What changed in this filing

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Item 1. Financial Statements

2023-02-07 compared with 2022-11-08 · 455 added, 252 removed, 731 unchanged (49% of the section changed)

2 unchanged sentences

Unaudited Condensed Consolidated Balance Sheets

September 30,

(In thousands, except share data)

8 unchanged sentences

Total current assets

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - September:

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December:

$ 36,735 June:

24 unchanged sentences

200,000,000 with $ 0.001 par value;

Issued and outstanding shares, net of treasury - September:

Issued and outstanding shares, net of treasury - December:

63,751,337 June:

16 unchanged sentences

Three months ended

September 30,

Six months ended

(In thousands, except per share data)

REVENUE (Note 15)

4 unchanged sentences

OPERATING LOSS

NET GAIN ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENTS (Note 5)

UNREALIZED LOSS RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS (Note 4)

(LOSS) GAIN ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 5)

INTEREST INCOME

2 unchanged sentences

INCOME TAX EXPENSE (Note 18)

NET LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS

LOSS FROM EQUITY-ACCOUNTED INVESTMENTS (Note 5)

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 5)

NET LOSS ATTRIBUTABLE TO LESAKA

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

1 unchanged sentence

Diluted loss attributable to Lesaka shareholders

(1) $ 185,000 of transaction costs previously included in the caption selling, general and administration and has been reclassified to the caption transaction costs related to Connect acquisition in order to conform with the Company's presentation for the year ended June 30, 2022

See Notes to Unaudited Condensed Consolidated Financial Statements

2 unchanged sentences

Three months ended

September 30,

Six months ended

(In thousands)

Other comprehensive (loss) income, net of taxes

(In thousands)

Other comprehensive income (loss), net of taxes

Movement in foreign currency translation reserve

Release of foreign currency translation reserve related to disposal of Finbond equity securities (Note 11)

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

Release of foreign currency translation reserve related to disposal of Finbond equity securities

Total other comprehensive (loss) income, net of taxes

Comprehensive loss

Add comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to Lesaka

Total other comprehensive income (loss), net of taxes

Comprehensive income (loss)

Comprehensive income (loss) attributable to Lesaka

See Notes to Unaudited Condensed Consolidated Financial Statements

12 unchanged sentences

Redeemable common stock

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

Balance – July 1, 2021

For the three months ended December 31, 2021 (dollar amounts in thousands)

Balance – October 1, 2021

( 24,891,292 )

Restricted stock granted (Note 12)

Exercise of stock options

Stock-based compensation charge (Note 12)

2 unchanged sentences

Other comprehensive loss (Note 11)

Balance – September 30, 2021

Balance – December 31, 2021

( 24,891,292 )

For the six months ended December 31, 2021 (dollar amounts in thousands)

Balance – July 1, 2021

( 24,891,292 )

Restricted stock granted

Exercise of stock options

Stock-based compensation charge (Note 12)

Reversal of stock-based compensation charge (Note 12)

Stock-based compensation charge related to equity-accounted investment

Other comprehensive income (Note 11)

Balance – December 31, 2021

( 24,891,292 )

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

11 unchanged sentences

Redeemable common stock

For the three months ended September 30, 2022 (dollar amounts in thousands)

Balance – July 1, 2022

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

Balance – October 1, 2022

( 24,926,752 )

4 unchanged sentences

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

Other comprehensive income (Note 11)

Balance – December 31, 2022

( 24,956,854 )

See Notes to Unaudited Condensed Consolidated Financial Statements

For the six months ended December 31, 2022 (dollar amounts in thousands)

Balance – July 1, 2022

( 24,891,292 )

Shares repurchased (Note 12)

Restricted stock granted

Exercise of stock option (Note 12)

Stock-based compensation charge (Note 12)

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

Other comprehensive loss (Note 11)

Balance – September 30, 2022

Balance – December 31, 2022

( 24,956,854 )

3 unchanged sentences

Three months ended

September 30,

Six months ended

(In thousands)

Cash flows from operating activities

1 unchanged sentence

Movement in allowance for doubtful accounts receivable

Loss from equity-accounted investments (Note 5)

Fair value adjustment related to financial liabilities

Interest payable

Facility fee amortized

Net gain on disposal of equity-accounted investments (Note 5)

Unrealized loss related to fair value adjustment to currency options (Note 4)

Fair value adjustment related to financial liabilities

Loss (Gain) on disposal of equity-accounted investments (Note 5)

(Earnings) Loss from equity-accounted investments

Profit on disposal of property, plant and equipment (1)

Facility fee amortized

Stock-based compensation charge (Note 12)

Dividends received from equity-accounted investments

(Increase) Decrease in accounts receivable and finance loans receivable

Decrease (Increase) in accounts receivable

Increase in finance loans receivable (2)

(Increase) Decrease in inventory

Increase (Decrease) in accounts payable and other payables

Increase in taxes payable

Decrease in deferred taxes

Net cash used in operating activities

Increase in accounts payable and other payables

(Decrease) Increase in taxes payable

(Decrease) Increase in deferred taxes

Net cash provided by (used) in operating activities

Cash flows from investing activities

1 unchanged sentence

Proceeds from disposal of property, plant and equipment

Proceeds from disposal of equity-accounted investments (Note 5)

Loan to equity-accounted investment

Proceeds from disposal of equity-accounted investment (Note 5)

Acquisition of intangible assets

Proceeds from disposal of equity-accounted investment - Bank Frick, net of expenses

Loan to equity-accounted investment (Note 5)

Repayment of loans by equity-accounted investments

Net change in settlement assets

Net cash used in investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities

5 unchanged sentences

Proceeds from exercise of stock options

Guarantee fee

Net change in settlement obligations

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net increase in cash, cash equivalents and restricted cash

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash – beginning of period

Cash, cash equivalents and restricted cash – end of period (Note 14)

(1) Impairment losses of $ 140,000 previously reported in a separate caption during the three months ended September 30, 2021, have been included in the caption profit on disposal of property, plant and equipment for the three months ended September 30, 2021

(1) Impairment losses of $ 85,000 and $ 225,000 respectively, previously reported in a separate caption during the three and six months ended December 31, 2021, have been included in the caption profit on disposal of property, plant and equipment for the three and six months ended December 31, 2021

(2) The movement in accounts receivable and finance loans receivable were previously combined, however, it was determined in the three months ended December 31, 2022, to present the movement in finance loans receivable as a separate caption.

Previous periods have been restated.

See Notes to Unaudited Condensed Consolidated Financial Statements

1 unchanged sentence

Notes to the Unaudited Condensed Consolidated Financial Statements

for the three months ended September 30, 2022 and 2021

for the three and six months ended December 31, 2022 and 2021

(All amounts in tables stated in thousands or thousands of U.S.

4 unchanged sentences

generally accepted accounting principles (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-Q and include all of the information and disclosures required for interim financial reporting.

The results of operations for the three months ended September 30, 2022 and 2021, are not necessarily indicative of the results for the full year.

The results of operations for the three and six months ended December 31, 2022 and 2021, are not necessarily indicative of the results for the full year.

The Company believes that the disclosures are adequate to make the information presented not misleading.

9 unchanged sentences

The adoption of this guidance did not have a material impact on the Company’s financial statements and related disclosures.

Recent accounting pronouncements not yet adopted as of September 30, 2022

Recent accounting pronouncements not yet adopted as of December 31, 2022

In June 2016, the FASB issued guidance regarding Measurement of Credit Losses on Financial Instruments .

15 unchanged sentences

Accounts receivable, net and other receivables

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

September 30,

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

Accounts receivable, trade, net

2 unchanged sentences

Beginning of period

Reallocation to allowance for doubtful finance loans receivable (1)

Reversed to statement of operations

2 unchanged sentences

Current portion of amount outstanding related to sale of interest in Carbon, net of allowance:

September 2022:

December 2022:

Loans provided to Carbon, net of allowance:

3 unchanged sentences

Total accounts receivable, net and other receivables

Current portion of amount outstanding related to sale of interest in Carbon represents the amount due from the purchaser related to the sale of Carbon Tech Limited (“Carbon”), an equity-accounted investment of $ 0.25 million, net of an allowance for doubtful loans receivable of $ 0.25 million, refer to Note 5 for additional information.

(1) Represents reallocation of a portion of the Merchant allowance for doubtful finance loans receivable as of June 30, 2022, which was included in the allowance for doubtful accounts receivable as of June 30, 2022.

Current portion of amount outstanding related to sale of interest in Carbon represents the amount due from the purchaser related to the sale of the Company’s interest in Carbon Tech Limited (“Carbon”), an equity-accounted investment of $ 0.25 million, net of an allowance for doubtful loans receivable of $ 0.25 million, refer to Note 5 for additional information.

