LESAKA TECHNOLOGIES INC 10-Q/A

Item 1. Financial Statements LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Balance Sheets December 31, June 30, 2024 (A) 2024 (B) (In thousands, except share data) ASSETS CURRENT ASSETS Cash and cash equivalents $ 60,625 $ 59,065 Restricted cash related to ATM funding and credit facilities (Note 9) 112 6,853 Accounts receivable, net and other receivables (Note 3) 46,203 36,667 Finance loans receivable, net (Note 3) 49,529 44,058 Inventory (Note 4) 27,346 18,226 Total current assets before settlement assets 183,815 164,869 Settlement assets 27,550 22,827 Total current assets 211,365 187,696 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $ 48,124 June: $ 49,762 42,295 31,936 OPERATING LEASE RIGHT-OF-USE (Note 17) 7,649 7,280 EQUITY-ACCOUNTED INVESTMENTS (Note 6) 181 206 GOODWILL (Note 7) 200,760 138,551 INTANGIBLE ASSETS, NET (Note 7) 125,964 111,353 DEFERRED INCOME TAXES 6,278 3,446 OTHER LONG-TERM ASSETS, including equity securities (Note 6 and 8) 46,082 77,982 TOTAL ASSETS 640,574 558,450 LIABILITIES CURRENT LIABILITIES Short-term credit facilities for ATM funding (Note 9) - 6,737 Short-term credit facilities (Note 9) 51,152 9,351 Accounts payable 16,704 16,674 Other payables (Note 10) 59,416 56,051 Operating lease liability - current (Note 17) 3,257 2,343 Current portion of long-term borrowings (Note 9) 79,753 15,719 Income taxes payable 1,385 654 Total current liabilities before settlement obligations 211,667 107,529 Settlement obligations 26,882 22,358 Total current liabilities 238,549 129,887 DEFERRED INCOME TAXES 36,260 38,128 OPERATING LEASE LIABILITY - LONG TERM (Note 17) 4,819 5,087 LONG-TERM BORROWINGS (Note 9) 68,904 127,467 OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 8) 3,048 2,595 TOTAL LIABILITIES 351,580 303,164 REDEEMABLE COMMON STOCK 88,957 79,429 EQUITY COMMON STOCK (Note 11) Authorized: 200,000,000 with $ 0.001 par value; Issued and outstanding shares, net of treasury - December: 80,159,292 June: 64,272,243 101 83 PREFERRED STOCK Authorized shares: 50,000,000 with $ 0.001 par value; Issued and outstanding shares, net of treasury: December: - June: - - - ADDITIONAL PAID-IN-CAPITAL 421,950 343,639 TREASURY SHARES, AT COST: December: 28,297,365 June: 25,563,808 ( 302,319 ) ( 289,733 ) ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 12) ( 199,969 ) ( 188,355 ) RETAINED EARNINGS 273,547 310,223 TOTAL LESAKA EQUITY 193,310 175,857 NON-CONTROLLING INTEREST 6,727 - TOTAL EQUITY 200,037 175,857 TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY $ 640,574 $ 558,450 (A) – The Company reclassified an amount of $ 11,453 from long-term borrowings to current portion of long-term borrowings , refer to Note 1. (B) – The Company reclassified an amount of $ 11,841 from long-term borrowings to current portion of long-term borrowings , refer to Note 1. See Notes to Unaudited Condensed Consolidated Financial Statements LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Operations 3 Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 (As restated) (A) (As restated) (A) (In thousands, except per share data) (In thousands, except per share data) REVENUE (Note 16) $ 176,216 $ 143,893 $ 329,784 $ 279,982 EXPENSE Cost of goods sold, IT processing, servicing and support 130,696 114,266 249,605 221,756 Selling, general and administration 36,520 21,507 63,246 44,022 Depreciation and amortization 8,223 5,813 14,499 11,669 Transaction costs related to Adumo acquisition (Note 2) - 34 1,702 34 OPERATING INCOME 777 2,273 732 2,501 CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 5 and 6) ( 33,731 ) - ( 33,731 ) - LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 6) 161 - 161 - REVERSAL OF ALLOWANCE FOR DOUBTFUL EMI DEBT RECEIVABLE - - - 250 INTEREST INCOME 721 485 1,307 934 INTEREST EXPENSE 6,174 4,822 11,206 9,731 LOSS BEFORE INCOME TAX (BENEFIT) EXPENSE ( 38,568 ) ( 2,064 ) ( 43,059 ) ( 6,046 ) INCOME TAX (BENEFIT) EXPENSE (Note 19) ( 6,412 ) 686 ( 6,334 ) 950 NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY- ACCOUNTED INVESTMENTS ( 32,156 ) ( 2,750 ) ( 36,725 ) ( 6,996 ) EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 6) 50 43 77 ( 1,362 ) NET LOSS ( 32,106 ) ( 2,707 ) ( 36,648 ) ( 8,358 ) LESS NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST 28 - 28 - NET LOSS ATTRIBUTABLE TO LESAKA $ ( 32,134 ) $ ( 2,707 ) $ ( 36,676 ) $ ( 8,358 ) Net loss per share, in United States dollars (Note 14): Basic loss attributable to Lesaka shareholders $ ( 0.40 ) $ ( 0.04 ) $ ( 0.51 ) $ ( 0.13 ) Diluted loss attributable to Lesaka shareholders $ ( 0.40 ) $ ( 0.04 ) $ ( 0.51 ) $ ( 0.13 ) (A) Revenue and Cost of goods sold, IT processing, servicing and support have been restated to correct the misstatements discussed in Note 1. See Notes to Unaudited Condensed Consolidated Financial Statements LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income 4 Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 (In thousands) (In thousands) Net loss $ ( 32,106 ) $ ( 2,707 ) $ ( 36,648 ) $ ( 8,358 ) Other comprehensive (loss) income, net of taxes Movement in foreign currency translation reserve ( 22,731 ) 6,112 ( 12,206 ) 5,268 Release of foreign currency translation reserve related to liquidation of subsidiaries (Note 12) 6 ( 952 ) 6 ( 952 ) Release of foreign currency translation reserve related to disposal of Finbond equity securities (Note 12) - 1,543 - 1,543 Movement in foreign currency translation reserve related to equity-accounted investments - - - 489 Total other comprehensive (loss) income, net of taxes ( 22,725 ) 6,703 ( 12,200 ) 6,348 Comprehensive (loss) income ( 54,831 ) 3,996 ( 48,848 ) ( 2,010 ) Less comprehensive loss attributable to non- controlling interest 558 - 558 - Comprehensive (loss) income attributable to Lesaka $ ( 54,273 ) $ 3,996 $ ( 48,290 ) $ ( 2,010 ) See Notes to Unaudited Condensed Consolidated Financial Statements LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Changes in Equity 5 Lesaka Technologies, Inc. Shareholders Number of Shares Amount Number of Treasury Shares Treasury Shares Number of shares, net of treasury Additional Paid-In Capital Retained Earnings Accumulated other comprehensive loss Total Lesaka Equity Non- controlling Interest Total Redeemable common stock For the three months ended December 31, 2023 (dollar amounts in thousands) Balance – October 1, 2023 88,883,198 $ 83 ( 25,244,286 ) $ ( 288,238 ) 63,638,912 $ 337,490 $ 322,012 $ ( 196,081 ) $ 175,266 $ - $ 175,266 $ 79,429 Shares repurchased (Note 13) ( 50,975 ) ( 198 ) ( 50,975 ) - ( 198 ) ( 198 ) Restricted stock granted (Note 13) 868,996 868,996 - - Exercise of stock options (Note 13) 592 - 592 2 2 2 Stock-based compensation charge (Note 13) - 1,812 1,812 1,812 Reversal of stock-based compensation charge (Note 13) ( 14,002 ) ( 14,002 ) ( 8 ) ( 8 ) ( 8 ) Stock-based compensation charge related to equity-accounted investment (Note 6) - ( 147 ) ( 147 ) ( 147 ) Net loss - ( 2,707 ) ( 2,707 ) - ( 2,707 ) Other comprehensive loss (Note 12) 6,703 6,703 - 6,703 Balance – December 31, 2023 89,738,784 $ 83 ( 25,295,261 ) $ ( 288,436 ) 64,443,523 $ 339,149 $ 319,305 $ ( 189,378 ) $ 180,723 $ - $ 180,723 $ 79,429 LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Changes in Equity 6 Lesaka Technologies, Inc. Shareholders Number of Shares Amount Number of Treasury Shares Treasury Shares Number of shares, net of treasury Additional Paid-In Capital Retained Earnings Accumulated other comprehensive loss Total Lesaka Equity Non- controlling Interest Total Redeemable common stock For the six months ended December 31, 2023 (dollar amounts in thousands) Balance – July 1, 2023 88,884,532 $ 83 ( 25,244,286 ) $ ( 288,238 ) 63,640,246 $ 335,696 $ 327,663 $ ( 195,726 ) $ 179,478 $ - $ 179,478 $ 79,429 Shares repurchased (Note 13) - ( 50,975 ) ( 198 ) ( 50,975 ) ( 198 ) ( 198 ) Restricted stock granted (Note 13) 868,996 868,996 - - Exercise of stock options (Note 13) 7,385 - 7,385 23 23 23 Stock-based compensation charge (Note 13) 3,580 3,580 3,580 Reversal of stock-based compensation charge (Note 13) ( 22,129 ) ( 22,129 ) ( 17 ) ( 17 ) ( 17 ) Stock-based compensation charge related to equity-accounted investment ( 133 ) ( 133 ) ( 133 ) Net loss ( 8,358 ) ( 8,358 ) - ( 8,358 ) Other comprehensive loss (Note 12) 6,348 6,348 - 6,348 Balance – December 31, 2023 89,738,784 $ 83 ( 25,295,261 ) $ ( 288,436 ) 64,443,523 $ 339,149 $ 319,305 $ ( 189,378 ) $ 180,723 $ - $ 180,723 $ 79,429 See Notes to Unaudited Condensed Consolidated Financial Statements LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Changes in Equity 7 Lesaka Technologies, Inc. Shareholders Number of Shares Amount Number of Treasury Shares Treasury Shares Number of shares, net of treasury Additional Paid-In Capital Retained Earnings Accumulated other comprehensive loss Total Lesaka Equity Non- controlling Interest Total Redeemable common stock For the three months ended December 31, 2024 (dollar amounts in thousands) Balance – October 1, 2024 89,865,751 $ 83 ( 25,563,808 ) $ ( 289,733 ) 64,301,943 $ 346,016 $ 305,681 $ ( 177,830 ) $ 184,217 $ - $ 184,217 $ 79,429 Shares issued (Note 2 and Note 11) 17,279,803 17 - - 17,279,803 73,239 73,256 73,256 9,528 Shares repurchased (Note 13) - ( 2,733,557 ) ( 12,586 ) ( 2,733,557 ) ( 12,586 ) ( 12,586 ) Restricted stock granted (Note 13) 1,331,310 1,331,310 - - Exercise of stock options (Note 13) 17,014 1 17,014 51 52 52 Stock-based compensation charge (Note 13) - - 2,655 2,655 2,655 Reversal of stock-based compensation charge (Note 13) ( 37,221 ) ( 37,221 ) ( 11 ) ( 11 ) ( 11 ) Adumo non-controlling interest acquired (Note 2) - 7,586 7,586 Net loss ( 32,134 ) ( 32,134 ) 28 ( 32,106 ) Dividends paid to non-controlling interest - ( 301 ) ( 301 ) Other comprehensive loss (Note 12) ( 22,139 ) ( 22,139 ) ( 586 ) ( 22,725 ) Balance – December 31, 2024 108,456,657 $ 101 ( 28,297,365 ) $ ( 302,319 ) 80,159,292 $ 421,950 $ 273,547 $ ( 199,969 ) $ 193,310 $ 6,727 $ 200,037 $ 88,957 LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Changes in Equity 8 Lesaka Technologies, Inc. Shareholders Number of Shares Amount Number of Treasury Shares Treasury Shares Number of shares, net of treasury Addition al Paid- In Capital Retained Earnings Accumulated other comprehensiv e loss Total Lesaka Equity Non- controllin g Interest Total Redeemda ble common stock For the six months ended December 31, 2024 (dollar amounts in thousands) Balance – July 1, 2024 89,836,051 $ 83 ( 25,563,808 ) $ ( 289,733 ) 64,272,243 $ 343,639 $ 310,223 $ ( 188,355 ) $ 175,857 $ - $ 175,857 $ 79,429 Shares issued (Note 2 and Note 11) 17,279,803 17 - - 17,279,803 73,239 73,256 73,256 9,528 Shares repurchased (Note 13) ( 2,733,557 ) ( 12,586 ) ( 2,733,557 ) ( 12,586 ) ( 12,586 ) Restricted stock granted 1,364,110 1,364,110 - - - Exercise of stock options (Note 13) 17,014 1 17,014 51 52 52 Stock-based compensation charge (Note 13) - - 5,032 5,032 5,032 Reversal of stock-based compensation charge (Note 13) ( 40,321 ) ( 40,321 ) ( 11 ) ( 11 ) ( 11 ) Stock-based compensation charge related to equity-accounted investment (Note 6) - - - Adumo non-controlling interest acquired (Note 2) - - 7,586 7,586 Net loss ( 36,676 ) ( 36,676 ) 28 ( 36,648 ) Dividends paid to non-controlling interest - - ( 301 ) ( 301 ) Other comprehensive loss (Note 12) ( 11,614 ) ( 11,614 ) ( 586 ) ( 12,200 ) Balance – December 31, 2024 108,456,657 $ 101 ( 28,297,365 ) $ ( 302,319 ) 80,159,292 $ 421,950 $ 273,547 $ ( 199,969 ) $ 193,310 $ 6,727 $ 200,037 $ 88,957 See Notes to Unaudited Condensed Consolidated Financial Statements LESAKA TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Cash Flows 9 Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 (In thousands) (In thousands) Cash flows from operating activities Net loss $ ( 32,106 ) $ ( 2,707 ) $ ( 36,648 ) $ ( 8,358 ) Depreciation and amortization 8,223 5,813 14,499 11,669 Movement in allowance for doubtful accounts receivable 2,521 1,164 4,020 2,689 Fair value adjustment related to financial liabilities ( 454 ) ( 836 ) ( 264 ) ( 870 ) Loss on disposal of equity-accounted investments (Note 6) 161 - 161 - (Earnings) Loss from equity-accounted investments ( 50 ) ( 43 ) ( 77 ) 1,362 Movement in allowance for doubtful loans to equity-accounted investments - - - ( 250 ) Change in fair value of equity securities (Note 5 and 6) 33,731 - 33,731 - Profit on disposal of property, plant and equipment ( 14 ) ( 163 ) ( 41 ) ( 199 ) Movement in interest payable 1,864 ( 1,573 ) 3,557 191 Facility fee amortized 68 89 137 316 Stock-based compensation charge (Note 13) 2,644 1,804 5,021 3,563 Dividends received from equity-accounted investments 65 54 65 54 Increase in accounts receivable ( 11,988 ) ( 13,157 ) ( 4,295 ) ( 15,502 ) Increase in finance loans receivable ( 8,325 ) ( 2,889 ) ( 9,915 ) ( 3,377 ) (Increase) Decrease in inventory ( 4,560 ) 985 ( 5,449 ) 506 Increase (Decrease) in accounts payable and other payables 8,135 13,728 ( 9,042 ) 14,103 (Decrease) Increase in taxes payable ( 153 ) ( 654 ) 612 ( 346 ) Decrease in deferred taxes ( 8,928 ) ( 1,032 ) ( 9,374 ) ( 1,594 ) Net cash (used in) provided by operating activities ( 9,166 ) 583 ( 13,302 ) 3,957 Cash flows from investing activities Capital expenditures ( 6,318 ) ( 2,198 ) ( 10,283 ) ( 5,007 ) Proceeds from disposal of property, plant and equipment 475 436 1,325 720 Acquisition of intangible assets ( 428 ) ( 47 ) ( 601 ) ( 182 ) Acquisitions, net of cash acquired ( 3,957 ) - ( 3,957 ) - Proceeds from disposal of equity-accounted investment (Note 6) - 3,508 - 3,508 Repayment of loans by equity-accounted investments - 250 - 250 Net change in settlement assets ( 1,266 ) ( 43 ) 2,304 ( 11,280 ) Net cash (used in) provided by investing activities ( 11,494 ) 1,906 ( 11,212 ) ( 11,991 ) Cash flows from financing activities Proceeds from bank overdraft (Note 9) 48,855 69,012 72,748 128,586 Repayment of bank overdraft (Note 9) ( 4,512 ) ( 66,048 ) ( 35,540 ) ( 128,841 ) Long-term borrowings utilized (Note 9) 12,903 8,557 13,677 11,028 Repayment of long-term borrowings (Note 9) ( 8,322 ) ( 3,184 ) ( 13,794 ) ( 5,813 ) Acquisition of treasury stock (Note 13) ( 12,586 ) ( 198 ) ( 12,586 ) ( 198 ) Proceeds from exercise of stock options 51 2 51 23 Guarantee fee ( 431 ) - ( 431 ) - Dividends paid to non-controlling interest ( 301 ) - ( 301 ) - Net change in settlement obligations 1,209 197 ( 2,439 ) 10,893 Net cash provided by financing activities 36,866 8,338 21,385 15,678 Effect of exchange rate changes on cash and cash equivalents ( 5,278 ) 2,005 ( 2,052 ) 1,562 Net increase (decrease) in cash, cash equivalents and restricted cash 10,928 12,832 ( 5,181 ) 9,206 Cash, cash equivalents and restricted cash – beginning of period 49,809 55,006 65,918 58,632 Cash, cash equivalents and restricted cash – end of period (Note 15) $ 60,737 $ 67,838 $ 60,737 $ 67,838 See Notes to Unaudited Condensed Consolidated Financial Statements 10 LESAKA TECHNOLOGIES, INC Notes to the Unaudited Condensed Consolidated Financial Statements for the three and six months ended December 31, 2024 and 2023 (All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated) 1. Basis of Presentation, Restatement of Financial Statement and Summary of Significant Accounting Policies Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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 and six months ended December 31, 2024 and 2023, are not necessarily indicative of the results for the full year. The Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, except as noted below, there are no material changes to significant accounting policies. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the interim periods presented. References to “Lesaka” are references solely to Lesaka Technologies, Inc. References to the “Company” refer to Lesaka and its consolidated subsidiaries, collectively, unless the context otherwise requires. Restatement of Previously Issued Financial Statements Subsequent to the issuance of the Company’s unaudited condensed consolidated financial statements for the three and six months ended December 31, 2024, the Company’s management determined that the Company incorrectly classified and recorded revenue from the sale of certain vouchers on an agent basis instead of as a principal due to a misinterpretation of the accounting implications related to a change in an operating process with its supplier. The Company understated its revenue and cost of goods sold, IT processing, servicing and support by $ 29.4 million and $ 37.4 million in its unaudited condensed consolidated statement of operations for the three and six months ended December 31, 2024, respectively. The correction of the misclassification did not impact the Company’s basic and diluted loss per share, condensed consolidated balance sheet as of December 31, 2024, or its unaudited condensed consolidated statements of comprehensive (loss) income, unaudited condensed consolidated statement of changes in equity and unaudited condensed consolidated statements of cash flows for the three and six months ended December 31, 2024. The tables below present the impact of the restatement on the Company’s unaudited condensed consolidated statement of operations for the three and six months ended December 31, 2024: Three months ended December 31, 2024 As previously reported Restatement adjustment As restated (in thousands) Revenue $ 146,818 $ 29,398 $ 176,216 Cost of goods sold, IT processing, servicing and support $ 101,298 $ 29,398 $ 130,696 Six months ended December 31, 2024 As previously reported Restatement adjustment As restated (in thousands) Revenue $ 292,364 $ 37,420 $ 329,784 Cost of goods sold, IT processing, servicing and support $ 212,185 $ 37,420 $ 249,605 Revision of Previously Issued Financial Statements In April 2025, the Company identified that it had misclassified certain of its long-term borrowings. The Company’s CCC Revolving Credit Facility was scheduled to be repaid in full on November 2024, but this has been extended to June 30, 2025. The Company incorrectly classified amounts due under its CCC Revolving Credit Facility as long-term borrowings instead of as current portion of long-term borrowings in its unaudited condensed consolidated balance sheet as of December 31, 2024, and its audited consolidated balance sheet as of June 30, 2024. 11 1. Basis of Presentation, Restatement of Financial Statement and Summary of Significant Accounting Policies (continued) Revision of Previously Issued Financial Statements (continued The table below presents the impact of the revision of the Company’s financial statements as of December 31, 2024 and June 30, 2024: Consolidated balance sheet As previously reported Correction Revised (in thousands) December 31, 2024 Current portion of long-term borrowings $ 68,300 $ 11,453 $ 79,753 Long-term borrowings $ 80,357 $ ( 11,453 ) $ 68,904 June 30, 2024 Current portion of long-term borrowings $ 3,878 $ 11,841 $ 15,719 Long-term borrowings $ 139,308 $ ( 11,841 ) $ 127,467 The correction of the misclassification did not impact the Company’s audited consolidated statements of operations, consolidated statements of comprehensive (loss) income, consolidated statement of changes in equity, or consolidated statements of cash flows for the year ended June 30, 2024 and, except as noted above, the Company’s audited balance sheet as of June 30, 2024. The misclassification did not affect compliance with any debt covenants. The Company assessed the materiality of this error and change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99 “Materiality” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements.” Based on this assessment, the Company has concluded that previously issued financial statements were not materially misstated based upon overall considerations of both quantitative and qualitative factors. The effects of both the restatement relating to the correction of the misclassification of revenue and the revision relating to the correction of the misclassification of long-term borrowings have been corrected in all impacted tables and footnotes throughout these condensed consolidated financial statements. Recent accounting pronouncements adopted In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance regarding Segment Reporting (Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. This guidance is effective for the Company beginning July 1, 2024 for its year ended June 30, 2025, and for interim periods commencing from July 1, 2025 (i.e. for the quarter ended September 30, 2025). Recent accounting pronouncements not yet adopted as of December 31, 2024 In December 2023, the FASB issued guidance regarding Income Taxes (Topic 740) to improve income tax disclosure requirements. The guidance requires entities, on an annual basis, to (1) disclose specific categories in the income tax rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). This guidance is effective for the Company beginning July 1, 2025. The Company is currently assessing the impact of this guidance on its financial statements and related disclosures. In November 2024, the FASB issued guidance regarding Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) which requires disaggregated disclosure of income statement expenses for public business entities. The guidance does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance is effective for the Company beginning July 1, 2027. Early adoption is permitted. The Company is currently assessing the impact of this guidance on its financial statements and related disclosures. 2. Acquisitions The Company did not make any acquisition during the six months ended December 31, 2023. The cash paid, net of cash received related to the Company’s acquisitions during the six months ended December 31, 2024, is summarized in the table below: Total Total cash paid $ 13,392 Less: cash acquired 9,435 Total cash paid, net of cash received $ 3,957 12 2. Acquisitions (continued) 2025 Acquisitions October 2024 acquisition of Adumo On May 7, 2024, the Company entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with Lesaka SA, and Crossfin Apis Transactional Solutions (Pty) Ltd and Adumo ESS (Pty) Ltd (“the Sellers”). Pursuant to the Purchase Agreement and subject to its terms and conditions, Lesaka, through its subsidiary, Lesaka SA, agreed to acquire, and the Sellers agreed to sell, all of the outstanding equity interests and certain claims in the Adumo (RF) Proprietary Limited (“Adumo”). The transaction closed on October 1, 2024. Adumo is an independent payments and commerce enablement platform in Southern Africa, and at acquisition it served approximately 23,000 active merchants with operations across South Africa, Namibia, Botswana and Kenya. For more than two decades, Adumo has facilitated physical and online commerce between retail merchants and end-consumers by offering a unique combination of payment processing and integrated software solutions, which currently include embedded payments, integrated payments, reconciliation services, merchant lending, customer engagement tools, card issuing program management and data analytics. Adumo operates across three businesses, which provide payment processing and integrated software solutions to different end markets: ● The Adumo Payments business offers payment processing, integrated payments and reconciliation solutions to small-and- medium (“SME”) merchants in South Africa, Namibia and Botswana, and also provides card issuing program management to corporate clients such as Anglo American and Coca-Cola; ● The Adumo ISV business, also known as GAAP, has operations in South Africa, Botswana and Kenya, and clients in a further 21 countries, and is the leading provider of integrated point-of-sales software and hardware to the hospitality industry in Southern Africa, serving clients such as KFC, McDonald’s, Pizza Hut, Nando’s and Krispy Kreme; and, ● The Adumo Ventures business offers online commerce solutions (Adumo Online), cloud-based, multi-channel point-of-sales solutions (Humble) and an aggregated payment and credit platform for in-store and online commerce (SwitchPay) to SME merchants and corporate clients in South Africa and Namibia. The acquisition continues the Company’s consolidation in the Southern African fintech sector. At acquisition, the Company’s ecosystem served approximately 1.7 million active consumers, 120,200 merchants, and processes over ZAR 270 billion in throughput (cash, card and VAS) per year. The acquisition of Adumo enhances the Company’s strength in both the consumer and merchant markets in which it operates. The total purchase consideration was ZAR 1.67 billion ($ 96.2 million) and comprised the issuance of 17,279,803 shares of the Company’s common stock (“Consideration Shares”) with a value of $ 82.8 million ( 17,279,803 multiplied by $ 4.79 per share) and cash of $ 13.4 million. The purchase consideration was settled through the combination of the Consideration Shares and a ZAR 232.2 million ($ 13.4 million, translated at the prevailing rate of $1: ZAR 17.3354 as of October 1, 2024) payment in cash. The Company’s closing price on the Johannesburg Stock Exchange on October 1, 2024, was ZAR 83.05 ($ 4.79 using the October 1, 2024, $1: ZAR exchange rate). The closing of the transaction was subject to customary closing conditions, including (i) approval from the competition authorities of South Africa and Namibia; (ii) exchange control approval from the financial surveillance department of the South African Reserve Bank; (iii) approval from all necessary regulatory bodies and from shareholders to issue the Consideration Shares to the Sellers; (iv) obtaining certain third-party consents; (v) the Company obtained confirmation from RMB that it has sufficient funds to settle the cash portion of the purchase consideration; (vi) approval of Adumo shareholders (including preference shareholders) with respect to entering into and implementation of the Purchase Agreement, and all other agreements and transactions contemplated in the Purchase Agreement; (vii) obtained the consent of Adumo’s lender regarding Adumo entering into and implementing the Purchase Agreement, and all other agreements and transactions contemplated in the Purchase Agreement; (viii) the release of certain Seller’s shares held as security by such bank; (ix) consent of the lender of one of Adumo’s shareholders regarding Adumo entering into the transaction; (x) the Company signing a written addendum to the Policy Agreement with International Finance Corporation that provides for the inclusion of the Consideration Shares attributable to certain Seller shareholders in the definition of “Put Shares” under the Policy Agreement, and related change; and (xi) a Seller (or their nominee), which ultimately was Crossfin, concluding share purchase agreements to dispose of an amount of Consideration Shares (which ultimately was determined as 3,587,332 Consideration Shares). The Company agreed to file a resale registration statement with the United States Securities and Exchange Commission (“SEC”) covering the resale of the Consideration Shares by the Sellers. The resale registration statement was declared effective by the SEC on December 6, 2024. 13 2. Acquisitions (continued) 2025 Acquisitions (continued) October 2024 acquisition of Adumo (continued) The Company incurred transaction-related expenditures of $ 1.7 million during the six months ended December 31, 2024, related to the acquisition of Adumo. The Company’s accruals presented in Note 10 of as December 31, 2024, includes an accrual of transaction related expenditures of $ 0.6 million and the Company does not expect to incur any further significant transaction costs over the remainder of the 2025 fiscal year. November 2024 acquisition of Innervation Value Added Services Namibia Pty Ltd (continued) Effective November 1, 2024, the Company, through its wholly owned subsidiary Adumo Technologies Proprietary Limited (“Adumo AT”), acquired the remaining shares (representing 50 % of the issued and outstanding shares) it did not own in Innervation Value Added Services Namibia Pty Ltd (“IVAS Nam”) for $ 0.4 million (ZAR 6.0 million, translated at November 1, 2024 exchange rates). IVAS Nam was accounted for using the equity method prior to the acquisition of a controlling interest in the company. Adumo paid ZAR 2.0 million of the purchase price prior the acquisition of Adumo by the Company and the balance of ZAR 4.0 million will be paid in two equal tranches, one in March 2025 and the other in September 2025. The Company did not incur any significant transaction costs related to this acquisition. The preliminary purchase price allocation of acquisitions during the six months ended December 31, 2024, translated at the foreign exchange rates applicable on the date of acquisition, in provided is the table below: Acquisitions during fiscal 2025 through December 31, 2024 Adumo IVAS Nam Total Cash and cash equivalents $ 9,219 $ 216 $ 9,435 Accounts receivable 6,800 630 7,430 Inventory 5,121 3 5,124 Property, plant and equipment 9,169 12 9,181 Operating lease right of use asset 1,024 - 1,024 Equity-accounted investment 477 - 477 Goodwill 72,299 432 72,731 Intangible assets 28,383 - 28,383 Deferred income taxes assets 1,060 55 1,115 Other long-term assets 2,809 - 2,809 Current portion of long-term borrowings ( 1,178 ) - ( 1,178 ) Accounts payable ( 3,266 ) ( 388 ) ( 3,654 ) Other payables ( 28,045 ) ( 226 ) ( 28,271 ) Operating lease liability - current ( 1,019 ) - ( 1,019 ) Income taxes payable ( 150 ) ( 42 ) ( 192 ) Deferred income taxes liabilities ( 6,994 ) - ( 6,994 ) Operating lease liability - long-term ( 326 ) - ( 326 ) Long-term borrowings ( 7,308 ) - ( 7,308 ) Other long-term liabilities ( 141 ) - ( 141 ) Settlement assets 8,610 - 8,610 Settlement liabilities ( 8,530 ) - ( 8,530 ) Fair value of assets and liabilities on acquisition $ 88,014 $ 692 $ 88,706 The fair value of the non-controlling interests recorded was $ 7.6 million. The fair value of the non-controlling interest was determined as the non-controlling interests respective portion of the equity value of the entity acquired by the Company, and which was adjusted for a 20 % minority discount. The allocation of the purchase price is preliminary and not yet finalized. The preliminary allocation of the purchase price is based upon preliminary estimates which used information that was available to management at the time the unaudited condensed consolidated financial statements were prepared and these estimates and assumptions are subject to change within the measurement period, up to one year from the acquisition date. Accordingly, the allocation may change. We continue to refine certain inputs to the calculation of acquired intangible assets and the valuation of the non-controlling interest. 