disposal of equity-accounted investment (Note 9)
584
161
-
Gain on deconsolidation of subsidiary
(848)
-
-
(Profit) Loss on disposal of property, plant and equipment
(316)
13
(305)
Stock-based compensation charge (Note 17)
6,969
9,550
7,911
(Earnings) Loss from equity-accounted investments (Note 9)
(215)
(114)
1,279
Reversal of allowance for doubtful loans receivable
(1,500)
-
(250)
Dividends received from equity-accounted investments
105
96
95
Interest payable
20
4,723
1,119
Facility fee amortized (Note 12)
413
429
443
Increase (Decrease) in income taxes payable
402
485
(400)
Deferred tax benefit
(A)
(9,451)
(21,739)
(2,712)
Changes in net working capital
Decrease (Increase) in accounts receivable (Note 20)
3,500
1,081
(10,873)
Increase in finance loans receivable (Note 20)
(34,421)
(34,614)
(10,029)
Decrease in inventory
6,704
169
9,840
Increase (Decrease) in accounts payable and other payables
(A)
19,793
(12,164)
23,216
Deferred consideration included in other payables (Note 3 and Note 13)
-
13,586
-
Net cash provided by (used in) operating activities
52,444
(9,122)
28,789
Cash flows from investing activities
Capital expenditures
(20,646)
(17,199)
(12,665)
Proceeds from disposal of property, plant and equipment
1,849
1,938
1,565
Acquisition of intangible assets
(4,403)
(3,900)
(294)
Acquisitions, net of cash acquired (Note 3)
(11,117)
(12,946)
(1,583)
Proceeds from disposal of equity securities (Note 6 and 9)
2,971
16,441
-
Investment in equity securities
(450)
-
-
Cash disposed on disposal of subsidiary
(165)
-
-
Proceeds from disposal of equity-accounted investment (Note 9)
-
-
3,508
Repayment of loans by equity-accounted investments
-
-
250
Acquisition of insurance entity investments
(4,598)
-
-
Net change in settlement assets
10,822
4,324
(7,196)
Net cash used in investing activities
(25,737)
(11,342)
(16,415)
Cash flows from financing activities
Proceeds from bank overdraft (Note 12)
123,712
98,616
182,990
Repayment of bank overdraft (Note 12)
(129,417)
(90,309)
(199,642)
Long-term borrowings utilized (Note 12)
6,949
190,061
23,728
Repayment of long-term borrowings (Note 12)
(13,741)
(149,511)
(20,073)
Non-refundable deal origination fees/ guarantee fees (Note 12)
(285)
(970)
-
Repurchase of shares of common stock and treasury stock (Note 14)
(339)
(13,660)
(1,495)
Proceeds from exercise of stock options
63
116
165
Acquisition of non-controlling interests (Note 14)
(3,538)
-
-
Dividends paid to non-controlling interest
-
(432)
-
Net change in settlement obligations
(10,390)
(4,179)
7,214
Net cash (used in) provided by financing activities
(26,986)
29,732
(7,113)
Effect of exchange rate changes on cash
5,178
1,453
2,025
Net increase in cash, cash equivalents and restricted cash
4,899
10,721
7,286
Cash, cash equivalents and restricted cash – beginning of period
76,639
65,918
58,632
Cash, cash equivalents and restricted cash – end of period (Note 20)
$
81,538
$
76,639
$
65,918
(A) Revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-11
1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Lesaka Technologies, Inc. (“Lesaka” and collectivelywith its consolidated subsidiaries, the “Company”), formerly named Net 1
UEPSTechnologies,Inc.,was incorporatedintheStateofFloridaonMay8,1997.The Companyprovidesfinancialtechnology
solutions to underservicedconsumers, merchants andenterprises, improving theway they managetheir daily financialactivities and
increasingfinancialinclusioninthemarketsinwhichweoperate.Inplainterms,theCompanyhelpsitscustomers
pay,receive,
borrow, insure and grow
: the Company enables them to makeand accept payments, receive income such as wagesand welfare grants,
access credit, protect their families and assets through insurance, and grow their businesses and financiallives. The Company delivers
thesecapabilitiesthroughthreebusinessdivisions:Merchant,whichprovidespaymentacceptance,software,cashmanagement,
lending and alternative digital productsolutions to merchants across our twochannels; Community and Corporate. Consumer,which
provides banking,lending andinsurance solutionsto consumers,principally recipientsof social welfaregrants inSouth Africa;and
Enterprise, which provides payment processing, prepaid solutions andbill payment infrastructure connecting enterprises to consumers
and businesses.
Basis of presentation
The accompanyingconsolidated financialstatements includesubsidiaries overwhich Lesakaexercises controland havebeen
prepared in accordance with accounting principles generally acceptedin the United States of America (“GAAP”).
Implications of reverse acquisition concluded in June 2004
On June 7, 2004,Lesaka and the formershareholders of Net 1 AppliedTechnologyHoldings Limited (“Aplitec”) implemented
a transactionunder whichthe formershareholdersof Aplitecobtaineda majorityvoting interestin Lesaka.Aplitec wasa holding
company established andexisting under thelaws of Republicof South Africaand was liquidatedand deregistered followingthe closing
of the transaction.GAAP requires thatthe company whoseshareholders retaina majority interestin a combinedbusiness be treated
as the acquirer for accounting purposes. Consequently, this transaction was accounted for as a reverse acquisition. Forthe period from
June 7, 2004,the financial informationreported for theCompany represents theconsolidated results ofLesaka and Aplitecwith Lesaka
as the acquired entity.
Although Aplitec isdeemed to bethe acquiring companyfor financial andreporting purposes, thelegal status of theLesaka as
the surviving corporation did not change.
Revision of Previously Issued Financial Statements
Understatement of cost and accumulated depreciationfor computer equipment
In October 2025, the Companyidentified that it had understatedits June 30, 2025, amountsof cost and accumulated depreciation
forcomputerequipmentaswellasthetotalsforcostandaccumulateddepreciationby$
6.5
millioninthenotestotheaudited
consolidated financialstatements forthe yearsended June30, 2025and 2024.The carryingvalue ofproperty,plant andequipment
reported as ofJune 30, 2025,was not impactedby the error. TheCompany has recastthe amounts ofcost and accumulateddepreciation
forcomputerequipmentaswellasthetotalsforcostandaccumulateddepreciationby$
6.5
millionintheProperty,Plantand
Equipment,net note, refer to Note 7.
The Company assessed the materiality of this error and change in presentation on prior period consolidatedfinancial statements
in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99 “Materiality” and SAB No. 108, “Considering the Effects of Prior
YearMisstatementswhenQuantifyingMisstatementsintheCurrentYearFinancialStatements.”Basedonthisassessment,the
Company has concludedthat previously issuedfinancial statements werenot materially misstatedbased upon overallconsiderations
of both quantitative and qualitative factors.
Understatement of cost of goods sold, IT processing,servicing and support due to incorrect claim of indirecttaxes
Subsequent to the issuanceof the Company’sQuarterly Report on Form10-Q for the threemonths ended September30, 2025,
itdeterminedthatitscertainindirecttaxeshadnotbeenaccountedforcorrectlyinitsconsolidatedbalancesheet,consolidated
statements ofoperations,consolidatedstatement ofcomprehensiveloss, consolidatedstatement ofchanges inequity,consolidated
statement of cash flows andrelated notes to theconsolidated financial statements included inpreviously filed Annual Reports onForm
10-K and Quarterly Reports on Form 10-Q since June 30, 2022, and these filings were incorrect. In these previous filings, the amount
ofcertainindirecttaxeswereincorrectlyclaimedinmonthlyindirecttaxsubmissiontothetaxingauthorityandwereincorrectly
excludedfromthe Company’sreportedcost ofgoodssold, ITprocessing,servicingand supportin theconsolidatedstatements of
operationsandotherpayablesandretainedearningsintheconsolidatedbalancesheet.Thecorrectedpresentationintherevised
consolidatedfinancialstatementsincludescertainindirecttaxesincostofgoodssold,IT processing,servicingandsupportinthe
c
onsolidated statements of operations and other payables and retainedearnings in the consolidated balance sheet.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-12
1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION(continued)
Revision of Previously Issued Financial Statements (continued)
Understatement of costof goods sold,IT processing, servicing andsupport due toincorrect claim of indirect taxes(continued)
The Company hasalso determined thatit may alsobe liable forpenalties and interestrelated to theindirect taxes notpaid in a
timely manner and has recorded the penalties in the selling,general and administration expense and the interest in interest expensein
the revised consolidated statements of operations. The cumulative sum of the penalties and interest are included in other payables and
retained earnings in the revised consolidated balance sheet.
The Company has determinedthat at this timeit is more likelythan not that itwill be unable toclaim an income taxdeduction
related to the error, however,it is performing further analysis ofits tax position with its external tax advisors.Therefore, there are no
income tax adjustments reflected in these consolidated financial statements relatedto the correction of this error.
The Company hasrevised the previouspresentations on theconsolidated statements ofoperations for theyears ended June 30,
2025 and2024, andcorrected themin thisfiling. TheCompany hasalso includedthe impactof thecorrection forthe threemonths
ended September 30, 2025, in the consolidated statements of operations for the year June 30, 2026, included in this filing. The impact
of these revisions has increasedcost of goods sold,IT processing, servicing andsupport,selling, general and administrationexpense
and interest expense, and all subtotals from operating income to net income (loss)attributable to Lesaka for the affected periods.
The Company has revised the consolidated balance sheet as of June 30, 2025, and corrected it in this filing where these amounts
are presented as comparative prior period amounts in other payablesand retained earnings and affected subtotals and totals.
Specifically, for the year endedJune 30, 2026,Cost of goodssold, IT processing,servicing and supportincreased by $
0.2
million,
Selling, general and administration expense increased by $
0.06
million, Operating income decreased by $
0.2
million, Interest expense
increased by $
0.1
million, and Netincome attributableto Lesaka decreasedby $
0.4
million, as aresult of thecorrection to amounts
reported for the three months ended September 30, 2025. Basic and Diluted earnings per share for the year ended June 30, 2026, were
not impacted by the correction to amounts reported for the three monthsended September 30, 2025.
Correction of deferred taxasset included in deferred income taxes dueto correction of intercompanytransactions
WhilepreparingitsAnnualReportonForm10-KfortheyearendedJune30,2026,theCompanydeterminedthatcertain
intercompany transactions processed in previous periods were incorrectly recorded which resulted in the incorrect amount of deferred
incometaxesrecordedinitsconsolidatedbalancesheet,consolidatedstatementsofoperations,consolidatedstatementsof
comprehensiveloss,consolidatedstatementsofchangesinequity,consolidatedstatementsofcashflowsandrelatednotestothe
consolidated financialstatements includedin its AnnualReports on Form10-K and QuarterlyReports on Form10-Q since June30,
2025, and thesefilings were incorrect.The deferred taxassets, net includedin the Company’sconsolidated balance sheetas of June
30, 2025, andsubsequently presented balancesheets, were overstatedby $
2.2
million and retainedearnings were overstatedby $
2.2
million. Income tax benefitfor the year endedJune 30, 2025, includedin the consolidated statementof operations was overstatedby
$
2.2
million. Thecorrected presentationin therevised consolidatedfinancial statementsincludes adjustmentsfor deferredtaxes in
income taxbenefit in theconsolidated statementsof operationsand deferredincome taxes andretained earningsin the consolidated
balance sheet.
The Companyhas revisedthe previous presentationson the consolidatedstatements ofoperations forthe yearended June30,
2025,andcorrectedtheminthis filing.Theimpactoftheserevisionshasdecreasedincometaxesbenefit,andallsubtotalsfrom
operatingincometonetincome(loss)attributabletoLesakafortheaffectedperiods.TheCompanyhasrevisedtheconsolidated
balance sheet asof June 30,2025, and corrected itin this filingwhere these amountsare presented ascomparative prior period amounts
in deferred tax assets, net and retained earnings and affectedsubtotals and totals.
The Company assessedthe materiality ofthese errors andchange inpresentation on priorperiod consolidated financialstatements
inaccordancewithSABNo.99“Materiality”andSABNo.108,“ConsideringtheEffectsofPriorYearMisstatementswhen
QuantifyingMisstatements inthe CurrentYearFinancial Statements.”Based onthis assessment,the Companyhas concludedthat
previouslyissuedfinancialstatementswerenotmateriallymisstatedbaseduponoverallconsiderationsofbothquantitativeand
qualitative factors.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-13
1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION(continued)
Revision of Previously Issued Financial Statements (continued)
ThetablesbelowpresenttheimpactoftherevisionstospecificcaptionstotheCompany’sconsolidatedbalancesheetand
consolidated statements of operations for the periods identified.
Consolidated balance sheet
June 30, 2025
As reported
Correction
As revised
Deferred tax assets, net
$
12,554
$
(2,216)
$
10,338
Other payables
72,079
3,956
76,035
Accumulated other comprehensive loss
(185,664)
38
(185,626)
(2,216)
Retained earnings
$
222,719
$
(3,994)
$
216,509
Consolidated statement of operations
Yearended June 30, 2025
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
486,546
$
640
$
487,186
Selling, general and administration, exclusive of depreciation and amortization
(A)
131,512
226
131,738
Interest expense
21,453
371
21,824
Income tax expense (benefit)
$
(18,198)
$
2,216
$
(15,982)
Basic earnings (loss) per share attributable to Lesaka shareholders
$
(1.14)
$
(0.05)
$
(1.19)
Diluted earnings (loss) per share attributable to Lesaka shareholders
$
(1.14)
$
(0.05)
$
(1.19)
(A) Asreported forselling, generaland administration,exclusive ofdepreciation andamortizationincludes themovement in
allowance for credit losses of $
8,011
, which is now presented separately on the consolidated statement of operations.
Consolidated statement of operations
Yearended June 30, 2024
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
442,673
$
620
$
443,293
Selling, general and administration, exclusive of depreciation and amortization
(A)
91,969
216
92,185
Interest expense
18,932
239
19,171
Basic earnings (loss) per share attributable to Lesaka shareholders
$
(0.27)
$
(0.02)
$
(0.29)
Diluted earnings (loss) per share attributable to Lesaka shareholders
$
(0.27)
$
(0.02)
$
(0.29)
(A)As reportedforselling,generalandadministration,exclusiveofdepreciationandamortizationincludesthemovementin
allowance for credit losses of $
5,158
, which is now presented separately on the consolidated statement of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-14
1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION(continued)
Revision of Previously Issued Financial Statements (continued)
Correction of number of shares and amounts used for common stock and treasuryshares and amounts for additional paid-in
capital
Subsequent tothe issuanceof theCompany’sQuarterly Reporton Form10-Q forthe threemonths endedMarch 31,2026, it
determined that the presentationof the number ofshares and amounts usedfor common stock andtreasury shares and theamount of
additional paid-incapital inits consolidatedbalance sheetsand consolidatedstatement of changesin equityand related notesto the
consolidated financialstatements includedin previouslyfiled AnnualReports onForm 10-Kand QuarterlyReports onForm 10-Q
since June 30,2006, wereincorrect. In theseprevious filings, sharesof Lesaka’s common stockrepurchased byLesaka wereincorrectly
presentedastreasuryshares.UndertheFloridaBusinessCorporationAct,sharesacquireddirectlybytheissuingcorporationare
restored by operationof Florida lawto the statusof authorized butunissued shares.However, sharesrepurchased by acompany are
presentedastreasurysharesif(i)thereisaprovisioninacorporation’sarticlesofincorporationdesignatingtherepurchaseofa
corporation’s shares as treasury shares,or (ii) inthe case ofa corporation whoseshares are registeredon a nationalsecurities exchange,
therepurchasedsharesthathavebeendesignatedastreasurysharesinthecorporation’sbylawsorinresolutionsofitsboardof
directors. Shares repurchased by Lesaka were not designated as treasury shares under (i) or(ii) as described in the preceding sentence.
GuidanceunderU.S.GAAPrequiresthattherepurchaseofsharesbyacompanyshouldconformwithapplicablelawand
therefore the repurchase of shares of its common stock by Lesaka should have reducedthe number of common stock and amount and
the amount of additional paid-in capitalpresented. The corrected presentation in therevised consolidated financial statements includes
the repurchasesof commonstock byLesaka asa reductionof thenumber ofshares ofcommon stockand amountand reducesthe
amount ofadditional paid-incapital.TotalLesaka equityand thenumber ofissued andoutstandingshares arenot affectedby this
revision.Acquisition of shares ofLesaka’s commonstock by its subsidiariesarenot affected bythe aforementioned rulesand these
shares will continue to be presented as treasury shares in these consolidated financialstatements.
The Company assessed the materiality of this error and change in presentation on prior period consolidatedfinancial statements
inaccordancewithSABNo.99“Materiality”andSABNo.108,“ConsideringtheEffectsofPriorYearMisstatementswhen
QuantifyingMisstatements inthe CurrentYearFinancial Statements.”Based onthis assessment,the Companyhas concludedthat
previouslyissuedfinancialstatementswerenotmateriallymisstatedbaseduponoverallconsiderationsofbothquantitativeand
qualitative factors.
The Company has revised the previouspresentations on the consolidated balancesheet as of June 30, 2025, and correctedthem
in this filing.The Company has alsoincluded the impactof the correctionfor the years endedJune 30, 2025 and2024, respectively,
in the consolidatedstatement of changesin equity for theyears ended June 30,2025 and 2024,included in this filing.The impact of
these revisions has decreased the amount for common stock, treasury shares,at cost, and additional paid-in capital on theconsolidated
balance sheet asof June 30,2025. The impactof these revisionshas decreased thenumber of sharesand amount forcommon stock,
decreasedthenumberofsharesandamountoftreasuryshares,anddecreasedtheamountofadditionalpaid-incapitalonthe
consolidated statement of changes in equity for the years ended June 30, 2025and 2024, respectively.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-15
1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION(continued)
Revision of Previously Issued Financial Statements (continued)
Correction of number of shares and amounts used for common stock and treasuryshares and amounts for additional paid-in
capital (continued)
The table below presentsthe impact of the revisions to specific captions to the Company’s consolidated balance sheet as of June
30, 2025.
Consolidated balance sheet
June 30, 2025
As reported
Correction
As revised
Common stock
$
103
$
(19)
$
84
Treasury shares, cost
(298,523)
291,464
(7,059)
Additional paid-in capital
$
426,950
$
(291,445)
$
135,505
The table below presents the impact of the revisions to specific captions to the Company’sconsolidated statement of changes in
equity for the periods identified.
Consolidated statement of changes in equity
Yearended June 30, 2025
As reported
Correction
As revised
(in thousands, except per share data)
Common stock:
Balance - July 1, 2024:
Number of shares
89,836,051
(25,563,808)
64,272,243
Amount
$
83
$
(19)
$
64
Treasury shares repurchased
Number of shares
-
(371,187)
(371,187)
Balance - June 30, 2025:
Number of shares
111,183,141
(25,934,995)
85,248,146
Amount
$
103
$
(19)
$
84
Treasury shares:
Balance - July 1, 2024:
Number of shares
(25,563,808)
25,563,808
-
Amount
$
(289,733)
$
289,733
$
-
Treasury shares repurchased
Number of shares
(5,462,597)
371,187
(5,091,410)
Amount
$
(13,660)
$
1,731
$
(11,929)
Balance - June 30, 2025:
Number of shares
(29,934,044)
25,934,995
(3,999,049)
Amount
$
(298,523)
$
291,464
$
(7,059)
Additional paid-in capital:
Balance - July 1, 2024:
$
343,639
$
(289,714)
$
53,925
Treasury shares repurchased
$
-
$
(1,731)
$
(1,731)
Balance - June 30, 2025:
$
426,950
$
(291,445)
$
135,505
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-16
1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION(continued)
Revision of Previously Issued Financial Statements (continued)
Correction of number of shares and amounts used for common stock and treasuryshares and amounts for additional paid-in
capital (continued)
The table below presents the impact of the revisions to specific captions to the Company’sconsolidated statement of changes in
equity for the periods identified.
Consolidated statement of changes in equity
Yearended June 30, 2024
As reported
Correction
As revised
(in thousands, except per share data)
Common stock:
Balance - July 1, 2023:
Number of shares
88,884,532
(25,244,286)
63,640,246
Amount
$
83
$
(19)
$
64
Treasury shares repurchased
Number of shares
-
(319,522)
(319,522)
Balance - June 30, 2024:
Number of shares
89,836,051
(25,563,808)
64,272,243
Amount
$
83
$
(19)
$
64
Treasury shares:
Balance - July 1, 2023:
Number of shares
(25,244,286)
25,244,286
-
Amount
$
(288,238)
$
288,238
$
-
Treasury shares repurchased
Number of shares
(319,522)
319,522
-
Amount
$
(1,495)
$
1,495
$
-
Balance - June 30, 2024:
Number of shares
(25,563,808)
25,563,808
-
Amount
$
(289,733)
$
289,733
$
-
Additional paid-in capital:
Balance - July 1, 2023:
$
335,696
$
(288,219)
$
47,477
Treasury shares repurchased
$
-
$
(1,495)
$
(1,495)
Balance - June 30, 2024:
$
343,639
$
(289,714)
$
53,925
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-17
2.SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The financial statements ofentities which are controlledby Lesaka, referred to assubsidiaries, are consolidated. Inter-company
accounts and transactions are eliminated upon consolidation.
The Company, if it is the primary beneficiary,consolidates entities which are considered to be variable interest entities (“VIE”).
The primary beneficiary is consideredto be the entity that will absorb amajority of the entity's expected losses,receive a majority of
the entity's expected residualreturns, or both. TheCompany has an obligationto absorb the financiallosses of the LesakaEmployee
Share Trust (“Lesaka ESOP Trust”)and also has the ability to control this trust and therefore it has been consolidated. This trust does
not generate significant losses or residual returns.
Business combinations
TheCompanyaccountsforitsbusinessacquisitionsundertheacquisitionmethodofaccounting.Thetotalvalueofthe
consideration paidfor acquisitions isallocated tothe underlyingnet assets acquired,based on theirrespective estimated fairvalues.
The Company uses a numberof valuation methods to determinethe fair value of assets andliabilities acquired, including discounted
cashflows,externalmarketvalues,valuationsonrecenttransactionsoracombinationthereof,andbelievesthatitusesthemost
appropriatemeasureoracombinationofmeasurestovalueeachassetorliability.The Companyrecognizesmeasurement-period
adjustments in the reporting period in which the adjustment amounts are determined.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptionsthat
affectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancial
statementsandthe reportedamountsof revenuesandexpenses duringthe reportingperiod.Actual resultscoulddifferfromthose
estimates.
Translation of foreigncurrencies
The primaryfunctional currencyof theconsolidated entitiesis theSouth AfricanRand (“ZAR”)and theCompany’sreporting
currency is the U.S. dollar.Assets and liabilities are translatedat the exchange rates in effectat the balance sheet date. Revenuesand
expenses are translated at averagerates for the period. Translationgains and losses are reported inaccumulated other comprehensive
income in totalequity.The Company releases theforeign currency translationreserve included in accumulatedother comprehensive
income attributableto a foreignentity upon saleor complete, orsubstantially complete,liquidation of theinvestment in thatforeign
entity and includes the release in the gain or loss reported related to the sale orliquidation of the foreign entity.
Foreign exchange transactions are translated at the spot rate ruling at the date of the transaction. Monetary items are translated at
the closingspot rateat thebalance sheetdate. Transactionalgains andlosses arerecognizedin selling,general andadministration
expense on the Company’s consolidatedstatement of operations for the period.
Cash, cash equivalents and restricted cash
Cash and cash equivalentsinclude cash on hand and fundsdeposited in bank accounts withfinancial institutions that are liquid,
unrestricted andreadily available.Restricted cashrepresents cashwhich islegally orcontractually restrictedas touse andincludes
cash related to cash withdrawn from the Company’s debt facilities to fund ATMsas well cash in certain bank accounts that have been
ceded to under certain of the Company’sborrowings.
Allowance for credit losses
The Company uses historical default experience overthe lifetime of loans inorder to develop an expected lossrate for its lending
books. Theallowance forcredit losses relatedto Consumerfinance loansreceivables iscalculated bymultiplying theexpected loss
rate withthe month-endoutstanding lendingbook. Theallowance forcredit lossesrelated toMerchant financeloans receivablesis
calculatedby addingtogether actualreceivables indefault plusmultiplyingtheexpected lossrate withthe month-endoutstanding
lending book. The Companywrites off microlendingfinance loans receivable andrelated service fees and interestif a borrower isin
arrears withrepayments formore thanthree monthsor isdeceased. TheCompany writesoff merchantand workingcapital finance
receivables and relatedfees when it isevident that reasonablerecovery procedures,including where deemednecessary, formallegal
a
ction, have failed.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-18
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for credit losses (continued)
Foraccountsreceivables,theCompanyusesalifetimelossratebyexpressingwrite-offexperienceasapercentageof
corresponding invoice amounts (asopposed to outstanding balances).The allowance for credit losses relatedto these receivables has
been calculated by multiplying the lifetime loss rate with recent invoice/origination amounts. Non-recoverabilityis assessed based on
a quarterlyreview bymanagement ofthe ageingof outstandingamounts, thelocationand thepaymenthistoryof thecustomerin
relation to those specific amounts.
Inventory
Inventoryis valuedat thelower ofcost andnet realizablevalue. Costis determinedon afirst-in,first-out basisand includes
transport and handling costs.
Property, plantand equipment
Property,plant andequipment areshown atcost less accumulateddepreciation. Property,plant andequipment aredepreciated
on the straight-line basis at rates whichare estimated to amortize the assets totheir anticipated residual values over their usefullives.
Within the following asset classifications,the expected economic useful lives are approximately:
Vaults
10
years
Computer equipment
3
to
9
years
Office equipment
2
to
10
years
Vehicles
3
to
8
years
Furniture and fittings
3
to
15
years
The gain or loss arisingon the disposal or retirementof an asset is determinedas the difference betweenthe sales proceeds and
the carrying amount of the asset and is recognized in income.
Leases
The Company determines whether an arrangement is a lease at inception.Operating leases are included in operating lease right-
of-use assets (“ROU”),operating lease liability- current, andoperating lease liability– long termin its consolidatedbalance sheets.
The Companydoes nothave anysignificant financeleases asof June30, 2026and 2025,respectively,but itspolicy isto include
finance leases in property and equipment, other payables, and otherlong-term liabilities in its consolidated balance sheets.
A ROU assetrepresents theCompany’sright to usean underlyingasset for thelease term andthe lease liabilitiesrepresent its
obligation tomake leasepayments arisingfrom thelease arrangement.Operating leaseROU assetsand liabilitiesare recognizedat
commencement date based onthe present value oflease payments over thelease term. Asmost of theCompany’s leases do not provide
an implicit rate,the Company generallyuses its incrementalborrowing ratebased onthe estimated rateof interest forcollateralized
borrowing overa similar termof the leasepayments at commencementdate. The operatinglease ROU assetalso includes anylease
prepayments madeand excludes leaseincentives. The termsof the Company’slease arrangements mayinclude options toextend or
terminatetheleasewhenit isreasonablycertainthatthe Companywill exercisethatoption.Leaseexpenseforlease paymentsis
recognized on a straight-line basis over the lease term.
The Company does not recognize right-of-use assets and lease liabilities for lease arrangements with a term of twelve months or
less. The Companyaccounts for allcomponents in alease arrangement asa single combinedlease component. Costsincurred in the
adaptation of leased properties toserve the requirements ofthe Company (leasehold improvements) arecapitalized and amortized over
the shorter of the estimated useful life of the asset and the remaining term ofthe lease.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-19
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity-accounted investments
The Company uses the equitymethod to account forinvestments in companies whenit has significant influence butnot control
overthe operationsof thecompany.Under theequity method,the Companyinitially recordsthe investmentat costandthereafter
adjusts the carrying value of the investment to recognize its proportional share of the equity-accounted company’s net income or loss.
In addition, when an investment qualifies for the equitymethod (as a result of an increase in the level of ownershipinterest or degree
of influence),the costof acquiringthe additionalinterest inthe investeeis addedto thecurrent basisof theCompany’spreviously
held interest and the equity method would beapplied subsequently from the date on whichthe Company obtains the ability to exercise
significant influence over the investee.
The Companyreleases apro rataportion ofthe foreigncurrency translationreserve relatedto anequity-accounted investment
that isincludedin accumulatedother comprehensiveincome toearnings uponthe saleof aportion ofits ownershipinterest inthe
equity-accountedinvestment.Thereleaseoftheprorataportionoftheforeigncurrencytranslationreserveisincludedinthe
measurement ofthe gainor losson saleof aportion ofthe Company’sownership interestin theequity-accounted investment.The
Company does not recognize cumulative losses in excess of its investment or loans inan equity-accounted investment except if it has
an obligation to provide additional financial support.
Dividends received from an equity-accounted investment reduce the carrying valueof the Company’s investment. The Company
has elected to classify distributions received from equity method investees using the nature of the distribution approach.This election
requires the Company to evaluateeach distribution received on thebasis of the source of thepayment and classify the distributionas
eitheroperatingcashinflowsorinvestingcashinflows.TheCompanyreviewsitsequity-accountedinvestmentsforimpairment
whenever events or circumstances indicate that the carrying amount ofthe investment may not be recoverable.
Goodwill
Goodwillrepresentstheexcessofthepurchasepriceofanacquiredenterpriseoverthefairvaluesoftheidentifiableassets
acquired and liabilities assumed basedupon their estimated fairvalue at the dateof purchase. The Companyreviews the carrying value
of goodwill annually or more frequently if circumstances indicate impairmenthas occurred.
Circumstances thatcould triggeran impairment testinclude but arenot limited to:a significant adversechange in thebusiness
climate or legalfactors; an adverseaction or assessmentby a regulator;unanticipated competition; lossof key personnel;the likelihood
that a reporting unit orsignificant portion of a reportingunit will be soldor otherwise disposed; and resultsof testing for recoverability
of a significant asset group within a reporting unit. If goodwill is allocated to a reporting unitand the carrying amount of the reporting
unit exceedsthe fair valueof that reportingunit, an impairmentloss is recordedin the statementof operations.Measurement ofthe
fair value of a reporting unit is based on present value techniques of estimatedfuture cash flows.
Intangible assets
Intangible assets are shown atcost less accumulated amortization. Intangible assetsare amortized over the followinguseful lives:
Customer relationships
1
to
15
years
Software, integrated platform and unpatented technology
3
to
10
years
FTS patent
10
years
Exclusive licenses
7
years
Brands and trademarks
0.5
to
20
years
Intangible assetsare periodicallyevaluated forrecoverability,and thoseevaluations takeinto accountevents orcircumstances
that warrant revised estimates of useful lives or that indicate that impairmentexists.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-20
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Debt and equity securities
Debt securities
The Company is required toclassify all applicable debt securitiesas either trading securities, availablefor sale or heldto maturity
upon investment in the security.
Held to maturity
Debt securities acquired by the Company which it has the ability and the positive intent to hold to maturity are classified as held
to maturity debt securities. The Company is required to make an election to classify these debt securities as held to maturity and these
securities are carried at amortized cost. The amortized costof held to maturity debt securitiesis adjusted for amortization of premiums
and accretion of discounts to maturity.Interest received from the held tomaturity security together with this amortizationis included
in interest income in the Company’s consolidated statement of operations. The Company hada held to maturity security as ofJune 30,
2025. The Company useshistorical default experience overthe lifetime of debtsecurities in order tocalculate a lifetime loss ratefor
its held tomaturity debtsecurities. The Companyhad
no
held to maturitydebt securities asof June 30,2026.As of June30, 2025,
the carrying value of the Company’sheld to maturity debt securities was $
0
.
Impairment of debt securities
With regardto heldto maturitydebt securities,the Companyconsiders (i)the abilityand intentto holdthe debtsecurity fora
period of time to allowfor recovery of value(ii) whether it is morelikely than not thatthe Company will be requiredto sell the debt
security; and (iii)whether it expects to recoverthe entire carrying amountof the debt security.The Company records animpairment
loss in its consolidatedstatement of operations representingthe difference betweenthe debt securities carryingvalue and thecurrent
fair value as of the date of the impairment if the Company determines that it intends to sell the debt security or if that it is morelikely
than not that itwill be required tosell the debt securitybefore recovery of theamortized cost basis. However,the impairment lossis
split between a credit loss and a non-credit loss for debt securities that the Company determines that it does not intend to sell or that it
is more likely than not that it will not be required to sell the debt securities before the recovery of the amortizedcost basis. The credit
loss portion, which is measuredas the difference betweenthe debt security’scost basis and the present valueof expected future cash
flows, isrecognized inthe Company’sconsolidated statementof operations.The non-creditloss portion,which ismeasured asthe
differencebetweenthedebtsecurity’scostbasisanditscurrentfairvalue,isrecognizedinothercomprehensiveincome,netof
applicable taxes.
Equity securities
Equitysecuritiesaremeasuredatfairvalue.ChangesinthefairvalueofequitysecuritiesarerecordedintheCompany’s
consolidated statementof operations withinthe caption titled“change in fairvalue of equitysecurities”. TheCompany may electto
measure equity securities without readily determinable fairvalues at its costminus impairment, if any, plus or minus changes resulting
from observable price changes in orderly transactions for the identical ora similar investment of the same issuer (“cost minus changes
in observableprices equitysecurities”). Changesin the fairvalue ofthe Company’scost minuschanges inobservable pricesequity
securities are discussed in Note 9. The Company performs a qualitative assessment on a quarterly basis and recognizes an impairment
loss if there are sufficient indicators that the fair value of the equity securityis less than its carrying value.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-21
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Policy reserves and liabilities
Reserves for policy benefits and claims payable
The Companydetermines itsreserves forpolicy benefitsunder itslife insuranceproducts usingmodels whichestimate claims
incurred that have not been reported, expensesthat are expected to be incurred when settlingthese claims, and the total present value
ofdisabilityclaims-in-paymentatthebalancesheetdate.Thesemodelsallowforbestestimateassumptionsbasedonexperience
(where sufficient) plus a risk adjustment for non-financial risk, as required in the markets in which these products are offered, namely
South Africa.
The best estimate assumptions include (i) mortality and morbidity assumptions reflecting the company’s most recent experience,
(ii) expense assumptions based on the expected claims handling cost and (iii) claimreporting delays reflecting Company specific and
industry experience. Thedisability claims-in-paymentreserve is largelyreinsured and thereported values werebased on thereserve
held by the relevant reinsurer.The values of matured guaranteed endowments are increased by late paymentinterest.