The loan of $ 3.0 million provided to Carbon was scheduled to be repaid before June 30, 2020, however, Carbon requested a payment holiday as a result of the impact of the COVID-19 pandemic on its business.

2 unchanged sentences

The loan was sold in September 2022 for $ 0.75 million (refer to Note 5).

Investment in 7.625 % of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625 % notes represents the investment in a note which was due to mature in August 2022 and formed part of Cell C’s capital structure.

The carrying value as of each of September 30, 2022 and June 30, 2022, respectively was $ 0 (nil).

Other receivables includes prepayments, deposits, income taxes receivable and other receivables, as well as transactions-switching funds receivable of $ 3.2 million which was received in full in November 2022.

Investment in 7.625 % of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625 % notes represents the investment in a note which was due to mature in August 2022 and forms part of Cell C’s capital structure.

The carrying value as of each of December 31, 2022, and June 30, 2022, respectively was $ 0 (nil).

Other receivables includes prepayments, deposits, income taxes receivable and other receivables, and as of June 30, 2022, also includes transactions-switching funds receivable of $ 3.3 million which was received in full in November 2022.

Contractual maturities of held to maturity investments

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

Summarized below is the contractual maturity of the Company’s held to maturity investment as of December 31, 2022:

Estimated fair value (1)

7 unchanged sentences

Finance loans receivable, net

The Company’s finance loans receivable, net, as of September 30, 2022, and June 30, 2022, is presented in the table below:

September 30,

The Company’s finance loans receivable, net, as of December 31, 2022, and June 30, 2022, is presented in the table below:

Microlending finance loans receivable, net

9 unchanged sentences

Beginning of period

Reallocation from allowance for doubtful accounts receivable (1)

Reversed to statement of operations

2 unchanged sentences

Total finance loans receivable, net

Total finance loans receivable, net, comprises microlending finance loans receivable related to the Company’s microlending operations in South Africa as well as its merchant finance loans receivable related to Connect’s lending activities in South Africa.

Certain merchant finance loans receivable have been pledged as security for the Company’s revolving credit facility (refer to Note 8).

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

September 30,

The Company’s inventory comprised the following categories as of December 31, 2022, and June 30, 2022 :

Raw materials

1 unchanged sentence

Finished goods

As of September 30, 2022 and June 30, 2022, finished goods includes $ 11.0 million and $ 13.7 million, respectively, of Cell C airtime inventory that was previously classified as finished goods subject to sale restrictions.

As of December 31, 2022 and June 30, 2022, finished goods includes $ 10.1 million and $ 13.7 million, respectively, of Cell C airtime inventory that was previously classified as finished goods subject to sale restrictions.

In support of Cell C’s liquidity position and pursuant to Cell C’s recapitalization process, the Company limited the resale of this airtime to its own distribution channels.

1 unchanged sentence

The amount to be repurchased by Cell C will be calculated as ZAR 10 million less the face value of any sales made by the Company during that month.

The Company has continued to sell a minimum amount of Cell C airtime through its internal channels in late fiscal 2022/ early fiscal 2023 in support of Cell C’s liquidity position.

The Company continued to sell a minimum amount of Cell C airtime through its internal channels in late fiscal 2022/ early fiscal 2023 in support of Cell C’s liquidity position.

However, its ability to sell this airtime has increased significantly since the acquisition of Connect because Connect is a significant reseller of Cell C airtime.

As a result, and depending on prevailing conditions in the airtime market, the Company intends to sell a higher volume of airtime through this channel than it did prior to the Cell C recapitalization.

As a result, and depending on prevailing conditions in the airtime market, the Company has sold higher volumes of airtime through this channel than it did prior to the Cell C recapitalization.

If the Company is able to sell at least ZAR 10 million a month through this channel from October 1, 2023, then Cell C would not be required to repurchase any airtime from the Company during any specific month.

24 unchanged sentences

With respect to credit risk on financial instruments, the Company maintains a policy of entering into such transactions only with South African and European financial institutions that have a credit rating of “B” (or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings.

Microlending credit risk

The Company is exposed to credit risk in its microlending activities, which provides unsecured short-term loans to qualifying customers.

Credit bureau checks as well as an affordability test are conducted as part of the risk management process, both of which are in accordance with local regulations.

The affordability test takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses.

Consumer microlending credit risk

The Company is exposed to credit risk in its Consumer microlending activities, which provides unsecured short-term loans to qualifying customers.

Credit bureau checks as well as an affordability test are conducted as part of the origination process, both of which being in line with local regulations.

The Company considers this policy to be appropriate because the affordability test it performs takes into account a variety of factors such as other debts and total expenditures on normal household and lifestyle expenses.

Additional allowances may be required should the ability of its customers to make payments when due deteriorate in the future.

A significant amount of judgment is required to assess the ultimate recoverability of these finance loan receivables, including ongoing evaluation of the creditworthiness of each customer.

Merchant lending

The Company maintains an allowance for doubtful finance loans receivable related to its Merchant services segment with respect to short-term loans to qualifying merchant customers.

The Company’s risk management procedures include adhering to its proprietary lending criteria which uses an online-system loan application process, obtaining necessary customer transaction-history data and credit bureau checks.

The Company considers these procedures to be appropriate because it takes into account a variety of factors such as the customer’s credit capacity and customer-specific risk factors when originating a loan.

Fair value of financial instruments (continued)

Risk management (continued

Equity price and liquidity risk

3 unchanged sentences

The Company may not be able to sell some or all of these securities at one time, or over an extended period of time without influencing the exchange-traded price, or at all.

Fair value of financial instruments (continued)

Financial instruments

9 unchanged sentences

The Company’s Level 3 asset represents an investment of 75,000,000 class “A” shares in Cell C, a significant mobile telecoms provider in South Africa.

The Company used a discounted cash flow model developed by the Company to determine the fair value of its investment in Cell C as of September 30, 2022 and June 30, 2022, respectively, and valued Cell C at $ 0.0 (zero) at each of September 30, 2022, and June 30, 2022.

The Company used a discounted cash flow model developed by the Company to determine the fair value of its investment in Cell C as of December 31, 2022 and June 30, 2022, respectively, and valued Cell C at $ 0.0 (zero) and $ 0.0 (zero) as of December 31, 2022, and June 30, 2022, respectively.

The Company incorporates the payments under Cell C’s lease liabilities into the cash flow forecasts and assumes that Cell C’s deferred tax assets would be utilized over the forecast period.

The Company has increased the marketability discount from 10 % to 20 % and the minority discount from 15 % to 30 % due to the reduction in our shareholding percentage from 15 % to 5 % as well as current market conditions.

The Company utilized the latest revised business plan provided by Cell C management for the period ended December 31, 2025, for the September 30, 2022, and June 30, 2022 valuations.

The Company utilized the latest revised business plan provided by Cell C management for the period ended December 31, 2025, for the December 31, 2022, and June 30, 2022 valuations.

Adjustments have been made to the WACC rate to reflect the Company’s assessment of risk to Cell C achieving its business plan.

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

The following key valuation inputs were used as of December 31, 2022 and June 30, 2022:

Weighted Average Cost of Capital ("WACC"):

6 unchanged sentences

30 % ( 15 % as of June 30, 2022)

Net adjusted external debt - September 30, 2022:

Net adjusted external debt - December 31, 2022:

ZAR 6.9 billion ($ 0.4 billion), no lease liabilities included

2 unchanged sentences

(1) translated from ZAR to U.S.

dollars at exchange rates applicable as of September 30, 2022.

dollars at exchange rates applicable as of December 31, 2022.

(2) translated from ZAR to U.S.

dollars at exchange rates applicable as of June 30, 2022.

The following table presents the impact on the carrying value of the Company’s Cell C investment of a 1.0% increase and 1.0% decrease in the WACC rate and the EBITDA margins respectively used in the Cell C valuation on September 30, 2022, all amounts translated at exchange rates applicable as of September 30, 2022:

The following table presents the impact on the carrying value of the Company’s Cell C investment of a 1.0% increase and 1.0% decrease in the WACC rate and the EBITDA margins respectively used in the Cell C valuation on December 31, 2022, all amounts translated at exchange rates applicable as of December 31, 2022:

Sensitivity for fair value of Cell C investment

2 unchanged sentences

EBITDA margin

The fair value of the Cell C shares as of September 30, 2022, represented 0 % of the Company’s total assets, including these shares.

The Company expects to hold these shares for an extended period of time and that there will be short-term equity price volatility with respect to these shares particularly given the current situation of Cell C’s business.

The fair value of the Cell C shares as of December 31, 2022, represented 0 % of the Company’s total assets, including these shares.