14 2. Acquisitions (continued) 2025 Acquisitions (continued) Intangible assets acquired No intangible assets were identified related to the acquisition of IVAS Nam. Summarized below is the fair value of the Adumo intangible assets acquired and the weighted-average amortization period: Fair value as of acquisition date Weighted-average amortization period (in years) Finite-lived intangible asset: Acquired during the six months ended December 31, 2024: Adumo – technology assets $ 13,949 3 - 7 Adumo – customer relationships 10,813 5 - 10 Adumo – brands $ 3,621 10 - 15 On acquisition, the Company recognized a deferred tax liability of approximately $ 7.7 million related to the acquisition of Adumo intangible assets during the six months ended December 31, 2024. Pro forma results related to acquisitions Pro forma results of operations have not been presented for the acquisition of IVAS Nam because the effect of the IVAS Nam acquisition is not material to the Company. Since the closing of the IVAS Nam acquisition, it has contributed revenue and net income of $ 0.9 million and $ 0.2 million, respectively, for the six months ended December 31, 2024. The results of Adumo’s operations are reflected in the Company’s financial statements from October 1, 2024. The following unaudited pro forma revenue and net income information has been prepared as if the acquisition of Adumo had occurred on July 1, 2023 using the applicable average foreign exchange rates for the periods presented: Three months ended December 31, 2023 (As restated) (A) Six months ended December 31, 2024 2023 Revenue $ 159,397 $ 335,146 $ 307,897 Net loss $ ( 3,040 ) $ ( 35,024 ) $ ( 15,088 ) (A) Revenue during the three and six months ended December 31, 2024 has been restated to correct the misstatements of $ 29.4 million and $ 37.4 million, respectively, discussed in Note 1. The unaudited pro forma financial information presented above includes the business combination accounting and other effects from the acquisition including (1) amortization expense related to acquired intangibles and the related deferred tax; (2) the loss of interest income, net of taxation, as a result of funding a portion of the purchase price in cash; and (3) an adjustment to exclude all applicable transaction-related costs recognized in the Company’s consolidated statement of operations for six months ended December 31, 2024, and include the applicable transaction -related costs for the year ended June 30, 2024. The unaudited pro forma net income presented above does not include any cost savings or other synergies that may result from the acquisition. The unaudited pro forma information as presented above is for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had occurred on these dates. Since the closing of the acquisition, Adumo has contributed revenue of $ 17.0 million and net income attributable to the Company, including intangible assets amortization related to assets acquired, net of deferred taxes, of $ 0.45 million. 15 3. Accounts receivable, net and other receivables and finance loans receivable, net Accounts receivable, net and other receivables The Company’s accounts receivable, net, and other receivables as of December 31, 2024, and June 30, 2024, are presented in the table below: December 31, June 30, 2024 2024 Accounts receivable, trade, net $ 21,407 $ 13,262 Accounts receivable, trade, gross 23,258 14,503 Allowance for doubtful accounts receivable, end of period 1,851 1,241 Beginning of period 1,241 509 Reversed to statement of operations ( 200 ) ( 511 ) Charged to statement of operations 1,385 1,305 Utilized ( 493 ) ( 67 ) Foreign currency adjustment ( 82 ) 5 Current portion of amount outstanding related to sale of interest in Carbon, net of allowance: December 2024: $ 750 ; June 2024: $ 750 - - Current portion of total held to maturity investments - - Investment in 7.625 % of Cedar Cellular Investment 1 (RF) (Pty) Ltd 8.625 % notes - - Other receivables 24,796 23,405 Total accounts receivable, net and other receivables $ 46,203 $ 36,667 Trade receivables include amounts due from customers which generally have a very short-term life from date of invoice or service provided to settlement. The duration is less than a year in all cases and generally less than 30 days in many instances. The short-term nature of these exposures often results in balances at month-end that are disproportionately small compared to the total invoiced amounts. The month-end outstanding balance are more volatile than the monthly invoice amounts because they are affected by operational timing issues and the fact that a balance is outstanding at month-end is not necessarily an indication of increased risk but rather a matter of operational timing. Credit risk in respect of trade receivables are generally not significant and the Company has not developed a sophisticated model for these basic credit exposures. The Company determined to use a lifetime loss rate by expressing write-off experience as a percentage of corresponding invoice amounts (as opposed to outstanding balances). The allowance for credit losses related to these receivables has been calculated by multiplying the lifetime loss rate with recent invoice/origination amounts. Management actively monitors performance of these receivables over short periods of time. Different balances have different rules to identify an account in distress. Once balances in distress are identified, specific allowances are immediately created. Subsequent recovery from distressed accounts is not significant. Current portion of amount outstanding related to sale of interest in Carbon represents an amount due related to the sale of the loan in Carbon Tech Limited (“Carbon”), 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. The Company has not yet received the outstanding $ 0.75 million related to the sale of the $ 3.0 million loan, and continues to engage with the purchaser to recover the outstanding balance. 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, 2024, and June 30, 2024, respectively was $ 0 (zero). Other receivables include prepayments, deposits, income taxes receivable and other receivables. 16 3. Accounts receivable, net and other receivables and finance loans receivable, net (continued) Finance loans receivable, net The Company’s finance loans receivable, net, as of December 31, 2024, and June 30, 2024, is presented in the table below: December 31, June 30, 2024 2024 Microlending finance loans receivable, net $ 35,196 $ 28,184 Microlending finance loans receivable, gross 37,642 30,131 Allowance for doubtful finance loans receivable, end of period 2,446 1,947 Beginning of period 1,947 1,432 Reversed to statement of operations ( 162 ) ( 210 ) Charged to statement of operations 1,927 2,454 Utilized ( 1,166 ) ( 1,795 ) Foreign currency adjustment ( 100 ) 66 Merchant finance loans receivable, net 14,333 15,874 Merchant finance loans receivable, gross 17,375 18,571 Allowance for doubtful finance loans receivable, end of period 3,042 2,697 Beginning of period 2,697 2,150 Reversed to statement of operations ( 23 ) ( 359 ) Charged to statement of operations 1,093 2,479 Utilized ( 607 ) ( 1,672 ) Foreign currency adjustment ( 118 ) 99 Total finance loans receivable, net $ 49,529 $ 44,058 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 with an aggregate balance of $ 13.6 million as of December 31, 2024 have been pledged as security for the Company’s revolving credit facility (refer to Note 9). Allowance for credit losses Microlending finance loans receivable Microlending finance loans receivable is related to the Company’s microlending operations in South Africa whereby it provides unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to nine months , with the majority of loans originated having a tenor of six months . The Company analyses this lending book as a single portfolio because the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk of the lending book. Refer to Note 5 related to the Company risk management process related to these receivables. The Company has operated this lending book for more than five years and uses historical default experience over the lifetime of loans in order to calculate a lifetime loss rate for the lending book. The allowance for credit losses related to these microlending finance loans receivables is calculated by multiplying the lifetime loss rate with the month end outstanding lending book. The lifetime loss rate as of each of June 30, 2024 and December 31, 2024, was 6.50 %. The performing component (that is, outstanding loan payments not in arrears) of the book exceeds more than 98 %, of the outstanding lending book as of each of June 30, 2024 and December 31, 2024. Merchant finance loans receivable Merchant finance loans receivable is related to the Company’s Merchant lending activities in South Africa whereby it provides unsecured short-term loans to qualifying customers. Loans to customers have a tenor of up to twelve months , with the majority of loans originated having a tenor of approximately eight months . The Company analyses this lending book as a single portfolio because the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk of the lending book. Refer to Note 5 related to the Company risk management process related to these receivables. 17 3. Accounts receivable, net and other receivables and finance loans receivable, net (continued) Finance loans receivable, net (continued) Allowance for credit losses (continued) Merchant finance loans receivable (continued) The Company uses historical default experience over the lifetime of loans generated thus far in order to calculate a lifetime loss rate for the lending book. The allowance for credit losses related to these merchant finance loans receivables is calculated by adding together actual receivables in default plus multiplying the lifetime loss rate with the month-end outstanding lending book. The lifetime loss rate as of each of June 30, 2024 and December 31, 2024, was approximately 1.18 %. The performing component (that is, outstanding loan payments not in arrears), under-performing component (that is, outstanding loan payments that are in arrears) and non-performing component (that is, outstanding loans for which payments appeared to have ceased) of the book represents approximately 84 %, 15 % and 1 %, respectively, of the outstanding lending book as of June 30, 2024. The performing component, under-performing component and non-performing component of the book represents approximately 85 %, 15 % and 0 %, respectively, of the outstanding lending book as of December 31, 2024. 4. Inventory The Company’s inventory comprised the following categories as of December 31, 2024, and June 30, 2024: December 31, June 30, 2024 2024 Raw materials $ 2,333 $ 2,791 Work-in-progress 145 71 Finished goods 24,868 15,364 $ 27,346 $ 18,226 Finished goods as of June 30, 2024, includes $ 1.8 million of Cell C airtime inventory that was previously classified as finished goods subject to sale restrictions. The Company sold all of this inventory during the first two months of the six months ended December 31, 2024. 5. Fair value of financial instruments Initial recognition and measurement Financial instruments are recognized when the Company becomes a party to the transaction. Initial measurements are at cost, which includes transaction costs. Risk management The Company manages its exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price and liquidity risks as discussed below. Currency exchange risk The Company is subject to currency exchange risk because it purchases components for its safe assets, that the Company assembles, and inventories that it is required to settle in other currencies, primarily the euro, renminbi, and U.S. dollar. The Company has used forward contracts in order to limit its exposure in these transactions to fluctuations in exchange rates between the South African rand (“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand. Translation risk Translation risk relates to the risk that the Company’s results of operations will vary significantly as the U.S. dollar is its reporting currency, but it earns a significant amount of its revenues and incurs a significant amount of its expenses in ZAR. The U.S. dollar to the ZAR exchange rate has fluctuated significantly over the past three years. As exchange rates are outside the Company’s control, there can be no assurance that future fluctuations will not adversely affect the Company’s results of operations and financial condition. 18 5. Fair value of financial instruments (continued) Risk management (continued) Interest rate risk As a result of its normal borrowing activities, the Company’s operating results are exposed to fluctuations in interest rates, which it manages primarily through regular financing activities. Interest rates in South Africa remained unchanged for the majority of calendar 2024 however the South African Reserve Bank announced a 25-basis point reduction in the South African repurchase rate in each of September 2024 and November 2024, with further reductions expected in the short-term. Therefore, ignoring the impact of changes to the margin on its borrowings (refer to Note 9) and value of borrowings outstanding, the Company expects its cost of borrowing to decline moderately in the foreseeable future, however, the Company would expect a higher cost of borrowing if interest rates were to increase in the future. The Company periodically evaluates the cost and effectiveness of interest rate hedging strategies to manage this risk. The Company generally maintains surplus cash in cash equivalents and held to maturity investments and has occasionally invested in marketable securities. Credit risk Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The Company maintains credit risk policies in respect of its counterparties to minimize overall credit risk. These policies include an evaluation of a potential counterparty’s financial condition, credit rating, and other credit criteria and risk mitigation tools as the Company’s management deems appropriate. With respect to credit risk on financial instruments, the Company maintains a policy of entering into such transactions only with South African and European financial institutions that have a credit rating of “B” (or its equivalent) or better, as determined by credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings. 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 are 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. 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. Equity price and liquidity risk Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price of equity securities that it holds. The market price of these securities may fluctuate for a variety of reasons and, consequently, the amount that the Company may obtain in a subsequent sale of these securities may significantly differ from the reported market value. Equity liquidity risk relates to the risk of loss that the Company would incur as a result of the lack of liquidity on the exchange on which those securities are listed. The Company may not be able to sell some or all of these securities at one time, or over an extended period of time without influencing the exchange-traded price, or at all. 19 5. Fair value of financial instruments (continued) Financial instruments (continued) The following section describes the valuation methodologies the Company uses to measure its significant financial assets and liabilities at fair value. In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology would apply to Level 1 investments. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. These investments would be included in Level 2 investments. In circumstances in which inputs are generally unobservable, values typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model- based techniques that include option pricing models, discounted cash flow models, and similar techniques. Investments valued using such techniques are included in Level 3 investments. Asset measured at fair value using significant observable inputs – investment in MobiKwik The Company’s owns 6,215,620 equity shares of One MobiKwik Systems Limited (“MobiKwik”). MobiKwik listed on the National Stock Exchange of India (“NSE”) on December 18, 2024. Up until its listing MobiKwik did not have a readily determinable fair value and the Company elected to measure its investment in MobiKwik at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer (“cost plus or minus changes in observable prices equity securities”). From the date of MobiKwik’s listing, the Company has used MobiKwik’s closing price reported on the NSE on the last trading day related to last day of the Company’s reporting period to determine the fair value of the equity securities owned by the Company. The Company has determined a fair value per MobiKwik share of $ 6.85 (INR 586.15 per share at the USD: INR exchange rates applicable as of December 31, 2024). Refer to Note 6 for additional information. Asset measured at fair value using significant unobservable inputs – investment in Cell C The Company’s Level 3 asset represents an investment of 75,000,000 class “A” shares in Cell C, a significant mobile telecoms provider in South Africa. The Company used a discounted cash flow model developed by the Company to determine the fair value of its investment in Cell C as of December 31, 2024 and June 30, 2024, respectively, and valued Cell C at $ 0.0 (zero) and $ 0.0 (zero) as of December 31, 2024, and June 30, 2024, 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 assumed a marketability discount of 20 % and a minority discount of 24 %. The Company utilized the latest business plan provided by Cell C management for the period ending December 31, 2027, for the December 31, 2024, and June 30, 2024, 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 December 31, 2024 and June 30, 2024: Weighted Average Cost of Capital ("WACC"): Between 21 % and 25 % over the period of the forecast Long term growth rate: 4.5 % ( 4.5 % as of June 30, 2024) Marketability discount: 20 % ( 20 % as of June 30, 2024) Minority discount: 24 % ( 24 % as of June 30, 2024) Net adjusted external debt - December 31, 2024: (1) ZAR 7.4 billion ($ 0.4 billion), no lease liabilities included Net adjusted external debt - June 30, 2024: (2) ZAR 7.9 billion ($ 0.4 billion), no lease liabilities included (1) translated from ZAR to U.S. dollars at exchange rates applicable as of December 31, 2024. (2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2024. The following table presents the impact on the carrying value of the Company’s Cell C investment of a 1.0 % decrease and 1.0 % increase in the WACC rate and the EBITDA margins respectively used in the Cell C valuation on December 31, 2024, all amounts translated at exchange rates applicable as of December 31, 2024: Sensitivity for fair value of Cell C investment 1.0% increase 1.0% decrease WACC rate $ - $ 426 EBITDA margin $ 1,059 $ - The aggregate fair value of the MobiKwik and Cell C’s shares as of December 31, 2024, represented 6.6 % of the Company’s total assets, including these shares . The Company expects that there will be short-term equity price volatility with respect to these shares, and with respect to Cell C specifically, particularly given that Cell C remains in a turnaround process. 20 5. Fair value of financial instruments The following table presents the Company’s assets measured at fair value on a recurring basis as of December 31, 2024, according to the fair value hierarchy: Quoted Price in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Investment in Cell C $ - $ - $ - $ - Investment in MobiKwik 42,566 - - 42,566 Related to insurance business: Cash, cash equivalents and restricted cash (included in other long-term assets) 217 - - 217 Fixed maturity investments (included in cash and cash equivalents) 4,532 - - 4,532 Total assets at fair value $ 47,315 $ - $ - $ 47,315 The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2024, according to the fair value hierarchy: Quoted Price in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Investment in Cell C $ - $ - $ - $ - Related to insurance business Cash and cash equivalents (included in other long-term assets) 216 - - 216 Fixed maturity investments (included in cash and cash equivalents) 4,635 - - 4,635 Total assets at fair value $ 4,851 $ - $ - $ 4,851 There have been no transfers in or out of Level 3 during the six months ended December 31, 2024 and 2023, 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 six months ended December 31, 2024 and 2023. 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, 2024: Carrying value Assets Balance as of June 30, 2024 $ - Foreign currency adjustment (1) - Balance as of December 31, 2024 $ - (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. 21 5. Fair value of financial instruments 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, 2023: Carrying value Assets Balance as of June 30, 2023 $ - Foreign currency adjustment (1) - Balance as of December 31, 2023 $ - (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. Assets measured at fair value on a nonrecurring basis The Company measures equity investments without readily determinable fair values at fair value on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available and may include quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of the asset exceeds its fair value and the excess is determined to be other-than-temporary. Refer to Note 6 for impairment charges recorded during the reporting periods presented herein. The Company has no liabilities that are measured at fair value on a nonrecurring basis. 6. Equity-accounted investments and other long-term assets Refer to Note 9 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2024, for additional information regarding its equity-accounted investments and other long-term assets. Equity-accounted investments The Company’s ownership percentage in its equity-accounted investments as of December 31, 2024, and June 30, 2024, was as follows: December 31, June 30, 2024 2024 Sandulela Technology (Pty) Ltd ("Sandulela") 49.0 % 49.0 % SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”) 50.0 % 50.0 % Sale and impairment of Finbond shares during the three and six months ended December 31, 2023 On August 10, 2023, the Company, through its wholly owned subsidiary Net1 Finance Holdings (Pty) Ltd, entered into an agreement with Finbond to sell its remaining shareholding to Finbond for a cash consideration of ZAR 64.2 million ($ 3.5 million), or ZAR 0.2911 per share. The transaction was subject to certain conditions, including regulatory and shareholder approvals, which were finalized in December 2023. The cash proceeds received of ZAR 64.2 million ($ 3.5 million) were used to repay capitalized interest under the Company’s borrowing facilities. As noted above, the Company entered into an agreement to exit its position in Finbond and the Company considered this an impairment indicator. The Company is required to include any foreign currency translation reserve and other equity account amounts in its impairment assessment if it considers exiting an equity method investment. The Company performed an impairment assessment of its holding in Finbond, including the foreign currency translation reserve and other equity account amounts, as of September 30, 2023. The Company recorded an impairment loss of $ 1.2 million during the quarter ended September 30, 2023, which represented the difference between the determined fair value of the Company’s interest in Finbond and the Company’s carrying value, including the foreign currency translation reserve (before the impairment). The Company used the price of ZAR 0.2911 referenced in the August 2023 agreement referred to above to calculate the determined fair value for Finbond. 22 6. Equity-accounted investments and other long-term assets (continued) Equity-accounted investments (continued) Sale and impairment of Finbond shares during the three and six months ended December 31, 2023 (continued) The Company sold 7,379,656 shares in Finbond for cash during the three and six months ended December 31, 2023, respectively. The Company did no t record a gain or loss on the disposal because the sale proceeds were equivalent to the net carrying value, including accumulated reserves, of the investment in Finbond as of the disposal date. The following table presents the calculation of the disposal of Finbond shares during the three and six months ended December 31, 2023: 2023 Loss on disposal of Finbond shares: Consideration received in cash $ 3,508 Less: carrying value of Finbond shares sold ( 2,112 ) Less: release of foreign currency translation reserve from accumulated other comprehensive loss ( 1,543 ) Add: release of stock-based compensation charge related to equity-accounted investment 147 Loss on sale of Finbond shares $ - Carbon In September 2022, the Company, through its wholly-owned subsidiary, Net1 Applied Technologies Netherlands B.V. (“Net1 BV”), entered into a binding term sheet with the Etobicoke Limited (“Etobicoke”) to sell its entire interest, or 25 %, in Carbon to Etobicoke for $ 0.5 million and a loan due from Carbon, with a face value of $ 3.0 million, to Etobicoke for $ 0.75 million. Both the equity interest and the loan had a carrying value of $ 0 (zero) at June 30, 2022. The parties agreed that Etobicoke pledge the Carbon shares purchased as security for the amounts outstanding under the binding term sheet. The Company received $ 0.25 million on closing and the outstanding balance due by Etobicoke was expected to be paid as follows: (i) $ 0.25 million on September 30, 2023 (the amount was received in October 2023), and (ii) the remaining amount, of $ 0.75 million in March 2024 (the amount has not been received as of December 31, 2024 (refer to Note 3)). Summarized below is the movement in equity-accounted investments and loans provided to equity-accounted investments during the six months ended December 31, 2024: Total (1) Investment in equity Balance as of June 30, 2024 $ 206 Comprehensive income: 77 Other comprehensive income - Equity accounted (loss) earnings 77 Share of net (loss) earnings 77 Impairment - Dividends received ( 65 ) Equity-accounted investment acquired in business combination (Note 2) 477 Disposal of equity accounted investment (Note 2) ( 507 ) Foreign currency adjustment (2) ( 7 ) Balance as of December 31, 2024 $ 181 (1) Includes Sandulela, and SmartSwitch Namibia; (2) The foreign currency adjustment represents the effects of the fluctuations of the ZAR and Namibian dollar, against the U.S. dollar on the carrying value. 23 6. 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 December 31, 2024, and June 30, 2024: December 31, June 30, 2024 2024 Total equity investments $ 42,566 $ 76,297 Investment in 5 % of Cell C (June 30, 2024: 5 %) at fair value (Note 5) - - Investment in 8 % of MobiKwik (June 30, 2024: 10 %) (1) 42,566 76,297 Investment in 87.5 % of CPS (June 30, 2024: 87.5 %) at fair value (1)(2) - - Policy holder assets under investment contracts (Note 8) 217 216 Reinsurance assets under insurance contracts (Note 8) 1,692 1,469 Other long-term assets 1,607 - Total other long-term assets $ 46,082 $ 77,982 (1) The Company determined that MobiKwik (up until December 2024) and CPS do not have readily determinable fair values and therefore elected to record these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. (2) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that CPS be placed into liquidation. Refer to Note 5 for additional information regarding the determination of the fair value of Company’s investment in MobiKwik as of December 31, 2024. The Company used this valuation as the basis for its adjustment to decrease the carrying value of its investment in MobiKwik by $ 33.7 million from $ 76.3 million to $ 42.6 million as of December 31, 2024. The change in the fair value of MobiKwik for the three and six months ended December 31, 2024, of $ 33.7 million, is included in the caption “Change in fair value of equity securities” in the consolidated statement of operations for the three and six months ended December 31, 2024. 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, 2024: Cost basis Unrealized holding Unrealized holding Carrying gains losses value Equity securities: Investment in CPS $ - $ - $ - $ - Held to maturity: Investment in Cedar Cellular notes (Note 3) - - - - Summarized below are the components of the Company’s equity securities without readily determinable fair value and held to maturity investments as of June 30, 2024: Cost basis Unrealized holding Unrealized holding Carrying gains losses value Equity securities: Investment in MobiKwik $ 26,993 $ 49,304 $ - $ 76,297 Investment in CPS - - - - Held to maturity: Investment in Cedar Cellular notes - - - - Total $ 26,993 $ 49,304 $ - $ 76,297 24 7. Goodwill and intangible assets, net Goodwill Summarized below is the movement in the carrying value of goodwill for the three months ended December 31, 2024: Gross value Accumulated impairment Carrying value Balance as of June 30, 2024 $ 157,899 $ ( 19,348 ) $ 138,551 Acquisitions (Note 2) (1) 72,731 - 72,731 Foreign currency adjustment (2) ( 10,989 ) 467 ( 10,522 ) Balance as of December 31, 2024 $ 219,641 $ ( 18,881 ) $ 200,760 (1) – Represents goodwill arising from the acquisition of Adumo and IVAS Namibia and translated at the foreign exchange rates applicable on the date the transactions became effective. This goodwill has been allocated to the Merchant and Consumer reportable operating segments. (2) – 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 associated with the acquisitions represents the excess of cost over the fair value of acquired net assets. Goodwill arising from these acquisitions is not deductible for tax purposes. See Note 2 for the allocation of the purchase price to the fair value of acquired net assets. Refer to Note 7 for additional information regarding changes to the Company’s reportable segments during the six months ended December 31, 2024. Goodwill has been allocated to the Company’s reportable segments as follows: Merchant Consumer Enterprise Carrying value Balance as of June 30, 2024 $ 123,396 $ - $ 15,155 $ 138,551 Acquisitions (Note 2) 64,241 8,490 - 72,731 Foreign currency adjustment (1) ( 9,327 ) ( 674 ) ( 521 ) ( 10,522 ) Balance as of December 31, 2024 $ 178,310 $ 7,816 $ 14,634 $ 200,760 (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. Intangible assets, net Carrying value and amortization of intangible assets Summarized below is the carrying value and accumulated amortization of intangible assets as of December 31, 2024, and June 30, 2024: As of December 31, 2024 As of June 30, 2024 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value Finite-lived intangible assets: Customer relationships (1) $ 34,945 $ ( 14,941 ) $ 20,004 $ 25,880 $ ( 14,030 ) $ 11,850 Software, integrated platform and unpatented technology (1) 124,690 ( 31,056 ) 93,634 115,213 ( 25,763 ) 89,450 FTS patent 2,035 ( 2,035 ) - 2,107 ( 2,107 ) - Brands and trademarks (1) 17,191 ( 4,865 ) 12,326 14,353 ( 4,300 ) 10,053 Total finite-lived intangible assets $ 178,861 $ ( 52,897 ) $ 125,964 $ 157,553 $ ( 46,200 ) $ 111,353 (1) December 31, 2024 balances include the intangible assets acquired as part of the Adumo acquisition in October 2024. 