Deposits on investment contracts
For the Company’s interest-sensitivelife contracts, liabilities approximate the policyholder’s accountvalue.
Reinsurance contracts held
The Company enters into reinsurancecontracts with reinsurers underwhich the Company is compensatedfor the entire amount
or a portion of losses arising on one or more of the insurance contracts it issues.
The expected benefits to which the Company isentitled under its reinsurance contracts held are recognized as reinsuranceassets.
These assets consistof short-termbalances due fromreinsurers (classified withinAccounts receivable,net and otherreceivables) as
well as long-term receivables (classified within other long-term assets) that are dependent on the expected claims and benefits arising
under therelated reinsurancecontracts. Amountsrecoverable fromor dueto reinsurersare measuredconsistently withthe amounts
associated with the reinsured contracts and in accordance with the terms of each reinsurance contract. Reinsurance assets are assessed
for impairment ateach balance sheetdate. If thereis reliableobjective evidence thatamounts due maynot be recoverable,the Company
reduces the carrying amount of the reinsurance asset to its recoverable amount and recognizes that impairment loss in its consolidated
statement of operations. Reinsurance premiums are recognized whendue for payment under each reinsurance contract.
Redeemable common stock
Common stockthat isredeemable (1)at afixed ordeterminable priceon afixed ordeterminable date,(2) atthe optionof the
holder,or (3)upon theoccurrence ofan eventthat isnot solelywithin thecontrol ofCompany ispresented outsideof totalLesaka
equity (i.e. permanent equity). Redeemable common stock isinitially recognized at issuance date fair value andthe Company does not
adjusttheissuance datefair valueif redemptionis notprobable.The Companyre-measuresthe redeemablecommonstockto the
maximumredemptionamountatthebalancesheetdateonceredemptionisprobable.Reductioninthecarryingamountofthe
redeemable common stock isonly appropriate to theextent that the Companyhas previously recorded increasesin the carrying amount
of theredeemableequity instrumentas theredeemable commonstock maynot becarried atan amountthat isless thanthe initial
amount reported outside of permanent equity.
Redeemable common stock is reclassified as permanent equity when presentation outsidepermanent equity is no longer required
(if, for example, a redemptionfeature lapses, or thereis a modification of theterms of the instrument). Theexisting carrying amount
of the redeemable commonstock is reclassified to permanentequity at the date ofthe event that caused thereclassification and prior
period consolidated financial statements are not adjusted.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-22
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
TheCompanyrecognizesrevenueupontransferofcontrolofpromisedproductsorservicestocustomersinanamountthat
reflectstheconsiderationtheCompanyexpectstoreceiveinexchangeforthoseproductsorservices.TheCompanyentersinto
contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted
for asseparate performanceobligations basedon observablestandalone sellingprices. Revenueis recognizednet ofallowances for
returns and any taxes collected from customers, which are subsequently remittedto governmental authorities.
Nature of products and services
Acquiring
The Company providesits customers withacquiring processing servicesthat involve thecollection, transmittal andretrieval of
all transaction data in exchange for consideration upon completion of the transaction and recognizes revenue from these activities at a
point in time.In certain instances,the Company alsoprovides a fundscollection and settlementservice for itscustomers and recognizes
revenue from these activities at a point in time.
ADP
The Company purchases airtime vouchers for resale to customers and acts asa principal in these transactions. Airtime purchased
for resale is included in inventory and released to cost of goods sold,IT processing, servicing and support upon sale of the inventory.
The Company negotiates and agrees sales prices for airtime saleswith its customers and revenue is measured at the agreedcontractual
price. The Company recognizes revenue when the airtime is delivered to the customer.
TheCompany,asatransactionprocessorandinthecapacityofanagent,facilitatesthedeliveryofADPtoitscustomers
(includingprepaidairtimevouchers,prepaidelectricityandgamingvouchers)andearnsacommissiononcetheseservicesare
delivered to the customer.The Company recognizes revenue from these activities ata point in time. Revenue from these transactions
fluctuates based on the volume of ADP services distributed.
The Company provides its customers with transaction processing services that involve the collection, transmittal and retrieval of
alltransactiondata(includingrelatedtobillpayments)inexchangeforconsiderationuponcompletionofthetransactionand
recognizesrevenue fromthese activitiesat apoint intime. Incertain instances,the Companyalso providesa fundscollection and
settlement service for its customers and recognizes revenue from these activitiesat a point in time.
Cash
TheCompanyprovidescustomerswithcashmanagementanddigitizationserviceswhichenablesitsmerchantcustomersto
depositcash intodigital vaultsoperatedby theCompany,after whichthe fundsare thenelectronicallyaccessible bycustomersto
either transfer to their nominated bank account or to pay certain pre-selected suppliers and recognizes revenue from these activities at
a point in time.The Company considerseach of these servicesas a single performanceobligation. The Company’scontracts specify
a transaction price forservices provided. Cash revenuefluctuates based on thetype and thevolume of transactions processed. Revenue
is recognized on the completion of the processed transaction and recognizesrevenue at a point in time.
Software
The Company providesrental and supportservices under amaster rental agreementwith customers. Controlof the rentalasset
is transferred through the right ofuse on a monthly basis as perthe master rental agreement terms. Customersare required to pay the
monthlyrental andsupport feein advance.The performanceobligationfor theservice componentis providedover themonth and
revenue is recognized at the end of the month. The Company recognizes revenuefrom these activities over time.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-23
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Nature of products and services (continued)
Lending
The Company provides short-term loans to merchants in South Africa and levies interest on the amount lent. The Company does
not chargethese customersup-front initiationfees ormonthly servicefees. Interestearned fromcustomers isrecognized usingthe
effective interestrate method,which requiresthe utilizationof therate ofreturn implicitin theloan, thatis, thecontractual interest
rate adjustedfor any netdeferred loanfees orcosts, premium,or discountexisting atthe originationor acquisitionof theloan. The
interest rate included in the contract with the customer generally changes with changes to benchmark rates of interest set by the South
African Reserve Bank (“SARB”).
TheCompanyalsoprovidesshort-termloanstocustomers(consumers)inSouthAfricaandchargesup-frontinitiationfees,
interest and monthly service fees.Interest earned from customers isrecognized using the effective interest rate method,which requires
the utilization of the rate of return implicit in the loan, that is, the contractualinterest rate adjusted for any net deferred loan initiation
fees orcosts, premium,or discountexisting atthe originationor acquisitionof theloan. Monthlyservice feerevenue isrecognized
under the contractual terms of the loan. The monthly service fee are earned over time and is fixed upon initiation and does not change
over the term of the loan and is recognized when billed on a monthly basis.
Transactional fees
Customers servicedby theCompany’sConsumeroperating segmentthat havea bankaccount managedby theCompanyare
issued cards that can be utilized to withdrawfunds at an ATM or to transact at a merchant point of sale device(“POS”). The Company
also earns transactionfees from transactionsprocessed for thesecustomers. The Company’scontracts specify atransaction price for
each serviceprovided (forinstance, ATMwithdrawal, balanceenquiry,etc.). Transactionrevenue fluctuatesbased onthe typeand
volume of transactions performed by the customer. Revenue is recognized on the completion of the processed transaction at a point in
time.
TheCompanyalsoprovidesbankaccountstocustomersandthisserviceisunderwrittenbyaregulatedbankinginstitution
because the Company is nota bank. The Companycharges its customers a fixedmonthly bank account administration feefor all active
bankaccountsregardlessofwhethertheaccountholderhas transactedornot.TheCompanyrecognizesaccountholder feesona
monthly basis on all active bankaccounts, which are earned over timeand billed on a monthly basis. Revenuefrom account holders’
fees fluctuates based on the number of active bank accounts.
Insurance
The Company writeslife insurance contracts, andpolicy holders paythe Company amonthly insurance premium atthe beginning
of each month. Premium revenueis recognized on a monthly basis net ofpolicy lapses. Policy lapses are providedfor on the basis of
expected non-payment of policy premiums.
Utilities
The Company facilitates the delivery of prepaid electricity tokens toits customersand earns a commission from the delivery of
these tokens. The Company recognizes revenue from these activities at a point intime.
Other
The Company supplies hardware and licenses for its customers to use the Company’stechnology. Hardware includes the sale of
POS devices, SIM cards and other consumables whichcan occur on an adhoc basis. The Company recognizes revenue from hardware
atthetransactionpricespecifiedinthe contractas thehardwareis deliveredto thecustomer.Licensesincludethe rightto access
certain technology developed by the Company and the associated revenueis recognized ratably over the license period.
Accounts Receivable, Contract Assets and Contract Liabilities
TheCompanyrecognizesaccountsreceivablewhenitsrighttoconsiderationunderitscontractswithcustomersbecomes
u
nconditional. The Company has no contract assets or contract liabilities.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-24
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Research and development expenditure
Research anddevelopment expenditureis chargedto netincome inthe periodin whichit isincurred. Duringthe yearsended
June 30, 2026,2025 and 2024, theCompany incurred researchand development expendituresof $
0.8
million, $
0.5
million and $
0.5
million, respectively.
Computer software development
Productdevelopmentcosts inrespectofsoftwareintendedforsaletolicenseesareexpensedasincurreduntiltechnological
feasibility is attained.Technologicalfeasibility is attainedwhen the Company’ssoftware has completedsystem testing and hasbeen
determinedtobeviableforitsintendeduse.Oncetechnologicalfeasibilityisreached,theCompanycapitalizedsuchcostsand
amortizesthese costs overthe products’estimated life. Thetime betweenthe attainmentof technological feasibilityand completion
of software development is generally short with insignificant amounts of developmentcosts incurred during this period.
Costs inrespect ofthe developmentof softwarefor theCompany’sinternal useare expensedas incurred,except tothe extent
thatthesecostsareincurredduringtheapplicationdevelopmentstage.Allothercostsincludingthoseincurredintheproject
development and post-implementation stages are expensed as incurred.
Income taxes
The Companyprovides for incometaxes using theasset and liabilitymethod. Thisapproach recognizesthe amount ofincome
taxes payable or refundablefor the current year,as well as deferredtax assets and liabilities forthe future tax consequenceof events
recognized in the financial statements and tax returns. Deferred taxes areadjusted to reflect the effects of changes in tax laws or rates
in theperiod ofenactment. Themajority ofthe Company’sincometaxes anddeferred taxbalances arisein theSouth Africa.The
Company used the enacted statutory tax rate of
27
% for the years ended June 30, 2026, 2025 and 2024 to measure currenttax expense
(benefit) anddeferred taxexpense (benefit)in SouthAfrica. TheCompany measuredits SouthAfrican currenttax expensefor the
years ended June30, 2026and 2025and its SouthAfrican deferred taxassets and liabilitiesas of June 30,2026 and 2025, usingthe
enacted statutory tax rate in South Africa of
27
%.
In establishing the appropriate deferred tax asset valuation allowances, the Company assesses the realizability of its deferred tax
assets, and based on all available evidence, both positiveand negative, determines whether it is more likely than notthat the deferred
taxassetsoraportionthereofwillberealized.TheCompanydoesnotconsiderfuturereversalsofexistingtaxabletemporary
differences associated with indefinite lived assetswhere the timing of thereversal cannot be predicted asa source of income tosupport
deferred tax assets for carryforward that do not expire.
Unrecognized taxbenefits are recordedin the financialstatements for positionswhich are notconsidered more likelythan not,
based onthe technicalmerits of theposition, of beingsustained uponexamination bythe taxing authorities.For positions thatmeet
the more likely than notstandard, the measurement ofthe tax benefit recognizedin the financial statements is basedupon the largest
amount of tax benefit that, in management’s judgement, is greater than 50% likely of beingrealized based on a cumulative probability
assessmentofthe possibleoutcomes.TheCompany’spolicyis toincludeinterestrelatedtoincometaxesininterest expenseand
penalties in selling, general and administration in the consolidated statements ofoperations.
The Company has elected the period cost methodand records U.S. inclusions in taxable income related to globalintangible low
taxed income (“GILTI”)as a current-period expense when incurred.
Stock-based compensation
Stock-based compensation represents thecost related tostock-based awards granted.The Company measuresequity-based stock-
based compensation cost atthe grant date, based onthe estimated fair value ofthe award, and recognizes thecost as an expense ona
straight-line basis (net of estimated forfeitures) over the requisiteservice period. In respect of awards with only serviceconditions that
have a gradedvesting schedule, theCompany recognizes compensationcost on a straight-linebasis over therequisite service period
for theentire award.The forfeiturerate isestimated usinghistorical trendsof thenumber ofawards forfeitedprior tovesting.The
expense is recorded inthe statement of operations andclassified based on the recipients’respective functions. The Companyrecords
deferred taxassets for awardsthat result indeductions on theCompany’sincome tax returns,based on theamount of compensation
cost recognized and the Company’sstatutory tax rate in the jurisdictionin which it will receive a deduction.Differences between the
deferred taxassets recognizedfor financialreporting purposesand theactual taxdeduction reportedon theCompany’sincome tax
r
eturn are recorded in income tax expense in the consolidated statementof operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-25
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity instruments issued to third parties
Equityinstruments issuedto thirdpartiesfor servicesprovidedrepresents thecost relatedto equityinstruments granted.The
Company measuresthis cost atthe grant date,based on theestimated fair valueof the award,and recognizes thecost as anexpense
on astraight-line basis(net ofestimated forfeitures)over therequisite serviceperiod. Theforfeiture rateis estimatedbased onthe
Company’sexpectation of thenumber of awardsthat will be forfeitedprior to vesting.The Company recordsdeferred tax assetsfor
equity instrumentawards thatresult indeductions onthe Company’sincome taxreturns, basedon theamount ofequity instrument
cost recognized and the Company’sstatutory tax rate in the jurisdictionin which it will receive a deduction.Differences between the
deferred taxassets recognizedfor financialreporting purposesand theactual taxdeduction reportedon theCompany’sincome tax
return are recorded in the statement of operations.
Settlement assets and settlement obligations
TheCompanyprovidescustomerswithcashmanagementanddigitizationserviceswhichenableitsmerchantcustomersto
depositcash intodigital vaultsoperatedby theCompany,after whichthe fundsare thenelectronicallyaccessible bycustomersto
either transfer to their nominated bank account or to pay certain pre-selected suppliers.
Settlement assets comprise (1) cash received from merchant customers from cash deposits into the Company’svaults, which are
then electronically accessible by customers to either transferto their nominated bank account or to pay certainpre-selected suppliers,
(2)cash receivedfrom creditcardcompanies (aswell asothertypes ofpaymentservices) whichhavebusiness relationshipswith
merchants sellinggoods andservices thatare theCompany’scustomers andon whosebehalf itprocesses thetransactions between
various parties,and (3) cash received from gift card customers.
Settlementobligationscomprise(1)amountsthattheCompanyisobligatedtodisbursetomerchantcustomersortotheir
nominated pre-selected suppliers, (2) amountsthat the Company is obligated to disburse to merchantsselling goods and services that
are the Company’s customers and on whose behalf it processes the transactions between various parties and settles the funds fromthe
credit card companiesto the Company’smerchant customers, and(3) amounts that theCompany is obligedto pay to variousparties
as a result of transaction performed using gift cards.
The balancesat each reportingdate may varywidely depending onthe timing ofthe receipts andpayments of theseassets and
obligations.
Recent accounting pronouncements adopted
In December2023, the FinancialAccounting StandardsBoard (“FASB”)issued guidance regarding
Income Taxes(Topic740)
to improve income taxdisclosure requirements. The guidancerequires entities, on anannual basis, to (1) disclosespecific categories
in the income tax rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if
the effect of those reconciling items is equal to or greater than five percent ofthe amount computed by multiplying pre-tax income or
loss bythe applicablestatutory incometax rate).This guidancewas effectivefor theCompany beginningJuly 1,2025 forits year
ended June 30, 2026. Refer to Note 18.
Recent accounting pronouncements not yet adoptedas of June 30, 2026
InNovember2024,theFASBissuedguidanceregarding
IncomeStatement—ReportingComprehensiveIncome—Expense
DisaggregationDisclosures
(Subtopic220-40)
whichrequiresdisaggregateddisclosureofincomestatementexpensesforpublic
business entities. The guidance does not change the expense captions anentity presents on the face of the income statement; rather,it
requiresdisaggregationofcertainexpensecaptionsintospecifiedcategoriesindisclosureswithinthefootnotestothefinancial
statements. This guidanceis effective forthe Company beginning July1, 2027, andinterim reporting periodsduring that fiscal year.
Early adoptionis permitted.The Companyis currentlyassessing theimpact ofthis guidanceon itsfinancial statementsand related
disclosures.
InJuly2025,theFASBissuedguidanceregarding
FinancialInstruments-CreditLosses(Topic326)MeasurementofCredit
Losses for Accounts Receivable and Contract Assets
which amends current guidance to provide a practicalexpedient (for all entities)
and an accountingpolicy election (forall entities, other thanpublic business entities,that elect the practicalexpedient) related tothe
estimation of expected creditlosses for current accounts receivableand current contract assets thatarise from transactions accounted
for under
Revenue From Contracts WithCustomers (Topic606).
This guidance is effective forthe Company beginning July 1, 2026,
andinterimreportingperiodsduringthatfiscalyear.The Companywillapplytheguidancefromtheeffectivedateandelectthe
practical expedient.The Companydoes notexpect theimpact ofthis guidanceto be materialon its financialstatements andrelated
d
isclosures.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-26
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements not yet adoptedas of June 30, 2026 (continued)
OnSeptember18,2025,theFASBissuedguidanceregarding
Intangibles—GoodwillandOther—Internal-UseSoftware
(Subtopic 350-40)
which amends certainaspects of theaccounting for anddisclosure of softwarecosts under ASC350-40. The new
guidancemakestargetedimprovementstoexistingguidancebutdoesnotfullyaligntheframeworkforaccountingforinternally
developed softwarecosts thatare subjectto ASC350-40 withthe frameworkapplied tosoftware tobe soldor marketedexternally
that issubject toguidance regarding
Costs ofSoftware toBe Sold,Leased, orMarketed
(Subtopic ASC985-20)
. Thenew guidance
also does not amend the guidanceon costs of software licenses thatare within the scope of ASC 985-20. The amendments supersede
the guidanceon websitedevelopment costsin guidanceregarding
WebsiteDevelopment Costs(Subtopic ASC350-50)
and relocate
that guidance,along with therecognition requirementsfor development costsspecific to websites,to ASC 350-40. This guidanceis
effective forthe Company beginningJuly 1, 2028,and interim reportingperiods during that fiscalyear. Earlyadoption is permitted.
Entitiesmayapplytheguidanceprospectively,retrospectively,orviaamodifiedprospectivetransitionmethod.Themodified
prospectivetransitionapproachwouldallowentitiestoaccountforanin-processprojectthat,beforethetransitiondate,metthe
capitalization requirements but would no longer meetthe requirements for capitalization under thenew guidance by derecognizing the
capitalized costs forthat in-process projectthrough acumulative-effect adjustmentto the openingbalance of retainedearnings. The
Company is currently assessing the impact of this guidance on its financialstatements and related disclosures.
On December8, 2025,the FASBissued guidanceregarding
Interim Reporting(Topic270)
which isintendedto improvethe
navigabilityof theguidancein ASC270and clarifywhen itapplies.Under theamendments, anentity issubject toASC 270ifit
provides “interim financialstatements and notesin accordance withGAAP.” The updated guidance alsoaddresses theform and content
of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes
a principleunder which anentity must “discloseevents since theend of thelast annual reportingperiod that havea material impact
on the entity.”As the FASBstated in theproposed guidance andreiterates in the ASU,the amendments arenot intended to“change
the fundamental natureof interim reportingor expand orreduce current interimdisclosure requirements.” Thisguidance is effective
for theCompany beginningJuly 1,2028, andinterim reportingperiods duringthat fiscalyear.Early adoptionis permitted.Entities
m
ay apply the guidance prospectively or retrospectively.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-27
3.ACQUISITIONS AND DISPOSITIONS
The cash paid, netof cash received related tothe Company’s acquisitionduring the years endedJune 30, 2026, 2025 and2024,
is summarized in the table below:
2026
2025
2024
Total cash paid
$
13,294
$
24,161
$
2,248
Less: cash acquired
2,177
11,215
665
Total cash paid, netof cash received
$
11,117
$
12,946
$
1,583
Acquisitions
2027Proposed acquisitions of Bank Zero
OnJune26,2025,LesakaSAenteredintoaTransactionImplementationAgreement(the“TransactionImplementation
Agreement”) withZero ResearchProprietary Limited(“Zero Research”),Bank ZeroMutual Bank(“Bank Zero”),and otherparties
identified inAnnexure Ato theTransactionImplementation Agreement(being allof theshareholdersof BankZero savefor Zero
Research andNaughtHoldings Ltd,the “BankZero Sellers”),the partieslisted inAnnexureB tothe TransactionImplementation
Agreement (beingall of theshareholders ofZero Research savefor NaughtHoldings Ltd, the“Zero ResearchSellers”) and Naught
Holdings Ltd. All amounts below translated at the closing rate of $1: ZAR
17.76
as of June 30, 2025.
ThepurchaseconsiderationpayablebyLesakaSAinexchangefortherelevantsharesinBankZeroandthesubscription
consideration payable byLesaka SA in exchangethe subscription shares will besettled through a combinationof delivery of Lesaka
shares ofcommon stockand upto ZAR
91.0
million ($
5.1
million)in cash.Zero Researchwill applythe cashand Lesakashares
received by it to settlethe repurchase consideration due to theZero Research Sellers. Following implementation ofeach of these steps,
and subject to the belowadjustment, the Bank Zero Sellers,Zero Research Sellers andNaught Holdings Ltd will ownapproximately
12
% of Lesaka'sfully diluted sharesat the timeof completion ofthe proposed transaction.The Transaction Implementation Agreement
allows amechanism (incertain circumstances)pursuant to whichthe BankZero Sellers andthe ZeroResearch Sellersmay acquire
fewer shares in Lesaka and a larger cash consideration.
TheTransactionImplementationAgreementincludescustomaryinterimperiodundertakingswhichrequiredeachofZero
ResearchandBankZero,amongotherthings(i)toconducttheirbusinessintheordinarycourseduringtheperiodbetweenthe
execution of theTransaction Implementation Agreement and theclosing of thetransaction contemplated thereby, and (ii)not to engage
in certain kinds of transactions duringsuch period. The TransactionImplementation Agreement is subject tothe fulfilment of certain
conditionsprecedent.TheTransactionImplementationAgreementwilllapseifalloftheconditionsprecedentarenotmetornot
waived by January 31, 2027 (or such later date as may be agreed).
BankZeroandLesakaSAhaveagreedtoimplementalong-termincentivearrangementfollowingimplementationofthe
transaction, under which an agreed portion of a number of shares ofLesaka's shares of common stock calculated will be granted by (i)
dividingZAR
70.0
million($
3.9
million)byanagreedvalue(asdefinedintheTransactionImplementationAgreement)(the
“Retention LTIPShares”) and (ii) dividingZAR
30.0
million ($
1.7
million) by such agreedvalue (the “PerformanceLTIPShares”).
TheRetentionLTIPShareswill besubjecttotimeandcertainperformance-basedvestingconditions.Thetermsof thelong-term
incentive plan are required to be considered, and if necessary approved, by Lesaka's remunerationcommittee.
The Companyincurred transaction-relatedexpenditures of $
0.4
million and $
0.6
million during theyears endedJune 30, 2026
and 2025, respectively, related to the proposed acquisition of Bank Zero. The Company’s accruals presented in Note 13 of as June 30,
2026, includes an accrual oftransaction related expenditures of $
0.4
million and the Companyexpects to incur furthertransaction costs
of $
0.2
million during the 2027 fiscal year.
2026 Acquisitions
Atom Operations Proprietary Limited
On November10, 2025,the Company,through itswhollyownedsubsidiary,Prism HoldingsProprietaryLimited(“Prism”),
enteredintoaSaleofSharesAgreement(the“AtomPurchaseAgreement”)withGravatonInvestmentsProprietaryLimited
(“Gravaton”) and Atom Operations Proprietary Limited (“Atom”). Pursuant to the Atom Purchase Agreement and subject to its terms
and conditions, Prism agreed toacquire, and Gravaton agreedto sell, all ofthe outstanding equity interestsin Atom for atotal purchase
consideration of $
0.7
million which comprisedof $
0.4
million (ZAR
6.0
million, translated atDecember 1, 2025exchange rates)in
cash and
76,716
shares of the Company’sshares of common stock (whichhad an aggregate valueof $
0.3
million (
76,716
multiplied
by$
3.95
)on closing).The transactionclosedon December1, 2025.The Companydid notincuranysignificanttransactioncosts
r
elated to this acquisition.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-28
3.ACQUISITIONS AND DISPOSITIONS (continued)
2026 Acquisitions (continued)
Mobilemart Proprietary Limited
OnJanuary30,2026,theCompany,throughPrism,enteredintoaSaleofSharesAgreement(the“MobilemartPurchase
Agreement”) with BASA VenturesProprietary Limited (“BASA”) andMobilemart Proprietary Limited (“MobileMart”).Pursuant to
the Mobilemart Purchase Agreement and subject to its terms and conditions, Prism agreed to acquire,and BASA agreed to sell, all of
theoutstandingequityinterests inMobileMartforatotalpurchaseconsiderationof $
2.5
million(ZAR
40.0
million,translatedat
February 6,2026 exchangerates) incash. Thetransaction closedon February6, 2026.The Companydid notincur anysignificant
transaction costs related to this acquisition.
These acquisitions were allocated to our Enterprise operating segment.
Pro forma results relatedto acquisitions
Pro forma results of operations have not been presented for the acquisitions of Atom and MobileMart because the effect of these
acquisitions,individuallyandinaggregate,arenotmaterialtotheCompany.Sincetheclosingoftheseacquisitions,theyhave
contributed revenue and net loss of $
10.9
million and $
0.2
million, respectively, for theyear ended June 30, 2026.
2025Acquisitions
October 2024 acquisition of Adumo
On May 7,2024, the Companyentered into aSale and PurchaseAgreement (the “PurchaseAgreement”) with LesakaSA, and
Crossfin Apis TransactionalSolutions (Pty) Ltdand Adumo ESS(Pty) Ltd (“theSellers”). Pursuant tothe Purchase Agreementand
subject to its terms andconditions, Lesaka, through itssubsidiary,Lesaka SA, agreed toacquire, and the Sellers agreedto sell, all of
theoutstandingequityinterestsandcertainclaimsintheAdumo(RF)ProprietaryLimited(“Adumo”).Thetransactionclosedon
October 1, 2024.
Adumo is anindependent payments and commerceenablement platform in SouthernAfrica, with operations acrossSouth Africa,
Namibia, Botswana andKenya. For morethan two decades,Adumo facilitated physicaland online commercebetween retail merchants
and end-consumers byoffering a uniquecombination of paymentprocessing and integratedsoftware solutions, whichcurrently include
embedded payments, integratedpayments, reconciliation services,merchant lending, customerengagement tools, cardissuing program
management and data analytics.
Adumo operated across three businesses, which providedpayment processing and integrated software solutions to differentend
markets:
●
TheAdumoPaymentsbusinessofferspaymentprocessing,integratedpaymentsandreconciliationsolutionstosmall-and-
medium (“SME”)merchants inSouth Africa,Namibia andBotswana, andthe LesakaPayouts ProprietaryLimited, formerly
known asAdumo PayoutsProprietary Limited, (“LesakaPayouts”), businessprovides cardissuing programmanagement to
corporate clientssuch as AngloAmerican andCoca-Cola (Lesaka PaymentsProprietary Limited,formerly knownas Adumo
PaymentsProprietaryLimited(“LesakaPayments”)was allocatedtoMerchantoperatingsegmentandLesakaPayoutswas
allocated to the Consumer operating segment);
●
The Adumo ISV business, LesakaHospitality Proprietary Limited, formerly known asGAAP Point of Sale ProprietaryLimited
(“Lesaka Hospitality”), has operations in South Africa, Botswana and Kenya, and clients in a number of other countries, and is
the leading providerof integrated point-of-salessoftware and hardwareto the hospitalityindustry in SouthernAfrica, serving
clients suchas KFC,McDonald’s,Pizza Hut,Nando’sand KrispyKreme (AdumoISV wasallocated toMerchant operating
segment);and
●
TheAdumoVenturesbusinessoffersonlinecommercesolutions(LesakaOnlineProprietaryLimited,formerlyknownas
Adumo Online Proprietary Limited, (“Lesaka Online”)),cloud-based, multi-channel point-of-sales solutions (Humble Software
Proprietary Limited (“Humble”)and an aggregated payment and credit platformfor in-store and online commerce (SwitchPay
Proprietary Limited (“SwitchPay”) to SME merchants and corporate clients in South Africaand Namibia (Adumo Venture was
allocated to the Merchant operating segment).
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-29
3.ACQUISITIONS (continued)
2025Acquisitions (continued)
October 2024 acquisition of Adumo (continued)
The total purchaseconsideration was ZAR
1.67
billion ($
96.2
million) and comprisedthe issuance of
17,279,803
shares of the
Company’scommon stock(“Consideration Shares”)with avalue of$
82.8
million (
17,279,803
multiplied by$
4.79
per share)and
cash of $
13.4
million. The purchase consideration was settled throughthe combination of the Consideration Shares and a ZAR
232.2
million ($
13.4
million, translated at the prevailingrate of $1: ZAR
17.3354
as of October 1, 2024)payment in cash. The Company’s
closing price onthe JohannesburgStock Exchange onOctober 1, 2024,was ZAR
83.05
($
4.79
using the October1, 2024, $1:ZAR
exchange rate). Certain indirect shareholders of the sellers were investors in Adumo and the Company.These shareholders ultimately
receivedan aggregateof
1,989,162
shares ofthe Company’scommon stockat aprice of$
4.79
which wasincluded inredeemable
common stock (refer to Note 14).
The closingof thetransaction wassubject tocustomary closingconditions whichwe fulfilledprior toclosing. TheCompany
agreed to file a resale registration statement with the United States Securities and Exchange Commission (“SEC”) covering the resale
of the Consideration Shares by the Sellers. The resale registration statement was declared effective by the SEC on December 6, 2024.
The Company incurred transaction-related expenditures of $
0.003
million, $
1.6
million and $
2.3
million during the years ended
June 30, 2026, 2025 and 2024, respectively,related to the acquisition of Adumo.
March 2025 acquisition of Utilities
On November19, 2024,the Company,through LesakaSA, enteredinto aSale ofShares Agreement(the “UtilitiesPurchase
Agreement”)withImtiazDhooma(Utilities’formerchiefexecutiveofficer)andNinetyNineProprietaryLimited(“theSeller”).
Pursuant to theUtilities Purchase Agreement andsubject to itsterms and conditions, Lesaka,through its subsidiary, Lesaka SA,agreed
to acquire, andthe Seller agreedto sell, allof the outstandingequity interests inLesaka Utilities ProprietaryLimited, previously known
as Recharger Proprietary Limited (“Utilities”). The transactionclosed on March 3, 2025.
Atthesametime,UtilitiesalsoenteredintoindependentcontractoragreementwithUtilities’formerchiefexecutiveofficer
which hada termof
12
months andrequired him,among otherthings, tosupport operationalactivities ofthe Utilitiesbusiness, in
consultation withCompany representatives,facilitate thehandover processand assistUtilities intransitioning ownershipto Lesaka
SA, avail himself for importantcustomer and vendor meetings,attend scheduled weekly managementcommittee meetings regarding
operational and business activities of the Utilitiesbusiness, and providing support on an ad-hocbasis to Company representatives with
regard to operational matters and in facilitating the hand over,as and when reasonably required.
This acquisition hasbeen reportedas partof theCompany’s Enterprise operating segmentand demonstrates positiveadvancement
of the Company’s strategy in its Enterprise operating segment. The Company expects the acquisition to act as an entry point for it into
the South African private utilities space while augmenting Enterprise’salternative payment offering.
The transaction consideration per the Utilities Purchase Agreement was ZAR
503.4
million ($
27.0
million) and comprised ZAR
328.4
million ($
17.6
million) in cash andZAR
175.0
million ($
9.4
million) in shares ofthe Company’scommon stock, tobe settled
in two tranches. The share price applied to determine the number of shares ofcommon stock to be issued for the equity consideration
is based on the volume-weightedaverage price of the Company’scommon shares for the three-month periodprior to the disbursal of
each tranche. Lesaka SA extendeda ZAR
43.1
million ($
2.3
million) loan to Utilities at closingwhich was exclusively used torepay
an existing loan due by Utilities to the Seller.
The first tranche,comprising ZAR
153.4
million ($
8.2
million) in cashand
1,092,361
shares of theCompany’scommon stock
with a value of ZAR
98.3
million ($
5.3
million), was settled at closing. The value of the shares of common stock was calculated using
the shares issued multipliedby the Company’sclosing price on the JohannesburgStock Exchange on March3, 2025, of ZAR
90.00
,
and translated to U.S.dollars at theexchange rate of $1:ZAR
18.63
. Lesaka SAdelivered
1,092,361
shares of theCompany’s common
stock from a pool of shares it purchased in October 2024, and the Companyrecognized a gain in additional paid-in-capital duringthe
year ended June 30, 2025, of $
0.4
million related to the difference between in the value onMarch 3, 2025, and the price paid pershare
in October 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-30
3.ACQUISITIONS (continued)
2025 Acquisitions (continued)
March 2025 acquisition of Utilities (continued)
The secondand finaltranche wassettled onMarch 3,2026, andcomprised acontractual cashpayment ofZAR
175.0
million
($
10.4
million) and the delivery of shares of Lesaka’s common stock with a contractual value ofZAR
75.0
million ($
4.6
million). The
number of sharesto be deliveredwas calculated as
1,017,914
shares of Lesaka’scommon stock usingthe contractual valueof ZAR
75.0
million divided bythe volume-weightedaverage price ofthe Company’scommon shares onthe JohannesburgStock Exchange
for thethree-month periodprior toFebruary 24,2026. LesakaSA deliveredthe
1,017,914
shares ofthe Company’scommon stock
from a poolof shares it purchasedin October 2024,and the Companyrecognized a lossin additional paid-in-capitalduring the year
ended June 30, 2026,of $
0.1
million related to thedifference between inthe value on March3, 2026, and the pricepaid per share in
October 2024.
The total purchase considerationwas ZAR
294.8
million ($
15.8
million) and comprised theissuance of the
1,092,361
shares of
theCompany’scommonstockwithavalueofZAR
98.3
million($
5.3
million),thesettlementofthepre-existingrelationship
shareholder loan of ZAR
43.1
million ($
2.3
million) and cash of ZAR
153.4
million ($
8.2
) million.