Fair value of financial instruments (continued)

Financial instruments (continued)

Derivative transactions - Foreign exchange contracts

4 unchanged sentences

The Company has no derivatives that require fair value measurement under Level 1 or 3 of the fair value hierarchy.

The Company had no outstanding foreign exchange contracts as of September 30, 2022.

The Company’s outstanding foreign exchange contracts as of December 31, 2022, were as follows:

Notional amount ('000)

January 31, 2023

The Company had no outstanding foreign exchange contracts as of June 30, 2022.

Fair value of financial instruments (continued)

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

Derivative transactions – Fiscal 2022 foreign exchange option contracts

The Company held a significant amount of U.S.

dollars in early fiscal 2022 and intended to use a portion of these funds to settle part of the purchase consideration related to the Connect acquisition.

The purchase consideration was expected to be settled in ZAR.

Accordingly, the Company entered into foreign exchange option contracts with FirstRand Bank Limited acting through its Rand Merchant Bank division (“RMB”) in November 2021 in order to manage the risk of currency volatility and to fix the ZAR amount to be utilized for part of the purchase consideration settlement.

These foreign exchange option contracts, also known as synthetic forwards, were over-the-counter derivative transactions (Level 2).

RMB’s long-term credit rating is “BB”.

The Company used quoted prices in active markets for similar assets and liabilities to determine fair value of the foreign exchange option contracts (Level 2).

The Company marked-to-market the synthetic forwards as of December 31, 2021, using a Black-Scholes option pricing model which determined the respective fair value of the options utilizing appropriate market parameters, and recorded an unrealized loss of $ 2.4 million during the three and six months ended December 31, 2021.

The unrealized loss is included in the caption unrealized loss related to fair value adjustment to currency options in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended December 31, 2021.

These currency options matured on February 24, 2022.

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

Quoted Price in Active Markets for Identical Assets

5 unchanged sentences

Fixed maturity investments (included in cash and cash equivalents)

Foreign exchange contracts

Total assets at fair value

Fair value of financial instruments (continued)

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

7 unchanged sentences

Total assets at fair value

There have been no transfers in or out of Level 3 during the three months ended September 30, 2022 and 2021, respectively.

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 three months ended September 30, 2022 and 2021.

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

There have been no transfers in or out of Level 3 during the three and six months ended December 31, 2022 and 2021, respectively.

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 three and six months ended December 31, 2022 and 2021.

Summarized below is the movement in the carrying value of assets and liabilities measured at fair value on a recurring basis, and categorized within Level 3, during the six months ended December 31, 2022:

Carrying value

1 unchanged sentence

Foreign currency adjustment (1)

Balance as of September 30, 2022

Balance as of December 31, 2022

(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S.

dollar on the carrying value.

Fair value of financial instruments (continued)

Carrying value

1 unchanged sentence

Foreign currency adjustment (1)

Balance as of September 30, 2021

Balance as of December 31, 2021

(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S.

9 unchanged sentences

Equity-accounted investments

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

September 30,

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

Finbond Group Limited (“Finbond”)

2 unchanged sentences

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

As of September 30, 2022, the Company owned 245,897,968 shares in Finbond representing approximately 29.3 % of its issued and outstanding ordinary shares.

Finbond is listed on the Johannesburg Stock Exchange (“JSE”) and its closing price on September 30, 2022, the last trading day of the month, was ZAR 0.49 per share.

The market value, using the September 30, 2022, closing price, of the Company’s holding in Finbond on September 30, 2022, was ZAR 120.5 million ($ 6.7 million translated at exchange rates applicable as of September 30, 2022).

The Company sold 81,935 shares in Finbond for cash during the three months ended September 30, 2022, and recorded a loss of $ 0.002 million which is included in the caption net gain on disposal of equity-accounted investments in the Company’s unaudited condensed consolidated statements of operations.

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

Equity-accounted investments (continued)

Finbond (continued)

The following table presents the calculation of the loss on disposal of Finbond shares during the three months ended September 30, 2022:

Three months ended September 30,

As of December 31, 2022, the Company owned 238,518,312 shares in Finbond representing approximately 28.4 % of its issued and outstanding ordinary shares.

Finbond is listed on the Johannesburg Stock Exchange (“JSE”) and its closing price on December 30, 2022, the last trading day of the month, was ZAR 0.49 per share.

The market value, using the December 30, 2022, closing price, of the Company’s holding in Finbond on December 31, 2022, was ZAR 116.9 million ($ 6.9 million translated at exchange rates applicable as of December 31, 2022).

The Company sold 7,379,656 and 7,461,591 shares in Finbond for cash during the three and six months ended December 31, 2022, respectively, and recorded a loss of $ 0.112 million and $ 0.114 million, which is included in the caption net gain on disposal of equity-accounted investments in the Company’s unaudited condensed consolidated statements of operations.

The following table presents the calculation of the loss on disposal of Finbond shares during the three and six months ended December 31, 2022:

Three months ended December 31,

Six months ended December 31,

Loss on disposal of Finbond shares:

4 unchanged sentences

Loss on sale of Finbond shares

The Company considered the combination of the ongoing losses incurred and reported by Finbond and its lower share price as impairment indicators.

The Company did not identify any impairment indicators as of December 31, 2022.

The Company considered the combination of the ongoing losses incurred and reported by Finbond and its lower share price as impairment indicators as of September 30, 2022.

The Company performed an impairment assessment of its holding in Finbond as of September 30, 2022.

The Company recorded an impairment loss of $ 1.1 million during the quarter ended September 30, 2022, related to the other-than-temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value (before the impairment).

The Company recorded an impairment loss of $ 1.1 million during the six months ended December 31, 2022, related to the other-than-temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value (before the impairment).

There continues to be limited trading in Finbond shares on the JSE because a small number of shareholders own approximately 80 % of its issued and outstanding shares between them.

The Company calculated a fair value per share for Finbond by applying a liquidity discount of 25 % to the September 30, 2022, Finbond closing price of ZAR 0.49 .

The Company has increased the liquidity discount from 15 % (used in the previous impairment assessment) to 25 % as a result of the ongoing limited trading activity observed on the JSE.

The Company increased the liquidity discount from 15 % (used in the previous impairment assessment) to 25 % (used in the September 30, 2022 assessment) as a result of the ongoing limited trading activity observed on the JSE.

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

Equity-accounted investments (continued)

In September 2022, the Company, through its wholly-owned subsidiary, Net1 Applied Technologies Netherlands B.V.

3 unchanged sentences

The Company received $ 0.25 million on closing and the outstanding balance due by Etobicoke is expected to be paid as follows:

(i) $ 0.25 million on September 30, 2023, which is included in the caption accounts receivable, net and other receivables in the Company’s unaudited condensed consolidated balance sheet as of September 30, 2022, and (ii) the remaining amount, of $ 0.75 million in March 2024, which is included in the caption other long-term assets, including reinsurance assets in the Company’s unaudited condensed consolidated balance sheet as of September 30, 2022.

(i) $ 0.25 million on September 30, 2023, which is included in the caption accounts receivable, net and other receivables in the Company’s unaudited condensed consolidated balance sheet as of December 31, 2022, and (ii) the remaining amount, of $ 0.75 million in March 2024, which is included in the caption other long-term assets, including reinsurance assets in the Company’s unaudited condensed consolidated balance sheet as of December 31, 2022.

The Company has allocated the $ 0.25 million received to the sale of the equity interest and will allocate the funds received first to the sale of the equity interest and then to the loans.

The Company currently believes that the fair value of the Carbon shares provided as security is $ 0 (nil), in line with the carrying value as of June 30, 2022, and has created an allowance for doubtful loans receivable related to the $ 1.0 million due from Etobicoke.

The Company currently believes that the fair value of the Carbon shares provided as security is $ 0 (nil), which is in line with the carrying value as of June 30, 2022, and has created an allowance for doubtful loans receivable related to the $ 1.0 million due from Etobicoke.

The Company did not incur any significant transaction costs.

10 unchanged sentences

Equity-accounted investments (continued)

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

Summarized below is the movement in equity-accounted investments and loans provided to equity-accounted investments during the six months ended December 31, 2022:

Investment in equity

8 unchanged sentences

Foreign currency adjustment (2)

Balance as of September 30, 2022

Balance as of December 31, 2022

Investment in loans:

2 unchanged sentences

Foreign currency adjustment (2)

Balance as of September 30, 2022

Balance as of December 31, 2022

Carrying amount as of :

June 30, 2022

September 30, 2022

December 31, 2022

(1) Includes Carbon, Sandulela, and SmartSwitch Namibia;

1 unchanged sentence

dollar on the carrying value.