25 7. Goodwill and intangible assets, net (continued) Intangible assets, net (continued) Aggregate amortization expense on the finite-lived intangible assets for the three months ended December 31, 2024 and 2023, was $ 4.9 million and $ 3.6 million, respectively. Aggregate amortization expense on the finite-lived intangible assets for the six months ended December 31, 2024 and 2023, was $ 8.8 million and $ 7.2 million, respectively. Future estimated annual amortization expense for the next five fiscal years and thereafter, assuming exchange rates that prevailed on December 31, 2024, 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 2025 (excluding six months ended December 31, 2024) $ 9,291 Fiscal 2026 18,581 Fiscal 2027 18,286 Fiscal 2028 18,061 Fiscal 2029 17,699 Thereafter 44,046 Total future estimated annual amortization expense $ 125,964 8. Assets and policyholder liabilities under insurance and investment contracts Reinsurance assets and policyholder liabilities under insurance contracts Summarized below is the movement in reinsurance assets and policyholder liabilities under insurance contracts during the six months ended December 31, 2024: Reinsurance Assets (1) Insurance contracts (2) Balance as of June 30, 2024 $ 1,469 $ ( 2,241 ) Increase in policy holder benefits under insurance contracts 550 ( 5,028 ) Claims and decrease in policyholders’ benefits under insurance contracts ( 260 ) 4,582 Foreign currency adjustment (3) ( 67 ) 102 Balance as of December 31, 2024 $ 1,692 $ ( 2,585 ) (1) Included in other long-term assets (refer to Note 6); (2) Included in other long-term liabilities; (3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar. The Company has agreements with reinsurance companies in order to limit its losses from various insurance contracts, however, if the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contract liabilities is based on the best estimate assumptions of future experience plus prescribed margins, as required in the markets in which these products are offered, namely South Africa. The process of deriving the best estimate assumptions plus prescribed margins includes assumptions related to claim reporting delays (based on average industry experience). Assets and policyholder liabilities under investment contracts Summarized below is the movement in assets and policyholder liabilities under investment contracts during the six months ended December 31, 2024: Assets (1) Investment contracts (2) Balance as of June 30, 2024 $ 216 $ ( 216 ) Increase in policy holder benefits under investment contracts 8 ( 8 ) Foreign currency adjustment (3) ( 7 ) 7 Balance as of December 31, 2024 $ 217 $ ( 217 ) (1) Included in other long-term assets (refer to Note 6); (2) Included in other long-term liabilities; (3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar. The Company does not offer any investment products with guarantees related to capital or returns. 26 9. Borrowings Refer to Note 12 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2024, for additional information regarding its borrowings. Reference rate reform After the transition away from certain interbank offered rates in foreign jurisdictions (“IBOR reform ”), the reforms to South Africa’s reference interest rate are now accelerating rapidly. The Johannesburg Interbank Average Rate (“JIBAR”) will be replaced by the new South African Overnight Index Average (“ZARONIA”). Certain of the Company’s borrowings reference JIBAR as a base interest rate. ZARONIA reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by commercial banks. There is uncertainty surrounding the timing and manner in which the transition would occur and how this would affect our borrowings. The Company is engag ing with its borrowers to negotiate changes to its existing borrowing agreements or to introduce language to cater for the transition to ZARONIA in its future borrowing agreements. South Africa The Company is currently renegotiating its borrowing facilities and expects the process to be concluded before March 31, 2025. The amounts below have been translated at exchange rates applicable as of the dates specified. The JIBAR, an average of 3 month negotiable certificates of deposit (“NCD”) rates, on December 31, 2024, was 7.75 %. The prime rate, the benchmark rate at which private sector banks lend to the public in South Africa, on December 31, 2024, was 11.25 %, and reduced to 11.00 % on January 31, 2025, following a 0.25% reduction in the South African repo rate, the rate at which private sector banks borrow funds from the South African Reserve Bank. RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term borrowings Long-term borrowings - Facility G and Facility H As of December 31, 2024, Lesaka SA’s facilities included (i) Facility G of ZAR 627.0 million ($ 33.3 million); (ii) Facility H of ZAR 390.1 million ($ 20.8 million) (both fully utilized); and (iii) the Facility G revolver of ZAR 200.0 million ($ 10.6 million) (of which ZAR 199 million ($ 10.6 million) has been utilized). The interest rate on these facilities as of December 31, 2024, was JIBAR plus 4.75 %. Available short-term facility - Facility E The Company cancelled its Facility E facility agreement in November 2024. The overdraft facility could only be used to fund ATMs and therefore the overdraft utilized and converted to cash to fund the Company’s ATMs was considered restricted cash. The interest rate on this facility was equal to the prime rate. RMB Bridge Facilities, comprising a short-term facility obtained in October 2024 and amended in December 2024 On September 30, 2024, Lesaka SA entered into a Facility Letter (the “F2024 Facility Letter”) with RMB to provided Lesaka SA a ZAR 665.0 million funding facility (the “Facility”). As of December 31, 2024, the Company had utilized all of the ZAR 665 million bridge facility. The Facility has been used by Lesaka SA to (i) settle an amount of ZAR 232.2 due under the Adumo transaction (refer to Note 2); (ii) pay Crossfin Holdings (RF) Proprietary Limited (“Crossfin Holdings”) ZAR 207.2 million under a share purchase agreement concluded between Lesaka SA and Crossfin Holdings (refer to Note 11); (iii) pay an amount of ZAR 147.5 million, which includes interest, notified by Investec Bank Limited to Adumo and Lesaka SA as a result of the transaction described in Note 2, and (iv) pay an origination fee of ZAR 7.6 million to RMB. The Facility also provides Lesaka with ZAR 70.0 million for transaction - related expenses. On December 10, 2024, Lesaka SA and RMB entered into a First Addendum to the Facility Letter (the “F2024 Addendum Letter”). The F2024 Addendum Letter provides Lesaka SA with an additional ZAR 250.0 million general banking facility (“GBF Facility”) which may be used for general corporate purposes. As of December 31, 2024, the Company had utilized ZAR 98.2 million of the bridge facility. Interest on the Facility and the GBF Facility is calculated at the prime rate plus 1.80 %. The Facility and the GBF Facility are unsecured and are required to be repaid in full on or before February 28, 2025. 27 9. Borrowings (borrowings) (continued) South Africa (continued) Connect Facilities, comprising long-term borrowings and a short-term facility As of December 31, 2024, the Connect Facilities include (i) an overdraft facility (general banking facility) of ZAR 170.0 million (of which ZAR 170.0 million ($ 9.0 million) has been utilized); (ii) Facility A of ZAR 700.0 million ($ 37.2 million); (iii) Facility B of ZAR 550.0 million ($ 29.2 million) (both fully utilized); and (iv) an asset-backed facility of ZAR 200.0 million ($ 10.6 million) (of which ZAR 151.6 million ($ 8.1 million) has been utilized). On October 29, 2024, the Company, through its wholly owned subsidiary Cash Connect Management Solutions (Pty) Ltd, entered into an addendum to a facility letter with RMB, to obtain a ZAR 100.0 million temporary increase in its overdraft facility for a period of approximately four months to specifically fund the purchase of prepaid airtime vouchers. This temporary increase is repayable in equal daily instalments which commenced at the end of October 2024 with the final repayment due on February 15, 2025. CCC Revolving Credit Facility, comprising long-term borrowings As of December 31, 2024, the amount of the CCC Revolving Credit Facility was ZAR 300.0 million (of which ZAR 215.7 million has been utilized). 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 0.9 0% per annum. RMB facility, comprising indirect facilities As of December 31, 2024, the aggregate amount of the Company’s short-term South African indirect credit facility with RMB was ZAR 135.0 million ($ 7.1 million), which includes facilities for guarantees, letters of credit and forward exchange contracts. As of December 31, 2024 and June 30, 2024, the Company had utilized ZAR 33.1 million ($ 1.8 million) and ZAR 33.1 million ($ 1.8 million), respectively, of its indirect and derivative facilities of ZAR 135.0 million (June 30, 2024: ZAR 135.0 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 20). Nedbank facility, comprising short-term facilities As of December 31, 2024, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited was ZAR 156.6 million ($ 8.3 million). The credit facility represents indirect and derivative facilities of up to ZAR 156.6 million ($ 8.3 million), which include guarantees, letters of credit and forward exchange contracts. As of December 31, 2024 and June 30, 2024, the Company had utilized ZAR 2.1 million ($ 0.1 million) and ZAR 2.1 million ($ 0.1 million), respectively, of its indirect and derivative facilities of ZAR 156.6 million (June 30, 2024: ZAR 156.6 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 20). 28 9. Borrowings (borrowings) (continued) South Africa (continued) Movement in short-term credit facilities (continued) Summarized below are the Company’s short-term facilities as of December 31, 2024, and the movement in the Company’s short- term facilities from as of June 30, 2024 to as of December 31, 2024: RMB RMB RMB RMB Nedbank Facility E Bridge Indirect Connect Facilities Total Short-term facilities available as of December 31, 2024 $ - $ 48,594 $ 7,170 $ 14,339 $ 8,314 $ 78,417 Overdraft - 48,594 - 14,339 - 62,933 Indirect and derivative facilities - - 7,170 - 8,314 15,484 Movement in utilized overdraft facilities: Restricted as to use for ATM funding only 6,737 - - - - 6,737 No restrictions as to use - - - 9,351 - 9,351 Balance as of June 30, 2024 6,737 - - 9,351 - 16,088 Utilized 23,893 43,200 - 5,655 - 72,748 Repaid ( 31,028 ) - - ( 3,374 ) - ( 34,402 ) Guarantee fee paid - ( 431 ) - - - ( 431 ) Foreign currency adjustment (1) 398 ( 2,683 ) - ( 566 ) - ( 2,851 ) Balance as of December 31, 2024 - 40,086 - 11,066 - 51,152 No restrictions as to use $ - $ 40,086 $ - $ 11,066 $ - $ 51,152 Interest rate as of December 31, 2024 (%) (2) N/A 13.05 N/A 11.15 N/A Movement in utilized indirect and derivative facilities: Balance as of June 30, 2024 $ - $ - $ 1,821 $ - $ 116 $ 1,937 Foreign currency adjustment (1) - - ( 63 ) - ( 4 ) ( 67 ) Balance as of December 31, 2024 $ - $ - $ 1,758 $ - $ 112 $ 1,870 (1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar. (2) Facility E interest was set at prime, RMB Bridge at prime plus 1.8 % and the Connect facility at prime less 0.10 %. Interest expense incurred under the Company’s South African short-term borrowings and included in the caption interest expense on the condensed consolidated statement of operations during the three months ended December 31, 2024 and 2023, was $ 1.8 million and $ 0.6 million, respectively. 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 six months ended December 31, 2024 and 2023, was $ 2.4 million and $ 1.3 million, respectively. The Company cancelled Adumo’s overdraft arrangements on October 1, 2024, and settled Adumo’s outstanding overdraft balance of ZAR 20.0 million ($ 1.1 million) on the same day. The repayment is included in the caption repayment of bank overdraft included on the Company’s unaudited condensed consolidated statements of cash flows for the three and six months ended December 31, 2024. 29 9. Borrowings (continued) Movement in long-term borrowings Summarized below is the movement in the Company’s long-term borrowing from as of as of June 30, 2024 to as of December 31, 2024: Facilities Lesaka RMB G & H Connect RMB A&B CCC RMB (6) Connect Wesbank Asset backed Total Included in current $ - $ - $ 11,841 $ 3,878 $ 15,719 Included in long-term 56,151 66,815 - 4,501 127,467 Opening balance as of June 30, 2024 56,151 66,815 11,841 8,379 143,186 Facilities utilized 11,022 - 559 2,096 13,677 Facilities repaid ( 3,911 ) - ( 554 ) ( 2,117 ) ( 6,582 ) Non-refundable fees amortized 88 24 21 - 133 Capitalized interest 3,735 - - - 3,735 Capitalized interest repaid ( 95 ) - - - ( 95 ) Foreign currency adjustment (1) ( 2,374 ) ( 2,302 ) ( 414 ) ( 307 ) ( 5,397 ) Closing balance as of December 31, 2024 64,616 64,537 11,453 8,051 148,657 Included in current 64,616 - 11,453 3,684 79,753 Included in long-term - 64,537 - 4,367 68,904 Unamortized fees - ( 149 ) - - ( 149 ) Due within 2 years - 4,978 - 2,873 7,851 Due within 3 years - 7,634 - 1,119 8,753 Due within 4 years - 52,074 - 333 52,407 Due within 5 years $ - $ - $ - $ 42 $ 42 Interest rates as of December 31, 2024 (%): 12.50 11.50 12.15 12.00 Base rate (%) 7.75 7.75 11.25 11.25 Margin (%) 4.75 3.75 0.90 0.75 Footnote number (2) (3) (4) (5) (1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar. (2) Interest on Facility G and Facility H is based on the JIBAR in effect from time to time plus a margin, which margin is calculated as: (i) 5.50 % if the Look Through Leverage (“LTL”) ratio is greater than 3.50x; (ii) 4.75 % if the LTL ratio is less than 3.50x but greater than 2.75x; (iii) 3.75 % if the LTL ratio is less than 2.75x but greater than 1.75x; or (iv) 2.50 % if the LTL ratio is less than 1.75x. The LTL ratio is expressed as times (“x”), and was introduced to calculate the margin used in the determination of the interest rate. The LTL ratio is calculated as the Total Attributable Net Debt to the Total Attributable EBITDA, as defined in the Company’s borrowing arrangements with RMB, for the measurement period ending on a specified date. (3) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, which margin is calculated as (i) 4.00 % if the Leverage Ratio (“LR”) is greater than 3.50x; (ii) 3.75 % if the LR is less than 3.50x but greater than 2.50x; (iii) 3.40 % if the LTL ratio is less than 2.50x. (4) Interest is charged at prime plus 0.90 % per annum on the utilized balance. (5) Interest is charged at prime plus 0.75 % per annum on the utilized balance. (6) Amounts presented as of June 30, 2024, and as of December 31, 2024, have been revised, refer to Note 1 for additional information. The amounts as of June 30, 2024, and as of December 31, 2024, were incorrectly classified as long-term borrowings, instead of as current portion of long-term borrowings. 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 December 31, 2024 and 2023, was $ 4.3 million and $ 4.1 million, respectively. Prepaid facility fees amortized included in interest expense during the three months ended December 31, 2024 and 2023, respectively, were $ 0.1 million and $ 0.1 million, respectively. 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 $ 0.4 million and $ 0.4 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 months ended December 31, 2024 and 2023. 30 9. Borrowings (continued) Movement in long-term borrowings (continued) 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 six months ended December 31, 2024 and 2023, was $ 8.5 million and $ 8.1 million, respectively. Prepaid facility fees amortized included in interest expense during the six months ended December 31, 2024 and 2023, respectively, were $ 0.1 million and $ 0.3 million, respectively. Interest expense incurred under the Company’s CCC facilities relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and this interest expense of $ 0.8 million and $ 0.7 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 six months ended December 31, 2024 and 2023. The Company cancelled Adumo’s long-term borrowings arrangements on October 1, 2024, and settled Adumo’s outstanding balances of ZAR 126.7 million ($ 7.2 million) on the same day. The repayment is included in the caption repayment of long-term borrowings included on the Company’s unaudited condensed consolidated statements of cash flows for the three and six months ended December 31, 2024. 