Pursuant to the Utilities Purchase Agreement,payment of the second tranche in March 2026 was contingent on Utilities’ former
chief executive officer’songoing service under the independentcontractor agreement until June 30,2025. The second tranche would
nothavebeenpaid ifhefailed toprovidethe requisiteservice,exceptiffailuretoprovidefutureservicesis duetoexpiryof the
contract, mutual agreement or death of the former chief executive officer. The former chief executive officer was also a director of the
Seller,andsignedtheUtilitiesPurchaseAgreementonbehalfofhimself,UtilitiesandtheSeller.Healsosignedanindependent
contractor agreement under which he is required to provide post-combinationservice to Utilities until March 2026 (but the vesting of
the shares is only for services to June 30, 2025). The Company hasdetermined that as the payment of the second tranche is contingent
on these post-combination services, the valueof the second tranche is nottreated as purchase consideration and rather,under GAAP,
represents compensationfor post-combinationservices.In lateMay 2025,an addendumwas signedto reducethe post-combination
period from twelve months to four months (i.e. from March 2025to June 2025).
The post-combinationservices for theyear endedJune 30, 2025,of $
13.6
million was calculatedas the sumof the futurecash
payment and thevalue offuture shares tobe provided. Thevalue ofthe future sharesto beprovided was calculatedusing thecontractual
value of ZAR
75.0
million divided bythe volume-weighted average priceof the Company’s common sharesfor the three-monthperiod
priorto June30,2025, andat theapplicableexchangerate. Thepost-combinationcompensation chargeis includedin thecaption
transaction costs related to Adumo,Utilities and Bank Zero acquisitions and certain compensation costs includedon the consolidated
statement of operations.
TheCompanyrecordsstock-basedcompensationchargesthatarecash-settledawardsin otherpayables.Theliability forthe
future paymentswas included inthe captionOther payablesin the consolidatedbalance sheet asof June30, 2025, referto Note 13.
Therewasnounrecognizedcompensationcostsrelatedtothepost-combinationcompensationchargeasofJune30,2025.The
Company recordeda fairvalue lossof $
0.4
million duringthe yearended June30, 2026,related tothe settlementof the
1,017,914
shares of Lesaka’s commonstock under thecaption change infair value ofequity securities inthe consolidated statementof operations.
The fairvalue losswas calculatedas thedifferencebetween thefair valueof theshares ofcommon stocktransferred onMarch 3,
2026, and the amount recorded inother payables as of June 30, 2025.Thefair value of the shares of commonstock in U.S. dollars on
March 3, 2026, wascalculated using the sharesissued multiplied by theCompany’s closing price on theJohannesburg Stock Exchange
on March 3, 2026, of ZAR
75.37
, and translated to U.S. dollars at the exchange rate of $1: ZAR
16.35
.
The Company incurred transaction-related expenditures of $
0.01
million, $
0.4
million and $
0.03
during the years ended June 30,
2026, 2025 and 2024, respectively,related to the acquisition of Utilities.
Other acquisitions
EffectiveNovember 1,2024, theCompany,through itswholly ownedsubsidiary LesakaMerchant TechnologiesProprietary
Limited, formerly knownas Adumo TechnologiesProprietary Limited, (“LesakaMT”), acquired theremaining shares (representing
50
% of the issued and outstandingshares) it did not own in LesakaMerchant TechnologiesNamibia, formerly known asInnervation
Value Added Services Namibia Pty Ltd, (“Lesaka Nam”) for $
0.4
million (ZAR
6.0
million, translated at November 1, 2024 exchange
rates). Lesaka Nam was accounted for usingthe equity method prior to theacquisition of a controlling interest in thecompany. Lesaka
MT paid ZAR
2.0
million of the purchase price priorto the acquisition of Adumo bythe Company and the balance ofZAR
4.0
million
will be paidin
two
equal tranches, onein March 2025and the otherin September 2025.The Company didnot incur anysignificant
transaction costs related to this acquisition.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-31
3.ACQUISITIONS (continued)
2025 Acquisitions (continued)
Other acquisitions (continued)
The Company, through Lesaka SA, acquired
100
% of Lesaka Digital RiskProprietary Limited, formerly known as Genisus Risk
Proprietary Limited (“Lesaka DigitalRisk”), for a cashconsideration of ZAR
2.0
million ($
0.1
million). The Company didnot incur
any significant transaction costs related to this acquisition.
The Company,through itswholly ownedsubsidiary LesakaCash ManagementProprietary Limited,formerly knownas Cash
Connect Management Solutions ProprietaryLimited, (“LCM”), acquired
100
% of LesakaFuel Software Proprietary Limited,formerly
known as Master Fuel ProprietaryLimited (“Lesaka Fuel Software”) fora cash consideration of ZAR
2.0
million ($
0.1
million). The
Company did not incur any significant transaction costs related to this acquisition.
The purchase price allocation for all acquisitions closed during the year ended June 30, 2025, were finalized as of June30, 2025,
except for Utilities. The Companycompleted the purchase price allocation related tothe Utilities acquisition during the threemonths
endedSeptember 30,2025.There wereno changesto theUtilities preliminarypurchase priceallocationas ofJune 30,2025.The
purchase priceallocation of acquisitionsduring theyear ended June30, 2025,translated at theforeign exchangerates applicable on
the date of acquisition, is provided in the table below:
Acquisitions during fiscal 2025
Adumo
Utilities
Other
Total
Final
Final
Final
Cash and cash equivalents
$
9,227
$
1,720
$
268
$
11,215
Accounts receivable
6,799
17
728
7,544
Inventory
5,122
194
3
5,319
Property, plant and equipment
9,170
39
28
9,237
Operating lease right of use asset
1,025
401
-
1,426
Equity-accounted investment
477
-
-
477
Goodwill
71,992
3,614
508
76,114
Intangible assets
28,806
16,171
69
45,046
Deferred income taxes assets
1,061
81
55
1,197
Other long-term assets
2,809
-
-
2,809
Current portion of long-term borrowings
(1,178)
-
-
(1,178)
Accounts payable
(3,266)
(149)
(440)
(3,855)
Other payables
(28,116)
(1,439)
(252)
(29,807)
Operating lease liability - current
(948)
(185)
-
(1,133)
Income taxes payable
(150)
(4)
(42)
(196)
Deferred income taxes liabilities
(7,107)
(4,366)
(19)
(11,492)
Operating lease liability - long-term
(326)
(269)
-
(595)
Long-term borrowings
(7,308)
-
-
(7,308)
Other long-term liabilities
(140)
-
-
(140)
Settlement assets
8,603
-
-
8,603
Settlement liabilities
(8,530)
-
-
(8,530)
Fair value of assets and liabilities on acquisition
$
88,022
$
15,825
$
906
$
104,753
Thefairvalueofthenon-controllinginterestsrecordedwas $
7.6
million.Thefairvalueofthenon-controllinginterestwas
determined asthe non-controllinginterests respectiveportion ofthe equity valueof the entityacquired bythe Company,and which
was adjusted for a
20
% minority discount.
Pro forma results relatedto acquisitions
Pro forma results of operations have not been presented for the acquisition of LesakaNam, Lesaka Digital Risk and Lesaka Fuel
Software because the effect of these acquisitions, individually and in aggregate, are not material to the Company.Since the closing of
these acquisitions,the entitieshave contributedrevenue andnet incomeof $
0.8
million and$
0.1
million, respectively,for theyear
ended June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-32
3.ACQUISITIONS (continued)
2025 Acquisitions (continued)
Pro forma results relatedto acquisitions (continued)
The resultsof theAdumo andUtilities’ operationsare reflectedin theCompany’sfinancial statementsfrom October1, 2024,
and March 3, 2025, respectively.The following unaudited pro forma revenueand net income information has beenprepared as if the
acquisitions of Adumo and Utilities had occurred on July 1, 2023, using the applicable average foreign exchange rates for the periods
presented:
Yearended June 30,
2025
2024
Revenue
$
673,536
$
630,672
Net loss
$
(68,367)
$
(37,324)
The unaudited pro forma financialinformation presented above includes thebusiness combination accounting andother effects
from theacquisitions including(1) amortizationexpense relatedto acquiredintangibles andthe relateddeferred tax;(2) theloss of
interest income, net oftaxation, as aresult of funding aportion of thepurchase price incash; (3) anadjustment to exclude allapplicable
transaction-related costs recognized in the Company’s consolidated statement of operations for year ended June 30, 2025, and include
the applicable transaction-related costs for theyear ended June 30,2024; an adjustment to excludethe post-combination compensation
expenses related to the Utilities acquisition recognized in theCompany’s consolidated statement of operations for year ended June 30,
2025, andinclude theexpense duringthe yearended June 30,2024. Theunaudited proforma netincome presentedabove does not
include any cost savings or other synergies that may result fromthe acquisition.
The unaudited pro formainformation as presented aboveis for information purposesonly and is not indicativeof the results of
operations that would have been achieved if the acquisition had occurred onthese dates.
Sincetheclosingoftheacquisitions,AdumoandUtilitieshavecontributedaggregaterevenueof $
48.6
millionandnet loss
attributable tothe Company,including intangibleassets amortizationrelated toassets acquired,net ofdeferred taxes,and thepost-
combination compensation charge, of $
16.4
million.
2024 Acquisitions
April 2024 acquisition of Insights
InApril2024theCompanyclosedtheacquisitionofLesakaInsightsProprietaryLimited,formerlyknownasTouchsides
Proprietary Limited, (“Insights”). Insightshas been allocated to ourMerchant operating segment. The finalpurchase price allocation
of the Insights acquisition, translated at theforeign exchange rates applicable on the dateof acquisition, is provided in thetable below:
Insights
Cash and cash equivalents
$
665
Accounts receivable
788
Property, plant and equipment
1,106
Operating lease right of use asset
112
Intangible assets
33
Accounts payable
(53)
Other payables
(279)
Operating lease liability – current
(63)
Deferred income taxes liabilities
(9)
Operating lease liability - long-term
(52)
Fair value of assets and liabilities on acquisition
$
2,248
ProformaresultsofoperationshavenotbeenpresentedbecausetheeffectoftheInsightsacquisitionisnotmaterialtothe
Company. Duringthe year ended June 30, 2024, the Companyincurred acquisition-related expenditure of$
0.1
million related to this
acquisition.SincetheclosingoftheInsightsacquisition,itcontributedrevenueandnetlossof$
0.9
millionand$
0.2
million,
r
espectively, for the year endedJune 30, 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-33
3.ACQUISITIONS AND DISPOSITIONS (continued)
Transaction costs and certain compensation costs
The Company did
no
t incur any transaction costs related to the Bank Zero acquisitions during the year ended June 30, 2024. The
table below presents transaction costs incurred related to the acquisition of Adumo and Utilities,and the proposed acquisition of Bank
Zero, as well as certain post-combination compensation costs expensed duringthe years ended June 30, 2026, 2025 and 2024:
Yearended June 30,
2026
2025
2024
Bank Zero transaction costs
$
374
$
599
$
-
Utilities transaction costs
12
410
32
Adumo transaction costs
3
1,564
2,293
Total transactioncosts
389
2,573
2,325
Utilities post-combination services expensed
-
13,586
-
Total
$
389
$
16,159
$
2,325
Dispositions
2026Dispositions
December 2025 disposal of Humble
OnDecember1,2025,Adumo(RF)ProprietaryLimited,a wholly-ownedsubsidiaryof theCompany,disposedof itsentire
investment inHumble SoftwareProprietary Limited(“Humble”) andreceived
306,767
shares ofthe Company’scommon stockas
consideration. The fair value of these
306,767
shares of the Company’s common stock on December 1, 2025, was $
1.2
million. These
shares havebeen included inthe Company’streasury shares.The table belowpresents the impactof the deconsolidationof Humble
and the calculation of the net loss recognized on deconsolidation:
Deconsolidation of Humble
Humble
Fair value of consideration received
$
1,211
Add carrying value of non-controlling interest on deconsolidation
47
Less: carrying value of Humble, comprising
1,988
Cash and cash equivalents
162
Accounts receivable, net
26
Inventory
10
Property, plant and equipment,net
1
Goodwill
1,515
Intangible assets, net
63
Deferred income taxes assets
300
Accounts payable
(4)
Other payables
(58)
Income taxes payable
(1)
Released from accumulated other comprehensive income – foreigncurrency translation reserve
(26)
Loss recognized on disposal, before transaction costs
(730)
Loss recognized on disposal, before tax
(730)
Taxes related to gainrecognized on disposal
-
Tax benefit relatedto loss recognized on disposal
(1)
-
Release of valuation allowance
(1)
-
Loss recognized on disposal, after tax
$
(730)
(1)The Company incurred a capital loss of $
0.04
million. The Company recorded a valuation allowance of $
0.04
million related
to the capital loss generated.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-34
4.
ACCOUNTS RECEIVABLE,net AND OTHER RECEIVABLESand FINANCE LOANS RECEIVABLE,net
Accounts receivable, net and other receivables
The Company’saccounts receivable,net, and otherreceivables as ofJune 30,2026, and June30, 2025, arepresented in the
table below:
June 30,
June 30,
2026
2025
Accounts receivable, trade, net
$
19,329
$
16,433
Accounts receivable, trade, gross
22,536
18,186
Allowance for credit losses, end of period
3,207
1,753
Beginning of period
1,753
1,241
Reversed to statement of operations
(388)
(521)
Charged to statement of operations
2,109
1,856
Write-offs
(526)
(847)
Deconsolidation
(4)
-
Foreign currency adjustment
263
24
Current portion of amount outstanding related to sale of interest in Carbon,net of
allowance of: 2026: $
750
, 2025: $
750
-
-
Amount due from VantagePay,net of allowance of: 2026: $
0
, 2025: $
1,500
2,010
-
Other receivables
22,426
26,092
Total accounts receivable,net
$
43,765
$
42,525
Trade receivables include amountsdue from customerswhich generally havea very short-termlife fromdate of invoiceor service
provided to settlement. The durationis less than a year in all cases andgenerally less than 30 days in manyinstances. The short-term
natureoftheseexposuresoftenresultsinbalancesatmonth-endthataredisproportionatelysmallcomparedtothetotalinvoiced
amounts.Themonth-endoutstandingbalancesaremorevolatilethanthemonthlyinvoiceamountsbecausetheyareaffectedby
operational timing issues andthe fact that a balanceis outstanding at month-endis not necessarily an indicationof increased risk but
rather a matter of operational timing.
Current portion of amount outstanding related to sale of interest in Carbon represents the amount due from the purchaser related
to the sale ofthe Company’s interest in Carbon Tech Limited (“Carbon”),which was accounted foras an equity-accounted investment,
of $
0.25
million, net of an allowance for doubtful loans receivable of $
0.25
million as of June 30, 2023, and an amount due related to
the sale ofthe loan,with a facevalue of$
3.0
million, which wassold in September2022 for$
0.75
million, net ofan allowance for
doubtful loansreceivable of$
0.75
million, referto Note 9for additionalinformation. The Companyreceived theoutstanding $
0.25
millionrelatedto thesale ofthe equity-accountedinvestment inOctober2023,andhas reversedthe allowancefordoubtfulloans
receivable of$
0.25
million duringthe yearended June30, 2024.The Companyhas notyet receivedthe outstanding$
0.75
million
related to the sale of the $
3.0
million loan, and continues to engage with the purchaser to recoverthe outstanding balance.
The Company previously providedVantageAfrica Limited (“VantagePay”)with a working capital facilityof $
1.5
million. The
Company created an allowance forcredit losses related toloans receivable of $
1.5
million during the yearended June 30, 2021, related
to the full amount outstanding as of June 30, 2021. This amount was still outstanding as of June 30, 2025. In May 2026, the Company
enteredinto abinding headof termsagreementwith VantagePaywhich outlinesthe stepsto recoverthe amountoutstanding.The
Company believesthat there issufficient evidenceto support therecoverability ofthe amount duefrom VantagePay.The Company
recorded a reversal of the allowance for credit losses of $
1.5
million previously recognized during theyear ended June 30, 2026. The
Company also recognized outstanding interest of $
0.5
million during the year ended June 30, 2026.
O
ther receivables include prepayments, deposits, income taxes receivable andother receivables.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-35
4.
ACCOUNTS RECEIVABLE,net AND OTHER RECEIVABLESand FINANCE LOANS RECEIVABLE,net
(continued)
Finance loans receivable, net
The Company’s financeloans receivable, net, as of June 30, 2026, and June 30, 2025, is presented in the tablebelow:
June 30,
June 30,
2026
2025
Microlending finance loans receivable, net
$
80,584
$
52,492
Microlending finance loans receivable, gross
85,265
56,140
Allowance for credit losses - finance loans receivable, end of period
4,681
3,648
Beginning of period
3,648
1,947
Reversed to statement of operations
-
(161)
Charged to statement of operations
7,261
4,301
Write-offs
(6,600)
(2,499)
Foreign currency adjustment
372
60
Merchant finance loans receivable, net
23,226
21,618
Merchant finance loans receivable, gross
28,664
23,214
Allowance for credit losses - finance loans receivable, end of period
5,438
1,596
Beginning of period
1,596
2,697
Reversed to statement of operations
(117)
(22)
Charged to statement of operations
3,931
2,576
Write-offs
(459)
(3,709)
Foreign currency adjustment
487
54
Total financeloans receivable, net
$
103,810
$
74,110
Total financeloans receivable, net, comprisesthe Consumer operatingsegment’s microlendingfinance loans receivable related
totheCompany’smicrolendingoperationsinSouthAfricaaswellasitsMerchantsoperatingsegment’smerchantfinanceloans
receivable lending activities in South Africa. Certain merchant finance loans receivable with an aggregate balance of $
22.5
million as
of June 30, 2026 have been pledged as security for the Company’srevolving credit facility (refer to Note 12).
Allowance for credit losses
Microlending finance loans receivable
Microlending finance loans receivable is related to the Company’smicrolending operations in South Africa whereby it provides
unsecured short-term loans to qualifying customers. Loans to customershave a tenor of up to
nine months
, with the majority of loans
originated havinga tenor of
six months
. The Companyanalyses this lendingbook as asingle portfoliobecause theloans within the
portfolio have similar characteristics and management uses similar processes to monitor and assessthe credit risk of the lending book.
Refer to Note 6 related to the Company risk management process related tothese receivables.
The Company has operated this lending book for more than
five years
and uses historical default experience over the lifetime of
loans inorder todevelop anexpected lossrate forthe lendingbook. Theallowance forcredit lossesrelated tothese microlending
finance loans receivables is calculatedby multiplying the expected lossrate with the month end outstandinglending book. Default is
defined as loans in 90 days in arrears or greater and is primarily driven by missedor disrupted customer payments, as a result of non-
receiptofsocialgrantincomeandbroaderaffordabilitypressures.Lossoutcomesarefurtherinfluencedbylimitedpost-default
recoveries. The Company continues to undertake recovery activityfor up to six months postwrite-off; however, recoveries during this
period are minimal. After six months, collection activity ceases and recoveriesare considered negligible.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-36
4.
ACCOUNTS RECEIVABLE,net AND OTHER RECEIVABLESand FINANCE LOANS RECEIVABLE,net
(continued)
Finance loans receivable, net (continued)
In June30,2026, theCompanyreassessed theexpectedloss raterelatedto itsmicrolendingallowancefor creditlosses. The
assessmentconsideredtheperformanceofthelendingportfolio,historicallossexperience,portfoliomigrationtrends,sensitivity
analyses relatingto largerloan amountsand longerloan terms.Based onthis review,the Company’sconcluded thatexpected loss
rates shouldbe reducedfrom
6.5
% to
5.5
%.The reviewindicated that,despite theintroduction oflarger loanamounts andlonger
repaymentterms,theportfoliocontinuedtoperformbroadlyinlinewithexpectationsandthemodel-derivedexpectedcreditloss
requirementremainedbelowthehistoricalexpectedlossratio,includingduringperiodsofelevateddelinquencyandoperational
disruptions. The reduction in the expected loss ratio resulted in adecrease in the allowance for credit losses of $
0.9
million (ZAR
14.0
million, translated atexchange rates applicable asof June 30,2026) which isincluded in thecaption selling, general andadministration
to the consolidatedstatement of operationsfor the yearended June 30,2026. The underlyingmodel methodology,including the use
of historical lifetime loss experience as the foundation of the expected credit loss estimate, remainedunchanged.
The expectedloss rate asof June30, 2026and 2025, was
5.50
% and
6.50
%, respectively.The performingcomponent (that is,
outstanding loan payments not in arrears) of the book exceeds more than
99.0
% and
98.0
% of outstanding lending book as of June 30,
2026 and 2025, respectively.
Merchant finance loans receivable
Merchant finance loansreceivable is relatedto the Company’sMerchant lending activitiesin South Africawhereby it provides
unsecuredshort-term loansto qualifyingcustomers. Loansto customershave atenor ofup to
twelve months
, withthe majorityof
loans originated having a tenor of approximately
eight months
. The Company analyses this lending book as a single portfolio because
the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk
of the lending book.Refer to Note 6 related to the Company risk management process related to these receivables.
The Company uses historical default experience over the lifetime ofloans generated thus far in order to develop anexpected loss
rate for the lending book.A loan is classified as beingin default where a client hasmissed seven or more instalments, atwhich point
afullallowancefor outstandingcapital andaccruedinterest israisedas atop-upto thegeneralprovisionlevel. Upondefault,the
Company commencesrecovery proceduresincluding theuse ofexternal debtcollectors, assetattachment throughthe Sheriffof the
High Court, and judgements againstclients in both theirpersonal and entity capacities.An account isonly written off once allrecovery
procedures have failed and management confirms no further recoveryis possible.
The allowancefor creditlosses relatedto thesemerchantfinance loansreceivables iscalculated byadding together(i) actual
receivables in default plus (ii) the month-end outstanding lending book multiplied by theexpected loss rate. The expected loss rate as
of June 30, 2026 and2025, was approximately
3.21
% and
1.14
%, respectively.The performing component (thatis, outstanding loan
payments notin arrears),under-performingcomponent (thatis, outstandingloan paymentsthat arein arrears)and non-performing
component (thatis, outstandingloans forwhich paymentsappeared tohave ceased)of the bookrepresents approximately
92
%,
7
%
and
1
%, respectively, of the outstanding lending book as of June30, 2026.
The performing component, under-performing component
and non-performing component of the book represents approximately
95
%,
4
% and
1
%, respectively, of the outstanding lending book
as of June 30, 2025.
5.INVENTORY
The Company’s inventorycomprised the following categories as of June 30, 2026, and 2025.
June 30,
June 30,
2026
2025
Raw materials
$
2,378
$
2,963
Work in progress
204
293
Finished goods
17,531
20,295
$
20,113
$
23,551
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-37
6.FAIR VALUEOF FINANCIAL INSTRUMENTS
Fair value of financial instruments
Initial recognition and measurement
Financial instrumentsare recognizedwhen theCompany becomesa partyto thetransaction. Initialmeasurements areat cost,
which includes transaction costs.
Risk management
The Company manages its exposureto currency exchange, translation, interest rate,credit, microlending credit and equity price
and liquidity risks as discussed below.
Currency exchange risk
The Company is subject to currency exchange risk because it purchases componentsfor its vaults, that the Company assembles,
and inventoriesthat it isrequired tosettle in othercurrencies, primarilythe euro, renminbi,and U.S. dollar.The Companyhas used
forward contracts in order to limit itsexposure in these transactions to fluctuationsin exchange rates between the South Africanrand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates tothe risk thatthe Company’s results of operationswill vary significantlyas the U.S.dollar is itsreporting
currency,but it earns asignificant amount of itsrevenues and incurs asignificant amount of itsexpenses in ZAR. TheU.S. dollar to
the ZARexchange ratehas fluctuatedsignificantly overthe pastthree years.As exchangerates areoutside theCompany’scontrol,
there can be noassurance that future fluctuations willnot adversely affect the Company’s results of operations andfinancial condition.
Interest rate risk
As a result of itsnormal borrowing activities, the Company’s operating results are exposed to fluctuations ininterest rates, which
it manages primarily through itsfinancing activities. In May2026, the SARB increased therepurchase rate by 25basis points to 7.00%
against a backdrop of heightened inflation risks, includinghigher oil and fuel pricesassociated with the ongoing conflict in theMiddle
East. The SARB subsequently maintainedthe repurchase rate at 7.00% in July 2026. Inflationrisks nevertheless remain elevated and
further increases in interest rates remain possible should inflationarypressures persist or intensify.
Accordingly,assuming no changesin the marginsapplicable to theCompany’sborrowings (refer toNote 12) orthe amount of
borrowings outstanding,an increasein benchmarkinterest rateswould resultin acorresponding increasein theCompany’scost of
borrowing.
TheCompanyperiodicallyevaluatesthecostandeffectivenessofinterestratehedgingstrategiestomanagethisrisk.The
Companygenerallymaintainssurpluscashincashequivalentsandheld-to-maturityinvestmentsandhasoccasionallyinvestedin
marketable securities.
Credit risk
CreditriskrelatestotheriskoflossthattheCompanywouldincurasaresultofnon-performancebycounterparties.The
Companymaintainscreditriskpoliciesinrespectofitscounterpartiestominimizeoverallcreditrisk.Thesepoliciesincludean
evaluationofapotentialcounterparty’sfinancialcondition,creditrating,andothercreditcriteriaandriskmitigationtoolsasthe
Company’smanagement deemsappropriate.Withrespect tocredit riskon certainfinancial instruments,the Companymaintains a
policy of enteringinto such transactions onlywith South Africanand European financialinstitutions that havea credit ratingof “B”
(or its equivalent) or better, as determined bycredit rating agencies such as Standard & Poor’s, Moody’sand Fitch Ratings.
Consumer microlending creditrisk
The Companyis exposedto creditrisk inits Consumermicrolending activities,which providesunsecured short-termloans to
qualifying customers.Credit bureauchecks aswell asan affordabilitytest areconducted aspart ofthe originationprocess, bothof
which are in line with local regulations. The Company considers thispolicy to be appropriate because the affordability test itperforms
takes into accounta variety offactors suchas other debtsand total expenditureson normal householdand lifestyle expenses.Additional
allowancesmaybe requiredshould theability ofits customersto makepayments whenduedeterioratein thefuture. Judgmentis
required to assessthe ultimate recoverabilityof these financeloan receivables, includingongoing evaluationof the creditworthiness
of each customer.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-38
6.FAIR VALUEOF FINANCIAL INSTRUMENTS (continued)
Risk management (continued)
Merchant lending
The Company maintains an allowance fordoubtful finance loans receivable related toits Merchant services segment withrespect
to short-term loans to qualifying merchant customers. TheCompany’s risk management procedures include adhering to its proprietary
lending criteria which usesan online-system loan applicationprocess, obtaining necessary customer transaction-historydata and credit
bureau checks.The Company considersthese proceduresto be appropriatebecause it takesinto accounta variety offactors such as
the customer’s credit capacity and customer-specificrisk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equitysecurities thatit holdsfrom timeto time.The marketprice ofthese securitiesmay fluctuatefor avariety ofreasons and,
consequently,theamountthattheCompanymayobtaininasubsequentsale ofthesesecuritiesmaysignificantlydifferfromthe
reported market value.
Equity liquidity riskrelates to the riskof loss that theCompany would incur asa result of thelack of liquidity onthe exchange
onwhichthosesecuritiesarelisted.TheCompanymaynot beabletosell someorallofthesesecuritiesatonetime,oroveran
extended period of time without influencing the exchange-traded price,or at all.
Financial instruments
Fair valueis definedas the pricethat wouldbe receivedupon saleof anasset orpaid upontransfer ofa liabilityin an orderly
transaction betweenmarket participantsat themeasurement dateand inthe principalor mostadvantageous marketfor thatasset or
liability. Thefair value should be calculated basedon assumptions that market participantswould use in pricing the assetor liability,
not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk
including the Company’s own creditrisk.
Fair value measurements and inputs are categorized into afair value hierarchy which prioritizes the inputs intothree levels based
on theextent to whichinputs usedin measuringfair valueare observablein themarket. Each fairvalue measurementis reported in
one of the three levels which is determined by the lowest level input that is significantto the fair value measurement in its entirety.
These levels are:
●
Level 1 – inputs are based upon unadjusted quoted prices for identical instrumentstraded in active markets.
●
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments inmarkets thatare notactive, andmodel-based valuationtechniques forwhich allsignificant assumptionsare
observablein themarket orcan becorroboratedby observablemarketdata forsubstantially thefull termof theassets or
liabilities.
●
Level3–inputsaregenerallyunobservableandtypicallyreflectmanagement’sestimatesofassumptionsthatmarket
participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques
that include option pricing models, discounted cash flow models, andsimilar techniques.
The followingsection describesthe valuationmethodologies theCompany usesto measureits significantfinancial assetsand
liabilities at fair value.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-39
6.FAIR VALUEOF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Asset measured at fair value using significant observable inputs – investment in MobiKwik
The Company’sdisposed of its entire holding,comprising
6,215,620
equity shares, in MobiKwik inlate June 2025. MobiKwik
listed on the National StockExchange of India (“NSE”) on December18, 2024. Up until its listingMobiKwik did not have areadily
determinable fairvalue andthe Companyelected tomeasure itsinvestment inMobiKwik atcost minusimpairment, ifany,plus or
minus changesresulting fromobservable pricechanges inorderly transactionsfor theidentical ora similarinvestment ofthe same
issuer (“cost plus or minus changesin observable prices equity securities”).From the date of MobiKwik’slisting, the Company used
MobiKwik’s closing price reported onthe NSE on the last trading day related to last day of each of the Company’s external reporting
periodsthroughMarch31,2025todeterminethefairvalueoftheequitysecuritiesownedbytheCompany.RefertoNote9for
additional information.
Asset measured at fair value using significant unobservable inputs – investmentin Cell C
The Companyheld
75,000,000
class “A” sharesin CellC Limited(“Cell C”), asignificant mobiletelecoms providerin South
Africa.In November 2025,Cell C completed arestructuring process in anticipationof its listing onthe securities exchangeoperated
by the JSE Limited. Under this process, a new holding company,Cell C Holdings Limited (“Cell C Listco”), was established for Cell
C, with a transactionstep including the transferof shares in CellC by its existingshareholders to Cell CListco in exchangefor Cell
C Listco issuing shares tothe existing Cell C shareholders(the “Flip-up”). TheCompany exchanged its
75,000,000
class “A” shares
in Cell C for
76,590
shares in Cell C Listco. Cell C Listco listed on November 23, 2025.
On October 31, 2025, in considering the proposed restructureand listing of Cell C Listco, Lesaka SA entered into an agreement
with ThePrepaid CompanyProprietary Limited(“TPC”) todispose ofits sharesin CellC (or,after theFlip-up isimplemented, its
shares in Cell C Listco)(“Relevant Shares”), if certain conditions were met. Under the terms of the agreement,if:
●
the listingoccurred byNovember 30,2025, andthe valueof LesakaSA’sshares inCell Cwas lessthan ZAR
50
million,
then Lesaka SA could choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
50
million; or
●
the listing didnot occur byNovember 30, 2025(or, earlierthan this date,it is determinedthat the listingwill not proceed),
then Lesaka SAcould sell the RelevantShares to TPC forZAR
35
million. If, afterthis sale and beforeApril 30, 2026, the
Listing occurs and thelist price per share(“A”) is more than theprice paid to LesakaSA per Relevant Share(the aggregate
ZAR
35
million) (“B”), then TPC shall pay an amount equal to the difference between A and B, multiplied by the number of
Relevant Shares to Lesaka SA as a top-up to the purchase consideration.
The value of Lesaka SA’sshares in Cell C Listco was less than ZAR
50
million on listing and Lesaka SA elected to sell its Cell
C Listco shares to TPC for ZAR
50
million ($
3.0
million) and received the cash proceeds in December 2025.
TheCompany’sLevel3assetrepresentedaninvestmentof
75,000,000
class“A”sharesinCellC.TheCompanyuseda
discounted cashflow modeldeveloped bythe Companyto determinethe fair valueof itsinvestment inCell C asof June30, 2025,
and valued Cell Cat $
0.0
(zero) as of June30, 2025. The Companyassumed that Cell C’sdeferred tax assets wouldbe utilized over
the forecast period. The Company has assumed a marketability discount of
15
% as of June 2025 and a minority discount of
17
%. The
Company utilized the latest business plan providedby Cell C management for the period ended May 31, 2030,for the June 30, 2025,
valuation.
The following key valuation inputs were used as of June 30, 2025:
Weighted AverageCost of Capital ("WACC"):
24
%
Long-term growth rate:
4.5
%
Marketability discount:
15
%
Minority discount:
17
%
Net adjusted external debt - June 30, 2025:
(1)
ZAR
8.3
billion ($
0.5
billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as ofJune 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-40
6.FAIR VALUEOF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Derivative transactions - Foreign exchange contracts
As partof theCompany’srisk managementstrategy,the Companyenters intoderivative transactionsto mitigateexposures to
foreigncurrenciesusingforeignexchangecontracts. Theseforeignexchangecontractsareover-the-counterderivative
transactions. Substantially all of the Company’s derivative exposures are with counterparties that have long-term credit ratings of “B”
(or equivalent)or better.The Companyuses quotedprices inactive marketsfor similarassets and liabilitiesto determinefair value
(Level 2). TheCompany hasno derivativesthat requirefair valuemeasurement underLevel 1,Level 2or Level3 ofthe fairvalue
hierarchy.
The Company had
no
outstanding foreign exchange contracts as of June 30, 2026 and June 30,2025, respectively.
The following table presents theCompany’s assets measuredat fair value on a recurring basis as ofJune 30, 2026, according to
the fair value hierarchy:
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Related to insurance business:
$
$
$
$
Mutual fund (included in cash,
cash equivalents and restricted
cash)
-
3,688
-
3,688
Cash, cash equivalents and
restricted cash (included in other
long-term assets)
141
-
-
141
Mutual fund(included in other
long-term assets)
-
4,598
-
4,598
Total assets at fair value
$
141
$
8,286
$
-
$
8,427
The following table presents the Company’sassets measured at fair value on a recurring basis as ofJune 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
-
$
-
$
-
$
-
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
125
-
-
125
Fixed maturity investments
(included in cash and cash
equivalents)
4,739
-
-
4,739
Total assets at fair value
$
4,864
$
-
$
-
$
4,864
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-41
6.FAIR VALUEOF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Duringthe yearendedJune 30,2026,theCompanytransferredits investmentinCell CListcooutofLevel 3followingthe
disposal of theseequity securities. Duringthe year endedJune 30, 2026,the Company recordedan increase inthe carrying valueof
its investment in Cell C Listco prior to the disposal of these equity securities. There have been
no
transfers in or out of Level 3 during
the year ended June 30, 2025. There was
no
movement in the carrying value of assets measured at fair value on a recurring basis, and
categorized within Level 3, during the year ended June 30, 2025.