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

Other long-term assets

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

September 30,

Summarized below is the breakdown of other long-term assets as of December 31, 2022, and June 30, 2022:

Total equity investments

11 unchanged sentences

(3) Long-term portion of amount due related to sale of loan to Carbon represents $ 0.75 million related to the sale of a loan with a face value of $ 3.0 million which was sold in September 2022 for $ 0.75 million, net of an allowance for doubtful loans receivable of $ 0.75 million.

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

Other long-term assets

Cell C - reduced effective percentage holding following recapitalization

On September 30, 2022, Cell C completed its recapitalization process which includes the issuance of additional equity instruments by Cell C.

On September 30, 2022, Cell C completed its recapitalization process which included the issuance of additional equity instruments by Cell C.

The Company’s effective percentage holding in Cell C’s equity has reduced from 15 % to 5 % following the recapitalization.

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

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

Unrealized holding

14 unchanged sentences

Goodwill and intangible assets, net

Summarized below is the movement in the carrying value of goodwill for the three months ended September 30, 2022:

Summarized below is the movement in the carrying value of goodwill for the six months ended December 31, 2022:

Accumulated impairment

2 unchanged sentences

Foreign currency adjustment (1)

Balance as of September 30, 2022

Balance as of December 31, 2022

(1) – The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S.

dollar on the carrying value.

Refer to Note 17 for additional information regarding changes to the Company’s reportable segments during the six months ended December 31, 2022.

Goodwill has been allocated to the Company’s reportable segments as follows:

2 unchanged sentences

Foreign currency adjustment (1)

Balance as of September 30, 2022

Balance as of December 31, 2022

(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S.

dollar on the carrying value.

Goodwill and intangible assets, net (continued)

Intangible assets, net

Carrying value and amortization of intangible assets

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

As of September 30, 2022

Summarized below is the carrying value and accumulated amortization of intangible assets as of December 31, 2022, and June 30, 2022:

As of December 31, 2022

As of June 30, 2022

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Total finite-lived intangible assets

Aggregate amortization expense on the finite-lived intangible assets for the three months ended September 30, 2022 and 2021, was approximately $ 4.0 million and $ 0.1 million, respectively.

Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on September 30, 2022, is presented in the table below.

Aggregate amortization expense on the finite-lived intangible assets for the three months ended December 31, 2022 and 2021, was approximately $ 3.9 million and $ 0.1 million, respectively.

Aggregate amortization expense on the finite-lived intangible assets for the six months ended December 31, 2022 and 2021, was approximately $ 7.8 million and $ 0.1 million, respectively.

Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on December 31, 2022, is presented in the table below.

Actual amortization expense in future periods could differ from this estimate as a result of acquisitions, changes in useful lives, exchange rate fluctuations and other relevant factors.

Fiscal 2023 (nine months ended June 30, 2023)

Fiscal 2023 (six months ended June 30, 2023)

Total future estimated annual amortization expense

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Reinsurance assets and policyholder liabilities under insurance contracts

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

Summarized below is the movement in reinsurance assets and policyholder liabilities under insurance contracts during the six months ended December 31, 2022:

Reinsurance Assets (1)

4 unchanged sentences

Foreign currency adjustment (3)

Balance as of September 30, 2022

Balance as of December 31, 2022

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

4 unchanged sentences

The process of deriving the best estimate assumptions plus prescribed margins includes assumptions related to claim reporting delays (based on average industry experience).

Assets and policyholder liabilities under insurance and investment contracts (continued)

Assets and policyholder liabilities under investment contracts

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

Summarized below is the movement in assets and policyholder liabilities under investment contracts during the six months ended December 31, 2022:

Investment contracts (2)

3 unchanged sentences

Foreign currency adjustment (3)

Balance as of September 30, 2022

Balance as of December 31, 2022

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

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Long-term borrowings - Facility G and Facility H

The Company’s credit agreement with FirstRand Bank Limited, acting through its Rand Merchant Bank division (“RMB”), requires that the Company achieve certain milestones by September 30, 2022, failing which the Company would be required to place ZAR 250 million into bank accounts with RMB.

The Company was unable to achieve the required milestones by September 30, 2022.

However, RMB did not require the Company to place cash into the RMB bank accounts nor did RMB declare an event of default as a result of the Company’s failure to do so.

The Company is currently renegotiating the terms of these lending arrangements with RMB.

On December 29, 2022, the Company, through Lesaka Technologies (Pty) Ltd, entered into an Amendment Agreement (the “Amendment Agreement”), with FirstRand Bank Limited, acting through its Rand Merchant Bank division (“RMB”), which amends its Senior Facility G Agreement and its Senior Facility H Agreement.

Pursuant to the Amendment Agreement, the Senior Facility G Agreement was amended to (i) extend the final maturity date by approximately two years and eight months to December 31, 2025, (ii) delete the definitions of Trigger Event and Trigger Event Date and (iii) delete the clause (clause 12) regarding the operation of any trigger event.

The Senior Facility H Agreement was amended to extend the final maturity date by approximately two years and eight months to December 31, 2025.

Interest on Facility G and H is payable quarterly in arrears, however, RMB agreed to a delay in the payment of interest for the three months ended December 31, 2022, in order to support the Company’s liquidity position.

Available short-term facility - Facility E

As of September 30, 2022, the aggregate amount of the Company’s short-term South African overdraft facility with RMB was ZAR 1.4 billion ($ 77.7 million).

As of September 30, 2022, the Company had utilized approximately ZAR 1.0 billion ($ 58.0 million) of this overdraft facility.

As of December 31, 2022, the aggregate amount of the Company’s short-term South African overdraft facility with RMB was ZAR 1.4 billion ($ 82.3 million).

As of December 31, 2022, the Company had utilized approximately ZAR 0.9 billion ($ 54.3 million) of this overdraft facility.

This overdraft facility may only be used to fund ATMs and therefore the overdraft utilized and converted to cash to fund the Company’s ATMs is considered restricted cash.

The interest rate on this facility is equal to the prime rate.

The prime rate on September 30, 2022, was 9.75 %.

The prime rate on December 31, 2022, was 10.50 %, and increased to 10.75 % on January 27, 2023, following an increase in the South African repo rate.

Connect Facilities, comprising long-term borrowings and a short-term facility

As of September 30, 2022, the Connect Facilities include (i) an overdraft facility (general banking facility) of ZAR 248.0 million (of which ZAR 205.0 million has been utilized);

As of December 31, 2022, the Connect Facilities include (i) an overdraft facility (general banking facility) of ZAR 205.0 million (of which ZAR 180.0 million has been utilized);

(ii) Facility A of ZAR 700.0 million;

1 unchanged sentence

and (iv) an asset-backed facility of ZAR 200.0 million (of which ZAR 117.6 million has been utilized).

The amount available under the general banking facility will reduce to ZAR 205.0 million in mid-November 2022.

In November 2022, the Company, through its wholly owned subsidiaries, Cash Connect Rentals (Pty) Ltd and Main Street 1723 (Pty) Ltd, increased its aggregate asset-backed facilities from ZAR 100 million to ZAR 200 million.

K2020 facility, comprising long-term borrowings

The Company, through K2020 Connect (Pty) Limited (“K2020”), an indirect South African subsidiary, entered into a revolving credit facility agreement with RMB on February 15, 2021.

The revolving credit facility was for an amount of ZAR 150.0 million and matured on August 12, 2022, and has been replaced with the facility described below.

The facility continued to operate normally in agreement with K2020’s lender after maturity, while the parties concluded the legal agreements to significantly increase and extend the facility.

Interest on the revolving credit facility was payable quarterly in arrears based on the prime rate in effect from time to time plus a margin.

A commitment fee of 1.5 % per annum was charged on the undrawn available facility amount.

On November 29, 2022, the Company, through its indirect South African subsidiary Cash Connect Capital (Pty) Limited (“CCC”), entered into a Revolving Credit Facility Agreement (the “Loan Document”) with RMB and other Company subsidiaries within the Connect Group of companies listed therein, as guarantors.

The transaction closed on December 1, 2022.

The Loan Document contains customary covenants that require CCC and K2020 to collectively maintain a specified capital adequacy ratio, restrict the ability of the entities to make certain distributions with respect 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 Loan Document, CCC may borrow up to an aggregate of ZAR 300.0 million (“Revolving Credit Facility”) for the sole purposes of funding CCC’s consumer lending business, providing a limited recourse loan to K2020, settling up to ZAR 35.0 million related to an intercompany loan to CCC’s direct parent, and paying the structuring and execution fee and legal costs.

The Revolving Credit Facility replaces K2020’s existing lending arrangement and increases the borrowings available to facilitate further growth of the business.

Interest on the Revolving Credit Facility is payable on the last business day of each calendar month and is based on the South African prime rate in effect from time to time plus a margin of 0.95 % per annum.

The Company paid a non-refundable structuring and execution fee of ZAR 1.7 million, or $ 0.1 million, including value added taxation, to the Lenders on closing.