10. Other payables Summarized below is the breakdown of other payables as of December 31, 2024, and June 30, 2024: December 31, June 30, 2024 2024 Clearing accounts $ 8,093 $ 17,124 Vendor wallet balances 18,657 14,635 Accruals 12,522 7,173 Provisions 5,873 7,442 Value -added tax payable 2,088 1,191 Payroll-related payables 1,942 922 Participating merchants' settlement obligation 2 1 Other 10,239 7,563 $ 59,416 $ 56,051 Other includes deferred income, client deposits and other payables. 11. Capital structure October 2024 repurchase of common stock On October 1, 2024, the Company, through Lesaka SA, and Crossfin Holdings entered into a share purchase agreement under which Lesaka SA purchased 2,601,410 of the 3,587,332 Consideration Shares for ZAR 207.2 million ($ 12.0 million). The transaction was settled in early October 2024, and the shares of Company’s common stock repurchased have been included in the Company’s treasury shares included in its unaudited condensed consolidated statement of changes in equity for the three and six months ended December 31, 2024. The repurchase was made outside of the Company’s $ 100 million share repurchase authorization. Redeemable common stock issued pursuant to transaction with the IFC Investors Put Option Refer to Note 14 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2024, for additional information regarding its redeemable common stock issued pursuant to transaction with the IFC Investors. Certain IFC Investors were investors in Adumo and the Company issued an aggregate of 1,989,162 additional shares of its common stock at a price of $ 4.79 to these IFC Investors pursuant to the Purchase Agreement. The Company and the IFC Investors amended and restated the Policy Agreement (“Amended and Restated Policy Agreement”) to include these additional shares issued to the IFC Investors to also be covered by the put right included in the Amended and Restated Policy Agreement. The Company accounted for these 1,989,162 shares as redeemable common stock as a result of the put option. The Company believes that the put option has no value and, accordingly, has not recognized the put option in its consolidated financial statements. 31 11. Capital structure (continued) Impact of non-vested equity shares on number of shares, net of treasury 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, 2024 and 2023, respectively, and the number of shares, net of treasury, excluding non-vested equity shares that have not vested as of December 31, 2024 and 2023, respectively: December 31, December 31, 2024 2023 Number of shares, net of treasury: Statement of changes in equity 80,203,148 64,443,523 Less: Non-vested equity shares that have not vested as of end of period 2,902,303 3,205,580 Number of shares, net of treasury, excluding non-vested equity shares that have not vested 77,300,845 61,237,943 12. Accumulated other comprehensive loss The table below presents the change in accumulated other comprehensive loss per component during the three months ended December 31, 2024: Three months ended December 31, 2024 Accumulated foreign currency translation reserve Total Balance as of October 1, 2024 $ ( 177,830 ) $ ( 177,830 ) Release of foreign currency translation reserve related to liquidation of subsidiaries 6 6 Movement in foreign currency translation reserve ( 22,145 ) ( 22,145 ) Balance as of December 31, 2024 $ ( 199,969 ) $ ( 199,969 ) The table below presents the change in accumulated other comprehensive loss per component during the three months ended December 31, 2023: Three months ended December 31, 2023 Accumulated foreign currency translation reserve Total Balance as of October 1, 2023 $ ( 196,081 ) $ ( 196,081 ) Release of foreign currency translation reserve related to disposal of Finbond equity securities 1,543 1,543 Movement in foreign currency translation reserve related to liquidation of subsidiaries ( 952 ) ( 952 ) Movement in foreign currency translation reserve 6,112 6,112 Balance as of December 31, 2023 $ ( 189,378 ) $ ( 189,378 ) 32 12. Accumulated other comprehensive loss (continued) The table below presents the change in accumulated other comprehensive loss per component during the six months ended December 31, 2024: Six months ended December 31, 2024 Accumulated foreign currency translation reserve Total Balance as of July 1, 2024 $ ( 188,355 ) $ ( 188,355 ) Release of foreign currency translation reserve related to liquidation of subsidiaries 6 6 Movement in foreign currency translation reserve ( 11,620 ) ( 11,620 ) Balance as of December 31, 2024 $ ( 199,969 ) $ ( 199,969 ) The table below presents the change in accumulated other comprehensive loss per component during the six months ended December 31, 2023: a Six months ended December 31, 2023 Accumulated foreign currency translation reserve Total Balance as of July 1, 2023 $ ( 195,726 ) $ ( 195,726 ) Release of foreign currency translation reserve related to disposal of Finbond equity securities 1,543 1,543 Movement in foreign currency translation reserve related to equity-accounted investment 489 489 Movement in foreign currency translation reserve related to liquidation of subsidiaries ( 952 ) ( 952 ) Movement in foreign currency translation reserve 5,268 5,268 Balance as of December 31, 2023 $ ( 189,378 ) $ ( 189,378 ) The movement in the foreign currency translation reserve represents the impact of translation of consolidated entities which have a functional currency (which is primarily ZAR) to the Company’s reporting currency, which is USD. During each of the three and six months ended December 31, 2024, the Company reclassified a loss of $ 0.006 million, respectively, from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the liquidation of subsidiaries During each of the three and six months ended December 31, 2023, the Company reclassified losses of $ 1.5 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 6). The Company also reclassified a gain of $ 1.0 million from accumulated other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the liquidation of subsidiaries. 33 13. Stock-based compensation The Company’s Amended and Restated 2022 Stock Incentive Plan (“20 22 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, 2024. Stock option and restricted stock activity Options The following table summarizes stock option activity for the six months ended December 31, 2024 and 2023: Number of shares Weighted average exercise price ($) Weighted average remaining contractual term (in years) Aggregate intrinsic value ($'000) Weighted average grant date fair value ($) Outstanding - June 30, 2024 4,918,248 8.70 4.51 889 1.77 Granted - December 2024 350,000 6.00 - 433 1.24 Granted - December 2024 250,000 8.00 - 177 0.71 Exercised ( 17,014 ) 3.02 - 38 - Forfeited ( 13,333 ) 11.23 - - 8.83 Outstanding - December 31, 2024 5,487,901 8.48 4.04 1,418 1.76 Outstanding - June 30, 2023 673,274 4.37 5.14 239 1.67 Granted – December 2023 500,000 3.50 5.17 880 1.76 Exercised ( 7,385 ) 3.07 - 5 - Forfeited ( 186,846 ) 3.71 - - 1.28 Outstanding - December 31, 2023 979,043 4.07 5.50 48 1.80 The Company awarded 600,000 stock options to an executive officer during the three and six months ended December 31, 2024. The Company awarded a further 400,000 to the same executive officer in January 2025 with strike prices ranging from $ 8 to $ 14 . The 1,000,000 stock options will vest on December 31, 2026, and vesting is subject to the executive officers continued employment with the Company through to the vesting date. The 1,000,000 stock options expire on January 31, 2029. The Company awarded 500,000 stock options to Ali Mazanderani, the Company’s Executive Chairman, during the three and six months ended December 31, 2023. These options vested in December 2024, but may only be exercised during a period commencing from January 31, 2028 to January 31, 2029. During each of the three and six months ended December 31, 2024, the Company received $ 0.05 million from the exercise of 17,014 stock options, respectively. During the three and six months ended December 31, 2023, the Company received $ 0.002 million and $ 0.02 million from the exercise of 592 and 7,385 stock options, respectively. Employees forfeited an aggregate of 13,333 stock options during each of the three and six months ended December 31, 2024. Employees and a non-employee director forfeited an aggregate of 11,070 and 186,846 stock options during the three and six months ended December 31, 2023. The fair value of each option is estimated on the date of grant using the Cox Ross Rubinstein binomial model that uses the assumptions noted in the following table. The estimated expected volatility is calculated based on the Company’s 730 - day volatility. The estimated expected life of the option was determined based on the historical behavior of employees who were granted options with similar terms. The table below presents the range of assumptions used to value stock options granted during the six months ended December 31, 2024 and 2023: Six months ended December 31, 2024 2023 Expected volatility 42 % 56 % Expected dividends 0 % 0 % Expected life (in years) 2 5 Risk-free rate 4.3 % 2.1 % 34 13. Stock-based compensation (continued) The Company’s Amended and Restated 2022 Stock Incentive Plan (“2022 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, 2024. Stock option and restricted stock activity (continued) Options (continued) The following table presents stock options vested and expected to vest as of December 31, 2024: Number of shares Weighted average exercise price ($) Weighted average remaining contractual term (in years) Aggregate intrinsic value ($’000) Vested and expecting to vest - December 31, 2024 5,487,901 8.48 4.04 1,418 These options have an exercise price range of $ 3.01 to $ 14.00 . The following table presents stock options that are exercisable as of December 31, 2024: Number of shares Weighted average exercise price ($) Weighted average remaining contractual term (in years) Aggregate intrinsic value ($’000) Exercisable - December 31, 2024 360,995 4.56 5.03 428 No stock options became exercisable during each of the three and six months ended December 31, 2024 and 2023. The Company issues new shares to satisfy stock option exercises. 35 13. Stock-based compensation (continued) Stock option and restricted stock activity (continued) Restricted stock The following table summarizes restricted stock activity for the six months ended December 31, 2024 and 2023: Number of shares of restricted stock Weighted average grant date fair value ($’000) Non-vested – June 30, 2024 2,084,946 8,736 Total granted 1,331,110 4,850 Granted – August 2024 32,800 154 Granted – October 2024 100,000 490 Granted – November 2024, with performance conditions 1,198,310 4,206 Total vested ( 473,432 ) 2,469 Vested – July 2024 ( 78,801 ) 394 Vested – November 2024 ( 213,687 ) 1,134 Vested – November 2024, with performance conditions ( 103,638 ) 524 Vested – December 2024 ( 77,306 ) 417 Forfeitures ( 40,321 ) 216 Non-vested – December 31, 2024 2,902,303 11,348 Non-vested – June 30, 2023 2,614,419 11,869 Total Granted 868,996 3,394 Granted – October 2023 333,080 1,456 Granted – October 2023, with performance awards 310,916 955 Granted – October 2023 225,000 983 Total vested ( 255,706 ) 965 Vested – July 2023 ( 78,800 ) 302 Vested – November 2023 ( 109,833 ) 429 Vested – December 2023 ( 67,073 ) 234 Forfeitures ( 22,129 ) 91 Non-vested – December 31, 2023 3,205,580 13,880 Grants In August 2024 and October 2024, respectively, the Company granted 32,800 and 100,000 shares of restricted stock to employees which have time -based vesting conditions and which are subject to the employees continued employment with the Company through the applicable vesting dates. In November 2024, the Company awarded 1,198,310 shares of restricted stock to a group comprising employees and three executive officers and which are subject to a time-based vesting condition and a market condition and vest in full only on the date, if any, that the following conditions are satisfied: (1) a compounded annual 15 % appreciation in the Company’s stock price off a base price of $ 5.00 over the measurement period commencing on September 30, 2024 through September 30, 2027, and (2) the recipient is employed by the Company on a full-time basis through to September 30, 2027. 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 September 30, 2024, was $ 5.00 . The appreciation levels (times and price) and annual target percentages to earn the awards as of each period ended are as follows: ● Prior to the first anniversary of the grant date: 0 %; ● Fiscal 2026, the Company’s 30-day volume weighted-average stock price (“VWAP”) before September 30, 2025 is approximately 1.15 times higher (i.e. $ 5.75 or higher) than $ 5.00 : 33 %; ● Fiscal 2027, the Company’s VWAP before September 30, 2026 is 1.32 times higher (i.e. $ 6.61 or higher) than $ 5.00 : 67 %; ● Fiscal 2028, the Company’s VWAP before November 1, 2027 is 1.52 times higher (i.e. $ 7.60 ) than $ 5.00 : 100 %. 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 47.7 % for the closing price (of $ 5.50 ), 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. 36 13. Stock-based compensation (continued) Stock option and restricted stock activity (continued) Restricted stock (continued) Grants (continued) In October 2023, the Company awarded 333,080 shares of restricted stock with time-based vesting conditions to approximately 150 employees, which are subject to the employees continued employment with the Company through the applicable vesting dates. The Company also awarded 225,000 shares of restricted stock to an executive officer in October 2023, which vest on June 30, 2025, except if the executive officer is terminated for cause, in which case the award will be forfeited. In October 2023, the Company awarded 310,916 shares of restricted stock to three of its executive officers which 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 $ 4.00 over the measurement period commencing on September 30, 2023 through November 17, 2026, 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 September 30, 2023, was $ 3.90 . 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: 0 %; ● Fiscal 2025, the Company’s 30-day volume weighted-average stock price (“VWAP”) before November 17, 2024 is approximately 1.10 times higher (i.e. $ 4.40 or higher) than $ 4.00 : 33 %; ● Fiscal 2026, the Company’s VWAP before November 17, 2025 is 1.21 times higher (i.e. $ 4.84 or higher) than $ 4.00 : 67 %; ● Fiscal 2027, the Company’s VWAP before November 1, 2026 is 1.33 times higher (i.e. $ 5.32 ) than $ 4.00 : 100 %. 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 48.3 % for the closing price (of $ 4.37 ), 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. The Company has agreed to grant an advisor 5,500 shares per month in lieu of cash for services provided to the Company. The Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears, on a quarterly basis. During the three and six months ended December 31, 2024, the Company recorded a stock-based compensation charge of $ 0.2 million and included the issuance of 33,000 shares of common stock in its issued and outstanding share count. Vesting In July 2024, 78,801 shares of restricted stock granted to Mr. Meyer, our former Group CEO, vested. In November and December 2024, an aggregate of 290,993 shares of restricted stock granted to employees vested. Certain employees elected for 132,147 shares to be withheld to satisfy the withholding tax liability on the vesting of their shares. These 132,147 shares have been included in the Company’s treasury shares. In November 2024, 103,638 shares of restricted stock with performance conditions (share price targets) vested following the achievement of the agreed performance condition. In July 2023, 78,800 shares of restricted stock granted to Mr. Meyer vested. In November and December 2023, an aggregate of 176,906 shares of restricted stock granted to employees vested. Certain employees elected for 50,975 shares to be withheld to satisfy the withholding tax liability on the vesting of their shares. These 50,975 shares have been included in the Company’s treasury shares. Forfeitures During the three and six months ended December 31, 2024, respectively, employees forfeited 37,221 and 40,321 shares of restricted stock following their termination of employment with the Company or the failure to achieved agreed performance conditions ( 29,121 shares were forfeited following the failure to achieved agreed share performance targets). During the three and six months ended December 31, 2023, respectively, employees forfeited 14,002 and 22,129 shares of restricted stock following their termination of employment with the Company. 37 13. Stock-based compensation (continued) Stock-based compensation charge and unrecognized compensation cost The Company recorded a stock-based compensation charge, net during the three months ended December 31, 2024 and 2023, of $ 2.6 million and $ 1.8 million, respectively, which comprised: Total charge Allocated to cost of goods sold, IT processing, servicing and support Allocated to selling, general and administration Three months ended December 31, 2024 Stock-based compensation charge $ 2,655 $ - $ 2,655 Reversal of stock compensation charge related to stock options and restricted stock forfeited ( 11 ) - ( 11 ) Total - three months ended December 31, 2024 $ 2,644 $ - $ 2,644 Three months ended December 31, 2023 Stock-based compensation charge $ 1,812 $ - $ 1,812 Reversal of stock compensation charge related to stock options and restricted stock forfeited ( 8 ) - ( 8 ) Total - three months ended December 31, 2023 $ 1,804 $ - $ 1,804 The Company recorded a stock-based compensation charge, net during the six months ended December 31, 2024 and 2023, of $ 5.0 million and $ 3.6 million respectively, which comprised: a Total charge Allocated to cost of goods sold, IT processing, servicing and support Allocated to selling, general and administration Six months ended December 31, 2024 Stock-based compensation charge $ 5,032 $ - $ 5,032 Reversal of stock compensation charge related to stock options and restricted stock forfeited ( 11 ) - ( 11 ) Total - six months ended December 31, 2024 $ 5,021 $ - $ 5,021 Six months ended December 31, 2023 Stock-based compensation charge $ 3,580 $ - $ 3,580 Reversal of stock compensation charge related to stock options and restricted stock forfeited ( 17 ) - ( 17 ) Total - six months ended December 31, 2023 $ 3,563 $ - $ 3,563 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. As of December 31, 2024, the total unrecognized compensation cost related to stock options was $ 3.5 million, which the Company expects to recognize over two years . As of December 31, 2024, the total unrecognized compensation cost related to restricted stock awards was $ 6.3 million, which the Company expects to recognize over two years . During the three months ended December 31, 2024 and 2023, the Company recorded a deferred tax benefit of $ 0.5 million and $ 0.3 million, respectively, related to the stock-based compensation charge recognized related to employees of Lesaka. During the six months ended December 31, 2024 and 2023, the Company recorded a deferred tax benefit of $ 0.8 million and $ 0.3 million, respectively, related to the stock-based compensation charge recognized related to employees of Lesaka. During these periods the Company recorded a valuation allowance related to the full deferred tax benefit recognized 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. 38 14. (Loss) Earnings per share The Company has issued redeemable common stock which is redeemable at an amount other than fair value. Redemption of a class of common stock at other than fair value increases or decreases the carrying amount of the redeemable common stock and is reflected in basic earnings per share using the two-class method. There were no redemptions of common stock, or adjustments to the carrying value of the redeemable common stock during the three and six months ended December 31, 2024 and 2023. Accordingly, the two-class method presented below does not include the impact of any redemption. The Company’s redeemable common stock is described in Note 14 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2024. 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 and six months ended December 31, 2024 and 2023, reflects only undistributed earnings. The computation below of basic (loss) earnings per share excludes the net loss attributable to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the dilutive impact of these unvested shares of restricted stock from the denominator. Diluted (loss) earnings per share has been calculated to give effect to the number of shares of additional common stock that would have been outstanding if the potential dilutive instruments had been issued in each period. Stock options are included in the calculation of diluted (loss) earnings per share utilizing the treasury stock method and are not considered to be participating securities, as the stock options do not contain non-forfeitable dividend rights. The Company has excluded employee stock options to purchase 257,445 and 51,704 shares of common stock from the calculation of diluted loss per share during the three months ended December 31, 2024 and 2023 because the effect would be antidilutive. The Company has excluded employee stock options to purchase 338,725 and 46,756 shares of common stock from the calculation of diluted loss per share during the six months ended December 31, 2024 and 2023, 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. 39 14. (Loss) Earnings per share (continued) The vesting conditions for all awards made are discussed 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, 2024. 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 Six months ended December 31, December 31, 2024 2023 2024 2023 (in thousands except (in thousands except percent and percent and per share data) per share data) Numerator: Net loss attributable to Lesaka $ ( 32,134 ) $ ( 2,707 ) $ ( 36,676 ) $ ( 8,358 ) Undistributed loss ( 32,134 ) ( 2,707 ) ( 36,676 ) ( 8,358 ) Percent allocated to common shareholders (Calculation 1) 97 % 96 % 97 % 95 % Numerator for loss per share: basic and diluted $ ( 31,034 ) $ ( 2,588 ) $ ( 35,430 ) $ ( 7,961 ) Denominator Denominator for basic (loss) earnings per share: weighted-average common shares outstanding 77,024 60,990 69,589 60,134 Effect of dilutive securities: Denominator for diluted (loss) earnings per share: adjusted weighted average common shares outstanding and assuming conversion 77,024 60,990 69,589 60,134 Loss per share: Basic $ ( 0.40 ) $ ( 0.04 ) $ ( 0.51 ) $ ( 0.13 ) Diluted $ ( 0.40 ) $ ( 0.04 ) $ ( 0.51 ) $ ( 0.13 ) (Calculation 1) Basic weighted-average common shares outstanding (A) 77,024 60,990 69,589 60,134 Basic weighted-average common shares outstanding and unvested restricted shares expected to vest (B) 79,753 63,805 72,037 63,134 Percent allocated to common shareholders (A) / (B) 97 % 96 % 97 % 95 % Options to purchase 4,743,500 shares of the Company’s common stock at prices ranging from $ 6.00 to $ 14.00 per share were outstanding during the three and six months ended December 31, 2024, 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 755,006 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, 2023, 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, 2024. 15. Supplemental cash flow information The following table presents supplemental cash flow disclosures for the three and six months ended December 31, 2024 and 2023: Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 Cash received from interest $ 716 $ 482 $ 1,297 $ 927 Cash paid for interest $ 4,242 $ 6,308 $ 7,513 $ 9,233 Cash paid for income taxes $ 3,253 $ 2,806 $ 3,208 $ 3,410 40 15. Supplemental cash flow information (continued) Disaggregation of cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash included on the Company’s unaudited condensed consolidated statement of cash flows includes restricted cash related to cash withdrawn from the Company’s debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as restricted cash. Cash, cash equivalents and restricted cash also includes cash in certain bank accounts that 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 9 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, 2024 and 2023, and June 30, 2024: December 31, 2024 December 31, 2023 June 30, 2024 Cash and cash equivalents $ 60,625 $ 44,316 $ 59,065 Restricted cash 112 23,522 6,853 Cash, cash equivalents and restricted cash $ 60,737 $ 67,838 $ 65,918 Leases The following table presents supplemental cash flow disclosure related to leases for the three and nine months ended December 31, 2024 and 2023: Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,212 $ 679 $ 2,216 $ 1,372 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 708 $ 243 $ 1,218 $ 983 16. Revenue recognition Disaggregation of revenue 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, 2024: Merchant Consumer Enterprise Total (As restated) (A) (As restated) (A) Processing fees (A) $ 35,794 $ 7,862 $ 5,825 $ 49,481 South Africa (A) 33,931 7,862 5,825 47,618 Rest of Africa 1,863 - - 1,863 Technology products 8,121 65 1,187 9,373 South Africa 8,057 65 1,187 9,309 Rest of Africa 64 - - 64 Prepaid airtime sold (A) 98,188 23 1,660 99,871 South Africa (A) 91,409 23 1,660 93,092 Rest of Africa 6,779 - - 6,779 Lending revenue - 7,376 - 7,376 Interest from customers 1,610 120 - 1,730 Insurance revenue - 4,868 - 4,868 Account holder fees - 1,765 - 1,765 Other 902 850 - 1,752 South Africa 845 850 - 1,695 Rest of Africa 57 - - 57 Total revenue, derived from the following geographic locations (A) 144,615 22,929 8,672 176,216 South Africa (A) 135,852 22,929 8,672 167,453 Rest of Africa $ 8,763 $ - $ - $ 8,763 41 16. Revenue recognition (continued) Disaggregation of revenue (continued) (A) Processing fees (and South Africa) have reduced by $ 2.1 million and Prepaid airtime sold (South Africa) have increased by $ 31.5 million as a result of the correction discussed in Note 1. The net correction to revenue was $ 29.4 million. 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, 2023: Merchant Consumer Enterprise Total Processing fees $ 22,984 $ 6,175 $ 6,820 $ 35,979 South Africa 21,528 6,175 6,820 34,523 Rest of Africa 1,456 - - 1,456 Technology products 557 12 2,646 3,215 South Africa 518 12 2,646 3,176 Rest of Africa 39 - - 39 Prepaid airtime sold 90,620 52 1,339 92,011 South Africa 85,618 52 1,339 87,009 Rest of Africa 5,002 - - 5,002 Lending revenue - 5,586 - 5,586 Interest from customers 1,453 - - 1,453 Insurance revenue - 2,897 - 2,897 Account holder fees - 1,502 - 1,502 Other 654 483 113 1,250 South Africa 604 483 113 1,200 Rest of Africa 50 - - 50 Total revenue, derived from the following geographic locations 116,268 16,707 10,918 143,893 South Africa 109,721 16,707 10,918 137,346 Rest of Africa $ 6,547 $ - $ - $ 6,547 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, 2024: Merchant Consumer Enterprise Total (As restated) (A) (As restated) (A) Processing fees (A) $ 60,162 $ 15,392 $ 12,337 $ 87,891 South Africa (A) 56,497 15,392 12,337 84,226 Rest of Africa 3,665 - - 3,665 Technology products 9,966 67 2,478 12,511 South Africa 9,829 67 2,478 12,374 Rest of Africa 137 - - 137 Prepaid airtime sold (A) 192,066 40 3,238 195,344 South Africa (A) 179,407 40 3,238 182,685 Rest of Africa 12,659 - - 12,659 Lending revenue - 14,332 - 14,332 Interest from customers 3,286 120 - 3,406 Insurance revenue - 9,208 - 9,208 Account holder fees - 3,464 - 3,464 Other 2,199 1,378 51 3,628 South Africa 2,085 1,378 51 3,514 Rest of Africa 114 - - 114 Total revenue, derived from the following geographic locations (A) 267,679 44,001 18,104 329,784 South Africa (A) 251,104 44,001 18,104 313,209 Rest of Africa $ 16,575 $ - $ - $ 16,575 42 16. Revenue recognition (continued) Disaggregation of revenue (continued) (A) Processing fees (and South Africa) have reduced by $ 2.8 million and Prepaid airtime sold (South Africa) have increased by $ 40.3 million as a result of the correction discussed in Note 1. The net correction to revenue was $ 37.4 million. 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, 2023: Merchant Consumer Enterprise Total Processing fees $ 45,310 $ 11,908 $ 13,254 $ 70,472 South Africa 42,494 11,908 13,254 67,656 Rest of Africa 2,816 - - 2,816 Technology products 1,068 31 4,172 5,271 South Africa 978 31 4,172 5,181 Rest of Africa 90 - - 90 Prepaid airtime sold 176,856 93 2,416 179,365 South Africa 167,100 93 2,416 169,609 Rest of Africa 9,756 - - 9,756 Lending revenue - 10,959 - 10,959 Interest from customers 2,973 - - 2,973 Insurance revenue - 5,508 - 5,508 Account holder fees - 2,870 - 2,870 Other 1,424 918 222 2,564 South Africa 1,325 918 222 2,465 Rest of Africa 99 - - 99 Total revenue, derived from the following geographic locations 227,631 32,287 20,064 279,982 South Africa 214,870 32,287 20,064 267,221 Rest of Africa $ 12,761 $ - $ - $ 12,761 17. Leases The Company has entered into leasing arrangements classified as operating leases under accounting guidance. These leasing arrangements relate primarily to the lease of its corporate head office, administration offices and branch locations through which the Company operates its consumer business in South Africa. The Company’s operating leases have remaining lease terms of between one and five years . The Company also operates parts of its consumer 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 December 31, 2024 and 2023 was $ 1.2 million and $ 0.7 million, respectively. The Company’s operating lease expense during the six months ended December 31, 2024 and 2023 was $ 2.2 million and $ 1.4 million, respectively. The Company has also entered into short-term leasing arrangements, primarily for the lease of branch locations and other locations, to operate its consumer business in South Africa. The Company’s short-term lease expense during the three months ended December 31, 2024 and 2023, was $ 1.2 million and $ 1.0 million, respectively. The Company’s short-term lease expense during the six months ended December 31, 2024 and 2023, was $ 2.3 million and $ 1.9 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, 2024 and June 30, 2024: December 31, June 30, 2024 2024 Right of use assets obtained in exchange for lease obligations: Weighted average remaining lease term (years) 2.7 3.1 Weighted average discount rate (percent) 10.5 10.5 43 17. Leases (continued) The maturities of the Company’s operating lease liabilities as of December 31, 2024, are presented below: Maturities of operating lease liabilities Year ended June 30, 2025 (excluding six months to December 31, 2024) $ 2,338 2026 3,200 2027 2,155 2028 1,369 2029 279 Thereafter 40 Total undiscounted operating lease liabilities 9,381 Less imputed interest 1,305 Total operating lease liabilities, included in 8,076 Operating lease liability - current 3,257 Operating lease liability - long-term $ 4,819 18. Operating segments Operating segments The Company discloses segment information as reflected in the management information systems reports that its chief operating decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in which the entity holds material assets or reports material revenues. Change to internal reporting structure and re cast of previously reported information The Company’s chief operating decision maker is the Company’s Executive Chairman. He changed the Company’s operating and internal reporting structures to present a new segment, Enterprise, separately. The chief operating decision maker has decided to analyze the Company’s operating performance primarily based on three operational lines, namely, (i) Merchant, which focuses on both formal and informal sector merchants. Formal sector merchants are generally in urban areas, have higher revenues and have access to multiple service providers. Informal sector merchants, which are often sole proprietors and usually have lower revenues compared with formal section merchants, operate in rural areas or in informal urban areas and do not always have access to a full-suite of traditional banking products; (ii) Consumer, which primarily focuses on individuals who have historically been excluded from traditional financial services and to whom we offer transactional accounts (banking), insurance, lending (short-term loans), payments solutions (digital wallet) and various value-added services; and (iii) Enterprise, which comprises large-scale corporate and government organizations, including but not limited to banks, mobile network operators (“MNOs”) and municipalities. Reallocation of certain activities among operating segments The change in our operating segments during the second quarter of fiscal 2025 included the separation of Enterprise out of Merchant. The Company has also allocated the majority of Adumo’s operations to Merchant, with a smaller part of its operations focusing on the provision of physical and digital prepaid and secure payout solutions for South African businesses with large individual end-users being allocated to Consumer. Previously reported information has been recast. The Merchant segment includes revenue generated from the sale of prepaid airtime, and fees earned from the provision of value- added services (“VAS”) and card-acquiring services to informal sector merchants. It also includes activities related to the provision of goods and services provided to corporate and other juristic entities. The Company earns fees from processing activities performed (including card acquiring and the provision of a payment gateway services) for its customers, and rental and license fees from the provision of point of sales (“POS”) hardware and software to the hospitality industry. The Company also provides cash management and payment services to merchant customers through a digital vault which is located at the customer’s premises and through which the Company is able to provide the services which generate processing fee revenue. From July 1, 2023, the segment includes fees earned from transactions performed by customers utilizing its ATM infrastructure. 44 18. Operating segments (continued) Reallocation of certain activities among operating segments (continued) The Consumer segment includes activities related to the provision of financial services to customers, including a bank account, loans and insurance products. The Company charges monthly administration fees for all bank accounts. Customers that have a bank account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant POS. The Company earns processing fees from transactions processed for these customers. The Company also earns fees on transactions performed by other banks’ customers utilizing its ATM (until June 30, 2023) or POS. The Company provides short-term loans to customers in South Africa for which it earns initiation and monthly service fees, and interest revenue from the second quarter of fiscal 2025. The Company writes life insurance contracts, primarily funeral-benefit policies, and policy holders pay the Company a monthly insurance premium. The Company also earns fees from the provision of physical and digital prepaid and secure payout solutions for South African businesses. The Enterprise segment provides its business and government-related customers with transaction processing services that involve the collection, transmittal and retrieval of all transaction data. This segment also includes sales of hardware and licenses to customers. Hardware includes the sale of POS devices, SIM cards and other consumables which can occur on an ad hoc basis. Licenses include the right to use certain technology developed by the Company. The reconciliation of the reportable segment’s revenue to revenue from external customers for the three months ended December 31, 2024 and 2023, is as follows: Revenue Reportable Segment Inter- segment From external customers (As restated) (A) (As restated) (A) Merchant (as restated) (A) $ 145,209 $ 594 $ 144,615 Consumer 22,929 - 22,929 Enterprise 8,933 261 8,672 Total for the three months ended December 31, 2024 (as restated) (A) $ 177,071 $ 855 $ 176,216 Merchant $ 117,182 $ 914 $ 116,268 Consumer 16,707 - 16,707 Enterprise 11,921 1,003 10,918 Total for the three months ended December 31, 2023 $ 145,810 1,917 143,893 (A) Revenue has been restated for the three months ended December 31, 2024 to correct the misstatement of $ 29.4 million as discussed in Note 1. The reconciliation of the reportable segment’s revenue to revenue from external customers for the six months ended December 31, 2024 and 2023, is as follows: Revenue Reportable Segment Inter- segment From external customers (As restated) (A) (As restated) (A) Merchant (as restated) (A) $ 268,861 $ 1,182 $ 267,679 Consumer 44,001 - 44,001 Enterprise 20,815 2,711 18,104 Total for the six months ended December 31, 2024 (as restated) (A) $ 333,677 $ 3,893 $ 329,784 Merchant $ 229,243 $ 1,612 $ 227,631 Consumer 32,287 - 32,287 Enterprise 21,388 1,324 20,064 Total for the six months ended December 31, 2023 $ 282,918 $ 2,936 $ 279,982 ( A) Revenue has been restated for the six months ended December 31, 2024 to correct the misstatement of $ 37.4 million as discussed in Note 1. 45 18. Operating segments (continued) 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’s reportable segments’ measure of profit or loss. The Company is working on obtaining a separate lending facility to fund a portion of its Consumer lending during the twelve months ended June 30, 2025. The Company expected to have this facility in place on July 1, 2024, however, the Company has been unable to finalize terms as the separate lending facility will form part of a broader refinancing of the Company’s facilities. Therefore, the Company has included an intercompany interest expense in its Consumer Segment Adjusted EBITDA for the three and six months ended December 31, 2024. The Company does not allocate once-off items, stock-based compensation charges, 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), interest income, certain 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; legal fees; group and US-listed related audit fees; and directors and officer’s insurance premiums. Once-off items represent non-recurring expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. Unrealized loss FV for currency adjustments represents foreign currency mark-to-market adjustments on certain intercompany accounts. Interest adjustment represents the intercompany interest expense included in the Consumer Segment Adjusted EBITDA. The Stock-based compensation adjustments reflect stock-based compensation expense and are 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. Effective from fiscal 2025, all lease charges are allocated to the Company’s operating segments, whereas in fiscal 2024 the Company presented certain lease charges on a separate line outside of its operating segments. Prior period information has been re-presented to include the lease charges which were previously reported on a separate line in the Company’s Consumer and Merchant (now Merchant, Enterprise and Consumer) operating segments. 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, 2024 and 2023, is as follows: Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 Reportable segments' measure of profit or loss $ 14,630 $ 10,963 $ 26,942 $ 20,808 Operating loss: Group costs ( 2,820 ) ( 2,011 ) ( 5,769 ) ( 3,833 ) Once-off costs ( 488 ) 816 ( 2,293 ) 738 Interest adjustment 757 - 1,588 - Unrealized Loss FV for currency adjustments ( 435 ) 122 ( 216 ) 20 Stock-based compensation charge adjustments ( 2,644 ) ( 1,804 ) ( 5,021 ) ( 3,563 ) Depreciation and amortization ( 8,223 ) ( 5,813 ) ( 14,499 ) ( 11,669 ) Loss on disposal of equity-accounted investments ( 161 ) - ( 161 ) - Change in fair value of equity securities ( 33,731 ) - ( 33,731 ) - Reversal of allowance of EMI doubtful debt - - - 250 Interest income 721 485 1,307 934 Interest expense ( 6,174 ) ( 4,822 ) ( 11,206 ) ( 9,731 ) Loss before income tax expense $ ( 38,568 ) $ ( 2,064 ) $ ( 43,059 ) $ ( 6,046 ) 46 18. Operating segments (continued) Operating segments (continued) The following tables summarize supplemental segment information for the three and six months ended December 31, 2024 and 2023: Three months ended Six months ended December 31, December 31, 2024 2023 2024 2023 (As restated) (A) (As restated) (A) Revenues Merchant (as restated) (A) $ 145,209 $ 117,182 $ 268,861 $ 229,243 Enterprise 8,933 11,921 20,815 21,388 Consumer 22,929 16,707 44,001 32,287 Total reportable segment revenue (as restated) (A) 177,071 145,810 333,677 282,918 Segment Adjusted EBITDA Merchant (1)(2) 10,319 7,497 17,873 14,407 Enterprise (2) ( 31 ) 891 331 1,706 Consumer (1)(2) 4,342 2,575 8,738 4,695 Total Segment Adjusted EBITDA 14,630 10,963 26,942 20,808 Depreciation and amortization Merchant 3,027 1,944 5,254 3,904 Enterprise 94 97 194 215 Consumer 235 179 437 348 Subtotal: Operating segments 3,356 2,220 5,885 4,467 Group costs 4,867 3,593 8,614 7,202 Total 8,223 5,813 14,499 11,669 Expenditures for long-lived assets Merchant 5,783 2,052 9,669 4,736 Enterprise 24 26 46 105 Consumer 511 120 568 166 Subtotal: Operating segments 6,318 2,198 10,283 5,007 Group costs - - - - Total $ 6,318 $ 2,198 $ 10,283 $ 5,007 (A) Revenue during the three and six months ended December 31, 2024, have been restated by $ 29.4 million and $ 37.4 million, respectively, to correct the misstatements discussed in Note 1. (1) Segment Adjusted EBITDA for the three months ended December 31, 2024, includes retrenchments costs for Consumer of $ 0.01 million (ZAR 0.1 million). Segment Adjusted EBITDA for Merchant includes retrenchment costs of $ 0.01 million (ZAR 0.1 million) and Consumer includes retrenchment costs of $ 0.1 million (ZAR 1.3 million) for the three months ended December 31, 2023. (2) Segment Adjusted EBITDA for the six months ended December 31, 2024, includes retrenchments costs for Consumer of $ 0.1 million (ZAR 1.2 million) and Enterprise of $ 0.0 million (ZAR 0.2 million). Segment Adjusted EBITDA for Merchant includes retrenchment costs of $ 0.2 million (ZAR 4.7 million) and Consumer includes retrenchment costs of $ 0.2 million (ZAR 2.8 million) for the six months ended December 31, 2023. The segment information as reviewed by the chief operating decision maker does not include a measure of segment assets per segment as all of the significant assets are used in the operations of all, rather than any one, of the segments. The Company does not have dedicated assets assigned to a particular operating segment. Accordingly, it is not meaningful to attempt an arbitrary allocation and segment asset allocation is therefore not presented. 47 19. Income tax Income tax in interim periods For the purposes of interim financial reporting, the Company determines the appropriate income tax provision by first applying the effective tax rate expected to be applicable for the full fiscal year to ordinary income. This amount is then adjusted for the tax effect of significant unusual items, for instance, changes in tax law, valuation allowances and non-deductible transaction-related expenses that are reported separately, and have an impact on the tax charge. The cumulative effect of any change in the enacted tax rate, if and when applicable, on the opening balance of deferred tax assets and liabilities is also included in the tax charge as a discrete event in the interim period in which the enactment date occurs. For the three and six months ended December 31, 2024, the Company’s effective tax rate was impacted by the tax expense recorded by the Company’s profitable South African operations, non-deductible expenses (including transaction-related expenditures), 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, 2023, 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. Uncertain tax positions As of three months ended December 31, 2024 and June 30, 2023, the Company had no unrecognized tax benefits. The Company files income tax returns mainly in South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of December 31, 2024, 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, 2020. 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. 20. Commitments and contingencies Guarantees The South African Revenue Service and certain of the Company’s customers, suppliers and other business partners have asked the Company to provide them with guarantees, including standby letters of credit, issued by South African banks. The Company is required to procure these guarantees for these third parties to operate its business. RMB has issued guarantees to these third parties amounting to ZAR 33.1 million ($ 1.8 million, translated at exchange rates applicable as of December 31, 2024) 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. 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, 2024) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of between 0.47 % per annum to 1.84 % 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, 2024. 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, 2024). As discussed in Note 9, 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 2.1 million ($ 0.1 million, translated at exchange rates applicable as of December 31, 2024). The guarantees have reduced the amount available under its indirect and derivative facilities in the Company’s short-term credit facilities described in Note 9. Contingencies The Company is subject to a variety of insignificant claims and suits that arise from time to time in the ordinary course of business. Management currently believes that the resolution of these other matters, individually or in the aggregate, will not have a material adverse impact on the Company’s financial position, results of operations or cash flows. 48 21. Subsequent events Proposed acquisition of Recharger On November 20, 2024, the Company announced the acquisition of Recharger (Pty) Ltd (“Recharger”). The acquisition is subject to the satisfaction of customary closing conditions, including certain regulatory approvals. As of January 29, 2025, all regulatory approvals, including approval by the Competition Commission (South Africa), were satisfied. The acquisition is expected to close in the third quarter of fiscal 2025. The purchase consideration of ZAR 507 million will be paid over two tranches with the first tranche settled at closing and the second tranche a year later. The purchase consideration will be settled through a combination of ZAR 332 million in cash and ZAR 175 million in shares of the Company’s common stock. The share price applied to determine the number of shares of common stock to be issued for the equity consideration will be based on the volume-weighted average price of the Company’s common shares for the three-month period prior to the disbursal of each tranche. The Company will also make a ZAR 43 million contribution to Recharger at closing which will be used exclusively to repay a loan due by Recharger to the seller. The Company expects the acquisition to act as an entry point for it into the South African private utilities space while augmenting the Enterprise division’s alternative payment offering. 49