Summarized below isthe movement in the carryingvalue of assets measuredat fair value on arecurring basis, and categorized
within Level 3, during the year ended June 30, 2026:
Carrying value
Assets
Balance as of June 30, 2025
$
-
Gain on fair value re-measurement
2,971
Disposal of investment in Cell C
(2,971)
Foreign currency adjustment
(1)
-
Balance as of June 30, 2026
$
-
(1) Theforeign currencyadjustment representsthe effectsof the fluctuationsof the SouthAfrican randagainst theU.S. dollar
on the carrying value.
Summarized below is the movement in the carrying value ofassets and liabilities measured at fair value on a recurringbasis, and
categorized within Level 3, during the year ended June 30, 2025:
Carrying value
Assets
Balance as at June 30, 2024
$
-
Foreign currency adjustment
(1)
-
Balance as of June 30, 2025
$
-
(1) Theforeign currencyadjustment representsthe effectsof the fluctuationsof the SouthAfrican randagainst theU.S. dollar
on the carrying value.
Trade, finance loans and other receivables
Trade, finance loans and other receivables originated by the Company arestated at cost less allowance for credit losses. The fair
value of trade, finance loans and other receivables approximates their carryingvalue due to their short-term nature.
Trade and other payables
The fair values of trade and other payables approximates their carrying amounts, dueto their short-term nature.
Assets and liabilities measured at fair value on a nonrecurring basis
The Companymeasures equityinvestments withoutreadily determinablefair valuesat fairvalue ona nonrecurringbasis. The
fair values ofthese investments aredetermined based onvaluation techniques usingthe best informationavailable, and mayinclude
quoted market prices, market comparables, and discounted cash flowprojections. An impairment charge is recorded when the costof
theassetexceedsitsfairvalueandtheexcessisdeterminedtobeother-than-temporary.RefertoNote9forimpairmentcharges
recorded during thereporting periods presentedherein. The Companyhas
no
liabilities thatare measured atfair valueon anonrecurring
basis.
Long-term borrowings
The fair value of long-term borrowings approximates its carrying amountsbecause they represent the carrying amounts of
variable-rate borrowings that are reset quarterly.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-42
7.PROPERTY,PLANT AND EQUIPMENT,net
Summarized belowis the cost,accumulated depreciationand carrying amountof property,plant andequipment as ofJune 30,
2026 and 2025:
June 30,
June 30,
2026
2025
Cost
Vaults
$
41,427
$
33,276
Computer equipment
(A)
60,214
52,047
Furniture and office equipment
11,141
9,723
Motor vehicles
7,053
4,873
Plant and machinery
143
91
119,978
100,010
Accumulated depreciation:
Vaults
17,806
11,911
Computer equipment
(A)
39,935
34,158
Furniture and office equipment
8,130
7,225
Motor vehicles
3,815
1,747
Plant and machinery
80
45
69,766
55,086
Carrying amount:
Vaults
23,621
21,365
Computer equipment
20,279
17,889
Furniture and office equipment
3,011
2,498
Motor vehicles
3,238
3,126
Plant and machinery
63
46
$
50,212
$
44,924
(A) Cost and accumulateddepreciation for computer equipmentand totals for cost andaccumulated depreciation as ofJune 30,
2025, have each been increased by $
6.5
million to correct the error discussion in Note 1.
8.LEASES
TheCompanyhasentered intoleasingarrangementsclassifiedas operatingleases underaccountingguidance.These leasing
arrangementsrelate primarilyto thelease ofits corporateheadoffice,administrationoffices,a manufacturingfacility,and branch
locations through which theCompany operates its financial servicesbusiness in South Africa.The Company’soperating leases have
a remaininglease termof between
one year
to
ten years
. TheCompanyalso operatesparts ofits financialservicesbusiness from
locations which it leases for a period of less than
one year
.
The Company’soperating lease expenseduring the yearsended June 30,2026, 2025 and2024, was $
5.9
million, $
4.8
million,
and $
3.2
million, respectively. The Company doesnot have anysignificant leases thathave not commenced asof June 30,2026, except
for a new regional office in Cape Town,Western Cape, South Africa(refer below).
The Companyhas entered intoshort-term leasingarrangements, primarilyfor the leaseof branchlocations and otherlocations
to operateits financialservices businessin SouthAfrica.The Company’sshort-term leaseexpense duringthe yearsended June30,
2026, 2025 and 2024, was $
1.9
million, $
4.7
million and $
3.6
million, respectively.
New corporate head office and other leases obtained
In December2025, theCompany,through LesakaSA, enteredinto aleasing arrangementfora newcorporate headofficein
Dunkeld,Gauteng, SouthAfrica withOxford ParksProprietary Limited,a limitedliability privatecompany incorporatedin South
Africa. The leasecommenced on July1, 2026 andis for aperiod of
10 years
with
two
renewal options of
five years
each. The Company
secured beneficialoccupation fromApril 1,2026, andrecorded aROU assetand anoperating leaseliability relatedto thislease in
April 2026 upontaking beneficial occupation.The Company wasrequired to providea bank guaranteeor cash totaling$
0.5
million
(ZAR
7.5
million, translatedat exchangerates applicableas ofJune 30,2026) tothe lessorand onMay 29,2026, itprocuredand
delivered a bank guaranteeto the lessor. TheCompany expects topay an annualbasic lease expenseof $
1.5
million (ZAR
25.1
million,
translated at exchange rates applicable as of June 30, 2026), which increasesby
6.25
% per annum.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-43
8.LEASES (continued)
New corporate head office and other leases obtained (continued)
In April 2026,the Company,through Lesaka SA,entered into abinding offerto lease for anew regional officein Cape Town,
WesternCape,SouthAfricawithGrowthpointSecuritisationWarehouseTrust,atrustincorporatedinSouthAfrica.Thelease
commences on October 1, 2026 and is for aperiod of
10 years
. The Company secured beneficial occupation from August 1, 2026, and
recordeda ROUasset andanoperatinglease liabilityrelatedto thisleasein August2026upon takingbeneficial occupation.The
Company expects topay an annual basiclease expense of $
0.7
million (ZAR
11.3
million, translated at exchangerates applicable as
of June 30, 2026), which increases by
7.50
% per annum.
Impairment of previous corporate head officelease and other leases
In March 2026, theCompany determined that itsexisting operating lease arrangementsfor its corporate headoffice and certain
relatedleasedfacilitieswill nolongerbeutilizedas originallyintendedas aresultofthenewleasearrangementandtheplanned
transition of its corporatehead office and otheroperating activities to thenew premises. In June2026, the Company determinedthat
otherexistingoperatingleasearrangements,primarilyinCapeTown,forleasedfacilitieswillnolongerbeutilizedasoriginally
intendedasaresultofthenewleasearrangementconcludedinApril2026.Accordingly,theCompanyidentifiedindicatorsof
impairment for these related ROU assets and certain items of property,plant and equipment during the year ended June 30, 2026.
TheCompanyevaluatedtheimpactedROUassetsforimpairmentinMarch2026andagaininJune2026.Theasset groups
consisted of operating leaseROU assets and related leaseholdimprovements associated with theaffected locations as wellas certain
items of property,plant and equipment, includingfurniture and officeequipment. The recoverabilitytests indicated that thecarrying
amounts of these asset groupswere not recoverable, asthe undiscounted future cash flowswere insufficient torecover their carrying
values.
TheCompanyinitiallymeasuredtheseoperatingleaseROUassetsandrelatedleaseholdimprovementsatfairvalueona
non-recurring basis duringthe nine months endedMarch 31, 2026, asa result of impairment.In June 2026, theCompany reassessed
the initial measurementof the fairvalue exercisesperformed inMarch 2026,and remeasured thefair valueof theseoperating lease
ROU assets and relatedleasehold improvementsat fair valueusing updated informationas of June 30,2026. The Companyupdated
its inputsfor theremaining leaseterms, expectedsublease incomeand marketrental rateswith currentinformation availableas of
June 30, 2026. TheCompany also measuredother operating lease ROUassets and related leaseholdimprovements at fair valueon a
non-recurringbasisduringthethreemonthsendedJune30,2026,asaresultofimpairment.Thesefairvaluemeasurementsare
classifiedwithinLevel3ofthefairvaluehierarchy.Fairvaluewasestimatedusingadiscountedcashflowmethodology,which
incorporates significantunobservable inputs,including assumptionsrelated to remaininglease terms, expectedsublease incomeand
market rental rates.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-44
8.LEASES (continued)
As a result, theCompany recorded animpairment charge of $
2.6
million during theyear ended June 30,2026, representing the
excess ofthe carryingamount ofthe affectedROU assetsand relatedleasehold improvementsover theirestimated fairvalue.The
impairment chargeis includedin thecaption impairmentloss (referto Note10) inthe consolidatedstatement ofoperations forthe
year ended June 30, 2026. The impairment did not impact the relatedoperating lease liabilities.
The followingtable presentssupplementalbalance sheetdisclosure relatedto ourright-of-use assetsand ouroperating leases
liabilities as of June 30, 2026 and 2025:
June 30,
June 30,
2026
2025
Right-of-use assets obtained in exchange for lease obligations
Weighted averageremaining lease term (years)
6.59
2.84
Weighted averagediscount rate
10.1
%
9.8
%
Maturities of operating lease liabilities
2027
$
6,946
2028
5,413
2029
3,693
2030
3,252
2031
2,760
Thereafter
12,396
Total undiscountedoperating lease liabilities
34,460
Less imputed interest
10,714
Total operating lease liabilities,included in
23,746
Operating lease liability - current
4,408
Operating lease liability - long-term
$
19,338
9.EQUITY-ACCOUNTEDINVESTMENTS AND OTHER LONG-TERM ASSETS
Equity-accounted investments
The Company’s ownership percentagein its equity-accounted investments as of June 30, 2026 and 2025, was as follows:
June 30,
June 30,
2026
2025
Sandulela TechnologyProprietary Limited ("Sandulela")
49
%
49
%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)
50
%
50
%
SmartSwitch Namibia
The Company recordeda losson impairment ofequity-accounted investment of$
0.6
million during thenine months endedMarch
31, 2026, which primarily includes the release of accumulated othercomprehensive loss (refer to Note 15).
Finbond
In December2023, theCompany soldits entireremaining equityinterest inFinbond whichcomprised of
220,523,358
shares,
and which represented approximately
27.8
% of Finbond’s issued andoutstanding ordinary shares immediatelyprior to thesale. Lesaka
SA had pledged, among other things, its entire equity interest in Finbondas security for its previous South African facilities.
Sale of Finbond shares during the year endedJune 30, 2024
OnAugust10,2023,theCompany,throughitswhollyownedsubsidiaryNet1FinanceHoldings(Pty)Ltd,enteredintoan
agreement with Finbond to sell its remaining shareholding to Finbond for a cash consideration of ZAR
64.2
million ($
3.5
million), or
ZAR
0.2911
per share. The transaction closed in December 2023. The Company did
no
t record a gain or loss on the disposal because
the saleproceeds wereequivalent tothe netcarrying value,including accumulatedreserves, ofthe investmentin Finbondas ofthe
disposaldate.ThecashproceedsreceivedofZAR
64.2
million($
3.5
million)wereusedtorepaycapitalizedinterestunderour
b
orrowing facilities, refer to Note 12.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-45
9.EQUITY-ACCOUNTEDINVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Finbond (continued)
Sale of Finbond shares during the year endedJune 30, 2024 (continued)
The following table presents the calculation of the loss on disposal of Finbond sharesduring the year ended June 30, 2024:
Yearended
June 30,
2024
Loss on disposal of Finbond shares:
Consideration received in cash
$
3,508
Less: carrying value of Finbond shares sold
(2,112)
Less: release of foreign currency translation reserve from accumulated othercomprehensive loss
(1,543)
Add: release of stock-based compensation charge relatedto equity-accounted investment
147
Loss on sale of Finbond shares
$
-
Finbond impairmentsrecorded duringthe year ended June 30, 2024
The Company performed an impairment assessment of its holding in Finbond, including the foreign currency translation reserve
and other equityaccount amounts, asof September30, 2023. TheCompany recordedan impairmentloss of $
1.2
million during the
quarter ended September30, 2023, whichrepresented the differencebetween the determinedfair value ofthe Company’sinterest in
Finbond and the Company’s carrying value, including the foreign currency translation reserve (before the impairment). The Company
used theprice ofZAR
0.2911
referenced inthe August2023 agreementreferred toabove tocalculate thedetermined fairvalue for
Finbond.
Carbon
In September 2022, the Companyentered into a binding term sheet tosell its entire interest, or
25
%, in Carbon for $
0.5
million
and aloan due fromCarbon, with aface value of$
3
million, for $
0.75
million. Boththe equityinterest andthe loan hada carrying
value of$
0
(zero) at June30, 2022.The Companyreceived $
0.25
million on closingand the outstandingbalance due byEtobicoke
was expected to be paidas follows: (i) $
0.25
million on September 30,2023 (the amount was receivedin October 2023), and (ii)the
remainingamount, of$
0.75
million inMarch 2024(the amounthas notbeen receivedas ofJune 30,2026 (referto Note4)). The
Companyhasallocatedthe $
0.25
millionreceivedon closingto thesale oftheequity interestandallocatedthe subsequentfunds
received first to the sale of the equity interest and then to the loans.
The Companybelieved thatthe fair valueof the Carbonshares providedas security was$
0
(zero), whichwas in linewith the
carrying value asof June 30, 2022,and created an allowancefor doubtful loans receivablerelated to the $
1.0
million previously due
from Etobicoke.The Companydid notincur any significanttransaction costs.The Companyhas includedthe gain of$
0.25
million
related to the sale of the Carbon equity interest in the caption netgain on disposal of equity-accounted investments in the Company’s
c
onsolidated statements of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-46
9.EQUITY-ACCOUNTEDINVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Summarizedbelow isthe movementin equity-accountedinvestments duringthe yearsended June30, 2026and 2025,which
includes the investment in equity and the investment in loans providedto equity-accounted investees:
Other
(1)
Total
Investment in equity
Balance as of June 30, 2024
$
206
$
206
Comprehensive income:
114
114
Other comprehensive income
-
-
Equity accounted earnings
114
114
Share of net income
114
114
Dividends received
(96)
(96)
Sale of shares in equity-accounted investment
(507)
(507)
Equity-accounted investment acquired in business combination (Note3)
477
477
Foreign currency adjustment
(2)
5
5
Balance as of June 30, 2025
199
199
Comprehensive income:
215
215
Other comprehensive income
-
-
Equity accounted earnings
215
215
Share of net income
215
215
Dividends received
(105)
(105)
Impairment
(34)
(34)
Foreign currency adjustment
(2)
20
20
Balance as of June 30, 2026
$
295
$
295
(1) Includes Sandulela and SmartSwitch Namibia;
(2) The foreign currencyadjustment represents theeffects of the fluctuationsof the ZAR andNamibian dollar, againstthe U.S.
dollar on the carrying value.
Other long-term assets
Summarized below is the breakdown of other long-term assets as of June 30,2026, and June 30, 2025:
June 30,
June 30,
2026
2025
Total equity investments
$
450
$
-
Investment in
10
% of Cowdi at fair value and loan
(1)
450
-
Investment in Cell C (June 30, 2025:
5
%) at fair value (Note 6)
(2)
-
-
Investment in
87.50
% of CPS (June 30, 2025:
87.50
%) at fair value
(1)(3)
-
-
Insurance investments
4,598
-
Policy holder assets under investment contracts (Note 11)
141
125
Reinsurance assets under insurance contracts (Note 11)
2,416
1,837
Other long-term assets
2,092
1,847
Total other long-termassets
$
9,697
$
3,809
(1) The Companydetermined that Cowdiand CPS donot have readilydeterminable fair valuesand therefore electedto record
its investments at costminus impairment, if any, plus orminus changes resulting fromobservable price changes in orderlytransactions
for the identical or a similar investment of the same issuer.
(2) The Company disposed of its entire shareholding in Cell C in December 2025,refer to Note 6 for additional information.
(3) On October 16, 2020, theHigh Court of South Africa, Gauteng Division,Pretoria ordered that Cash Paymaster Services (Pty)
Ltd (“CPS”) be placed into liquidation.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-47
9.EQUITY-ACCOUNTEDINVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets (continued)
Cowdi
During the year ended June 30, 2026, theCompany invested $
0.3
million to acquire a
10
% interest in Cowdi Limited (“Cowdi”),
an entityincorporatedin Englandand Wales,with operationsthrougha Kenyanwholly-owned subsidiaryofferingdigital loansto
customers in that country. The Company also extended a $
0.75
million credit facility to Cowdi and they withdraw $
0.2
million during
the year endedJune 30, 2026. Cowdihad utilized $
0.2
million of thefacility as ofJune 30, 2026,and this amount wasrepaid in full
in July 2026.
MobiKwik
The Companysigned asubscription agreementwith MobiKwik,which isone ofIndia’slargest independentmobile payments
networks and buy nowpay later businesses.Pursuant to thesubscription agreement, the Company agreedto make anequity investment
of up to $
40.0
million in MobiKwik over a
24
-month period. The Company made aninitial $
15.0
million investment in August 2016
and afurther$
10.6
million investmentin June2017,under thissubscriptionagreement.During theyear endedJune 30,2019,the
Companypaid$
1.1
milliontosubscribeforadditionalsharesinMobiKwik.TheCompanyowned
6,215,620
equitysharesin
MobiKwik, which as of June 30, 2024, represented approximately
10
% of MobiKwik’s issued share capital.
Refer to 6 for additionalinformation regarding the determinationof the fair value ofCompany’s investmentin MobiKwik. The
Company disposedof itsentire equityinterest inMobiKwik for$
16.4
million duringthe year endedJune 30,2025, andrecorded a
loss of $
59.8
million. This loss comprisedof (i) fair valueadjustments to decrease thecarrying value of itsinvestment by $
54.2
million
from $
76.3
million as of June 30, 2024, to $
22.1
million as of March 31, 2025, and (ii) a further loss $
5.6
million upon disposal in the
fourth quarter offiscal 2025. Theloss is includedin thecaption “Change infair value ofequity securities” inthe consolidated statement
of operations for the year ended June 30, 2025.
TheCompanydidnotidentify anyobservabletransactionsduringthe yearendedJune 30,2024,andthereforethere wasno
change inthe fairvalue ofMobiKwik duringthat year.During theyear endedJune 30,2021, MobiKwikentered intoa numberof
separate agreementswith newshareholders toraise additionalcapital throughthe issuanceof additionalshares. TheCompany used
the valuationfrom MobiKwik’sJune 2021capital raiseas thebasis forits fairvalue determinationof $
76.3
million asof June30,
2024.
Cell C
OnAugust2,2017,theCompany,throughitssubsidiary,Net1SA,purchased
75,000,000
class“A”sharesofCellCforan
aggregate purchase price of ZAR
2.0
billion ($
151.0
million) in cash. The Company funded the transaction througha combination of
cash and a borrowing facility. Net1 SA has pledged, among other things, its entire equity interest in CellC as security for the previous
South Africanfacilities describedin Note 12.On September 30,2022, Cell Ccompleted itsrecapitalization processwhich included
the issuance of additional equity instruments by Cell C. The Company’s effectivepercentage holding in Cell C’s equity reduced from
15
% to
5
% following the recapitalization. The Company’s investment in Cell C was carried at fair value as of June 30, 2025. Refer to
Note 6 for additional information regarding changes in the fair value of Cell C.
CPS
The Companydeconsolidatedits investmentin CPSin May2020. Asof June30, 2026and 2025,respectively,the Company
owned
87.5
% of CPS’ issued share capital.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-48
9.EQUITY-ACCOUNTEDINVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets (continued)
Summarized beloware the componentsof the Company’sequity securitieswithout readilydeterminable fairvalue and heldto
maturity investments as of June 30, 2026:
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in Cowdi
$
250
$
-
$
-
$
250
Investment in CPS
-
-
-
-
Total
$
250
$
-
$
-
$
250
Summarized below are the components of the Company’sequity securities without readily determinable fair value and held to
maturity investments as of June 30, 2025:
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in CPS
$
-
$
-
$
-
$
-
Held to maturity:
Investment in Cedar Cellular notes
-
-
-
-
10.GOODWILL AND INTANGIBLEASSETS,net
Goodwill
Summarized below is the movement in the carrying value of goodwillfor the years ended June 30, 2026, 2025 and 2024:
Gross value
Accumulated
impairment
Carrying value
Balance as of July 1, 2023
$
152,619
$
(18,876)
$
133,743
Foreign currency adjustment
(1)
5,280
(472)
4,808
Balance as of June 30, 2024
157,899
(19,348)
138,551
Impairment loss
-
(17,041)
(17,041)
Acquisitions (Note 3)
(2)
76,114
-
76,114
Foreign currency adjustment
(1)
2,096
(325)
1,771
Balance as of June 30, 2025
236,109
(36,714)
199,395
Impairment loss
-
(388)
(388)
Acquisition (Note 3)
(3)
1,586
-
1,586
Deconsolidation of Humble (Note 3)
(1,515)
-
(1,515)
Foreign currency adjustment
(1)
18,770
(2,550)
16,220
Balance as of June 30, 2026
$
254,950
$
(39,652)
$
215,298
(1) – The foreign currency adjustment represents the effects of the fluctuations between the South African Rand against the U.S.
dollar on the carrying value.
(2) – Represents goodwillarising from the acquisitionof Adumo, Utilities, LesakaNam and Lesaka FuelSoftware and translated
at the foreignexchange rates applicableon the datethe transactions becameeffective. This goodwillhas been allocatedto the Merchant
(aportionAdumo,LesakaNamandLesakaFuelSoftware),Consumer(aportionofAdumo)andEnterprise(Utilities)reportable
operating segments.
(3) – Represents goodwill arising from the acquisitionof MobileMart and translated at the foreign exchange rates applicableon
the date the transactions became effective. This goodwill has beenallocated to the Enterprise reportable operating segment.
Goodwill associated withthe acquisitions represents theexcess of costover the fair valueof net assetsacquired. Goodwill arising
fromtheseacquisitionsis notdeductiblefortaxpurposes.SeeNote3fortheallocationofthepurchasepricetothe fairvalueof
a
cquired net assets.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-49
10.GOODWILL AND INTANGIBLEASSETS,net (continued)
Goodwill (continued)
Impairment loss
The Company assesses the carryingvalue of goodwill for impairmentannually, ormore frequently,whenever events occur and
circumstances change indicatingpotential impairment. The Companyperforms its annual impairmenttest as at June 30of each year.
The Company did not perform a qualitative assessment during the years ended June 30, 2026, 2025 and 2024, respectively.Except as
discussed below, no goodwillhas been impaired during the years ended June 30, 2026, 2025 and 2024, respectively.
In order to determine the amount ofthe goodwill impairments, the estimated fair value ofour reporting units’ business assets and
liabilities were compared to the carrying value oftheir assets and liabilities. The Companyused a discounted cash flow model inorder
to determine thefair valueof thebusinesses (this isa Level-3 fairvalue measurement). Basedon thisanalysis, the Companydetermined
that the carrying value of the reporting units’ business assets and liabilities exceededtheir fair value at the reporting date.
Indeterminingthefairvalueofthereportingunits,theCompanyconsideredkeyjudgementsrelatedtothereportingunits’
revenue growth rates, weighted-average cost of capital (“WACC”)applicable to peer and industry comparables of the reporting units,
andtheforecastperiodsused.TheCompanymayrecordanimpairmentloss infutureifactualgrowthratesarelowerthanthose
included in the Company’s discounted cash flow model. Furthermore, use of a higher weighted-average cost of capital mayalso result
in an impairment loss in the future.
Year endedJune 30, 2026 goodwill impairment loss
The Companyrecognized an impairmentloss of $
0.4
million as aresult of theimpairment analysis performedas of March31,
2026, relatedto goodwillallocated toits SwitchPayreporting unitwithin itsMerchant segment.The impairmentis includedwithin
the caption impairment loss in the consolidated statement of operationsfor the year ended June 30, 2026.
At June 30, 2025, the fair value of the SwitchPay reportingunit exceeded its carrying value by
50
%. The impairment loss in the
SwitchPay reporting unitresulted from the terminationof its sole customercontract during fiscal 2026which adversely impactedits
future cash flows, growth prospects and its ability to continue as a going concern.
Year endedJune 30, 2025 goodwill impairment loss
The Companyrecognized an impairmentloss of $
17.0
million as aresult of itsannual impairmentanalysis related togoodwill
allocated to its LCM and Lesaka MT reporting units within its Merchant segment, its Lesaka Payouts reporting unit within Consumer
segment and its LesakaAlternative Digital ProductsProprietary Limited, formerlyknown as EasyPay ProprietaryLimited, (“Lesaka
ADP”)reportingunitwithinitsEnterprisesegment.Theimpairmentsareincludedwithinthecaptionimpairmentlossinthe
consolidated statement of operations for the year ended June 30, 2025.
At June 30, 2024, the fair value of the LCM reporting unit exceeded its carrying valueby
11
%.The impairment loss in the LCM
reportingunitresultedfromareassessmentofthebusiness’growthprospectsinthecontextofitsstrategicmarketpositioning,
optimized capital expenditures and increase WACCover prior years.
The impairment loss in the Lesaka MT reporting unit resulted from a reassessment of the business’ growth prospects, a strategic
decision to exit low return and sub-optimal merchants’ contracts.
The impairment loss in theLesaka Payouts reporting unitresulted from a reassessment ofthe business’ growth prospects ofthe
reporting unit with lower revenue and therefore lower free cash flow generation expected compared to when performing the purchase
price allocation.
Lesaka ADP was acquired in fiscal2006. At June 30, 2024, the fairvalue of the Lesaka ADP reporting unitexceeded its carrying
valueby
318
%.TheimpairmentlossintheLesakaADPreportingunitduringtheyearendedJune30,2025,resultedfroma
reassessment ofthe business’growth andthe expectedimpact onits futurecash flowsas aresult thecash outflowsexpected from
initiatives to modernize its existing technology platform to retain and expand itsproduct offering and customer base.
The fairvalue ofthe LesakaHospitality andHumble reportingunits(both allocatedto Merchant)included inthe Company’s
acquisition ofAdumo didnot substantially exceedthe carryingvalue of theirrespective reportingunit. Thefair value ofthe Lesaka
Hospitality reporting unit exceeded the carrying value by
2.4
% and Humble exceeded the carrying value by
1
%. As of June 30, 2025,
carrying valueof goodwillallocated toLesaka Hospitalityand Humblewas $
34.0
million and$
1.5
million, respectively.All other
reporting units’ fair value exceeded the carrying value of the reporting unit byat least
28
%.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-50
10.GOODWILL AND INTANGIBLEASSETS,net (continued)
Goodwill (continued)
Impairment loss (continued)
Year endedJune 30, 2025 goodwill impairment loss (continued)
The table belowpresents the impairmentper reporting unitfor the yearended June 30,2025 and therevenue growth rates,WACC
and forecast period forreporting units usedin the discountedcash flow modelsfor the June30, 2025 and June30, 2024, andfor entities
acquiring during the current fiscal year, the informationused in the purchase price allocation:
Segments and reporting units
with impairments
Impairment
Remaining
goodwill
Range of
revenue
growth rates
(%)
Terminal
revenue
growth rates
(%)
WACC(%)
Forecast
period
(years)
Merchant
$
9,268
$
22,283
Lesaka Cash Management
5,688
22,283
Used at June 30, 2025
3.2
-
23
6.0
15.6
5
Used at June 30, 2024
10
-
13.9
5.0
14.7
5
Lesaka MT
3,580
-
Used at June 30, 2025
(
10
) -
37
(10.0)
18.5
5
Used at acquisition
6.7
-
14.9
N/A
18.9
Consumer
2,197
6,027
Lesaka Payouts
2,197
6,027
Used at June 30, 2025
7.5
-
40.2
6.0
18.2
5
Used at acquisition
11.8
-
26.6
N/A
18.9
4
Enterprise
5,576
3,533
Lesaka ADP
5,576
3,533
Used at June 30, 2025
6
-
65.6
6.0
22.5
10
Used at June 30, 2024
(
21.7
) -
6.9
6.0
14.7
5
Total
$
17,041
$
31,843
In the event that there is a deterioration in the Company’s operating segments, or in any other of the Company’sbusinesses, this
may leadto impairmentsin futureperiods. Furthermore,the difficultiesof integratingacquired businessesmay beincreased bythe
necessity of integrating personnel with disparatebusiness backgrounds and combining different corporate cultures. TheCompany also
maynotbeabletoretainkeycustomersofanacquiredbusinessorrealizecostefficienciesorsynergiesorotherbenefitsthatit
anticipated when selecting its acquisition candidates. These factorsmay also lead to impairments in future periods.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-51
10.GOODWILL AND INTANGIBLEASSETS,net (continued)
Goodwill (continued)
Goodwill has been allocated to the Company’sreportable segments as follows:
Merchant
Consumer
Enterprise
Carrying value
Balance as of July 1, 2023
$
119,117
$
-
$
14,626
$
133,743
Foreign currency adjustment
(1)
4,279
-
529
4,808
Balance as of June 30, 2024
123,396
-
15,155
138,551
Impairment loss
(9,268)
(2,197)
(5,576)
(17,041)
Acquisitions (Note 3)
63,808
8,423
3,883
76,114
Foreign currency adjustment
(1)
1,698
(199)
272
1,771
Balance as of June 30, 2025
179,634
6,027
13,734
199,395
Impairment loss
(388)
-
-
(388)
Acquisitions (Note 3)
-
-
1,586
1,586
Deconsolidation of Humble (Note 3)
(1,515)
-
-
(1,515)
Foreign currency adjustment
(1)
14,635
495
1,090
16,220
Balance as of June 30, 2026
$
192,366
$
6,522
$
16,410
$
215,298
(1) – The foreign currency adjustmentrepresents the effects of the fluctuations betweenthe South African Rand, against theU.S.
dollar on the carrying value.
The table presents the components of impairment loss for the years ended June30, 2026 and 2025:
2026
2025
Goodwill impairment loss
$
388
$
17,041
Impairment of right-of-use assets (Note 8)
2,623
-
Impairment of property,plant and equipment
(1)
989
-
Impairment of intangible assets
35
1,822
Total
$
4,035
$
18,863
(1) During thenine months endedMarch 31, 2026,the Company commencedthe process towind down itsATMbusiness and
recognized an impairmentrelated to ATMsrecorded in property,plant and equipment toreduce the carrying amountsof these assets
to theirestimated recoverablevalues. Therecoverable valueswere determinedbased onestimated proceedsexpected tobe realized
primarilythroughthepiecemealdisposaloftheassets.TheCompany’smanagementestimatedtherecoverablevaluesbasedon
observable marketpricing forsimilar assets,adjusted forthe condition,age andexpected timingof sale.These estimatesrepresent
management’s best estimate of fairvalue less coststo sell. Thefair value measurements associatedwith the impairment wereclassified
withinLevel3ofthefairvaluehierarchy,asthevaluationincorporatessignificantunobservableinputs,includingassumptions
regardingexpectedsellingprices andmarketdemandforused ATMequipment.Actual proceedsmaydifferfromthese estimates
a
rising from changes in market conditions or the timing and manner ofdisposal.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-52
10.GOODWILL AND INTANGIBLEASSETS,net
Intangible assets
Intangible assets acquired
Summarized belowis thefair valueof intangibleassets acquired,translated atthe exchangerate applicableas ofthe relevant
acquisition dates, and the weighted-average amortization period:
Fair value as of
acquisition date
Weighted-average
amortization
period (in years)
Finite-lived intangible asset:
Acquired during the year ended June 30, 2025:
Adumo – technology assets
$
13,998
3
-
7
Adumo – customer relationships
11,185
5
-
10
Adumo – brands
3,623
10
-
15
Utilities – technology assets
1,161
4
Utilities – customer relationships
15,010
5
Lesaka Digital Risk – technology assets
$
69
0.1
On acquisition ofthese businesses, theCompany recognized anaggregate deferredtax liability of approximately$
12.2
million
related to the acquisition of intangible assets during the year endedJune 30, 2025.
Impairment loss during the yearsended June 30, 2026 and 2025
The Companyassesses the carryingvalue ofintangible assetsfor impairmentwhenever eventsoccur orcircumstances change
indicating that the carrying amount of the intangible asset may not be recoverable.
No
intangible assets have been impaired during the
years endedyears ended June30, 2026, 2025and 2024, respectively,except for intangibleassets of $
0.04
million and $
1.8
million,
respectively,related to LesakaMT which werefully impaired duringthe years endedJune 30, 2026and 2025. Theimpairment was
identified during the Company’s annual goodwill impairment testing. The method for determining fair value is discussed above under
Goodwill—Impairmentloss.Theimpairmentlossrelatedtotheimpairmentoftheintangibleassetsisincludedinthecaption
Impairment loss in the consolidated statements of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-53
10.GOODWILL AND INTANGIBLEASSETS,net (continued)
Intangible assets (continued)
Summarized below is the carrying value and accumulated amortization of the intangible assets as of June 30, 2026, and June 30,
2025:
As of June 30, 2026
As of June 30, 2025
Gross
carrying
value
Accumulated
amortization
and
impairment
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Software, integrated
platform and unpatented
technology
(1)
$
153,867
$
(62,220)
$
91,647
$
137,099
$
(41,925)
$
95,174
Customer relationships
(1)
57,862
(26,084)
31,778
53,369
(18,568)
34,801
FTS patent
2,335
(2,335)
-
2,158
(2,158)
-
Brands and trademarks
(1)(2)
19,732
(19,732)
-
18,233
(8,993)
9,240
Total finite-lived
intangible assets
$
233,796
$
(110,371)
$
123,425
$
210,859
$
(71,644)
$
139,215
(1) June30, 2025,balances includethe intangibleassets acquiredas partof theAdumo acquisitionin October2024, andthe
Utilities and Lesaka Digital Risk acquisitions in March 2025.