Borrowings (continued)

South Africa (continued)

K2020 facility, comprising long-term borrowings

The Company, through its wholly owned subsidiary, K2020, entered into a revolving credit facility agreement with RMB on February 15, 2021.

The revolving credit facility is for an amount of ZAR 150.0 million and matured on August 12, 2022.

The facility continues to operate normally in agreement with K2020’s lender, while the parties conclude the legal agreements to significantly increase and extend the facility.

Interest on the revolving credit facility is payable quarterly in arrears based on the prime rate in effect from time to time plus a margin.

A commitment fee of 1.5 % per annum is charged on the undrawn available facility amount.

RMB facility, comprising indirect facilities

As of September 30, 2022, the aggregate amount of the Company’s short-term South African indirect credit facility with RMB was ZAR 135.0 million ($ 7.5 million), which includes facilities for guarantees, letters of credit and forward exchange contracts.

As of September 30, 2022 and June 30, 2022, the Company had utilized approximately ZAR 33.1 million ($ 1.8 million) and ZAR 5.1 million ($ 0.3 million), respectively, of its indirect and derivative facilities of ZAR 135.0 million (June 30, 2022:

As of December 31, 2022, the aggregate amount of the Company’s short-term South African indirect credit facility with RMB was ZAR 135.0 million ($ 7.9 million), which includes facilities for guarantees, letters of credit and forward exchange contracts.

As of December 31, 2022 and June 30, 2022, the Company had utilized approximately ZAR 33.1 million ($ 1.9 million) and ZAR 5.1 million ($ 0.3 million), respectively, of its indirect and derivative facilities of ZAR 135.0 million (June 30, 2022:

ZAR 135.0 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 19).

Nedbank facility, comprising short-term facilities

As of September 30, 2022, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited was ZAR 156.6 million ($ 8.7 million).

As of December 31, 2022, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited was ZAR 156.6 million ($ 9.2 million).

The credit facility represents indirect and derivative facilities of up to ZAR 156.6 million ($ 9.2 million), which include guarantees, letters of credit and forward exchange contracts.

As of September 30, 2022 and June 30, 2022, the Company had utilized approximately ZAR 92.1 million ($ 5.1 million) and ZAR 92.1 million ($ 5.7 million), respectively, of its indirect and derivative facilities of ZAR 156.6 million (June 30, 2022:

As of December 31, 2022 and June 30, 2022, the Company had utilized approximately ZAR 2.1 million ($ 0.1 million) and ZAR 92.1 million ($ 5.7 million), respectively, of its indirect and derivative facilities of ZAR 156.6 million (June 30, 2022:

ZAR 156.6 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 19).

Movement in short-term credit facilities

Summarized below are the Company’s short-term facilities as of September 30, 2022, and the movement in the Company’s short-term facilities from as of June 30, 2022 to as of September 30, 2022:

Short-term facilities available as of September 30, 2022

Summarized below are the Company’s short-term facilities as of December 31, 2022, and the movement in the Company’s short-term facilities from as of June 30, 2022 to as of December 31, 2022:

Short-term facilities available as of December 31, 2022

Overdraft restricted as to use for ATM funding only

5 unchanged sentences

Foreign currency adjustment (1)

Balance as of September 30, 2022

Balance as of December 31, 2022

Restricted as to use for ATM funding only

No restrictions as to use

Interest rate as of September 30, 2022 (%) (2)

Interest rate as of December 31, 2022 (%) (2)

Movement in utilized indirect and derivative facilities:

Balance as of June 30, 2022

Guarantees cancelled

Foreign currency adjustment (1)

Balance as of September 30, 2022

Balance as of December 31, 2022

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

2 unchanged sentences

Movement in long-term borrowings

Summarized below is the movement in the Company’s long-term borrowing from as of as of June 30, 2022 to as of September 30, 2022:

Summarized below is the movement in the Company’s long-term borrowing from as of as of June 30, 2022 to as of December 31, 2022:

Included in current

6 unchanged sentences

Foreign currency adjustment (1)

Closing balance as of September 30, 2022

Closing balance as of December 31, 2022

Included in current

5 unchanged sentences

Due within 5 years

Interest rates as of September 30, 2022 (%):

Interest rates as of December 31, 2022 (%):

Base rate (%)

5 unchanged sentences

(3) Interest on Facility H is calculated based on JIBAR in effect from time to time plus a margin of 2.00 % per annum which increases by a further 2.00 % per annum in the event of default (as defined in the Loan Documents).

(4) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, of approximately 3.75 %, in effect from time to time.

(4) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, of 3.75 %, in effect from time to time.

(5) Interest is charged at prime plus 1.25 % per annum on the utilized balance.

(6) Interest is charged at prime plus 1.00 % per annum on the utilized balance.

Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense on the condensed consolidated statement of operations during the three months ended September 30, 2022, was $ 2.7 million.

There was no interest expense incurred during the three months ended September 30, 2021.

Prepaid facility fees amortized included in interest expense during the three months ended September 30, 2022, were $ 0.2 million.

There was no prepaid facility fee amortization during the three months ended September 30, 2021.

Interest expense incurred under the Company’s K2020 facility relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and this interest expense of $ 0.2 million is included in the caption cost of goods sold, IT processing, servicing and support on the condensed consolidated statement of operations for the three months ended September 30, 2022.

Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense on the condensed consolidated statement of operations during the three and six months ended December 31, 2022, was $ 3.0 million and $ 5.7 million, respectively.

There was no interest expense incurred during the three and six months ended December 31, 2021.

Prepaid facility fees amortized included in interest expense during the three and six months ended December 31, 2022, were $ 0.2 million and $ 0.4 million, respectively.

There was no prepaid facility fee amortization during the three and six months ended December 31, 2021.

Interest expense incurred under the Company’s K2020 and CCC facilities relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and this interest expense of $ 0.3 million and $ 0.5 million, respectively, is included in the caption cost of goods sold, IT processing, servicing and support on the condensed consolidated statement of operations for the three and six months ended December 31, 2022.

Other payables

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

September 30,

Summarized below is the breakdown of other payables as of December 31, 2022, and June 30, 2022:

Value-added tax payable

4 unchanged sentences

Capital structure

The following table presents a reconciliation between the number of shares, net of treasury, presented in the unaudited condensed consolidated statement of changes in equity as of September 30, 2022 and 2021, respectively:

September 30,

The following table presents a reconciliation between the number of shares, net of treasury, presented in the unaudited condensed consolidated statement of changes in equity during the six months ended December 31, 2022 and 2021, respectively, and the number of shares, net of treasury, excluding non-vested equity shares that have not vested as of December 31, 2022 and 2021, respectively:

Number of shares, net of treasury:

3 unchanged sentences

Accumulated other comprehensive loss

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

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

Three months ended

September 30, 2022

December 31, 2022

Accumulated foreign currency translation reserve

Balance as of July 1, 2022

Balance as of October 1, 2022

Release of foreign currency translation reserve related to the disposal of Finbond equity securities (Note 5)

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

Movement in foreign currency translation reserve

Balance as of September 30, 2022

Balance as of December 31, 2022

Accumulated other comprehensive loss (continued)

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

The table below presents the change in accumulated other comprehensive loss per component during the three months ended December 31, 2021:

Three months ended

September 30, 2021

December 31, 2021

Accumulated foreign currency translation reserve

Balance as of October 1, 2021

Movement in foreign currency translation reserve

Balance as of December 31, 2021

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

Six months ended

December 31, 2022

Accumulated foreign currency translation reserve

Balance as of July 1, 2022

Release of foreign currency translation reserve related to disposal of Finbond equity securities (Note 5)

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

Movement in foreign currency translation reserve

Balance as of September 30, 2021

During the three months ended September 30, 2022, the Company reclassified $ 0.002 million from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the disposal of shares in Finbond (refer to Note 5).

There were no reclassifications from accumulated other comprehensive loss to net (loss) income during the three months ended September 30, 2021.

Balance as of December 31, 2022

The table below presents the change in accumulated other comprehensive loss per component during the six months ended December 31, 2021:

Six months ended

December 31, 2021

Accumulated foreign currency translation reserve

Balance as of July 1, 2021

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

Movement in foreign currency translation reserve

Balance as of December 31, 2021

During the three and six months ended December 31, 2022, the Company reclassified $ 0.1 million and $ 0.1 million, respectively, from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the disposal of shares in Finbond (refer to Note 5).

There were no reclassifications from accumulated other comprehensive loss to net (loss) income during the three and six months ended December 31, 2021.

Stock-based compensation

The Company’s Amended and Restated 2015 Stock Incentive Plan and the vesting terms of certain stock-based awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2022.

The Company’s Amended and Restated 2015 Stock Incentive Plan (“2015 Plan”) and the vesting terms of certain stock-based awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2022.

On September 7, 2022, the Company’s Board further amended and restated the Company’s 2015 Plan, and on November 16, 2022, the Company’s shareholders approved the Amended and Restated 2022 Stock Incentive Plan (“2022 Plan”).

Amendments included:

(1) increasing the number of shares available for issuance by 2,500,000 ;

(2) extending the term of the plan to September 7, 2032;

(3) addressed the treatment of equity awards upon a change in control;

(4) clarified that all equity awards will generally have a vesting period of at least one year;

(5) included an explicit prohibition on the payment of dividends and dividend equivalents on unvested full value awards;

(6) clarified and updated repricing restrictions;

(7) included mandatory application of our clawback policy to equity awards under the 2022 Plan;

and (8) removed deadwood provisions related to the “performance based compensation” exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended.

Stock option and restricted stock activity

The following table summarizes stock option activity for the three months ended September 30, 2022 and 2021:

The following table summarizes stock option activity for the six months ended December 31, 2022 and 2021:

Number of shares

4 unchanged sentences

Outstanding - June 30, 2022

Outstanding - September 30, 2022

Outstanding - December 31, 2022

Outstanding - June 30, 2021

Outstanding - September 30, 2021

Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Options (continued)

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

Outstanding - December 31, 2021

No stock options were awarded during the three and six months ended December 31, 2022 and 2021.

No stock options were forfeited during the three and six months ended December 31, 2022, and during the three months ended December 31, 2021.

Employees forfeited 85,000 stock options during the six months ended December 31, 2021.

During the three and six months ended December 31, 2022, the Company received approximately $ 0.3 million and $ 0.3 million from the exercise of 107,826 and 109,826 stock options, respectively.

During each of the three and six months ended December 31, 2021, the Company received approximately $ 0.7 million from the exercise of 242,853 stock options.

The following table presents stock options vested and expected to vest as of December 31, 2022:

Weighted average exercise price

1 unchanged sentence

Aggregate intrinsic value

Vested and expecting to vest - September 30, 2022

Vested and expecting to vest - December 31, 2022

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

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

Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Options (continued)

The following table presents stock options that are exercisable as of December 31, 2022:

Weighted average exercise price

1 unchanged sentence

Aggregate intrinsic value

Exercisable - September 30, 2022

No stock options became exercisable during the three months ended September 30, 2022.

During the three months ended September 30, 2021, 75,000 stock options became exercisable.

Exercisable - December 31, 2022

During the three months ended December 31, 2022 and 2021, respectively, 217,316 and 145,015 stock options became exercisable.

During the six months ended December 31, 2022 and 2021, respectively, 292,316 and 376,348 stock options became exercisable.

The Company issues new shares to satisfy stock option exercises.

Restricted stock

The following table summarizes restricted stock activity for the three months ended September 30, 2022 and 2021:

The following table summarizes restricted stock activity for the six months ended December 31, 2022 and 2021:

Number of shares of restricted stock

4 unchanged sentences

Granted – August 2022

Granted – November 2022

Granted – December 2022

Granted – December 2022, with performance conditions

Vested – July 2022

Non-vested – September 30, 2022

Vested – November 2022

Vested – December 2022

Total granted and vested - December 2022

Granted - December 2022

Vested - December 2022

Non-vested – December 31, 2022

Non-vested – June 30, 2021

2 unchanged sentences

Granted – August 2021

Non-vested – September 30, 2021

Granted – November and December 2021

Granted – December 2021

Total granted and vested - November and December 2021

Granted - November and December 2021

Vested - November and December 2021

Non-vested – December 31, 2021

Stock-based compensation (continued)

1 unchanged sentence

Restricted stock (continued)

In July 2022, the Company granted 32,582 shares of restricted stock to employees which have time -based vesting conditions.

The Company agreed to match, on a one -for-one basis, an employee’s purchase of up to $ 1.0 million worth of the Company’s shares of common stock in open market purchases, and in August 2022, the Company granted 179,498 shares of restricted stock to the employee .

In July 2022 and December 2022, the Company awarded 32,582 and , 430399 shares of restricted stock, respectively, to employees and an executive officer which have time -based vesting conditions.

In December 2022, the Company awarded 257,868 shares of restricted stock to executive officers which contained time and performance-based (market conditions related to share price performance) vesting conditions.

The Company also agreed to match, on a one -for-one basis, (1) an employee’s purchase of up to $ 1.0 million worth of the Company’s shares of common stock in open market purchases, and in August 2022, the Company granted 179,498 shares of restricted stock to the employee, and (2) another employee’s purchase of up to 150,000 shares of the Company’s common stock, and in November 2022, the Company granted 150,000 shares of restricted stock to the employee.

These shares of restricted stock contain time-based vesting conditions.

The Company awarded 300,000 shares to an executive officer on December 31, 2022, which vested on the date of the award.

The 257,868 shares of restricted stock awarded to executive officers 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 10 % appreciation in the Company’s stock price off a base price of $ 4.94 over the measurement period commencing on December 1, 2022 through December 1, 2025, and (2) the recipient is employed by the Company on a full-time basis when the condition in (1) is met.

If either of these conditions is not satisfied, then none of the shares of restricted stock will vest and they will be forfeited.

The Company’s closing price on December 1, 2022, was $ 4.08 .

The appreciation levels (times and price) and vesting percentages as of each period ended are as follows:

Prior to the first anniversary of the grant date:

Fiscal 2024, stock price as of December 1, 2023 is 1.1 times higher (i.e.

$ 5.43 or higher) than $ 4.94 :

Fiscal 2025, stock price as of December 1, 2024 is 1.21 times higher (i.e.

$ 5.97 or higher) than $ 4.94 :

Fiscal 2026, stock price as of December 1, 2025 is 1.331 times higher (i.e.

$ 6.57 ) than $ 4.94 :

The fair value of these shares of restricted stock was calculated using a Monte Carlo simulation.

In scenarios where the 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 on vesting date.

In its calculation of the fair value of the restricted stock, the Company used an equally weighted volatility of 50.1 % for the closing price (of $ 4.08 ), a discounting based on U.S.

dollar overnight indexed swap rates for the grant date, and no 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.

On July 1, 2021, the Company granted its Group Chief Executive Officer, 117,304 shares of restricted stock, which are subject to time-based vesting conditions and vest in full on June 30, 2024, subject to Mr.

4 unchanged sentences

In August 2021, the Company awarded 44,986 shares of restricted stock to an employee which contained time and performance-based (market conditions related to share price performance) vesting conditions.

As fully described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2022, the Company granted a further 19,443 shares to an advisor during the three months ended September 30, 2022, which may not be transferred until the earlier of December 31, 2022, or the occurrence of the agreed event.

In August 2021 and December 2021, the Company awarded 44,986 and 50,300 shares of restricted stock, respectively, to employees which have time and performance-based (market conditions related to share price performance) vesting conditions.

Upon joining the Company, each of Messrs.

Meyer and Lincoln C.

Mali, were entitled to receive an award of shares of restricted stock which were subject to them purchasing an agreed value of shares (“matching awards”) in the market during a prescribed period of time.

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

The shares vest ratably over three years on the applicable vesting date based on the anniversary of each executive’s date of joining the Company.

As fully described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2022, the Company granted a further 12,962 and 32,405 shares to an advisor during the three and six months ended December 31, 2022, respectively, which were ineligible for transfer until the earlier of December 31, 2022, or the occurrence of the agreed event.

Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Restricted stock (continued)

In July 2022, 78,801 shares of restricted stock granted to Mr.

Meyer vested and he elected for 35,460 shares to be withheld to satisfy the withholding tax liability on the vesting of these shares.

These 35,460 shares have been included in our treasury shares.

The Company recorded a stock-based compensation charge, net during the three months ended September 30, 2022 and 2021, of $ 1.5 million and $ 0.3 million, respectively, which comprised:

In November and December 2022, an aggregate of 66,893 shares of restricted stock granted to employees vested and they elected for 30,102 shares to be withheld to satisfy the withholding tax liability on the vesting of these shares.

These 65,562 ( 35,460 plus 30,102 ) shares have been included in our treasury shares.

Except as discussed above, no shares of restricted stock vested during the three months ended December 31, 2021.

During the three and six months ended December 31, 2021, 30,000 shares of restricted stock were forfeited by an executive officer as the market condition (related to share price performance) was not achieved.