(2)Duringearlycalendar2025,theCompany’sexecutiveconsideredtheunificationoftheCompany’smerchantsegments
operationsandtherealignmentoftheCompany’sbrandsunderthemasterbrand“Lesaka”.TheCompany’sBoardofDirectors
approved the realignment of certain of the Company’s brands to the master brand in May 2025. The Company identified the steps and
timing to realignthe affected brandsunder the master brandand expects tohave complete alignment byFebruary 2027, with certain
brands aligned in December 2025. The change in brands has resulted ina change in the useful lives of certain of theCompany’s brand
andtrademarkintangibleassetswhichhasresultedinanincrease(excludingtheimpacton“Adumo”and“GAAP”brands)in
amortization expenseof $
6.3
million and$
2.6
million duringthe years endedJune 30, 2026and 2025, respectively,compared with
the comparativeperiods assumingthe originaluseful lives.The changein theuseful livesresulted ina $
4.6
million decreasein the
Company’s net income from continuing operations for the year endedJune 30, 2026, and didnot have a significant impacton earnings
per share. The change in theuseful lives resulted in a $
1.9
million increase in the Company’snet loss from continuing operations for
the year ended June 30, 2025, and did not have a significantimpact on loss per share. The change did not impactthe year ended June
30, 2024.
Aggregateamortizationexpense onthe finite-livedintangible assetsfortheyearsended June30,2026,2025and2024,was
approximately $
29.7
million, $
22.0
million and $
14.4
million, respectively.
Future estimated annual amortization expense for the next fivefiscal years and thereafter, using the exchange rates that prevailed
on June30, 2026, ispresented in thetable below.Actual amortizationexpense in futureperiods could differfrom this estimateas a
result of acquisitions, changes in useful lives, exchange rate fluctuations and otherrelevant factors.
Fiscal 2027
$
23,794
Fiscal 2028
23,110
Fiscal 2029
22,383
Fiscal 2030
20,447
Fiscal 2031
16,963
Thereafter
16,728
Total futureestimated annual amortization expense
$
123,425
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-54
11.ASSETS AND POLICYHOLDER LIABILITIES UNDER INSURANCE ANDINVESTMENT CONTRACTS
Reinsurance assets and policyholder liabilities under insurance contracts
Summarized below is the movement in reinsurance assets and policyholder liabilities underinsurance contracts during the years
ended June 30, 2026 and 2025:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of July 1, 2024
$
1,469
$
(2,241)
Increase in policyholder benefits under insurance contracts
461
(10,127)
Claims and policyholders’ benefits under insurance contracts
(131)
9,781
Foreign currency adjustment
(3)
38
(57)
Balance as of June 30, 2025
1,837
(2,644)
Increase in policyholder benefits under insurance contracts
799
(13,437)
Claims and policyholders’ benefits under insurance contracts
(412)
12,690
Foreign currency adjustment
(3)
192
(297)
Balance as of June 30, 2026
$
2,416
$
(3,688)
(1) Included in other long-term assets (refer to Note 9);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company has agreements with reinsurance companies in order to limit its losses from large insurance contracts, however,if
the reinsurer is unable to meet its obligations, the Company retains the liability.The value of insurance contract liabilities is based on
the best estimateassumptions offuture experienceplus a riskadjustment fornon-financial risk,as requiredin the marketsin which
these products are offered, namely South Africa. The process of deriving the best estimates assumptions plus risk adjustments include
assumptions related to claim reporting delays (based onaverage industry experience) and their associated costsas well as assumptions
related to the present value of disability claims in payment.
Assets and policyholder liabilities under investment contracts
Summarized below is the movement in assetsand policyholder liabilities under investment contracts during the yearsended June
30, 2026 and 2025:
Assets
(1)
Investment
contracts
(2)
Balance as of July 1, 2024
$
216
$
(216)
Increase in policyholder benefits under investment contracts
5
(5)
Claims and decrease in policyholders’ benefits under investment contracts
(101)
101
Foreign currency adjustment
(3)
13
(5)
Balance as of June 30, 2025
133
(125)
Increase in policyholder benefits under investment contracts
6
(6)
Foreign currency adjustment
(3)
2
(10)
Balance as of June 30, 2026
$
141
$
(141)
(1) Included in other long-term assets (refer to Note 9);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
T
he Company does not offer any investment products with guaranteesrelated to capital or returns.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-55
12.BORROWINGS
Reference rate reform
After thetransitionaway fromcertaininterbankofferedrates inforeignjurisdictions(“IBOR reform”),the reformsto South
Africa’sreference interestrate are nowaccelerating rapidly.The JohannesburgInterbank AverageRate (“JIBAR”)will be replaced
by thenew SouthAfrican OvernightIndex Average(“ZARONIA”) followingthe cessationof JIBARafter itsfinal publicationon
December31,2026.ZARONIAreflectstheinterestrateatwhichrand-denominatedovernightwholesalefundsareobtainedby
commercialbanks.The“NoNewJIBAR”initiativecommencedonMay1,2026,markingthecut-offdatefromwhichmarket
participants should nolonger enterinto newfinancial contractsreferencing JIBAR, exceptin clearlydefined and limitedcircumstances.
Certain of theCompany’s borrowings referenced JIBAR asa base interest rate.In February 2026,the Company amended itsborrowing
agreement to changethe reference ratefrom JIBAR toZARONIA from April1, 2026 inanticipation of the“No New JIBAR”initiative.
The referencerate applicableto FacilitiesA andB usesZARONIA plusa creditadjustment spread(“CAS”), whichis intendedto
place the parties in substantially the same economic position as if JIBAR had not ceased.
South Africa
The ZARONIArate andCAS on June30, 2026,was
6.73
% and
0.1619
%, respectively.The primerate, the benchmarkrate at
which private sector banks lend to the public in South Africa, on June 30,2026, was
10.50
%.
Facilities obtained in February 2025
LesakaSA hasobtainedfour loanfacilitiesfromFirstRandBankLimited(actingthrough itsRandMerchantBank division)
(“RMB”),FirstRandBankLimited(actingthroughitsWesBankdivision)(“WesBank”),FirstRandBankLimitedbeingaSouth
African corporate and investment bank, Investec Bank Limited (acting through its Investment Banking division: Corporate Solutions)
(“Investec”andtogetherwith RMBandWesBank,the“Lenders”).These compriseaterm loanof uptoZAR
2.2
billion($
121.4
million) (“FacilityA”), an amortizingloan of ZAR
1.0
billion ($
56.3
million) (“Facility B”)and a seniorrevolving credit facilityof
up toZAR
2.2
billion ($
121.4
million) (“SeniorRCF”), anda generalbanking facilityfrom RMBof upto ZAR
1.1
billion ($
66.0
million) (the “GBF”, and collectively with Facility A, Facility B and Senior RCF, the “Facilities”), which are described in more detail
below.
On February27, 2026,the Company,Lesaka SAand anumber ofother subsidiariesof LesakaSA, theLenders andthe Debt
Guarantor enteredinto a Amendedand Restated CommonTermsAgreement (“CTA”)which replaced theOriginal CommonTerms
Agreement (“Original CTA”), and:
●
amended the reference rate from JIBAR to ZARONIA;
●
aligned theannual repaymentdates forFacility Bfrom Februaryto March,with thefinal maturitydate unchangedas
February 28, 2029; and
●
updated certain provisions to expressly permit the implementation ofinterest rate hedging.
The CTA was further amended by a letter dated March 27, 2026, due to a change in the working capitalfacility discussed below.
The Company,Lesaka SAand themajority ofLesaka SA’sdirectly andindirectly wholly-ownedsubsidiaries haveagreed to
guarantee the obligations of Lesaka SA and of the other borrowers under the Facilities to theLenders.
LesakahaspledgeditsequityinterestsinLesakaSAandtheCompany’sinterestsinacertainbankingaccounttotheDebt
Guarantor as collateral securing Lesaka's guarantee obligations.
The CTAgoverning the abovecontains customary covenantswhich include arequirement for LesakaSA to maintain specified
NetDebttoEBITDAandInterestCoverRatios (asdefinedintheCTA)andrestrictstheabilityofLesakaSA,andcertainofits
subsidiaries to make certain distributions with respect to their capital stock,prepay other debt, encumber their assets, incur additional
indebtedness,makeinvestmentsabovespecifiedlevels,engageincertainbusinesscombinationsandengageinothercorporate
activities.
Lesaka SA paid non-refundable debt structuring fees of ZAR
10.0
million ($
0.5
million) to the Lenders on February 27, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-56
12.BORROWINGS (continued)
South Africa (continued)
Facilities obtained in February 2025 (continued)
Long-term borrowings – Facility A and Facility B Agreements
Lesaka SA mayborrow up to anaggregate amount ofZAR
2.2
billion for the solepurpose of refinancingthe existing facilities
of LesakaSA andLesaka CashManagementwith RMB,fundingtransaction costsand forgeneral corporatepurposes. LesakaSA
utilized Facility A in fullon February 28,2025, to settle a portionof its existing facilities withRMB and to settle all ofLesaka Cash
Management’sexisting facilities with RMB, as well as to pay certain transaction costs.
Lesaka SA mayborrow up toan aggregate ofZAR
1.0
billion for thesole purpose ofrefinancing the LesakaSA existing facilities,
includingitsgeneralbankingfacilities,withRMB,andforgeneralcorporatepurposes.LesakaSAutilizedFacilityBinfullon
February 28, 2025, to repay a portion of its existing facilities as well as to settle a portionof its existing general banking facility.
Facility A is required to be repaid in full on February 28, 2029. Facility A is subject to customary mandatory prepaymentterms.
LesakaSAispermittedtomakevoluntaryprepaymentsofFacilityA,andispermittedtosubsequentlyutilizeanyvoluntary
prepayments made under Facility A under the RCF Agreement. Amountsutilized under the RCF Agreement are required to be repaid
in full on February 28, 2029. No drawdowns has occurred under the RCF.
Facility B isrequired to be repaidin
four
annual installments, as follows:(i) ZAR
150.0
million ($
9.0
million) was paid onMarch
31, 2026; (ii) ZAR
200.0
million ($
12.2
million) on March 31, 2027; (iii) ZAR
300.0
million ($
18.3
million) on March 31, 2028; and
(iv) ZAR
350.0
million ($
21.3
million) on February 28, 2029. Facility B issubject to customary mandatory prepayment terms. Lesaka
SA is permitted to make voluntary prepayments of Facility B, however it is unableto subsequently utilize any amounts prepaid.
Interest on Facility Aand Facility B as wellas any interest relatedto utilization underthe RCF Agreement ispayable quarterly
in arrears at end of March, June, September and December,with the first interest payment commencing on June 30, 2025.
Short-term facility - General Banking Facility
Lesaka SAand certainof itssubsidiaries mayborrow upto anaggregate ofZAR
1.1
billion undera generalbanking facility
(“GBF”) from RMB for general corporate expenditure (including capital expenditure) and working capital purposes of the Lesaka SA
and certain ofits subsidiaries. LesakaSA utilized aportion of theGBF to refinanceits existing generalbanking facility.As of June
30, 2026, the Company had utilized ZAR
339.2
million ($
20.7
million) of this facility.
ConcurrentwiththeexecutionoftheCTA,LesakaSAandRMBenteredintoaGeneralBankingFacilityAgreement(the
“Original GBF Agreement”), whichwas amended by an addendumdated on or about July16, 2025. On March27, 2026, Lesaka SA
and RMBentered intoan Amendedand RestatedGeneral BankingFacility (“RestatedGBF Agreement”)to amendand replacethe
Original GBF Agreement.Pursuant tothe Restated GBFAgreement, LesakaSA and certainof its subsidiarieshave access todirect
facilitiesofZAR
1.1
billion($
67.7
million),whichincludeageneralbankingfacility(ademandfacility);short-termdirectand
contingent facilities which coverforward exchange contracts and creditcards; an indirect facility of ZAR
90.8
million ($
5.5
million)
for bankguarantees; andsettlement linesof ZAR
326.0
million ($
19.9
million). Thedirect facilitiesmay bereallocated asindirect
facilities, and indirect facilitiesmay be reallocated asdirect facilities. Asof June 30, 2026,the Company had utilizedZAR
33.1
million
($
1.9
million) ofits otherfacilities toenable thebank toissue guarantees,letters ofcredit andforward exchangecontracts (referto
Note 22).
The facilities under theRestated GBF Agreement wereavailable for utilizationfrom March 30, 2026,and are subject to annual
review byRMB. Lesaka SApaid andcapitalized an upfrontfee paid toRMB and legalfees paid tolegal advisors totalingZAR
4.2
million ($
0.3
million) related to this transaction.
Interest on the GBF is payable monthly and is based on the South African prime rate in effect from time to time less
0.50
%. The
Company pays acommitment fee of
0.70
% (seventy basispoints) per annum(excluding VAT)of the unutilizedGBF, where utilization
of the GBF is less than
90
% of available GBF.This fee is calculated daily and payable monthly in arrears.
Wesbank Facilities
The Company, through certainof itsSouth African subsidiaries,has anasset-backed facility ofZAR
214.5
million ($
13.1
million)
of which ZAR
147.7
million ($
9.0
million) has been utilized.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-57
12.BORROWINGS (continued)
South Africa (continued)
Refinanced Lesaka Capital Loan Document,comprising long-term borrowings
On September 5,2025, theCompany, through its indirectSouth African subsidiariesLesaka Capital ProprietaryLimited (“Lesaka
Capital”) and Lesaka Fuel, entered into aZAR
400
million Revolving Credit Facility Agreement (“LesakaCapital Loan Document”)
of which ZAR
316.8
million has been utilized as of June 30, 2026.
The LesakaCapital LoanDocument containcustomary covenantsthat requireLesaka Capitaland LesakaFuel tocollectively
maintain a specified capital adequacyratio, restrict the ability of theentities to make certain distributions withrespect to their capital
stock, encumber their assets, incur additional indebtedness, make investments, engage in certain business combinations and engage in
other corporate activities.
Pursuant to the LesakaCapital Loan Document,Lesaka Capital and Lesaka Fuelcollectively may borrow up toan aggregate of
ZAR
400.0
million forthe solepurposes offunding LesakaCapital’sand LesakaFuel’slending business,settling upto ZAR
20.0
million related to an intercompany loan to Lesaka Capital’sdirect parent, and paying structuring and execution fee and legal costs.
Interest is payable on the last business day of each calendar month.
The Companypaid anon-refundable structuringand executionfee ofZAR
0.5
million, excludingvalue addedtaxation, tothe
RMB on closing of the Lesaka Capital Loan Document in September 2025.
Certain merchant finance loans receivable have been pledged as securityfor the revolving credit facility obtained from RMB.
Nedbank facility, comprising short-term facilities
As ofJune 30,2026 andJune 30,2025, theCompany hadutilized ZAR
2.1
million ($
0.1
million) andZAR
2.1
million ($
0.1
million), respectively,of its indirect and derivativefacilities of ZAR
156.6
million (June 30, 2025: ZAR
156.6
million) to enable the
bank to issue guarantees, letters of credit and forward exchange contracts (referto Note 22).
In terms of a commitment provided to the lender under the CTA,the Company has undertaken not to utilize more than ZAR
5.0
million ($
0.3
million) of the Nedbank Facility.
The Companyhas enteredinto cessionand pledgeagreements withNedbank relatedto certainof itsNedbank creditfacilities
(the general bankingfacility and aportion of theindirect facility) andthe Company hasceded and pledgedcertain bank accountsto
Nedbank and also provided a cession of Lesaka SA’sshareholding in Cell C. The funds included in these bank accounts are restricted
as they may not be withdrawn without the express permission of Nedbank.
RMB BridgeFacilities,comprisinga short-termfacilityobtainedin September2024 andamendedin December2024(all
repaid)
On September 30, 2024, Lesaka SA entered into a Facility Letter (the “F2024 Facility Letter”) with RMB to provideLesaka SA
a ZAR
665.0
million fundingfacility (the“Bridge Facility”).The BridgeFacility wasused byLesaka SAto (i)settle anamount of
ZAR
232.2
dueundertheAdumotransaction(refertoNote3);(ii)payCrossfinHoldings(RF)ProprietaryLimited(“Crossfin
Holdings”) ZAR
207.2
million under a share purchase agreement concluded between Lesaka SA and Crossfin Holdings (refer toNote
14); (iii) payan amount ofZAR
147.5
million, which includesinterest, notified byInvestec to Adumoand Lesaka SAas a resultof
the transaction described in Note 3, and (iv) pay an origination fee of ZAR
7.6
million to RMB. The Facility also provided Lesaka SA
with ZAR
70.0
million for transaction-related expenses.
OnDecember10,2024,LesakaSAandRMBenteredintoaFirstAddendumtotheFacilityLetter(the“F2024Addendum
Letter”).The F2024AddendumLetter providedLesaka SAwith anadditional ZAR
250.0
million generalbanking facility(“2024
GBF Facility”) which could be used for general corporate purposes. The Bridge Facility and 2024 GBF Facility were repaid in full on
February 28, 2025, utilizing funding obtained under the CTAand the agreements were cancelled.
Interest on theBridge Facility andthe 2024 GBF Facilitywas calculated atthe prime rateplus
1.80
%. The BridgeFacility and
the 2024GBF Facilitywere unsecuredand wererepaid infull onFebruary 28,2025, thematurity date,pursuant tothe refinancing
process.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-58
12.BORROWINGS (continued)
South Africa (continued)
Cancelled RMB Facilities,as amended, comprising ashort-term facility (Facility E)and long-term borrowings (allrepaid)
On July 21,2017, Lesaka SAentered into aCommon TermsAgreement, SubordinationAgreement, SecurityCession & Pledge
andcertainancillaryloandocuments(collectively,the“OriginalLoanDocuments”)withRMB,aSouthAfricancorporateand
investmentbank, andNedbank Limited(actingthrough itsCorporateand InvestmentBanking division),an Africancorporateand
investment bank (collectively, the “Lenders”).Since 2017, these agreements have been amended to addadditional facilities, including
Facilities G andH, which were obtainedto finance the acquisitionof Connect.Facilities E, G andH have been repaidand cancelled
in February 2025 and there is
no
balance outstanding as of June 30, 2025.
Short-term facility - Facility E
The Companycancelled itsFacility Efacility agreementin November2024. Theoverdraft facilitycould onlybe usedto fund
ATMsand therefore the overdraft utilized and converted to cash to fund the Company’sATMswas considered restricted cash.
Interest onthe overdraftfacility waspayable onthe firstday ofthe monthfollowing utilizationof thefacility andon thefinal
maturity date based on the South Africanprime rate. The overdraft facility amount utilized wasrequired to be repaid in full within
one
month
of utilization and atleast
90
% of the amountutilized was to berepaid within
25 days
. The overdraft facilitywas secured by a
pledge byLesaka SAof, amongother things,cash andcertain bankaccounts utilizedin theCompany’sATMfunding process,the
cessionofLesakaSA’sshareholdinginCellC,thecessionofaninsurancepolicywithSenateTransitUnderwritersManagers
Proprietary Limited, and any rights and claims Lesaka SA had against GrindrodBank Limited.
Long-term borrowings - Facility G and Facility H
On March16, 2023,the Company,through LesakaSA, enteredinto aFifth AmendmentandRestatement Agreement,which
included,amongotheragreements,anAmendedandRestatedCommonTermsAgreement(“ExpiredCTA”),anAmendedand
Restated Senior FacilityG Agreement (“Facility GAgreement”) and anAmended and RestatedSenior Facility HAgreement (“Facility
H Agreement”)(collectively,the “LoanDocuments”) with RMB.Main Street 1692(RF) Proprietary Limited(“Debt Guarantor”),a
SouthAfricancompanyincorporatedforthesolepurposeofholdingcollateralforthebenefitoftheLendersandactingasdebt
guarantor isalso a partyto the LoanDocuments. Pursuantto theFacility GAgreement, LesakaSA wasentitled toborrow upto an
aggregate of approximatelyZAR
708.6
million. Facility G includeda term loan ofZAR
508.6
million and a revolvingcredit facility
of up toZAR
200
million. Pursuant tothe Facility HAgreement, Lesaka SAwas entitled toborrow up toan aggregate ofapproximately
ZAR
357.4
million.
On February 28,2025, the Companyused its new borrowingsto settle FacilityG and FacilityH in full, includingaccumulated
interest of ZAR
201.7
million ($
10.9
million). These facilities, excludingaccrued interest, included (i)Facility G ofZAR
492.1
million
($
26.6
million);(ii) FacilityH ofZAR
350.0
million($
18.9
million);and(iii) aFacility Grevolverof ZAR
200.0
million($
10.8
million) (ofwhich ZAR
199
million ($
10.8
million) hadbeen utilizedat February28, 2025).These facilitieswere repaidin fullon
February 28, 2025,utilizing fundingobtained underthe Expired CTAand the FacilityG and FacilityH agreementswere cancelled.
Amounts translated at rates prevailing on the repayment date. The interest rateon these facilities was JIBAR plus a margin of
4.75
%.
Lesaka SA paid aquarterly commitment fee computed ata rate of
35
% of the ApplicableMargin (as defined in theExpired CTA)
on the amountof the revolvingcredit facility outstanding andsuch commitment fee wascapitalized, subject tothe cap discussedabove.
The Company used cash proceeds of ZAR
64.2
million ($
3.5
million) received from the sale of Finbond shares (refer to Note 9)
during the year ended June 30, 2024, to repay capitalized interest underFacility G and Facility H.
Cancelled Connect Facilities, comprising long-term borrowings anda short-term facility (all repaid)
On March 22,2023, the Company, through CCMS,entered into aFirst Amendment andRestatement Agreement, whichincluded,
among otheragreements, anAmendedand RestatedFacilities Agreement(“CCMS FacilitiesAgreement”)with RMB.The CCMS
Facilities Agreement wasamended to increasethe Facility B availableunder the CCMS FacilitiesAgreement by ZAR
200.0
million
to ZAR
550.0
million. The finalmaturity date wasextended to December31, 2027, andscheduled principal repaymentswere amended,
withthefirstscheduledrepaymentcommencingfromMarch31,2026.ThesefacilitieswererepaidinfullonFebruary28,2025,
utilizing fundingobtained underthe CTAand theagreements cancelled.Prior tosettlement andcancellation, theConnect Facilities
included (i) an overdraftfacility (general bankingfacility) of ZAR
170.0
million ($
9.2
million); (ii) CCMS FacilityA of ZAR
700.0
million ($
37.9
million); (iii) CCMS Facility B of ZAR
550.0
million ($
29.8
million) (both were fully utilized). Amounts translated at
rates prevailing on the repayment date.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-59
12.BORROWINGS (continued)
South Africa (continued)
Cancelled Connect Facilities, comprising long-term borrowings anda short-term facility (all repaid) (continued)
On October29, 2024, theCompany,through CCMS, enteredinto an addendumto a facilityletter with RMB,to obtaina ZAR
100.0
million temporary increase inits overdraft facility fora period of approximatelyfour months to specificallyfund the purchase
of prepaid airtime vouchers.This temporary increase wasrepayable in equal dailyinstalments which commenced atthe end ofOctober
2024 with the final repayment made on February 15, 2025.
In February 2023, the Company,through CCMS, obtained a ZAR
175.0
million temporary increase in its overdraft facility for a
period of
four months
to specificallyfund thepurchase ofprepaid airtimevouchers. Thistemporary increasewas repayablein
four
equal monthly instalments of ZAR
43.8
million and which commencedin March 2023. In May2023, the Company,through CCMS,
obtained a ZAR
155.0
million temporary increasein its overdraft facilityfor a period of
one month
to specifically fund thepurchase
of prepaid airtime vouchers. This temporary increase was repaid in full in June 2023. Interest at the South Africa prime rate less
0.1
%
was payable on a monthly basis on both of these temporary facilities.
Interest on CCMS Facility A and CCMS Facility B was payable quarterlyin arrears based on JIBAR in effect from time to time
plus a margin.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-60
12.BORROWINGS (continued)
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of June 30, 2026, and the movement in the Company’sshort-term
facilities from as of June 30, 2025 to as of June 30, 2026:
RMB
RMB
Nedbank
RMB
RMB
RMB
GBF
Other
Facilities
Connect
Bridge
Facility E
Total
Short-term facilities available as
of June 30, 2026
$
67,702
$
5,534
$
9,542
$
-
$
-
$
-
$
82,778
Overdraft
67,702
-
-
-
-
-
67,702
Indirect and derivative
facilities
-
5,534
9,542
-
-
-
15,076
Movement in utilized overdraft
facilities:
Balance as of June 30, 2024
-
-
-
9,351
-
6,737
16,088
Utilized
27,917
-
-
5,655
41,150
23,894
98,616
Repaid
(4,311)
-
-
(14,627)
(39,205)
(31,028)
(89,171)
Foreign currency adjustment
(1)
863
-
-
(379)
(1,945)
397
(1,064)
Balance as of June 30, 2025
24,469
-
-
-
-
-
24,469
No restrictions as to use
24,469
-
-
-
-
-
24,469
Utilized
123,712
-
-
-
-
-
123,712
Repaid
(129,417)
-
-
-
-
-
(129,417)
Facility fees paid
(252)
-
-
-
-
-
(252)
Facility fees amortized
64
-
-
-
-
-
64
Foreign currency
adjustment
(1)
2,095
-
-
-
-
-
2,095
Balance as of June 30, 2026
20,671
-
-
-
-
-
20,671
No restrictions as to use
20,671
-
-
-
-
-
20,671
Interest rate as of June 30,
2026 (%)
(2)
10.00
Interest rate as of June 30,
2025 (%)
(2)
10.25
Movement in utilized indirect and
derivative facilities:
Balance as of June 30, 2024
-
1,821
116
-
-
-
1,937
Foreign currency
adjustment
(1)
-
43
3
-
-
-
46
Balance as of June 30, 2025
-
1,864
119
-
-
-
1,983
Guarantees cancelled
-
(1,543)
-
-
-
-
(1,543)
Utilized
-
3,588
-
-
-
-
3,588
Foreign currency
adjustment
(1)
-
370
10
-
-
-
380
Balance as of June 30, 2026
$
-
$
4,279
$
129
$
-
$
-
$
-
$
4,408
(1) Represents the effects of the fluctuations between the ZAR and theU.S. dollar.
(2) RMB GBF interest is set at prime less
0.50
%.
Interest expense incurred under the Company’s South African long-term borrowingsand included in the captioninterest expense
ontheconsolidatedstatementofoperationsduringtheyearsendedJune30,2026and2025,was$
2.5
millionand$
4.2
million,
respectively.
TheCompanycancelledAdumo’soverdraftarrangementsonOctober1,2024,andsettledAdumo’soutstandingoverdraft
balance of ZAR
20.0
million ($
1.1
million) on thesame day.The repayment isincluded in thecaption repaymentof bank overdraft
included on the Company’s consolidatedstatements of cash flows for the year ended June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-61
12.BORROWINGS (continued)
Movement in long-term borrowings
Summarized below is the movement in the Company’slong-term borrowing from as of June 30, 2025, to as of June 30, 2026:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
Lesaka
G & H
Connect
A&B
Total
Opening balance as of June 30,
2024
$
-
$
-
$
8,379
$
11,841
$
56,151
$
66,815
$
143,186
Facilities utilized
116,652
54,112
3,184
5,091
11,022
-
190,061
Facilities repaid
-
-
(4,513)
(554)
(60,245)
(65,910)
(131,222)
Non-refundable fees paid
970
-
-
-
-
-
970
Non-refundable fees amortized
248
-
-
21
116
32
417
Capitalized interest
-
-
-
-
5,033
-
5,033
Capitalized interest repaid
-
-
-
-
(11,077)
-
(11,077)
Foreign currency adjustment
(1)
2,505
2,209
129
495
(1,000)
(937)
3,401
Included in current
-
8,448
3,508
-
-
-
11,956
Included in long-term
120,375
47,873
3,671
16,894
-
-
188,813
Opening balance as of June
30, 2025
120,375
56,321
7,179
16,894
-
-
200,769
Facilities utilized
-
-
5,977
972
-
-
6,949
Facilities repaid
-
(8,953)
(4,788)
-
-
-
(13,741)
Non-refundable fees paid
-
-
-
(33)
-
-
(33)
Non-refundable fees
amortized
314
-
5
29
-
-
348
Capitalized interest
-
-
-
-
-
-
-
Capitalized interest repaid
-
-
-
-
-
-
-
Foreign currency
adjustment
(1)
9,902
4,439
632
1,446
-
-
16,419
Closing balance as of
June 30, 2026
130,591
51,807
9,005
19,308
-
-
210,711
Included in current
-
12,190
3,924
-
-
-
16,114
Included in long-term
130,591
39,617
5,081
19,308
-
-
194,597
Unamortized fees
(799)
-
-
(6)
-
-
(805)
Due within 2 years
-
18,285
3,085
19,314
-
-
40,684
Due within 3 years
131,390
21,332
1,694
-
-
-
154,416
Due within 4 years
-
-
302
-
-
-
302
Due within 5 years
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Interest rates as of June 30, 2026
(%):
10.14
10.04
10.75
10.40
-
-
Base rate (%)
6.73
6.73
10.50
10.50
-
-
Credit adjustment spread (%)
0.16
0.16
-
-
-
-
Margin (%)
3.25
3.15
0.25
(0.10)
-
-
Footnote number
(2)(3)
(4)(5)
(6)
(7)
Interest rates as of June 30, 2025
(%):
10.54
10.44
11.50
11.70
-
-
Base rate (%)
7.29
7.29
10.75
10.75
-
-
Margin (%)
3.25
3.15
0.75
0.95
-
-
Footnote number
(3)
(5)
(6)
(8)
(1) Represents the effects of the fluctuations between the ZAR and theU.S. dollar.
(2) From April1, 2026, interest onFacility A is basedon ZARONIA ineffect fromtime to time plusa margin.The margin on
Facility A is determined withreference to the Net Debtto EBITDA Ratio, and themargin will be either (i)
3.25
%, if the Net Debt to
EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
2.50
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Intereston FacilityA was basedon the JIBARin effectfrom timeto time plusan initial marginof
3.25
% per annumuntil
June 30,2025. FromJuly 1,2025,to March31, 2026,the marginon FacilityA wasdetermined withreference tothe NetDebt to
EBITDA Ratio, and the margin would be either (i)
3.25
%, if the Net Debt to EBITDA Ratio was greater than or equal to 2.5 times; or
(
ii)
2.50
%, if the Net Debt to EBITDA Ratio was less than 2.5 times.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-62
12.BORROWINGS (continued)
Movement in long-term borrowings (continued)
(4) From April 1, 2026, interest on Facility B is calculated based on ZARONIA from time to time plusa margin. The margin on
Facility B is determinedwith reference to theNet Debt to EBITDA Ratio,and the margin will beeither (i)
3.15
%, if the Net Debt to
EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
2.40
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
(5) Interest on Facility B was calculated based on JIBAR from time to time plus an initial margin of
3.15
% per annum until June
30, 2025. From July 1, 2025, to March 31, 2026, the margin on Facility B was determined with reference to the NetDebt to EBITDA
Ratio, and the margin would beeither (i)
3.15
%, if the NetDebt to EBITDA Ratiowas greater than or equalto 2.5 times; or(ii)
2.40
%,
if the Net Debt to EBITDA Ratio was less than 2.5 times.
(6) Interest is charged at prime plus
0.75
% per annum on the utilized balance.
(7) Interest is charged at prime less
0.10
% per annum on the utilized balance.
(8) Interest was charged at prime plus
0.95
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in thecaption interest expense
on the consolidatedstatement of operationsduring the yearsended June 30,2026, 2025and 2024, was$
14.4
million, $
16.9
million
and $
16.1
million, respectively.Prepaid facilityfees amortizedincludedin interestexpense duringthe yearsended June30, 2026,
2025 and 2024, was $
0.3
million, $
0.4
million and $
0.4
million, respectively.
InterestexpenseincurredundertheCompany’sSouthAfricanlong-termborrowingsto fundits Consumerlending bookand
Lesaka Capital’s merchant finance loans receivable areincluded in the captioncost of goodssold, IT processing, servicing andsupport
on the consolidated statement of operations.Total interest expense incurred relatedto the Consumer lending book (for the year ended
June 30,2026 andthe fourmonths endedJune 30,2025)and interestincurred underthe LesakaCapital’smerchant financeloans
receivable was $
7.2
million, $
2.9
million, and $
1.4
, for the years ended June 30, 2026, 2025 and 2024, respectively.
The CompanycancelledAdumo’slong-termborrowings arrangementson October1, 2024,and settledAdumo’soutstanding
balancesof ZAR
126.7
million($
7.2
million) onthe sameday.The repaymentis includedin thecaptionrepayment oflong-term
borrowings included on the Company’sconsolidated statements of cash flows for the year ended June 30, 2025.
13.OTHER PAYABLES
Summarized below is the breakdown of other payables as of June 30,2026 and 2025:
June 30,
June 30,
2026
2025
Vendorwallet balances
$
35,154
$
19,529
Accruals
10,562
8,469
Clearing accounts
9,682
6,766
Provisions
12,076
8,497
Value-added tax payable
(A)
6,668
6,347
Payroll-related payables
1,798
1,931
Deferred consideration due to seller of Utilities (Note 3)
-
13,837
Other
7,322
10,659
$
83,262
$
76,035
(A) Value-addedtax payable and the total of Other payables as of June 30, 2025, have each increased by $
4.0
million as a result
of the correction discussed in Note 1.
Clearing accounts and vendor walletbalances may fluctuate due to theday (weekend or public holiday)on which the Company’s
quarter or yearend fallsbecause certain elementsof transactionswithin these accountsare notsettled over weekendsor publicholidays.
Other includes deferred income, client deposits and other payables.
In December 2025,the Company determinedthat the liquidationof CPS is atan advanced stageand released anaccrual raised
at the time ofdeconsolidation. The release hasbeen included in thecaption “Other income” inthe consolidated statement of operations
f
or the year ended June 30, 2026.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-63
14.COMMON STOCK
Common stock
Holders of shares of Lesaka’s common stock are entitled to receive dividends and other distributions when declared by Lesaka’s
board ofdirectors outof legallyavailable funds.Payment ofdividends anddistributions issubject tocertain restrictionsunder the
Florida Business Corporation Act, includingthe requirement that after makingany distribution Lesaka must beable to meet its debts
as they become due inthe usual course ofits business. Upon voluntary orinvoluntary liquidation, dissolution or winding upof Lesaka,
holders ofcommon stockshare ratablyin theassets remainingafter paymentsto creditorsand provisionfor thepreference ofany
preferredstockaccordingtoitsterms.Therearenopre-emptiveorothersubscriptionrights,conversionrightsorredemptionor
scheduled installment payment provisions relating to sharesof common stock. All ofthe outstanding shares of common stockare fully
paid and non-assessable.
Each holder ofcommon stock isentitled to onevote per sharefor the electionof directors andfor all othermatters to bevoted
on by shareholders. Holdersof common stock maynot cumulate theirvotes in theelection of directors, andare entitled toshare equally
and ratably in the dividends that may be declared by the board of directors, but only after payment of dividends required to be paid on
outstanding shares of preferred stock according to its terms. The shares ofLesaka common stock are not subject to redemption.
Issue of shares to Lesaka Cash Management sellers pursuant toApril 2022 transaction
The total purchase considerationpursuant to the LesakaCash Management acquisitionin April 2022 includes
3,185,079
shares
of the Company’scommon stock. These shares ofcommon stock were issued in
three
equal tranches on each ofthe first, second and
third anniversaries of the April 14, 2022 closing. The Company legally issued
1,061,693
shares of its common stock, representing the
third and second tranche, to the Lesaka CashManagement sellers in each of April 2025 and 2024,respectively, and this had no impact
on the number of shares,net of treasury,presented in the consolidatedstatement of changes inequity during the yearended June 30,
2025and2024,respectivelybecausetheseshareswereincludedinthe
3,185,079
shares includedinthenumberof shares,netof
treasury, as of June 30, 2025and 2024.
Impact of non-vested equity shares on number of shares,net of treasury
The Company’snumber ofshares, netof treasury,presented inthe consolidatedbalance sheetsand consolidatedstatement of
changes inequity includesparticipating non-vestedequity shares (specificallycontingently returnableshares) as describedbelow in
Note17“—AmendedandRestatedStockIncentivePlan—RestrictedStock—GeneralTermsofAwards”.Thefollowingtable
presents a reconciliationbetween the numberof shares, net oftreasury,presented in theconsolidated statement ofchanges in equity
and thenumber ofshares, netof treasury,excluding non-vestedequity sharesthat havenot vestedduring theyears endedJune 30,
2026, 2025 and 2024:
2026
2025
2024
Number of shares, net of treasury:
Statement of changes in equity – common stock
83,306,794
81,249,097
64,272,243
Less: Non-vested equity shares that have not vested as of end of year (Note 17)
2,462,188
2,169,900
2,084,946
Number of shares, net of treasury excluding non-vested equity shares that have
not vested
80,844,606
79,079,197
62,187,297
Redeemable common stock issued pursuant to transaction with the IFC Investors
Holders of redeemable commonstock have all the rights enjoyed byholders of common stock, however,holders of redeemable
commonstockhaveadditionalcontractualrights.OnApril11,2016,theCompanyenteredintoaSubscriptionAgreement(the
“Subscription Agreement”)with InternationalFinance Corporation(“IFC”), IFCAfrican, LatinAmerican andCaribbean Fund,LP
(“ALAC”),IFCFinancialInstitutionsGrowthFund,LP,andAfricaCapitalizationFund,Ltd.(collectively,the“IFCInvestors”).
Under the Subscription Agreement, the IFC Investors purchased,and the Company sold in the aggregate, approximately
9.98
million
shares of the Company’s common stock, par value $
0.001
per share, at a price of $
10.79
per share, for gross proceeds to the Company
of approximately$
107.7
million. The Companyaccounted forthese
9.98
million sharesas redeemablecommon stockas a resultof
the put option discussed below.
On May19, 2020,the AfricaCapitalization Fund,Ltd soldits entireholding of
2,103,169
shares ofthe Company’scommon
stock andtherefore theadditional contractualrights, includingthe putoption rightsrelated tothese
2,103,169
shares, expired.The
Company reclassified $
22.7
million related tothese
2,103,169
shares sold fromredeemable common stockto additional paid-in-capital
during the year ended June 30, 2020.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-64
14.COMMON STOCK (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors (continued)
During theyear endedJune 30,2026, ALAC,made numerousfilings onForm 4Statement ofBeneficial Ownershipwith the
United States Securities and ExchangeCommission reporting that ALAChad sold an aggregate of
925,352
shares of the Company’s
common stock and therefore the additional contractual rights, includingthe put option rights related to these
925,352
shares, expired.
The Companyreclassified $
10.0
million relatedto these
925,352
shares soldfrom redeemablecommon stockto additionalpaid-in-
capital during the year ended June 30, 2026.
On August 19, 2022, the IFC Investorsfiled an amended Form13D/A, amendment no. 2,with the UnitedStates Securities and
ExchangeCommissionreportingthatinOctober2017andFebruary2018,theIFCsoldanaggregateof
514,376
sharesofthe
Company’scommonstockand thereforetheadditionalcontractualrights,includingthe putoptionrightsrelatedtothese
514,376
shares,expired.TheCompanyreclassified$
5.6
millionrelatedtothese
514,376
sharessoldfromredeemablecommonstockto
additional paid-in-capital during the year ended June 30, 2022.
The Company has enteredinto a Policy Agreement withthe IFC Investors (the“Policy Agreement”). Thematerial terms of the
Policy Agreement are described below.
CertainIFCInvestorswereinvestorsinAdumoandtheCompanyissuedanaggregateof
1,989,162
additionalsharesofits
common stock at a price of $
4.79
to these IFC Investors pursuant to the Purchase Agreement (refer to Note 3). The Companyand the
IFC Investors amendedand restated thePolicy Agreement(“Amended andRestated Policy Agreement”)to include theseadditional
shares issued tothe IFC Investorsto also becovered by theput right includedin the Amendedand Restated PolicyAgreement. The
Company also accounted for these
1,989,162
shares as redeemable common stock as a result of the put option.
Board Rights
For so long as the IFC Investors in aggregate beneficially own shares representing at least
5
% of the Company’s common stock,
the IFC Investors will have the right to nominate one director to the Company’s board of directors. For so long as the IFC Investors in
aggregate beneficiallyown shares representingat least
2.5
% of theCompany’scommon stock,the IFC Investorswill have theright
to appointan observerto theCompany’sboard ofdirectors atany timewhen theyhave notdesignated, ordo nothave theright to
designate, a director.
Put Option
Each IFC Investor will havethe right, upon the occurrence of specifiedtriggering events, to require the Companyto repurchase
all of the sharesof its common stock purchased bythe IFC Investors pursuant tothe Subscription Agreement (or upon exerciseof their
preemptive rightsdiscussed below).Events triggeringthis putright relateto (1)the Companybeing thesubject ofa governmental
complaint alleging, a court judgment finding or an indictment alleging that the Company (a) engaged in specified corrupt,fraudulent,
coercive, collusive or obstructive practices; (b) entered into transactions with targets of economic sanctions; or (c) failed to operate its
business in compliance with anti-money laundering and anti-terrorism laws; or (2) the Company rejecting a bona fide offer to acquire
all of its outstanding Common Stock at a time when it has in place or implements a shareholder rights plan, or adopting a shareholder
rights plan triggered by a beneficial ownershipthreshold of less than
twenty
percent. The put price per share willbe the higher of the
price pershare paidby theIFC Investorspursuant tothe SubscriptionAgreement (orpaid whenexercising theirpreemptive rights)
and thevolume weightedaverage priceper shareprevailing forthe
60
trading dayspreceding thetriggering event,except thatwith
respect to a put right triggered by rejection of a bona fide offer, the put price per share will be the highest price offeredby the offeror.
The Company believes that theput option has novalue and, accordingly, has not recognized the putoption in its consolidatedfinancial
statements.
Registration Rights
The Company has agreedto grant certain registrationrights to the IFC Investorsfor the resale of theirshares of the Company’s
common stock, including filing a resale shelf registration statement andtaking certain actions to facilitate resales thereunder.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-65
14.COMMON STOCK (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors (continued)
Preemptive Rights
For so long as the IFC Investors hold inaggregate
5
% of the outstanding shares of common stock ofthe Company, each Investor
will have the right to purchase its pro-rata share of new issuances of securities by the Company,subject to certain exceptions.
Common stock repurchases
October 2024 repurchase of common stock and issue of shares in Utilities transaction
On October1, 2024,the Company,through LesakaSA, andCrossfin Holdingsentered intoa sharepurchase agreementunder
which Lesaka SA purchased
2,601,410
of the
3,587,332
Consideration Shares for ZAR
207.2
million ($
12.0
million). The transaction
was settled in early October 2024, and the shares of the Company’s common stock repurchased have been included in the Company’s
treasurysharesincludedinitsconsolidatedstatementofchangesinequityfortheyearendedJune30,2025,respectively.The
repurchase was made outside of the Company’sthen $
100
million share repurchase authorization.
The Company, through Lesaka SA, issued
1,092,361
of the
2,601,410
shares of the Company’s common stock tothe Seller under
the termsof RechargerPurchase Agreementdescribed inNote 3during theyear endedJune 30,2025. TheCompany recognizeda
gain of$
0.4
million on issuanceof these whichis included inthe captionadditional paid-in-capitalin the consolidatedstatement of
changes in equity for the year ended June 30, 2025. InMarch 2026, Lesaka SA delivered
1,017,914
shares of the
2,601,410
shares of
the Company’scommon stockto theSeller underthe termsof RechargerPurchase Agreement.The Companyrecognized aloss in
additional paid-in-capital of $
0.1
million during the year ended June 30, 2026, related tothe difference between in the value on March
3, 2026, and the price paid per share in October 2024.
Acquisition of Lesaka Hospitality non-controllinginterests
During the yearended June 30,2026, the Companyacquired all of theissued share capital ofLesaka Hospitality thatit did not
previously own for approximately $
6.5
million, which was settled utilizingcash of $
3.5
million and the transfer of
662,714
shares of
Lesaka’s common stock with a fair value of $
3.0
million on closing on March 6,2026. The
662,714
shares of the Company’s common
stock weresourced fromthe
2,601,410
shares ofthe Company’scommon stockreferred toabove andshares acquiredin December
2025.TheCompanyrecognizeda gaininadditional paid-in-capitalof $
0.1
millionrelatedto thedifferencebetweenthevalueon
March 6, 2026, and the price paid per share in October 2024 and December 2025, respectively. The acquisition of the non-controlling
interests was accounted for as anequity transaction with a non-controlling interestand accordingly
no
gain or loss was recognized in
the Company’sconsolidated statement ofoperations. The carryingamount of thenon-controlling interestwas adjusted toreflect the
change in ownership interest in Lesaka Hospitality. The difference between the fair value of the consideration paid and the amount by
which the non-controlling interest was adjusted, of $
0.4
million, was recognized in, and increased, total Lesaka equity.
Executed under share repurchase authorizations
OnSeptember 2, 2025,theCompany’sBoardofDirectorsapprovedasharerepurchaseauthorizationtorepurchaseuptoan
aggregate of $
15
million of common stock. The authorization has no expiration date. This share repurchase authorization replaces our
$
100
millionshare repurchaseauthorizationwhichwas approvedon February5, 2020. Theshare repurchaseauthorizationwill be
used at management’s discretion, subject to limitations imposed bySEC Rule 10b-18 and otherlegal requirements and subject toprice
andotherinternallimitationsestablishedbytheBoard.RepurchaseswillbefundedfromtheCompany’savailablecash.Share
repurchases may bemade through open-marketpurchases, privately negotiatedtransactions, or both.There can beno assurance that
the Company willpurchase any sharesor anyparticular number ofshares. The authorizationmay be suspended,terminated or modified
at any time forany reason, including marketconditions, the cost ofrepurchasing shares, liquidityand other factors thatmanagement
deemsappropriate.TheCompanydid
no
trepurchaseanyofitssharesduringtheyearsendedJune30,2026,2025,and2024,
respectively, under the share repurchaseauthorization, however, it did repurchase
84,758
,
371,187
and
319,522
shares of its common
stockfromitsemployeesduringtheyearsendedJune30,2026,2025,and2024,respectively,refertoNote17foradditional
i
nformation regarding these repurchases.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-66
15.ACCUMULATED OTHERCOMPREHENSIVE LOSS
The table belowpresents the changein accumulated othercomprehensive (loss) incomeper component duringthe years ended
June 30, 2026, 2025 and 2024:
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2023
(A)
$
(195,516)
$
(195,516)
Release of foreign currency translation reserve related to liquidation of subsidiaries
(952)
(952)
Release of foreign currency translation reserve: disposal of Finbondequity securities
(Note 9)
1,543
1,543
Movement in foreign currency translation reserve related to equity-accounted
investment
489
489
Movement in foreign currency translation reserve
(A)
6,209
6,209
Balance as of June 30, 2024
(A)
(188,227)
(188,227)
Release of foreign currency translation reserve related to liquidation of subsidiaries
6
6
Movement in foreign currency translation reserve
(B)
2,595
2,595
Balance as of June 30, 2025
(B)
(185,626)
(185,626)
Release of foreign currency translation reserve related to impairment of equity-
accounted investment (Note 9)
550
550
Release of foreign currency translation reserve related to liquidation of subsidiaries
(516)
(516)
Movement in foreign currency translation reserve
(C)
19,273
19,273
Balance as of June 30, 2026
(C)
$
(166,319)
$
(166,319)
(A) Accumulated othercomprehensive loss andTotal asof July 1, 2023,have each decreased by$
0.2
million as a resultof the
correction discussed inNote 1.Accumulated other comprehensiveloss andTotal for the yearended June 30,2024, have eachdecreased
by $
0.08
million as a result of the correction discussed in Note 1 to the amount included in the caption Movement in foreign currency
translation reserve. Accumulatedother comprehensive loss andTotal asof June 30, 2024, haveeach decreased by $
0.29
million as a
result of the correction discussed in Note 1.
(B) Accumulated other comprehensive loss and Total for the year ended June 30, 2025, have each decreased by $
0.09
million as
a result of the correction discussed in Note 1 to the amount included in the caption Movement inforeign currency translation reserve.
Accumulated other comprehensive lossand Total as ofJune 30,2025, have eachdecreased by $
0.22
million as aresult of thecorrection
discussed in Note 1.
(C) Accumulated other comprehensive loss and Totalfor the year ended June 30, 2026, have eachincreased by $
0.1
million as
a resultof thecorrection, asdiscussed inNote 1,to theamount includedin thecaption Movementin foreigncurrency translation
reserve for thethree months endedSeptember 30, 2025. Accumulatedother comprehensive lossand Totalas of June 30,2026, have
each increased by $
0.1
million as a result of the correction discussed in Note 1.
The movement in theforeign currency translation reserve representsthe impact of translationof consolidated entities which have
a functional currency (which is primarily ZAR) to the Company’sreporting currency, which is USD.
During theyear endedJune 30, 2026,the Companyreclassified losses of$
0.6
million from accumulatedother comprehensive
loss (accumulatedforeign currencytranslation reserve)to netloss relatedto theimpairmenton liquidationof anequity-accounted
investment. During the year ended June 30, 2026, the Company reclassified an aggregate gain of $
0.5
million from accumulated other
comprehensiveloss(accumulatedforeigncurrencytranslationreserve)tonetlossrelatedtothedisposalofasubsidiaryandthe
liquidation of a subsidiary. During the year ended June 30, 2025, the Company reclassified a loss of $
0.006
million from accumulated
othercomprehensiveloss(accumulatedforeigncurrencytranslationreserve)tonetlossrelatedtotheliquidationofsubsidiaries.
During the yearended June 30,2024, the Company reclassified$
1.5
million from accumulatedother comprehensive loss (accumulated
foreigncurrencytranslationreserve)tonetloss relatedtothedisposalofsharesinFinbond(refertoNote9).TheCompanyalso
reclassified a gainof $
1.0
million from accumulatedother comprehensive loss(accumulated foreigncurrency translation reserve)to
n
et loss related to the liquidation of subsidiaries during the year ended June 30,2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-67
16.REVENUE
The Companyis aprovider ofdigitized cashmanagement solutionsand merchantacquiring services,including anintegrated
platform forthe distributionof ADP(including value-addedservices suchas prepaidairtime, prepaidelectricity andbill payment);
softwaresolutions,transaction processingservices; financialinclusion productsand services,andsecure paymenttechnology.The
Companyoperatesasapaymentprocessorin SouthAfrica.TheCompanyoffersdebit,creditandprepaidprocessingandissuing
services forall majorpayment networks.In SouthAfrica, theCompany providesinnovative low-costfinancial inclusionproducts,
including banking, lending and insurance.
The Company analyzes its business under a “product” view,for example, its acquiring activities in Merchant are allocatedto an
acquiring product viewfor Merchant. TheCompany has updatedits disaggregation ofrevenue disclosures toalign with this product
view. Comparativeperiods have been recast.
Disaggregation of revenue
Thefollowingtablerepresentsourrevenuedisaggregatedbymajorrevenuestreams,includingreconciliationtooperating
segments for the year ended June 30, 2026:
Merchant
Consumer
Enterprise
Total
ADP
$
367,574
$
205
$
52,038
$
419,817
South Africa
325,696
205
52,038
377,939
Rest of world
41,878
-
-
41,878
Transactional fees
-
50,443
-
50,443
Acquiring
46,776
-
-
46,776
South Africa
46,776
-
-
46,776
Rest of world
-
-
-
-
Cash
41,604
-
-
41,604
Software
22,139
-
-
22,139
Utilities
-
-
15,002
15,002
Other
18,350
802
5,878
25,030
South Africa
17,757
802
5,878
24,437
Rest of world
593
-
-
593
Totalrevenue under ASC 606, derived from the
following geographic location
496,443
51,450
72,918
620,811
South Africa
453,972
51,450
72,918
578,340
Rest of world
42,471
-
-
42,471
Lending
9,750
57,618
-
67,368
South Africa
9,688
57,618
-
67,306
Rest of world
62
-
-
62
Insurance
-
33,375
-
33,375
Totalnon-ASC 606 revenue, derived from the
following geographic location
9,750
90,993
-
100,743
South Africa
9,688
90,993
-
100,681
Rest of world
62
-
-
62
Totalrevenue, derived from the following
geographic locations
506,193
142,443
72,918
721,554
South Africa
463,660
142,443
72,918
679,021
Rest of world
$
42,533
$
-
$
-
$
42,533
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-68
16.REVENUE (continued)
Thefollowingtablerepresentsourrevenuedisaggregatedbymajorrevenuestreams,includingreconciliationtooperating
segments for the year ended June 30, 2025:
Merchant
Consumer
Enterprise
Total
ADP
$
404,317
$
-
$
30,512
$
434,829
South Africa
370,009
-
30,512
400,521
Rest of world
34,308
-
-
34,308
Transactional fees
-
39,506
82
39,588
Cash
43,723
-
-
43,723
Acquiring
32,507
-
-
32,507
South Africa
32,507
-
-
32,507
Rest of world
-
-
-
-
Software
14,872
-
-
14,872
Utilities
-
-
4,027
4,027
Other
19,663
530
4,820
25,013
South Africa
19,173
530
4,820
24,523
Rest of world
490
-
-
490
Totalrevenue under ASC 606, derived from the
following geographic location
515,082
40,036
39,441
594,559
South Africa
480,284
40,036
39,441
559,761
Rest of world
34,798
-
-
34,798
Lending
9,170
35,920
-
45,090
South Africa
9,113
35,920
-
45,033
Rest of world
57
-
-
57
Insurance
-
20,052
-
20,052
Totalnon-ASC 606 revenue, derived from the
following geographic location
9,170
55,972
-
65,142
South Africa
9,113
55,972
-
65,085
Rest of world
57
-
-
57
Totalrevenue, derived from the following
geographic locations
524,252
96,008
39,441
659,701
South Africa
489,397
96,008
39,441
624,846
Rest of world
$
34,855
$
-
$
-
$
34,855
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-69
16.REVENUE (continued)
Thefollowingtablerepresentsourrevenuedisaggregatedbymajorrevenuestreams,includingreconciliationtooperating
segments for the year ended June 30, 2024:
Merchant
Consumer
Enterprise
Total
ADP
$
390,041
$
-
$
31,064
$
421,105
South Africa
363,879
-
31,064
394,943
Rest of world
26,162
-
-
26,162
Cash
40,319
-
-
40,319
Transactional fees
-
31,238
-
31,238
Acquiring
12,642
-
-
12,642
Other
4,790
76
7,878
12,744
South Africa
4,379
76
7,878
12,333
Rest of world
411
-
-
411
Totalrevenue under ASC 606, derived from the
following geographic location
447,792
31,314
38,942
518,048
South Africa
421,219
31,314
38,942
491,475
Rest of world
26,573
-
-
26,573
Lending
8,277
25,140
-
33,417
South Africa
8,222
25,140
-
33,362
Rest of world
55
-
-
55
Insurance
-
12,757
-
12,757
Totalnon-ASC 606 revenue, derived from the
following geographic location
8,277
37,897
-
46,174
South Africa
8,222
37,897
-
46,119
Rest of world
55
-
-
55
Totalrevenue, derived from the following
geographic locations
456,069
69,211
38,942
564,222
South Africa
429,441
69,211
38,942
537,594
Rest of world
$
26,628
$
-
$
-
$
26,628
17.STOCK-BASED COMPENSATION
Amended and Restated Stock Incentive Plan
The Company’sAmended andRestated 2022Stock IncentivePlan (“2022Plan”) wasmost recentlyamended andrestated on
November 16, 2022.On each of April 11,2024, and September2, 2025, respectively,the Company’sBoard amended the 2022Plan
to increase the number of shares availablefor issuance by
3,000,000
(for a total increase of
6,000,000
). On each of June 3, 2024, and
December 8, 2025, respectively,the Company’s shareholders approvedthe amendment.
No evergreen provisions are included in the 2022 Plan. This means that the maximum number ofshares issuable under the 2022
Plan is fixed andcannot be increased withoutshareholder approval, the2022 Plan expires byits terms upon aspecified date, andno
new stock optionsare awarded automaticallyupon exercise ofan outstandingstock option. Shareholderapproval is requiredfor the
repricing of awardsor theimplementation of anyaward exchangeprogram. The Planpermits Lesaka togrant toits employees,directors
andconsultantsincentivestockoptions,nonqualifiedstockoptions,stockappreciationrights,restrictedstock,performance-based
awardsandotherawardsbasedonitscommonstock.TheRemunerationCommitteeoftheCompany’sBoardofDirectors
(“Remuneration Committee”) administers the 2022 Plan.
The totalnumber ofshares ofcommon stockissuable underthe 2022Plan is
19,552,580
. Themaximum numberof sharesfor
which stockoptions, stockappreciation rights(other thanperformance-based awardsthat arenot options)may begranted duringa
calendar year to anyparticipant is
600,000
shares. Shares covered byawards that expire, terminateor lapse without paymentwill again
be availablefor the grantof awards underthe 2022 Plan,as well asshares that aredelivered tous by theholder topay withholding
taxesoraspaymentfortheexercisepriceofanaward,ifpermittedbytheRemunerationCommittee.Thesharesdeliverablein
connection withawards grantedunder the2022 Planmay consist, inwhole orin part,of authorizedbut unissuedshares ortreasury
shares. Toaccount forstock splits,stock dividends,reorganizations,recapitalizations,mergers,consolidations,spin-offsandother
corporate events, the 2022Plan requires the RemunerationCommittee to equitablyadjust the number andkind of shares ofcommon
stock issued or reserved pursuant to the2022 Plan or outstanding awards, the maximumnumber of shares issuable pursuant to awards,
the exercise price for awards, and other affected terms of awards to reflect such event. No awards may begranted under the 2022 Plan
a
fter September 7, 2032, but awards granted on or before such date mayextend to later dates.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-70
17.STOCK-BASED COMPENSATION(continued)
Amended and Restated Stock Incentive Plan (continued)
Options
General Terms ofAwards
Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant,
with vesting conditioned upon the recipient’s continuous service through the applicable vesting date and expire
10
years after the date
of grant. The options generally become exercisable in accordance with avesting schedule ratably over a period of
three years
from the
date of grant. The Company issues new shares to satisfy stock option award exercises but mayalso use treasury shares.
ValuationAssumptions
Thefairvalueofeachoptionisestimatedonthedateofgrantusing theCoxRossRubinsteinbinomialmodelthatuses the
assumptions notedin thetable below.The estimatedexpected volatilityis calculatedbased onthe Company’s
730
,
1095
and
1460
-
day volatility (as applicable).The estimated expected life of the option was determined based on the historical behavior of employees
who weregranted optionswith similarterms.
No
stock optionswere grantedduring theyear endedJune 30,2026. Thetable below
presents the range of assumptions used to value options granted during the yearsended June 30, 2025 and 2024:
2025
2024
Expected volatility
43
%
56
%
Expected dividends
0
%
0
%
Expected life (in years)
2.0
5.0
Risk-free rate
4.32
%
2.09
%
Restricted Stock
General Terms ofAwards
Shares of restricted stock areconsidered to be participating non-vested equity shares(specifically contingently returnable shares)
for thepurposes ofcalculating earnings pershare (referto Note19) because, asdiscussed inmore detailbelow, the recipient isobligated
to transfer any unvestedrestricted stock back tothe Company for noconsideration and these sharesof restricted stock areeligible to
receive non-forfeitabledividend equivalentsat thesame rate ascommon stock.Restricted stockgenerally vestsratably overa
three
year
period, withvesting conditionedupon therecipient’scontinuous servicethrough theapplicable vestingdate andunder certain
circumstances, the achievement of certain performance targets,as described below.
RecipientsareentitledtoallrightsofashareholderoftheCompanyexceptasotherwiseprovidedintherestrictedstock
agreements. Theserights include theright to voteand receive dividendsand/or otherdistributions,however, anyor all dividendsor
otherdistributionspaidrelatedtorestrictedstockduringthe periodofsuchrestrictionsshallbeaccumulated(withoutinterest)or
reinvested in additional shares of common stock, which in either case shall be subject to the same restrictions as the underlying award
or such other restrictions as the RemunerationCommittee may determine.The restricted stock agreements generallyprohibit transfer
of anynonvested andforfeitable restrictedstock. If arecipient ceasesto bea memberof theBoard ofDirectors oran employeefor
any reason, allshares of restrictedstock that arenot then vestedand non-forfeitablewill be immediatelyforfeited and transferredto
the Companyfor no consideration,except as otherwiseagreed betweenthe parties.Forfeited sharesof restrictedstock areavailable
for future issuances by the Remuneration Committee.
The Company issues new shares to satisfy restricted stock awards.
ValuationAssumptions
The fair valueof restricted stockis generally basedon the closingprice of theCompany’s stockquoted on TheNasdaq Global
Select Market on the date of grant.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-71
17.STOCK-BASED COMPENSATION(continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock (continued)
Market Conditions - Restricted Stock Granted in November 2025
In November2025, theCompany awarded
245,000
shares ofrestricted stockto agroup comprisingemployees andwhich are
subject to a time-based vesting condition and a market condition and vest in full only on the date, if any, that the following conditions
are satisfied: (1) a compounded annual
15
% appreciation in the Company’s stock price off a baseprice of $
4.31
over the measurement
period commencing on November 1, 2025 through October 31, 2028, and(2) the recipient is employed by theCompany on a full-time
basis through to October 31, 2028. If either of these conditions is not satisfied, then none of the shares ofrestricted stock will vest and
they will be forfeited. The Company’sclosing price on October 31, 2025, was $
4.30
.
The appreciation levels (times and price) andannual target percentages to earn theawards as of each periodended are as follows:
●
Prior to the first anniversary of the grant date:
0
%;
●
Fiscal2027,theCompany’s30-dayvolumeweighted-averagestockprice(“VWAP”)beforeOctober31,2026is
approximately
1.15
times higher (i.e. $
4.96
or higher) than $
4.31
:
33
%;
●
Fiscal 2028, the Company’sVWAP beforeOctober 31, 2027 is
1.32
times higher (i.e. $
5.70
or higher) than $
4.31
:
67
%;
●
Fiscal 2029, the Company’sVWAP beforeOctober 31, 2028 is
1.52
times higher (i.e. $
6.55
) than $
4.31
:
100
%.
The fair valueof these sharesof restrictedstock was calculatedusing a MonteCarlo simulation. Inscenarios wherethe shares
do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share
price onvesting date.In its calculationof thefair valueof therestricted stock,the Companyused anequally weightedvolatility of
41.2
% forthe closingprice (of$
4.35
), adiscounting basedon U.S.dollar overnightindexed swaprates forthe grantdate, andno
future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log
prices for the three years preceding the grant date.
Restricted Stock Units
The Remuneration Committeemay approve thegrant of otherstock-based awards. InApril 2022, theCompany granted
1,250,486
sharesofrestrictedstocktoemployeesofConnectpursuanttothetermsoftheacquisition.Theawardincludedanequalization
mechanism tomaintain areturn of$
7.50
per shareof restrictedstock uponvesting throughthe issueof restrictedstock units.The
conversion of restricted stock units to shares cannot exceed
50
% under the terms of the award and therefore no more than
625,243
(or
1,250,486
divided by two) would beissued upon vesting. Duringthe years ended June 30, 2025and 2024, respectively,
380,775
and
388,908
shares of restrictedstock vested, and
190,378
and
194,454
restricted stock unitsvested, the maximum amountpossible, and
wereconvertedtosharesofcommonstock.Employeeselectedfor
173,354
and
166,087
sharestobewithheldfrom
173,468
and
166,167
restricted stock units which vested, and which were converted to shares, inorder to satisfy the withholding tax liability on the
vestingof theseand othershares. The
173,354
and
166,087
shares havebeen includedas areductionof theCompany’sshares of
common stock (these shares were included in treasury shares prior to the recastdiscussed in Note 1).
Stock Appreciation Rights
The Remuneration Committee may also grant stock appreciation rights, eithersingly or in tandem with underlying stockoptions.
Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock
(as determined by the Remuneration Committee)equal in value to theexcess of the fairmarket value of the sharescovered by the right
over the grant price.
No
stock appreciation rights have been granted.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-72
17.STOCK-BASED COMPENSATION(continued)
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the years endedJune 30, 2026, 2025 and 2024:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - July 1, 2023
673,274
4.37
5.14
239
1.67
Granted – June 2024
500,000
3.50
5.17
880
1.76
Granted – June 2024
1,000,000
6.00
4.60
1,690
1.69
Granted – June 2024
1,000,000
8.00
4.60
1,300
1.30
Granted – June 2024
1,000,000
11.00
4.60
920
0.92
Granted – June 2024
1,000,000
14.00
4.60
685
0.69
Exercised
(54,287)
2.25
-
71
-
Forfeited
(200,739)
3.96
-
1.42
Outstanding - June 30, 2024
4,918,248
8.70
4.51
889
1.77
Granted – December 2024
350,000
6.00
2.00
433
1.24
Granted – December 2024
250,000
8.00
2.00
177
0.71
Granted – January 2025
100,000
8.00
2.00
71
0.71
Granted – January 2025
150,000
11.00
2.00
107
0.71
Granted – January 2025
150,000
14.00
2.00
123
0.82
Exercised
(38,011)
3.02
-
72
-
Forfeited
(13,333)
11.23
-
8.83
Outstanding - June 30, 2025
5,866,904
8.71
3.55
703
1.20
Exercised
(21,196)
3.02
-
41
-
Outstanding - June 30, 2026
5,845,708
8.73
2.29
979
1.20
These options have an exercise price range of $
3.01
to $
14.00
.
No
stock optionswere awardedduringthe yearended June30, 2026.The Companyawarded
1,000,000
and
4,500,000
stock
options to employees during the years ended June 30, 2025and 2024, respectively.
The Company awarded
1,000,000
stock options during theyear ended June 30, 2025with strike prices rangingfrom $
6
to $
14
.
These stock optionswill vest on December31, 2026, and vestingis subject to theexecutive officers continuedemployment with the
Company through to the vesting date. The
1,000,000
stock options expire on January 31, 2029.
The
4,500,000
stock options awardedduring the yearended June 30,2024, were awardedto Mr.Mazanderani, the Company’s
Executive Chairman, and
500,000
of these stock options were granted pursuant to the 2022 Plan and
4,000,000
were granted pursuant
to shareholder approval which wasobtained on June 3, 2024. The
500,000
options vested on December 3, 2024,the first anniversary
of the grant date, and were subject to Mr. Mazanderani’s continued services as Executive Chair through the vesting date. The
500,000
options were scheduledto vest immediatelyif Mr.Mazanderani’s employmentwas terminated bythe Company without causeon or
before the first anniversary of the grant date. In March 2025, the Company’s Remuneration Committee amended the exercise terms of
the
500,000
stock options frombeing exercisable duringa period commencingfrom January 31,2028 to January31, 2029, tobeing
exercisable from March 2025, however,any stock options exercised may only be sold during a periodcommencing from January 31,
2028 to January 31, 2029. The
4,000,000
options vested on January 31, 2026, and were subject to Mr. Mazanderani’s ongoing service
through to thisdate. The
4,000,000
stock options mayonly be exercisedduring a periodcommencing from January31, 2028 toJanuary
31, 2029.
On August 3, 2026, the Company awarded Mr. Mazanderani, an option to purchase
1,000,000
shares of the Company’s common
stock at an exercise price of $
5.00
per share. These stock options may only be exercised during the period commencingfrom April 1,
2029to April1, 2030.Vestingof thesestock optionsis subjectto Mr.Mazanderani’scontinuousemploymentwith theCompany
t
hrough April 1, 2028.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-73
17.STOCK-BASED COMPENSATION(continued)
Stock option and restricted stock activity (continued)
Options (continued)
Duringthe yearendedJune 30,2026,
4,000,000
stock optionsvestedandare exercisableduringa periodcommencingfrom
January31, 2028to January31,2029. Duringthe yearsended June30, 2025and 2024,an additional
26,982
(whichexcludes the
500,000
options discussed earlier), and
116,063
stock options became exercisable, respectively. During theyears ended June 30,2026,
2025 and 2024,the Company receivedapproximately $
0.06
million, $
0.1
million, and $
0.2
million from theexercise of
21,196
,
38,011
,
and
54,287
stock options, respectively.
No
stock options were forfeited during the yearended June 30, 2026. During theyears ended June 30, 2025and 2024, employees
forfeited
13,333
and
200,739
stock options, respectively.The stock options forfeited had strike prices ranging from $
3.01
to $
11.23
.
The following table presents stock options vested and expected to vest as ofJune 30, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vestedand expected to vest - June 30, 2026
5,845,708
8.73
2.29
979
These options have an exercise price range of $
3.01
to $
14.00
, and include the
4,000,000
options awarded in June 2024.
The following table presents stock options that are exercisable as of June30, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - June 30, 2026
845,708
4.01
2.68
979
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-74
17.STOCK-BASED COMPENSATION(continued)
Stock option and restricted stock activity(continued)
Restricted stock
The following table summarizes restricted stock activity for the yearsended June 30, 2025 and 2024:
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2023
2,614,419
11,869
Total granted
1,002,241
3,942
Granted – October 2023
333,080
1,456
Granted – October 2023, with performance conditions
310,916
955
Granted – October 2023
225,000
983
Granted – January 2024
56,330
197
Granted – February 2024
9,195
31
Granted - June 2024
67,720
320
Total vested
(1,232,251)
5,208
Vested– July 2023
(78,800)
302
Vested– November 2023
(109,833)
429
Vested– December 2023
(67,073)
234
Vested– February 2024
(14,811)
53
Vested– March 2024
(69,286)
256
Vested– April 2024
(394,932)
1,630
Vested– May 2024
(88,617)
391
Vested– June 2024
(350,247)
1,639
Vested– June 2024, with performance conditions
(58,652)
274
Total forfeitures
(299,463)
1,315
Forfeitures - employee terminations
(82,077)
298
Forfeitures – May and July 2021 awards with market condition
(217,386)
1,017
Non-vested – June 30, 2024
2,084,946
8,736
Total granted
1,433,610
5,381
Granted – August 2024
32,800
154
Granted – October 2024
100,000
490
Granted – November 2024, with performance conditions
1,198,310
4,206
Granted – January 2025
65,000
354
Granted – April 2025
37,500
177
Total vested
(1,197,944)
5,742
Vested– July 2024
(78,801)
394
Vested– November 2024
(213,687)
1,134
Vested– November 2024, with performance conditions
(103,638)
524
Vested– December 2024
(77,306)
417
Vested– February 2025
(13,922)
68
Vested– March 2025
(69,287)
328
Vested– April 2025
(385,787)
1,737
Vested– June 2025
(255,516)
1,140
Total forfeitures
(150,712)
728
Forfeitures - employee terminations
(121,591)
571
Forfeitures – December 2021 awards with market condition
(29,121)
157
Non-vested – June 30, 2025
2,169,900
7,833
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-75
17.STOCK-BASED COMPENSATION(continued)
Stock option and restricted stock activity(continued)
Restricted stock (continued)
The following table summarizes restricted stock activity for the yearended June 30, 2026:
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2025
2,169,900
7,833
Total granted
1,054,095
4,228
Granted – July 2025
3,772
17
Granted – August 2025
5,323
25
Granted – September 2025
200,000
922
Granted – October 2025
215,000
905
Granted – November 2025
160,000
708
Granted – November 2025, with performance conditions
245,000
598
Granted – February 2026
150,000
698
Granted – March 2026
30,000
139
Granted – May 2026
45,000
216
Total vested
(400,394)
1,691
Vested– August 2025
(10,933)
50
Vested– October 2025
(33,333)
139
Vested– November 2025
(120,434)
465
Vested– December 2025
(52,479)
196
Vested– February 2026
(21,666)
99
Vested– April 2026
(12,499)
61
Vested– June 2026
(149,050)
681
Total forfeitures
(361,413)
1,437
Forfeitures - employee terminations
(103,545)
475
Forfeitures - December 2022 award with market conditions
(257,868)
962
Non-vested – June 30, 2026
2,462,188
9,381
Awards granted
InJuly,August,September,OctoberandNovember2025,andFebruary,MarchandMay2026,respectively,theCompany
granted
3,772
;
5,323
;
200,000
;
215,000
;
160,000
;
150,000
;
30,000
; and
45,000
shares ofrestricted stockto employeeswhich have
time-basedvestingconditionsandwhicharesubjecttotheemployees’continuedemploymentwiththeCompanythroughthe
applicable vesting dates. In November2025, the Company awarded
245,000
shares of restricted stock to employeeswhich contained
time and performance-based (market conditions related to share price performance)vesting conditions.
In August 2024, October2024, January 2025 andApril 2025, respectively,the Company granted
32,800
;
100,000
;
65,000
; and
37,500
shares ofrestrictedstock toemployees whichhave time-basedvestingconditions andwhichare subjectto theemployee’s
continued employment with the Company through the applicablevesting dates. In November 2024, the Company awarded
1,198,310
shares of restricted stock to executiveofficers and employees which contained time andperformance-based (market conditions related
to share price performance) vesting conditions.
In October 2023, the Companyawarded
333,080
shares of restricted stock with time-basedvesting conditions to approximately
150
employees, which are subject to the employees continued employment with the Company through the applicable vesting dates. In
October 2023, the Company awarded
310,916
shares of restricted stock to executive officers whichcontained time and performance-
based(marketconditionsrelatedtosharepriceperformance)vestingconditions.TheCompanyalsoawarded
225,000
sharesof
restricted stock to an executive officer in October2023, which vest on June 30, 2025, except if the executiveofficer is terminated for
cause, in which case the awardwill be forfeited. In January 2024,February 2024 and June 2024, theCompany awarded
56,330
;
9,195
;
and
67,720
shares of restricted stock with time-based vesting conditions to employees.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-76
17.STOCK-BASED COMPENSATION(continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Awards granted(continued)
The Companyhad previouslyagreed togrant anadvisor
5,500
shares permonth inlieu of cashfor adhoc consultingservices
provided to the Company. The Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears,
on a quarterly basis. During the year ended June 30, 2026, the Companyrecorded a stock-based compensation charge of $
0.1
million
and included the issuance of
27,500
shares of common stock in its issued and outstanding share count. During theyear ended June 30,
2026, the Company and the consultant agreed that
49,500
shares of the Company’s commonstock that were previously issued would
be forfeitedand acash paymentof $
0.2
million wasmade inlieu ofthe forfeitedshares. Duringthe yearended June30, 2025,the
Company recordeda stock-based compensationcharge of $
0.4
million and includedthe issuance of
66,000
shares of commonstock
in its issued and outstanding share count. Overall, the Company issued atotal of
44,000
shares (
27,500
plus
66,000
less
49,500
) of the
Company’s commonstock to the consultant during the year ended June 30, 2026.
Awards vested
During the years ended June 30, 2026, 2025 and2024, respectively,
400,394
;
1,197,944
; and
1,002,241
shares of restricted stock
with time-based and performance-based vesting conditions vested. The June 30, 2025, shares include
78,801
shares of restricted stock
granted toMr.Meyer, ourformer GroupCEO, whichvested inJuly 2024,and
103,638
shares ofrestricted stockwith performance
conditions (share price targets) which vested in November 2024, following the achievement of the agreed performance condition. The
June 30,2024, sharesof stock vestingincludes
58,652
shares witha performance-basedcondition relatedto theachievement ofthe
2021 to 2024 financialservices plan. The fairvalue of restricted stockwhich vested during theyears ended June 30,2026, 2025and
2024, was $
4.2
million, $
5.9
million and $
5.2
million, respectively.
In August, November andDecember 2025 and Januaryand April 2026, anaggregate of
192,936
shares of restricted stockgranted
to employees vestedand they electedfor
84,758
shares to bewithheld tosatisfy the withholdingtax liability onthe vesting ofthese
shares.
In November 2024,
27,546
shares of restricted stock granted to Mr.Mali vested and he elected for
12,396
shares to be withheld
to satisfythe withholdingtax liabilityon thevesting ofthese shares.In addition,in Novemberand December2024 andFebruary,
April, May and June2025, an aggregate of
556,889
shares of restricted stockgranted to employees vestedand they elected for
185,437
shares to be withheld to satisfy the withholding tax liability on the vesting ofthese shares.
In May2024,
55,598
shares ofrestricted stockgranted toMr.Mali vestedand heelected for
25,020
shares tobe withheldto
satisfy the withholding tax liability on the vesting of these shares. In addition, in November and December2023and February, April,
May and June2024, an aggregateof
556,889
shares of restrictedstock granted to employeesvested and they electedfor
128,415
shares
to be withheld to satisfy the withholding tax liability on the vesting of theseshares.
These
84,758
,
197,833
(
12,396
plus
185,437
) and
153,435
(
25,020
plus
128,415
) shares havebeen included inthe Company’s
shares of common stock (these shares were included intreasury shares prior to the recast discussedin Note 1) for the years ended June
30, 2026, 2025 and 2024, respectively.
Awards forfeited
During the year ended June 30, 2026,
257,868
shares of restricted stock were forfeited by executive officers (including a former
Group CEO)as themarket condition(related toshare priceperformance) werenot achieved.During theyear endedJune 30,2026,
employees forfeited
103,545
shares of restricted stock following their termination of employment with the Company.
During theyear endedJune 30,2025,
29,121
shares ofrestricted stockwere forfeitedby anemployee asthe marketcondition
(related to share priceperformance) were not achieved.During the year endedJune 30, 2025, employeesforfeited
121,591
shares of
restricted stock following their termination of employment with the Company.
During the yearended June 30,2024,
217,386
shares of restrictedstock were forfeitedby executive officers(including former
executive officers)as themarket condition(related toshare priceperformance)were notachieved.During theyear endedJune 30,
2
024, employees forfeited
82,077
shares of restricted stock following their termination of employment with the Company.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-77
17.STOCK-BASED COMPENSATION(continued)
Lesaka ESOP Trust
On November 14, 2024, the Company announced that its shareholders voted on and approvedthe funding and issuance of shares
to the Lesaka ESOP Trust at its annual general meeting. The Lesaka Employee Share Ownership Plan (“ESOP”)is designed to create
alignmentwiththeCompany'slong-termgrowthobjectives.TheLesakaESOPTrustisalsoexpectedtoadvancethe Company’s
transformationinitiativesandplaysanimportantroleinimprovingthecompany’sBroad-BasedBlackEconomicEmpowerment
(“BBBEE”) rating.As ofNovember 2024,when shareholdersapproved theplan, theCompany’semployee basewas comprisedof
approximately
87
%designatedgroupsforBBBEEpurposes.Throughthecreationofabroaderbaseofemployeeownership,the
Companyishelpingtopromoteeconomicinclusionandcontributetotransformationin thebroaderSouthAfricaneconomy.The
Lesaka ESOP Trustis structured asan evergreentrust, ensuringthe permanence ofthe plan andallowing for theinclusion of future
employees as the Company continues to grow.
TheLesakaESOPTrustwasrequiredtohaveaneffectiveholdingof
3
%oftheCompany’sissuedsharesatthedateof
implementation,and inFebruary 2025,the Companyissued
2,490,000
shares ofits commonstock tothe LesakaESOP Trust.The
subscription pricepayable bythe LesakaESOP Trustfor theshares wasvendor fundedby theCompany througha notionalvendor
funding (“NVF”)structure wherebythe Companyprovided anotional loanto theLesaka ESOPTrust representingthe fair valueof
the shares, facilitatingthe acquisition bythe Lesaka ESOPTrust ofthe shares withoutrequiring any upfrontpayment by theLesaka
ESOP Trust except for the payment of a nominal value of $
0.001
per share. The NVF structure will achieve thesame economic effect
as a traditionalloan structure fromthe Company to theLesaka ESOP Trustto enable the LesakaESOP Trust tosubscribe for shares
in the Company, but withoutany actual flow of funds from the Company to the Trust.
A notional amount on the dateof issue was ascribed to each sharethat the Lesaka ESOP Trustsubscribed for, whichis equal to
the fair market valueof one of theCompany shares of commonstock (which is theamount the Lesaka ESOPTrust would havepaid
for one of the Company’s shares in an ordinary course cash transaction with the Company) less a
10
% discount. The principal amount
on the NVF loan willaccrue interest at a fixedrate of
3
% per annum. The NVFwill have a
five-year
term. The notional amount was
not recognized in the Company’s financial statements becauseit represents a formula tocalculate the number of theCompany’s shares
of common stock to be returned by the Lesaka ESOP Trustto the Company after
five years
.
On or about the 5
th
anniversary of the implementation date of the ESOP (“Maturity Date”), the Company will have the option to
repurchaseaportionofthesharesheldbytheLesakaESOPTrustatthenominalaggregateamounttosettlethetotalNVFloan
outstanding. The number ofshares to be repurchased will bedetermined by using a formulaset out in the transactiondocuments that
considers the totalNVF loan outstanding onthe Maturity Dateand the marketvalue of oneof the Company’s shares heldby the Lesaka
ESOP Trust. The purchaseconsideration that would have beenpayable for the shares the Companywill repurchase (which is the fair
market value the Companywould have paid for the sharesin an ordinary course cash transactionwith the Lesaka ESOP Truston the
Maturity Date) will be set offagainst the total NVF loan outstanding.After settlement of the NVF loan,
50
% of the remaining shares
held by the Lesaka ESOP Trust, if any,will be distributed to eligible employees.
The Lesaka ESOP Trust will hold shares ofthe Company’s common stock. TheLesaka ESOP Trust will therefore be entitled to
receive its proportionate share of anydividends and other distributions declared by theCompany to its shareholders and voteits shares
held on matters requiring shareholder approval.
The Lesaka ESOP Trustis administered by theboard of trustees made upof
five
members nominated by the Company’sBoard
and the participants in the ESOP.The Company’s Board has the rightto nominate
two
members to the board of trustees. The balance
of the trustees,
one
of which must be an independent trustee,are nominated by the participants. The nomineesappointed to the board
of trustees may not be members of the Company’s Board or an officer as contemplated in Rule 16a-(f) of the Securities and Exchange
Act of 1934. The nominees ofthe participants need to meet an electioncriteria to be eligible for nomination which requiresparticipant
nominees to have been employed by the Group for a continuous and uninterrupted period of at least
three years
. The trustees have the
discretion to determine howthe Lesaka ESOP Trustshould vote shares ofthe Company common stock held onmatters requiring the
Company’s shareholdersapproval. The decisions by the trustees are decided by a majority vote.
The Companyis responsiblefor allreasonableoperating expensesincurredby theLesaka ESOPTrustuntil suchtime asthe
Lesaka ESOP Trust has sufficientcash resources of its own to settle its operating expenses.The Company controls the Lesaka
ESOP
Trust becausethe Lesaka ESOPTrust isconsidered tobe a variableinterest entity (“VIE”)in which theCompany has acontrolling
financial interest.Accordingly,the Lesaka ESOPTrust isconsolidated bythe Company.As the LesakaESOP Trustis consolidated
by theCompany,the
2,490,000
shares ofthe Company’scommon stockheld byLesaka ESOPTrustare accountedfor astreasury
shares at thenominal amountof $
0.001
per share. Purchasesand sales ofthe Company’scommon stockbetween theCompany and
the Lesaka ESOP Trust will be recognized within equity with no profit or lossbeing recognized in the statement of operations on such
acquisition or disposal.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-78
17.STOCK-BASED COMPENSATION(continued)
Lesaka ESOP Trust (continued)
Qualifying employeeswere allocated Aand B units.An A unitrepresents an optionfor the employeesto acquire sharesof the
Company’s common stock in future. The Aunit represents an equity-settled share-basedpayment, requiring the recognition ofa stock-
based compensationcharge overa
five year
service period.The Aunits weremeasured attheir grantdate fairvalue usinga Black
Scholes valuation model.A B unit representsan employees’ entitlementto cash paymentsbased on dividendspaid by the Company
totheLesakaESOPTrust,andconsequentlydistributionsthattheLesakaESOPTrustmakestoqualifyingemployeeswhoare
beneficiaries of the LesakaESOP Trust. Thesepayments represent anemployee benefit, requiringthat the Company torecognize an
expense to the value of the payment made when each payment is made.
Initialqualifyingemployeesarerequiredtohaveaminimumof
two year
’sservicewiththeCompany,withcriteriabeing
determined on December 31, 2024. Initial qualifying employees received invitation and allocation notices on or around April 1, 2025.
Asemployeescomplete
two years
’servicetoanysubsidiaryoftheCompanytheywillbecomeeligibleforconsiderationasa
beneficiary of the Lesaka ESOP Trust. Qualifyingemployees include employees of recent acquisitions, including Adumo.
On April 1,2025, the LesakaESOP Trustawarded
2,030
qualifying employees
1,989,400
A units and
2,030
B units. Lesaka’s
closing price on the Nasdaq on April 1, 2025 was $
5.00
per share and each A unit was issued with an initial strike priceof $
4.50
(the
closing priceless a
10
% discount)and isexpected togrow by
3
% perannum throughto April1, 2030.The Companyestimated a
forfeiture rate of
8
% per annum. Thefair value ofeach A unit isestimated on thedate of grantusing Black-Scholes modelthat uses
the assumptions noted in the table below. The estimated expected volatility is generally calculated based on the Company’s
1,251
-day
volatility.Theestimatedexpectedlifeoftheoptionwasdeterminedastheperiodfromgrantdatethroughtothevestingdatein
February 2030.
On April 1, 2026, the Lesaka ESOP Trust awarded
348
qualifying employees
278,400
A units and
348
B units. Lesaka’s closing
price on the Nasdaq on April 1, 2026 was $
4.92
per share and each A unit was issued with an initial strike priceof $
4.50
(the closing
price less a
10
% discount) andis expected togrow by
3
% per annumthrough to April1, 2030. TheCompany estimateda forfeiture
rateof
8
%perannum.ThefairvalueofeachAunitisestimatedonthedateofgrantusing Black-Scholesmodelthatusesthe
assumptions notedin thetable below.The estimatedexpected volatilityis generallycalculated basedon theCompany’s
1,251
-day
volatility.Theestimatedexpectedlifeoftheoptionwasdeterminedastheperiodfromgrantdatethroughtothevestingdatein
February 2030.
The table below presents the range of assumptions used to value options granted duringthe years ended June 30, 2026 and 2025:
2026
2025
Expected volatility
44
%
46
%
Expected dividends
0
%
0
%
Expected life (in years)
3.9
4.9
Risk-free rate
4.18
%
4.17
%
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-79
17.STOCK-BASED COMPENSATION(continued)
Stock-based compensation charge and unrecognized compensationcost
The Company hasrecorded a net stockcompensation chargeof $
7.0
million, $
9.6
million and $
7.9
million for theyears ended
June 30, 2026, 2025 and 2024, respectively,which comprised:
Totalcharge
Allocated to IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Yearended June 30, 2026
Stock-based compensation charge
$
6,616
$
-
$
6,616
Stock-based compensation charge related to ESOP
655
-
655
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(302)
-
(302)
Total - year ended June30, 2026
$
6,969
$
-
$
6,969
Yearended June 30, 2025
Stock-based compensation charge
$
9,482
$
-
$
9,482
Stock-based compensation charge related to ESOP
157
-
157
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(89)
-
(89)
Total - year ended June30, 2025
$
9,550
$
-
$
9,550
Yearended June 30, 2024
Stock-based compensation charge
$
8,045
$
-
$
8,045
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(134)
-
(134)
Total - year ended June30, 2024
$
7,911
$
-
$
7,911
Thestock-basedcompensationchargesandreversalhavebeenallocatedtoselling,generalandadministrationbasedonthe
allocation of the cash compensation paid to the relevant employees.
As of June30, 2026, thetotal unrecognizedcompensation cost relatedto stock optionswas approximately$
2.7
million, which
theCompanyexpectstorecognizeoverapproximately
two years
.As ofJune30,2026,thetotalunrecognizedcompensationcost
related to restricted stock awards was approximately $
5.3
million, which the Company expects to recognize over approximately
three
years
.
Income tax consequences
During the years ended June 30, 2026, 2025 and 2024, theCompany recorded a deferred tax benefit of $
0.6
million, $
1.0
million
and$
0.7
million, respectively,relatedto thestock-basedcompensationchargerecognized relatedto employeesof Lesaka.During
these periods theCompany recorded avaluation allowance relatedto thefull deferred taxbenefit recognized becauseit does notbelieve
that thestock-based compensationdeduction wouldbe utilizedas itdoes notanticipate generatingsufficient taxableincome inthe
United States. TheCompany deducts thedifference between themarket value on thedate of exercise bythe option recipientand the
exercise pricefrom incomesubject totaxation inthe UnitedStates. Lesakarecharges itssubsidiaries forstock-based compensation
chargesrelatedto serviceprovidedby employeesof itssubsidiaries.Duringthe yearsendedJune 30,2026,2025 and2024,these
subsidiaries deducted stock-based compensation chargesof $
3.6
million, $
4.3
million, and $
4.6
million, respectively.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-80
18.INCOME TAXES
Income tax expense
The table below presents thecomponents of income (loss) beforeincome tax expense (benefit)for the years ended June30, 2026,
2025 and 2024:
2026
2025
2024
Domestic: South Africa
(A)
$
11,233
$
(35,554)
$
(5,480)
Foreign:
(7,507)
(71,629)
(8,393)
United States
(11,993)
(12,322)
(8,705)
Other
(1)
4,486
(59,307)
312
Income (Loss) before income tax expense (benefit)
(A)
$
3,726
$
(107,183)
$
(13,873)
(A) Income(loss) beforeincome taxexpense (benefit)to Netincome (loss)attributable toLesaka forthe yearended June30,
2025and2024decreasedby$
1.2
millionand$
1.1
million,respectively,inordertocorrecttheerrordiscussedinNote1tothe
consolidated statement of operations.
(1) Amountfor theyear endedJune 30,2025, includesthe impactof thechange infair valueof equitysecurities discussedin
Note 6 related to MobiKwik.
Presented belowis income taxexpense (benefit)by location ofthe taxingjurisdiction for theyears endedJune 30, 2026,2025
and 2024:
2026
2025
2024
Current tax expense
$
10,880
$
5,757
$
5,766
Domestic: South Africa
8,412
5,582
5,634
Foreign:
2,468
175
132
Other
2,468
175
132
Deferred tax (benefit) expense
(A)
(9,451)
(21,739)
(2,712)
Domestic: South Africa
(A)
(9,483)
(11,601)
(2,716)
Foreign:
32
(10,138)
4
United States
-
(10,120)
-
Other
32
(18)
4
Foreign tax credits generated - United States
-
-
309
Income tax expense (benefit)
$
1,429
$
(15,982)
$
3,363
(A) Deferred tax expense (benefit) and South Africa for the year ended June30, 2025, have decreased by $
2.2
million as a result
of the correction discussed in Note 1.
There were
no
changes tothe enactedincome taxrate inthe yearsended June30, 2026,2025 and2024 inSouth Africa,the
jurisdiction inwhich we incurthe majorityof ourincome tax expense.The Company’scurrent tax expensefor the yearended June
30, 2026, was higher than the previous yeardue to the higher taxable income generated bythe Company’s subsidiaries during the year
ended June30, 2026,primarily dueto continuedimproved profitabilitygenerated fromthe Consumeroperating segmentcompared
with the year ended June30, 2025, as well as fromthe contribution to profitability fromprevious year’s acquisitions forthe full year
during the year ended June 30, 2026.
The Company’s deferred tax benefit for the year ended June 30, 2026, was lower compared with theprevious year primarily due
to the releases of valuations allowances inthe previous year, which was partially offset by ahigher benefit recorded in the current year
due to (i) the higher deferred tax benefit recorded during the year ended June 30, 2026, related to the amortization of intangible assets
recognized dueto theacquisition ofAdumo andUtilities inSouth Africa,(ii) thechange inuseful livesof certainbrand intangible
assets whichresultinhigher deferredtax benefitsinSouth Africa,(iii)the releaseof avaluationallowancecreatedrelatedto net
operating losses inthe United Statesfollowing the utilizationof net operatinglosses against taxableincome, (iv) andthe reversal of
$
12.3
million related to certain valuation allowances created in prior years followingan improvement in profitability of certain of the
Company’ssubsidiaries. Duringthe yearended June30, 2026,the Companyrecognized abenefit foroperating losscarryforwards
generated of $
3.9
million where the related deferred tax asset was not offset by a valuation allowance. During the year ended June 30,
2026 the Companyrecognized a valuation allowancerelated to an operatingloss carryforward andother deferred tax assetstotalling
$
9.9
million following a determination by the management, after considering both positiveand negative evidence, that these deferred
t
ax assets would not be realized in future years.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-81
18.INCOME TAXES (continued)
Income tax expense (continued)
The Company’sdeferred tax(benefit) expensefor the yearended June30, 2025,was highercompared withthe previous year
duetoreversalofthedeferredtaxliability(abenefit)relatedtothechangeinthecarryingamountofourentireinvestmentin
MobiKwik,theinclusionofthe deferredtaxbenefitrecordedduringtheyearendedJune 30,2025,relatedtotheamortizationof
intangible assets recognized due to the acquisition ofAdumo and Utilities and the reversal of $
12.8
million related to certain valuation
allowancescreatedin prioryears following(i) animprovementin profitabilityof certainof theCompany’ssubsidiariesand(ii) a
changeinjudgmentontheneedforavaluationallowanceof$
11.4
millionrelatedtoanentitywhichtheCompanybelieveshas
achieved sustainableprofitability.During theyear theCompany recognizeda benefitfor operatingloss carryforwardsgenerated of
$
6.8
million where the related deferredtax asset was not offset bya valuation allowance. During theyear the Company recognizeda
valuationallowancerelatedto anoperatingloss carryforwardof $
6.0
millionfollowing adeterminationby themanagement,after
considering both positive and negative evidence, that the operatingloss carryforward would not be realized.
During the yearsended June 30,2026, 2025 and2024, the Companyincurred net operatinglosses through certainof its South
African wholly-ownedsubsidiaries and recordeda deferred taxbenefit related tothese losses. However,the Companyhas created a
valuationallowance forcertain ofthese netoperating losseswhich reducedthe deferredtax benefitrecorded. Netoperating losses
incurred during the year endedJune 30, 2026, were higherthan in previous periods dueto losses incurred bycertain entities that exited
existing businesses and higher operating costs incurred, but overall associated valuation allowance created during the year ended June
30, 2026, were lower than in previous periods because the Company believes it is more likely than not that certain of these losses will
be utilizedin subsequentperiods.Net operatinglosses andassociated valuationallowancecreatedduringthe yearended June30,
2025, were lower than in previous periods due to the improvement in operatingperformance by the Company’s subsidiaries.
Adoption of new accounting guidance impacting presentation of theincome tax rate reconciliation and income taxespaid
Followingthe adoptionof guidanceto enhanceannual incometax disclosuresthe Companyhas amendedits presentationto
provide additionaldisaggregation ofinformation includedin theincome taxrate reconciliationand toprovide additionaldisclosure
regarding income taxes paid. The Company adopted the guidanceon a prospective basis during the year ended June 30, 2026.
OnJune7,2004,LesakaandAplitecimplementedatransactionunderwhichtheformershareholdersofAplitecobtaineda
majority voting interest in Lesaka.Aplitec was a holding companyestablished and existing under thelaws of Republic ofSouth Africa
and wasliquidated andderegistered followingthe closingof thetransaction. GAAPrequires thatthe companywhose shareholders
retain a majority interest in acombined business be treated asthe acquirer for accounting purposes. Consequently, this transaction was
accounted for as areverse acquisition. For theperiod from June 7,2004, the financial informationreported for the Companyrepresents
the consolidatedresults ofLesaka andAplitec withLesaka asthe acquiredentity.Although Aplitecis deemedto bethe acquiring
company forfinancial and reportingpurposes, the legalstatus of theLesaka as thesurviving corporationdid not change.Therefore,
the Company has used the South African incometax rate of
27
% for purposes of its income tax rate reconciliation andthe country of
South Africa for other income tax disclosures.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-82
18.INCOME TAXES (continued)
Incomes taxes rate reconciliation
A reconciliation of income taxes,calculated at the South Africanincome tax rate to theCompany’s reported income tax expense,
for the year ended June 30, 2026, is as follows:
2026
Income taxes at the South African statutory income tax rate
1,007
27.00
%
Foreign Tax Effects
United States
Statutory income tax rate difference between the United States federal and South Africa rates
720
19.32
%
Non-taxable other
(95)
(2.55)
%
Non-deductible other expenses
308
8.26
%
Changes in valuation allowances
(5,847)
(156.92)
%
Prior years under provision
281
7.54
%
Prior year global intangible low-taxed income ("GILTI")
3,565
95.68
%
Current year GILTI
4,306
115.57
%
Botswana
Statutory income tax rate difference between Botswana and South Africa
(94)
(2.52)
%
Namibia
Statutory income tax rate difference between Namibia and South Africa
60
1.61
%
Withholding taxes
124
3.33
%
Zambia
Withholding taxes
189
5.07
%
Germany
Statutory tax rate difference between other jurisdictions and South Africa
(27)
(0.72)
%
Non-taxable: Other
(156)
(4.19)
%
Prior years (over) under provision
(242)
(6.49)
%
Netherlands
Non-taxable income related to an allowance for doubtful loans receivable reversed
(479)
(12.86)
%
Other jurisdictions
Other
6
0.16
%
Changes in Valuation Allowances: South Africa
21,878
587.17
%
Nontaxable or Nondeductible Items: South Africa
Non-deductible goodwill impairment
103
2.76
%
Non-deductible interest expense paid on borrowings
924
24.80
%
Non-deductible consulting fees
135
3.62
%
Non-deductible penalties
54
1.45
%
Non-deductible interest expense paid to taxing authorities
83
2.23
%
Non-deductible other expenses
143
3.84
%
Non-deductible rebrand costs
304
8.16
%
Non-deductible loss on disposal of business
204
5.48
%
Non-taxable gain on consolidation
(286)
(7.68)
%
Non-taxable other income
(320)
(8.59)
%
Deferred tax asset related to capital loss generated
(25,026)
(671.66)
%
Other: South Africa
Prior years (over) under provision
(545)
(14.63)
%
Withholding taxes
280
7.51
%
Other
(128)
(3.44)
%
Income tax expense / Effective tax rate
1,429
38.33
%
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-83
18.INCOME TAXES (continued)
Income tax rate reconciliation (continued)
For reconciling itemsequal to orgreater than 5%of the amountcomputed by applyingthe South Africanstatutory income tax
rate to income (loss) before income tax expense (benefit), additional qualitativeinformation is provided below:
●
Foreign taxrate effects:United States:
primarily relatesto the(i) taxesrelated toprior periodGILTIfrom earningsand
losses fromforeign jurisdiction,mainly SouthAfrica,(ii) taxesrelated tocurrent yearGILTI,(iii) releaseof thevaluation
allowancerelatedtocertainnet operatingloss carryforwardsas aresultofutilizationof netoperatingloss carryforwards
against these taxes, and (iv) non-deductible expenses.
●
Foreign taxeffects: Botswana,Namibia, Zambia,Germany,Netherlands andother jurisdictions:
primarily relatesto
the (i) effectof earnings generatedin jurisdictions withstatutory tax ratesdifferent from theSouth African sstatutory rate,
including Botswana, Namibia,Germany and otherjurisdictions in whichthe Company operates,(ii) withholding taxespaid
inforeignjurisdictions,(iii)non-taxableincomerelatedanallowancefordoubtfulloansreceivablereversed,and(iv)
inclusion of prior period tax entries in the current year.
●
Changesinvaluationallowance:
relatestothe(i)releaseofvaluationallowancesfollowinganimprovedoperating
performance by certain ofthe Company’s South African subsidiaries, and(ii) recognition of avaluation allowances following
management assessment of the utilization of deferred tax assets in South Africa.
●
Nontaxable ornondeductible items:
primarily consistof expensesin SouthAfrica thatare notdeductible forincome tax
purposes under applicable tax laws, including (i) related to goodwill impaired, (ii) interest expense incurred on certain of the
Company’sborrowings,(iii)consultingfeesincurredthatarenotintheproductionoftaxableincome(iv)penaltiesand
interest incurred relatedthe taxing authority,(v) a loss on deconsolidationof a business and(vi) a deferred taxasset related
to capital loss generated on disposal of Cell C (the Company has created a full valuationallowance for this capital loss).
As previously disclosed,a reconciliation ofincome tax expense(benefit), calculated atthe fully-distributed SouthAfrican income
tax rate to the Company’s effectivetax rate, for the years ended June 30, 2025 and 2024, is as follows:
2025
2024
Income taxes at South African income tax rates
27.00
%
27.00
%
Non-deductible interest expense
(1.29)
%
(24.55)
%
Movement in valuation allowance
(A)
3.55
%
(22.15)
%
Non-deductible transaction costs
(4.19)
%
(5.91)
%
Goodwill impairment
(4.22)
%
-
-
Capital gains tax rate differential
-
-
1.62
%
Prior year adjustments
0.22
%
(1.37)
%
Non-deductible items
(A)
(3.42)
%
0.93
%
Foreign tax credits
0.03
%
0.19
%
Foreign tax rate differential
(2.77)
%
-
Effective tax rate
14.91
%
(24.24)
%
(A) Movementin valuationallowance decreasedfrom
5.62
% to
3.55
%, andnon-deductibleitems increasedfrom (
3.23
%) to
(
3.42
%) as a result of the correction discussed in Note 1.
Percentages included in the 2024column in the reconciliation of incometax expense (benefit), presented above arespecifically
impacted by the loss incurredby the Company during theyears ended June 30, 2024. Forinstance, for the year endedJune 30, 2024,
income tax expense of $
3.4
million represents (
24.24
%) multiplied by the loss before tax (benefit) expense of $(
13,873
).
Movement inthe valuationallowance forthe yearended June30, 2025,includes theimpact ofthe reversalof theallowances
createdin previousperiods relatedto certainnet operatingloss carryforwardswhich theCompanybelieves areno longerrequired
following improved and sustained profitability generated by certain of the Company’ssubsidiaries. Non-deductible items for the year
endedJune30,2025,includestransactionscostsandinterestexpenseincurredwhichthe Companycannotdeductforincometax
purposes.
MovementinthevaluationallowancefortheyearendedJune30,2024,includesallowancescreatedrelatedtocertainnet
operating loss carryforwards generated during the year.Non-deductible items for the year ended June 30, 2024,includes transactions
costs and interest expense incurred which the Company cannot deduct for incometax purposes.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-84
18.INCOME TAXES (continued)
Income tax paid
The Companyis requiredto separatelydisclose incometaxes paid,net ofrefunds received,to anindividual jurisdictionwhen
the amount paidto that jurisdictionequals or exceeds5% of total incometaxes paid, netof refunds received.Income taxes paid,net
of refunds received, to the jurisdictions that met the threshold for the year endedJune 30, 2026, was as follows:
2026
Jurisdiction
Domestic: South Africa
$
9,332
Foreign:
1,100
Namibia
780
All other
320
Total incometaxes paid, net of refunds received
$
10,432
Deferred tax assets and liabilities
Deferredtaxesreflectthetemporarydifferencesbetweenthe financialstatementcarryingamountandtaxbasesofassets and
liabilities andcarryforwards measuredusing enactedtax ratesin effectfor theyear inwhich theitems areexpected toreverse. The
primary components of the temporary differences and carryforwards that gave rise to the Company’s deferred tax assets and liabilities
as of June 30, and their classification, were as follows:
June 30,
June 30,
2026
2025
Totaldeferred tax assets
Net operating loss carryforwards
$
57,083
$
63,740
Capital loss carryforwards
32,104
7,094
Provisions and accruals
8,630
6,648
Equity investments
5,567
29,475
Operating lease liability
6,010
-
Foreign tax credit carryforwards
-
12,300
Other
4,642
4,604
Totaldeferred tax assets before valuation allowance
114,036
123,861
Valuationallowances
(A)
(92,143)
(109,468)
Totaldeferred tax assets, net of valuation allowance
21,893
14,393
Totaldeferred tax liabilities:
Intangible assets
31,215
36,403
Operating lease right-of-use
4,735
-
Other
1,852
1,573
Totaldeferred tax liabilities
37,802
37,976
Reported as
Long-term deferred tax assets, net
12,470
10,338
Long-term deferred tax liabilities, net
28,379
33,921
Net deferred tax liabilities
$
15,909
$
23,583
(A) Valuationallowances as of June 30, 2025, has increased by $
2.2
million as a result of the correction discussed in Note 1.
Decrease in total net deferred tax liabilities
Net operating loss carryforwards
Net operatingloss carryforwardshave decreasedprimarily dueto the utilizationof net operatingloss carryforwardsin current
year, which was partially offsetby the generation ofnet operating losscarryforwards in the currentyear from lossesincurred by certain
of the Company’s subsidiaries.Net operating loss carryforwards arealso impacted by the currencychanges between the South African
Rand against the UnitedStates dollar. During the year endedJune 30, 2026, netoperating loss carryforwards related toa South African
subsidiaryof$
1.5
millionexpiredbecausethesubsidiaryisnolongertrading.TheCompanyhadpreviouslycreatedavaluation
allowance of $
1.5
million related to this net operating loss carryforward and utilized the valuation allowance against the net operating
loss deferred tax asset.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-85
18.INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in total net deferred tax liabilities (continued)
Capital loss carryforwards
Capital losscarryforwardsas ofJune 30,2026,comprisedthe lossesarisingfromthe disposalof FinbondandCell Cwhich
resulted in the generation of capital loss carryforwardsin South Africa of $
138.0
million and capital loss carryforwards in the United
States of$
10.9
million. Capitalloss carryforwardsas ofJune 30,2025, comprisesthe lossesarisingfromthe disposalof Finbond
which resultedin the generationof capital losscarryforwards inSouth Africaof $
17.7
million andcapital losscarryforwards inthe
United States of$
15.5
million. Capital losscarryforwards in SouthAfrica do notexpire, and capitalloss carryforward inthe United
Stateswillexpireafterfiveyears,between2029and2031.ThechangeinCapitallosscarryforwardsalsoincludestheimpactof
currency changes between the South African Rand against the United States dollar.
Equity investments
Equity investmentsas ofJune 30,2026, comprisedthe temporarydifferences arisingfrom thedifferencebetween theamount
paid for CPSin 2004 andthe financial statementcarrying amount asof the respectiveyear end, of$
0.0
million (nil). Equityinvestments
as of June30, 2025,comprises the temporarydifferences arisingfrom thedifference betweenthe amountpaid for CellC in August
2017 and the financialstatements carrying amount as ofthe respective year end, of$
0.0
million (nil), and the differencebetween the
amount paidfor CPSin 2004and thefinancial statementcarryingamount asof therespective yearend, of$
0.0
million (nil).The
change in Equity investments relates to the derecognition of Cell C following the disposal of the investment(and creation of a capital
loss carryforward – refer above) and the impact of currency changes between the South African Rand against theUnited States dollar.
Operating lease liability
Operating lease liability as of June 30, 2026, hasbeen presented due to the significant increase in theCompany’s operating lease
liabilities during the year ended June 30, 2026 (refer to Note 8 foradditional information).
Foreign tax creditcarryforwards
There are
no
foreign tax creditcarryforwards as ofJune 30, 2026.Foreign tax creditcarryforwards as ofJune 30, 2025,comprised
foreign taxcredits generatedfrom distributionsfrom Lesaka’ssubsidiaries. Thetax creditsas ofJune 30,2025, expiredduring the
year ended June 30, 2026. During the year ended June 30, 2025,foreign tax credits of $
20.2
million expired.
Intangibles assets
Intangible assets have decreased due to the amortization of the intangibleassets.
Operating lease right-of-use
Operating lease right-of-use as ofJune 30, 2026, has been presenteddue to the significant increase inthe Company’s operating
lease right-of-use assets during the year ended June 30, 2026 (refer toNote 8 for additional information).
Decrease in valuation allowance
At June 30,2026, theCompany haddeferred tax assetsof $
21.9
million (2025:$
14.4
million), net ofthe valuation allowance.
Management believes,based onthe weightof availablepositive andnegative evidenceit ismore likelythan notthat theCompany
will realizethe benefitsof thesedeductible temporarydifferences andcarryforwards, netof thevaluation allowance.However,the
amount of the deferred tax asset considered realizable could be adjustedin the near term if estimates of taxable income are revised.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-86
18.INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in valuation allowance(continued)
At June30, 2026,the Companyhad avaluationallowance of$
92.1
million (2025:$
109.5
million)to reduceits deferredtax
assets to the estimated realizable value. Themovement in the valuation allowance for the yearsended June 30, 2026, 2025 and 2024,
is presented below:
Total
Equity
investments
Capital loss
carry-
forwards
Net
operating
loss carry-
forwards
Foreign tax
credit
carry-
forwards
Other
July 1, 2023
$
109,120
$
27,782
$
8,485
$
38,381
$
32,599
$
1,873
Charged to statement of operations
5,061
-
665
3,163
-
1,233
Reversed to statement of operations
(1,865)
-
-
(1,793)
(72)
-
Foreign currency adjustment
2,371
1,004
103
1,215
-
49
Net change in the valuation allowance
5,567
1,004
768
2,585
(72)
1,282
July 1, 2024
$
114,687
$
28,786
$
9,253
$
40,966
$
32,527
$
3,155
Charged to statement of operations
6,241
-
977
4,063
-
1,201
Reversed to statement of operations
(A)
(10,630)
-
-
(8,469)
-
(2,161)
Utilized
(25,528)
-
(3,226)
(2,002)
(20,227)
(73)
Acquired in business combinations
22,976
-
-
20,354
-
2,622
Foreign currency adjustment
1,722
690
90
887
-
55
Net change in the valuation allowance
(5,219)
690
(2,159)
14,833
(20,227)
1,644
June 30, 2025
109,468
29,476
7,094
55,799
12,300
4,799
Charged to statement of operations
28,374
-
25,026
1,645
-
1,703
Reversed to statement of operations
(12,340)
(631)
-
(11,361)
-
(348)
Utilized
(40,243)
(25,026)
(977)
(1,537)
(12,300)
(403)
Foreign currency adjustment
6,884
1,748
961
3,850
-
325
Net change in the valuation allowance
(17,325)
(23,909)
25,010
(7,403)
(12,300)
1,277
June 30, 2026
$
92,143
$
5,567
$
32,104
$
48,396
$
-
$
6,076
(A) Reversedto statementof operationsduring theyear endedJune 30,2025, hasdecreased by$
2.2
million asa result ofthe
correction discussed in Note 1.
Net operating loss carryforwards and foreign tax credit carryforwards
South Africa
Net operating losscarryforwards generated inSouth Africa of$
211.4
million as ofJune 30,2026, are carriedforward indefinitely,
but the loss carryforward that may be used against future taxable income is limited to 80% of taxable income before the net operating
loss deduction.
United States
Net operatingloss carryforwardsgenerated inthe United Statesare carriedforward indefinitely,but the losscarryforward that
may be used against future taxable income is limited to 80% of taxable income before the net operating loss deduction. The Company
had utilized all of its net operating loss carryforwards as of June 30, 2026.Lesaka had no net unused foreign tax credits that are more
likely than not to be realized as of June 30, 2026 and 2025, respectively.
Unrecognized tax benefits
As of June 30, 2026 and 2025, the Company had
no
unrecognized tax benefits. The Company files income tax returns mainly in
South Africa,Botswana, Namibia and in the U.S. federal jurisdiction. As of June 30, 2026, the Company’s South African subsidiaries
are no longersubject to incometax examination by theSouth African Revenue Servicefor periods beforeJune 30, 2020.The Company
is subject toincome taxin otherjurisdictions outsideSouth Africa,none of whichare individuallymaterial to itsfinancial position,
s
tatement of cash flows, or results of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-87
19.EARNINGS (LOSS) PER SHARE
The Company hasissued redeemable commonstock (refer to Note14) which is redeemableat an amount otherthan fair value.
Redemption of a class of common stockat other than fair valueincreases or decreases the carrying amountof the redeemable common
stockandisreflectedinbasicearningspershareusingthetwo-classmethod.Therewere
no
redemptionsofcommonstock,or
adjustments to thecarrying value of theredeemable common stock duringthe years endedJune 30, 2026,2025 and 2024. Accordingly,
the two-class method presented below does not include the impact ofany redemption.
Basic earnings (loss) per shareincludes shares of restricted stock thatmeet the definition of aparticipating security because these
shares are eligibleto receive non-forfeitable dividendequivalents at thesame rate ascommon stock.Basic earnings (loss)per share
has been calculated using the two-class method and basic earnings (loss) per share for the years ended June 30, 2026,2025 and 2024,
reflects onlyundistributedearnings. Thecomputation belowof basicearnings (loss)per shareexcludes thenet lossattributableto
shares of unvested restrictedstock (participating non-vestedrestricted stock) fromthe numerator and excludesthe dilutive impact of
these unvested shares of restricted stock from the denominator.
Diluted earnings(loss) pershare havebeen calculatedto giveeffect tothe numberof sharesof additionalcommon stockthat
would havebeen outstandingif thepotential dilutiveinstruments hadbeen issuedin eachperiod. Stockoptions areincluded inthe
calculation of diluted earnings (loss) per share utilizing the treasury stockmethod and are not considered to be participating securities,
as thestock optionsdo notcontain non-forfeitabledividend rights.The calculationof dilutedearnings (loss)per shareincludes the
dilutive effectof a portion ofthe restricted stockgranted to employeesduring the currentand previous fiscalperiods as theseshares
of restrictedstock areconsidered contingentlyreturnable sharesfor thepurposes ofthe dilutedearnings (loss)per sharecalculation
and thevesting conditionsin respectof aportion ofthe restrictedstock hadbeen satisfied.The vestingconditions arediscussed in
Note17.TheCompanyhasexcludedemployeestockoptionstopurchase
188,632
and
46,777
sharesofcommonstockfromthe
calculationofdilutedlosspershareduringtheyearsendedJune30,2025and2024,respectively,becausetheeffectwouldbe
antidilutive.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-88
19.EARNINGS (LOSS) PER SHARE (continued)
The followingtable presents netloss attributableto Lesakaand the sharedata used inthe basic anddiluted earnings(loss) per
share computations using the two-class method for the years endedJune 30, 2026, 2025 and 2024:
2026
2025
2024
(in thousands except percent and per share data)
Numerator:
Net income (loss) attributable to Lesaka
(A)
$
2,758
$
(90,957)
$
(18,515)
Undistributed income (loss)
(A)
2,758
(90,957)
(18,515)
Percent allocated to common shareholders
(Calculation 1)
97%
97%
95%
Numerator for earnings (loss) per share: basic and diluted
$
2,672
$
(87,894)
$
(17,678)
Denominator
Denominator for basic earnings (loss) per share:
weighted-average common shares outstanding
79,516
73,891
61,276
Effect of dilutive securities:
Stock options
161
-
-
Denominator for diluted earnings (loss) per share: adjusted weighted
average common shares outstanding and assumed conversion
79,677
73,891
61,276
Earnings (Loss) per share:
Basic
(A)
$
0.03
$
(1.19)
$
(0.29)
Diluted
(A)
$
0.03
$
(1.19)
$
(0.29)
(Calculation 1)
Basic weighted-average common shares outstanding (A)
79,516
73,891
61,276
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest (B)
82,088
76,466
64,179
Percent allocated to common shareholders
(A) / (B)
97%
97%
95%
(A) Net income(loss) attributable toLesaka and Undistributedearnings (loss) forthe year endedJune 30, 2026,has decreased
by$
0.4
million,asaresultofthecorrection,asdiscussedinNote1,totheamountincludedinthecaptionsNetincome(loss)
attributable to Lesaka and Undistributed earnings (loss)for the three months endedSeptember 30, 2025. Net income(loss) attributable
to Lesaka and Undistributed earnings (loss) for years ended June 30, 2025 and 2024, havedecreased by $
3.4
million and $
1.1
million,
respectively, as a result ofthe correction discussed in Note 1.
The correctionof theerror didnot impactBasic andDilutedearnings pershare forthe yearended June30, 2026.Basic and
Diluted loss pershare for theyears ended June30, 2025 and2024, decreased by$
0.05
(five U.S. cents)and $
0.02
(two U.S. cents),
respectively.
Options to purchase
6,412,973
,
6,493,683
and
4,737,543
shares of theCompany’s commonstock at pricesranging from $
5.22
to $
14.00
(2026) and$
4.87
to $
14.00
(2025 and2024) pershare wereoutstanding duringthe yearended June30, 2026,2025 and
2024, respectively,but were not includedin the computation ofdiluted earnings (loss) pershare because the options’exercise prices
were greaterthan theaverage marketpriceof theCompany’scommonshares. Theoptions, whichexpire atvarious datesthrough
February 3, 2032, were still outstanding as of June 30, 2026.
20.SUPPLEMENTAL CASHFLOW INFORMATION
The following table presents supplemental cash flow disclosures forthe years ended June 30, 2026, 2025 and 2024:
2026
2025
2024
Cash received from interest
$
2,331
$
2,576
$
2,277
Cash paid for interest
$
21,812
$
18,077
$
17,381
Cash paid for income taxes, net of refunds received
$
10,432
$
6,481
$
6,506
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-89
20.SUPPLEMENTAL CASHFLOW INFORMATION(continued)
Disaggregation of cash, cash equivalents and restricted cash
Cash, cash equivalentsand restricted cashincluded onthe Company’sconsolidated statementof cash flowsincludes restricted
cash relatedto cashwithdrawn fromone ofthe Company’sdebt facilitiesto fundATMs.This facilitywas cancelledin November
2024. The Company was only permitted to use this cash to fund ATMsand this cash was considered restricted as to use and therefore
was classified as restrictedcash. Cash, cash equivalentsand restricted cash alsoincludes cash in certainbank accounts that hasbeen
ceded to Nedbank. As this cash has been pledged and ceded it may not be drawn and is considered restricted as to use and therefore is
classified asrestricted cashas well.Refer toNote 12for additionalinformation regardingthe Company’sfacilities. Thefollowing
table presents the disaggregation of cash, cash equivalents and restrictedcash as of June 30, 2026, 2025 and 2024:
2026
2025
2024
Cash and cash equivalents
$
81,409
$
76,520
$
59,065
Restricted cash
129
119
6,853
Cash, cash equivalents and restricted cash
$
81,538
$
76,639
$
65,918
Leases
The followingtable presentssupplementalcash flowdisclosure relatedto leasesfor theyears endedJune 30,2026, 2025and
2024:
2026
2025
2024
Cash paid related to lease liabilities
Operating cash flows from operating leases
$
5,942
$
4,834
$
3,238
Right-of-use assets obtained in exchange for lease obligations
Operating leases
$
19,017
$
5,707
$
4,800
21.OPERATING SEGMENTS
Operating segments
The Company discloses segment information as reflected in the managementinformation systems reports that its chief operating
decision maker (“CODM”) uses in making decisions and to report certain entity-wide disclosures about products and services, and the
countries in which the entity holds material assets or reports material revenues. The Company currently has
three
reportable segments:
Merchant, Consumer and Enterprise. The Company’sCODM is the Company’s Executive Chairman.
The CODM analyzesthe Company’s operating performanceprimarily based on these three operational lines, namely,
(i) Merchant, which focuses onboth formal and informal sectormerchants. Formal sector merchants are generally inurban areas,
have higherrevenues andhave accessto multipleservice providers.Informal sectormerchants, whichare oftensole proprietorsand
usuallyhave lowerrevenues comparedwith formalsection merchants,operate inrural areasor ininformal urbanareas anddo not
always have access to a full-suite of traditional banking products;
(ii) Consumer,which primarilyfocuses onindividuals whohave historicallybeen excludedfrom traditionalfinancial services
and to whom we offertransactional accounts (banking), insurance,lending (short-term loans), payments solutions(digital wallet) and
various value-added services; and
(iii) Enterprise, which comprises large-scale corporateand government organizations, including but notlimited to banks, mobile
network operators (“MNOs”) and municipalities, and,through Recharger, landlordsutilizing Recharger’s prepaid electricitymetering
solution.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-90
21.OPERATING SEGMENTS(continued)
The Merchantsegment includesrevenue generatedfrom thesale ofADP (selectprepaid solutions,supplier-enabled payments,
international moneytransfer and other)and card-acquiring servicesto informal sectormerchants. It alsoincludes activities relatedto
the provision of goods andservices provided to corporate andother juristic entities. The Company earnsfees from processing activities
performed (includingcard acquiringand theprovision ofa paymentgateway services)for itscustomers, andrental andlicense fees
fromtheprovisionofPOShardwareandsoftwaretothehospitalityindustry.TheCompanyalsoprovidescashmanagementand
paymentservices tomerchant customersthrough adigital vaultwhich islocated atthe customer’spremises andthrough whichthe
Company is able to providethe services which generate processingfee revenue. The Merchant segmentincludes interest earned from
the provision of loans to its customers.
The Consumer segmentincludes activities relatedto the provisionof financial servicesto customers, includinga bank account,
loans andinsurance products.The Companycharges monthlyadministration feesfor allbank accounts.Customers thathave abank
account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant POS.
TheCompanyearnsprocessingfeesfromtransactionsprocessedforthesecustomers.TheCompanyprovidesshort-termloansto
customers in South Africa for which it earns initiation and monthly service fees, and interest revenue from the second quarter of fiscal
2025. The Company writes life insurance contracts, primarily funeral-benefit policies, and policy holders pay the Companya monthly
insurance premium.The Companyalso earns feesfrom the provisionof physical anddigital prepaidand secure payoutsolutions for
South African businesses.
The Enterprise segment provides its business andgovernment-related customers with transaction processing services that involve
the collection, transmittaland retrieval oftransaction data. TheCompany offers landlords accessto Utilities prepaid electricitymetering
solutionthroughwhichEnterpriseearnscommissionrevenuefromprepaidelectricityvouchersalestotenantsrechargingprepaid
meters. This segment also includes sales of hardware and licensesto customers. Hardware includes the sale of POS devices,SIM cards
andotherconsumableswhich canoccuron anad hocbasis. Licensesincludethe rightto usecertaintechnologydevelopedby the
Company.
Segment measure of profit or loss
TheCompanyevaluatessegmentperformancebasedonsegmentearningsbeforeinterest, tax,depreciationandamortization
(“EBITDA”),adjustedforitemsmentionedinthesentencesbelow(“SegmentAdjustedEBITDA”),theCompany’sreportable
segments’ measure of profit or loss.
TheCompanyobtainedagenerallendingfacilityinFebruary2025,whichhasbeenpartiallyusedtofundaportionofits
Consumer lendingduring theyear endedJune 30,2026, andinterest relatedto theseborrowings havebeen allocatedto Consumer.
The Companyalso includedan intercompanyinterest expense inits ConsumerSegment AdjustedEBITDA forthe yearended June
30, 2025.
The Company does notallocate once-off items, stock-basedcompensation charges, impairmentof other intangible assets,other
items (including gains orlosses on disposal ofinvestments, fair value adjustmentsto equity securities), interestincome, certain interest
expense, incometax expenseor lossfrom equity-accounted investmentsto itsreportablesegments. Groupcosts generallyinclude:
employee related costs in relation toemployees specifically hired for group rolesand related directly to managing theUS-listed entity;
expenditures relatedto compliancewith theSarbanes-OxleyAct of2002; non-employeedirectors’ fees;legal fees;group andUS-
listedrelatedauditfees;anddirectorsandofficer’sinsurancepremiums.Once-offitemsrepresentnon-recurringexpenseitems,
including costsrelated toacquisitions andtransactions consummatedor ultimatelynot pursued.Unrealized (loss)gain forcurrency
adjustments represents foreign currency mark-to-market adjustments oncertain intercompany accounts. Interest adjustment represents
theintercompanyinterestexpenseincludedintheConsumerSegmentAdjustedEBITDAduringfiscal2025.TheStock-based
compensationadjustmentsreflectstock-basedcompensationexpenseandareexcludedfromthecalculationofSegmentAdjusted
EBITDAandarethereforereportedas reconcilingitemstoreconcilethereportablesegments’SegmentAdjustedEBITDAtothe
C
ompany’s loss before incometax expense.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-91
21.OPERATING SEGMENTS(continued)
Segment measure of profit or loss (continued)
OurCODMdoesnotreviewthecomponentsofsegmentselling,generalandadministrationexpensesandispresentedwith
reports which include revenue and segment adjusted EBITDA.
The table below presentsthe reconciliation of revenue fromexternal customers to thereportable segment’srevenue, significant
expenditures, the Company’s reportable segment’s measure of profit orloss, and certain othersegment information for theyears ended
June 30, 2026 and 2025, respectively,is as follows:
Yearended June 30,2026
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
506,193
$
142,443
$
72,918
$
-
$
721,554
Intersegment revenues
3,142
188
1,812
-
5,142
Segment revenue
(z)
509,335
142,631
74,730
-
726,696
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
(y)
395,124
47,606
53,246
-
495,976
Selling, general and administration
(1)(2)
78,678
48,832
13,365
-
140,875
Segment adjusted EBITDA
$
35,533
$
46,193
$
8,119
$
-
$
89,845
(z) includes interest revenue of:
9,750
27,419
-
-
37,169
(y) includes interest expense of:
1,945
5,257
-
-
7,202
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
14,734
$
1,742
$
430
$
30,440
$
47,346
Expenditures for long-lived assets
$
19,581
$
2,890
$
2,578
$
-
$
25,049
Yearended June 30,2025
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
524,252
$
96,008
$
39,441
$
-
$
659,701
Intersegment revenues
2,348
-
3,113
-
5,461
Segment revenue
(z)
526,600
96,008
42,554
-
665,162
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
(y)(A)
426,427
35,603
32,549
-
494,579
Selling, general and administration
(A)(1)(3)
64,844
36,456
8,718
-
110,018
Segment adjusted EBITDA
(A)
$
35,329
$
23,949
$
1,287
$
-
$
60,565
(z) includes interest revenue of:
7,231
5,038
-
-
12,269
(y) includes interest expense of:
1,671
3,394
-
-
5,065
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
10,997
$
968
$
371
$
21,385
$
33,721
Expenditures for long-lived assets
$
18,117
$
1,500
$
1,482
$
-
$
21,099
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-92
21.OPERATING SEGMENTS(continued)
The table below presentsthe reconciliation of revenue fromexternal customers to thereportable segment’srevenue, significant
expenditures, the Company’s reportable segment’smeasure of profit or loss, and certain other segment information for the year ended
June 30, 2024, respectively,is as follows:
Yearended June 30,2024
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
456,069
$
69,211
$
38,942
$
-
$
564,222
Intersegment revenues
3,721
-
7,955
-
11,676
Segment revenue
(z)
459,790
69,211
46,897
-
575,898
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
(y)(A)
394,238
23,165
37,424
-
454,827
Selling, general and administration
(A)(1)(4)
37,218
33,367
6,542
-
77,127
Segment adjusted EBITDA
(A)
$
28,334
$
12,679
$
2,931
$
-
$
43,944
(z) includes interest revenue of:
6,096
-
-
-
6,096
(y) includes interest expense of:
1,448
-
-
-
1,448
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
8,141
$
734
$
402
$
14,388
$
23,665
Expenditures for long-lived assets
$
11,202
$
1,317
$
146
$
-
$
12,665
(A) Cost of goods sold,IT processing, servicing andsupport and Selling, generaland administration for Merchantand Total for
the yearended June30, 2026haveeach increasedby $
0.2
millionand$
0.06
million,respectively,as aresult ofthe correction,as
discussed in Note1, to theamount included inthe captions Costof goods sold,IT processing, servicingand support andSelling, general
and administrationfor the threemonths ended September30, 2025. SegmentAdjusted EBITDA forMerchant and Totalfor the year
ended June 30, 2026 haveeach decreased by $
0.2
million as a result ofthe correction, as discussed inNote 1, to the amountincluded
in the caption Segment Adjusted EBITDA for the three months ended September30, 2025.
Cost of goodssold, IT processing,servicing and supportand Selling, generaland administration forMerchant and Totalfor the
year ended June 30, 2025 have each increased by $
0.6
million and $
0.2
million, respectively, as a resultof the correction discussed in
Note 1. Segment AdjustedEBITDA for Merchant andTotal forthe year ended June 30,2025 have each decreasedby $
0.9
million as
a result of the correction discussed in Note 1.
Cost of goodssold, IT processing,servicing and supportand Selling, generaland administration forMerchant and Totalfor the
year ended June 30, 2024 have each increased by $
0.6
million and $
0.2
million, respectively, as a resultof the correction discussed in
Note 1. Segment AdjustedEBITDA for Merchant andTotal forthe year ended June 30,2024 have each decreasedby $
0.8
million as
a result of the correction discussed in Note 1.
(1)Selling,generalandadministrationincludeshumancapital-relatedexpenses(includingbasesalaryandbonus),IT-related
expenses(includingsoftwarelicenses,hardwaremaintenance,hosting,andcommunicationexpenses),professionalfees(including
audit, legal,consulting andother fees),lease andutilities expenses,the allowancefor creditlosses andother operatingand support
expenses.
(2) Segment AdjustedEBITDA for theyear ended June30, 2026, includesretrenchment and reorganizationcosts for Merchant
of $
0.8
million (ZAR
14.0
million), Consumer of $
0.4
million (ZAR
7.1
million) and Enterprise of $
0.1
million (ZAR
1.1
million).
(3) SegmentAdjusted EBITDA forthe year endedJune 30, 2025,includes retrenchment andreorganization costsfor Merchant
of $
0.8
million (ZAR
15.7
million), Consumer of $
0.1
million (ZAR
1.5
million) and Enterprise of $
0.8
million (ZAR
13.6
million).
(4) Segment Adjusted EBITDA for the yearended June 30, 2024, includes retrenchment costsfor Merchant of $
0.3
million (ZAR
4.9
million) and Consumer of $
0.2
million (ZAR
3.5
million).
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-93
21.OPERATING SEGMENTS(continued)
The reconciliation of the reportable segments’ measures of profit or loss to income (loss)before income taxes for the years ended
June 30, 2026, 2025 and 2024, respectively,is as follows:
2026
2025
2024
Reportable segments measure of profit or loss
(A)
$
89,845
$
60,565
$
43,944
Operating loss: Group costs
(14,103)
(10,743)
(7,844)
Once-off costs
(5,452)
(17,826)
(1,853)
Interest adjustment
-
2,195
-
Unrealized gain (loss)for currency adjustments
53
(23)
83
Stock-based compensation charge adjustments
(6,969)
(9,550)
(7,911)
Depreciation and amortization
(47,346)
(33,721)
(23,665)
Loss on disposal of equity-accounted investment (Note 9)
(584)
(161)
-
Impairment loss
(1)
(3,347)
(18,863)
-
Change in fair value of equity securities (Note 3)
2,593
(59,828)
-
Gain on disposal of equity securities
(730)
-
-
Other income
3,883
-
-
Reversal of doubtful loan receivable
1,500
-
250
Interest income
2,889
2,596
2,294
Interest expense
(A)
(18,506)
(21,824)
(19,171)
Income (Loss) before income taxes
(A)
$
3,726
$
(107,183)
$
(13,873)
(A) Reportable segments’ measure of profit or loss and net lossbefore taxes for the year ended June 30, 2026, have decreased by
$
0.2
million and $
0.4
million, respectively, as a result of the correction, as discussed in Note 1, to the amount included in the captions
Reportablesegments’measure ofprofitor lossandnet lossbeforetaxes forthe threemonths endedSeptember 30,2025.Interest
expense forthe year endedJune 30,2026, has increasedby $
0.1
million, as aresult of thecorrection, asdiscussed in Note1, to the
amount included in the caption Interest expense for the three months endedSeptember 30, 2025.
Reportable segments’measure ofprofit orloss andnet lossbefore taxesfor theyear endedJune 30,2025, havedecreased by
$
0.9
million, and $
1.2
million, respectively,as a result ofthe correctiondiscussed in Note1. Interest expensefor the June30, 2025,
has increased by $
0.4
million as a result of the correction discussed in Note 1.
Reportable segments’measure ofprofit orloss andnet lossbefore taxesfor theyear endedJune 30,2024, havedecreased by
$
0.8
million, and $
1.1
million, respectively,as a result ofthe correctiondiscussed in Note1. Interest expensefor the June30, 2024,
has increased by $
0.2
million as a result of the correction discussed in Note 1.
(1) Impairment loss excludes an amount of $
0.7
million which is included in the caption Once-off costs related to the exit of the
ATMbusiness.
The segmentinformation asreviewed bythe chiefoperating decisionmaker doesnot includea measureof segmentassets per
segment as all ofthe significant assets areused in the operationsof all, rather thanany one, of thesegments. The Company doesnot
have dedicated assetsassigned to aparticular operating segment.Accordingly,it is not meaningfulto attempt an arbitraryallocation
and segment asset allocation is therefore not presented.
Long-lived assets based on their geographic location as of June 30, 2026,2025 and 2024, are presented in the table below:
Long-lived assets
2026
2025
2024
South Africa
$
403,085
$
392,098
$
286,700
India - Investment in MobiKwik (Note 9)
-
-
76,297
Rest of world
8,609
3,055
2,548
Total
$
411,694
$
395,153
$
365,545
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-94
22.COMMITMENTS AND CONTINGENCIES
Capital commitments
AsofJune30,2026and2025,theCompanyhadoutstandingcapitalcommitmentsofapproximately$
0.6
millionand$
0.2
million, respectively.
Purchase obligations
As of June 30,2026 and 2025, theCompany had purchaseobligations totaling $
5.7
million and $
2.9
million, respectively.The
purchaseobligationsasofJune30,2026,primarilyrelatetoPOSdevices,componentsforsafeassetsandinventorythatwillbe
delivered to the Company and sold to customers in fiscal 2027.
Guarantees
The South AfricanRevenue Service andcertain of theCompany’s customers,suppliers and otherbusiness partners haveasked
the Companyto providethem withguarantees, includingstandby lettersof credit,issued bySouth Africanbanks. TheCompany is
required to procure these guarantees for these third parties to operateits business.
Nedbank hasissued guaranteesto thesethird partiesamounting toZAR
2.1
million ($
0.1
million, translatedat exchangerates
applicableasofJune30,2026)therebyutilizingpartoftheCompany’sshort-termfacilities.TheCompanypayscommissionof
between
0.47
% per annum to
1.84
% per annum of the facevalue of these guarantees and doesnot recover any of the commissionfrom
third parties.
RMB hasissuedguaranteestothesethirdpartiesamountingtoZAR
70.2
million($
4.3
million,translatedatexchangerates
applicable as of June 30, 2026) thereby utilizing part of the Company’sshort-term facilities.
The Company has not recognized any obligation related tothese guarantees in its consolidated balance sheet as ofJune 30, 2026.
The maximum potentialamount that the Companycould pay underthese guarantees is ZAR
72.3
million ($
4.4
million, translated at
exchange rates applicableas of June 30, 2026).As discussed in Note12, the Companyhas ceded and pledgedcertain bank accounts
to Nedbankas securityfor theseguaranteeswith anaggregate valueof ZAR
2.1
million ($
0.1
million translatedat exchangerates
applicable asof June30, 2026).The guaranteeshave reducedthe amountavailable underits indirectand derivativefacilities inthe
Company’s short-term credit facility describedin Note 12.
Contingencies
TheCompanyissubjecttoavarietyofinsignificantclaimsandsuitsthatarisefromtimetotimeintheordinarycourseof
business. Managementcurrently believesthat theresolution ofthese othermatters, individuallyor inthe aggregate,will nothave a
material adverse impact on the Company’sfinancial position, results of operations or cash flows.
23.RELATED PARTYTRANSACTIONS
Related parties of the Executive Chairman
The Company's Executive Chairmanalso serves asChairman of a Teya Holdings Ltd.(“Teya”), a group of privatelyheld entities.
Certain entities within the Teya groupengage in transactions with the Company in the ordinary course of business. The Company has
evaluated thesearrangements anddetermined thatthe related transactionswere immaterial,individually andin the aggregate,to the
Company's consolidated financial statements for the periods presented.
Related parties of a non-employee director
One of the Company's non-employee directors(Mr. Dean Sparrow) also serves as directorand chief executive officer of Crossfin
Holdings.Crossfin Holdings has an indirect shareholding in VantagePayand Mr. Sparrow is a director of VantagePay.The Company
a
nd VantagePayhave engaged in a transaction in the ordinary course of business, refer to Note 4 for additionalinformation.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-95
24.SUBSEQUENT EVENTS
New lease obtained
In August 2026, theCompany, throughLesaka SA, entered into abinding offer to leasefor a new regional officein Umhlanga,
Durban,KwaZulu-Natal,SouthAfricawithSA SugarDistributorsProprietaryLimited, asubsidiaryof ABFS,aprivatecompany
incorporated in SouthAfrica. The lease commenceson November 1, 2026and is for a periodof
5
years, with an optionto renew for
a further
five years
. The Company secured beneficial occupation from September 1, 2026, and is expected to recorda ROU asset and
an operating lease liability related from the date of taking beneficial occupation. The Company was required to provide a cash deposit
oftwomonth’srenttothelessor.TheCompanyexpectstopayanannualbasicleaseexpenseof$
0.3
million(ZAR
5.1
million,
translated at exchange rates applicable as of June 30, 2026), which increasesby
7.00
% per annum.
Guarantee issued to supplier
In July and August 2026, RMBissued guarantees of ZAR
22.0
million and ZAR
7.3
million, respectively, ($
1.3
million and $
0.4
million,respectively,translatedatexchangeratesapplicableasofJune30,2026),tothirdpartiestherebyutilizingpartofthe
Company’s short-termfacilities.
*
****************************