Stock-based compensation charge and unrecognized compensation cost

The Company recorded a stock-based compensation charge, net during the three months ended December 31, 2022 and 2021, of $ 2.9 million and $ 0.8 million, respectively, which comprised:

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

Allocated to selling, general and administration

Three months ended September 30, 2022

Three months ended December 31, 2022

Stock-based compensation charge

Total - three months ended September 30, 2022

Three months ended September 30, 2021

Total - three months ended December 31, 2022

Three months ended December 31, 2021

Stock-based compensation charge

Total - three months ended December 31, 2021

The Company recorded a stock-based compensation charge, net during the six months ended December 31, 2022 and 2021, of $ 4.3 million and $ 1.1 million respectively, which comprised:

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

Allocated to selling, general and administration

Six months ended December 31, 2022

Stock-based compensation charge

Reversal of stock compensation charge related to stock options forfeited

Total - six months ended December 31, 2022

Six months ended December 31, 2021

Stock-based compensation charge

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

Total - three months ended September 30, 2021

Total - six months ended December 31, 2021

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

Stock-based compensation (continued)

As of September 30, 2022, the total unrecognized compensation cost related to stock options was approximately $ 0.3 million, which the Company expects to recognize over approximately two years .

As of September 30, 2022, the total unrecognized compensation cost related to restricted stock awards was approximately $ 9.9 million, which the Company expects to recognize over approximately three years .

As of September 30, 2022, and June 30, 2022, respectively, the Company recorded a deferred tax asset of approximately $ 0.4 million and $ 0.3 million, related to the stock-based compensation charge recognized related to employees of Lesaka.

As of September 30, 2022, and June 30, 2022, respectively, the Company recorded a valuation allowance of approximately $ 0.4 million and $ 0.3 million, related to the deferred tax asset because it does not believe that the stock-based compensation deduction would be utilized as it does not anticipate generating sufficient taxable income in the United States.

As of December 31, 2022, the total unrecognized compensation cost related to stock options was approximately $ 0.3 million, which the Company expects to recognize over approximately two years .

As of December 31, 2022, the total unrecognized compensation cost related to restricted stock awards was approximately $ 11.5 million, which the Company expects to recognize over approximately three years .

As of December 31, 2022, and June 30, 2022, respectively, the Company recorded a deferred tax asset of approximately $ 0.5 million and $ 0.3 million, related to the stock-based compensation charge recognized related to employees of Lesaka.

As of December 31, 2022, and June 30, 2022, respectively, the Company recorded a valuation allowance of approximately $ 0.5 million and $ 0.3 million, related to the deferred tax asset because it does not believe that the stock-based compensation deduction would be utilized as it does not anticipate generating sufficient taxable income in the United States.

The Company deducts the difference between the market value on the date of exercise by the option recipient and the exercise price from income subject to taxation in the United States.

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Redemption of a class of common stock at other than fair value increases or decreases the carrying amount of the redeemable common stock and is reflected in basic earnings per share using the two-class method.

There were no redemptions of common stock, or adjustments to the carrying value of the redeemable common stock during the three months ended September 30, 2022 and 2021.

There were no redemptions of common stock, or adjustments to the carrying value of the redeemable common stock during the six months ended December 31, 2022 and 2021.

Accordingly, the two-class method presented below does not include the impact of any redemption.

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Basic (loss) earnings per share includes shares of restricted stock that meet the definition of a participating security because these shares are eligible to receive non-forfeitable dividend equivalents at the same rate as common stock.

Basic (loss) earnings per share has been calculated using the two-class method and basic (loss) earnings per share for the three months ended September 30, 2022 and 2021 , reflects only undistributed earnings.

Basic (loss) earnings per share has been calculated using the two-class method and basic (loss) earnings per share for the six months ended December 31, 2022 and 2021 , reflects only undistributed earnings.

The computation below of basic (loss) earnings per share excludes the net loss attributable to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the dilutive impact of these unvested shares of restricted stock from the denominator.

1 unchanged sentence

Stock options are included in the calculation of diluted (loss) earnings per share utilizing the treasury stock method and are not considered to be participating securities, as the stock options do not contain non-forfeitable dividend rights.

The Company has excluded employee stock options to purchase 210,530 shares of common stock from the calculation of diluted loss per share during the three months ended September 30, 2022, because the effect would be antidilutive.

The Company has excluded employee stock options to purchase 76,572 and 143,551 shares of common stock from the calculation of diluted loss per share during the six months ended December 31, 2022 , because the effect would be antidilutive.

The calculation of diluted (loss) earnings per share includes the dilutive effect of a portion of the restricted stock granted to employees as these shares of restricted stock are considered contingently returnable shares for the purposes of the diluted (loss) earnings per share calculation and the vesting conditions in respect of a portion of the restricted stock had been satisfied.

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(Loss) Earnings per share (continued)

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

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

Three months ended

September 30,

Six months ended

(in thousands except

per share data)

Net loss attributable to Lesaka

Undistributed (loss) earnings

Percent allocated to common shareholders (Calculation 1)

Numerator for (loss) earnings per share:

Undistributed loss

Percent allocated to common shareholders

(Calculation 1)

Numerator for loss per share:

basic and diluted

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weighted-average common shares outstanding

Effect of dilutive securities:

Denominator for diluted (loss) earnings per share:

adjusted weighted average common shares outstanding and assuming conversion

(Loss) Earnings per share:

Loss per share:

(Calculation 1)

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

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

Options to purchase 324,619 shares of the Company’s common stock at prices ranging from $ 4.87 to $ 11.23 per share were outstanding during the three months ended September 30, 2022, respectively, but were not included in the computation of diluted (loss) earnings per share because the options’ exercise price was greater than the average market price of the Company’s common stock.

Options to purchase 270,832 shares of the Company’s common stock at prices ranging from $ 6.20 to $ 11.23 per share were outstanding during the three months ended September 30, 2021, respectively, but were not included in the computation of diluted (loss) earnings per share because the options’ exercise price was greater than the average market price of the Company’s common stock.

The options, which expire at various dates through February 3, 2032, were still outstanding as of September 30, 2022.

Percent allocated to common shareholders

Options to purchase 324,619 shares of the Company’s common stock at prices ranging from $ 4.87 to $ 11.23 per share were outstanding during the three and six months ended December 31, 2022, respectively, but were not included in the computation of diluted (loss) earnings per share because the options’ exercise price was greater than the average market price of the Company’s common stock.

Options to purchase 270,832 shares of the Company’s common stock at prices ranging from $ 6.20 to $ 11.23 per share were outstanding during the three and six months ended December 31, 2021, respectively, but were not included in the computation of diluted (loss) earnings per share because the options’ exercise price was greater than the average market price of the Company’s common stock.

The options, which expire at various dates through February 3, 2032, were still outstanding as of December 31, 2022.

Supplemental cash flow information

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

The following table presents supplemental cash flow disclosures for the three and six months ended December 31, 2022 and 2021:

Three months ended

September 30,

Six months ended

Cash received from interest

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Supplemental cash flow information (continued)

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

Three months ended

September 30,

Disaggregation of cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash included on the Company’s unaudited condensed consolidated statement of cash flows includes restricted cash related to cash withdrawn from the Company’s debt facilities to fund ATMs.

This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash.

Cash, cash equivalents and restricted cash also includes cash in certain bank accounts that has been ceded to Nedbank.

As this cash has been pledged and ceded it may not be drawn and is considered restricted as to use and therefore is classified as restricted cash as well.

Refer to Note 8 for additional information regarding the Company’s facilities.

The following table presents the disaggregation of cash, cash equivalents and restricted cash as of December 31, 2022 and 2021, and June 30, 2022:

December 31, 2022

December 31, 2021

June 30, 2022

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

The following table presents supplemental cash flow disclosure related to leases for the three and six months ended December 31, 2022 and 2021:

Three months ended December 31,

Six months ended December 31,

Cash paid for amounts included in the measurement of lease liabilities

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Disaggregation of revenue

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

The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to reportable segments for the three months ended December 31, 2022:

Processing fees

13 unchanged sentences

Disaggregation of revenue (continued)

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

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

Processing fees

7 unchanged sentences

Rest of world

The following table presents the Company’s revenue disaggregated by major revenue streams, including a reconciliation to reportable segments for the six months ended December 31, 2022:

Processing fees

Rest of world

Technology products

Rest of world

Telecom products and services

Rest of world

Lending revenue

Interest from customers

Insurance revenue

Account holder fees

Rest of world

Total revenue, derived from the following geographic locations

Rest of world

Revenue recognition (continued)

Disaggregation of revenue (continued)

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

Processing fees

Rest of world

Technology products

Telecom products and services

Lending revenue

Insurance revenue

Account holder fees

Total revenue, derived from the following geographic locations

Rest of world

The Company has entered into leasing arrangements classified as operating leases under accounting guidance.

2 unchanged sentences

The Company also operates parts of its financial services business from locations which it leases for a period of less than one year.

The Company’s operating lease expense during the three months ended September 30, 2022 and 2021 was $ 0.8 million and $ 0.9 million, respectively.

The Company does not have any significant leases that have not commenced as of September 30, 2022 .

The Company’s operating lease expense during each of the three months ended December 31, 2022 and 2021 was $ 0.8 million, respectively.

The Company’s operating lease expense during the six months ended December 31, 2022 and 2021 was $ 1.6 million and $ 1.8 million, respectively.

The Company does not have any significant leases that have not commenced as of December 31, 2022 .

The Company has also entered into short-term leasing arrangements, primarily for the lease of branch locations and other locations, to operate its financial services business in South Africa.

The Company’s short-term lease expense during the three months ended September 30, 2022 and 2021 , was $ 1.1 million and $ 1.3 million, respectively.

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

September 30,

The Company’s short-term lease expense during the three months ended December 31, 2022 and 2021 , was $ 0.9 million and $ 1.3 million, respectively.

The Company’s short-term lease expense during the six months ended December 31, 2022 and 2021 , was $ 2.0 million and $ 2.6 million, respectively.

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

Right of use assets obtained in exchange for lease obligations:

1 unchanged sentence

Weighted average discount rate (percent)

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

The maturities of the Company’s operating lease liabilities as of December 31, 2022, are presented below:

Maturities of operating lease liabilities

Year ended June 30,

2023 (excluding three months to September 30, 2022)

2023 (excluding six months to December 31, 2022)

Total undiscounted operating lease liabilities

7 unchanged sentences

A description of the Company’s operating segments is contained in Note 21 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2022.

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

Reallocation of certain activities in Other to Merchant

During the second quarter of fiscal 2023, certain processing activities performed outside South Africa which were within our Other operating segment commenced reporting to management within our Merchant operating segment as part of the integration of Connect.

The Company has allocated these operations from its Other reporting segment to Merchant in its reportable segments during the second quarter of fiscal 2023.

Previously reported information has been restated.

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

Reportable Segment

1 unchanged sentence

From external customers

Total for the three months ended September 30, 2022

Total for the three months ended September 30, 2021

Total for the three months ended December 31, 2022

Total for the three months ended December 31, 2021

The reconciliation of the reportable segment’s revenue to revenue from external customers for the six months ended December 31, 2022 and 2021, is as follows:

Reportable Segment

Inter-segment

From external customers

Total for the six months ended December 31, 2022

Total for the six months ended December 31, 2021

The Company evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”).

The Company does not allocate depreciation and amortization, impairment of goodwill or other intangible assets, certain lease charges (“Lease adjustments”), other items (including gains or losses on disposal of investments, fair value adjustments to equity securities, stock-based compensation charges, fair value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted investments to its reportable segments.

The Company does not allocate once-off items, stock-based compensation charges, certain lease charges (“Lease adjustments”), depreciation and amortization, impairment of goodwill or other intangible assets, other items (including gains or losses on disposal of investments, fair value adjustments to equity securities, fair value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted investments to its reportable segments.

Group costs generally include:

employee related costs in relation to employees specifically hired for group roles and related directly to managing the US-listed entity;

expenditures related to compliance with the Sarbanes-Oxley Act of 2002;

non-employee directors’ fees;

group and US-listed related audit fees;

and directors and officer’s insurance premiums.

Once-off items represents non-recurring expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued.

The Lease adjustments reflect lease charges and the Stock-based compensation adjustments reflect stock-based compensation expense and are both excluded from the calculation of Segment Adjusted EBITDA and are therefore reported as reconciling items to reconcile the reportable segments’ Segment Adjusted EBITDA to the Company’s loss before income tax expense.

The reconciliation of the reportable segments’ measures of profit or loss to loss before income tax expense for the three months ended September 30, 2022 and 2021, is as follows:

Operating segments (continued)

The reconciliation of the reportable segments measure of profit or loss to loss before income taxes for the three and six months ended December 31, 2022 and 2021, is as follows:

Three months ended

September 30,

Six months ended

Reportable segments measure of profit or loss

Operating loss:

Corporate/Eliminations

Once-off items

Lease adjustments

1 unchanged sentence

Depreciation and amortization

Gain on disposal of equity-accounted investments

Unrealized loss related to fair value adjustment to currency options

Loss (Gain) on disposal of equity-accounted investment

Interest income

Interest expense

Loss before income tax expense (benefit)

Loss before income taxes

Operating segments (continued)

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

Operating segments (continued)

The following tables summarize supplemental segment information for the three and six months ended December 31, 2022 and 2021:

Three months ended

September 30,

Total reportable segment revenue

Six months ended

Segment Adjusted EBITDA

Total Segment Adjusted EBITDA

Corporate/Eliminations

Lease adjustments

Stock-based compensation adjustments

Depreciation and amortization

Total operating loss

Depreciation and amortization

Operating segments

Corporate/Eliminations

Expenditures for long-lived assets

Operating segments

Corporate/Eliminations

The segment information as reviewed by the chief operating decision maker does not include a measure of segment assets per segment as all of the significant assets are used in the operations of all, rather than any one, of the segments.

6 unchanged sentences

The South African corporate income tax rate was expected to reduce from 28 % to 27 % from July 1, 2022.

The change in the income tax rate has not been enacted as of September 30, 2022, and accordingly all deferred taxes assets and liabilities related to the Company’s South African operations are still recorded using the enacted corporate income tax rate of 28 %.

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

Income tax (continued)

Income tax in interim periods (continued)

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

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

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

For the three and six months ended December 31, 2021, the Company’s effective tax rate was impacted by the tax effect of the tax expense recorded by the Company’s profitable South African operations, non-deductible expenses, the on-going losses incurred by certain of the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities (including the unrealized loss on the foreign currency options (refer to Note 4)).

Uncertain tax positions

The Company had no significant uncertain tax positions during the three months ended September 30, 2022, and therefore, the Company had no accrued interest related to uncertain tax positions on its balance sheet.

The Company had no significant uncertain tax positions during the three and six months ended December 31, 2022, and therefore, the Company had no accrued interest related to uncertain tax positions on its balance sheet.

The Company does no t expect changes related to its unrecognized tax benefits will have a significant impact on its results of operations or financial position in the next 12 months.

2 unchanged sentences

federal jurisdiction.

As of September 30, 2022, the Company’s South African subsidiaries are no longer subject to income tax examination by the South African Revenue Service for periods before June 30, 2018.

As of December 31, 2022, the Company’s South African subsidiaries are no longer subject to income tax examination by the South African Revenue Service for periods before June 30, 2018.

The Company is subject to income tax in other jurisdictions outside South Africa, none of which are individually material to its financial position, statement of cash flows, or results of operations.

2 unchanged sentences

The Company is required to procure these guarantees for these third parties to operate its business

Nedbank has issued guarantees to these third parties amounting to ZAR 92.1 million ($ 5.1 million, translated at exchange rates applicable as of September 30, 2022) thereby utilizing part of the Company’s short-term facilities.

RMB has issued guarantees to these third parties amounting to ZAR 33.1 million ($ 1.9 million, translated at exchange rates applicable as of December 31, 2022) thereby utilizing part of the Company’s short-term facilities.

The Company pays commission of between 3.42 % per annum to 3.44 % per annum of the face value of these guarantees and does not recover any of the commission from third parties.

RMB has issued guarantees to these third parties amounting to ZAR 33.1 million ($ 1.8 million, translated at exchange rates applicable as of September 30, 2022) thereby utilizing part of the Company’s short-term facilities.

The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of September 30, 2022.

The maximum potential amount that the Company could pay under these guarantees is ZAR 125.2 million ($ 7.0 million, translated at exchange rates applicable as of September 30, 2022).

As discussed in Note 8, the Company has ceded and pledged certain bank accounts to Nedbank as security for the guarantees issued by them with an aggregate value of ZAR 95.1 million ($ 5.3 million, translated at exchange rates applicable as of September 30, 2022).

Nedbank has issued guarantees to these third parties amounting to ZAR 2.1 million ($ 0.1 million, translated at exchange rates applicable as of December 31, 2022) thereby utilizing part of the Company’s short-term facilities.

The Company pays commission of between 0.4 % per annum to 1.82 % per annum of the face value of these guarantees and does not recover any of the commission from third parties.

The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of December 31, 2022.

The maximum potential amount that the Company could pay under these guarantees is ZAR 35.2 million ($ 2.1 million, translated at exchange rates applicable as of December 31, 2022).

As discussed in Note 8, the Company has ceded and pledged certain bank accounts to Nedbank as security for the guarantees issued by them with an aggregate value of ZAR 3.0 million ($ 0.2 million, translated at exchange rates applicable as of December 31, 2022).

The guarantees have reduced the amount available under its indirect and derivative facilities in the Company’s short-term credit facilities described in Note 8.

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements