Lesaka cuts leverage, flags control weaknesses
Lesaka expands its Southern African fintech platform and reduces leverage, but faces material internal-control weaknesses and prior-period restatements.
Rhea-AI Filing Summary
Lesaka Technologies, Inc. (LSAK) reports on a year of integration and growth across its Merchant, Consumer and Enterprise fintech segments in Southern Africa, while addressing significant internal-control challenges. The company focuses on underserviced markets, offering payments, banking, lending, insurance and prepaid utilities in a single ecosystem.
As of June 30, 2026, Lesaka served approximately 132,000 merchants and 2.1 million active consumers, with strong growth in consumer cross-sell, lending and insurance, and expanding Enterprise bill-pay and prepaid electricity volumes. Net debt to Group Adjusted EBITDA improved from 2.9x to 1.9x, meeting a 2.0x deleveraging target.
Management advanced portfolio simplification, exiting loss-making and legacy businesses, and continued regulatory progress on the proposed Bank Zero acquisition, expected to reshape funding via customer deposits. However, multiple material weaknesses in internal control over financial reporting led to immaterial misstatements, restated prior quarters and ongoing remediation efforts, which may weigh on investor confidence.
Positive
- Net debt to Group Adjusted EBITDA improved to 1.9x by June 30, 2026, from 2.9x at the start of the year, achieving Lesaka’s medium-term deleveraging target while still funding growth, including expansion of its lending books.
- The Consumer segment showed strong operating momentum: active consumers grew 11% to 2.08 million, lending originations rose 51% to ZAR 3.8 billion and gross written insurance premiums increased 41% to ZAR 528 million.
- Enterprise utilities volumes expanded rapidly, with prepaid electricity TPV up 151% to ZAR 1.93 billion and active meters rising 11% to 382,000, reinforcing a recurring, annuity-style revenue base.
- The proposed acquisition of Bank Zero passed South African competition approvals; once remaining regulatory consents are obtained, management expects it to enable funding of lending growth through deposits and reduce more than ZAR 1 billion of gross debt.
Negative
- Lesaka reported multiple material weaknesses in internal control over financial reporting, including in consumer lending, insurance, payroll, journal entries and certain subsidiaries’ processes, leading to ineffective process-level controls and reliance on significant remediation efforts.
- Earlier material misstatements in quarterly results required restatements of Form 10-Q filings for the quarters ended September 30, 2024, December 31, 2024 and March 31, 2025, which the company acknowledges may increase legal, regulatory and reputational risks.
- Control deficiencies caused immaterial misstatements in prior periods and a corrected current-period revenue error, highlighting ongoing risk that weaknesses could affect the accuracy and timing of future financial reporting if not fully remediated.
Filing Explained
The filing leaves a $15 million repurchase authorization available, but Bank Zero’s deposit-funding benefits remain uncompleted and no cash dividend is planned.
This Form 10-K is the audited annual report for the year ended
The company retains a
The proposed Bank Zero acquisition is not complete: Prudential Authority final approval and South African Exchange Control approval remain outstanding, and the long-stop date is
Consequently, the filing’s expected shift toward customer-deposit funding and reduction in gross debt of more than
Separately, the Constitutional Court ordered CPS to refund adjusted certified profits to SASSA, made no adverse order against Lesaka SA, and concluded the matter on
Key Figures
Market value of non-affiliate common stock: $252.1 million
Shares outstanding: 85,824,094 shares
Net debt to Group Adjusted EBITDA: 1.9x
+5 more
8 metrics
Market value of non-affiliate common stock
$252.1 million
Aggregate market value as of December 31, 2025
Shares outstanding
85,824,094 shares
Common stock outstanding as of September 9, 2026, net of treasury shares
Net debt to Group Adjusted EBITDA
1.9x
June 30, 2026, versus 2.9x at start of fiscal year
Consumer lending portfolio
ZAR 1.40 billion
Gross consumer lending portfolio outstanding as of June 30, 2026
Consumer lending originations
ZAR 3.77 billion
Lending originations during fiscal 2026, up 51% year over year
Enterprise utilities TPV
ZAR 1.93 billion
Value of electricity vended in fiscal 2026, up 151% from prior year
Employees
3,861 employees
Total workforce as of June 30, 2026 across five countries
Merchant active base
131,545 merchants
Active merchants as of June 30, 2026, up 3% year over year
Key Terms
serviceable addressable market, ad valorem pricing model, material weakness, NIST Cybersecurity Framework, +2 more
6 terms
serviceable addressable market financial
"an estimated serviceable addressable market of approximately ZAR 416 billion in net revenue by 2030"
ad valorem pricing model financial
"Revenues in Merchant are derived from a combination of transaction-based fees and an ad valorem pricing model"
material weakness regulatory
"we had, as of such date, material weaknesses in our internal control over financial reporting related to"
A material weakness is a significant flaw in the systems and checks a company uses to ensure its financial reports are accurate, meaning errors or fraud could happen and not be caught. For investors it matters because it raises the risk that reported results are unreliable—similar to finding a hole in a ship’s hull—potentially leading to corrected financials, regulatory action, reduced trust, and negative effects on stock value and borrowing costs.
NIST Cybersecurity Framework technical
"Our cybersecurity program is informed by recognized standards and regulatory requirements applicable to our business, including PCI DSS, the NIST Cybersecurity Framework"
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards regulatory
"South Africa is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards"
FAQ
What is Lesaka Technologies (LSAK) core business model?
Lesaka operates a three-segment fintech platform in Southern Africa: Merchant (acquiring, software, cash management, lending, prepaid), Consumer (transactional accounts, microlending, insurance, payouts) and Enterprise (bill payments, prepaid products, utilities submetering, payment infrastructure), targeting underserviced consumers, merchants and enterprises.
How many customers did Lesaka Technologies (LSAK) serve as of June 30, 2026?
As of June 30, 2026, Lesaka served approximately 131,545 active merchants and 2.08 million active consumers. Its Enterprise division connected more than 650 billers and over 50 corporate clients across South Africa, creating a multi-sided payments and services ecosystem.
What were key growth metrics for Lesaka’s Consumer segment in fiscal 2026?
Consumer active customers rose 11% to 2.08 million, ARPU increased 15% to ZAR 94 per month, lending originations grew 51% to ZAR 3.77 billion and the lending portfolio reached ZAR 1.40 billion. Active insurance policies increased 34% to 753,000 with gross written premiums up 41%.
What leverage level did Lesaka Technologies (LSAK) report at June 30, 2026?
Lesaka reported net debt to Group Adjusted EBITDA of 1.9x at June 30, 2026, down from 2.9x at the start of the fiscal year, meeting its stated medium-term target of 2.0x or lower while continuing to invest in growth initiatives.
What is the status and expected impact of Lesaka’s proposed Bank Zero acquisition?
Lesaka’s proposed acquisition of Bank Zero Mutual Bank has received South African competition approvals, with Prudential Authority and exchange control approvals still pending. Management expects, once completed, it will allow funding of lending growth through customer deposits and reduce gross debt by over ZAR 1 billion.
What internal-control and restatement issues did Lesaka Technologies (LSAK) disclose?
Lesaka disclosed material weaknesses in internal controls over areas including consumer lending, insurance, payroll, journal entries and several subsidiaries, which caused immaterial misstatements and restatements of three fiscal 2025 quarters. The company is implementing remediation but warns unresolved weaknesses could affect reporting reliability.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
☒
ACT OF 1934
For the fiscal year ended
OR
☐
EXCHANGE ACT OF 1934
For the transition period from
To
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
,
,
,
,
,
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: +
-
-
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
☐
☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act. Yes
☐
☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
☒
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required
to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit such files).
☒
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act (check one):
☐
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s
assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
☒
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis
of incentive-based compensation received by any of the registrant’s executive officers during the relevant
recovery period pursuant to §240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
☐
☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of
December 31, 2025 (the last business day of the registrant’s most recently completed second fiscal quarter),
based upon the closing price of the common stock as reported by The NASDAQ Global Select Market on such
date, was $
. This calculation does not reflect a determination that persons are affiliates for any other
purposes.
As of September 9, 2026,
of treasury shares, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the definitive Proxy Statement for our 2026 Annual Meeting of Shareholders are
i
ncorporated by reference into Part III of this Form 10-K.
1
LESAKA TECHNOLOGIES, INC
INDEX TO ANNUAL REPORT ON FORM 10-K
Year Ended June 30, 2026
Page
PART I
Item 1.
Business
2
Item 1A.
Risk Factors
13
Item 1B.
Unresolved Staff Comments
27
Item 1C
Cybersecurity
27
Item 2.
Properties
28
Item 3.
Legal Proceedings
28
Item 4.
Mine Safety Disclosures
28
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
29
Item 6.
[
Reserved]
30
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
31
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
57
Item 8.
Financial Statements and Supplementary Data
59
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
60
Item 9A.
Controls and Procedures
60
Item 9B.
Other Information
63
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
63
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
64
Item 11.
Executive Compensation
64
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
64
Item 13.
Certain Relationships and Related Transactions, and Director Independence
64
Item 14.
Principal Accountant Fees and Services
64
PART IV
Item 15.
Exhibits and Financial Statement Schedules
65
Item 16.
Form 10-K Summary
69
Signatures
70
Financial Statements
F-1
2
PART I
FORWARD LOOKING STATEMENTS
In addition to historical information, this Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements
that involve risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied
in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those
discussed in Item 1A—“Risk Factors.” In some cases, you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of such terms and other comparable terminology. You should not place undue reliance on these forward-
looking statements, which reflect our opinions only as of the date of this Annual Report. We undertake no obligation to release publicly
any revisions to the forward-looking statements after the date of this Annual Report. You should carefully review the risk factors
described in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), including the
Quarterly Reports on Form 10-Q to be filed by us during our 2027 fiscal year, which runs from July 1, 2026 to June 30, 2027.
All references to “the Company,” “we,” “us,” or “our” are references to Lesaka Technologies, Inc. and its consolidated
subsidiaries, collectively, and all references to “Lesaka” are to Lesaka Technologies, Inc. only, except as otherwise indicated or where
the context indicates otherwise.
ITEM 1. BUSINESS
Overview
Lesaka provides financial technology solutions to underserviced consumers, merchants and enterprises, improving the way they
manage their daily financial activities and increasing financial inclusion in the markets in which we operate. In plain terms, we help
our customers
pay, receive, borrow, insure and grow
: we enable them to make and accept payments, receive income such as wages
and welfare grants, access credit, protect their families and assets through insurance, and grow their businesses and financial lives. We
deliver these capabilities through three business divisions: Merchant, which provides payment acceptance, software, cash management,
lending and alternative digital product solutions to merchants across our two channels; Community and Corporate. Consumer, which
provides banking, lending and insurance solutions to consumers, principally recipients of social welfare grants in South Africa; and
Enterprise, which provides payment processing, prepaid solutions and bill payment infrastructure connecting enterprises to consumers
and businesses.
We bring these customer communities together within a single ecosystem by enabling them to engage and transact with each
other. For example, an enterprise biller connected to our proprietary biller network can collect payment from a consumer who pays
their bill at a nearby merchant using cash withdrawn with a debit card linked to a transactional account we provide to that consumer
to receive their welfare grant or wages with the merchant, in turn, digitizing the cash received through one of our cloud-connected
cash vaults. Each participant in this chain is a Lesaka customer, and each interaction deepens our data insight and our cross-sell
opportunity. As of June 30, 2026, we served approximately 132,000 active merchants and approximately 2.1 million active consumers,
and our Enterprise division connected a network of more than 650 billers and over 50 corporate clients across South Africa.
To build and maintain our ecosystem, we have approximately 3,900 employees operating on the ground in five countries: South
Africa (our primary market), Namibia, Botswana, Zambia and Kenya as of June 30, 2026. Lesaka was created in 2022, and we have
since combined organic growth with acquisitions including the Connect Group (April 2022), Adumo (October 2024), Recharger
(March 2025), and the proposed acquisition of Bank Zero (agreement signed June 2025, and closing subject to achievement of relevant
condition precedents) to assemble an integrated fintech platform, unified under a single Lesaka brand in fiscal 2026. For a discussion
of specific developments during fiscal 2026, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results
of Operations–Developments during Fiscal 2026”.
We serve a large and structurally underpenetrated market. Cash remains the dominant payment instrument across much of
Southern Africa, and a material portion of consumers and small businesses remain outside, or only partially served by, the formal
financial system. Across our footprint and adjacent markets accessible through strategic partnerships, we serve a market of
approximately 250 million people with an estimated serviceable addressable market of approximately ZAR 416 billion in net revenue
by 2030 as of the date of this Annual Report. This estimate is derived from management analysis using a range of external sources
including but not limited to: Population Reference Bureau, IMF Database, Global Findex Report - 2025, Global Data Analytics – SA
Card and Payments Opportunities and Risks to 2028; July 2024, BDO – Unlocking potential Fintech in Africa; June 2024, Boston
Consulting Group – Reimagining the Future of Finance; May 2023, combined with internal data, assumptions and management’s best
estimates.
3
Our Go-
To
-Market Model
Our go-to-market model describes how we serve and grow customer relationships in practice. It has five elements:
1.
Wide breadth of solutions
– and we win a customer relationship with a single critical financial service at a relatively stable customer acquisition cost,
expanding the relationship from there. For example, a community merchant will often first adopt our supplier-enabled
payments product to pay for inventory digitally, and subsequently add our cash vaults, card acquiring or a merchant cash
advance as their business grows. Similarly, a consumer typically joins us by opening a transactional account to receive their
monthly social security grant and may over time take up a short-term loan or a funeral insurance policy. This approach
increases customer lifetime value with little incremental acquisition cost. As of June 30, 2026, approximately 51% of our
active consumers and approximately 46% of our active merchants used two or more of our products;
2.
Differentiated reach
teams supported by cost-efficient branches and community service centers in the rural and peri-urban areas where our
customers live and transact, including close to the locations where grant payments are disbursed. Our merchant community
channel is built on the same principle, acquiring merchants through direct, face-to-face sales with rapid conversion cycles;
3.
Digital engagement
and deepen their use of our solutions. For consumers, this includes our banking app and unstructured supplementary service
data (“USSD”) channels that work in real time on any mobile phone, including basic feature phones without internet access
– while merchants manage their deposits, settlements and supplier payments through our digital merchant account;
4.
Proprietary access to data
which we believe is rare in our markets, particularly among the underserviced. We put this data to work directly: our consumer
lending is underwritten using our view of the money flowing in and out of a consumer’s account, and our merchant lending
is underwritten using our visibility into a merchant’s daily card and cash turnover; and
5.
A unified brand
consolidated our brand identity, including a consistent articulation across all three segments – of what we enable our
customers to do: pay, receive, borrow, insure and grow. We believe a unified brand and a consistent expression of our offering
build trust, support customer awareness and acquisition across divisions and facilitate the roll-out and adoption of new
solutions.
Our Business Segments
We operate and report through three business segments: Merchant, Consumer and Enterprise.
1. Merchant
Our Merchant Market
We manage our Merchant operations through two distinct channels:
Community:
and the sole proprietors and suppliers that serve them acquired through direct, face-to-face sales with rapid conversion cycles. These
merchants operate in a largely cash-based environment, and we believe they will increasingly adopt digital payment solutions and
complementary services as the secular shift from cash to digital payments progresses.
Corporate:
organizations that require customized, multi-product solutions sold through a strategic, longer-term sales process.
As of June 30, 2026, we served approximately 132,000 active merchants.
Merchant Solutions
Our merchant solutions serve merchants of all sizes, helping them accept payments, manage and digitize cash, run their operations
and access working capital. Our merchant solutions and products comprise:
•
Merchant Acquiring:
card acceptance and payment processing solutions for merchants;
•
Software:
integrated point-of-sale (“POS”) software and hardware, principally serving the restaurant industry, including
Unity, our cloud-based POS offering, which enables easier integration of our software and acquiring propositions into a single
bundle;
4
•
Cash Management:
instant
cash digitalization solutions in a merchant’s store through cloud-connected cash vaults, paired
with digital accounts through which merchants can track deposits and pay suppliers;
•
Lending:
access to working capital through merchant cash advances and business credit, underwritten using our proprietary
visibility into merchants’ transaction activity; and
•
Alternative Digital Products (“ADP”):
prepaid solutions (airtime, data, electricity and gaming), bill payments, and supplier-
enabled payments, which allow community merchants to digitize payments to their suppliers at competitive pricing and serve
as an entry point into the broader Lesaka merchant ecosystem.
We are dependent on a limited number of software and hardware suppliers. Refer to “Item 1A. Risk Factors” included herein for
more information.
The proposed acquisition of Bank Zero, which is subject to conditions precedent described herein, primarily deepens, rather than
widens, our merchant proposition. Our merchant product suite does not change; instead, we expect the banking license will enable us
to enhance it in ways previously unavailable to us as a non-bank including same-day settlement for acquiring, integrated merchant
bank accounts, savings accounts and remittance products, strengthening the competitiveness and completeness of our offering to
existing and prospective merchants.
Merchant Competitive Landscape
We estimate an addressable revenue pool of approximately ZAR 130 billion as of the date of this Annual Report, of which we
believe we have approximately 3% market share. This estimate is derived from management analysis using a range of external sources
including but not limited to: Population Reference Bureau, IMF Database, Global Findex Report - 2025, Global Data Analytics – SA
Card and Payments Opportunities and Risks to 2028; July 2024, BDO – Unlocking potential Fintech in Africa; June 2024, Boston
Consulting Group – Reimagining the Future of Finance; May 2023), peer company public quarterly results combined with internal
data, assumptions and management’s best estimates. We differentiate ourselves by being a customer-led, rather than product-led,
provider. The industry remains highly fragmented, with most competitors providing one or two products, while we provide an
integrated suite of solutions; we believe no single competitor offers the range of solutions we provide. We accordingly face a different
competitive universe in each product area: traditional South African banks are the principal competitors in core merchant acquiring,
while software, cash management and alternative digital products are contested by a fragmented set of specialist vendors ranging from
traditional banks, digital lenders, payment service providers and fintechs .
2. Consumer
Consumer Market
Consumer focuses on individuals who have historically been excluded from, or underserviced by, traditional financial services.
Although our products are designed for consumers at the lower socioeconomic end of the market, the infrastructure and product
offering allow for a frictionless move upstream to a wider market of consumers.
There are approximately 12.0 million permanent grant beneficiaries in South Africa, and approximately 8.0 million people
receive a Social Relief of Distress (“SRD”) grant each month, according to the South African Social Security Agency (“SASSA”). As
of June 30, 2026, we had approximately 2.1 million active consumers of which approximately 89% are permanent grant beneficiaries
and approximately 174,000 active payouts cardholders. We believe that for consumers receiving welfare grants from the South African
government, no other provider offers a transactional account, lending and insurance product within one ecosystem. Our proposition
includes a distinctive “last mile” distribution model: we take our services to rural and peri-urban communities across the country, and
through digitally enabled onboarding supported by Bonngwe, our proprietary customer relationship management engine. Our
consultants can open an account and issue a physical card at the point of application in under five minutes.
The acquisition of Bank Zero, which is subject to conditions precedent described herein, is expected to materially widen the
consumer market we can address. Our traditional addressable market comprises the approximately 12 million grant beneficiaries
described above. Bank Zero’s digital banking platform and license enable us to increase this addressable market to approximately 24
million people, through the unlock of a further approximately 12 million salaried individuals, a segment positioned above our grant-
beneficiary base on the income pyramid and for which Bank Zero’s low-cost, digital -first banking proposition is well suited. This is a
targeted expansion, based on the product offering we intend to launch for this segment. Our existing consumer product suite does not
change as a result; rather, the banking license and Bank Zero’s deposit-taking capabilities allow us to extend our transactional, lending
and insurance offerings to this broader population over time.
5
Consumer Solutions
Our consumer solutions provide banking, credit and insurance capabilities that anchor our relationship with a consumer and grow
with their needs over time. Our consumer product offering includes:
•
Transactional accounts:
our low-cost transactional account, accessible via card, mobile application, web and USSD. USSD
is an important channel for consumers with limited or no data connectivity. Consumers use a linked debit card and mobile
app to withdraw cash, make purchases and pay bills, forming the anchor relationship from which we cross-sell additional
financial services
•
Lending:
short-term, unsecured personal loans to qualifying consumers, underwritten using our visibility of cash flows of
their accounts. For many of our consumers, we provide their first access to regulated credit;
•
Insurance:
funeral insurance policies that help our consumers protect their families and assets, cross-sold through our
distribution network and Bonngwe engine. During fiscal 2026 we also launched a funeral insurance offering for grant
beneficiaries outside the Lesaka consumer base; and
•
Payouts:
secure payout solutions for corporate employees who receive employment-related payments from their employers
through us.
We do not have a South African banking license and, therefore, we provide our banking offering through an arrangement with a
third-party bank. Through the acquisition of Bank Zero, however, we expect to move our sponsorship arrangement from African Bank
to Bank Zero. Refer to “Item 1A. Risk Factors” included herein for more information.
Consumer Competitive Landscape
The consumer market we address today is focused on South African grant beneficiaries and other payout cardholders. We
estimate an addressable revenue pool of approximately ZAR 43 billion as of the date of this Annual Report, of which we believe we
have approximately 5% market share. This estimate is derived from management analysis using a range of external sources including
but not limited to: South African National Treasury Database 2025/2026, SASSA Statistical Database, peer company public quarterly
results combined with internal data, assumptions and management’s best estimates. We face a different set of competitors in each
product area: banks are the principal competitors for transactional accounts, the lending market is dominated by micro-finance
companies and the insurance market by insurance companies.
3. Enterprise
Enterprise Market
Enterprise serves clients with large ecosystems of billpayers, tenants, employees or constituents, providing targeted solutions that
facilitate payments between consumers and businesses. Our network comprises more than 650 billers and over 50 corporate clients
across South Africa as of June 30, 2026, with deep integrations across municipal councils, utility providers, banks and mobile network
operators who leverage our technology to create readily scalable solutions.
Enterprise Solutions
Our Enterprise product offering is focused across three core verticals:
•
ADP:
integration technology enabling customers across South Africa to purchase prepaid solutions (such as airtime,
electricity or gaming) and pay bills through channels such as retailer distribution networks and digital banking apps.
Following the acquisition of MobileMart Proprietary Limited (“MobileMart”) in February 2026, we have direct integrations
into the four primary mobile network operators in South Africa, providing access to preferential rates and supplier availability.
Our ADP offering also includes 4All, a multi-store-of-value voucher developed by internal teams, which is redeemable at
more than 40 partners;
•
Utilities:
a prepaid electricity submetering platform that enables tenants to purchase and top up prepaid electricity meters and
allows landlords to manage tenant electricity usage without postpaid risk. This is a low-churn, annuity-style revenue model,
serving approximately 382,000 active meters as of June 30, 2026, and;
•
Payments:
the group’s proprietary payment technology, including our payment switch, which enables us to insource
components of the payments value chain, create efficiencies and reduce third-party dependencies, together with ancillary
security and tokenization services offered to enterprise clients.
Enterprise also increasingly acts as the group’s central procurement engine for prepaid products: the bulk of merchant electricity
volumes are now processed via the enterprise segment, reducing reliance on third-party providers, and we expect to migrate the
r
emaining ADP volumes offered in merchant to the enterprise segment.
6
The acquisition of Bank Zero, which is subject to conditions precedent described herein, is expected to extend Enterprise’s
addressable product set into alliance banking which provides banking capabilities and infrastructure to third-party partners, a vertical
that was previously unavailable to us without a banking license. Alliance banking leverages Bank Zero’s existing digital banking
platform and our enterprise integration capabilities and is consistent with the division’s capital-light operating model.
Enterprise Competitive Landscape
We estimate an addressable revenue pool of approximately ZAR 12 billion as of the date of this Annual Report, of which we
believe we have approximately 9% market share. This estimate is derived from management analysis using a range of external sources
including but not limited to: Electrum – The State of Value -Added Services in South Africa; 2024, South African National Treasury
Database 2025/2026, peer company public quarterly results combined with internal data, assumptions and management’s best
estimates. As in Merchant and Consumer, we face competitors within each core product; at the ADP product offering, our competitors
are typically Value -Added Services (“VAS”) aggregators and payment infrastructure providers whereas within Lesaka Utilities
Proprietary Limited, formerly known as Recharger Proprietary Limited (“Utilities”), our competitors are the prepaid electricity vendors
who are a fragmented collection of private companies. However, we believe no single competitor participates across the integrated
suite of products offered by our Enterprise Division.
Intellectual Property
We rely on a combination of trademark and copyright laws and trade secret protections in South Africa, as well as confidentiality
procedures and contractual provisions, to protect the intellectual property rights in our products and services.
In South Africa, we have registered intellectual property rights in respect of our trading name (“Lesaka”, and derivatives thereof)
and certain product names and devices (logos). In Setswana and Sesotho (both common languages spoken in certain African countries),
the word “Lesaka” means “kraal”, which is an enclosure or pen typically used for livestock. Given the general meaning of the term,
other businesses use the word in their names and trademarks as well. We may thus have difficulty protecting our use of the word. The
same applies to our decision to use the image of a foot and foot print as our logo.
Being a technology-driven company, our employees develop intellectual property used in the conduct of our business. We also
contract with external service providers and consultants to assist in the development of intellectual property. Where relevant, the
contract concluded with the relevant employee / service provider / consultant includes provisions for the assignment of ownership of
the intellectual property so created to us, as well as other contractual protections in relation to such intellectual property.
The industries in which we compete rely on the use of technology, and an enhanced / improved technology offering can be a
competitive advantage. There is no assurance that our intellectual property rights will not be challenged, invalidated, or circumvented;
that others will not assert intellectual property rights to technologies that are relevant to us; or that our rights will give us a competitive
advantage. In addition, the laws of certain countries may not protect our proprietary rights to the same extent as the laws of South
Africa. For additional information regarding some of the risks relating to our intellectual property see Item 1A—“Risk Factors —
Risks Relating to Our Business—
Defending our intellectual property rights or defending ourselves in infringement suits that may be
brought against us is expensive and time-consuming and may not be successful
”.
Human Capital Resources
Our strong leadership helps enable us to take on transformational projects, including our focus on building One Lesaka, consistent
with our core values. Shifting our culture to enable our growth ambitions are a key focus area for us.
Our core values:
Integrity
Collective Wisdom
Entrepreneurial Spirit
Ownership
Bias to Action
Resilience
Empathy
Customer First
Efficiency
Meritocracy
These are our values that underpin our mission to make financial inclusion a reality for all who have been underserviced.
7
Employee training and skills development
Investing in skills development is key for us to ensure that we grow the best talent. Our employee training and development
programs ensure that we have the required available skills and helps us to unlock talent. Offering development and career progression
is a key aspect of our employee value proposition. We offer the following development programs to enhance employee performance
and skills:
•
training programs;
•
formal training programs for people with disabilities;
•
leadership development programs;
•
unemployed and employed learnerships;
•
internships;
•
financial assistance to pursue further studies and obtain formal qualifications;
•
other in-house and cross-functional training to aid with career advancement; and
•
succession planning – training interventions to address scarce and critical skills.
Equal opportunity
Our equal opportunity approach has not changed, providing a conducive work environment where talent from any background
can thrive is important to us. Having an inclusive and diverse workforce which reflects our economically active population and society
in general, is crucial for helping the organization attract and retain talent and is important for long -term organizational success. Our
human capital team in partnership with our leaders drive recruiting and retaining a talented and diverse workforce with special focus
on hiring previously disadvantaged groups whenever possible. We are committed to hiring qualified candidates without regard to their
personal status, while taking into account the unique circumstances affecting our operations in South Africa and the need to uplift
previously disadvantaged groups. This commitment extends to all levels of our organization, including within senior management and
our board of directors.
As of June 30, 2026, the composition of our workforce was:
•
54% female and 46% male;
•
39.8% between 18 and 34 years old, 54.6% between 35 and 54 years old, and 5.6% over 55 years old; and
•
67% Black, 10% two or more races, 10% Indian and 13% White.
We continue to strive to build a more inclusive workforce and to enhance our pay structures by taking measures to eliminate
potential remuneration discrimination and to help close gender pay gaps to progress towards gender equality at work. We have taken
positive strides towards a rewards philosophy that rewards high performance and focuses on equal pay for work of equal value.
Employee compensation programs
We are committed to ensuring that all our employees are paid fair and competitive remuneration. To that end, we offer the
following to our employees:
•
Access to a comprehensive medical, dental, and vision plan that our employees have the option to join;
•
Access to a defined contribution retirement plan that our employees have the option to join;
•
Participation in our Lesaka Employee Share Ownership Plan for qualifying employees;
•
Paid sick, study, annual and family responsibility leave;
•
Maternity and paternity benefits;
•
Life and disability insurance coverage;
•
Financial aid to fund tertiary education for children of employees;
•
Employee assistance programs; and
•
Product discounts.
Annual increases and incentive compensation are based on merit, which is communicated to employees at onboarding and
documented as part of our annual remuneration review process.
8
Our number of employees allocated on a segmental and group basis as of the years ended June 30, 2026, 2025 and 2024, is
presented in the table below:
Number of employees
2026
2025
2024
Consumer
(1)
1,514
1,542
1,333
Merchant
(1)
1,883
1,957
1,059
Enterprise
(1)
279
213
130
Total segments
3,676
3,712
2,522
Group
(1)
185
16
9
Total
3,861
3,728
2,531
(1) Fiscal 2026 includes one executive officer in Enterprise and four executive officers in Group. Fiscal 2025 includes five
executive officers in Group. Fiscal 2024 includes one executive officer in each of Consumer and Merchant and two executive officers
in Group.
On a functional basis, as of June 30, 2026, 5 of our employees were our named executive officers, 13 senior managers, 1,544
were employed in sales and marketing, 700 were employed in finance and administration, 423 were employed in information
technology and development and 1,176 were employed in operations.
Health and safety laws and regulations
We are subject to various South African laws and regulations that regulate the health and safety of our South African-based
workforce, including those laws monitored by the South African Department of Employment and Labour which stipulates the legal
framework within which we need to function. This framework comprises the Compensation for Occupational Injuries and Diseases
Act, No. 130 of 1993; the Occupational Health and Safety Act, No. 85 of 1993; the Basic Conditions of Employment Act, No. 75 of
1997; the Labour Relations Act, No. 66 of 1995; the National Minimum Wage Act, No. 9 of 2018; the Employment Equity Act, No.
55 of 1998; the Unemployment Insurance Act, 63 of 2001 and the Unemployment Insurance Contributions Act, No. 4 of 2002; and
the Broad-Based Black Economic Empowerment Act, No. 53 of 2003. We have implemented and regularly update human capital-
related policies that are designed to ensure compliance with applicable South African laws and regulations.
9
Our Executive Officers
The table below presents our executive officers, their ages and their titles:
Name
Age
Title
Ali Mazanderani
44
Executive Chairman and Director
Dan Smith
54
Group Chief Financial Officer and Director
Naeem E. Kola
53
Group Chief Operating Officer and Director
Lincoln Mali
58
Chief Executive Officer: Southern Africa and Director
Steven Heilbron
61
Head of Corporate Development and Director
Ali Mazanderani
co-founder and chairman of Teya, a pan-European fintech. He is also a non-executive director on the board of several companies
including Thunes (Singapore based private fintech), Kushki (Latin American payments company) and is the president of The European
Digital Payments Industry Alliance (EDPIA). He was previously on the board of several other leading payments companies globally
including StoneCo (Nasdaq: STNE) in Brazil and Network International Holdings Plc (LSE:NETW) in the Middle East. He was
formerly a Partner at Actis, a London-based emerging market private equity firm, where he led multiple landmark fintech investments
globally. Prior to his career at Actis, Mr. Mazanderani advised private equity and corporate clients for OC&C Strategy Consultants in
London and served as lead strategy consultant for First National Bank based in Johannesburg. He holds postgraduate degrees in
Economics from the University of Pretoria, Oxford University and the London School of Economics, an MBA from INSEAD and a
Masters in Business Law from the University of St Gallen.
Dan Smith
sectors in South Africa and the United Kingdom. Mr. Smith is a director of ADvTECH Limited (JSE: ADH). He founded DLS
Advisors in 2020 and was its CEO until joining VCP in 2021, where he was employed until September 2024. Prior to that, he was
employed by Standard Bank South Africa for a number of years where he accumulated vast corporate finance experience, including
heading the Mergers & Acquisitions investment banking team. He holds a Bachelor of Commerce, a Bachelor of Accounting and a
Higher Diploma in Taxation Law from the University of Witwatersrand and is a Chartered Accountant (SA). He is a Graduate of the
Oxford Fintech Programme from the Saïd Business School, University of Oxford. He also has an Advanced Valuation
Techniques certification from the Gordon Institute of Business Science and a Diploma in Strategic Client Management from the UCT
Graduate School of Business.
Naeem E. Kola
Officer from March 1, 2022 until September 30, 2024. Mr. Kola has progressively held senior finance roles in Dubai, most notably as
Chief Financial Officer of the Emerging Markets Payments Group (“EMP”), a high-growth fintech business that grew materially and
successfully concluded and integrated five acquisitions during Mr. Kola’s six-year tenure as Chief Financial Officer. Prior to becoming
Chief Financial Officer, Mr. Kola was Senior Vice President for Investments, Strategy and Business Planning at Network International.
Since the acquisition of EMP by Network International in 2017, Mr. Kola had been an Operations Director and Strategic Advisor to
the emerging market private equity firm Actis, where he again focused on fintech businesses. He is a qualified Chartered Accountant
(SA) and a member of the South African Institute of Chartered Accountants.
Lincoln Mali
with over 25 years in the industry. Until April 2021, he was the Head of Group Card and Payments at Standard Bank Group, having
served in many different roles within that organization since 2001. Mr. Mali chaired the board of directors of Diners Club South Africa
until April 2021, and was a member of the Central and Eastern Europe, Middle East and Africa Business Council for Visa. Mr. Mali
holds Bachelor of Arts (BA) and Bachelor of Laws (LLB) degrees from Rhodes University, an MBA from Henley Management
College, various diplomas and attended an Advanced Management Program at Harvard Business School. In 2026, Mr. Mali was
awarded an honorary degree in Human Services from Urban College of Boston, a certificate of recognition from the City of Boston
for his global contributions to philanthropy, youth development and community empowerment, as well as the 2026 Legacy Award, an
official citation from the Massachusetts Senate.
Steven Heilbron
joined us following the acquisition of Connect in 2022. Mr. Heilbron has two decades of financial services
experience, having spent 19 years working for Investec in South Africa and the UK, where he served as Global Head of Private
Banking and Joint Chief Executive Officer of Investec Bank plc. He led a private consortium that acquired Lesaka Cash Management
Proprietary Limited, formerly Cash Connect Management Solutions Proprietary Limited, in 2013. Mr. Heilbron has presided over
significant organic growth in the rebranded Connect Group, as well as spearheading the successful acquisition and integration of
Kazang and EFTpos acquired from the Paycorp Group in February 2020. He is a member of the South African Institute of Chartered
Accountants.
10
Financial Information about Geographical Areas and Operating Segments
Refer to Note 21 to our audited consolidated financial statements included in this Annual Report, which contains detailed
financial information about our operating segments for fiscal 202 6, 2025 and 2024. Revenues based on the geographic location from
which the sale originated and geographic location where long-lived assets are held for the years ended June 30, are presented in the
table below:
Revenue
(1)
Long lived assets
2026
2025
2024
2026
2025
2024
$'000
$'000
$'000
$'000
$'000
$'000
South Africa
679,021
624,846
537,594
403,085
392,098
286,700
India (MobiKwik)
-
-
-
-
-
76,297
Rest of the world
42,533
34,855
26,628
8,609
3,055
2,548
Total
721,554
659,701
564,222
411,694
395,153
365,545
(1) Refer to Note 16 to our audited consolidated financial statements included in this Annual Report which contains detailed
financial information about our revenue for fiscal 2026, 2025 and 2024.
Government Regulation
We are subject to a wide range of laws, regulations, and legal requirements globally, including those that may apply to the
products and services offered by our businesses, and those that apply more generally to companies operating in each jurisdiction in
which we are incorporated and/or operate, including requirements related to (among others) privacy, data storage and protection,
advertising, employment relations. These requirements are continually evolving, and they can be unclear and vary significantly across
jurisdictions. We monitor material regulatory developments in the jurisdictions in which we operate and maintain procedures and
controls designed to support compliance with applicable legal and regulatory requirements. A number of the products and services
offered by our businesses are subject to regulation by certain regulatory authorities / government bodies, and require us to have
appropriate licences, approvals, registrations, authorizations or regulatory approvals.
South Africa
Our South African operations are subject to the oversight of several regulatory authorities, including the following:
The Prudential Authority, which is housed within the South African Reserve Bank, is responsible for supervising the soundness,
governance, risk management and capital adequacy of financial institutions. Our insurance business, Lesaka Life Limited, is a licensed
life insurer and subject to prudential supervision and oversight by the Prudential Authority. The Prudential Authority exercises its
functions under the Financial Sector Regulation Act, 2017 and applicable sector laws. The Act establishes South Africa's "Twin Peaks"
regulatory framework and creates the Prudential Authority and the Financial Sector Conduct Authority (discussed below). The Act
grants the Prudential Authority extensive supervisory, inspection, enforcement and information-gathering powers.
Lesaka Life Limited is also subject to regulation under the Insurance Act, 2017 and Long-term Insurance Act, 1998 (together
with the applicable subordinated legislation). The Insurance Act is the primary prudential statute governing licensed insurers. For life
insurers such as Lesaka Life Limited, the Act regulates: licensing and ongoing authorization requirements; requirements regarding
capital adequacy, solvency and financial soundness; governance, risk management and internal control frameworks; fit and proper
requirements for directors, key persons and significant owners; regulatory reporting and disclosure obligations; and compliance with
prudential standards issued by the Prudential Authority.
Remaining operative provisions of the Long-term Insurance Act are aimed at conduct of business policyholder protection.
Together with the Policyholder Protection Rules, the Act regulates matters such as: policy terms and contractual requirements; fair
treatment of policyholders; premium collection, claims handling and settlement processes; restrictions on commissions and
intermediary remuneration; and certain conduct-related requirements.
The National Payment System Department is a department within the South African Reserve Bank responsible for the regulation
of South Africa's National Payment System. A few of our group companies participate in the National Payment System, either as an
authorized system operator (an SO) or a registered third-party payments provider (a TPPP). These entities are subject to compliance
with the National Payment System Act, 1998 (together with the applicable directives published thereunder). TPPPs (which are subject
to regulation in terms of Directive 1 of 2007) are required to ensure that payments to third persons are processed in accordance with
the applicable regulatory framework and that proceeds of payment instructions are handled in a secure and controlled manner. SOs
(which are subject to regulation in terms of Directive 2 of 2007) are required to ensure the reliable, secure and efficient operation of
payment infrastructure that supports payment clearing and settlement activities. Both TPPPs and SOs are subject to ongoing oversight
by the National Payment System Department and must comply with directives relating to, among other matters, conduct within the
National Payment System, operational resilience, cyber-risk management, reporting obligations and any conditions attached to their
registration or authorization.
11
The National Payment System Department is currently reviewing and modernising the regulatory framework applicable to
payment system participants (which includes TPPPs and SOs) and have issued drafts of the proposed new directive, which is expected
to introduce a more comprehensive authorization and oversight framework for payment service providers. The proposed reforms have
not yet been finalised. Accordingly, affected group entities continue to comply with the existing regulatory framework while
monitoring developments in the proposed reforms.
Governance of the national payments system is also undergoing a significant transformation as part of the South African Reserve
Bank’s ongoing work to strengthen the regulatory, supervisory, oversight and operational architecture needed to support safe, efficient,
transparent and resilient payments in South Africa. With effect from September 2, 2026, the South African Reserve Bank withdrew
its recognition of the Payments Association of South Africa as the payment system management body and introduced transitional
arrangements relating to existing system operator authorizations and third-party payment provider registrations. Existing
arrangements, rules, agreements and authorizations remain in force unless otherwise determined by the South African Reserve Bank.
Furthermore, certain entities are authorized financial services providers (“FSPs”) under the Financial Advisory and Intermediary
Services Act, 2002. The Act regulates the rendering of financial advice and intermediary services to clients and establishes licensing,
fit-and-proper, conduct and supervisory requirements for financial services providers and their representatives. Authorized FSPs are
subject to ongoing supervision and enforcement by the Financial Sector Conduct Authority (under the purview of the Financial Sector
Regulation Act, 2017). Authorized FSPs are required to conduct their business honestly, fairly, with due skill, care and diligence, and
in the interests of their customers while maintaining compliance with applicable conduct standards and regulatory requirements.
Our consumer lending business, operated by Lesaka Financial Services Proprietary Limited, is a registered credit provider under
the National Credit Act, 2005, which serves to regulate the provision of credit, protect consumers, promote responsible lending and
prevent over-indebtedness. The Act requires registered credit providers to conduct affordability assessments before extending credit,
prohibits reckless lending and unfair credit practices, regulates credit marketing and disclosures, limits or prescribes maximum fees
and interest charges, and grants consumers extensive rights relating to information, privacy and fair treatment. The Act also provides
mechanisms for debt review and debt reorganisation where consumers become over-indebted, and establishes the National Credit
Regulator and National Consumer Tribunal to supervise compliance and enforce the legislation.
Further, both the life insurer and the financial services providers are also subject to compliance with Financial Institutions
(Protection of Funds) Act, 2001, which seeks to regulate the integrity, safety, and proper administration of client funds held by financial
institutions. The Act imposes duties on financial institutions and relevant persons concerning the custody, investment, administration
and protection of money and other property entrusted to them.
The Financial Intelligence Centre Act, 2001 establishes South Africa's anti-money laundering, counter-terrorist financing and
counter-proliferation financing framework and imposes a range of obligations on entities classified as accountable institutions. A
number of the group entities also qualify as accountable institutions. The Act requires accountable institutions to implement a risk-
based compliance framework; conduct customer due diligence and beneficial ownership verification; screen against targeted financial
sanctions; monitor and report prescribed transactions and suspicious activities; maintain appropriate records and training; and establish
appropriate governance and oversight of compliance with the requirements of the Act. The Financial Intelligence Centre is South
Africa’s financial intelligence unit, mandated to assist in identifying the proceeds of crime, and in combating money laundering,
terrorist financing and the financing of proliferation of weapons of mass destruction through its supervision of compliance with the
Act.
As a customer-focused business operating in the consumer domain, we are also subject to (i) the Consumer Protection Act, 2008,
which regulates the supply of goods and services to consumers; and (ii) the Protection of Personal Information Act, 2013 which seeks
to protect personal information relating to identifiable natural and juristic persons, where applicable and regulate how organisations
collect, use, store, share and delete, destroy or de-identify that information.
Outside of South Africa
In Botswana, the key legislation is the Electronic Payment Services Regulations, 2019 and the Financial Intelligence Act, 2022.
In this regard, Lesaka Payment Services Botswana Proprietary Limited holds an electronic payments services (EPS) provider licence
issued by the Bank of Botswana and qualifies as an accountable institution under the Financial Intelligence Act, 2022. The Electronic
Payment Services Regulations require licensees to maintain appropriate governance structures, internal controls, risk management
frameworks, technological infrastructure, capital adequacy and liquidity arrangements. They also impose requirements relating to the
safeguarding of customer funds; execution of payment transactions; record retention; outsourcing arrangements; and regulatory
reporting. The Financial Intelligence Act, together with the relevant regulations / guidelines, regulates the measures to be taken to
prevent and/or identify money laundering, terrorist financing and proliferation financing. In Botswana, the Financial Intelligence
Agency, is mandated to request, receive and disseminate information to investigatory, supervisory and other competent authorities, as
well as comparable bodies, to support the prevention, detection, investigation and prosecution of financial offences, including money
laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, and to assist supervisory authorities
in carrying out their functions under the Act.
We are also subject to (i) the Consumer Protection Act, 2018, which regulates the provision of goods and services to consumers;
and (ii) Data Protection Act, 2024 which seeks to protect individuals’ personal data and regulate how organisations collect, use, store,
d
isclose and destroy that data.
12
In Namibia, the key regulation is the Payment System Management Act, 2023 (together with the applicable determinations /
notices published thereunder). In this regard, two of our entities, Lesaka Online Namibia (Proprietary) Limited and Lesaka Merchant
Technologies Namibia (Proprietary) Limited, are licensed payment service providers, subject to regulation by the Bank of Namibia.
The Act regulates the licensing and ongoing supervision of payment service providers, the authorization of payment system operators,
safeguarding and trust-account arrangements where applicable, operational and technical requirements, consumer protection, reporting
and the Bank of Namibia’s inspection and enforcement powers.
In Kenya, privacy law is primarily governed by the Data Protection Act No. 24 of 2019, which applies to all public and private
organisations. In the course of conducting our business in Kenya, we are obliged to comply with the provisions of the Act in relation
to the collection, processing, storage and transfer of all personal data.
The above focusses on those jurisdictions in which we have separately incorporated entities. In jurisdictions where we operate
but do not have incorporated entities, we comply with all applicable legal and regulatory requirements that apply to the products and
services offered by our businesses.
For more information on the risks relating to our regulatory environment, see the section titled Item 1A—“Risk Factors—Risks
Relating to Government Regulation.”
Corporate history
Lesaka was incorporated in Florida in May 1997 as Net 1 UEPS Technologies, Inc. and changed its name to Lesaka Technologies,
Inc. on May 12, 2022. In 2004, Lesaka acquired Net1 Applied Technology Holdings Limited (“Aplitec”), a public company listed on
the Johannesburg Stock Exchange (“JSE”). In 2005, Lesaka completed an initial public offering and listed on the NASDAQ Stock
Market. In 2008, Lesaka listed on the JSE in a secondary listing, which enabled the former Aplitec shareholders (as well as South
African residents generally) to hold Lesaka common stock directly.
Available information
We maintain a website at www.lesaka.tech. Our Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-
K, and amendments to those reports, as well as our proxy statements, are available free of charge through the “SEC filings” portion of
our website, as soon as reasonably practicable after they are filed with the SEC. The information contained on, or accessible through,
our website is not incorporated into this Annual Report.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information
r
egarding issuers that file electronically with the SEC.
13
ITEM 1A. RISK FACTORS
OUR OPERATIONS AND FINANCIAL RESULTS ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES,
INCLUDING THOSE DESCRIBED BELOW, THAT COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS, CASH FLOWS, AND THE TRADING PRICE OF OUR COMMON STOC K
Risks Relating to Our Business
To achieve our mission, our strategy is to build and operate the leading South African full-service fintech platform offering
cash management, payment and financial services. Our future success, and our ability to sustain profitability and positive cash
flow, is substantially dependent on our ability to complete the implementation of this strategy successfully.
Our board conducted an extensive review of our business strategy and operations in July 2020, and decided to focus on our South
African operations and other business opportunities in South Africa and, to a lesser extent, the rest of the African continent. Over
recent years, we have pursued strategic acquisitions, technology investments, business integration initiatives, and the expansion of our
financial services offering. These have included the integration of Lesaka Cash Management Pty Ltd, Adumo (RF) Pty Ltd, and Lesaka
Utilities Pty Ltd, as well as growth across the Group’s Consumer, Merchant, and Enterprise divisions. The proposed acquisition of
Bank Zero described herein remains subject to the fulfilment or waiver of applicable conditions precedent. The successful realization
of anticipated benefits remains subject to various internal and external factors, including market conditions, competitive pressures,
regulatory developments, technology advancements, integration execution, and customer adoption of products and services. However,
we cannot assure you that we will be able to complete our strategy successfully and sustain profitability and positive cash flow.
Even where we are profitable, achieving net income does not necessarily ensure positive cash flow. Failure to effectively execute
on our strategy, achieve targeted synergies, sustain revenue growth, manage costs, or maintain positive cash generation could adversely
impact financial performance, strategic objectives, and long-term shareholder value. We therefore cannot assure you that we will
sustain or increase profitability in the future and if we do not, our business will be materially and adversely affected.
We have a significant amount of indebtedness that requires us to comply with restrictive and financial covenants. If we are
unable to comply with these covenants, we could default on this debt, which would have a material adverse effect on our business
and financial condition.
As of June 30, 2026, we had aggregate borrowings outstanding of ZAR 3.5 billion ($210.7 million translated at exchange rates
as of June 30, 2026). We partially funded certain of our acquisitions through South African bank borrowings. We, together with Lesaka
Technologies Proprietary Limited (“Lesaka SA”) and the majority of Lesaka SA’s directly and indirectly wholly-owned subsidiaries,
have agreed to guarantee the obligations of Lesaka SA and of the other borrowers under certain of the borrowings to the lenders.
Certain of these borrowings contain customary covenants which include a requirement for Lesaka SA to maintain specified Net Debt
to EBITDA and Interest Cover Ratios (as defined in the lending agreements) and restricts the ability of Lesaka SA, and certain of its
subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional
indebtedness, make investment above specified levels, engage in certain business combinations and engage in other corporate
activities.
The borrowings through our merchant lending operations, through Lesaka Capital Proprietary Limited (formerly known as Cash
Connect Capital Proprietary Limited) (“Lesaka Capital”) and Lesaka Fuel Proprietary Limited (formerly known as K2020 Connect
Proprietary Limited) (“Lesaka Fuel”), include a ZAR 400 million revolving credit facility agreement. This facility contains customary
covenants that require the borrowing parties to collectively maintain a specified capital adequacy ratio, restrict the ability of the entities
to make certain distributions with respect to their capital stock, encumber their assets, incur additional indebtedness, make investments,
engage in certain business combinations and engage in other corporate activities.
These security arrangements and covenants may reduce our operating flexibility or our ability to engage in other transactions that
may be beneficial to us. If we are unable to comply with the covenants, we could be in default and the indebtedness could be
accelerated. If this were to occur, we might not be able to obtain waivers of default or to refinance the debt with another lender and as
a result, our business, financial condition and stock price would suffer.
Failure to complete, or delays in completing, the Bank Zero acquisition, could materially and adversely affect our results of
operations and stock price.
The completion of the Bank Zero acquisition is subject to a number of conditions precedent, including receipt of regulatory
approvals and certain third-party consents. Some of these conditions are outside our control.
To complete the acquisition, we must make certain filings with, and obtain certain consents and approvals from, various
governmental and regulatory authorities. The regulatory approval processes may take a lengthy period of time to complete, and there
can be no assurance as to the outcome of the approval processes, including the undertakings and conditions that may be required for
approval, or whether the regulatory approvals will be obtained at all.
In addition, the completion of the acquisition is conditional on, among other things, no action or circumstance occurring that
w
ould result in a material adverse effect on the Bank Zero’s business operations or financial results.
14
We cannot provide any assurance regarding if or when all conditions precedent to the acquisition will be satisfied or waived. If,
for any reason, the acquisition is not completed, or its completion is materially delayed and/or the transaction agreement is terminated,
the market price of our common stock may be materially and adversely affected.
In addition, if the acquisition is not completed for any reason, there are risks that (i) the announcement of the acquisition and (ii)
the dedication of management’s attention and other of our resources to the completion thereof, could have a negative impact on our
relationships with our stakeholders and could have a material adverse effect on our current and future operations, financial condition
and prospects.
We may not realize some or all of the anticipated benefits from the Bank Zero acquisition or we may fail to realize some or
all of the expected benefits of certain recently integrated acquisitions, including Adumo and Utilities
Even if we complete the Bank Zero acquisition, we may experience unforeseen events, changes or circumstances that may
adversely affect us. For example, we may incur unexpected costs, charges or expenses resulting from the transaction, including charges
to future earnings if Bank Zero’s business does not perform as expected. Our expectations regarding Bank Zero’s business and
prospects may not be realized, including as a result of changes in the financial condition of the markets that Bank Zero serves. In
addition, there are risks associated with Bank Zero’s product and service offerings or results of operations, including the risk of failing
to comply with certain regulatory rules required to operate its business.
Further, there are numerous challenges, risks and costs involved with integrating the operations of Bank Zero with ours. For
example, integrating Bank Zero into our company will require significant attention from our senior management which may divert
their attention from our day-to-day business. The difficulties of integration may also be increased by cultural differences between our
two organizations and the necessity of retaining and integrating personnel, including Bank Zero’s key employees.
Our Sarbanes-Oxley Act of 2002 (“Sarbanes”) management certification and auditor attestation regarding the effectiveness of
our internal control over financial reporting as of June 30, 2026, includes the operations of Adumo and Utilities as these entities are
now in scope for this attestation. However, the aforementioned entities are still in the process of becoming SOX compliant. Refer to
Item 9A for further detail. The requirement to evaluate and report on our internal controls also applies to companies that we acquire,
including Bank Zero. The future integration of Bank Zero into our internal control over financial reporting is expected to require
significant time and resources from our management and other personnel and is expected to increase our compliance costs. If we fail
to successfully integrate the operations of Bank Zero into our internal control over financial reporting, our internal control over
financial reporting may not be effective.
As such, if some or all of the aforementioned risks materialize, our ability to successfully integrate Bank Zero’s operations into
our business and realize the associated benefits of that acquisition could be adversely impacted. This could lead to the recording of
material impairments, and as a result, our financial condition, results of operations, cash flows and stock price could suffer.
We may undertake acquisitions that could increase our costs or liabilities or be disruptive to our business.
Acquisitions are an integral part of our new growth strategy as we seek to expand our business and deploy our technologies in
new markets in Southern Africa. However, we may not be able to locate suitable acquisition candidates at prices that we consider
appropriate. If we do identify an appropriate acquisition candidate, we may not be able to successfully negotiate the terms of the
transaction, finance it or, if the transaction occurs, integrate the new business into our existing business. These transactions may require
debt financing or additional equity financing, resulting in additional leverage or dilution of ownership.
Acquisitions of businesses or other material operations and the integration of these acquisitions or their businesses will require
significant attention from members of our senior management team, which may divert their attention from our day-to-day business.
The difficulties of integration may be increased by the necessity of integrating personnel with disparate business backgrounds and
combining different corporate cultures. We also may not be able to retain key employees or customers of an acquired business or
realize cost efficiencies or synergies or other benefits that we anticipated when selecting our acquisition candidates. Acquisition
candidates may have liabilities or adverse operating issues that we fail to discover through due diligence prior to the acquisition.
We may need to record write-downs from future impairments of goodwill or other intangible assets, which could reduce our
future reported earnings.
We may identify additional errors related to our Value Added Tax (VAT) processes, indirect tax positions, or similar
transaction-level tax matters, which could require future adjustments to our financial statements.
During the second quarter of fiscal 2026, we identified errors in the historical VAT treatment of certain gaming voucher
transactions within our Merchant business. Although we have completed an initial review of the matter and determined to correct the
identified errors through revisions to our previously issued financial statements, our review is ongoing. Refer to Note 1 to our audited
consolidated financial statements for additional information. The error arose from the incorrect application of indirect tax rules, the
configuration of underlying systems, and operational practices involving downstream vendors.
15
While we have implemented remedial actions, including enhancing our system of internal control and conducting further analyses
with our external advisors, there is a risk that we have not identified all errors associated with this matter. Additional issues may be
discovered as we continue to evaluate historical periods, refine our technical tax conclusions, or from inadequate updates to our
systems. Moreover, similar errors could exist in accounting and reporting for other indirect tax transactions particularly where our
business involves complex multi-party arrangements, voucher products, commissions, or activities involving non-registered VAT
vendors.
Identification of additional errors may require us to record further adjustments, amend or restate previously issued financial
statements, update our tax filings, make additional payments of tax, penalties, or interest, or make further enhancements to our internal
control processes. Any such developments could result in increased compliance costs, additional administrative burdens, diversion of
management attention, or investor perceptions of weaknesses in our financial reporting or tax compliance processes. If material,
additional errors could also adversely affect our financial condition, results of operations, liquidity, or internal control over financial
reporting.
Geopolitical conflicts, including the conflict between Russia and Ukraine and in the Middle East, may adversely affect our
business and results of operations.
Global economic and geopolitical conditions continue to influence the environment in which we operate. Heightened geopolitical
tensions, including the conflict between Russia and Ukraine and ongoing conflicts in the Middle East, have contributed to volatility in
global financial markets and increased macroeconomic uncertainty. We have no direct operations, assets or revenue exposure in the
affected regions. However, the indirect effects of these developments may adversely impact the South African operating environment,
our primary market, including through foreign exchange volatility, inflationary pressures, tighter external funding conditions, and
reduced consumer affordability. While we do not currently believe these developments have had a material effect on our financial
position, results of operations or cash flows, geopolitical conditions remain fluid and their broader consequences are uncert ain.
A
continuation or escalation of these conflicts, or their expansion to surrounding areas, could adversely affect our business, and any
material changes to our risk profile or financial position will be disclosed in accordance with applicable regulatory requirements.
A prolonged economic slowdown or lengthy or severe recession in South Africa or elsewhere could harm our operations.
A prolonged economic downturn or recession in South Africa could materially impact our results from operations, particularly
in light of electricity disruptions, a significantly weak USD/ ZAR exchange rate compared with previous periods, and our strategic
decision to focus on our South African operations. In October 2025, South Africa exited the Financial Action Task Force grey list
after completing the required reforms. The removal from the grey list was widely viewed as positive for investor sentiment, capital
flows, funding costs, and international business confidence in South Africa. However, economic confidence in South Africa, our main
operating environment, has been historically low and, as a result, there is a risk of a prolonged economic downturn, which could have
a negative impact on merchants and retailers; mobile phone operators; our account holders; the level of transactions we process; the
take-up of the financial services we offer and the ability of our customers to repay our loans or to pay their insurance premiums. If
financial institutions and retailers experience decreased demand for their products and services, our hardware, software, related
technology sales and processing revenue could decrease.
Our consumer microlending loan book and merchant lending book expose us to credit risk and our allowance for doubtful
finance loans receivable may not be sufficient to absorb future write-offs.
All of our microfinance loans made are for a period of nine months or less and all of our merchant lending is for a period of less
than 12 months. We have created an allowance for doubtful finance loans receivable related to these books. When creating the
allowance, management considered factors including the period of the finance loan outstanding, creditworthiness of the customers and
the past payment history of the borrower. We consider this policy to be appropriate as it takes into account factors such as historical
bad debts, current economic trends and changes in our customer payment patterns. However, additional allowances may be required
should the ability of our customers to make payments when due deteriorate in the future. A significant amount of judgment is required
to assess the ultimate recoverability of these microfinance loan receivables.
We may face competition from other companies that offer innovative payment technologies and payment processing, which
could result in the loss of our existing business and adversely impact our ability to successfully market additional products and
services.
Our primary competitors in the payment processing market include other independent processors, as well as financial institutions,
independent sales organizations, new digital and fintech entrants and, potentially card networks. Many of our competitors are
companies who are larger than we are and have greater financial and operational resources than we have. These factors may allow
them to offer better pricing terms or incentives to customers, which could result in a loss of our potential or current customers and/or
force us to lower our prices. Either of these actions could have a significant effect on our revenues and earnings.
16
Our future success will depend in part on our ability to attract, integrate, retain and incentivize key personnel and a sufficient
number of skilled employees, particularly in the technical, sales and senior management areas.
We believe our management team has the right experience and skills to execute on our strategy. However, in order to succeed in
our product development and marketing efforts, we may need to identify and attract new qualified technical and sales personnel, as
well as motivate and retain our existing employees. As a result, an inability to hire and retain such employees would adversely affect
our ability to achieve our strategic goals and maintain our technological relevance. We may face difficulty in assimilating, transitioning
and integrating newly-hired personnel or management of any future acquisitions into our existing management team, and this may
adversely affect our business. Competitors may attempt to recruit our top management and employees. In order to attract and retain
personnel in a competitive marketplace, we must provide competitive pay packages, including cash and equity -based compensation
and the volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. We do not
maintain any “key person” life insurance policies. If we fail to attract, integrate, retain and incentivize key personnel and skilled
employees, our ability to manage and grow our business could be harmed and our product development and marketing activities could
be negatively affected.
Cybersecurity breaches and other system disruptions pose a significant threat to business operations.
As a fintech organization reliant on digital infrastructure, we are highly susceptible to cybersecurity incidents involving sensitive
data such as personally identifiable information (“PII”), payment card information (“PCI”), and proprietary business records. Our
exposure includes the risk of data breaches, ransomware, denial-of-service attacks, and unauthorised system access. Although we
follow the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework in our security controls, evolving cyber
threats mean no system is invulnerable. A successful cybersecurity breach, especially with increased adoption of AI technologies,
could result in financial losses, regulatory penalties, reputational damage, operational interruptions, and legal consequences. Prolonged
or frequent breaches or system disruptions may diminish customer trust, potentially leading customers to consider our systems
unreliable, which could impact adoption and harm brand reputation. Addressing breaches or system disruptions can significantly strain
staff resources and delay new service launches. Furthermore, if customers rely on our products for critical transactions, a breach could
disrupt their businesses and lead to claims for compensation. Even if unsuccessful, this type of claim could be time-consuming and
costly for us to address.
Although certain of our systems have been designed to reduce downtime in the event of outages or catastrophic occurrences, they
remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, terrorist attacks,
computer viruses, computer denial-of-service attacks and similar events. Some of our systems are not fully redundant, and our disaster
recovery planning may not be sufficient for all eventualities.
Protection against fraud is of key importance to the purchasers and end users of our solutions. We incorporate security features,
including encryption software, biometric identification and secure hardware, into our solutions to protect against fraud in electronic
transactions and to provide for the privacy and integrity of cardholder data. Our solutions and systems may be vulnerable to breaches
in security due to defects in the security mechanisms, the operating system, applications or the hardware platform as well as through
risk introduced into our environment through third party suppliers, which the group relies heavily on. Security vulnerabilities could
jeopardize the security of information transmitted using our solutions. If the security of our solutions is compromised, our reputation
and marketplace acceptance of our solutions may be adversely affected, which would cause our business to suffer, and we may become
subject to damages claims. We have not yet experienced any significant security breaches affecting our business.
Despite robust measures, unforeseen cyber incidents or natural disasters could trigger lengthy service interruptions. Existing
business interruption insurance may not adequately compensate for losses stemming from cybersecurity failures.
Our use of artificial intelligence (“AI”) may present risks that could adversely affect our business, results of operations and
reputation.
While our use of AI is not currently material, we may increasingly incorporate AI technologies into our systems, operations and
product offerings. The development, deployment and use of AI present a number of risks and uncertainties. AI systems may produce
inaccurate, unreliable or otherwise flawed outputs, including as a result of limitations in model design, training data quality, bias or
other technical constraints. Any such issues could impair the effectiveness of our products and services or expose us to liability.
The use of AI is expected to increase cybersecurity, privacy, intellectual property and operational risks. For example, the use of
AI is likely to involve the processing of sensitive data, reliance on third-party tools, or the generation of outputs that are misused or
misinterpreted. In addition, AI technologies are expected to introduce new or evolving vulnerabilities that could be exploited, and our
risk management processes may not be effective in identifying or mitigating all such risks.
The legal and regulatory landscape relating to AI is rapidly evolving and uncertain. We may be subject to existing and emerging
laws, regulations and regulatory expectations in the United States and other jurisdictions (including South Africa) relating to, among
other things, data protection, consumer protection, intellectual property and the use of automated decision-making. Compliance with
such requirements may increase our costs, limit the use or effectiveness of AI in our business, or require changes to our products or
operations. Failure to comply with applicable requirements, or the perception that our use of AI is inappropriate or controversial, could
r
esult in regulatory scrutiny, litigation, reputational harm or competitive disadvantage.
17
As AI technologies continue to develop, we may not be able to anticipate or effectively manage all associated risks, especially
cybersecurity related risks. If any of these risks were to materialize, they could have a material adverse effect on our business, results
of operations and financial condition.
Defending our intellectual property rights or defending ourselves in infringement suits that may be brought against us is
expensive and time-consuming and may not be successful.
Litigation to enforce our trademarks or other intellectual property rights or to protect our trade secrets could result in substantial
costs and may not be successful. Any loss of, or inability to protect, intellectual property in our technology could diminish our
competitive advantage and also seriously harm our business. In addition, the laws of certain foreign countries may not protect our
intellectual property rights to the same extent as do the laws in countries where we currently have protection. Our means of protecting
our intellectual property rights in countries where we currently have protection, or any other country in which we operate, may not be
adequate to fully protect our intellectual property rights. Similarly, if third parties claim that we infringe their intellectual property
rights, we may be required to incur significant costs and devote substantial resources to the defense of such claims, to discontinue
using and selling any infringing technology and services, to expend resources to develop non-infringing technology or to purchase
licenses or pay royalties for other technology. In addition, if we are unsuccessful in defending any such third-party claims, we could
suffer costly judgments and injunctions that could materially adversely affect our business, results of operations or financial condition.
We may incur material losses in connection with our movement of cash through our infrastructure in South Africa.
In our merchant business we collect and process large volumes of cash from our customers, assuming the risk of loss from the
moment that cash is deposited into our vaults. We are then responsible for its collection and transportation to processing centers, which
we outsource to various cash-in-transit service providers. These services extend across all areas of South Africa.
South Africa suffers from high levels of crime and in particular cash-in-transit heists. We cannot insure against certain risks of
loss or theft of cash from our delivery and collection vehicles, and we will therefore bear the full cost of certain uninsured losses or
theft in connection with the cash handling process. Such losses could materially and adversely affect our financial condition, cash
flows and results of operations. We have not incurred any material losses resulting from cash distribution in recent years, but there is
no assurance that we will not incur any such material losses in the future.
We depend upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm
our business.
We obtain our smart cards, electronic payment and POS devices, components for our vaults, components to repair the ISV
(independent software vendor) division’s POS hardware, and the other hardware we use in our business from a limited number of
suppliers, and do not manufacture this equipment ourselves. We generally do not have long-term agreements with our manufacturers
or component suppliers. If our suppliers become unwilling or unable to provide us with adequate supplies of parts or products when
we need them, or if they increase their prices, we may not be able to find alternative sources in a timely manner and could be faced
with a critical shortage. This could harm our ability to meet customer demand and cause our revenues to decline. Even if we are able
to secure alternative sources in a timely manner, our costs could increase as a result of supply or geopolitical shocks, which may lead
to an increase in the prices of goods and services from third parties. A supply interruption, such as the previous global shortage of
semiconductors, or an increase in demand beyond current suppliers’ capabilities could harm our ability to distribute our equipment
and thus to acquire new customers who use our technology. Any interruption in the supply of the hardware necessary to operate our
technology, or our inability to obtain substitute equipment at acceptable prices in a timely manner, could impair our ability to meet the
demand of our customers, which would have an adverse effect on our business.
Our Lesaka Life business exposes us to risks typically experienced by life assurance companies.
Lesaka Life Limited (formerly known as EasyPay Insurance Limited) (“Lesaka Life”) is a life insurance company and exposes
us to risks typically experienced by life assurance companies. Some of these risks include the extent to which we are able to continue
to reinsure our risks at acceptable costs, reinsurer counterparty risk, maintaining regulatory capital adequacy, solvency and liquidity
requirements, our ability to price our insurance products appropriately, the risk that actual claims experience may exceed our estimates,
the ability to recover policy premiums from our customers and the competitiveness of the South African insurance market. If we are
unable to maintain our desired level of reinsurance at prices that we consider acceptable, we would have to either accept an increase
in our risk exposure or reduce our insurance writings. If our reinsurers are unable to meet their commitments to us in a timely manner,
or at all, we may be unable to discharge our obligations under our insurance contracts. As such, we are exposed to counterparty risk,
including credit risk, of these reinsurers.
Our product pricing includes long-term assumptions regarding investment returns, mortality, morbidity, persistency and
operating costs and expenses of the business. Using the wrong assumptions to price our insurance products could materially and
adversely affect our financial position, results of operations and cash flows. If our actual claims experience is higher than our estimates,
our financial position, results of operations and cash flows could be adversely affected. Finally, the South African insurance industry
is highly competitive. Many of our competitors are well-established, represented nationally and market similar products and we
therefore may not be able to effectively penetrate the South African insurance market.
18
Risks Relating to Operating in South Africa and Other Foreign Markets
Operating in Southern and East Africa, both emerging markets, subjects us to greater risks than those we would face if we
operated in more developed markets.
Emerging markets such as Southern Africa are subject to greater risks than more developed markets. While we focus our business
primarily on emerging markets because that is where we perceive the greatest opportunities to market our products and services
successfully, the political, economic and market conditions in these markets present risks that could make it more difficult to operate
our business successfully.
Some of these risks include:
•
Political, legal and economic instability, including higher rates of inflation and currency fluctuations;
•
High levels of corruption, including bribery of public officials;
•
Loss due to civil strife, acts of war or terrorism, guerrilla activities and insurrection;
•
A lack of well-developed legal systems which could make it difficult for us to enforce our intellectual property and contractual
rights;
•
Logistical, utilities (including electricity and water supply) and communications challenges;
•
Potential adverse changes in laws and regulatory practices, including import and export license requirements and restrictions,
tariffs, legal structures and tax laws;
•
Difficulties in staffing and managing operations and ensuring the safety of our employees;
•
Restrictions on the right to convert or repatriate currency or export assets;
•
Greater risk of uncollectible accounts and longer collection cycles;
•
Indigenization and empowerment programs;
•
Exposure to liability under the UK Bribery Act; and
•
Exposure to liability under U.S. securities and foreign trade laws, including the Foreign Corrupt Practices Act, or FCPA, and
regulations established by the U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC.
If we do not achieve applicable Broad-Based Black Economic Empowerment objectives in our South African businesses, we
may be subject to fines and we risk losing our government and/or private contracts. In addition, it is possible that we may be
required to increase the Black shareholding of our company in a manner that could dilute your ownership and/or change the
companies from which we purchase goods or procure services (to companies with a better BEE Status Level).
The legislative framework for the promotion of Broad-Based Black Economic Empowerment (“BEE”) in South Africa has been
established through the Broad-Based Black Economic Empowerment Act, No. 53 of 2003, as amended from time to time, and the
Amended BEE Codes of Good Practice, 2013, or BEE Codes, and any sector-specific codes of good practice, or Sector Codes,
published pursuant thereto. Sector Codes are fully binding between and among businesses operating in a sector for which a Sector
Code has been published. Achievement of BEE objectives is measured by a scorecard which establishes a weighting for the various
elements. Scorecards are independently reviewed by accredited BEE verification agencies which issue a verification certificate that
presents an entity’s BEE Status Level. This BEE verification process must be conducted on an annual basis, and the resultant BEE
verification certificate is only valid for a period of 12 months from the date of issue. Under our consolidated scorecard, which includes
all South African businesses, we currently hold a BEE Status Level 3.
Two of our South African businesses, being Lesaka Financial Services (Pty) Ltd, formerly known as EasyPay Financial Services
Proprietary Limited, (“LFS”) and Lesaka Life, are subject to the Amended Financial Sector Code, or the FS Sector Code, and all other
businesses are consolidated under the Department of Trade and Industry (DTI) Generic Codes. The FS Sector Code has been amended
and aligned with the new BEE Codes and were promulgated in December 2017. Licensing and/or regulatory authorities overseeing
these South African businesses may set minimum adherence requirements to BEE standards as a condition for an operating license to
trade. The minimum requirement under the Financial Sector Code is Level 8. We currently have a BEE Status Level 2 for LFS and
BEE Status Level 4 for Lesaka Life.
The BEE scorecard includes a component relating to management control, which serves to determine the participation of Black
people in the board, as well as at various levels of management within a measured entity (including, inter alia, Executive Management,
Senior Management, Middle Management and Junior Management). The BEE Codes and/or Sector Codes define the terms "Senior
Management", "Middle Management" and "Junior Management" as those occupational categories as determined in accordance with
the Employment Equity Regulations, with specific emphasis on improving participation in proportion to the demographics of the
Economically Active Population of South Africa, as published by Statistics South Africa, from time to time. Employment Equity
legislation seeks to drive the alignment of the workforce with the racial composition of the economically active population of South
Africa and accelerate the achievement of employment equity targets, introducing monetary fines for non-compliance with the
Employment Equity legislation and misrepresented submissions. Annexure EEA9 to the Employment Equity Regulations sets out the
various occupational levels which are determined in accordance with the relevant grading systems applied by the measured entity and
referred to in said Annexure.
19
During fiscal 2026, we made cash contributions to 61 community-based organizations and enterprises to enable them to promote
growth and strengthen their capacity to develop innovative platforms or provide services to the markets they serve. We were also
involved in disaster relief efforts for 601 families who were affected by disasters such as floods and fires.
However, it is possible that these and other actions may not be sufficient to enable us to achieve the applicable BEE objectives
set out for specific financial years. In that event, in order to maintain competitiveness in the South African marketplace, we may have
to seek to increase compliance through other means, including by selling or placing additional shares of Lesaka or of our South African
subsidiaries to Black South Africans (either directly or indirectly), over and above what has already been approved, and/or changing
to suppliers that have higher BEE Status Levels. Such sales or placements of shares could have a dilutive impact on your ownership
interest, which could cause the market price of our stock to decline.
We expect that our BEE Status Level will be important in order for us to remain competitive in the South African marketplace.
We continually seek ways to improve our BEE Status Level, especially the ownership (so-called “equity”) and procurement elements
thereof.
We may not be able to effectively and efficiently manage the disruption to our operations as a result of erratic electricity
supply in South Africa, which could adversely affect our, financial position, cash flows and future growth.
Our businesses in South Africa are dependent on electricity generated and supplied by the state-owned utility, Eskom, in order
to operate, and, in recent years, Eskom has been unable to consistently generate and supply the amount of electricity required by the
South African economy which has resulted in significant and often unpredictable electricity supply disruptions. Eskom has
implemented a number of short- and long-term mitigation plans to correct these issues, but supply disruptions continued to occur
regularly and with no predictability, although consistency of electricity supply has improved significantly since April 2024. As part of
our business continuity programs, we have installed back-up diesel generators in order for us to continue to operate our core data
processing facilities in the event of intermittent disruptions to our electricity supply. We have to perform regular monitoring and
maintenance of these generators and also source and manage diesel fuel levels. We may also be required to replace these generators
on a more frequent basis due to the additional burden placed on them.
Our results of operations, financial position, cash flows and future growth could be adversely affected if Eskom is unable to raise
sufficient funding to operate and/or commission new electricity-generating power stations in accordance with its plans, or at all, or if
we are unable to effectively and efficiently test, maintain, source fuel for, and replace, our generators.
Fluctuations in the value of the South African rand have had, and will continue to have, a significant impact on our reported
results of operations, which may make it difficult to evaluate our business performance between reporting periods and may also
adversely affect our stock price.
The South African rand, or ZAR, is the primary operating currency for our business operations while our financial results are
reported in U.S. dollars. Therefore, any depreciation in the ZAR against the U.S. dollar, would negatively impact our reported revenue
and net income. The U.S. dollar/ZAR exchange rate has historically been volatile and we expect this volatility to continue (refer to
Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Currency Exchange Rate
Information.”). Due to the significant fluctuation in the value of the ZAR and its impact on our reported results, you may find it
difficult to compare our results of operations between financial reporting periods even though we provide supplemental information
about our results of operations determined on a ZAR basis. Similarly, depreciation in the ZAR may negatively impact the prices at
which our stock trades.
We generally do not engage in any currency hedging transactions intended to reduce the effect of fluctuations in foreign currency
exchange rates on our results of operations, other than economic hedging using forward contracts relating to our inventory purchases
which are settled in U.S. dollars or euros. We cannot guarantee that we will enter into hedging transactions in the future or, if we do,
that these transactions will successfully protect us against currency fluctuations.
South Africa’s high levels of poverty, unemployment and crime may increase our costs and impair our ability to maintain a
qualified workforce.
While South Africa has a highly developed financial and legal infrastructure, it also has high levels of crime and unemployment,
relative to peer countries in Africa and other emerging economies, and there are significant differences in the level of economic and
social development among its people, with large parts of the population, particularly in rural areas, having limited access to adequate
education, healthcare, housing and other basic services, including water and electricity. In addition, South Africa has a high prevalence
of HIV/AIDS and tuberculosis, the impact of which may be exacerbated in the short-term by the discontinuation of the U.S.
government’s funding of certain HIV/AIDS research and outreach programs.
Government policies aimed at alleviating and redressing the disadvantages suffered by the majority of citizens under previous
governments may increase our costs and reduce our profitability, all of which could negatively affect our business. These problems
may prompt emigration of skilled workers, hinder investment into South Africa and impede economic growth. As a result, we may
have difficulties attracting and retaining qualified employees.
20
The economy of South Africa is exposed to high rates of inflation, interest and corporate tax, which could increase our
operating costs and thereby reduce our profitability. Furthermore, the South African government requires additional income to
fund future government expenditures and may be required, among other things, to increase existing income tax rates, including
the corporate income tax rate, amend existing tax legislation or introduce additional taxes.
The economy of South Africa in the past has been, and in the future may continue to be, characterized by rates of inflation and
interest that are substantially higher than those prevailing in the United States and other highly-developed economies. High rates of
inflation could increase our South African-based costs and decrease our operating margins. High interest rates increase the cost of our
debt financing, though conversely, they also increase the amount of income we earn on any cash balances. The South African corporate
income tax rate, of 27%, is higher than the U.S. federal income tax rate, of 21%. Any increase in the effective South African corporate
income tax rate would adversely impact our profitability and cash flow generation.
Risks Relating to Government Regulation
We are required to comply with certain laws and regulations, including economic and trade sanctions, which could adversely
impact our future growth.
We are subject to U.S. and other trade controls, economic sanctions and similar laws and regulations, including those in the
jurisdictions where we operate. Our failure to comply with these laws and regulations could subject us to civil, criminal and
administrative penalties and harm our reputation. These laws and regulations place restrictions on our operations, trade practices,
partners and investment decisions. In particular, our operations are subject to U.S. and foreign trade control laws and regulations,
including various export controls and economic sanctions programs, such as those administered by OFAC. We monitor compliance in
accordance with the 10 principles as set out in the United Nations Global Compact Principles, the Organisation for Economic Co-
operation and Development recommendations relating to corruption, and the International Labor Organization Protocol in terms of
certain of the items to be monitored. As a result of doing business in foreign countries and with foreign partners, we are exposed to a
heightened risk of violating trade control laws as well as sanctions regulations.
Violations of trade control laws and sanctions regulations are punishable by civil penalties, including fines, denial of export
privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as
criminal fines and imprisonment. We have developed policies and procedures as part of a company-wide compliance program that is
designed to assist our compliance with applicable U.S. and international trade control laws and regulations, including trade controls
and sanctions programs administered by OFAC, and provide regular training to our employees to create awareness about the risks of
violations of trade control laws and sanctions regulations and to ensure compliance with these laws and regulations. However, there
can be no assurance that all of our employees, consultants, partners, agents or other associated persons will not act in violation of our
policies and these laws and regulations, or that our policies and procedures will effectively prevent us from violating these regulations
in every transaction in which we may engage or provide a defense to any alleged violation. In particular, we may be held liable for the
actions that our local, strategic or joint venture partners take inside or outside of the United States, even though our partners may not
be subject to these laws. Such a violation, even if our policies prohibit it, could materially and adversely affect our reputation, business,
results of operations and financial condition. Any expansion into developing countries, and our development of new partnerships and
joint venture relationships, could increase the risk of OFAC violations in the future.
In addition, our payment processing and financial services activities are subject to extensive regulation. Compliance with the
requirements under the various regulatory regimes may cause us to incur significant additional costs and failure to comply with such
requirements could result in the shutdown of the non-complying facility, the imposition of liens, fines and/or civil or criminal liability.
We are required to comply with anti-corruption laws and regulations, including the FCPA and UK Bribery Act, in the
jurisdictions in which we operate our business, which could adversely impact our future growth.
The FCPA prohibits us from providing anything of value to foreign officials for the purposes of obtaining or retaining business,
or securing any improper business advantage, and requires us to keep books and records that accurately and fairly reflect our
transactions. As part of our business, we may deal with state-owned business enterprises, the employees of which are considered
foreign officials for purposes of the FCPA. The UK Bribery Act includes provisions that extend beyond bribery of foreign public
officials and also apply to transactions with individuals not employed by a government and the act is also more onerous than the FCPA
in a number of other respects, including jurisdiction, non-exemption of facilitation payments and penalties. Some of the international
locations in which we operate or have investments lack a developed legal system and have higher than normal levels of corruption.
Any failure by us to adopt appropriate compliance procedures and ensure that our employees, agents and business partners
comply with the anti-corruption laws and regulations could subject us to substantial penalties, and the requirement that we comply
with these laws could put us at a competitive disadvantage against companies that are not required to comply. For example, in many
emerging markets, there may be significant levels of official corruption, and thus, bribery of public officials may be a comm only
accepted cost of doing business. Our refusal to engage in illegal behavior, such as paying bribes, may result in us not being able to
obtain business that we might otherwise have been able to secure or possibly even result in unlawful, selective or arbitrary action being
t
aken against us.
21
Violations of anti-corruption laws and regulations are punishable by civil penalties, including fines, as well as criminal fines and
imprisonment. We have developed policies and procedures as part of a company-wide compliance program that is designed to assist
our compliance with applicable U.S., South African and other international anti-corruption laws and regulations, and provide regular
training to our employees to comply with these laws and regulations. However, there can be no assurance that all of our employees,
consultants, partners, agents or other associated persons will not take actions in violation of our policies or these laws and regulations,
or that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may
engage, or provide a defense to any alleged violation. In particular, we may be held liable for the actions that our local, strategic or
joint venture partners take inside or outside of the United States, even though our partners may not be subject to these laws. Such a
violation, even if our policies prohibit it, could materially and adversely affect our reputation, business, results of operations and
financial condition.
We do not have a South African banking license and, therefore, we provide our banking offering through an arrangement
with a third-party bank, which limits our control over this business and the economic benefit we derive from it. If this arrangement
were to be terminated, we would not be able to operate our Lesaka EasyPay business without alternate means of access to a banking
license. We are also required to comply with the requirements of payment schemes, including VISA and Mastercard. Furthermore,
we provide certain of our services under partnerships with South African banks. We will be unable to provide our payments and
card-acquiring businesses if we fail to comply with payment scheme rules, and/or fail to maintain certain regulatory licenses and
registrations, and/ or if we were unable to continue to partner with South African banks to provide our payments and card acquiring
services.
The South African retail banking market is highly regulated. Under current law and regulations, our Lesaka EasyPay business
activities require us to be registered as a bank in South Africa or to have access to an existing banking license. We are not currently
so registered, but we have an agreement with African Bank Limited (“African Bank”), that enables us to implement our Lesaka
EasyPay program in compliance with the relevant laws and regulations. If this agreement were to be terminated, we would not be able
to operate these services unless we were able to obtain access to a banking license through alternate means. Furthermore, we have to
comply with the South African Financial Intelligence Centre Act, 2001 and money laundering and terrorist financing control
regulations, when we open new bank accounts for our customers and when they transact. Failure to effectively implement and monitor
responses to the legislation and regulations may result in significant fines or prosecution of African Bank and ourselves.
The South African Financial Advisory and Intermediary Services Act, 2002, requires persons who act as intermediaries between
financial product suppliers and consumers in South Africa to register as financial service providers. Lesaka Life and LFS were granted
a Financial Service Provider (“FSP”) licenses on June 9, 2015, and July 11, 2017, respectively. If our FSP licenses are withdrawn or
suspended, we may be stopped from continuing our financial services businesses in South Africa unless we are able to enter into a
representative arrangement with a third party FSP.
Furthermore, the Conduct of Financial Institutions Bill (“COFI Bill”) will overhaul the current regulatory and legislative
framework by replacing the rules-based approach with an outcomes-driven and principles-based model, and the adoption of an activity-
based licensing and authorization regime. It aims to establish a single, modern conduct architecture aligned to emerging risks across
the financial services sector, and embed fair outcomes across the value chain, thereby simplifying and rationalizing existing fragmented
conduct rules, and strengthening governance, culture and accountability. While the COFI Bill is expected to significantly change the
manner in which we operate our business, including the conversion of existing licenses for the relevant Lesaka subsidiaries through
transitional arrangements and other financial services activities which may require licensing, it is also likely to substantially increase
operational costs as we seek to meet regulatory expectations. Although timing remains uncertain, the COFI Bill was introduced in
Parliament in April 2026.
We are required to comply with the requirements of payment schemes, including VISA and Mastercard. We have deployed a
significant number of devices, and any mandatory compliance upgrades to our deployed POS devices would require significant capital
expenditure and/or be disruptive to our customer base. Failure to comply with the payment schemes’ rules may result in significant
fines and/or a loss of license to participate in the scheme(s).
We provide card acquiring services to our customers by partnering with Nedbank Limited and ABSA Bank Limited, and payment
processing services in partnership with the largest banks in South Africa. If these agreements were to be terminated, certain of our
business would not be able to operate their payment services unless they were able to enter alternative card acquiring or payment
processing agreements with other partners or obtain a direct designation license with the schemes and regulatory bodies. In addition,
any loss of or failure to renew our current authorizations would result in an inability to operate its payment services.
Compliance with the requirements under these various regulatory regimes may cause us to incur significant additional costs and
failure to comply with such requirements could result in the shutdown of the non-complying facility, the imposition of liens, fines
and/or civil or criminal liability.
22
Proposed regulatory changes to the national payments system are expected to have a substantial impact on the South African
payments industry. It may change the manner in which we conduct business and likely lead to increased operating costs for our
business as we work to ensure compliance with the new legislative and regulatory framework, which may have a material adverse
effect on our business.
On March 3, 2025, the South African Reserve Bank (“SARB”) published certain draft regulatory documents for commentary
that are expected to have a substantial impact on how we conduct our business namely: (i) a draft directive entitled “Directive in
respect of specific payment activities within the national payment system” (the “Directive”); (ii) a draft exemption notice entitled
“Designation by the Prudential Authority of specific activities conducted in the national payment system which shall be deemed not
to constitute ‘the business of a bank’ under paragraph (cc) in section 1(1) of the Banks Act, 1990” (the “Exemption Notice”); and
(iii) the National Payment System Bill (“NPS Bill”), which seeks to replace the existing National Payment System Act, 1998.
Following the initial publication of the proposed regulations, for which we submitted detailed comments through our industry body,
the Association of South African Payment Providers (“ASAPP”), revised versions of the Directive and the Exemption Notice were
published for commentary on May 20, 2026, and detailed comments were submitted to ASAPP.
The key objectives of the proposed regulations are to clarify the mandate and objectives of the SARB with respect to the national
payment system (“NPS”); and establish a robust regulatory, oversight, and supervisory framework for the NPS. The proposed
regulations also aim to promote financial inclusion, competition, the prevention of financial crime, and the fair treatment and protection
of customers, while introducing an activity-based licensing and authorization regime. In this regard, the Directive defines seven
“payment activities” and provides that a person, which can be a bank or a non-bank, providing a “payment activity" must obtain
authorisation from the SARB to undertake such activity. Under the Exemption Notice, certain payment activities are exempted from
the definition of ‘the business of a bank’. Prior to the Exemption Notice, these activities could only be undertaken by a bank. Pursuant
to the Exemption Notice, these activities can be undertaken by non-banks, subject to certain conditions. Certain of our businesses
currently undertake activities which would qualify as “payment activities” under the Directive and the NPS Bill. Under the current
regulatory framework, these activities are undertaken in partnership with a sponsoring bank and the sponsoring bank is subject to
regulation by the SARB. In other words, the business undertaking the “payment activity” is not subject to direct regulation with respect
to such payment activities.
It is uncertain if and when the proposed regulations will enter into effect and the extent to which we as a non-bank may elect
whether to conduct an exempted payment activity by partnering with a bank to do so, or on its own, if it is authorised by the SARB -
i.e. whether both options will be available to a non-bank. Should our businesses be subject to direct regulation under this new regime
(i.e., if our current sponsorship model is no longer available), we expect that we will incur significant operating costs to comply with
the new requirements, and to obtain authorization with respect thereto. Furthermore, while some requirements may already exist under
other current regulatory frameworks for certain of our businesses, we will likely need to invest in additional resources, systems and
processes to satisfy the regulatory requirements contemplated in the proposed regulations, which may also lead to increased operational
costs, which may have a material adverse effect on our business.
We may be subject to regulations regarding privacy, data use and/or security, which could adversely affect our business.
We are subject to regulations in a number of the countries in which we operate relating to the processing (which includes, inter
alia, the collection, use, retention, security and transfer) of personal information about the people (whether natural or juristic) who use
our products and services. The interpretation and application of user data protection laws are in a state of flux. These laws may be
interpreted and applied inconsistently from country to country and our current data protection policies and practices may not be
consistent with those interpretations and applications. Complying with these varying requirements could cause us to incur substantial
costs or require us to change our business practices in a manner adverse to our business. Any failure, or perceived failure, by us to
comply with any regulatory requirements or international privacy or consumer protection-related laws and regulations could result in
proceedings or actions against us by governmental entities or others, subject us to significant penalties and negative publicity. In
addition, as noted above, we are subject to the possibility of security breaches, which themselves may result in a violation of these
laws.
Amendments to the NCA were signed into law in South Africa in August 2019. Compliance with these amendments may
adversely impact our micro-lending operations in South Africa.
In August 2019, the National Credit Amendment Bill, or debt-relief bill, was signed into law in South Africa. The effective date
of the debt-relief bill has not yet been announced and has been significantly delayed. We believe that the debt-relief bill will restrict
the ability of financial services providers to provide lending products to certain low-income earners and will increase the cost of credit
to these consumers. As a result, compliance with the debt -relief bill may adversely impact our micro-lending operations in South
Africa. Furthermore, we expect that it will take us, and other credit providers, some time to fully understand, interpret and implement
this new legislation in our lending processes and practices. Non-compliance with the provisions of this new legislation may result in
financial loss and penalties, reputational loss or other administrative punishment.
23
Risks Relating to our Common Stock
Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt
or equity capital.
Form S-3 permits eligible issuers to conduct registered offerings using a short form registration statement that allows the issuer
to incorporate by reference its past and future filings and reports made under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). In addition, Form S-3 enables eligible issuers to conduct primary offerings “off the shelf” under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”). The shelf registration process, combined with the ability to forward
incorporate information, allows issuers to avoid delays and interruptions in the offering process and to access the capital markets in a
more expeditious and efficient manner than raising capital in a standard registered offering pursuant to a Registration Statement on
Form S-1. The ability to register securities for resale may also be limited as a result of the loss of Form S-3 eligibility.
We did not file our 2025 Form 10-K within the timeframe required by the SEC; thus, we have not remained current in our
reporting requirements with the SEC. Although we regained status as a current filer by filing our Form 10-K/A to amend our 2025
Form 10-K, as of the date of this Annual Report, we are ineligible to file new short form registration statements on Form S-3 and,
absent a waiver of the Form S-3 eligibility requirements, we are no longer permitted to use our existing registration statements on
Form S-3. If we wish to pursue an offering now, we would be required to conduct the offering on an exempt basis, such as in accordance
with Rule 144A, or file a registration statement on Form S-1. Using a Form S-1 registration statement for a public offering would
likely take significantly longer than using a registration statement on Form S-3 and increase our transaction costs, and could, to the
extent we are not able to conduct offerings using alternative methods, adversely impact our ability to raise capital or complete
acquisitions of other companies in a timely manner.
Our stock price has been and may continue to be volatile.
Our stock price has periodically experienced significant volatility. During the 2026 fiscal year, our stock price ranged from a low
of $3.62 to a high of $5.54. We expect that the trading price of our common stock may continue to be volatile as a result of a number
of factors, including, but not limited to the following:
•
Any adverse developments in litigation or regulatory actions in which we are involved;
•
Fluctuations in currency exchange rates, particularly the U.S. dollar/ZAR exchange rate;
•
Announcement of additional BEE transactions, especially one involving the issuance or potential issuance of equity securities
or dilution or sale of our existing business in South Africa;
•
Quarterly variations in our operating results;
•
Significant fair value adjustments or impairment in respect of investments or intangible assets;
•
Announcements of acquisitions or disposals;
•
The timing of, or delays in the commencement, implementation or completion of major projects;
•
Large purchases or sales of our common stock; and
•
General conditions in the markets in which we operate.
Additionally, shares of our common stock can be expected to be subject to volatility resulting from purely market forces over
which we have no control.
The put right we granted to the IFC Investors on the occurrence of certain triggering events may have adverse impacts on us.
In May 2016, we issued an aggregate of 9,984,311 shares of our common stock to the IFC Investors. Certain IFC Investors were
also investors in Adumo and on October 1, 2024, we issued an aggregate of 1,989,162 additional shares of our common stock to these
IFC Investors pursuant to the Adumo transaction agreement. As of June 30, 2026, the IFC Investors held 8,430,676 shares. We granted
the IFC Investors certain rights, including the right to require us to repurchase any share held by the IFC Investors pursuant to the May
2016 and October 2024 transactions upon the occurrence of specified triggering events, which we refer to as a “put right.” The put
price per share will be the higher of the price per share paid to us by the IFC Investors and the volume-weighted average price per
share prevailing for the 60 trading days preceding the triggering event, except that with respect to a put right triggered by rejection of
a bona fide offer, the put price per share will be the highest price offered by the offeror. If a put triggering event occurs, it could
adversely impact our liquidity and capital resources. In addition, the existence of the put right could also affect whether or on what
terms a third party might in the future offer to purchase our company. Our response to any such offer could also be complicated,
delayed or otherwise influenced by the existence of the put right.
Approximately 29% of our outstanding common stock is owned by two shareholders. The interests of these shareholders may
conflict with those of our other shareholders.
There is a concentration of ownership of our outstanding common stock because approximately 29% of our outstanding common
stock is owned by two shareholders. Based on their most recent SEC filings disclosing ownership of our shares, Value Capital Partners
(Pty) Ltd, or VCP, and IFC Investors, beneficially own approximately 19% and 10% of our outstanding common stock as of June 30,
2026, respectively.
24
The interests of VCP and the IFC Investors may be different from or conflict with the interests of our other shareholders. As a
result of the significant combined ownership by VCP and the IFC Investors, they may be able, if they act together, to significantly
influence the voting outcome of all matters requiring shareholder approval. This concentration of ownership may have the effect of
delaying or preventing a change of control of our company, thus depriving shareholders of a premium for their shares, or facilitating
a change of control that other shareholders may oppose.
We may seek to raise additional financing by issuing new securities with terms or rights superior to those of shares of our
common stock, which could adversely affect the market price of such shares.
We may require additional financing to fund future operations, including expansion in current and new markets, programming
development and acquisition, capital costs and the costs of any necessary implementation of technological innovations or alternative
technologies, or to fund acquisitions. We may also wish to raise additional equity funding to reduce the amount of debt funding on our
balance sheet. Because of the exposure to market risks associated with economies in emerging markets, we may not be able to obtain
financing on favorable terms or at all. If we raise additional funds by issuing equity securities, the percentage ownership of our current
shareholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of
common stock, which could adversely affect the market price and voting power of shares of common stock. If we raise additional
funds by issuing debt securities, the holders of these debt securities would similarly have some rights senior to those of the holders of
shares of common stock, and the terms of these debt securities could impose restrictions on operations and create a significant interest
expense for us.
Issuances of significant amounts of stock in the future could potentially dilute your equity ownership and adversely affect the
price of our common stock.
We believe that it is necessary to maintain a sufficient number of available authorized shares of our common stock in order to
provide us with the flexibility to issue shares for business purposes that may arise from time to time. For example, we could sell
additional shares to raise capital to fund our operations, to reduce debt or to acquire other businesses, issue shares in a BEE transaction,
issue additional shares under our stock incentive plan or declare a stock dividend. Our board may authorize the issuance of additional
shares of common stock without notice to, or further action by, our shareholders, unless shareholder approval is required by law or the
rules of the NASDAQ Stock Market. The issuance of additional shares could dilute the equity ownership of our current shareholders
and any such additional shares would likely be freely tradable, which could adversely affect the trading price of our common stock.
We have identified material weaknesses in our internal control over financial reporting which, if not timely remediated, may
adversely affect the accuracy and reliability of our financial statements, and our reputation, business and stock price, as well as
lead to a loss of investor confidence in us.
As described under Item 9A—“Controls and Procedures.”, we concluded that our disclosure controls and procedures were not
effective as of June 30, 2026, and that we had, as of such date, material weaknesses in our internal control over financial reporting
related to:
●
Our Consumer lending, Consumer insurance and Group payroll processes, specifically insufficient risk assessment and
monitoring activities relating to changes in or migration of systems and processes, insufficient controls over internal
information and information from service organizations, and insufficient design and implementation of Information
Technology General Controls (“ITGCs”), controls over service organizations and process level controls, resulting in
ineffective process level controls, including a lack of validation of the completeness and accuracy of information used within
the process;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls including insufficient controls over information resulting in ineffective process level controls including a lack of
validation of the completeness of the journal entry population and inadequate validation of the completeness and accuracy
of information used within the process;
●
The failure of our Utilities, Lesaka Hospitality Proprietary Limited (formerly known as GAAP-Point-Of-Sale Proprietary
Limited) (“Lesaka Hospitality”), Lesaka Merchant Technologies and Lesaka Payments businesses to comply with the our
Sarbanes program, specifically insufficient risk assessment and monitoring activities relating to systems and processes,
insufficient controls over internal information and information from service organizations, and insufficient design and
implementation of ITGCs controls over service organizations and process level controls, resulting in ineffective process
level controls, including a lack of validation of the completeness and accuracy of information used within the process;
●
An insufficient number of experienced and trained resources to execute on their internal control responsibilities resulting in
inadequate risk assessment, ineffective design, implementation and operating effectiveness of process level controls for
processes in the scope of our internal control over financial reporting evaluation.
25
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be
prevented or detected on a timely basis. The material weaknesses identified in Item 9A—“Controls and Procedures.”, resulted in
immaterial misstatements of prior period amounts, which have been corrected through revision of the prior period financial statements
as described in Note 1 to our consolidated financial statements, and in a corrected immaterial current period misstatement related to
revenue; they did not require amendment of any previously filed report.
We intend to remediate these material weaknesses. While we believe the steps we take to remediate these material weaknesses
will improve the effectiveness of our internal control over financial reporting and will remediate the identified deficiencies, if our
remediation efforts are insufficient to address the material weakness or we identify additional material weaknesses in our internal
control over financial reporting in the future, our ability to analyze, record and report financial information accurately, to prepare our
financial statements within the time periods specified by the rules and forms of the SEC and to otherwise comply with our reporting
obligations under the federal securities laws may be adversely affected. The occurrence of, or failure to remediate, these material
weaknesses and any future material weaknesses in our internal control over financial reporting may adversely affect the accuracy and
reliability of our financial statements and have other consequences that could materially and adversely affect our business, including
an adverse impact on the market price of our common stock, potential actions or investigations by the SEC or other regulatory
authorities, shareholder lawsuits, a loss of investor confidence and damage to our reputation.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act, especially over companies that we may acquire, could have a material adverse effect on our business and stock price.
Under Section 404 of Sarbanes, we are required to furnish a management certification and auditor attestation regarding the
effectiveness of our internal control over financial reporting. We are required to report, among other things, control deficiencies that
constitute a “material weakness” or changes in internal control that materially affect, or are reasonably likely to materially affect,
internal control over financial reporting.
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected
on a timely basis.
The requirement to evaluate and report on our internal controls also applies to companies that we acquire. While we continue to
dedicate resources and management time to ensuring that we have effective controls over financial reporting, failure to achieve and
maintain an effective internal control environment could have a material adverse effect on the market’s perception of our business and
our stock price.
The restatement of our prior quarterly financial statements may affect shareholder and investor confidence in us or harm our
reputation, and may subject us to additional risks and uncertainties, including increased costs and the increased possibility of legal
proceedings and regulatory inquiries, sanctions or investigations.
We identified material misstatements in the original filings of our Quarterly Report on Form 10-Q for the quarters ended
September 30, 2024, December 31, 2024 and March 31, 2025 (“Original Filings”) and withdrew reliance on these Original Filings on
September 10, 2025. We filed amended quarterly reports on November 5, 2025 which include restatement(s), refer to the section titled
“Restatement” in Note 1 to the unaudited condensed consolidated financial statements in each of the amended filings on Form 10-Q/A
for the quarters ended September 30, 2024, December 31, 2024 and March 31, 2025, for additional information regarding the
restatement(s). Management also identified material weaknesses in our internal control over financial reporting specific to the
evaluation of information that was known or knowable at the time of the transaction or event included in the Original Filings, refer to
Item 9A—“Controls and Procedures.”
As a result of the restatement described above, we have incurred, and may continue to incur, unanticipated costs for accounting
and legal fees in connection with, or related to, such restatement. In addition, such restatement could subject us to a number of
additional risks and uncertainties, including the increased possibility of legal proceedings and inquiries, sanctions or investigations by
the SEC or other regulatory authorities. Any of the foregoing may adversely affect our reputation, the accuracy and timing of our
financial reporting, or our business, results of operations, liquidity and financial condition, or cause shareholders, investors and
customers to lose confidence in the accuracy and completeness of our financial reports or cause the market price of our common stock
to decline.
26
You may experience some difficulties in effecting service of legal process, enforcing U.S and/or foreign judgments or bringing
original actions based upon U.S. laws, including federal securities laws or other foreign laws, against us or certain of our directors
and officers and experts.
While Lesaka is incorporated in the state of Florida, United States, substantially all of the company’s assets are located outside
the United States. For this reason, the majority of Lesaka’s directors and all its officers reside outside of the United States and the
majority of our experts, including our independent registered public accountants, are based in South Africa.
As a result, even though you could effect service of legal process upon Lesaka, as a Florida corporation, in the United States,
you may not be able to collect any judgment obtained against Lesaka in the United States, including any judgment based on the civil
liability provisions of U.S. federal securities laws, because substantially all of our assets are located outside the United States.
Any legal processes initiating action in the United States against Lesaka's directors, officers, and experts who are located outside
of the United States, will need to be served on them in that country, in accordance with the procedures prescribed by the relevant U.S.
court. South Africa is not a party to any treaties regarding the enforcement of foreign commercial judgments. In order to be able to
enforce a foreign judgment, it is required for the South African courts to first "recognize" the U.S. judgment – in the absence of this,
the foreign judgment has no automatic extra territorial effect. The foreign judgment constitutes a "cause of action" which may be
recognized and enforced by South African courts. In order to achieve this, legal proceedings must be commenced in the South African
courts.
South Africa is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and its
International Arbitration Act 15 of 2017 provides that foreign arbitral awards must be recognised and enforced in South Africa.
However, application must still be made to the South African High Court in order for the award to be recognised and enforceable in
South Africa.
Additional, practical, considerations relating to the enforcement of foreign judgments and arbitration awards in South Africa
include the following:
●
If a foreign judgment is enforced by a South African court, the approval of the SARB (or an Authorised Dealer of SARB) is
required (i) before a defendant resident in South Africa may pay money to a non-resident plaintiff; and (ii) to settle the
judgement in a currency other than South African Rand; and
●
A plaintiff who is not resident in South Africa may be required to provide security for costs when initiating court proceedings
i
n South Africa (including for the enforcement of foreign judgments and awards).
27
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
We operate in the Southern African fintech industry, which is subject to cybersecurity risks that could adversely affect our
business, financial condition and results of operations, including intellectual property theft, fraud, extortion, harm to employees or
customers, violations of privacy laws, litigation and legal risk, regulatory scrutiny and reputational harm.
We have
business, information systems and data. These processes are integrated into our broader enterprise risk management framework, and
cybersecurity risks are assessed and prioritized alongside our other principal enterprise risks. Our cybersecurity program is informed
by recognized standards and regulatory requirements applicable to our business, including PCI DSS, the NIST Cybersecurity
Framework, SARB / Prudential Authority requirements applicable to cybersecurity and cyber-resilience within the National Payment
System, and the CIS Critical Controls. During the year, we continued to mature our cybersecurity program, including through our
transition to NIST CSF 2.0, further development of cyber risk governance processes, and continued execution of divisional
cybersecurity roadmaps.
We periodically conduct
-party security risk assessments to
and to inform appropriate mitigation strategies and controls. We use a combination of technical, administrative and organizational
controls to manage cybersecurity risk, including endpoint and network monitoring, security operations monitoring, identity and access
controls, data protection tools, vulnerability management, penetration testing, threat intelligence, backup and recovery procedures, and
cyber awareness and training programs. We also conduct periodic phishing simulations and crisis simulations to support workforce
preparedness and incident-response readiness.
We maintain incident-response processes designed to provide a consistent basis for the identification, escalation, assessment and
response to cybersecurity incidents. During the year, we issued an updated Group Incident Response Plan to support divisional
incident-response playbooks.
We also maintain processes to oversee cybersecurity risks associated with third-party service providers that have access to
personal, confidential or proprietary information or support significant business processes. During the year, we enhanced our third-
party risk management processes, including additional due diligence and assurance requirements for certain service providers and the
establishment of a cross-functional working group involving procurement, finance, risk and compliance, legal and information security
personnel to support vendor risk oversight.
Management, led by our
”)
compliance, legal and finance personnel, is responsible for assessing and managing cybersecurity risks.
Management receives
information regarding cybersecurity risks through security monitoring, risk assessments, vulnerability assessments, incident -response
processes, third-party risk reviews and reports from internal and external security providers. Material cybersecurity matters are
escalated to senior management and, where appropriate, to the Audit Committee and Board.
The Board oversees cybersecurity risk through the Audit Committee.
The Audit Committee receives quarterly reports from the
Group CISO regarding cybersecurity posture, compliance activities, progress against the Group cybersecurity strategy and roadmap,
third-party risk, and material cybersecurity incidents, if any, and related remediation.
The Group CISO is a qualified cybersecurity
professional with over 25 years of experience and holds a Master’s in Information Security from Royal Holloway, University of
London.
Our business depends on the availability, reliability and security of our information systems, networks, data and intellectual
property. Any disruption, compromise or breach of our systems or data due to a cybersecurity threat or incident could adversely affect
our operations, customer service, product development and competitive position. Such an event could also result in breach of
contractual obligations or legal duties to protect the privacy and confidentiality of stakeholders and could expose us to business
interruption, lost revenue, remediation costs, liabilities to affected parties, cybersecurity protection costs, lost assets, litigation,
regulatory scrutiny and actions, reputational harm, customer dissatisfaction, harm to vendor relationships or loss of market share.
As of the date of this Annual Report, we do
cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company, including its business
strategy, results of operations or financial condition.
c
omprehensive understanding of the risks and uncertainties related to our business and operations.
28
ITEM 2. PROPERTIES
We lease our corporate headquarters facility which consists of approximately 90,880 square feet in Dunkeld, Johannesburg,
South Africa. We also lease properties throughout South Africa, including 217 financial services branches, 17 financial service
community sites and eight sites to support our integrated POS software and hardware to the hospitality industry operations. We also
lease additional office space in Johannesburg, Cape Town , and Durban, South Africa; Gaborone, Botswana; Windhoek Namibia; and
Nairobi, Kenya. These leases expire at various dates through 2036, assuming the exercise of options to extend. We believe that we
have adequate facilities for our current business operations.
ITEM 3. LEGAL PROCEEDINGS
Litigation related to CPS
Lesaka SA was party to proceedings in the Constitutional Court of South Africa involving its former subsidiary, Cash Paymaster
Services Proprietary Limited (“CPS”), which is in liquidation. The key objective of these proceedings was to procure an order for CPS
to be ordered to pay to the South African Social Security Agency (“SASSA”) the profit generated by CPS from an agreement concluded
between SASSA and CPS, following SASSA awarding a tender to CPS. This arose from prior court proceedings which concluded that
the tender should not have been awarded to CPS (for technical reasons not related to any misconduct by CPS). Lesaka SA was included
in these proceedings to provide information relevant to determining the profit so made by CPS. The Constitutional Court delivered its
ruling on April 8, 2026. The Court ordered CPS to refund certain adjusted certified profits to SASSA. The Court did not make any
adverse order against Lesaka SA. The Court’s ruling concluded the matter.
General
We are, from time to time, subject to claims and suits, or threats of claims or suits, relating to our business, including claims for
damages for personal injuries, breach of contract and employment related claims. In certain of these actions, plaintiffs request payment
for damages, including punitive damages, which may not be covered by insurance or may otherwise have a material adverse effect on
our business or results of operations. In the opinion of management, we are not currently a party to any proceedings that would have
a material adverse effect on our business, financial condition, or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
N
ot applicable.
29
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market information
Our common stock is listed on The NASDAQ Global Select Market, or Nasdaq, in the United States under the symbol “LSAK”
and on the JSE in South Africa under the symbol “LSK.” The Nasdaq is our principal market for the trading of our common stock and
we have a secondary listing on the JSE.
Our transfer agent in the United States is Computershare Shareowner Services LLC, 480 Washington Blvd, Jersey City, New
Jersey, 07310. According to the records of our transfer agent, as of September 7, 2026, there were 6 shareholders of record of our
common stock. We believe that a substantially greater number of beneficial owners of our common stock hold their shares though
banks, brokers, and other financial institutions (i.e. “street name”). Our transfer agent in South Africa is JSE Investor Services (Pty)
Ltd, One Exchange Square, 2 Gwen Lane, Sandown, Sandton, 2196, South Africa.
Dividends
We have not paid any dividends on shares of our common stock during our last two fiscal years and presently intend to retain
future earnings to finance the expansion of the business. We do not anticipate paying any cash dividends in the foreseeable future. The
future dividend policy will depend on our earnings, capital requirements, debt commitments, expansion plans, financial condition and
other relevant factors.
Issuer purchases of equity securities
On September 2, 2025, our board of directors approved a share repurchase authorization to repurchase up to an aggregate of $15
million of our common stock. The authorization has no expiration date. This share purchase authorization replaces our $100 million
share repurchase authorization.
The table below presents information relating to purchases of shares of our common stock during the fourth quarter of fiscal
2026:
Period
(a)
Total number of
shares purchased
(b)
Average price
paid per share ($)
(c)
Total number of shares
purchased as part of
publicly announced
plans or programs
(d)
Maximum dollar value
of shares that may yet
be purchased under the
plans or programs ($)
April 2026
0
-
-
15,000,000
May 2026
(1)
5,625
4.93
-
15,000,000
June 2026
0
-
-
15,000,000
Total
5,625
-
(1) Relates to the delivery of shares of our common stock to us by certain of our employees to settle their income tax liabilities.
These shares do not reduce the repurchase authority under our current $15 million share repurchase program.
30
Share performance graph
The chart below compares the five-year cumulative return, assuming the reinvestment of dividends, where applicable, on our
common stock with that of the S&P 500 Index and the NASDAQ Industrial Index. This graph assumes $100 was invested on June 30,
2021, in each of our common stock, the companies in the S&P 500 Index, and the companies in the NASDAQ Industrial Index.
ITEM 6. [RESERVED]
31
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with Item 8—“Financial Statements and Supplementary
Data.” In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. See Item 1A— “Risk Factors” and “Forward Looking Statements.”
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. We discuss why we consider it useful to
present these non-GAAP measures and the material risks and limitations of these measures, as well as a reconciliation of these non-
GAAP measures to the most directly comparable GAAP financial measure below at “—Results of Operations —Use of Non-GAAP
Measures” below.
Overview
We offer an integrated and holistic multiproduct platform that provides transactional accounts, lending, insurance, merchant
acquiring, cash management, software and ADP. Targeted solutions and integrations facilitate payments between consumers and
businesses. By providing a full-service fintech platform in our connected ecosystem, we facilitate the digitization of commerce in our
markets.
Sources of Revenue
We generate revenue through a diversified portfolio of financial, payment, software, and technology solutions, structured across
three reportable segments: Merchant, Consumer, and Enterprise.
Merchant
Revenues in Merchant are derived from a combination of transaction-based fees and an ad valorem pricing model.
●
Merchant acquiring:
We earn revenue from merchant acquiring on an ad valorem basis, based on a percentage of the total
transaction value processed through our network. We also earn revenue from transaction fees charged to merchants.
●
Software:
Revenue is generated from providing licensing software and technology services and through selling hardware
(such as POS devices) to merchants.
●
Cash:
We earn revenue on an ad valorem basis, based on a percentage of the total cash settlements processed through our cash
vaulting network. We also earn transaction fees when customers utilize our ATM network.
●
Lending:
We generate interest revenue from qualifying merchant customers who are able to access short-term business loans.
This revenue stream includes interest charged on outstanding loan balances.
●
ADP:
We also offer merchant customers access to platforms through which we (a) generate revenue from the sale of prepaid
airtime and generate fees from distribution of ADP, including prepaid solutions (airtime, data, electricity and gaming), and
supplier enabled payments (bill payments, international money transfers and supplier payments). These fees are largely
charged on an ad valorem basis.
Consumer
Revenues in Consumer are generated from transactional banking fees, interest income, insurance premiums and card transaction
processing fees.
●
Transactional Fees:
services purchased. Transactional fees associated with our consumer accounts include monthly account service fees, ATM
withdrawal fees, and other fees based on usage.
●
Lending:
outstanding loan balances and monthly service fees.
●
Insurance:
Enterprise
Like Merchant, Enterprise generates revenue from a combination of transaction-based fees and an ad valorem pricing model.
●
ADP:
pricing model is on an ad valorem basis, depending on the specific digital product being sold.
●
Utilities:
Our utilities vertical generates revenue predominantly through an annuity-based model, with fees charged on an ad
valorem basis based on the total value of electricity vended through our platform. Ad-hoc hardware sales of utility meters
also an additional contribution to revenue which are sold on a fixed price basis.
●
Other:
Our payment solutions enable payment acceptance for us and external enterprises, on which we earn a fixed fee per
transaction processed.
32
Developments during Fiscal 2026
This item discusses our fiscal 2026 results across our three reportable segments: Merchant, Consumer, and Enterprise.
Discussions of our fiscal 2025 results compared to our fiscal 2024 results can be found within our Annual Report on Form 10-K for
the year ended June 30, 2025.
Group Level:
1.
Merchant
Fiscal 2026 marks a pivotal year of transformation and consolidation for Merchant. Following the acquisitions of the Adumo
Group in fiscal 2025, the division has been undertaking a deliberate, multi-faceted integration designed to eliminate duplication, unify
our brand go-to-market approach, and build a single, multi-product platform serving merchants across all segments. This
transformation also included bolstering operational analytics, which now aligns the Merchant revenue drivers to a number of active
merchants and ARPU (Average Revenue Per User) basis, akin to Consumer. New leadership was appointed to drive the integration
executing against a clear set of priorities: integrating our Community and Corporate Merchant channels under a unified operating
model, rationalizing cost and infrastructure and deepening product penetration across our merchant base.
2.
One Lesaka: Unification of Group Branding
In November 2025, we launched a refreshed Lesaka master brand, accelerating the realignment of all merchant-facing brands
including Kazang, Adumo, GAAP, Card Connect, and Capital Connect under a single “One Lesaka” identity. We expect full brand
alignment to be substantially complete by the end of calendar 2026, with certain brands already transitioned. This unification is not
merely cosmetic but it reflects the consolidation of our operating infrastructure, sales force, and distribution channels into a single
integrated model. Coupled with the branding change, we have consolidated our Johannesburg office footprint into a single hub, with
similar exercises close to completion in both Cape Town and Durban. As a result of these unification actions, we have incurred Lesaka
brand refresh expenses (treated as a once-off item) and increased intangible asset amortization charges due to the shortening of the
deemed useful lives of certain brand trademark assets in fiscal 2026, and recorded right-of-use lease impairments.
3.
Deleveraging: Approaching Our Medium-Term Capital Structure Target
Our capital structure has continued to strengthen materially over the course of fiscal 2026, building on the debt refinancing
actions in fiscal 2025 and 2026. Net debt to Group Adjusted EBITDA has reduced progressively through the year, from 2.9 times at
the start of the fiscal year to 1.9 times by the end of the fiscal year, achieving our medium term target of 2.0 times or lower. This
deleveraging has been achieved alongside continued investment in growth, including in our lending books, and reflects the combined
benefit of the lower funding costs secured through our fiscal 2025 and 2026 refinancing, the cash generation of the underlying business,
and disciplined capital allocation across the Group. We expect the proposed Bank Zero transaction, once completed, to support a
further step-change in our funding profile by enabling Lesaka to fund lending growth increasingly through customer deposits rather
than wholesale debt, representing further structural improvement to the Group's funding profile and an additional, significant
deleveraging event at the Group level.
4.
Portfolio Rationalization and Exit of Non-Core Activities
During fiscal 2026, we have continued to simplify the Group. In the third quarter, we made the decision to exit our ATM business,
which we had concluded was structurally loss-making and immaterial in scale, recognizing an impairment and once-off costs of
approximately ZAR 27 million in connection with the wind-down. In the same quarter, we sunset SwitchPay Proprietary Limited
(“SwitchPay”), a legacy buy-now-pay-later product, recognizing an impairment of $0.4 million (ZAR 6.5 million). We also
deregistered Masterpayment GmbH (“Masterpayment”), a legacy offshore entity, recognizing a gain of $0.9 million (ZAR 14 million)
on deregistration, and reversed a $1.5 million (ZAR 25 million) receivables allowance following the successful collection of monies
owed in respect of a legacy investment. Earlier in fiscal 2026, we finalized the liquidation of CPS, releasing provisions of ZAR 65
million, and disposed of our remaining stake in Cell-C for proceeds of $3.9 million (ZAR 50 million). These actions collectively
represent the substantial completion of the non-core portfolio rationalization that has been undertaken since fiscal 2023, allowing
management to focus capital and attention on our scalable, digitally-led growth platforms with a balance sheet representative of
present-day Lesaka and no material legacy investments.
5.
Proposed Acquisition of Bank Zero: Regulatory Progress
Our proposed acquisition of Bank Zero Mutual Bank, announced on June 26, 2025, has progressed through key regulatory
milestones during fiscal 2026. In November 2025, the South African Competition Commission recommended approval of the
transaction, and the Competition Tribunal subsequently granted its approval in the second quarter of fiscal 2026, a significant step
forward in the transaction timeline. We continue to engage with the Prudential Authority of the South African Reserve Bank regarding
its final approval, which remains outstanding alongside South African Exchange Control approval. As these remaining regulatory
consents are still being procured, on June 11, 2026 we agreed with the Bank Zero sellers’ representatives to extend the long-stop date
for fulfilment or waiver of remaining conditions precedent from August 6, 2026 to January 31, 2027. We do not believe this extension
s
ignals any impediment to closing; rather, it reflects the ordinary pace of the outstanding Prudential Authority process.
33
Once completed, the transaction is expected to deliver meaningful funding and balance sheet benefits, including a reduction in
gross debt of more than ZAR 1 billion, whereby Lesaka can fund lending growth through Bank Zero, supporting further deleveraging
and improved cash conversion.
Operating Segment Level:
Merchant
We manage our Merchant operations through two distinct channels: Community, which focuses on local, high-growth businesses
acquired through direct, face-to-face sales and rapid conversion cycles; and Corporate, which serves large -scale organizations and
franchises requiring customized, multi-product solutions through a strategic, long-term sales process.
In the second quarter of fiscal 2026, we introduced a refined reporting framework for the Merchant division to better represent the
primary drivers of our revenue and performance. Developed through a comprehensive review of our operational analytics, this
framework aligns our Merchant metrics, specifically active merchant count and blended ARPU with our Consumer division
to provide a holistic view of our ecosystem. We are treating this updated approach as a baseline for future comparisons to ensure
consistent reporting across our channels; as such, this transition may result in non-material inconsistencies with certain legacy metrics.
Our definition of an active merchant is any merchant that has made a voluntary transaction (debit and/or credit) within the last
90 days. Previously, we reported on a point of presence basis, which was more focused on our device estate. This updated methodology
of an active merchant reflects the revenue generating engagement of our entire Merchant base and more accurately tracks our current
and future monetization strategy for the division. ARPU excludes once-off and non-recurring revenue such as hardware and installation
costs as well as revenue from non-South African subsidiaries.
The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related Key
Performance Indicators (“KPI’s ”) are shown below.
2026
2025
2026 vs
2025
Merchant
Active Merchants
131,545
127,588
3%
Merchant ARPU
(1)
1,784
1,884
(5%)
Product Penetration Rate: 2 or more products
46%
46%
0%
Product Penetration Rate: 3 or more products
7%
10%
(29%)
Merchant: Acquiring
Active Merchants
73,714
70,294
5%
Total Payment Volume (“TPV”) (ZAR billions)
43.7
34.5
27%
Merchant: Software
Active Merchants
9,738
9,755
(0%)
Merchant: Cash Management
Active Merchants
4,942
4,837
2%
TPV (ZAR billions)
119.0
114.8
4%
Merchant: Lending
Lending Origination (ZAR millions)
844
847
(0%)
Net Lending Portfolio Outstanding (ZAR millions)
463
402
15%
Merchant: Alternative Digital Products
Active Merchants
101,659
98,222
3%
TPV (ZAR billions)
54.8
41.7
31%
TPV - Prepaid Solutions (ZAR billions)
23.5
20.9
12%
TPV - Supplier Enabled Payments (ZAR billions)
31.2
20.8
50%
Notes:
(1) ARPU is calculated on a revenue per active merchant basis based on a 3-month rolling average for the quarter ended June 30,
2026.
34
Notable developments within Merchant:
Within Merchant Acquiring: Year -on-year comparison of TPV are not meaningful as fiscal 2025 only included Adumo for nine
months, which is in the Corporate channel. In the Community channel it is comparable and TPV attributable to the Community channel
increased to ZAR 15.7 billion representing 15% year-on-year growth. This was driven primarily from the continued strategy to offer
a multi-product offering focused on cash management solutions and ADP, particularly Supplier Enabled Payments, to attract greater
merchant acquiring volumes in this segment.
Within Software: Continued focus on deploying Unity, our cloud-based point-of-sale (POS) software offering to existing and
new merchants. Unity has a lower monthly cost than on-premises solutions, the increase in client numbers was offset by a decrease in
average revenue per user, resulting in core revenue remaining flat. Migration to Unity enables easier integration of our Software and
Acquiring propositions into one holistic bundle. Approximately 17% of our Software base currently use the Unity offering.
Within Cash: Our business is experiencing differing secular trends in its two distinct markets. At the Corporate channel, cash
continues to experience a downward trend of growth as digital payment adoption progressively increases in this sector. At the
Community channel, we continue to see growth for our cash management solutions, with cash TPV growth totaling to 55% year-on
year. The Community channel now accounts for 20% of all processed cash TPV processed. This signals rapid growth among merchants
within this segment aiming to digitize their cash holdings.
Within Lending: Lending originations remained flat year-over-year, primarily reflecting the ongoing product refinement and
distribution strategy for this specific product within the Corporate channel. We experienced a modest increase in aggregate portfolio
duration over the period.
Within ADP: Core to our device placement strategy is the decision to focus on quality business and optimizing our existing fleet.
This can be seen through the TPV growth which is primarily driven by our Supplier Enabled Payment product, delivering 50% year
on-year growth. This enables Community Merchants to digitize their required payments to suppliers at competitive pricing and
introduces them to the Lesaka Merchant ecosystem. Within the Prepaid Solutions product, TPV processed delivered 12% year-on-
year growth. Although we continue to see sustained margin pressures from wholesale providers of airtime, we have seen an offset in
TPV processed for other prepaid products such as electricity and vouchers.
Consumer
Our consumer base includes South African grant beneficiaries and other Lesaka Payouts cardholders.
Our grant beneficiary base includes both permanent and non-permanent grant beneficiaries. As Consumer has evolved, both sub-
categories of consumers are revenue generating and hence the combined consumer base metrics shown below are most appropriate to
measure the performance of the division financially and operationally. Although historically we have shown these metrics separately,
it is maintained that approximately 89% of the active consumer base are permanent grant beneficiaries.
Our definition of an active consumer is any consumer that has made a voluntary transaction (debit and/or credit) within the last
90 days. Consumers who may be charged a monthly banking fee but have not made a voluntary transaction in the last 90 days would
not be considered an active consumer.
The definition of an active consumer reflects the revenue generating engagement of our entire consumer base and more accurately
tracks our current and future monetization strategy for the division. We will continue to show the Lesaka Payouts separately given this
follows a different monetization model.
35
The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related
KPI’s are shown below.
2026
2025
2026 vs
2025
Consumer
Active Consumers (millions)
2.08
1.88
11%
ARPU
(1)
94
82
15%
Product Penetration Rate: 2 or more products
51%
45%
11%
Product Penetration Rate: 3 products
20%
16%
23%
Consumer: Transactional Accounts
Active Consumers (millions)
2.08
1.88
11%
Net Activations (thousands)
202
349
(42%)
Consumer: Lending
Number of Loans Originated (thousands)
1,523
1,299
17%
Lending Origination (ZAR millions)
3,769
2,500
51%
Lending Portfolio Outstanding (ZAR millions)
(2)
1,396
997
40%
Consumer: Insurance
Number of Insurance Policies Written (thousands)
278
215
29%
Active Insurance Policies (thousands)
753
563
34%
Gross Written Premium (ZAR millions)
528
376
41%
Consumer: Lesaka Payouts
Approximate number of active cardholders (thousands)
174
213
(18%)
Approximate load value for the period (ZAR millions)
770
604
27%
Notes:
(1) ARPU is calculated on a revenue per active consumer basis whereby an active consumer can be both a permanent and non
permanent grant. ARPU is a monthly figure based on a 3-month rolling average for the quarter ended June 30, 2026.
(2) Gross loan book, before provisions.
Notable developments within Consumer:
Within Transactional Accounts: Growth in active consumers was driven primarily by continued product and technology
innovation, including Bonngwe (our proprietary Customer Relationship Management (“CRM”) engine). These improvements to sales
consultant and consumer experience have driven higher cross-sell penetration for both our existing base and newly onboarded
consumers. As we grow our distribution footprint, further growth in active consumers has come from product augmentation, an
example being Pusha Manje, our USSD-focused, direct-to-consumer ADP platform, which allows consumers to purchase airtime,
electricity, and other products directly from a mobile phone.
Within Lending: We have continued to see strong growth in our lending products, with credit loss ratios tracking below our risk
appetite. Reflecting the realized loss experience that has consistently come in below provisioning levels, and supported by
enhancements to assessment criteria e.g. affordability, we have adjusted our provisioning from 6.5% to 5.5% of the outstanding lending
portfolio. The revised rate reflects management's current best estimate of expected credit losses and remains subject to regular review
as the book evolves.
Within Insurance: Our insurance product saw continued growth in Gross Written Premiums written which has been driven by
continued adoption of our Bonngwe engine, enabling sales consultants to cross-sell an insurance policy in an efficient manner. We
have launched our open market insurance offering which allows for consumers outside of the Lesaka base to purchase a policy, which
represents a key growth vector for the product offering.
36
Enterprise
Our Enterprise Division primarily consists of our ADP offering (which includes prepaid solutions and bill payments) and the
Utilities offering.
The underlying drivers of performance are primarily based on TPV processed. Individual product related KPI’s are shown below.
2026
2025
2026 vs
2025
Enterprise: ADP
TPV (ZAR billions)
48.0
40.9
17%
Enterprise: Utilities
Active Meters (thousands)
382
345
11%
TPV (ZAR millions)
1,934
771
151%
Notable developments within Enterprise:
Within ADP: We continue to see increased TPV for bill payments driven from increased usage from our existing bank channel
partners, which grew primarily from targeted marketing campaigns as well as newly onboarded channel partners across banking,
fintech and retail. The launch of our “4All” product, a multi-store of value voucher which can be redeemed at 40+ partners, has seen
continued growth in TPV at higher take rates than bill payments, despite still being in early development. We have now migrated 95%
of all other subproducts of ADP TPV offered in Merchant via the Enterprise division, reducing reliance on external partners.
Within Utilities: We delivered results consistent with the stable, recurring nature of the business, underpinned by transaction-
based revenue coupled with continued growth in the number of connected meters and sustained demand for prepaid electricity
vouchers. Year -over-year comparisons for the vertical are not meaningful, as the business was consolidated into our results only from
the third quarter of fiscal 2025 and therefore contributed a partial period in the prior year against a full twelve months in fiscal 2026.
Performance over the period reflected the product’s core strengths of predictable, annuity-like revenue streams and steady volume
growth.
Critical Accounting Policies
Our audited consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management
to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities. As future events and their effects cannot be determined with absolute certainty, the determination of
estimates requires management’s judgment based on a variety of assumptions and other determinants such as historical experience,
current and expected market conditions and certain scientific evaluation techniques. Management believes that the following
accounting policies are critical due to the degree of estimation required and the impact of these policies on the understandi ng of the
results of our operations and financial condition.
Recoverability of Goodwill
A significant component of our growth strategy is to acquire and integrate businesses that complement our existing operations.
The purchase price of an acquired business is allocated to the tangible and intangible assets acquired and liabilities assumed based
upon their estimated fair value at the date of purchase. The difference between the purchase price and the fair value of the net assets
acquired is recorded as goodwill. In determining the fair value of assets acquired and liabilities assumed in a business combination,
we use various recognized valuation methods, including present value modeling. Further, we make assumptions using certain valuation
techniques, including discount rates and timing of future cash flows.
We review the carrying value of goodwill annually (June 30) or more frequently if circumstances indicating impairment have
occurred. For instance, we performed interim impairment testing as of March 31, 2026, related to goodwill allocated to our Switchpay
reporting unit within our Merchant segment as triggering events were identified outside of the annual impairment test date. In
performing this review, we are required to estimate the fair value of goodwill that is implied from a valuation of the reporting unit to
which the goodwill has been allocated after deducting the fair values of all the identifiable assets and liabilities that form part of the
reporting unit. The determination of the fair value of a reporting unit requires us to make significant judgments and estimates. Changes
in these judgements and estimates may impact on the outcome of the impairment test. For instance, the fair value of the Lesaka Payouts
reporting unit included in our Consumer segment exceeded the carrying value of the reporting unit as of June 30, 2026, by 15.8%. If
we had used a weighted average cost of capital (“WACC”) rate that was 2% higher, we would have recorded an impairment of $0.4
million, and if the WACC rate was 2% lower, the headroom would have increased from 15.8% to 45.3%.
37
In determining the fair value of reporting units for fiscal 2026 and fiscal 2025, we considered key judgements related to reporting
unit revenue growth rates, the weighted-average cost of capital applicable to peer and industry comparables of the reporting units and
the forecast period to be used. In determining the fair value of reporting units for fiscal 2024, our key judgements related to reporting
unit revenue growth rates and the weighted-average cost of capital applicable to peer and industry comparables of the reporting units.
We base our estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. In addition, we
make judgments and assumptions in allocating assets and liabilities to each of our reporting units. Refer to Note 10 to our audited
consolidated financial statements for a summary of the key judgements used in our impairment testing.
The results of our impairment tests during fiscal 2026 and 2025 indicated that the fair value of our reporting units exceeded their
carrying values, with the exception of the $0.4 million (related to the SwitchPay reporting unit) and $17.0 million (related to the Lesaka
Cash Management , Lesaka MT, Lesaka Payouts and Lesaka Alternative Digital Products Proprietary Limited (formerly known as
EasyPay Proprietary Limited) (“Lesaka ADP”) reporting units), respectively, of goodwill impaired during fiscal 2026 and 2025, as
discussed in Note 10 to our audited consolidated financial statements. The results of our impairment tests during fiscal 2024 indicated
that the fair value of our reporting units exceeded their carrying values and so did not require impairment.
Intangible Assets Acquired Through Acquisitions
The fair values of the identifiable intangible assets acquired through acquisitions were determined by management using the
purchase method of accounting. We completed the acquisition of Atom Operations Proprietary Limited (“Atom”) and MobileMart
during fiscal 2026 where we identified and recognized intangible assets. We completed the acquisition of Adumo and Utilities during
fiscal 2025 where we identified and recognized intangible assets. We did not identify any significant intangible assets related to the
Lesaka Insights Proprietary Limited (formerly known as Touchsides Proprietary Limited) (“Lesaka Insights”) acquisition in fiscal
2024. We used the relief from royalty method to value identified brands identified in the Adumo acquisition, and the multi-period
excess earnings method to value identified customer relationships and the replacement cost approach to value the identified technology
assets related to Atom, MobileMart, Adumo and Utilities. We have used the relief from royalty method, the multi-period excess
earnings method, the income approach and the cost approach to value other historic acquisition-related intangible assets. In so doing,
we made assumptions regarding expected future revenues and expenses to develop the underlying forecasts, applied contributory asset
charges, WACC rates, and useful lives.
The valuations were based on information available at the time of the acquisition and the expectations and assumptions that were
deemed reasonable by us. No assurance can be given, however, that the underlying assumptions or events associated with such assets
will occur as projected. For these reasons, among others, the actual cash flows may vary from forecasts of future cash flows. To the
extent actual cash flows vary, revisions to the useful life or impairment of intangible assets may be necessary. Management assesses
the useful life of the acquired intangible assets upon initial recognition and revisions to the useful life or impairment of these intangible
assets may be necessary in the future.
For instance, during early calendar 2025, our executive considered the unification of our merchant segments operations and the
realignment of our brands under the master brand “Lesaka”.
We
have identified the steps and timing to realign the affected brands
under the master brand and expect to have complete alignment by February 2027, with certain brands already aligned by December
2025. The change in brands has resulted in a change in the useful lives of certain of our brand and trademark intangible assets which
has resulted in an increase (excluding the impact on “Adumo” and “GAAP” brands) in amortization expense of $6.3 million and $2.6
million during the years ended June 30, 2026 and 2025, respectively, compared with the comparative periods assuming the original
useful lives. Furthermore, we recorded an impairment loss of $1.8 million related to Lesaka MT intangible assets which were fully
impaired during the year ended June 30, 2025. Refer to Note 10 of our audited consolidated financial statements for additional
information.
Revenue recognition – principal versus agent considerations
We generate revenue from the provision of transaction-processing services through our various platforms and service offerings.
We use these platforms to (a) sell prepaid airtime vouchers that are held as inventory and (b) distribute ADP, including prepaid airtime
vouchers (which we do not hold as inventory), prepaid electricity, gaming vouchers, and other services, to end consumers through our
platforms. The determination of whether we act as a principal or as an agent when providing these services using guidance contained
in
Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers
judgement. When we are the principal in a transaction, revenue is reported on a gross basis. When we are an agent in a transaction,
revenue is recognized based on the amount that we are contractually entitled to receive for performing the distribution service on
behalf of our customers.
38
Finance Loans Receivable and Allowance for Credit Losses
Merchant lending
The allowance for credit losses related to Merchant finance loans receivables is calculated by multiplying the expected write-off
rate for doubtful or legal debt with the total actual receivables in default plus multiplying the expected loss rate with the month-end
outstanding lending book. Our risk management procedures include adhering to our proprietary lending criteria which uses an online-
system loan application process, obtaining necessary customer transaction-history data and credit bureau checks. We consider 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.
We use historical default experience over the lifetime of loans generated thus far in order to calculate an expected loss rate for
the lending book. In addition, management determines the expected write-off rate for doubtful or legal debt based on historical recovery
trends for defaulted receivables. The allowance for credit losses related to these merchant finance loans receivables is calculated by
multiplying the expected write-off rate for doubtful or legal debt with the total actual receivables in default plus multiplying the lifetime
loss rate with the month-end outstanding lending book. The expected loss rate as of June 30, 2026 and June 30, 2025, was 3.21% and
1.14%, respectively. The performing component (that is, outstanding loan payments 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 92%, 7% and 1%, respectively, of the outstanding lending book as of
June 30, 2026. The performing component, under-performing component and non-performing component of the book represents
approximately 95%, 4% and 1%, respectively, of the outstanding lending book as of June 30, 2025.
Consumer microlending
The allowance for credit losses related to Consumer finance loans receivables is calculated by multiplying the expected loss rate
with the month-end outstanding lending book , excluding upfront initiation fees. Loans to customers have a tenor of up to nine months,
with the majority of loans originated having a tenor of six months. 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. We consider 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. While the allowance for credit losses is primarily determined utilizing a provisioning model, there is still an
element of judgment required to assess the ultimate recoverability of these finance loan receivables, including ongoing evaluation of
the creditworthiness of each customer.
We have operated this lending book for more than five years and use historical default experience over the lifetime of loans in
order to calculate a expected loss rate for the lending book. We analyze 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. The allowance for credit losses related to these microlending finance loans receivables is calculated by multiplying the expected
loss rate with the month end outstanding lending book, excluding upfront initiation fees. The expected loss rate as of June 30, 2026
and 2025, was 5.50% and 6.50%, respectively. The performing component (that is, outstanding loan payments not in arrears) of the
book exceeds more than 99.0% and 98.0% of outstanding lending book as of June 30, 2026 and 2025, respectively.
Recent Accounting Pronouncements
Recent accounting pronouncements adopted
Refer to Note 2 of our audited consolidated financial statements for a full description of recent accounting pronouncements,
including the dates of adoption and effects on financial condition, results of operations and cash flows.
Recent accounting pronouncements not yet adopted as of June 30, 2026
Refer to Note 2 of our audited consolidated financial statements for a full description of recent accounting pronouncements not
yet adopted as of June 30, 2026, including the expected dates of adoption and effects on financial condition, results of operations and
cash flows.
39
Currency Exchange Rate Information
Actual exchange rates
The actual exchange rates for and at the end of the periods presented were as follows:
Table 1
June 30,
2026
2025
2024
ZAR : $ average exchange rate
16.9074
18.1644
18.7070
Highest ZAR : $ rate during period
18.1650
19.6350
19.4568
Lowest ZAR : $ rate during period
15.7392
17.1144
17.6278
Rate at end of period
16.4072
17.7554
18.1808
Translation Exchange Rates
We have translated the results of operations and operating segment information for the year ended June 30, 2026, 2025, and
2024, provided in the tables below using the actual average exchange rates per month between the USD and ZAR. Thus, the average
rates used to translate this data for the years ended June 30, 2026, 2025 and 2024, vary slightly from the averages shown in the table
above.
40
Results of operations
The discussion of our consolidated overall results of operations is based on amounts as reflected in our audited consolidated
financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in U.S. dollars, as
presented in the audited consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the
entities which contribute the majority of our results and is the currency in which the majority of our transactions are initially incurred
and measured. Presentation of our reported results in ZAR is a non-GAAP measure. Due to the significant impact of currency
fluctuations between the U.S. dollar and ZAR on our reported results and because we use the U.S. dollar as our reporting currency,
we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to understand the changes in
the underlying trends of our business.
Our operating segment revenue presented in “—Results of operations by operating segment” represents total revenue per
operating segment before intercompany eliminations. A reconciliation between total operating segment revenue and revenue, as well
as the reconciliation between our segment performance measure and net income (loss) before tax expense (benefit), is presented in our
audited consolidated financial statements in Note 21 to those statements. Our chief operating decision maker is our Executive Chairman
and he 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”) for each operating segment. We do not allocate
once-off items (as defined below), stock-based compensation charges, impairment of other intangible assets, other items (including
gains or losses on disposal of investments, fair value adjustments to equity securities), interest income, interest expense, income tax
expense or earnings from equity-accounted investments to our reportable segments. We have included an intercompany interest
expense in our Consumer Segment Adjusted EBITDA for fiscal 2025. Once-off items represent non-recurring expense items, including
costs related to acquisitions and transactions consummated or ultimately not pursued. The Stock-based compensation adjustments
reflect stock-based compensation expense and are both excluded from the calculation of Segment Adjusted EBITDA and are therefore
reported as reconciling items to reconcile the reportable segments’ Segment Adjusted EBITDA to our income (loss) before income
tax expense.
Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of
Operations—Use of Non-GAAP Measures” below.
In fiscal 2026 we closed the acquisitions of Atom and MobileMart and have integrated their businesses into ours from December
2025 and February 2026, respectively. In fiscal 2025 we closed the acquisitions of Adumo and Utilities and have integrated their
businesses into ours. Our fiscal 2025 financial results include Adumo from October 1, 2024 and Utilities from March 3, 2025, and do
not include Atom and MobileMart. Refer also to Note 3 to the audited consolidated financial statements for additional information
regarding these transactions. Atom, MobileMart, Adumo and Utilities are not included in our financial results for fiscal 2024.
We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Merchant (2)
Consumer and (3) Enterprise. In addition, corporate activities that are impracticable to allocate directly to the operating segments, as
well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are included in Eliminations.
Fiscal 2026 Compared to Fiscal 2025
The following factors had a significant influence on our results of operations during fiscal 2026 as compared with the same period
in the prior year:
●
Higher revenue:
Our revenues increased by 9.4% in U.S. dollar and 1.7% in ZAR, primarily due to the inclusion of Utilities
and MobileMart, as well as higher transaction, insurance and lending revenues in Consumer, which was partially offset by
lower prepaid airtime revenue;
●
Operating income increase:
Operating income increased primarily due to strong performance by Consumer and the
contribution from Utilities in Enterprise, which was partially offset by an increase in amortization of acquisition-related
intangible assets;
●
Lower net interest charge:
349.5 million) primarily due to a lower interest expense following lower interest rates and the exclusion of interest expense
incurred under our borrowing arrangements related to our Consumer lending book in fiscal 2026 compared with 2025. On a
comparable basis the equivalent interest expense related to the Consumer lending book for fiscal 2025 was included in interest
expense from July 2024 to February 2025; and
●
Foreign exchange movements:
period, which positively impacted our U.S. dollar reported results.
41
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:
Table 2
In U.S. Dollars
Year ended June 30,
2026
2025
$ %
$ ’000
$ ’000
change
Revenue
721,554
659,701
9%
Cost of goods sold, IT processing, servicing and support
(A)
490,834
487,186
1%
Selling, general and administration
(A)(1)
166,269
131,738
26%
Depreciation and amortization
47,346
33,721
40%
Impairment loss
4,035
18,863
(79%)
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and
certain compensation costs
389
16,159
(98%)
Operating income (loss)
12,681
(27,966)
nm
Change in fair value of equity securities
2,593
(59,828)
nm
Loss on impairment or disposal of equity-accounted investment
584
161
263%
Reversal of allowance for doubtful loan receivable
1,500
-
nm
Loss on disposal of equity securities
730
-
nm
Other income
3,883
-
nm
Interest income
2,889
2,596
11%
Interest expense
(A)
18,506
21,824
(15%)
Income (Loss) before income tax expense (benefit)
3,726
(107,183)
nm
Income tax expense (benefit)
(A)
1,429
(15,982)
nm
Net income (loss) before earnings from equity-accounted investments
2,297
(91,201)
nm
Earnings from equity-accounted investments
215
114
89%
Net income (loss)
2,512
(91,087)
nm
Add net loss attributable to non-controlling interest
246
130
89%
Net income (loss) attributable to us
2,758
(90,957)
nm
(A) In order to correct the errors discussed in Note 1 to the consolidated statement of operations, Cost of goods sold, IT
processing, servicing and support increased by $0.6 million, Selling, general and administration expense increased by $0.2 million,
Operating income decreased by $0.9 million, Interest expense increased by $0.4 million, income tax expense (benefit) decreased by
$2.2 million, and the subtotal captions from Income (Loss) before earnings (loss) from equity-accounted investments to Net income
(loss) attributable to Lesaka decreased by $3.4 million for fiscal 2025 .
(1) Selling, general and administration includes allowance for credit losses.
42
Table 3
In South African Rand
Year ended June 30,
2026
2025
ZAR %
ZAR ’000
ZAR ’000
change
Revenue
12,180,962
11,980,399
2%
Cost of goods sold, IT processing, servicing and support
(A)
8,289,867
8,845,530
(6%)
Selling, general and administration
(A)(1)
2,806,221
2,392,857
17%
Depreciation and amortization
802,598
612,298
31%
Impairment loss
67,116
334,929
(80%)
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and
certain compensation costs
6,664
291,358
(98%)
Operating income (loss)
208,496
(496,573)
nm
Change in fair value of equity securities
43,957
(1,089,871)
nm
Loss on impairment or disposal of equity-accounted investment
10,342
2,886
258%
Reversal of allowance for doubtful loan receivable
25,132
-
nm
Loss on disposal of equity securities
12,286
-
nm
Other income
65,353
-
nm
Interest income
48,621
47,108
3%
Interest expense
(A)
313,258
396,649
(21%)
Income (Loss) before income tax expense (benefit)
55,673
(1,938,871)
nm
Income tax expense (benefit)
(A)
23,583
(289,008)
nm
Net income (loss) before earnings from equity-accounted investments
32,090
(1,649,863)
nm
Earnings from equity-accounted investments
3,593
2,035
77%
Net income (loss)
35,683
(1,647,828)
nm
Add net loss attributable to non-controlling interest
4,155
2,307
80%
Net income (loss) attributable to us
39,838
(1,645,521)
nm
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations, Cost of goods sold, IT processing,
servicing and support increased by ZAR 11.6 million, Selling, general and administration expense increased by ZAR 4.1 million,
Operating income decreased by ZAR 15.7 million, Interest expense increased by ZAR 6.8 million, income tax expense (benefit)
decreased by ZAR 39.3 million, and the subtotal captions from Income (Loss) before earnings (loss) from equity-accounted
investments to Net income (loss) attributable to Lesaka decreased by ZAR 61.7 million for fiscal 2025.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $61.9 million (ZAR 0.2 billion) or 9.4% (in ZAR, 1.7%). The increase was primarily due to the inclusion
of Utilities and MobileMart, the impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our
issuing business, and an increase in insurance premiums collected and lending revenues (including interest) following higher loan
originations, which was partially offset by the decrease in the volume of prepaid airtime sold. Refer to discussion above at “—
Developments during Fiscal 2026” for a description of key trends impacting our revenue this fiscal year.
Cost of goods sold, IT processing, servicing and support increased by $3.6 million (or 0.7%) and in ZAR decreased by ZAR
0.6 billion (or 6.3%). The decrease in ZAR is primarily due to the decrease in the prepaid airtime costs, which was partially offset by
an increase in lending related expenditures (including interest expense), higher insurance-related claims and third party transaction
fees and the inclusion of Utilities and MobileMart.
Selling, general and administration expenses increased by $34.5 million (ZAR 413.4 million), or 26.2% (in ZAR, 17.3%). The
increase was primarily due to the inclusion of Adumo and Utilities; higher marketing costs related to the Lesaka rebrand, an increase
in the allowance for credit losses as a result of higher lending activities by Consumer and Merchant, higher consulting fees, and the
year over-year impact of inflationary increases on certain expenses, which was partially offset by lower stock-based compensation
charges.
Depreciation and amortization expense increased by $13.63 million (ZAR 190.3 million), or 40.4% (in ZAR, 31.1%). The
increase was due to the change to a shorter useful life for certain of our brand and trademark intangible assets (refer to Note 10), the
inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Adumo and Utilities
acquisitions.
43
Impairment loss for fiscal 2026 includes an impairment loss of $2.6 million (ZAR 43.6 million) related to right-of-use assets and
$1.0 million (ZAR 16.5 million) related to leasehold improvements recorded in property, plant and equipment for our existing
operating lease arrangements as certain of our leased facilities will no longer be utilized as originally intended as a result of the planned
transition to our new corporate head office, an impairment loss of $0.7 million (ZAR 11.5 million) related to ATMs recorded in
property, plant and equipment as a result of the exit of the ATM business, and an impairment loss of $0.4 million (ZAR 6.5 million)
related to goodwill allocated to our SwitchPay reporting unit within the Merchant segment. Refer to Note 8 and Note 10 of our audited
consolidated financial statements for additional information regarding these impairment losses.
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and certain compensation costs includes fees paid to
external service providers associated with legal and advisory services procured to close the Adumo transaction on October 1, 2024,
and the Utilities transaction in March 2025, as well as post-combination compensation charges recognized related to the Utilities
acquisition of $13.6 million (ZAR 245.7 million) and decreased primarily due to these post-combination compensation charges
expensed in fiscal 2025. This caption also includes transaction costs related to the proposed acquisition of Bank Zero. Refer to Note 3
to our audited consolidated financial statements for additional information.
Our operating income (loss) margin in fiscal 2026 and 2025 was 1.8% and (4.2%), respectively.
We
discuss the components of
operating loss margin under “—Results of operations by operating segment.”
We
recorded an increase in the fair value of Cell C of $3.0 million (ZAR 50 million) during fiscal 2026 (refer to Note 6 for
additional information), partially offset by a non-cash change in fair value of equity securities of $0.4 million.
We
recorded a non-
cash change in fair value of equity securities of $59.8 million during fiscal 2025 related to a fair value adjustment loss related to
MobiKwik.
We
recently entered into discussions with Vantage Africa Limited (“VantagePay” ) regarding steps to recover $1.5 million
outstanding from them.
We
believe that there is sufficient evidence to support the recoverability of the amount due from VantagePay
and recorded a reversal of the allowance for credit losses of $1.5 million previously recognized during the year ended June 30, 2026.
Refer to Note 4 for additional information.
We
recorded a loss of $0.7 million (ZAR 12.3 million) related to the disposal of Humble Software Proprietary Limited
(“Humble”) during the year ended June 30, 2026. Refer to Note 3 for additional information.
In December 2025, we determined that the liquidation of CPS is at an advanced stage and released an accrual raised at the time
of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income.
Interest on surplus cash increased to $2.9 million (ZAR 48.6 million) from $2.6 million (ZAR 47.1 million), due to the inclusion
of Adumo and increased cash balances, which was partially offset by lower interest rates.
Interest expense decreased to $18.5 million (ZAR 313.3 million) from $21.8 million (ZAR 396.6 million). The decrease was
primarily due to lower interest rates and the partial exclusion of interest expense incurred under our borrowing arrangements related
to our Consumer lending book in fiscal 2026 compared with fiscal 2025. On a comparable basis the equivalent interest expense related
to the Consumer lending book for fiscal 2025 was included in interest expense from July 2024 to February 2025.
Fiscal 2026 income tax expense was $1.4 million (ZAR 23.6 million) compared to an income tax benefit of $16.0 million (ZAR
289.0 million) in fiscal 2025. Our effective tax rate for fiscal 2026 was impacted by the tax expense recorded by our profitable South
African operations, non-taxable income (primarily related to the disposal of Cell C and other income) and non-deductible expenses
(including transaction-related expenditures and the goodwill impairment). The income tax expense was also impacted by a higher
deferred tax benefit as a result of the reduction in the useful lives of certain of our brand and trademark intangible assets which has
resulted in an increase in amortization expense during fiscal 2026 and the release of $12.3 million related to certain valuation
allowances created in prior years following an improvement in profitability of certain of the Company’s subsidiaries, which was
partially offset by the recognition of a valuation allowance related to an operating loss carryforward and other deferred tax assets
totalling $9.9 million following a determination by the management, after considering both positive and negative evidence, that these
deferred tax assets would not be realized in future years.
Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value adjustment to our equity
securities, the reversal of $12.8 million related to certain valuation allowances created in prior years following (i) an improvement in
profitability of certain of our subsidiaries and (ii) a change in judgment on the need for a valuation allowance of $11.4 million related
to an entity which we believe has achieved sustainable profitability, the tax expense recorded by our profitable South African
operations, a deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses (in transaction-
related expenses), the on-going losses incurred by certain of our South African businesses and the associated valuation allowances
created related to the deferred tax assets recognized regarding net operating losses incurred by these entities. Our income tax benefit
for fiscal 2025 also includes a $2.2 million income tax expense related to the correction of the error discussed in Note 1.
44
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities to Group Adjusted EBITDA are illustrated below:
Table 4
In U.S. Dollars
Year ended June 30,
2026
% of
2025
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
509,335
71%
526,600
80%
(3%)
Consumer
142,631
20%
96,008
15%
49%
Enterprise
74,730
10%
42,554
6%
76%
Subtotal: Operating segments
726,696
101%
665,162
101%
9%
Eliminations
(5,142)
(1%)
(5,461)
(1%)
(6%)
Total consolidated revenue
721,554
100%
659,701
100%
9%
Group Adjusted EBITDA:
Merchant
(A)(1)
35,533
47%
35,329
70%
1%
Consumer
(1)
46,193
61%
23,949
48%
93%
Enterprise
(1)
8,119
11%
1,287
3%
531%
Group costs
(14,103)
(19%)
(10,743)
(21%)
31%
Group Adjusted EBITDA (non-GAAP)
(2)
75,742
100%
49,822
100%
52%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations, Merchant Segment Adjusted
EBITDA and Group Adjusted EBITDA decreased by $0.9 million for fiscal 2025.
(1) Segment Adjusted EBITDA for fiscal 2026, includes reorganization and retrenchment costs for Merchant of $0.8 million,
Enterprise of $0.1 million, and Consumer of $0.4 million. Segment Adjusted EBITDA for fiscal 2025, includes reorganization and
retrenchment costs for Merchant of $0.8 million, Enterprise of $0.8 million, and Consumer of $0.1 million.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 5
In South African Rand
Year ended June 30,
2026
% of
2025
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
8,609,898
71%
9,562,360
80%
(10%)
Consumer
2,401,720
20%
1,744,429
15%
38%
Enterprise
1,255,617
10%
773,057
6%
62%
Subtotal: Operating segments
12,267,235
101%
12,079,846
101%
2%
Eliminations
(86,273)
(1%)
(99,447)
(1%)
(13%)
Total consolidated revenue
12,180,962
100%
11,980,399
100%
2%
Group Adjusted EBITDA:
Merchant
(A)(1)
601,573
47%
641,509
70%
(6%)
Consumer
(1)
775,027
61%
435,193
48%
78%
Enterprise
(1)
136,164
11%
23,724
3%
474%
Group costs
(238,176)
(19%)
(193,853)
(21%)
23%
Group Adjusted EBITDA (non-GAAP)
(2)
1,274,588
100%
906,573
100%
41%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations, Merchant Segment Adjusted
EBITDA and Group Adjusted EBITDA decreased by ZAR 15.7 million for fiscal 2025.
(1) Segment Adjusted EBITDA for fiscal 2026, includes reorganization and retrenchment costs for Merchant of ZAR 14.0
million, Enterprise of ZAR 1.1 million, and Consumer of ZAR 7.1 million. Segment Adjusted EBITDA for fiscal 2025, includes
reorganization and retrenchment costs for Merchant of ZAR 15.7 million, Enterprise ZAR 13.6 million, and Consumer of ZAR 1.5
million.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
45
Merchant
Segment revenue decreased due to fewer prepaid airtime sales which was partially offset by the inclusion of Adumo, a higher
volume of ADP provided (Pinless Airtime and gaming). In ZAR, the decrease in Segment Adjusted EBITDA is primarily due to higher
operating expenses incurred, which was partially offset by the inclusion of Adumo for the entire period compared with the prior period.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for fiscal 2026 and 2025
was 7.0% and 6.7%, respectively.
Consumer
Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, the
impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our issuing business, insurance
premiums collected, lending revenues following an increase in loan originations. This increase in revenue has translated into improved
profitability, which was partially offset by a higher allowance for credit losses following an increase in loan originations during the
year, higher insurance-related claims, interest expense (of ZAR 88.5 million) incurred to fund our lending book and the year-over-
year impact of inflationary increases on certain expenses.
Our Segment Adjusted EBITDA margin for fiscal 2026 and 2025 was 32.4% and 24.9%, respectively.
Enterprise
Segment revenue increased primarily due to the inclusion of Utilities and MobileMart and organic revenue growth due to new
ADP customers acquired. In ZAR, the significant increase in Segment Adjusted EBITDA is primarily due to the inclusion of Utilities.
Our Segment Adjusted EBITDA margin for fiscal 2026 and 2025 was 10.9% and 3.0%, respectively.
Group costs
Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and costs
related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes; non-employee directors’ fees;
legal fees; group and US-listed related audit fees; and directors’ and officers’ insurance premiums.
Our group costs for fiscal 2026 increased compared with the prior period due to higher employee related costs, consulting fees
and compliance related expenditure.
Fiscal 2025 Compared to Fiscal 2024
The following factors had a significant influence on our results of operations during fiscal 2025 as compared with the same period
in the prior year:
●
Higher revenue:
Our revenues increased by 16.9% in U.S. dollar and 13.5% in ZAR, primarily due to the inclusion of Adumo
and Utilities, an increase in value-added services activity in Merchant, higher Pinned Airtime sales, as well as higher
transaction, insurance and lending revenues in Consumer, which was partially offset by a lower contribution from our legacy
Enterprise businesses;
●
Operating income increase, before transaction costs:
Operating income, before transaction and related costs, increased
significantly primarily due to contributions from Adumo from October 1, 2024 and Utilities from March 3, 2025, which were
partially offset by increased costs and an increase in amortization of acquisition-related intangible assets related to the
acquisition of Adumo and Utilities;
●
Non-cash fair value adjustment related to equity securities:
We recorded a non -cash fair value loss of $59.8 million during
fiscal 2025 related to the disposal of our investment in MobiKwik;
●
Higher net interest charge:
315.6 million) primarily higher overall borrowings, which was partially offset by an increase in interest received as a result
of the inclusion of Adumo; and
●
Foreign exchange movements:
period, which positively impacted our U.S. dollar reported results.
46
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:
Table 6
In U.S. Dollars
Year ended June 30,
2025
2024
$ %
$ ’000
$ ’000
change
Revenue
659,701
564,222
17%
Cost of goods sold, IT processing, servicing and support
(A)
487,186
443,293
10%
Selling, general and administration
(A)
131,738
92,185
43%
Depreciation and amortization
33,721
23,665
42%
Impairment loss
18,863
-
nm
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and
certain compensation costs
16,159
2,325
595%
Operating (loss) income
(27,966)
2,754
nm
Change in fair value of equity securities
(59,828)
-
nm
Reversal of allowance for doubtful loan receivable
-
250
nm
Loss on disposal of equity-accounted investment
161
-
nm
Interest income
2,596
2,294
13%
Interest expense
(A)
21,824
19,171
14%
Loss before income tax (benefit) expense
(107,183)
(13,873)
673%
Income tax (benefit) expense
(A)
(15,982)
3,363
nm
Net loss before earnings (loss) from equity-accounted investments
(91,201)
(17,236)
429%
Earnings (loss) from equity-accounted investments
114
(1,279)
nm
Net loss
(91,087)
(18,515)
392%
Add net loss attributable to non-controlling interest
130
-
nm
Net loss attributable to us
(90,957)
(18,515)
391%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations for fiscal 2025 and 2024, Cost
of goods sold, IT processing, servicing and support increased by $0.6 million and $0.6 million, respectively, Selling, general and
administration expense increased by $0.2 million and $0.2 million, respectively, Operating income decreased by $0.9 million and $0.8
million, respectively, Interest expense increased by $0.4 million and $0.2 million, respectively, for fiscal 2025, income tax expense
(benefit) decreased by $2.2 million, and the subtotal captions for fiscal 2025 and 2024 from Income (Loss) before earnings (loss) from
equity-accounted investments to Net income (loss) attributable to Lesaka decreased by $3.4 million and $1.1 million, respectively.
(1) Selling, general and administration includes allowance for credit losses.
47
Table 7
In South African Rand
(US GAAP)
Year ended June 30,
2025
2024
ZAR %
ZAR ’000
ZAR ’000
change
Revenue
11,980,399
10,553,233
14%
Cost of goods sold, IT processing, servicing and support
(A)(A)
8,845,530
8,291,826
7%
Selling, general and administration
(A)
2,392,857
1,724,039
39%
Depreciation and amortization
612,298
442,570
38%
Impairment loss
334,929
-
nm
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and
certain compensation costs
291,358
43,154
575%
Operating (loss) income
(496,573)
51,644
nm
Change in fair value of equity securities
(1,089,871)
-
nm
Reversal of allowance for doubtful loan receivable
-
4,741
nm
Loss on disposal of equity-accounted investment
2,886
-
nm
Interest income
47,108
42,896
10%
Interest expense
(A)
396,649
358,510
11%
Net loss before income tax (benefit) expense
(1,938,871)
(259,229)
648%
Income tax (benefit) expense
(A)
(289,008)
62,616
nm
Net loss before earnings (loss) from equity-accounted investments
(1,649,863)
(321,845)
413%
Earnings (loss) from equity-accounted investments
2,035
(24,298)
nm
Net loss
(1,647,828)
(346,143)
376%
Add net loss attributable to non-controlling interest
2,307
-
nm
Net loss attributable to us
(1,645,521)
(346,143)
375%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations for fiscal 2025 and 2024, Cost of
goods sold, IT processing, servicing and support increased by ZAR 11.6 million and ZAR 8.8 million, respectively , Selling, general
and administration expense increased by ZAR 4.1 million and ZAR 3.1 million, respectively, Operating income decreased by ZAR
15.7 million and ZAR 11.9 million, respectively, Interest expense increased by ZAR 6.8 million and ZAR 6.8 million, respectively,
for fiscal 2025, income tax expense (benefit) decreased by ZAR 39.3 million, and the subtotal captions for fiscal 2025 and 2024 from
Income (Loss) before earnings (loss) from equity-accounted investments to Net income (loss) attributable to Lesaka decreased by ZAR
61.7 million and ZAR 22.4 million, respectively.
(1) Selling, general and administration includes allowance for credit losses.
Revenue increased by $95.5 million (ZAR 1.4 billion), or 16.9% (in ZAR, 13.5%). The increase in ZAR was primarily due to,
the inclusion of Adumo, an increase in the volume of value-added services provided (Pinless Airtime and gaming), an increase in
Pinned Airtime sales, an increase in certain issuing fee base prices and transaction activity in our issuing business, and an increase in
insurance premiums collected and lending revenues following higher loan originations.
Cost of goods sold, IT processing, servicing and support increased by $43.9 million (ZAR 0.6 billion), or 9.9% (in ZAR, 6.7%),
primarily due to the inclusion of Adumo, higher commissions paid related to ADP revenue generated, and higher insurance-related
claims and third-party transaction fees, which was partially offset by the decrease in Pinned Airtime sales.
Selling, general and administration expenses increased by $39.6 million (ZAR 668.8 million), or 42.9% (in ZAR, 38.8%). The
increase was primarily due to the inclusion of Adumo; higher employee-related expenses (including annual salary increases); higher
stock-based compensation charges, consulting fees and audit fees; and the year-over-year impact of inflationary increases on certain
expenses.
Depreciation and amortization expense increased by $10.06 million (ZAR 169.7 million ), or 42.5% (in ZAR, 38.4%). The
increase was due to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to
the Adumo and Utilities acquisitions and an increase in depreciation expense related to additional POS devices deployed.
During fiscal 2025, we recorded an impairment loss which includes an impairment of goodwill of $17.0 million related to the
impairment of goodwill allocated to each of Merchant, Consumer and Enterprise as well as an impairment of intangible assets of $1.8
million. Refer to Note 10 of our audited consolidated financial statements for additional information regarding these impairment losses.
48
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and certain compensation costs includes fees paid to
external service providers associated with legal and advisory services procured to close the Adumo transaction on October 1, 2024,
and the Utilities transaction in March 2025, as well as post-combination compensation charges recognized related to the Utilities
acquisition of $13.6 million (ZAR 245.7 million) and increased primarily due to these post-combination compensation charges. This
caption also includes transaction costs related to the proposed acquisition of Bank Zero. Refer to Note 3 to our audited consolidated
financial statements for additional information.
Our operating (loss) income margin in fiscal 2025 and 2024 was (4.2%) and 0.5%, respectively.
We
discuss the components of
operating loss margin under “—Results of operations by operating segment.”
The change in fair value of equity securities of $59.8 million during fiscal 2025 represents a non-cash fair value adjustment loss
related to MobiKwik. We did not record any changes in the fair value of equity interests in MobiKwik during the fiscal 2024, or any
fair value adjustments for Cell C during fiscal 2025 or 2024, respectively. We carried our investment in Cell C at $0 (zero) as of June
30, 2025.
Interest on surplus cash increased to $2.6 million (ZAR 47.1 million) from $2.3 million (ZAR 42.9 million), primarily due to the
inclusion of Adumo and higher overall average cash balances on deposit during fiscal 2025 compared with 2024.
Interest expense increased to $21.8 million (ZAR 396.6 million) from $19.2 million (ZAR 358.5 million). In ZAR, the increase
was primarily as a result of higher overall borrowings during fiscal 2025 compared with the comparable period in the prior quarter,
which was partially offset by lower overall interest rates.
Fiscal 2025 income tax benefit was $16.0 million (ZAR 289.0 million) compared to an income tax expense of $(3.4) million
(ZAR (62.6) million) in fiscal 2024. Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value
adjustment to our equity securities, the reversal of $12.8 million related to certain valuation allowances created in prior years following
(i) an improvement in profitability of certain of our subsidiaries and (ii) a change in judgment on the need for a valuation allowance
of $11.4 million related to an entity which we believe has achieved sustainable profitability, the tax expense recorded by our profitable
South African operations, a deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses
(in transaction-related expenses), the on-going losses incurred by certain of our South African businesses and the associated valuation
allowances created related to the deferred tax assets recognized regarding net operating losses incurred by these entities. Our income
tax benefit for fiscal 2025 also includes a $2.2 million income tax expense related to the correction of the error discussed in Note 1.
Our effective tax rate for fiscal 2024 was impacted by the tax expense recorded by our profitable South African operations, a
deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses, the on-going losses incurred
by certain of our South African businesses and the associated valuation allowances created related to the deferred tax assets recognized
regarding net operating losses incurred by these entities.
Results of operations by operating segment and group costs
The composition of revenue and the contributions of our business activities to Group Adjusted EBITDA are illustrated below:
Table 8
In U.S. Dollars
Year ended June 30,
2025
% of
2024
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
526,600
80%
459,790
81%
15%
Consumer
96,008
15%
69,211
12%
39%
Enterprise
42,554
6%
46,897
8%
(9%)
Subtotal: Operating segments
665,162
101%
575,898
101%
15%
Eliminations
(5,461)
(1%)
(11,676)
(1%)
(53%)
Total consolidated revenue
659,701
100%
564,222
100%
17%
Group Adjusted EBITDA:
Merchant
(A)(1)
35,329
70%
28,334
78%
25%
Consumer
(1)
23,949
48%
12,679
35%
89%
Enterprise
(1)
1,287
3%
2,931
8%
(56%)
Group costs
(10,743)
(21%)
(7,844)
(21%)
37%
Group Adjusted EBITDA (non-GAAP)
(2)
49,822
100%
36,100
100%
38%
(
A) In order to correct the error discussed in Note 1 to the consolidated statement of operations, Merchant Segment Adjusted
49
EBITDA and Group Adjusted EBITDA for fiscal 2025 and fiscal 2024 decreased by $0.9 million and $0.8 million, respectively.
(1) Segment Adjusted EBITDA for fiscal 2025, includes reorganization and retrenchment costs for Merchant of $0.8 million,
Enterprise of $0.8 million, and Consumer of $0.1 million. Segment Adjusted EBITDA for fiscal 2024, includes retrenchment costs for
Merchant $0.3 million and Consumer of $0.2 million.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Table 9
In South African Rand
Year ended June 30,
2025
% of
2024
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
9,562,360
80%
8,599,450
81%
11%
Consumer
1,744,429
15%
1,294,632
12%
35%
Enterprise
773,057
6%
877,317
8%
(12%)
Subtotal: Operating segments
12,079,846
101%
10,771,399
101%
12%
Eliminations
(99,447)
(1%)
(218,166)
(1%)
(54%)
Total consolidated revenue
11,980,399
100%
10,553,233
100%
14%
Group Adjusted EBITDA:
Merchant
(A)(1)
641,509
70%
529,861
78%
21%
Consumer
(1)
435,193
48%
237,362
35%
83%
Enterprise
(1)
23,724
3%
54,924
8%
(57%)
Group costs
(193,853)
(21%)
(146,815)
(21%)
32%
Group Adjusted EBITDA (non-GAAP)
(2)
906,573
100%
675,332
100%
34%
(A) In order to correct the error discussed in Note 1 to the consolidated statement of operations, Merchant Segment Adjusted
EBITDA and Group Adjusted EBITDA for fiscal 2025 and fiscal 2024 decreased by ZAR 15.7 million and ZAR 11.9 million,
respectively.
(1) Segment Adjusted EBITDA for fiscal 2025, includes reorganization and retrenchment costs for Merchant of ZAR 15.7
million, Enterprise ZAR 13.6 million, and Consumer of ZAR 1.5 million. Segment Adjusted EBITDA for fiscal 2024, includes
retrenchment costs for Merchant of ZAR 4.9 million and Consumer of ZAR 3.5 million.
(2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non-
GAAP Measures”.
Merchant
Segment revenue primarily increased due to the inclusion of Adumo, and a higher volume of ADP provided (Pinless Airtime and
gaming) and an increase in fewer Pinned Airtime sales. In ZAR, the increase in Segment Adjusted EBITDA is primarily due to the
inclusion of Adumo, which was partially offset by higher operating expenses incurred, including employment-related expenditures, to
expand our offering, an increase in the allowance for credit losses following higher loan originations and reorganization and
retrenchment costs incurred during fiscal 2025.
Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for fiscal 2025 and 2024
was 6.7% and 6.2%, respectively.
Consumer
Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, an
increase in certain issuing fee base prices and transaction activity in our issuing business, insurance premiums collected, lending
revenues following an increase in loan originations and the inclusion of Adumo. This increase in revenue has translated into improved
profitability, which was partially offset by a higher allowance for credit losses following an increase in loan originations during fiscal
2025, higher insurance-related claims, interest expense (of ZAR 61.4 million) incurred to fund our lending book, higher computer
software license costs, and the year-over-year impact of inflationary increases on certain expenses. We have included an intercompany
interest expense in our Consumer Segment Adjusted EBITDA for fiscal 2025 compared with fiscal 2024.
Our Segment Adjusted EBITDA margin for fiscal 2025 and 2024 was 24.9% and 18.3%, respectively.
50
Enterprise
Segment revenue decreased primarily due to fewer ad hoc hardware sales as well as lower revenue generated from the sale of
prepaid airtime vouchers, which was partially offset by the inclusion of Utilities. In ZAR, the significant decrease in Segment Adjusted
EBITDA is primarily due to the impact of few sales, which was partially offset by the inclusion of Utilities.
Our Segment Adjusted EBITDA margin in fiscal 2025 and 2024 was 3.0% and 6.2%, respectively.
Group costs
Our group costs for fiscal 2025 increased compared with the prior period due to higher employee costs resulting from an increase
in the number of individuals allocated to group costs and base salary adjustments, higher bonus expense, travel, audit, consulting and
legal fees.
Use of Non-GAAP Measures
U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA
is a non-GAAP measure. We provide this non-GAAP measure to enhance our evaluation and understanding of our financial
performance and trends. We believe that this measure is helpful to users of our financial information understand key operating
performance and trends in our business because it excludes certain non-cash expenses (including depreciation and amortization and
stock-based compensation charges) and income and expenses that we consider once-off in nature.
Non-GAAP Measures
Group Adjusted EBITDA is earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for non-
operational transactions (including loss on disposal of equity-accounted investments, change in fair value of equity securities),
(earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We included an
intercompany interest expense in our Consumer Segment Adjusted EBITDA for eight months to February 28, 2025. We commenced
utilizing our February 2025 lending facilities to fund a portion of our Consumer lending book from March 1, 2025. Once-off items
represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or ultimately
not pursued.
51
The table below presents the reconciliation between GAAP net income (loss) attributable to Lesaka to Group Adjusted EBITDA:
Table 10
Years ended June 30,
2026
2025
2024
$ ’000
$ ’000
$ ’000
Income (Loss) attributable to Lesaka - GAAP
(A)
2,758
(90,957)
(18,515)
Add net loss attributable to non-controlling interest
246
130
-
Net income (loss)
2,512
(91,087)
(18,515)
(Earnings) loss from equity accounted investments
(215)
(114)
1,279
Net income (loss) before earnings from equity-accounted investments
2,297
(91,201)
(17,236)
Income tax expense (benefit)
(A)
1,429
(15,982)
3,363
Income (loss) before income tax expense
3,726
(107,183)
(13,873)
Interest expense
(A)
18,506
21,824
19,171
Interest income
(2,889)
(2,596)
(2,294)
Reversal of allowance for doubtful loan receivable
(1,500)
-
(250)
Loss on disposal of equity securities
730
-
-
Net loss on impairment/ disposal of equity-accounted investment
584
161
-
Other income
(3,883)
-
-
Change in fair value of equity securities
(2,593)
59,828
-
Operating income (loss)
12,681
(27,966)
2,754
Impairments
(1)
3,347
18,863
-
PPA amortization (amortization of acquired intangible assets)
30,441
21,384
14,419
Depreciation and amortization
16,905
12,337
9,246
Stock-based compensation charges
6,969
9,550
7,911
Interest adjustment
-
(2,195)
-
Once-off items
(2)
5,452
17,826
1,853
Unrealized (gain) loss FV for currency adjustments
(53)
23
(83)
Group Adjusted EBITDA - Non-GAAP
(A)
75,742
49,822
36,100
(A)
Loss attributable to Lesaka – GAAP and all subtotal captions to Income (Loss) before earnings (loss) from equity-accounted
investments for fiscal 2025 and fiscal 2024 have been decreased by $3.4 million and $1.1 million, respectively, as a result
of the correction discussed in Note 1. Income tax expense (benefit) for fiscal 2025 has been decreased by 2.2 million. Interest
expense for fiscal 2025 and fiscal 2024 has been increased by $0.4 million and $0.2 million, respectively, as a result of the
correction discussed in Note 1. Operating income and Group Adjusted EBITDA - Non-GAAP for fiscal 2025 and fiscal 2024
have been decreased by $0.9 million and $0.8 million, respectively, as a result of the correction discussed in Note 1.
Loss attributable to Lesaka – GAAP and all subtotal captions to Loss before income tax expense for fiscal 2026 have been
decreased by $0.4 million, as a result of the correction, as discussed in Note 1. Interest expense for fiscal 2026 has been
increased by $0.1 million as a result of the correction, as discussed in Note 1, to the amount included in the caption Interest
expense for the three months ended September 30, 2025. Operating income and Group Adjusted EBITDA - Non-GAAP for
fiscal 2026 have been decreased by $0.2 million, as a result of the correction, as discussed in Note 1, to the amounts included
in the caption Cost of goods sold, IT processing, servicing and support and Selling, general and administration expense for
the three months ended September 30, 2025.
(1)
Impairments excludes an amount of $0.7 million which is included in the caption exit of ATM business in the table below.
(2)
The table below presents the components of once-off items for the periods presented:
Table 11
Years ended June 30,
2026
2025
2024
$ ’000
$ ’000
$ ’000
Lesaka brand refresh
3,001
-
-
Exit of ATM business
1,599
-
-
Transaction costs
1,103
1,794
480
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and certain
compensation costs
389
16,159
2,325
Income recognized related to closure of legacy businesses
(579)
-
(952)
Indirect taxes provision
(61)
(127)
-
Total once-off items
5,452
17,826
1,853
52
Once-off items are non-recurring in nature, however, certain items may be reported in multiple quarters. For instance, transaction
costs include costs incurred related to acquisitions and transactions consummated or ultimately not pursued. The transactions can span
multiple quarters, for instance in fiscal 2025 we incurred significant transaction costs related to the acquisition of Adumo and Utilities
over a number of quarters, and the transactions are generally non-recurring.
Rebrand relates to costs incurred related to Lesaka’s new brand launched in November 2025, we expect that it will take the
remainder of the 2026 calendar year to roll out the refreshed brand throughout the organization. These are non-recurring costs incurred
as a necessary step in a set of strategic initiatives designed to create a “One Lesaka” identity for our customers and our employees.
Exit of ATM business includes expenses incurred to exit our ATM business and the impairment of ATMs recorded in property,
plant and equipment (refer to Note 10 to our audited consolidated financial statements for additional information).
Income recognized related to closure of legacy businesses represents (i) gains recognized related to the release of the foreign
currency translation reserve on deconsolidation of a subsidiary and (ii) costs incurred related to subsidiaries which we are in the process
of deregistering/ liquidation and therefore we consider these costs non-operational and ad hoc in nature.
Indirect tax provision release relates to the reversal of a non-recurring indirect tax provision created in fiscal 2023 which was
resolved in fiscal 2025 following settlement of the matter with the tax authority.
Liquidity and Capital Resources
At June 30, 2026, our unrestricted cash and cash equivalents were $81.4 million and comprised of ZAR-denominated balances
of ZAR 1.3 billion ($76.9 million), U.S. dollar-denominated balances of $2.6 million, and other currency deposits, primarily Botswana
pula, of $2.0 million, all amounts translated at exchange rates applicable as of June 30, 2026. The increase in our unrestricted cash
balances from June 30, 2025, was primarily due to positive contribution from our operating segments, and the utilization of our general
banking facilities to partially fund the growth in our Consumer lending book, which was partially offset by the application of the
proceeds received from the disposal of MobiKwik to reduce our general banking facilities utilized, the utilization of cash reserves to
fund certain scheduled repayments of our borrowings, acquisition of property, plant and equipment and intangible assets, to fund the
increase in our Consumer lending book and to settle amounts due to the sellers of Utilities and other entities acquired during the year.
We generally invest any surplus cash held by our South African operations in overnight call accounts that we maintain at South
African banking institutions, and any surplus cash held by our non-South African companies in U.S. dollar-denominated money market
accounts.
Historically, we have financed most of our operations, research and development, working capital, and capital expenditures, as
well as acquisitions and strategic investments, through internally generated cash and our financing facilities. When considering
whether to borrow under our financing facilities, we consider the cost of capital, cost of financing, opportunity cost of utilizing surplus
cash and availability of tax efficient structures to moderate financing costs. Refer to Note 12 to our consolidated financial statements
for the year ended June 30, 2026, for additional information related to our borrowings.
Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and
the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict
certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be
permitted to provide us with sufficient dividends, distributions or loans when necessary.
We are required to make a scheduled debt repayment of ZAR 200 million ($12.2 million) in March 2027. We expect to pay ZAR
100.0 million ($6.1 million) on closing of the Bank Zero transaction. All amounts translated at exchange rates as of June 30, 2026.
53
Available short-term borrowings
Summarized below are our short-term facilities available and utilized as of June 30, 2026:
Table 12
RMB GBF
RMB Other
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total short-term facilities available, comprising:
Total overdraft
67,702
1,110,808
-
-
-
-
Indirect and derivative facilities
(1)
-
-
5,534
90,793
9,542
156,556
Total short-term facilities available
67,702
1,110,808
5,534
90,793
9,542
156,556
Utilized short-term facilities:
Overdraft
20,671
339,156
-
-
-
-
Indirect and derivative facilities
-
-
4,279
70,199
129
2,114
Total short-term facilities available
20,671
339,156
4,279
70,199
129
2,114
Interest rate, based on South African prime rate
10.00%
N/A
N/A
(1) Other facilities include indirect and derivative facilities may only be used for guarantees, letters of credit and forward
exchange contracts to support guarantees issued by RMB and Nedbank to various third parties on our behalf.
The facilities under the Restated GBF Agreement were available for utilization from March 30, 2026, and are subject to annual
review by RMB.
In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, we have undertaken not to
utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility.
Long-term borrowings
We have aggregate long-term borrowing outstanding of ZAR 3.5 billion ($210.7 million translated at exchange rates as of June
30, 2026) as described in Note 12. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 2.8
billion, which was used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings. As of
September 9, 2026, we also have a revolving credit facility, of ZAR 400.0 million which is utilized to fund a portion of our merchant
finance loans receivable book and an asset backed facility of ZAR 214.5 million which is utilized to partially fund the acquisition of
POS devices and vaults.
Restricted cash
We have also entered into cession and pledge agreements with Nedbank related to our Nedbank indirect credit facilities and we
have ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted as they may not
be withdrawn without the express permission of Nedbank. Our cash, cash equivalents and restricted cash presented in our consolidated
statement of cash flows as of June 30, 2026, includes restricted cash of $0.1 million that has been ceded and pledged.
Arrangement with African Bank to fund our ATMs
In September 2024, we entered into an arrangement with African Bank Limited (“African Bank”) and certain cash-in-transit
service providers to fund our ATMs. Under this arrangement, African Bank used its cash resources to fund our ATMs and it is
specifically recorded that the cash in our ATMs was African Bank’s property. Therefore, as we had not utilized a facility to obtain the
cash, and did not own or control the cash for an extended period of time, we did not record cash or cash equivalents and borrowings
in our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers were
settled through the interbank settlement system from the ATM users bank account to African Bank’s bank accounts. We paid African
Bank a monthly fee for the service provided which was calculated based on the cumulative daily outstanding balance of cash utilized
multiplied by the South African prime interest rate less 1%. We were exposed to the risk of cash lost while it was in our ATMs (i.e.
from theft) and were required to repay African Bank for any shortages. We intend to cancel this arrangement as part of the process of
winding down our ATM business.
Cash flows from operating activities
Net cash provided by operating activities during fiscal 2026 was $52.4 million (ZAR 951.6 million) compared to net cash used
by operating activities of $9.1 million (ZAR 163.3 million) during fiscal 2025. Excluding the impact of income taxes, our cash provided
by operating activities during fiscal 2026 was positively impacted by the positive contribution from our operating segments and
positive working capital movements, which was partially offset by cash utilized for the significant net growth in our Consumer finance
loans receivable.
54
Net cash used in operating activities during fiscal 2025 was $9.1 million (ZAR 163.3 million) compared to net cash provided by
operating activities of $28.8 million (ZAR 537.9 million) during fiscal 2024. Excluding the impact of income taxes, our cash used in
operating activities during fiscal 2025 includes cash utilized for the settlement of working capital movements within our Merchant and
Enterprise businesses related to quarter-end transaction processing activities and which were settled in the following week (our fourth
quarter of fiscal 2024 closed on a Sunday), and the net growth in our Consumer and Merchant finance loans receivable books, which
was partially offset by the positive contribution from our Merchant and Consumer businesses.
During fiscal 2026, we paid our first provisional South African tax payments of $4.0 million (ZAR 66.8 million) related to our
2026 tax year. During fiscal 2026, we also made our second provisional South African tax payments of $4.8 million (ZAR 79.6 million
related to our 2026 tax year and received tax refunds of $0.06 million (ZAR 1.1 million). We also paid taxes totaling $1.1 million in
other tax jurisdictions, primarily in Botswana and Namibia.
During fiscal 2025, we paid our first provisional South African tax payments of $4.2 million (ZAR 76.1 million) related to our
2025 tax year. During fiscal 2025, we also made our second provisional South African tax payments of $2.2 million (ZAR 39.3 million
related to our 2025 tax year and received tax refunds of $0.4 million (ZAR 7.2 million). We also paid taxes totaling $0.3 million in
other tax jurisdictions, primarily in the Botswana and Namibia.
During fiscal 2024, we paid our first provisional South African tax payments of $2.7 million (ZAR 49.5 million) related to our
2024 tax year. During fiscal 2024, we also made our second provisional South African tax payments of $2.9 million (ZAR 52.7 million
related to our 2024 tax year and received tax refunds of $0.0 million (ZAR 0.8 million). We also paid taxes totaling $0.4 million in
other tax jurisdictions, primarily in Botswana.
Taxes paid during fiscal 2026, 2025 and 2024 were as follows:
Table 13
Year ended June 30,
2026
2025
2024
2026
2025
2024
$
$
$
ZAR
ZAR
ZAR
‘000
‘000
‘000
‘000
‘000
‘000
First provisional payments
3,969
4,182
2,663
66,795
76,118
49,534
Second provisional payments
4,830
2,198
2,861
79,579
39,279
52,721
Taxation paid related to prior years
506
225
641
8,818
4,081
12,187
Tax refund received
(64)
(438)
(38)
(1,110)
(7,173)
(768)
Dividend withholding taxes paid
91
-
-
1,526
-
-
Total South African taxes paid
9,332
6,167
6,127
155,608
112,305
113,674
Foreign taxes paid
1,100
314
379
18,412
5,738
7,063
Total tax paid
10,432
6,481
6,506
174,020
118,043
120,737
We expect to make additional provisional income tax payments in South Africa related to our 2026 tax year in the first quarter of
fiscal 2027, however, the amount was not quantifiable as of the date of the filing of this Annual Report.
Cash flows from investing activities
Cash used in investing activities for fiscal 2026 included capital expenditures of $20.6 million (ZAR 374.6 million), primarily
due to the acquisition of vaults and POS devices. We also incurred capital expenditures of $4.4 million (ZAR 79.9 million), primarily
related to the capitalization of development costs, during fiscal 2026. During fiscal 2026, we also received $3.0 million from the
disposal of Cell C. During fiscal 2026, we paid $11.1 million related to acquisition of certain businesses, including $10.4 million for
the final tranche of the Utilities acquisition, $0.3 million for MobileMart and $0.3 million for Atom. We also invested $4.6 million
related to the acquisition of mutual funds by our insurance business in order to obtain a higher yield on funds invested by this business.
Cash used in investing activities for fiscal 2025 included capital expenditures of $17.2 million (ZAR 307.9 million), primarily
due to the acquisition of vaults and POS devices. We also incurred capital expenditures of $3.9 million (ZAR 69.8 million), primarily
related to the capitalization of development costs, during fiscal 2025. During fiscal 2025, we paid $12.9 million related to acquisition
of certain businesses, including Adumo and Utilities. We also received $16.4 million related to the sale of our entire equity investment
in MobiKwik in June 2025.
Cash used in investing activities for fiscal 2024 included capital expenditures of $12.7 million (ZAR 236.6 million), primarily
due to the acquisition of vaults and POS devices. During fiscal 2024, we received proceeds of $3.5 million related to the sale of
remaining interest in Finbond and $0.25 million related to the second (and final) tranche from the disposal of our entire equity interest
in Carbon.
55
Cash flows from financing activities
During fiscal 2026, we utilized $123.7 million from our South African general banking facilities to partially fund the growth of
our Consumer lending book, and repaid $129.4 million. We utilized $6.9 million of our long-term borrowings to fund our Merchant
lending book and to finance the acquisition of POS devices and vehicles. We repaid $13.7 million of long-term borrowings in
accordance with our Facility B repayment schedule and under our asset-based facilities repayment schedule. We paid fees of $0.03
million related to the September 2025 refinance of our facility to fund the growth of Merchant lending book. We paid $3.5 million to
purchase Lesaka Hospitality non-controlling interests. We also paid $0.3 million to repurchase shares from employees in order for the
employees to settle taxes due related to the vesting of shares of restricted stock.
During fiscal 2025, we utilized $98.6 million from our South African overdraft facilities to fund our ATMs and our cash
management business through Merchant as well as to partially fund the acquisition of Utilities and for the February 2025 refinance of
certain of our facilities. We repaid $89.2 million of those facilities, including towards our refinanced facilities. We utilized $190.1
million of our borrowings to settle a portion of the Adumo purchase consideration, pay certain transaction expenses, repay Adumo’s
borrowings, repurchase shares of our common stock, fund the acquisition of certain capital expenditures, for working capital
requirements and for the February 2025 refinance of certain of our facilities. We repaid $131.2 million of long-term borrowings
towards our refinanced facilities and in accordance with our repayment schedule, paid $7.2 million to settle Adumo’s borrowings, and
settled a portion of our revolving credit facility utilized. We also paid an origination fee of $1.0 million to secure additional borrowings
as well as paid dividends to the non-controlling interest of $0.4 million.
During fiscal 2024, we utilized approximately $183.0 million from our South African overdraft facilities to fund our ATMs and
repaid $199.6 million of these facilities. We utilized $23.7 million of our long-term borrowings to fund the acquisition of certain
capital expenditures and for working capital requirements. We repaid $20.1 million of these long-term in accordance with our
repayment schedule as well as to settle a portion of our revolving credit facility utilized. We received $0.1 million from the exercise
of stock options. We also paid $1.5 million to repurchase shares from employees in order for the employees to settle taxes due related
to the vesting of shares of restricted stock.
Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2026:
Table 14
Payments due by Period, as of June 30, 2026 (in $ ’000s)
Total
Less than 1
year
2-3 years
3-5 years
Thereafter
Short-term credit facilities
(A)
20,671
20,671
-
-
-
Long-term borrowings
Principal repayments
(A)(B)
210,711
16,114
194,295
302
-
Interest payments
(A)(B)
29,537
10,750
18,771
16
-
Operating lease liabilities, including imputed interest
(C)
34,460
6,946
9,106
6,012
12,396
Purchase obligations
5,720
5,720
-
-
-
Capital commitments
633
633
-
-
-
Other long-term obligations reflected on our balance
sheet
(D)(E)
3,988
-
-
-
3,988
Total
305,720
60,834
222,172
6,330
16,384
Interest payments based on applicable interest rates as of June 30, 2026, and expected outstanding long-term borrowings over
the period. All amounts converted from ZAR to USD using the June 30, 2026, USD/ ZAR exchange rate.
rates applicable as of June 30, 2026.
Nedbank to secure guarantees it has issued to third parties on our behalf as the amounts that will be settled in cash are not
known and the timing of any payments is uncertain.
56
Off-Balance Sheet Arrangements
We have no off -balance sheet arrangements.
Capital Expenditures
Capital expenditures for the years ended June 30, 2026, 2025 and 2024 were as follows:
Table 15
2026
2025
2024
2026
2025
2024
$
$
$
ZAR
ZAR
ZAR
’000
’000
’000
’000
’000
’000
Merchant
19,581
18,117
11,202
355,297
324,350
209,302
Consumer
2,890
1,500
1,317
52,439
26,855
24,607
Enterprise
2,578
1,482
146
46,778
26,532
2,728
Total
25,049
21,099
12,665
454,514
377,737
236,637
Our capital expenditures for fiscal 2026, 2025 and 2024, are discussed under “—Liquidity and Capital Resources—Cash flows
from investing activities.”
All of our capital expenditures for the past three fiscal years were funded through internally-generated funds, except for certain
capital expenditures of POS devices and vaults, made through our Merchant business which were funded through the utilization of
asset-backed borrowings. We had outstanding capital commitments as of June 30, 2026, of $0.6 million. In addition to these capital
expenditures, we expect that capital spending for fiscal 2027 will include acquisition of POS devices, vaults, computer software,
computer and office equipment, as well as for our ATM infrastructure and branch network in South Africa. Acquisition of these assets
w
ill be funded through the use of internally-generated funds and available facilities.
57
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We seek to manage our exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price and
liquidity risks as discussed below.
Currency Exchange Risk
We are subject to currency exchange risk because we purchase components for vaults, that we assemble, and inventories that we
are required to settle in other currencies, primarily the euro, renminbi, and U.S. dollar. We have used forward contracts in order to
limit our 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.
We
had no outstanding foreign exchange contracts as of June 30, 2026 and 2025.
Translation Risk
Translation risk relates to the risk that our results of operations will vary significantly as the U.S. dollar is our reporting currency,
but we earn a significant amount of our revenues and incur a significant amount of our 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 our control, there can be no assurance
that future fluctuations will not adversely affect our results of operations and financial condition.
Interest Rate Risk
As a result of our normal borrowing activities, our operating results are exposed to fluctuations in interest rates, which we manage
primarily through our financing activities. The ongoing conflict in the Middle East has contributed to higher oil and commodity prices
and increased global market volatility, resulting in increased inflationary pressures.
In May 2026, the South African Reserve Bank (“SARB”) increased the repurchase rate by 25 basis points to 7.00% in response
to heightened inflation risks. The SARB subsequently maintained the repurchase rate at 7.00% in July 2026. While the outlook remains
uncertain, continued pressure on oil and other input prices presents an upside risk to inflation and, consequently, interest rates.
We periodically evaluate the cost and effectiveness of interest rate hedging strategies to manage our exposure to changes in interest
rates. We generally maintain surplus cash in cash equivalents and held-to-maturity investments and have occasionally invested in
marketable securities.
We have short and long-term borrowings in South Africa as described in Note 12 to our consolidated financial statements which
attract interest at rates that fluctuate based on changes in the South African prime and South African Overnight Index Average
(“ZARONIA”) interest rates. The following table illustrates the effect on our annual expected interest charge, translated at exchange
rates applicable as of June 30, 202 6, as a result of changes in the South African prime and South African Overnight Index Average
(“ZARONIA”) interest rates, using our outstanding short and long -term borrowings as of June 30, 2026. The effect of a hypothetical
1% (i.e. 100 basis points) increase and a 1% decrease in the interest rates applicable to the borrowings as of June 30, 2026, are shown.
The selected 1% hypothetical change does not reflect what could be considered the best- or worst-case scenarios.
Table 16
As of June 30, 2026
Annual expected
interest charge
($ ’000)
Hypothetical
change in
interest rates
Impact of
hypothetical
change in
interest rates
($ ’000)
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
($ ’000)
Interest on South Africa borrowings
23,567
1%
2,322
25,889
(1%)
(2,322)
21,245
Credit Risk
Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties.
We
maintain credit
risk policies in respect of our 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 our management deems
appropriate. With respect to credit risk on financial instruments, we maintain 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.
58
Consumer microlending credit risk
We are exposed to credit risk in our 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 line
with local regulations.
We
consider this policy to be appropriate because the affordability test we perform 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 our customers to make payments when due deteriorate in the future. A significant amount of judgment
is required to assess the ultimate recoverability of these finance loan receivables, including ongoing evaluation of the creditworthiness
of each customer.
Merchant lending
We
maintain an allowance for doubtful finance loans receivable related to its Merchant services segment with respect to short-
term loans to qualifying merchant customers. Our risk management procedures include adhering to our proprietary lending criteria
which uses an online-system loan application process, obtaining necessary customer transaction-history data and credit bureau checks.
We
consider 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 Securities Price Risk
Equity price risk relates to the risk of loss that we would incur as a result of the volatility in the exchange -traded price of equity
securities that we hold. As of June 30, 2026, we did not have any equity securities that were exchange-traded and held as available for
sale. Historically, exchange -traded equity securities held as available for sale were expected to be held for an extended period of time
and we were not concerned with short-term equity price volatility with respect to these securities provided that the underlying business,
economic and management characteristics of the company remained sound.
The market price of these exchange-traded equity securities may fluctuate for a variety of reasons and, consequently, the amount
we may obtain in a subsequent sale of these securities may significantly differ from the reported market value.
Equity Securities Liquidity Risk
Equity liquidity risk relates to the risk of loss that we would incur as a result of the lack of liquidity on the exchange on which
those securities are listed.
We
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.
We monitor these investments for impairment and make appropriate reductions in carrying value when an impairment is deemed
t
o be other-than-temporary. As of June 30, 2026, we did not own any exchange-traded equity securities.
59
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our audited consolidated financial statements, together with the reports of our independent registered public accounting firms,
a
ppear on pages F-1 through F-95 of this Annual Report.
60
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including our Executive Chairman and our Group Chief
Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our Executive Chairman and
Group Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2026, due to
the material weaknesses in internal control over financial reporting as described below.
Internal Control over Financial Reporting
Internal control over financial reporting is a process designed by, or under the supervision of, our Executive Chairman and Group
Chief Financial Officer, or persons performing similar functions, and effected by our board of directors, management, and other
personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP.
Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts
and expenditures of the company are being made only in accordance with authorizations of our officers and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could
have a material effect on our audited consolidated financial statements.
Inherent Limitations in Internal Control over Financial Reporting
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of
its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is
subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be
circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements
may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations
are known features of the financial reporting process. Therefore, it is possible to design safeguards into the process to reduce, though
not eliminate, this risk.
Management’s Report on Internal Control Over Financial Reporting
Management, including our Executive Chairman and our Group Chief Financial Officer, is responsible for establishing and
maintaining adequate internal control over our financial reporting. Management conducted an evaluation of the effectiveness of
internal control over financial reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation and as described below,
management concluded that our internal control over financial reporting was not effective as of June 30, 2026.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a
reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or
detected on a timely basis.
As of June 30, 2026, we identified material weaknesses related to:
●
Our Consumer lending, Consumer insurance and Group payroll processes, specifically insufficient risk assessment and
monitoring activities relating to changes in or migration of systems and processes, insufficient controls over internal
information and information from service organizations, and insufficient design and implementation of ITGCs, controls over
service organizations and process level controls, resulting in ineffective process level controls, including a lack of validation
of the completeness and accuracy of information used within the processes;
●
Our journal entry process, specifically relating to insufficient risk assessment, and ineffective design and implementation of
controls including insufficient controls over information resulting in ineffective process level controls including a lack of
validation of the completeness of the journal entry population and inadequate validation of the completeness and accuracy
of information used within the process;
●
The failure of our Utilities, Lesaka Hospitality, Lesaka Merchant Technologies and Lesaka Payments businesses to comply
with our Sarbanes program, specifically insufficient risk assessment and monitoring activities relating to systems and
processes, insufficient controls over internal information and information from service organizations, and insufficient design
a
nd implementation of ITGCs, controls over service organizations and process level controls, resulting in ineffective process
61
level controls, including a lack of validation of the completeness and accuracy of information used within the process;
●
An insufficient number of experienced and trained resources to execute on their internal control responsibilities resulting in
inadequate risk assessment, ineffective design, implementation and operating effectiveness of process level controls for
processes in the scope of our internal control over financial reporting evaluation.
Of the material weaknesses described above, the material weaknesses related to the journal entry process and the insufficient
number of experienced and trained resources to execute on their internal control responsibilities resulted in corrected prior period
misstatements related to the understatement of cost and accumulated depreciation for computer equipment and the correction of
deferred tax asset included in deferred income taxes due to correction of intercompany transactions as described in Note 1 to the
consolidated financial statements.
Additionally, of the material weaknesses described above, the material weakness related to an insufficient number of experienced
and trained resources to execute on their internal control responsibilities also resulted in corrected prior period misstatements related
to the understatement of cost of goods sold, IT processing, servicing and support due to incorrect claim of indirect taxes and correction
of number of shares and amounts used for common stock and treasury shares and amounts for additional paid-in capital as described
in Note 1 to the consolidated financial statements. The material weakness also resulted in a corrected immaterial misstatement in the
current period related to revenue.
All other material weaknesses did not result in any corrected material or immaterial misstatements; however, a reasonable
possibility exists that material misstatements in our consolidated financial statements may not be prevented or detected on a timely
basis.
Lesaka’s independent registered public accounting firm, KPMG Inc, who audited the consolidated financial statements included
in this Annual Report, has expressed an adverse report on the operating effectiveness of our internal control over financial reporting
as of June 30, 2026, which appears in Part II, Item 9A of this Annual Report.
Remediation of Newly Identified Material Weaknesses
To address the material weaknesses, our management, including our Information Technology (“IT”) team, has commenced with
remediation of these material weaknesses including, but not limited to: (1) developing and implementing a comprehensive remediation
plan that includes specific actions aimed at enhancing the understanding of control owners related to the operation and importance of
internal controls over financial reporting, including the principles and requirements of each control, with a focus on the impacted
processes including controls over service organizations, ITGCs, and other process level controls; (2) mandating improved risk
assessment procedures with governance requirements upon implementing new or migrating existing systems within the Group together
with the design, implementation and monitoring of control activities; (3) the recruitment of additional appropriately skilled resources
across the Finance and Risk and Compliance disciplines coupled with the further upskilling and training of existing resources
responsible for the execution of key controls as well as a focus on a greater degree of automation of controls throughout the
organization, (4) the embedding of controls compliance in the key performance indicators of senior executives as well as process and
control owners across the business and (5) collaborating closely with internal and external assurance partners to ensure the robustness
of our remediation plan.
While we are actively taking steps to implement our remediation plan, the material weaknesses will not be deemed resolved until
the enhanced controls operate for a sufficient period of time and management has confirmed through testing that the same are operating
effectively. We will continue to monitor the remediation plan's effectiveness and adjust our efforts as needed. As we assess and test
our internal control over financial reporting, we may identify the need for additional measures or modifications to the plan.
Remediation of Previously Identified Material Weaknesses
Management has made progress in remediating the material weaknesses identified in the previous fiscal year related to the
insufficient design and implementation of controls and policies and procedures related to the goodwill impairment assessment,
business combinations process and revenue recognition matters. Revised procedures have been implemented related to the validation
of completeness and accuracy of the data used in the goodwill impairment model together with additional procedures implemented to
enhance the precision levels in evaluating key assumptions utilized in this model. These have been adequately documented through
management review controls. The implementation of robust revenue recognition controls for the review of new contracts and product
offerings has mitigated key risks of potential material misstatement within the revenue process. This has been achieved through the
thorough assessment and documentation of the relevant accounting considerations, ensuring the accurate classification and recognition
of revenue. Furthermore, the enhanced processes and procedures relating to business combinations operated effectively with respect
to the acquisitions completed during the year; as no significant business combination occurred during the period, we will continue to
evaluate these controls as they operate over future significant transactions.
Changes in Internal Control over Financial Reporting
Except as described above, there were no changes in our internal control over financial reporting during the quarter ended June
30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of Lesaka Technologies, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Lesaka Technologies, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of June
30, 2026, based on criteria established in
Internal Control – Integrated Framework (2013)
Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the
achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting
as of June 30, 2026, based on criteria established in
Internal Control – Integrated Framework (2013)
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of June 30, 2026 and 2025, the related consolidated statements of
operations, comprehensive (loss) income, changes in equity, and cash flows for each of the years in the three-year period ended June
30, 2026, and the related notes (collectively, the consolidated financial statements), and our report dated September 9, 2026 expressed
an unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented
or detected on a timely basis. Material weaknesses related to insufficient risk assessment, insufficient experienced and trained
resources, insufficient design, implementation and operating effectiveness of control activities, insufficient controls over information,
and insufficient monitoring activities have been identified and included in management’s assessment. The material weaknesses were
considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2026 consolidated financial statements,
and this report does not affect our report on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG Inc.
Johannesburg, Republic of South Africa
September 9, 2026
63
ITEM 9B. OTHER INFORMATION
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934 (the “Exchange Act”),
may from time to time enter into plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) of the Exchange Act. During the quarter ended June 30, 2026, no officers or directors, as defined in Rule
16a-1(f),
,
, or
defined in Item 408 of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
64
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information about our executive officers is set out in Part I, Item 1 under the caption “Our Executive Officers.” The other
information required by this Item is incorporated by reference to the sections of our definitive proxy statement for our 2026 annual
meeting of shareholders entitled “Board of Directors and Corporate Governance” and “Additional Information.”
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the sections of our definitive proxy statement for our 2026
annual meeting of shareholders entitled “Executive Compensation,” “Board of Directors and Corporate Governance—Compensation
of Directors” and “—Remuneration Committee Interlocks and Insider Participation.”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference to the sections of our definitive proxy statement for our 2026
annual meeting of shareholders entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity
Compensation Plan Information.”
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item is incorporated by reference to the sections of our definitive proxy statement for our 2026
annual meeting of shareholders entitled “Certain Relationships and Related Transactions” and “Board of Directors and Corporate
Governance.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference to the sections of our definitive proxy statement for our 2026
a
nnual meeting of shareholders entitled “Audit and Non-Audit Fees.”
65
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a) The following documents are filed as part of this report
1. Financial Statements
The following financial statements are included on pages F-1 through F-95.
Report of the Independent Registered Public Accounting Firm –
)
F-2
Consolidated balance sheets as of June 30, 2026 and 2025
F-4
Consolidated statements of operations for the years ended June 30, 2026, 2025 and 2024
F-5
Consolidated statements of comprehensive (loss) income for the years ended June 30, 2026, 2025 and
2024
F-6
Consolidated statements of changes in equity for the years ended June 30, 2026, 2025 and 2024
F-7
Consolidated statements of cash flows for the years ended June 30, 2026, 2025 and 2024
F-10
Notes to the consolidated financial statements
F-1
1
2. Financial Statement Schedules
Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise
included.
Incorporated by Reference Herein
Exhibit
No.
Description of Exhibit
Included
Herewith
Form
Exhibit
Filing Date
2.1
Sale of Shares Agreement, dated October 31, 2021,
by and among Net1 Applied Technologies South
Africa Proprietary Limited; Net1 UEPS
Technologies, Inc.; Old Mutual Life Assurance
Company (South Africa) Limited; Lirast (Mauritius)
Company Limited; SIG International Investment
(BVI) Limited; Aldgate International Limited; Ivan
Michael Epstein; PFCC (BVI) Limited; PCF
Investments (BVI) Limited; Ovobix (RF) Proprietary
Limited; Luxanio 227 Proprietary Limited; Vista
Capital Investments Proprietary Limited; Vista
Treasury Proprietary Limited; K2021477132 (South
Africa) Proprietary Limited; and Cash Connect
Management Solutions Proprietary Limited.
8-K
10.1
November 2, 2021
2.2
Sale and Purchase Agreement, dated May 7, 2024,
between Lesaka Technologies Proprietary Limited;
Lesaka Technologies, Inc. and the parties listed in
Annexure A.
8-K
10.1
May 7, 2024
2.3
First Addendum to Sale and Purchase Agreement,
dated
October 1, 2024, between Lesaka Technologies
Proprietary
Limited; Lesaka Technologies, Inc. and
the parties listed in
Annexure A
8-K
2.2
October 2, 2024
2.4
Transaction Implementation Agreement, dated June
26, 2025, entered into between the parties listed in
Annexure A and the parties listed in Annexure B and
Lesaka Technologies Proprietary Limited and Zero
Research Proprietary Limited and Bank Zero Mutual
Bank and Naught Holdings Ltd.
8-K
2.1
July 2, 2025
3.1
Amended and Restated Articles of Incorporation
8-K
3.1
May 17, 2022
66
3.2
Amended and Restated By-Laws of Lesaka
Technologies, Inc.
8-K
3.2
May 17, 2022
4.1
Form of common stock certificate
10-K
4.1
September 9, 2022
4.2
Description of registrant’s securities
X
10.1*
Form of Restricted Stock Agreement
10-Q
10.49
February 7, 2023
10.2*
Form of Stock Option Agreement
10-Q
10.50
February 7, 2023
10.3*
Form of Restricted Stock Agreement (non-employee
directors)
10-Q
10.51
February 7, 2023
10.4*
Form of Indemnification Agreement
10-K
10.4
September 11, 2024
10.5*
Form of non-employee director agreement
10-K
10.5
August 24, 2017
10.6*
Amended and Restated 2022 Stock Incentive Plan of
Lesaka Technologies, Inc.
14A
A
September 30, 2022
10.7*
Amendment to the 2022 Amended and Restated
Stock Incentive Plan of Lesaka Technologies, Inc.
14A
B
April 22, 2024
10.8*
Amendment to the 2022 Amended and Restated
Stock Incentive Plan of Lesaka Technologies, Inc.
14A
A
October 28, 2025
10.9*
Amended and Restated Employment Agreement,
dated as of July 30, 2026, between Lesaka
Technologies, Inc. and Ali Mazanderani
8-K
10.1
July 30, 2026
10.10*
Employment Agreement, dated as of July 30, 2026,
between Lesaka Technologies (Pty) Ltd and Ali
Mazanderani
8-K
10.2
July 30, 2026
10.11*
Option Award Agreement between Ali Mazanderani
and Lesaka Technologies, Inc.
14A
A
April 22, 2024
10.12*
Option Award Agreement between Ali Mazanderani
and Lesaka Technologies, Inc.
14A
A
July 2, 2026
10.13*
Contract of Employment, effective February 5, 2021,
between Net1 Applied Technologies South Africa
Proprietary Limited and Lincoln Mali
8-K
10.1
February 11, 2021
10.14*
Restrictive Covenants Agreement, effective February
5, 2021, between Net1 Applied Technologies South
Africa Proprietary Limited and Lincoln Mali
8-K
10.2
February 11, 2021
10.15*
Contract of Employment, dated as of December 9,
2021, between Net1 Applied Technologies South
Africa (Pty) Ltd and Naeem Kola
8-K
10.1
December 10, 2021
10.16*
Restrictive Covenants Agreement, dated as of
December 9, 2021, between Net1 Applied
Technologies South Africa (Pty) Ltd and Naeem Kola
8-K
10.2
December 10, 2021
10.17*
Employment Agreement, dated as of December 9,
2021, between Net 1 UEPS Technologies, Inc. and
Naeem Kola
8-K
10.3
December 10, 2021
10.18*
Restrictive Covenants Agreement, dated as of
December 9, 2021, between Net 1 UEPS
Technologies, Inc. and Naeem Kola
8-K
10.4
December 10, 2021
10.19*
Employment Agreement, dated as of February 8,
2023, between Lesaka Technologies, Inc. and Steven
John Heilbron
10-Q
10.52
May 9, 2023
10.20*
Restrictive Covenants Agreement, dated as of
February 8, 2023, between Lesaka Technologies, Inc.
and Steven John Heilbron
10-Q
10.53
May 9, 2023
10.21*
Contract of Employment, dated as of October 1,
2024,
between Lesaka Technologies (Pty) Ltd and
Daniel Luke
Smith
10-Q
10.53
May 7, 2025
10.22*
Restrictive Covenants Agreement, dated as of October
1,
2024, between Lesaka Technologies (Pty) Ltd and
Daniel
Luke Smith
10-Q
10.54
May 7, 2025
67
10.23*
Employment Agreement, dated as of October 1, 2024,
between Lesaka Technologies, Inc. and Daniel Luke
Smith
10-Q
10.55
May 7, 2025
10.24
Restrictive Covenants Agreement, dated as of October
1,
2024, between Lesaka Technologies, Inc. and
Daniel Luke Smith
10-Q
10.56
May 7, 2025
10.25
Policy Agreement, dated April 11, 2016, among the
Company and the IFC Investors
8-K
10.32
April 12, 2016
10.26
Amended & Restated Policy Agreement, dated
October 28,
2024, among Lesaka Technologies, Inc.
and the IFC
Investors
10-Q
10.43
February 5, 2025
10.27
Cooperation Agreement, dated May 13, 2020, by and
between Net 1 UEPS Technologies, Inc. and VCP
(Proprietary) Limited
8-K
10.1
May 14, 2020
10.28
Amendment No. 1 to Cooperation Agreement, dated
December 9, 2020, by and between Net 1 UEPS
Technologies, Inc. and Value Capital Partners (Pty)
Ltd
8-K
10.1
December 10, 2020
10.29
Amendment No. 2 to Cooperation Agreement, dated
March 22, 2022, by and between Net 1 UEPS
Technologies, Inc. and Value Capital Partners (Pty)
Ltd
10-K
10.32
September 9, 2022
10.30
Securities Purchase Agreement, dated March 22, 2022,
among Net1 UEPS Technologies, Inc., Net1 Applied
Technologies South Africa Proprietary Limited and
Value Capital Partners Proprietary Limited
10-Q
10.58
May 10, 2022
10.31
Amendment No. 1 to Securities Purchase Agreement
dated March 16, 2023, among Lesaka Technologies,
Inc. (formerly Net1 UEPS Technologies, Inc.), Lesaka
Technologies Proprietary Limited (formerly Net1
Applied Technologies South Africa Proprietary
Limited) and Value Capital Partners Proprietary
Limited
8-K
10.3
March 22, 2023
10.32
Sale of Shares Agreement dated October 1, 2024,
between
Lesaka Technologies Proprietary Limited and
Crossfin
Holdings Proprietary Limited
8-K
10.40
October 1, 2024
10.33
Trust Deed of the Lesaka Employee Share Trust
entered
into between Lesaka Technologies, Inc. and
Nomaxabiso
Norma Teyise and Zwelethu Masinga
14A
A
October 2, 2024
10.34
Relationship Agreement between Lesaka
Technologies,
Inc. and the Trustees for the time being
of the Lesaka
Employee Share Trust
14A
B
October 2, 2024
10.35
Amendment and Restatement Agreement dated
February
27, 2026, between amongst others, Lesaka
Technologies
Borrower, FirstRand
Bank Limited (acting through its
Rand Merchant Bank
Division), as facility agent, and
Bowwood and Main No 408
(RF) Proprietary Limited,
as Debt Guarantor
10-Q
10.51
May 6, 2026
10.36
Letter of Amendment, dated March 27, 2026, among
Lesaka Technologies Proprietary Limited and
FirstRand
Bank Limited (acting through its Rand
Merchant Bank
division), as facility agent, related to
the amendment to the
Amended and Restated Common
Terms Agreement
10-Q
10.52
May 6, 2026
68
10.37
Senior Term Facility A Agreement between Lesaka
Applied Technologies Proprietary Limited (as
Term/RCF
Borrower) and The Persons Listed in
Annexure A (as
Original Senior Term Facility A
Lenders) and FirstRand
Bank Limited (acting through
its Rand Merchant Bank
Division) (as Facility Agent)
dated February 27, 2025
10-Q
10.47
May 7, 2025
10.38
Senior Term Facility B Agreement between Lesaka
Applied
Technologies Proprietary Limited (as
Term/RCF Borrower)
and The Persons Listed in
Annexure A (as Original Senior
Term Facility B
Lenders) and FirstRand Bank Limited
(acting through
its Rand Merchant Bank Division) (as
Facility Agent)
dated February 27, 2025
10-Q
10.48
May 7, 2025
10.39
Senior RCF Agreement between Lesaka Applied
Technologies Proprietary Limited (as Term/RCF
Borrower)
and The Persons Listed in Annexure A (as
Original Senior
RCF Lenders) and FirstRand Bank
Limited (acting through
its Rand Merchant Bank
Division) (as Facility Agent) dated
February 27, 2025
10-Q
10.49
May 7, 2025
10.40
Pledge and Cession in Security Agreement between
Lesaka
Technologies, Inc. (as Cedent) and Lesaka
Technologies
Proprietary Limited (as Obligors' agent
and Term/RCF
Borrower) and Bowwood and Main No
408 (RF)
Proprietary Limited (as Debt Guarantor) and
FirstRand
Bank Limited (acting through its Rand
Merchant Bank
Division) (as Facility Agent) dated
February 27, 2025
10-Q
10.50
May 7, 2025
10.41
Subordination Agreement between Lesaka Applied
Technologies Proprietary Limited (as Term/RCF
Borrower)
and The Persons Listed in Annexure A (as
Original
Subordinated Parties) and The Persons Listed
in Annexure
B (as Original Obligors) and The Persons
Listed in
Annexure C (As Original Lenders) and
FirstRand Bank
Limited (acting through its Rand
Merchant Bank Division)
(as Facility Agent) and
Bowwood and Main No 408 (RF)
Proprietary Limited
(as Debt Guarantor) dated February 28,
2025
10-Q
10.51
May 7, 2025
10.42
General Banking Facility Agreement dated February
27,
2025 between Lesaka Technologies (Proprietary)
Limited
and FirstRand Bank Limited (acting through
its Rand
Merchant Bank division)
10-Q
10.52
May 7, 2025
10.43
Letter of Amendment, dated March 27, 2026, among
Lesaka Technologies Proprietary Limited and
FirstRand
Bank Limited (acting through its Rand
Merchant Bank
division), as facility agent, related to
the amendment to the
Original General Banking
Facility Agreement and Facility
Letter
10-Q
10.53
May 6, 2026
10.44
Facility Letter between Nedbank Limited and Net1
Applied Technologies South Africa Limited and
certain of its subsidiaries dated as of December 13,
2013 and First Addendum thereto dated as of
December 18, 2013
8-K
10.27
December 19, 2013
10.45
Letter from Nedbank Limited to Net1 Applied
Technologies South Africa Proprietary Limited and
certain of its subsidiaries, dated December 7, 2016
8-K
10.50
December 9, 2016
69
10.46
Revolving Credit Facility Agreement, dated
September 5, 2025, between Cash Connect Capital
Proprietary Limited, the Parties Listed in Part I of
Schedule 1 (the Original Guarantors) and FirstRand
Bank Limited (acting through its Rand Merchant Bank
division) (as Lender)
8-K
10.1
September 9, 2025
14
Code of Ethics
X
19
Insider Trading Policy
X
21
Subsidiaries of Registrant
X
23.1
Consent of Independent Registered Public
Accounting Firm - KPMG, Inc.
X
31.1
Certification of Principal Executive Officer pursuant
to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as amended
X
31.2
Certification of Principal Financial Officer pursuant
to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as amended
X
32
Certification pursuant to 18 USC Section 1350
X
97
Compensation Clawback Policy
X
101.INS
XBRL Instance Document
X
101.SCH
XBRL Taxonomy Extension Schema
X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
X
101.DEF
XBRL Taxonomy Extension Definition Linkbase
X
101.LAB
XBRL Taxonomy Extension Label Linkbase
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
X
104
Cover Page Interactive Data File (formatted as inline
XBRL and continued in Exhibit 101)
X
* Indicates a management contract or compensatory plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
N
one.
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LESAKA TECHNOLOGIES, INC.
By: /s/ Ali Mazanderani
Ali Mazanderani
Executive Chairman and Director
Date: September 9, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
NAME
TITLE
DATE
/s/ Kuben Pillay
Lead Independent Director and Director
September 9, 2026
Kuben Pillay
/s/ Ali Mazanderani
Executive Chairman and Director (Principal Executive
Officer)
September 9, 2026
Ali Mazanderani
/s/ Dan Smith
Group Chief Financial Officer and Director (Principal
Financial and Accounting Officer)
September 9, 2026
Dan Smith
/s/ Antony Ball
Director
September 9, 2026
Antony Ball
/s/ Nonkululeko Gobodo
Director
September 9, 2026
Nonkululeko Gobodo
/s/ Steven Heilbron
Director
September 9, 2026
Steven Heilbron
/s/ Lincoln Mali
Director
September 9, 2026
Lincoln Mali
/s/ Venessa Naidoo
Director
September 9, 2026
Venessa Naidoo
/s/ Ekta Singh-Bushell
Director
September 9, 2026
Ekta Singh-Bushell
/s/ Dean Sparrow
Director
September 9, 2026
Dean Sparrow
F-1
LESAKA TECHNOLOGIES, INC.
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
Report of the Independent Registered Public Accounting Firm – KPMG Inc.
F-2
Consolidated balance sheets as of June 30, 2026 and 2025
F-4
Consolidated statements of operations for the years ended June 30, 2026, 2025 and 2024
F-5
Consolidated statements of comprehensive (loss) income for the years ended June 30, 2026, 2025 and
2024
F-6
Consolidated statements of changes in equity for the years ended June 30, 2026, 2025 and 2024
F-7
Consolidated statements of cash flows for the years ended June 30, 2026, 2025 and 2024
F-10
Notes to the consolidated financial statements
F-11
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of Lesaka Technologies, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Lesaka Technologies, Inc. and subsidiaries (the Company)
as of June 30, 2026 and 2025, the related consolidated statements of operations, comprehensive (loss) income, changes in equity, and
cash flows for each of the years in the three-year period ended June 30, 2026, and the related notes (collectively, the consolidated
financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the three-year
period ended June 30, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report
dated September 9, 2026 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Assessment of goodwill impairment test for certain reporting units
As discussed in Notes 2 and 10 to the consolidated financial statements, the Company recorded goodwill of $215,298 thousand
as of June 30, 2026. The Company tests for impairment of goodwill on an annual basis and at any other time if events or circumstances
change that could trigger an impairment test. The Company uses a discounted cash flow model to estimate the fair value for each
reporting unit, which requires the Company to make significant estimates and certain assumptions related to the reporting units’
revenue growth rates, terminal revenue growth rates, forecast period for certain reporting units and weighted average cost of capital.
We identified the assessment of the Company’s goodwill impairment test for certain reporting units as a critical audit matter.
Subjective auditor judgement and specialized skills and knowledge were required to evaluate certain assumptions used in the
discounted cashflow model. Specifically, reporting units’ revenue growth rates, terminal revenue growth rates, forecast period for
certain reporting units and the weighted average cost of capital. Changes in these assumptions could have a significant impact on the
fair value of the reporting units.
The following are the primary procedures we performed to address this critical audit matter:
•
We evaluated the revenue growth rates by comparing the revenue growth rates against historic performance, approved
budgets and challenged management on the expected future performance based on reporting unit specific factors.
•
We performed sensitivity analyses over revenue growth rates and the forecast period of certain reporting units to assess their
impact on the Company’s determination of the fair values in respect to the reporting units.
•
We involved valuation professionals with specialized skills and knowledge who assisted in:
o
independently recalculating the terminal revenue growth rates for the reporting units considering industry, product
and country specific information;
o
e
valuating the weighted average cost of capital, by developing an independent estimate of weighted average cost of
F-3
capital range and comparing it to the weighted average cost of capital selected by the Company for each reporting
unit; and
o
performing a sensitivity and scenario type analysis on terminal revenue growth rates and weighted average cost of
capital to assess the impact of changes in those assumptions on the Company’s determination of fair value for each
reporting unit.
/s/
KPMG Inc.
We have served as the Company’s auditor since 2024.
September 9, 2026
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
as of June 30, 2026 and 2025
F-4
June 30,
June 30,
2026
2025
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
$
Restricted cash related to short-term credit facilities (Note 12)
Accounts receivable, net and other receivables (Note 4)
Finance loans receivable, net (Note 4)
Inventory (Note 5)
Total current assets before settlement assets
Settlement assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT, NET (Note 1 and Note 7)
OPERATING LEASE RIGHT-OF-USE (Note 8)
EQUITY-ACCOUNTED INVESTMENTS (Note 9)
GOODWILL (Note 10)
INTANGIBLE ASSETS, NET (Note 10), including integrated platform - 2026: $
; 2025: $
DEFERRED TAX ASSETS, NET
(A)
OTHER LONG-TERM ASSETS, including equity securities (Note 9 and 11)
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities (Note 12)
Accounts payable
Other payables (Note 13)
(A)
Operating lease liability - current (Note 8)
Current portion of long-term borrowings (Note 12)
Income taxes payable
Total current liabilities before settlement obligations
Settlement obligations
Total current liabilities
DEFERRED TAX LIABILITIES, NET
OPERATING LEASE LIABILITY - LONG TERM (Note 8)
LONG-TERM BORROWINGS (Note 12)
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 11)
TOTAL LIABILITIES
REDEEMABLE COMMON STOCK (Note 14)
EQUITY
COMMON STOCK (Note 14)
Authorized:
Issued and outstanding shares, net of treasury - 2026:
; 2025:
(A)
PREFERRED STOCK
Authorized shares:
Issued and outstanding shares, net of treasury: 2026:
-
-
ADDITIONAL PAID-IN CAPITAL
(A)
TREASURY SHARES, AT COST: 2026:
; 2025:
(A)
(234 )
(7,059 )
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 15)
(A)
(166,319 )
(185,626 )
RETAINED EARNINGS
(A)
TOTAL LESAKA EQUITY
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY
$
$
(A) Amounts for June 30, 2025 revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT S OF OPERATIONS
for the years ended June 30, 2026, 2025 and 2024
F-5
2026
2025
2024
(In thousands, except per share data)
REVENUE (Note 16)
$
$
$
Services rendered
Loan-based fees received
Sale of goods
Income from rentals
EXPENSE
Cost of goods sold, IT processing, servicing and support, exclusive of depreciation and
amortization shown separately below
(A)
Selling, general and administration, exclusive of depreciation and amortization shown
separately below
(A)
Movement in allowance for credit losses (Note 4)
(B)
Depreciation and amortization
Transaction costs related to Adumo, Utilities and Bank Zero acquisitions and certain
compensation costs (Note 3)
Impairment loss (Note 10)
OPERATING INCOME (LOSS)
(27,966 )
CHANGE IN FAIR VALUE OF EQUITY SECURITIES (Note 6 and 9)
(59,828 )
OTHER INCOME (Note 13)
REVERSAL OF ALLOWANCE FOR DOUBTFUL LOAN RECEIVABLE (Note 4
and
Note
9)
NET LOSS ON IMPAIRMENT OF EQUITY-ACCOUNTED INVESTMENT/ LOSS ON
DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 9)
LOSS ON DISPOSAL OF EQUITY SECURITIES (Note 3)
INTEREST INCOME
INTEREST EXPENSE
(A)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
(107,183 )
(13,873 )
INCOME TAX EXPENSE (BENEFIT) (Note 18)
(A)
(15,982 )
INCOME (LOSS) BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED
INVESTMENTS
(91,201 )
(17,236 )
EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 9)
(1,279 )
NET INCOME (LOSS)
(91,087 )
(18,515 )
ADD NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
NET INCOME (LOSS) ATTRIBUTABLE TO LESAKA
$
$
(90,957 )
$
(18,515 )
Net earnings (loss) per share, in United States dollars
(Note 19):
Basic earnings (loss) attributable to Lesaka shareholders
(A)
$
$
(1.19 )
$
(0.29 )
Diluted earnings (loss) attributable to Lesaka shareholders
(A)
$
$
(1.19 )
$
(0.29 )
(A) Revised to correct the errors discussed in Note 1.
(B) Movement in allowance for credit losses for the years ended June 30, 2025, and 2024, were previously included in selling, general and
administration.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT S OF COMPREHENSIVE (LOSS) INCOME
for the years ended June 30, 2026, 2025 and 2024
F-6
2026
2025
2024
(In thousands)
Net income (loss)
(A)
$
$
(91,087 )
$
(18,515 )
Other comprehensive income (loss), net of taxes:
Movement in foreign currency translation reserve
(A)
Movement in foreign currency translation reserve related to equity-accounted
investments (Note 15)
Release of foreign currency translation reserve related to disposal/ impairment of
equity-accounted investments (Note 9 and Note 15)
Release of foreign currency translation reserve related to disposal/ liquidation of
subsidiaries (Note 15)
(520 )
(952 )
Total other comprehensive income, net of taxes
Comprehensive income (loss)
(88,669 )
(11,226 )
(Less) Add comprehensive (income) loss attributable to
non-controlling interest
(518 )
Comprehensive income (loss) attributable to Lesaka
$
$
(88,356 )
$
(11,226 )
(A) Revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Consolidated Statements of Changes in Equity for the year ended June 30, 2024 (dollar amounts in thousands)
F-7
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1, 2023
(A)
$
$
$
$
$
(195,516 )
$
$
$
$
Treasury shares repurchased
(A)
(319,522 )
(319,522 )
(1,495 )
(1,495 )
(1,495 )
Shares issued (Note 17)
Restricted stock granted
Exercise of stock options
Stock-based compensation charge (Note
17)
Reversal of stock-based compensation
charge (Note 17)
(299,463 )
(299,463 )
(134 )
(134 )
(134 )
Stock-based compensation charge
related to equity-accounted investment
(Note 9)
(133 )
(133 )
(133 )
Net loss
(A)
(18,515 )
(18,515 )
(18,515 )
Other comprehensive income (Note
15)
(A)
Balance – June 30, 2024
(A)
$
$
$
$
$
(188,227 )
$
$
$
$
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Consolidated Statements of Changes in Equity for the year ended June 30, 2025 (dollar amounts in thousands)
F-8
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1, 2024
(A)
$
$
$
$
$
(188,227 )
$
$
$
$
Treasury shares repurchased
(A)
(371,187 )
(5,091,410 )
(11,929 )
(5,462,597 )
(1,731 )
(13,660 )
(13,660 )
Shares issued (Note 14) (Note 17)
Gain recognized related to issue of
shares included in treasury shares (Note
3)
Restricted stock granted
Exercise of stock options
Stock-based compensation charge (Note
17)
Reversal of stock-based compensation
charge (Note 17)
(150,712 )
(150,712 )
(89 )
(89 )
(89 )
Adumo non-controlling interest
acquired (Note 3)
-
-
Net loss
(A)
(90,957 )
(90,957 )
(130 )
(91,087 )
Dividends paid to non-controlling
interests
-
(432 )
(432 )
Other comprehensive income (loss)
(Note 15)
(A)
(183 )
Balance – June 30, 2025
(A)
$
(3,999,049 )
$
(7,059 )
$
$
$
(185,626 )
$
$
$
$
(A) Revised to correct the errors discussed in Note 1.
LESAKA TECHNOLOGIES, INC.
Consolidated Statements of Changes in Equity for the year ended June 30, 2026 (dollar amounts in thousands)
F
-9
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1, 2025
(A)
$
(3,999,049 )
$
(7,059 )
$
$
$
(185,626 )
$
$
$
$
Treasury shares repurchased
(84,758 )
(84,758 )
(339 )
(339 )
(339 )
Gain recognized related to issue of
shares included in treasury shares (Note
3)
(51 )
Restricted stock granted
Exercise of stock options
Stock-based compensation charge (Note
17)
Reversal of stock-based compensation
charge (Note 17)
(410,913 )
(410,913 )
(302 )
(302 )
(302 )
Deconsolidation of Humble (Note 14)
(306,767 )
(1,211 )
(306,767 )
-
(1,211 )
(43 )
(1,254 )
Transfer from redeemable common
stock to additional paid-in-capital (Note
14)
(9,985 )
Lesaka Hospitality non-controlling
interest acquired (Note 14)
(7,312 )
(6,890 )
Net income (loss)
(246 )
Dividends paid to non-controlling
interests
Other comprehensive income (Note 15)
Balance – June 30, 2026
$
(2,548,472 )
$
(234 )
$
$
$
(166,319 )
$
$
$
$
(A) Revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT S OF CASHFLOWS
for the years ended June 30, 2026, 2025 and 2024
F
-10
2026
2025
2024
(In thousands)
Cash flows from operating activities
Net income (loss)
(A)
$
$
(91,087 )
$
(18,515 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Depreciation and amortization
Impairment loss (Note 10)
Movement in allowance for credit losses
Fair value adjustment related to financial liabilities
(238 )
(120 )
(853 )
Change in fair value of equity securities (Note 6 and 9)
(2,593 )
Other income
(3,883 )
Loss on disposal of equity securities (Note 3)
Loss on impairment/ disposal of equity-accounted investment (Note 9)
Gain on deconsolidation of subsidiary
(848 )
(Profit) Loss on disposal of property, plant and equipment
(316 )
(305 )
Stock-based compensation charge (Note 17)
(Earnings) Loss from equity-accounted investments (Note 9)
(215 )
(114 )
Reversal of allowance for doubtful loans receivable
(1,500 )
(250 )
Dividends received from equity-accounted investments
Interest payable
Facility fee amortized (Note 12)
Increase (Decrease) in income taxes payable
(400 )
Deferred tax benefit
(A)
(9,451 )
(21,739 )
(2,712 )
Changes in net working capital
Decrease (Increase) in accounts receivable (Note 20)
(10,873 )
Increase in finance loans receivable (Note 20)
(34,421 )
(34,614 )
(10,029 )
Decrease in inventory
(A)
(12,164 )
Deferred consideration included in other payables (Note 3 and Note 13)
Net cash provided by (used in) operating activities
(9,122 )
Cash flows from investing activities
Capital expenditures
(20,646 )
(17,199 )
(12,665 )
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(4,403 )
(3,900 )
(294 )
Acquisitions, net of cash acquired (Note 3)
(11,117 )
(12,946 )
(1,583 )
Proceeds from disposal of equity securities (Note 6 and 9)
Investment in equity securities
(450 )
Cash disposed on disposal of subsidiary
(165 )
Proceeds from disposal of equity-accounted investment (Note 9)
Repayment of loans by equity-accounted investments
Acquisition of insurance entity investments
(4,598 )
Net change in settlement assets
(7,196 )
Net cash used in investing activities
(25,737 )
(11,342 )
(16,415 )
Cash flows from financing activities
Proceeds from bank overdraft (Note 12)
Repayment of bank overdraft (Note 12)
(129,417 )
(90,309 )
(199,642 )
Long-term borrowings utilized (Note 12)
Repayment of long-term borrowings (Note 12)
(13,741 )
(149,511 )
(20,073 )
Non-refundable deal origination fees/ guarantee fees (Note 12)
(285 )
(970 )
Repurchase of shares of common stock and treasury stock (Note 14)
(339 )
(13,660 )
(1,495 )
Proceeds from exercise of stock options
Acquisition of non-controlling interests (Note 14)
(3,538 )
Dividends paid to non-controlling interest
(432 )
Net change in settlement obligations
(10,390 )
(4,179 )
Net cash (used in) provided by financing activities
(26,986 )
(7,113 )
Effect of exchange rate changes on cash
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash – beginning of period
Cash, cash equivalents and restricted cash – end of period (Note 20)
$
$
$
(A) Revised to correct the errors discussed in Note 1.
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-11
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Lesaka Technologies, Inc. (“Lesaka” and collectively with its consolidated subsidiaries, the “Company”), formerly named Net 1
UEPS Technologies, Inc., was incorporated in the State of Florida on May 8, 1997. The Company provides financial technology
solutions to underserviced consumers, merchants and enterprises, improving the way they manage their daily financial activities and
increasing financial inclusion in the markets in which we operate. In plain terms, the Company helps its customers
pay, receive,
borrow, insure and grow
: the Company enables them to make and accept payments, receive income such as wages and welfare grants,
access credit, protect their families and assets through insurance, and grow their businesses and financial lives. The Company delivers
these capabilities through three business divisions: Merchant, which provides payment acceptance, software, cash management,
lending and alternative digital product solutions to merchants across our two channels; Community and Corporate. Consumer, which
provides banking, lending and insurance solutions to consumers, principally recipients of social welfare grants in South Africa; and
Enterprise, which provides payment processing, prepaid solutions and bill payment infrastructure connecting enterprises to consumers
and businesses.
Basis of presentation
The accompanying consolidated financial statements include subsidiaries over which Lesaka exercises control and have been
prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Implications of reverse acquisition concluded in June 2004
On June 7, 2004, Lesaka and the former shareholders of Net 1 Applied Technology Holdings Limited (“Aplitec”) implemented
a transaction under which the former shareholders of Aplitec obtained a majority voting interest in Lesaka. Aplitec was a holding
company established and existing under the laws of Republic of South Africa and was liquidated and deregistered following the closing
of the transaction. GAAP requires that the company whose shareholders retain a majority interest in a combined business be treated
as the acquirer for accounting purposes. Consequently, this transaction was accounted for as a reverse acquisition. For the period from
June 7, 2004, the financial information reported for the Company represents the consolidated results of Lesaka and Aplitec with Lesaka
as the acquired entity.
Although Aplitec is deemed to be the acquiring company for financial and reporting purposes, the legal status of the Lesaka as
the surviving corporation did not change.
Revision of Previously Issued Financial Statements
Understatement of cost and accumulated depreciation for computer equipment
In October 2025, the Company identified that it had understated its June 30, 2025, amounts of cost and accumulated depreciation
for computer equipment as well as the totals for cost and accumulated depreciation by $
consolidated financial statements for the years ended June 30, 2025 and 2024. The carrying value of property, plant and equipment
reported as of June 30, 2025, was not impacted by the error. The Company has recast the amounts of cost and accumulated depreciation
for computer equipment as well as the totals for cost and accumulated depreciation by $
Equipment, net note, refer to Note 7.
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.
Understatement of cost of goods sold, IT processing, servicing and support due to incorrect claim of indirect taxes
Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2025,
it determined that its certain indirect taxes had not been accounted for correctly in its consolidated balance sheet, consolidated
statements of operations, consolidated statement of comprehensive loss, consolidated statement of changes in equity, consolidated
statement of cash flows and related notes to the consolidated financial statements included in previously filed Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q since June 30, 2022, and these filings were incorrect. In these previous filings, the amount
of certain indirect taxes were incorrectly claimed in monthly indirect tax submission to the taxing authority and were incorrectly
excluded from the Company’s reported cost of goods sold, IT processing, servicing and support in the consolidated statements of
operations and other payables and retained earnings in the consolidated balance sheet. The corrected presentation in the revised
consolidated financial statements includes certain indirect taxes in cost of goods sold, IT processing, servicing and support in the
c
onsolidated statements of operations and other payables and retained earnings in the consolidated balance sheet.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-12
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)
Revision of Previously Issued Financial Statements (continued)
Understatement of cost of goods sold, IT processing, servicing and support due to incorrect claim of indirect taxes (continued)
The Company has also determined that it may also be liable for penalties and interest related to the indirect taxes not paid in a
timely manner and has recorded the penalties in the selling, general and administration expense and the interest in interest expense in
the revised consolidated statements of operations. The cumulative sum of the penalties and interest are included in other payables and
retained earnings in the revised consolidated balance sheet.
The Company has determined that at this time it is more likely than not that it will be unable to claim an income tax deduction
related to the error, however, it is performing further analysis of its tax position with its external tax advisors. Therefore, there are no
income tax adjustments reflected in these consolidated financial statements related to the correction of this error.
The Company has revised the previous presentations on the consolidated statements of operations for the years ended June 30,
2025 and 2024, and corrected them in this filing. The Company has also included the impact of the correction for the three months
ended September 30, 2025, in the consolidated statements of operations for the year June 30, 2026, included in this filing. The impact
of these revisions has increased cost of goods sold, IT processing, servicing and support, selling, general and administration expense
and interest expense, and all subtotals from operating income to net income (loss) attributable to Lesaka for the affected periods.
The Company has revised the consolidated balance sheet as of June 30, 2025, and corrected it in this filing where these amounts
are presented as comparative prior period amounts in other payables and retained earnings and affected subtotals and totals.
Specifically, for the year ended June 30, 2026, Cost of goods sold, IT processing, servicing and support increased by $
Selling, general and administration expense increased by $
increased by $
reported for the three months ended September 30, 2025. Basic and Diluted earnings per share for the year ended June 30, 2026, were
not impacted by the correction to amounts reported for the three months ended September 30, 2025.
Correction of deferred tax asset included in deferred income taxes due to correction of intercompany transactions
While preparing its Annual Report on Form 10-K for the year ended June 30, 2026, the Company determined that certain
intercompany transactions processed in previous periods were incorrectly recorded which resulted in the incorrect amount of deferred
income taxes recorded in its consolidated balance sheet, consolidated statements of operations, consolidated statements of
comprehensive loss, consolidated statements of changes in equity, consolidated statements of cash flows and related notes to the
consolidated financial statements included in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q since June 30,
2025, and these filings were incorrect. The deferred tax assets, net included in the Company’s consolidated balance sheet as of June
30, 2025, and subsequently presented balance sheets, were overstated by $
million. Income tax benefit for the year ended June 30, 2025, included in the consolidated statement of operations was overstated by
$
income tax benefit in the consolidated statements of operations and deferred income taxes and retained earnings in the consolidated
balance sheet.
The Company has revised the previous presentations on the consolidated statements of operations for the year ended June 30,
2025, and corrected them in this filing. The impact of these revisions has decreased income taxes benefit, and all subtotals from
operating income to net income (loss) attributable to Lesaka for the affected periods. The Company has revised the consolidated
balance sheet as of June 30, 2025, and corrected it in this filing where these amounts are presented as comparative prior period amounts
in deferred tax assets, net and retained earnings and affected subtotals and totals.
The Company assessed the materiality of these errors and change in presentation on prior period consolidated financial statements
in accordance with 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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-13
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)
Revision of Previously Issued Financial Statements (continued)
The tables below present the impact of the revisions to specific captions to the Company’s consolidated balance sheet and
consolidated statements of operations for the periods identified.
Consolidated balance sheet
June 30, 2025
As reported
Correction
As revised
Deferred tax assets, net
$
$
(2,216 )
$
Other payables
Accumulated other comprehensive loss
(185,664 )
(185,626 )
(2,216 )
Retained earnings
$
$
(3,994)
$
Consolidated statement of operations
Year ended June 30, 2025
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
$
$
Selling, general and administration, exclusive of depreciation and amortization
(A)
Interest expense
Income tax expense (benefit)
$
(18,198 )
$
$
(15,982 )
Basic earnings (loss) per share attributable to Lesaka shareholders
$
(1.14 )
$
(0.05 )
$
(1.19 )
Diluted earnings (loss) per share attributable to Lesaka shareholders
$
(1.14 )
$
(0.05 )
$
(1.19 )
(A) As reported for selling, general and administration, exclusive of depreciation and amortization includes the movement in
allowance for credit losses of $
, which is now presented separately on the consolidated statement of operations.
Consolidated statement of operations
Year ended June 30, 2024
As reported
Correction
As revised
(in thousands, except per share data)
Cost of goods sold, IT processing, servicing and support
$
$
$
Selling, general and administration, exclusive of depreciation and amortization
(A)
Interest expense
Basic earnings (loss) per share attributable to Lesaka shareholders
$
(0.27 )
$
(0.02 )
$
(0.29 )
Diluted earnings (loss) per share attributable to Lesaka shareholders
$
(0.27 )
$
(0.02 )
$
(0.29 )
(A) As reported for selling, general and administration, exclusive of depreciation and amortization includes the movement in
allowance for credit losses of $
, which is now presented separately on the consolidated statement of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-14
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)
Revision of Previously Issued Financial Statements (continued)
Correction of number of shares and amounts used for common stock and treasury shares and amounts for additional paid-in
capital
Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2026, it
determined that the presentation of the number of shares and amounts used for common stock and treasury shares and the amount of
additional paid-in capital in its consolidated balance sheets and consolidated statement of changes in equity and related notes to the
consolidated financial statements included in previously filed Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q
since June 30, 2006, were incorrect. In these previous filings, shares of Lesaka’s common stock repurchased by Lesaka were incorrectly
presented as treasury shares. Under the Florida Business Corporation Act, shares acquired directly by the issuing corporation are
restored by operation of Florida law to the status of authorized but unissued shares. However, shares repurchased by a company are
presented as treasury shares if (i) there is a provision in a corporation’s articles of incorporation designating the repurchase of a
corporation’s shares as treasury shares, or (ii) in the case of a corporation whose shares are registered on a national securities exchange,
the repurchased shares that have been designated as treasury shares in the corporation’s bylaws or in resolutions of its board of
directors. Shares repurchased by Lesaka were not designated as treasury shares under (i) or (ii) as described in the preceding sentence.
Guidance under U.S. GAAP requires that the repurchase of shares by a company should conform with applicable law and
therefore the repurchase of shares of its common stock by Lesaka should have reduced the number of common stock and amount and
the amount of additional paid-in capital presented. The corrected presentation in the revised consolidated financial statements includes
the repurchases of common stock by Lesaka as a reduction of the number of shares of common stock and amount and reduces the
amount of additional paid-in capital. Total Lesaka equity and the number of issued and outstanding shares are not affected by this
revision. Acquisition of shares of Lesaka’s common stock by its subsidiaries are not affected by the aforementioned rules and these
shares will continue to be presented as treasury shares in these consolidated financial statements.
The Company assessed the materiality of this error and change in presentation on prior period consolidated financial statements
in accordance with 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 Company has revised the previous presentations on the consolidated balance sheet as of June 30, 2025, and corrected them
in this filing. The Company has also included the impact of the correction for the years ended June 30, 2025 and 2024, respectively,
in the consolidated statement of changes in equity for the years ended June 30, 2025 and 2024, included in this filing. The impact of
these revisions has decreased the amount for common stock, treasury shares, at cost, and additional paid-in capital on the consolidated
balance sheet as of June 30, 2025. The impact of these revisions has decreased the number of shares and amount for common stock,
decreased the number of shares and amount of treasury shares, and decreased the amount of additional paid-in capital on the
consolidated statement of changes in equity for the years ended June 30, 2025 and 2024, respectively.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-15
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)
Revision of Previously Issued Financial Statements (continued)
Correction of number of shares and amounts used for common stock and treasury shares and amounts for additional paid-in
capital (continued)
The table below presents the impact of the revisions to specific captions to the Company’s consolidated balance sheet as of June
30, 2025.
Consolidated balance sheet
June 30, 2025
As reported
Correction
As revised
Common stock
$
$
(19 )
$
Treasury shares, cost
(298,523 )
(7,059 )
Additional paid-in capital
$
$
(291,445 )
$
The table below presents the impact of the revisions to specific captions to the Company’s consolidated statement of changes in
equity for the periods identified.
Consolidated statement of changes in equity
Year ended June 30, 2025
As reported
Correction
As revised
(in thousands, except per share data)
Common stock:
Balance - July 1, 2024:
Number of shares
(25,563,808 )
Amount
$
$
(19 )
$
Treasury shares repurchased
Number of shares
(371,187 )
(371,187 )
Balance - June 30, 2025:
Number of shares
(25,934,995 )
Amount
$
$
(19 )
$
Treasury shares:
Balance - July 1, 2024:
Number of shares
(25,563,808 )
Amount
$
(289,733 )
$
$
Treasury shares repurchased
Number of shares
(5,462,597 )
(5,091,410 )
Amount
$
(13,660 )
$
$
(11,929 )
Balance - June 30, 2025:
Number of shares
(29,934,044 )
(3,999,049 )
Amount
$
(298,523 )
$
$
(7,059 )
Additional paid-in capital:
Balance - July 1, 2024:
$
$
(289,714 )
$
Treasury shares repurchased
$
$
(1,731 )
$
(1,731 )
Balance - June 30, 2025:
$
$
(291,445 )
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-16
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)
Revision of Previously Issued Financial Statements (continued)
Correction of number of shares and amounts used for common stock and treasury shares and amounts for additional paid-in
capital (continued)
The table below presents the impact of the revisions to specific captions to the Company’s consolidated statement of changes in
equity for the periods identified.
Consolidated statement of changes in equity
Year ended June 30, 2024
As reported
Correction
As revised
(in thousands, except per share data)
Common stock:
Balance - July 1, 2023:
Number of shares
(25,244,286 )
Amount
$
$
(19 )
$
Treasury shares repurchased
Number of shares
(319,522 )
(319,522 )
Balance - June 30, 2024:
Number of shares
(25,563,808 )
Amount
$
$
(19 )
$
Treasury shares:
Balance - July 1, 2023:
Number of shares
(25,244,286 )
Amount
$
(288,238 )
$
$
Treasury shares repurchased
Number of shares
(319,522 )
Amount
$
(1,495 )
$
$
Balance - June 30, 2024:
Number of shares
(25,563,808 )
Amount
$
(289,733 )
$
$
Additional paid-in capital:
Balance - July 1, 2023:
$
$
(288,219 )
$
Treasury shares repurchased
$
$
(1,495 )
$
(1,495 )
Balance - June 30, 2024:
$
$
(289,714 )
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-17
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The financial statements of entities which are controlled by Lesaka, referred to as subsidiaries, are consolidated. Inter-company
accounts and transactions are eliminated upon consolidation.
The Company, if it is the primary beneficiary, consolidates entities which are considered to be variable interest entities (“VIE”).
The primary beneficiary is considered to be the entity that will absorb a majority of the entity's expected losses, receive a majority of
the entity's expected residual returns, or both. The Company has an obligation to absorb the financial losses of the Lesaka Employee
Share Trust (“Lesaka ESOP Trust”) and also has the ability to control this trust and therefore it has been consolidated. This trust does
not generate significant losses or residual returns.
Business combinations
The Company accounts for its business acquisitions under the acquisition method of accounting. The total value of the
consideration paid for acquisitions is allocated to the underlying net assets acquired, based on their respective estimated fair values.
The Company uses a number of valuation methods to determine the fair value of assets and liabilities acquired, including discounted
cash flows, external market values, valuations on recent transactions or a combination thereof, and believes that it uses the most
appropriate measure or a combination of measures to value each asset or liability. The Company recognizes measurement-period
adjustments in the reporting period in which the adjustment amounts are determined.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Translation of foreign currencies
The primary functional currency of the consolidated entities is the South African Rand (“ZAR”) and the Company’s reporting
currency is the U.S. dollar. Assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Revenues and
expenses are translated at average rates for the period. Translation gains and losses are reported in accumulated other comprehensive
income in total equity. The Company releases the foreign currency translation reserve included in accumulated other comprehensive
income attributable to a foreign entity upon sale or complete, or substantially complete, liquidation of the investment in that foreign
entity and includes the release in the gain or loss reported related to the sale or liquidation of the foreign entity.
Foreign exchange transactions are translated at the spot rate ruling at the date of the transaction. Monetary items are translated at
the closing spot rate at the balance sheet date. Transactional gains and losses are recognized in selling, general and administration
expense on the Company’s consolidated statement of operations for the period.
Cash, cash equivalents and restricted cash
Cash and cash equivalents include cash on hand and funds deposited in bank accounts with financial institutions that are liquid,
unrestricted and readily available. Restricted cash represents cash which is legally or contractually restricted as to use and includes
cash related to cash withdrawn from the Company’s debt facilities to fund ATMs as well cash in certain bank accounts that have been
ceded to under certain of the Company’s borrowings.
Allowance for credit losses
The Company uses historical default experience over the lifetime of loans in order to develop an expected loss rate for its lending
books. The allowance for credit losses related to Consumer finance loans receivables is calculated by multiplying the expected loss
rate with the month-end outstanding lending book. The allowance for credit losses related to Merchant finance loans receivables is
calculated by adding together actual receivables in default plus multiplying the expected loss rate with the month-end outstanding
lending book. The Company writes off microlending finance loans receivable and related service fees and interest if a borrower is in
arrears with repayments for more than three months or is deceased. The Company writes off merchant and working capital finance
receivables and related fees when it is evident that reasonable recovery procedures, including where deemed necessary, formal legal
a
ction, have failed.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-18
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for credit losses (continued)
For accounts receivables, the Company uses 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. Non-recoverability is assessed based on
a quarterly review by management of the ageing of outstanding amounts, the location and the payment history of the customer in
relation to those specific amounts.
Inventory
Inventory is valued at the lower of cost and net realizable value. Cost is determined on a first-in, first-out basis and includes
transport and handling costs.
Property, plant and equipment
Property, plant and equipment are shown at cost less accumulated depreciation. Property, plant and equipment are depreciated
on the straight-line basis at rates which are estimated to amortize the assets to their anticipated residual values over their useful lives.
Within the following asset classifications, the expected economic useful lives are approximately:
Vaults
Computer equipment
Office equipment
Vehicles
Furniture and fittings
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and
the carrying amount of the asset and is recognized in income.
Leases
The Company determines whether an arrangement is a lease at inception. Operating leases are included in operating lease right-
of-use assets (“ROU”), operating lease liability - current, and operating lease liability – long term in its consolidated balance sheets.
The Company does not have any significant finance leases as of June 30, 2026 and 2025, respectively, but its policy is to include
finance leases in property and equipment, other payables, and other long-term liabilities in its consolidated balance sheets.
A ROU asset represents the Company’s right to use an underlying asset for the lease term and the lease liabilities represent its
obligation to make lease payments arising from the lease arrangement. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide
an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized
borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease
prepayments made and excludes lease incentives. The terms of the Company’s lease arrangements may include options to extend or
terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is
recognized on a straight-line basis over the lease term.
The Company does not recognize right-of-use assets and lease liabilities for lease arrangements with a term of twelve months or
less. The Company accounts for all components in a lease arrangement as a single combined lease component. Costs incurred in the
adaptation of leased properties to serve the requirements of the Company (leasehold improvements) are capitalized and amortized over
the shorter of the estimated useful life of the asset and the remaining term of the lease.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-19
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity-accounted investments
The Company uses the equity method to account for investments in companies when it has significant influence but not control
over the operations of the company. Under the equity method, the Company initially records the investment at cost and thereafter
adjusts the carrying value of the investment to recognize its proportional share of the equity-accounted company’s net income or loss.
In addition, when an investment qualifies for the equity method (as a result of an increase in the level of ownership interest or degree
of influence), the cost of acquiring the additional interest in the investee is added to the current basis of the Company’s previously
held interest and the equity method would be applied subsequently from the date on which the Company obtains the ability to exercise
significant influence over the investee.
The Company releases a pro rata portion of the foreign currency translation reserve related to an equity-accounted investment
that is included in accumulated other comprehensive income to earnings upon the sale of a portion of its ownership interest in the
equity-accounted investment. The release of the pro rata portion of the foreign currency translation reserve is included in the
measurement of the gain or loss on sale of a portion of the Company’s ownership interest in the equity-accounted investment. The
Company does not recognize cumulative losses in excess of its investment or loans in an equity-accounted investment except if it has
an obligation to provide additional financial support.
Dividends received from an equity-accounted investment reduce the carrying value of the Company’s investment. The Company
has elected to classify distributions received from equity method investees using the nature of the distribution approach. This election
requires the Company to evaluate each distribution received on the basis of the source of the payment and classify the distribution as
either operating cash inflows or investing cash inflows. The Company reviews its equity-accounted investments for impairment
whenever events or circumstances indicate that the carrying amount of the investment may not be recoverable.
Goodwill
Goodwill represents the excess of the purchase price of an acquired enterprise over the fair values of the identifiable assets
acquired and liabilities assumed based upon their estimated fair value at the date of purchase. The Company reviews the carrying value
of goodwill annually or more frequently if circumstances indicate impairment has occurred.
Circumstances that could trigger an impairment test include but are not limited to: a significant adverse change in the business
climate or legal factors; an adverse action or assessment by a regulator; unanticipated competition; loss of key personnel; the likelihood
that a reporting unit or significant portion of a reporting unit will be sold or otherwise disposed; and results of testing for recoverability
of a significant asset group within a reporting unit. If goodwill is allocated to a reporting unit and the carrying amount of the reporting
unit exceeds the fair value of that reporting unit, an impairment loss is recorded in the statement of operations. Measurement of the
fair value of a reporting unit is based on present value techniques of estimated future cash flows.
Intangible assets
Intangible assets are shown at cost less accumulated amortization. Intangible assets are amortized over the following useful lives:
Customer relationships
Software, integrated platform and unpatented technology
FTS patent
Exclusive licenses
Brands and trademarks
Intangible assets are periodically evaluated for recoverability, and those evaluations take into account events or circumstances
that warrant revised estimates of useful lives or that indicate that impairment exists.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-20
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Debt and equity securities
Debt securities
The Company is required to classify all applicable debt securities as either trading securities, available for sale or held to maturity
upon investment in the security.
Held to maturity
Debt securities acquired by the Company which it has the ability and the positive intent to hold to maturity are classified as held
to maturity debt securities. The Company is required to make an election to classify these debt securities as held to maturity and these
securities are carried at amortized cost. The amortized cost of held to maturity debt securities is adjusted for amortization of premiums
and accretion of discounts to maturity. Interest received from the held to maturity security together with this amortization is included
in interest income in the Company’s consolidated statement of operations. The Company had a held to maturity security as of June 30,
2025. The Company uses historical default experience over the lifetime of debt securities in order to calculate a lifetime loss rate for
its held to maturity debt securities. The Company had
the carrying value of the Company’s held to maturity debt securities was $
.
Impairment of debt securities
With regard to held to maturity debt securities, the Company considers (i) the ability and intent to hold the debt security for a
period of time to allow for recovery of value (ii) whether it is more likely than not that the Company will be required to sell the debt
security; and (iii) whether it expects to recover the entire carrying amount of the debt security. The Company records an impairment
loss in its consolidated statement of operations representing the difference between the debt securities carrying value and the current
fair value as of the date of the impairment if the Company determines that it intends to sell the debt security or if that it is more likely
than not that it will be required to sell the debt security before recovery of the amortized cost basis. However, the impairment loss is
split between a credit loss and a non-credit loss for debt securities that the Company determines that it does not intend to sell or that it
is more likely than not that it will not be required to sell the debt securities before the recovery of the amortized cost basis. The credit
loss portion, which is measured as the difference between the debt security’s cost basis and the present value of expected future cash
flows, is recognized in the Company’s consolidated statement of operations. The non-credit loss portion, which is measured as the
difference between the debt security’s cost basis and its current fair value, is recognized in other comprehensive income, net of
applicable taxes.
Equity securities
Equity securities are measured at fair value. Changes in the fair value of equity securities are recorded in the Company’s
consolidated statement of operations within the caption titled “change in fair value of equity securities”. The Company may elect to
measure equity securities without readily determinable fair values at its 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 minus changes
in observable prices equity securities”). Changes in the fair value of the Company’s cost minus changes in observable prices equity
securities are discussed in Note 9. The Company performs a qualitative assessment on a quarterly basis and recognizes an impairment
loss if there are sufficient indicators that the fair value of the equity security is less than its carrying value.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-21
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Policy reserves and liabilities
Reserves for policy benefits and claims payable
The Company determines its reserves for policy benefits under its life insurance products using models which estimate claims
incurred that have not been reported, expenses that are expected to be incurred when settling these claims, and the total present value
of disability claims-in-payment at the balance sheet date. These models allow for best estimate assumptions based on experience
(where sufficient) plus a risk adjustment for non-financial risk, as required in the markets in which these products are offered, namely
South Africa.
The best estimate assumptions include (i) mortality and morbidity assumptions reflecting the company’s most recent experience,
(ii) expense assumptions based on the expected claims handling cost and (iii) claim reporting delays reflecting Company specific and
industry experience. The disability claims-in-payment reserve is largely reinsured and the reported values were based on the reserve
held by the relevant reinsurer. The values of matured guaranteed endowments are increased by late payment interest.
Deposits on investment contracts
For the Company’s interest-sensitive life contracts, liabilities approximate the policyholder’s account value.
Reinsurance contracts held
The Company enters into reinsurance contracts with reinsurers under which the Company is compensated for the entire amount
or a portion of losses arising on one or more of the insurance contracts it issues.
The expected benefits to which the Company is entitled under its reinsurance contracts held are recognized as reinsurance assets.
These assets consist of short-term balances due from reinsurers (classified within Accounts receivable, net and other receivables) as
well as long-term receivables (classified within other long-term assets) that are dependent on the expected claims and benefits arising
under the related reinsurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with the amounts
associated with the reinsured contracts and in accordance with the terms of each reinsurance contract. Reinsurance assets are assessed
for impairment at each balance sheet date. If there is reliable objective evidence that amounts due may not be recoverable, the Company
reduces the carrying amount of the reinsurance asset to its recoverable amount and recognizes that impairment loss in its consolidated
statement of operations. Reinsurance premiums are recognized when due for payment under each reinsurance contract.
Redeemable common stock
Common stock that is redeemable (1) at a fixed or determinable price on a fixed or determinable date, (2) at the option of the
holder, or (3) upon the occurrence of an event that is not solely within the control of Company is presented outside of total Lesaka
equity (i.e. permanent equity). Redeemable common stock is initially recognized at issuance date fair value and the Company does not
adjust the issuance date fair value if redemption is not probable. The Company re-measures the redeemable common stock to the
maximum redemption amount at the balance sheet date once redemption is probable. Reduction in the carrying amount of the
redeemable common stock is only appropriate to the extent that the Company has previously recorded increases in the carrying amount
of the redeemable equity instrument as the redeemable common stock may not be carried at an amount that is less than the initial
amount reported outside of permanent equity.
Redeemable common stock is reclassified as permanent equity when presentation outside permanent equity is no longer required
(if, for example, a redemption feature lapses, or there is a modification of the terms of the instrument). The existing carrying amount
of the redeemable common stock is reclassified to permanent equity at the date of the event that caused the reclassification and prior
period consolidated financial statements are not adjusted.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-22
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that
reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into
contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted
for as separate performance obligations based on observable standalone selling prices. Revenue is recognized net of allowances for
returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Nature of products and services
Acquiring
The Company provides its customers with acquiring processing services that involve the collection, transmittal and retrieval of
all transaction data in exchange for consideration upon completion of the transaction and recognizes revenue from these activities at a
point in time. In certain instances, the Company also provides a funds collection and settlement service for its customers and recognizes
revenue from these activities at a point in time.
ADP
The Company purchases airtime vouchers for resale to customers and acts as a principal in these transactions. Airtime purchased
for resale is included in inventory and released to cost of goods sold, IT processing, servicing and support upon sale of the inventory.
The Company negotiates and agrees sales prices for airtime sales with its customers and revenue is measured at the agreed contractual
price. The Company recognizes revenue when the airtime is delivered to the customer.
The Company, as a transaction processor and in the capacity of an agent, facilitates the delivery of ADP to its customers
(including prepaid airtime vouchers, prepaid electricity and gaming vouchers) and earns a commission once these services are
delivered to the customer. The Company recognizes revenue from these activities at a point in time. Revenue from these transactions
fluctuates based on the volume of ADP services distributed.
The Company provides its customers with transaction processing services that involve the collection, transmittal and retrieval of
all transaction data (including related to bill payments) in exchange for consideration upon completion of the transaction and
recognizes revenue from these activities at a point in time. In certain instances, the Company also provides a funds collection and
settlement service for its customers and recognizes revenue from these activities at a point in time.
Cash
The Company provides customers with cash management and digitization services which enables its merchant customers to
deposit cash into digital vaults operated by the Company, after which the funds are then electronically accessible by customers to
either transfer to their nominated bank account or to pay certain pre-selected suppliers and recognizes revenue from these activities at
a point in time. The Company considers each of these services as a single performance obligation. The Company’s contracts specify
a transaction price for services provided. Cash revenue fluctuates based on the type and the volume of transactions processed. Revenue
is recognized on the completion of the processed transaction and recognizes revenue at a point in time.
Software
The Company provides rental and support services under a master rental agreement with customers. Control of the rental asset
is transferred through the right of use on a monthly basis as per the master rental agreement terms. Customers are required to pay the
monthly rental and support fee in advance. The performance obligation for the service component is provided over the month and
revenue is recognized at the end of the month. The Company recognizes revenue from these activities over time.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-23
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Nature of products and services (continued)
Lending
The Company provides short-term loans to merchants in South Africa and levies interest on the amount lent. The Company does
not charge these customers up-front initiation fees or monthly service fees. Interest earned from customers is recognized using the
effective interest rate method, which requires the utilization of the rate of return implicit in the loan, that is, the contractual interest
rate adjusted for any net deferred loan fees or costs, premium, or discount existing at the origination or acquisition of the loan. The
interest rate included in the contract with the customer generally changes with changes to benchmark rates of interest set by the South
African Reserve Bank (“SARB”).
The Company also provides short-term loans to customers (consumers) in South Africa and charges up-front initiation fees,
interest and monthly service fees. Interest earned from customers is recognized using the effective interest rate method, which requires
the utilization of the rate of return implicit in the loan, that is, the contractual interest rate adjusted for any net deferred loan initiation
fees or costs, premium, or discount existing at the origination or acquisition of the loan. Monthly service fee revenue is recognized
under the contractual terms of the loan. The monthly service fee are earned over time and is fixed upon initiation and does not change
over the term of the loan and is recognized when billed on a monthly basis.
Transactional fees
Customers serviced by the Company’s Consumer operating segment 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 point of sale device (“POS”). The Company
also earns transaction fees from transactions processed for these customers. The Company’s contracts specify a transaction price for
each service provided (for instance, ATM withdrawal, balance enquiry, etc.). Transaction revenue fluctuates based on the type and
volume of transactions performed by the customer. Revenue is recognized on the completion of the processed transaction at a point in
time.
The Company also provides bank accounts to customers and this service is underwritten by a regulated banking institution
because the Company is not a bank. The Company charges its customers a fixed monthly bank account administration fee for all active
bank accounts regardless of whether the account holder has transacted or not. The Company recognizes account holder fees on a
monthly basis on all active bank accounts, which are earned over time and billed on a monthly basis. Revenue from account holders’
fees fluctuates based on the number of active bank accounts.
Insurance
The Company writes life insurance contracts, and policy holders pay the Company a monthly insurance premium at the beginning
of each month. Premium revenue is recognized on a monthly basis net of policy lapses. Policy lapses are provided for on the basis of
expected non-payment of policy premiums.
Utilities
The Company facilitates the delivery of prepaid electricity tokens to its customers and earns a commission from the delivery of
these tokens. The Company recognizes revenue from these activities at a point in time.
Other
The Company supplies hardware and licenses for its customers to use the Company’s technology. Hardware includes the sale of
POS devices, SIM cards and other consumables which can occur on an ad hoc basis. The Company recognizes revenue from hardware
at the transaction price specified in the contract as the hardware is delivered to the customer. Licenses include the right to access
certain technology developed by the Company and the associated revenue is recognized ratably over the license period.
Accounts Receivable, Contract Assets and Contract Liabilities
The Company recognizes accounts receivable when its right to consideration under its contracts with customers becomes
u
nconditional. The Company has no contract assets or contract liabilities.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-24
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Research and development expenditure
Research and development expenditure is charged to net income in the period in which it is incurred. During the years ended
June 30, 2026, 2025 and 2024, the Company incurred research and development expenditures of $
million, respectively.
Computer software development
Product development costs in respect of software intended for sale to licensees are expensed as incurred until technological
feasibility is attained. Technological feasibility is attained when the Company’s software has completed system testing and has been
determined to be viable for its intended use. Once technological feasibility is reached, the Company capitalized such costs and
amortizes these costs over the products’ estimated life. The time between the attainment of technological feasibility and completion
of software development is generally short with insignificant amounts of development costs incurred during this period.
Costs in respect of the development of software for the Company’s internal use are expensed as incurred, except to the extent
that these costs are incurred during the application development stage. All other costs including those incurred in the project
development and post-implementation stages are expensed as incurred.
Income taxes
The Company provides for income taxes using the asset and liability method. This approach recognizes the amount of income
taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for the future tax consequence of events
recognized in the financial statements and tax returns. Deferred taxes are adjusted to reflect the effects of changes in tax laws or rates
in the period of enactment. The majority of the Company’s income taxes and deferred tax balances arise in the South Africa. The
Company used the enacted statutory tax rate of
% for the years ended June 30, 2026, 2025 and 2024 to measure current tax expense
(benefit) and deferred tax expense (benefit) in South Africa. The Company measured its South African current tax expense for the
years ended June 30, 2026 and 2025 and its South African deferred tax assets and liabilities as of June 30, 2026 and 2025, using the
enacted statutory tax rate in South Africa of
%.
In establishing the appropriate deferred tax asset valuation allowances, the Company assesses the realizability of its deferred tax
assets, and based on all available evidence, both positive and negative, determines whether it is more likely than not that the deferred
tax assets or a portion thereof will be realized. The Company does not consider future reversals of existing taxable temporary
differences associated with indefinite lived assets where the timing of the reversal cannot be predicted as a source of income to support
deferred tax assets for carryforward that do not expire.
Unrecognized tax benefits are recorded in the financial statements for positions which are not considered more likely than not,
based on the technical merits of the position, of being sustained upon examination by the taxing authorities. For positions that meet
the more likely than not standard, the measurement of the tax benefit recognized in the financial statements is based upon the largest
amount of tax benefit that, in management’s judgement, is greater than 50% likely of being realized based on a cumulative probability
assessment of the possible outcomes. The Company’s policy is to include interest related to income taxes in interest expense and
penalties in selling, general and administration in the consolidated statements of operations.
The Company has elected the period cost method and records U.S. inclusions in taxable income related to global intangible low
taxed income (“GILTI”) as a current-period expense when incurred.
Stock-based compensation
Stock-based compensation represents the cost related to stock-based awards granted. The Company measures equity-based stock-
based compensation cost at the grant date, based on the estimated fair value of the award, and recognizes the cost as an expense on a
straight-line basis (net of estimated forfeitures) over the requisite service period. In respect of awards with only service conditions that
have a graded vesting schedule, the Company recognizes compensation cost on a straight-line basis over the requisite service period
for the entire award. The forfeiture rate is estimated using historical trends of the number of awards forfeited prior to vesting. The
expense is recorded in the statement of operations and classified based on the recipients’ respective functions. The Company records
deferred tax assets for awards that result in deductions on the Company’s income tax returns, based on the amount of compensation
cost recognized and the Company’s statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the
deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax
r
eturn are recorded in income tax expense in the consolidated statement of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-25
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity instruments issued to third parties
Equity instruments issued to third parties for services provided represents the cost related to equity instruments granted. The
Company measures this cost at the grant date, based on the estimated fair value of the award, and recognizes the cost as an expense
on a straight-line basis (net of estimated forfeitures) over the requisite service period. The forfeiture rate is estimated based on the
Company’s expectation of the number of awards that will be forfeited prior to vesting. The Company records deferred tax assets for
equity instrument awards that result in deductions on the Company’s income tax returns, based on the amount of equity instrument
cost recognized and the Company’s statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the
deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax
return are recorded in the statement of operations.
Settlement assets and settlement obligations
The Company provides customers with cash management and digitization services which enable its merchant customers to
deposit cash into digital vaults operated by the Company, after which the funds are then electronically accessible by customers to
either transfer to their nominated bank account or to pay certain pre-selected suppliers.
Settlement assets comprise (1) cash received from merchant customers from cash deposits into the Company’s vaults, which are
then electronically accessible by customers to either transfer to their nominated bank account or to pay certain pre-selected suppliers,
(2) cash received from credit card companies (as well as other types of payment services) which have business relationships with
merchants selling goods and services that are the Company’s customers and on whose behalf it processes the transactions between
various parties, and (3) cash received from gift card customers.
Settlement obligations comprise (1) amounts that the Company is obligated to disburse to merchant customers or to their
nominated pre-selected suppliers, (2) amounts that the Company is obligated to disburse to merchants selling goods and services that
are the Company’s customers and on whose behalf it processes the transactions between various parties and settles the funds from the
credit card companies to the Company’s merchant customers, and (3) amounts that the Company is obliged to pay to various parties
as a result of transaction performed using gift cards.
The balances at each reporting date may vary widely depending on the timing of the receipts and payments of these assets and
obligations.
Recent accounting pronouncements adopted
In December 2023, the Financial Accounting Standards Board (“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 was effective for the Company beginning July 1, 2025 for its year
ended June 30, 2026. Refer to Note 18.
Recent accounting pronouncements not yet adopted as of June 30, 2026
In November 2024, the FASB issued guidance regarding
Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures
(Subtopic 220-40)
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, and interim reporting periods during that fiscal year.
Early adoption is permitted. The Company is currently assessing the impact of this guidance on its financial statements and related
disclosures.
In July 2025, the FASB issued guidance regarding
Financial Instruments-Credit Losses (Topic 326) Measurement of Credit
Losses for Accounts Receivable and Contract Assets
and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the
estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted
for under
Revenue From Contracts With Customers (Topic 606).
This guidance is effective for the Company beginning July 1, 2026,
and interim reporting periods during that fiscal year. The Company will apply the guidance from the effective date and elect the
practical expedient. The Company does not expect the impact of this guidance to be material on its financial statements and related
d
isclosures.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-26
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements not yet adopted as of June 30, 2026 (continued)
On September 18, 2025, the FASB issued guidance regarding
Intangibles—Goodwill and Other— Internal-Use Software
(Subtopic 350-40)
guidance makes targeted improvements to existing guidance but does not fully align the framework for accounting for internally
developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally
that is subject to guidance regarding
Costs of Software to Be Sold, Leased, or Marketed
(Subtopic ASC 985-20)
. The new guidance
also does not amend the guidance on costs of software licenses that are within the scope of ASC 985 -20. The amendments supersede
the guidance on website development costs in guidance regarding
Website Development Costs (Subtopic ASC 350-50)
that guidance, along with the recognition requirements for development costs specific to websites, to ASC 350 -40. This guidance is
effective for the Company beginning July 1, 2028, and interim reporting periods during that fiscal year. Early adoption is permitted.
Entities may apply the guidance prospectively, retrospectively, or via a modified prospective transition method. The modified
prospective transition approach would allow entities to account for an in-process project that, before the transition date, met the
capitalization requirements but would no longer meet the requirements for capitalization under the new guidance by derecognizing the
capitalized costs for that in-process project through a cumulative-effect adjustment to the opening balance of retained earnings. The
Company is currently assessing the impact of this guidance on its financial statements and related disclosures.
On December 8, 2025, the FASB issued guidance regarding
Interim Reporting (Topic 270)
navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it
provides “interim financial statements and notes in accordance with GAAP.” The updated guidance also addresses the form and content
of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes
a principle under which an entity must “disclose events since the end of the last annual reporting period that have a material impact
on the entity.” As the FASB stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to “change
the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements.” This guidance is effective
for the Company beginning July 1, 2028, and interim reporting periods during that fiscal year. Early adoption is permitted. Entities
m
ay apply the guidance prospectively or retrospectively.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-27
3. ACQUISITIONS AND DISPOSITIONS
The cash paid, net of cash received related to the Company’s acquisition during the years ended June 30, 2026, 2025 and 2024,
is summarized in the table below:
2026
2025
2024
Total cash paid
$
$
$
Less: cash acquired
Total cash paid, net of cash received
$
$
$
Acquisitions
2027 Proposed acquisitions of Bank Zero
On June 26, 2025, Lesaka SA entered into a Transaction Implementation Agreement (the “Transaction Implementation
Agreement”) with Zero Research Proprietary Limited (“Zero Research”), Bank Zero Mutual Bank (“Bank Zero”), and other parties
identified in Annexure A to the Transaction Implementation Agreement (being all of the shareholders of Bank Zero save for Zero
Research and Naught Holdings Ltd, the “Bank Zero Sellers”), the parties listed in Annexure B to the Transaction Implementation
Agreement (being all of the shareholders of Zero Research save for Naught Holdings Ltd, the “Zero Research Sellers”) and Naught
Holdings Ltd. All amounts below translated at the closing rate of $1: ZAR
The purchase consideration payable by Lesaka SA in exchange for the relevant shares in Bank Zero and the subscription
consideration payable by Lesaka SA in exchange the subscription shares will be settled through a combination of delivery of Lesaka
shares of common stock and up to ZAR
received by it to settle the repurchase consideration due to the Zero Research Sellers. Following implementation of each of these steps,
and subject to the below adjustment, the Bank Zero Sellers, Zero Research Sellers and Naught Holdings Ltd will own approximately
% of Lesaka's fully diluted shares at the time of completion of the proposed transaction. The Transaction Implementation Agreement
allows a mechanism (in certain circumstances) pursuant to which the Bank Zero Sellers and the Zero Research Sellers may acquire
fewer shares in Lesaka and a larger cash consideration.
The Transaction Implementation Agreement includes customary interim period undertakings which required each of Zero
Research and Bank Zero, among other things (i) to conduct their business in the ordinary course during the period between the
execution of the Transaction Implementation Agreement and the closing of the transaction contemplated thereby, and (ii) not to engage
in certain kinds of transactions during such period. The Transaction Implementation Agreement is subject to the fulfilment of certain
conditions precedent. The Transaction Implementation Agreement will lapse if all of the conditions precedent are not met or not
waived by January 31, 2027 (or such later date as may be agreed).
Bank Zero and Lesaka SA have agreed to implement a long-term incentive arrangement following implementation of the
transaction, under which an agreed portion of a number of shares of Lesaka's shares of common stock calculated will be granted by (i)
dividing ZAR
“Retention LTIP Shares”) and (ii) dividing ZAR
The Retention LTIP Shares will be subject to time and certain performance-based vesting conditions. The terms of the long-term
incentive plan are required to be considered, and if necessary approved, by Lesaka's remuneration committee.
The Company incurred transaction-related expenditures of $
and 2025, respectively, related to the proposed acquisition of Bank Zero. The Company’s accruals presented in Note 13 of as June 30,
2026, includes an accrual of transaction related expenditures of $
million and the Company expects to incur further transaction costs
of $
2026 Acquisitions
Atom Operations Proprietary Limited
On November 10, 2025, the Company, through its wholly owned subsidiary, Prism Holdings Proprietary Limited (“Prism”),
entered into a Sale of Shares Agreement (the “Atom Purchase Agreement”) with Gravaton Investments Proprietary Limited
(“Gravaton”) and Atom Operations Proprietary Limited (“Atom”). Pursuant to the Atom Purchase Agreement and subject to its terms
and conditions, Prism agreed to acquire, and Gravaton agreed to sell, all of the outstanding equity interests in Atom for a total purchase
consideration of $
cash and
by $
) on closing). The transaction closed on December 1, 2025. The Company did not incur any significant transaction costs
r
elated to this acquisition.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-28
3. ACQUISITIONS AND DISPOSITIONS (continued)
2026 Acquisitions (continued)
Mobilemart Proprietary Limited
On January 30, 2026, the Company, through Prism, entered into a Sale of Shares Agreement (the “Mobilemart Purchase
Agreement”) with BASA Ventures Proprietary Limited (“BASA”) and Mobilemart Proprietary Limited (“MobileMart”). Pursuant to
the Mobilemart Purchase Agreement and subject to its terms and conditions, Prism agreed to acquire, and BASA agreed to sell, all of
the outstanding equity interests in MobileMart for a total purchase consideration of $
February 6, 2026 exchange rates) in cash. The transaction closed on February 6, 2026. The Company did not incur any significant
transaction costs related to this acquisition.
These acquisitions were allocated to our Enterprise operating segment.
Pro forma results related to acquisitions
Pro forma results of operations have not been presented for the acquisitions of Atom and MobileMart because the effect of these
acquisitions, individually and in aggregate, are not material to the Company. Since the closing of these acquisitions, they have
contributed revenue and net loss of $
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, with operations across South Africa,
Namibia, Botswana and Kenya. For more than two decades, Adumo 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 operated across three businesses, which provided 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 the Lesaka Payouts Proprietary Limited, formerly
known as Adumo Payouts Proprietary Limited , (“Lesaka Payouts”), business provides card issuing program management to
corporate clients such as Anglo American and Coca-Cola (Lesaka Payments Proprietary Limited, formerly known as Adumo
Payments Proprietary Limited (“Lesaka Payments”) was allocated to Merchant operating segment and Lesaka Payouts was
allocated to the Consumer operating segment);
●
The Adumo ISV business, Lesaka Hospitality Proprietary Limited, formerly known as GAAP Point of Sale Proprietary Limited
(“Lesaka Hospitality”), has operations in South Africa, Botswana and Kenya, and clients in a number of other 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 (Adumo ISV was allocated to Merchant operating
segment); and
●
The Adumo Ventures business offers online commerce solutions (Lesaka Online Proprietary Limited, formerly known as
Adumo Online Proprietary Limited, (“Lesaka Online”)), cloud-based, multi-channel point-of-sales solutions (Humble Software
Proprietary Limited (“Humble”) and an aggregated payment and credit platform for in-store and online commerce (SwitchPay
Proprietary Limited (“SwitchPay”) to SME merchants and corporate clients in South Africa and Namibia (Adumo Venture was
allocated to the Merchant operating segment).
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-29
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
October 2024 acquisition of Adumo (continued)
The total purchase consideration was ZAR
Company’s common stock (“Consideration Shares”) with a value of $
cash of $
million ($
closing price on the Johannesburg Stock Exchange on October 1, 2024, was ZAR
exchange rate). Certain indirect shareholders of the sellers were investors in Adumo and the Company. These shareholders ultimately
received an aggregate of
common stock (refer to Note 14).
The closing of the transaction was subject to customary closing conditions which we fulfilled prior to closing. 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.
The Company incurred transaction-related expenditures of $
June 30, 2026, 2025 and 2024, respectively, related to the acquisition of Adumo.
March 2025 acquisition of Utilities
On November 19, 2024, the Company, through Lesaka SA, entered into a Sale of Shares Agreement (the “Utilities Purchase
Agreement”) with Imtiaz Dhooma (Utilities’ former chief executive officer) and Ninety Nine Proprietary Limited (“the Seller”).
Pursuant to the Utilities Purchase Agreement and subject to its terms and conditions, Lesaka, through its subsidiary, Lesaka SA, agreed
to acquire, and the Seller agreed to sell, all of the outstanding equity interests in Lesaka Utilities Proprietary Limited, previously known
as Recharger Proprietary Limited (“Utilities”). The transaction closed on March 3, 2025.
At the same time, Utilities also entered into independent contractor agreement with Utilities’ former chief executive officer
which had a term of
consultation with Company representatives, facilitate the handover process and assist Utilities in transitioning ownership to Lesaka
SA, avail himself for important customer and vendor meetings, attend scheduled weekly management committee meetings regarding
operational and business activities of the Utilities business, and providing support on an ad-hoc basis to Company representatives with
regard to operational matters and in facilitating the hand over, as and when reasonably required.
This acquisition has been reported as part of the Company’s Enterprise operating segment and demonstrates positive advancement
of the Company’s strategy in its Enterprise operating segment. The Company expects the acquisition to act as an entry point for it into
the South African private utilities space while augmenting Enterprise’s alternative payment offering.
The transaction consideration per the Utilities Purchase Agreement was ZAR
in two tranches. The share price applied to determine the number of shares of common stock to be issued for the equity consideration
is 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. Lesaka SA extended a ZAR
an existing loan due by Utilities to the Seller.
The first tranche, comprising ZAR
with a value of ZAR
the shares issued multiplied by the Company’s closing price on the Johannesburg Stock Exchange on March 3, 2025, of ZAR
,
and translated to U.S. dollars at the exchange rate of $1: ZAR
. Lesaka SA delivered
stock from a pool of shares it purchased in October 2024, and the Company recognized a gain in additional paid-in-capital during the
year ended June 30, 2025, of $
in October 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-30
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
March 2025 acquisition of Utilities (continued)
The second and final tranche was settled on March 3, 2026, and comprised a contractual cash payment of ZAR
($
number of shares to be delivered was calculated as
for the three-month period prior to February 24, 2026. Lesaka SA delivered the
from a pool of shares it purchased in October 2024, and the Company recognized a loss in additional paid-in-capital during the year
ended June 30, 2026, of $
October 2024.
The total purchase consideration was ZAR
the Company’s common stock with a value of ZAR
shareholder loan of ZAR
) million.
Pursuant to the Utilities Purchase Agreement, payment of the second tranche in March 2026 was contingent on Utilities’ former
chief executive officer’s ongoing service under the independent contractor agreement until June 30, 2025. The second tranche would
not have been paid if he failed to provide the requisite service, except if failure to provide future services is due to expiry of the
contract, mutual agreement or death of the former chief executive officer. The former chief executive officer was also a director of the
Seller, and signed the Utilities Purchase Agreement on behalf of himself, Utilities and the Seller. He also signed an independent
contractor agreement under which he is required to provide post-combination service to Utilities until March 2026 (but the vesting of
the shares is only for services to June 30, 2025). The Company has determined that as the payment of the second tranche is contingent
on these post-combination services, the value of the second tranche is not treated as purchase consideration and rather, under GAAP,
represents compensation for post-combination services. In late May 2025, an addendum was signed to reduce the post-combination
period from twelve months to four months (i.e. from March 2025 to June 2025).
The post-combination services for the year ended June 30, 2025, of $
payment and the value of future shares to be provided. The value of the future shares to be provided was calculated using the contractual
value of ZAR
prior to June 30, 2025, and at the applicable exchange rate. The post-combination compensation charge is included in the caption
transaction costs related to Adumo, Utilities and Bank Zero acquisitions and certain compensation costs included on the consolidated
statement of operations.
The Company records stock-based compensation charges that are cash-settled awards in other payables. The liability for the
future payments was included in the caption Other payables in the consolidated balance sheet as of June 30, 2025, refer to Note 13.
There was no unrecognized compensation costs related to the post-combination compensation charge as of June 30, 2025. The
Company recorded a fair value loss of $
shares of Lesaka’s common stock under the caption change in fair value of equity securities in the consolidated statement of operations.
The fair value loss was calculated as the difference between the fair value of the shares of common stock transferred on March 3,
2026, and the amount recorded in other payables as of June 30, 2025.The fair value of the shares of common stock in U.S. dollars on
March 3, 2026, was calculated using the shares issued multiplied by the Company’s closing price on the Johannesburg Stock Exchange
on March 3, 2026, of ZAR
, and translated to U.S. dollars at the exchange rate of $1: ZAR
.
The Company incurred transaction-related expenditures of $
2026, 2025 and 2024, respectively, related to the acquisition of Utilities.
Other acquisitions
Effective November 1, 2024, the Company, through its wholly owned subsidiary Lesaka Merchant Technologies Proprietary
Limited, formerly known as Adumo Technologies Proprietary Limited, (“Lesaka MT”), acquired the remaining shares (representing
% of the issued and outstanding shares) it did not own in Lesaka Merchant Technologies Namibia, formerly known as Innervation
Value Added Services Namibia Pty Ltd, (“Lesaka Nam”) for $
rates). Lesaka Nam was accounted for using the equity method prior to the acquisition of a controlling interest in the company. Lesaka
MT paid ZAR
will be paid in
transaction costs related to this acquisition.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-31
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
Other acquisitions (continued)
The Company, through Lesaka SA, acquired
% of Lesaka Digital Risk Proprietary Limited, formerly known as Genisus Risk
Proprietary Limited (“Lesaka Digital Risk”), for a cash consideration of ZAR
any significant transaction costs related to this acquisition.
The Company, through its wholly owned subsidiary Lesaka Cash Management Proprietary Limited, formerly known as Cash
Connect Management Solutions Proprietary Limited, (“LCM”), acquired
% of Lesaka Fuel Software Proprietary Limited, formerly
known as Master Fuel Proprietary Limited (“Lesaka Fuel Software”) for a cash consideration of ZAR
Company did not incur any significant transaction costs related to this acquisition.
The purchase price allocation for all acquisitions closed during the year ended June 30, 2025, were finalized as of June 30, 2025,
except for Utilities. The Company completed the purchase price allocation related to the Utilities acquisition during the three months
ended September 30, 2025. There were no changes to the Utilities preliminary purchase price allocation as of June 30, 2025. The
purchase price allocation of acquisitions during the year ended June 30, 2025, translated at the foreign exchange rates applicable on
the date of acquisition, is provided in the table below:
Acquisitions during fiscal 2025
Adumo
Utilities
Other
Total
Final
Final
Final
Cash and cash equivalents
$
$
$
$
Accounts receivable
Inventory
Property, plant and equipment
Operating lease right of use asset
Equity-accounted investment
Goodwill
Intangible assets
Deferred income taxes assets
Other long-term assets
Current portion of long-term borrowings
(1,178 )
(1,178 )
Accounts payable
(3,266 )
(149 )
(440 )
(3,855 )
Other payables
(28,116 )
(1,439 )
(252 )
(29,807 )
Operating lease liability - current
(948 )
(185 )
(1,133 )
Income taxes payable
(150 )
(4 )
(42 )
(196 )
Deferred income taxes liabilities
(7,107 )
(4,366 )
(19 )
(11,492 )
Operating lease liability - long-term
(326 )
(269 )
(595 )
Long-term borrowings
(7,308 )
(7,308 )
Other long-term liabilities
(140 )
(140 )
Settlement assets
Settlement liabilities
(8,530 )
(8,530 )
Fair value of assets and liabilities on acquisition
$
$
$
$
The fair value of the non-controlling interests recorded 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
% minority discount.
Pro forma results related to acquisitions
Pro forma results of operations have not been presented for the acquisition of Lesaka Nam, Lesaka Digital Risk and Lesaka Fuel
Software because the effect of these acquisitions, individually and in aggregate, are not material to the Company. Since the closing of
these acquisitions, the entities have contributed revenue and net income of $
ended June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-32
3. ACQUISITIONS (continued)
2025 Acquisitions (continued)
Pro forma results related to acquisitions (continued)
The results of the Adumo and Utilities’ operations are reflected in the Company’s financial statements from October 1, 2024,
and March 3, 2025, respectively. The following unaudited pro forma revenue and net income information has been prepared as if the
acquisitions of Adumo and Utilities had occurred on July 1, 2023, using the applicable average foreign exchange rates for the periods
presented:
Year ended June 30,
2025
2024
Revenue
$
$
Net loss
$
(68,367 )
$
(37,324 )
The unaudited pro forma financial information presented above includes the business combination accounting and other effects
from the acquisitions 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; (3) an adjustment to exclude all applicable
transaction-related costs recognized in the Company’s consolidated statement of operations for year ended June 30, 2025, and include
the applicable transaction-related costs for the year ended June 30, 2024; an adjustment to exclude the post-combination compensation
expenses related to the Utilities acquisition recognized in the Company’s consolidated statement of operations for year ended June 30,
2025, and include the expense during 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 acquisitions, Adumo and Utilities have contributed aggregate revenue of $
attributable to the Company, including intangible assets amortization related to assets acquired, net of deferred taxes, and the post-
combination compensation charge, of $
2024 Acquisitions
April 2024 acquisition of Insights
In April 2024 the Company closed the acquisition of Lesaka Insights Proprietary Limited, formerly known as Touchsides
Proprietary Limited, (“Insights”). Insight s has been allocated to our Merchant operating segment. The final purchase price allocation
of the Insights acquisition, translated at the foreign exchange rates applicable on the date of acquisition, is provided in the table below:
Insights
Cash and cash equivalents
$
Accounts receivable
Property, plant and equipment
Operating lease right of use asset
Intangible assets
Accounts payable
(53
Other payables
(279
Operating lease liability – current
(63
Deferred income taxes liabilities
(9
Operating lease liability - long-term
(52
Fair value of assets and liabilities on acquisition
$
Pro forma results of operations have not been presented because the effect of the Insights acquisition is not material to the
Company. During the year ended June 30, 2024, the Company incurred acquisition-related expenditure of $
acquisition. Since the closing of the Insights acquisition, it contributed revenue and net loss of $
r
espectively, for the year ended June 30, 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-33
3. ACQUISITIONS AND DISPOSITIONS (continued)
Transaction costs and certain compensation costs
The Company did
t incur any transaction costs related to the Bank Zero acquisitions during the year ended June 30, 2024. The
table below presents transaction costs incurred related to the acquisition of Adumo and Utilities, and the proposed acquisition of Bank
Zero, as well as certain post-combination compensation costs expensed during the years ended June 30, 2026, 2025 and 2024:
Year ended June 30,
2026
2025
2024
Bank Zero transaction costs
$
$
$
Utilities transaction costs
Adumo transaction costs
Total transaction costs
Utilities post-combination services expensed
Total
$
$
$
Dispositions
2026 Dispositions
December 2025 disposal of Humble
On December 1, 2025, Adumo (RF) Proprietary Limited, a wholly -owned subsidiary of the Company, disposed of its entire
investment in Humble Software Proprietary Limited (“Humble”) and received
consideration. The fair value of these
shares have been included in the Company’s treasury shares. The table below presents the impact of the deconsolidation of Humble
and the calculation of the net loss recognized on deconsolidation:
Deconsolidation of Humble
Humble
Fair value of consideration received
$
Add carrying value of non-controlling interest on deconsolidation
Less: carrying value of Humble, comprising
Cash and cash equivalents
Accounts receivable, net
Inventory
Property, plant and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes assets
Accounts payable
(4 )
Other payables
(58 )
Income taxes payable
(1 )
Released from accumulated other comprehensive income – foreign currency translation reserve
(26 )
Loss recognized on disposal, before transaction costs
(730 )
Loss recognized on disposal, before tax
(730 )
Taxes related to gain recognized on disposal
Tax benefit related to loss recognized on disposal
(1)
Release of valuation allowance
(1)
Loss recognized on disposal, after tax
$
(730 )
(1)The Company incurred a capital loss of $
to the capital loss generated.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-34
4.
ACCOUNTS RECEIVABLE, net AND OTHER RECEIVABLES and FINANCE LOANS RECEIVABLE, net
Accounts receivable, net and other receivables
The Company’s accounts receivable, net, and other receivables as of June 30, 2026, and June 30, 2025, are presented in the
table below:
June 30,
June 30,
2026
2025
Accounts receivable, trade, net
$
$
Accounts receivable, trade, gross
Allowance for credit losses, end of period
Beginning of period
Reversed to statement of operations
(388 )
(521 )
Charged to statement of operations
Write-offs
(526 )
(847 )
Deconsolidation
(4 )
Foreign currency adjustment
Current portion of amount outstanding related to sale of interest in Carbon, net of
allowance of: 2026: $
, 2025: $
Amount due from VantagePay, net of allowance of: 2026: $
, 2025: $
Other receivables
Total accounts receivable, net
$
$
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 balances 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.
Current portion of amount outstanding related to sale of interest in Carbon represents the amount due from the purchaser related
to the sale of the Company’s interest in Carbon Tech Limited (“Carbon”), which was accounted for as an equity-accounted investment,
of $
the sale of the loan, with a face value of $
doubtful loans receivable of $
million related to the sale of the equity -accounted investment in October 2023, and has reversed the allowance for doubtful loans
receivable of $
related to the sale of the $
The Company previously provided Vantage Africa Limited (“VantagePay”) with a working capital facility of $
Company created an allowance for credit losses related to loans receivable of $
to the full amount outstanding as of June 30, 2021. This amount was still outstanding as of June 30, 2025. In May 2026, the Company
entered into a binding head of terms agreement with VantagePay which outlines the steps to recover the amount outstanding. The
Company believes that there is sufficient evidence to support the recoverability of the amount due from VantagePay. The Company
recorded a reversal of the allowance for credit losses of $
Company also recognized outstanding interest of $
O
ther receivables include prepayments, deposits, income taxes receivable and other receivables.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-35
4.
ACCOUNTS RECEIVABLE, net AND OTHER RECEIVABLES and FINANCE LOANS RECEIVABLE, net
(continued)
Finance loans receivable, net
The Company’s finance loans receivable, net, as of June 30, 2026, and June 30, 2025, is presented in the table below:
June 30,
June 30,
2026
2025
Microlending finance loans receivable, net
$
$
Microlending finance loans receivable, gross
Allowance for credit losses - finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(161 )
Charged to statement of operations
Write-offs
(6,600 )
(2,499 )
Foreign currency adjustment
Merchant finance loans receivable, net
Merchant finance loans receivable, gross
Allowance for credit losses - finance loans receivable, end of period
Beginning of period
Reversed to statement of operations
(117 )
(22 )
Charged to statement of operations
Write-offs
(459 )
(3,709 )
Foreign currency adjustment
Total finance loans receivable, net
$
$
Total finance loans receivable, net, comprises the Consumer operating segment’s microlending finance loans receivable related
to the Company’s microlending operations in South Africa as well as its Merchants operating segment’s merchant finance loans
receivable lending activities in South Africa. Certain merchant finance loans receivable with an aggregate balance of $
of June 30, 2026 have been pledged as security for the Company’s revolving credit facility (refer to Note 12).
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
, with the majority of loans
originated having a tenor of
. The Company analyses this lending book as a single portfolio because the loans within the
portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk of the lending book.
Refer to Note 6 related to the Company risk management process related to these receivables.
The Company has operated this lending book for more than
loans in order to develop an expected loss rate for the lending book. The allowance for credit losses related to these microlending
finance loans receivables is calculated by multiplying the expected loss rate with the month end outstanding lending book. Default is
defined as loans in 90 days in arrears or greater and is primarily driven by missed or disrupted customer payments, as a result of non-
receipt of social grant income and broader affordability pressures. Loss outcomes are further influenced by limited post-default
recoveries. The Company continues to undertake recovery activity for up to six months post write-off; however, recoveries during this
period are minimal. After six months, collection activity ceases and recoveries are considered negligible.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-36
4.
ACCOUNTS RECEIVABLE, net AND OTHER RECEIVABLES and FINANCE LOANS RECEIVABLE, net
(continued)
Finance loans receivable, net (continued)
In June 30, 2026, the Company reassessed the expected loss rate related to its microlending allowance for credit losses. The
assessment considered the performance of the lending portfolio, historical loss experience, portfolio migration trends, sensitivity
analyses relating to larger loan amounts and longer loan terms. Based on this review, the Company’s concluded that expected loss
rates should be reduced from
% to
%. The review indicated that, despite the introduction of larger loan amounts and longer
repayment terms, the portfolio continued to perform broadly in line with expectations and the model-derived expected credit loss
requirement remained below the historical expected loss ratio, including during periods of elevated delinquency and operational
disruptions. The reduction in the expected loss ratio resulted in a decrease in the allowance for credit losses of $
million, translated at exchange rates applicable as of June 30, 2026) which is included in the caption selling, general and administration
to the consolidated statement of operations for the year ended June 30, 2026. The underlying model methodology, including the use
of historical lifetime loss experience as the foundation of the expected credit loss estimate, remained unchanged.
The expected loss rate as of June 30, 2026 and 2025, was
% and
%, respectively. The performing component (that is,
outstanding loan payments not in arrears) of the book exceeds more than
% and
% of outstanding lending book as of June 30,
2026 and 2025, respectively.
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
, with the majority of
loans originated having a tenor of approximately
. The Company analyses this lending book as a single portfolio because
the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk
of the lending book. Refer to Note 6 related to the Company risk management process related to these receivables.
The Company uses historical default experience over the lifetime of loans generated thus far in order to develop an expected loss
rate for the lending book. A loan is classified as being in default where a client has missed seven or more instalments, at which point
a full allowance for outstanding capital and accrued interest is raised as a top-up to the general provision level. Upon default, the
Company commences recovery procedures including the use of external debt collectors, asset attachment through the Sheriff of the
High Court, and judgements against clients in both their personal and entity capacities. An account is only written off once all recovery
procedures have failed and management confirms no further recovery is possible.
The allowance for credit losses related to these merchant finance loans receivables is calculated by adding together (i) actual
receivables in default plus (ii) the month-end outstanding lending book multiplied by the expected loss rate. The expected loss rate as
of June 30, 2026 and 2025, was approximately
% and
%, respectively. 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
%,
%
and
%, respectively, of the outstanding lending book as of June 30, 2026.
The performing component, under-performing component
and non-performing component of the book represents approximately
%,
% and
%, respectively, of the outstanding lending book
as of June 30, 2025.
5. INVENTORY
The Company’s inventory comprised the following categories as of June 30, 2026, and 2025.
June 30,
June 30,
2026
2025
Raw materials
$
$
Work in progress
Finished goods
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-37
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
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 vaults, 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.
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 its financing activities. In May 2026, the SARB increased the repurchase rate by 25 basis points to 7.00%
against a backdrop of heightened inflation risks, including higher oil and fuel prices associated with the ongoing conflict in the Middle
East. The SARB subsequently maintained the repurchase rate at 7.00% in July 2026. Inflation risks nevertheless remain elevated and
further increases in interest rates remain possible should inflationary pressures persist or intensify.
Accordingly, assuming no changes in the margins applicable to the Company’s borrowings (refer to Note 12) or the amount of
borrowings outstanding, an increase in benchmark interest rates would result in a corresponding increase in the Company’s cost of
borrowing.
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 certain 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.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-38
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Risk management (continued)
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 from time to time. 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.
Financial instruments
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or
liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability,
not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk
including the Company’s own credit risk.
Fair value measurements and inputs are categorized into a fair value hierarchy which prioritizes the inputs into three levels based
on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in
one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety.
These levels are:
●
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
●
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are
observable in the market or can be corroborated by observable market data for substantially the full term of the assets or
liabilities.
●
Level 3 – inputs are generally unobservable and 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.
The following section describes the valuation methodologies the Company uses to measure its significant financial assets and
liabilities at fair value.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-39
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Asset measured at fair value using significant observable inputs – investment in MobiKwik
The Company’s disposed of its entire holding, comprising
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 used
MobiKwik’s closing price reported on the NSE on the last trading day related to last day of each of the Company’s external reporting
periods through March 31, 2025 to determine the fair value of the equity securities owned by the Company. Refer to Note 9 for
additional information.
Asset measured at fair value using significant unobservable inputs – investment in Cell C
The Company held
Africa. In November 2025, Cell C completed a restructuring process in anticipation of its listing on the securities exchange operated
by the JSE Limited. Under this process, a new holding company, Cell C Holdings Limited (“Cell C Listco”), was established for Cell
C, with a transaction step including the transfer of shares in Cell C by its existing shareholders to Cell C Listco in exchange for Cell
C Listco issuing shares to the existing Cell C shareholders (the “Flip-up”). The Company exchanged its
in Cell C for
On October 31, 2025, in considering the proposed restructure and listing of Cell C Listco, Lesaka SA entered into an agreement
with The Prepaid Company Proprietary Limited (“TPC”) to dispose of its shares in Cell C (or, after the Flip-up is implemented, its
shares in Cell C Listco) (“Relevant Shares”), if certain conditions were met. Under the terms of the agreement, if:
●
the listing occurred by November 30, 2025, and the value of Lesaka SA’s shares in Cell C was less than ZAR
then Lesaka SA could choose to either hold the shares, or sell the Relevant Shares to TPC for a purchase price equal to ZAR
●
the listing did not occur by November 30, 2025 (or, earlier than this date, it is determined that the listing will not proceed),
then Lesaka SA could sell the Relevant Shares to TPC for ZAR
Listing occurs and the list price per share (“A”) is more than the price paid to Lesaka SA per Relevant Share (the aggregate
ZAR
Relevant Shares to Lesaka SA as a top-up to the purchase consideration.
The value of Lesaka SA’s shares in Cell C Listco was less than ZAR
C Listco shares to TPC for ZAR
The Company’s Level 3 asset represented an investment of
discounted cash flow model developed by the Company to determine the fair value of its investment in Cell C as of June 30, 2025,
and valued Cell C at $
the forecast period. The Company has assumed a marketability discount of
% as of June 2025 and a minority discount of
%. The
Company utilized the latest business plan provided by Cell C management for the period ended May 31, 2030, for the June 30, 2025,
valuation.
The following key valuation inputs were used as of June 30, 2025:
Weighted Average Cost of Capital ("WACC"):
%
Long-term growth rate:
%
Marketability discount:
%
Minority discount:
%
Net adjusted external debt - June 30, 2025:
(1)
ZAR
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-40
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Derivative transactions - Foreign exchange contracts
As part of the Company’s risk management strategy, the Company enters into derivative transactions to mitigate exposures to
foreign currencies using foreign exchange contracts. These foreign exchange contracts are over-the-counter derivative
transactions. Substantially all of the Company’s derivative exposures are with counterparties that have long-term credit ratings of “B”
(or equivalent) or better. The Company uses quoted prices in active markets for similar assets and liabilities to determine fair value
(Level 2). The Company has no derivatives that require fair value measurement under Level 1, Level 2 or Level 3 of the fair value
hierarchy.
The Company had
The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2026, according to
the fair value hierarchy:
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Related to insurance business:
$
$
$
$
Mutual fund (included in cash,
cash equivalents and restricted
cash)
Cash, cash equivalents and
restricted cash (included in other
long-term assets)
Mutual fund (included in other
long-term assets)
Total assets at fair value
$
$
$
$
The following table presents the Company’s assets measured at fair value on a recurring basis as of June 30, 2025, according to
the fair value hierarchy:
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
$
$
$
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
Fixed maturity investments
(included in cash and cash
equivalents)
Total assets at fair value
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-41
6. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
During the year ended June 30, 2026, the Company transferred its investment in Cell C Listco out of Level 3 following the
disposal of these equity securities. During the year ended June 30, 2026, the Company recorded an increase in the carrying value of
its investment in Cell C Listco prior to the disposal of these equity securities. There have been
the year ended June 30, 2025. There was
categorized within Level 3, during the year ended June 30, 2025.
Summarized below is the movement in the carrying value of assets measured at fair value on a recurring basis, and categorized
within Level 3, during the year ended June 30, 2026:
Carrying value
Assets
Balance as of June 30, 2025
$
Gain on fair value re-measurement
Disposal of investment in Cell C
(2,971 )
Foreign currency adjustment
(1)
Balance as of June 30, 2026
$
(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.
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 year ended June 30, 2025:
Carrying value
Assets
Balance as at June 30, 2024
$
Foreign currency adjustment
(1)
Balance as of June 30, 2025
$
(1) The foreign currency adjustment represents the effects of the fluctuations of the South African rand against the U.S. dollar
on the carrying value.
Trade, finance loans and other receivables
Trade, finance loans and other receivables originated by the Company are stated at cost less allowance for credit losses. The fair
value of trade, finance loans and other receivables approximates their carrying value due to their short-term nature.
Trade and other payables
The fair values of trade and other payables approximates their carrying amounts, due to their short-term nature.
Assets and liabilities 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 9 for impairment charges
recorded during the reporting periods presented herein. The Company has
basis.
Long-term borrowings
The fair value of long-term borrowings approximates its carrying amounts because they represent the carrying amounts of
variable-rate borrowings that are reset quarterly.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-42
7. PROPERTY, PLANT AND EQUIPMENT, net
Summarized below is the cost, accumulated depreciation and carrying amount of property, plant and equipment as of June 30,
2026 and 2025:
June 30,
June 30,
2026
2025
Cost
Vaults
$
$
Computer equipment
(A)
Furniture and office equipment
Motor vehicles
Plant and machinery
Accumulated depreciation:
Vaults
Computer equipment
(A)
Furniture and office equipment
Motor vehicles
Plant and machinery
Carrying amount:
Vaults
Computer equipment
Furniture and office equipment
Motor vehicles
Plant and machinery
$
$
(A) Cost and accumulated depreciation for computer equipment and totals for cost and accumulated depreciation as of June 30,
2025, have each been increased by $
8. 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, a manufacturing facility, and branch
locations through which the Company operates its financial services business in South Africa. The Company’s operating leases have
a remaining lease term of between
. The Company also operates parts of its financial services business from
locations which it leases for a period of less than
.
The Company’s operating lease expense during the years ended June 30, 2026, 2025 and 2024, was $
and $
for a new regional office in Cape Town , Western Cape, South Africa (refer below).
The Company has entered into short-term leasing arrangements, primarily for the lease of branch locations and other locations
to operate its financial services business in South Africa. The Company’s short-term lease expense during the years ended June 30,
2026, 2025 and 2024, was $
New corporate head office and other leases obtained
In December 2025, the Company, through Lesaka SA, entered into a leasing arrangement for a new corporate head office in
Dunkeld, Gauteng, South Africa with Oxford Parks Proprietary Limited, a limited liability private company incorporated in South
Africa. The lease commenced on July 1, 2026 and is for a period of
secured beneficial occupation from April 1, 2026, and recorded a ROU asset and an operating lease liability related to this lease in
April 2026 upon taking beneficial occupation. The Company was required to provide a bank guarantee or cash totaling $
(ZAR
delivered a bank guarantee to the lessor. The Company expects to pay an annual basic lease expense of $
translated at exchange rates applicable as of June 30, 2026), which increases by
% per annum.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-43
8. LEASES (continued)
New corporate head office and other leases obtained (continued)
In April 2026, the Company, through Lesaka SA, entered into a binding offer to lease for a new regional office in Cape Town,
Western Cape, South Africa with Growthpoint Securitisation Warehouse Trust, a trust incorporated in South Africa. The lease
commences on October 1, 2026 and is for a period of
. The Company secured beneficial occupation from August 1, 2026, and
recorded a ROU asset and an operating lease liability related to this lease in August 2026 upon taking beneficial occupation. The
Company expects to pay an annual basic lease expense of $
of June 30, 2026), which increases by
% per annum.
Impairment of previous corporate head office lease and other leases
In March 2026, the Company determined that its existing operating lease arrangements for its corporate head office and certain
related leased facilities will no longer be utilized as originally intended as a result of the new lease arrangement and the planned
transition of its corporate head office and other operating activities to the new premises. In June 2026, the Company determined that
other existing operating lease arrangements, primarily in Cape Town, for leased facilities will no longer be utilized as originally
intended as a result of the new lease arrangement concluded in April 2026. Accordingly, the Company identified indicators of
impairment for these related ROU assets and certain items of property, plant and equipment during the year ended June 30, 2026.
The Company evaluated the impacted ROU assets for impairment in March 2026 and again in June 2026. The asset groups
consisted of operating lease ROU assets and related leasehold improvements associated with the affected locations as well as certain
items of property, plant and equipment, including furniture and office equipment. The recoverability tests indicated that the carrying
amounts of these asset groups were not recoverable, as the undiscounted future cash flows were insufficient to recover their carrying
values.
The Company initially measured these operating lease ROU assets and related leasehold improvements at fair value on a
non-recurring basis during the nine months ended March 31, 2026, as a result of impairment. In June 2026, the Company reassessed
the initial measurement of the fair value exercises performed in March 2026, and remeasured the fair value of these operating lease
ROU assets and related leasehold improvements at fair value using updated information as of June 30, 2026. The Company updated
its inputs for the remaining lease terms, expected sublease income and market rental rates with current information available as of
June 30, 2026. The Company also measured other operating lease ROU assets and related leasehold improvements at fair value on a
non-recurring basis during the three months ended June 30, 2026, as a result of impairment. These fair value measurements are
classified within Level 3 of the fair value hierarchy. Fair value was estimated using a discounted cash flow methodology, which
incorporates significant unobservable inputs, including assumptions related to remaining lease terms, expected sublease income and
market rental rates.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-44
8. LEASES (continued)
As a result, the Company recorded an impairment charge of $
excess of the carrying amount of the affected ROU assets and related leasehold improvements over their estimated fair value. The
impairment charge is included in the caption impairment loss (refer to Note 10) in the consolidated statement of operations for the
year ended June 30, 2026. The impairment did not impact the related operating lease liabilities.
The following table presents supplemental balance sheet disclosure related to our right-of-use assets and our operating leases
liabilities as of June 30, 2026 and 2025:
June 30,
June 30,
2026
2025
Right-of-use assets obtained in exchange for lease obligations
Weighted average remaining lease term (years)
Weighted average discount rate
%
%
Maturities of operating lease liabilities
2027
$
2028
2029
2030
2031
Thereafter
Total undiscounted operating lease liabilities
Less imputed interest
Total operating lease liabilities, included in
Operating lease liability - current
Operating lease liability - long-term
$
9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS
Equity-accounted investments
The Company’s ownership percentage in its equity-accounted investments as of June 30, 2026 and 2025, was as follows:
June 30,
June 30,
2026
2025
Sandulela Technology Proprietary Limited ("Sandulela")
%
%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)
%
%
SmartSwitch Namibia
The Company recorded a loss on impairment of equity-accounted investment of $
31, 2026, which primarily includes the release of accumulated other comprehensive loss (refer to Note 15).
Finbond
In December 2023, the Company sold its entire remaining equity interest in Finbond which comprised of
and which represented approximately
% of Finbond’s issued and outstanding ordinary shares immediately prior to the sale. Lesaka
SA had pledged, among other things, its entire equity interest in Finbond as security for its previous South African facilities.
Sale of Finbond shares during the year ended June 30, 2024
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
ZAR
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 cash proceeds received of ZAR
b
orrowing facilities, refer to Note 12.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-45
9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Finbond (continued)
Sale of Finbond shares during the year ended June 30, 2024 (continued)
The following table presents the calculation of the loss on disposal of Finbond shares during the year ended June 30, 2024:
Year ended
June 30,
2024
Loss on disposal of Finbond shares:
Consideration received in cash
$
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
Loss on sale of Finbond shares
$
Finbond impairments recorded during the year ended June 30, 2024
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 $
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
Finbond.
Carbon
In September 2022, the Company entered into a binding term sheet to sell its entire interest, or
%, in Carbon for $
and a loan due from Carbon, with a face value of $
value of $
was expected to be paid as follows: (i) $
remaining amount, of $
Company has allocated the $
received first to the sale of the equity interest and then to the loans.
The Company believed that the fair value of the Carbon shares provided as security was $
carrying value as of June 30, 2022, and created an allowance for doubtful loans receivable related to the $
from Etobicoke. The Company did not incur any significant transaction costs. The Company has included the gain of $
related to the sale of the Carbon equity interest in the caption net gain on disposal of equity-accounted investments in the Company’s
c
onsolidated statements of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-46
9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Summarized below is the movement in equity-accounted investments during the years ended June 30, 2026 and 2025, which
includes the investment in equity and the investment in loans provided to equity-accounted investees:
Other
(1)
Total
Investment in equity
Balance as of June 30, 2024
$
$
Comprehensive income:
Other comprehensive income
Equity accounted earnings
Share of net income
Dividends received
(96 )
(96 )
Sale of shares in equity-accounted investment
(507 )
(507 )
Equity-accounted investment acquired in business combination (Note 3)
Foreign currency adjustment
(2)
Balance as of June 30, 2025
Comprehensive income:
Other comprehensive income
-
-
Equity accounted earnings
Share of net income
Dividends received
(105 )
(105 )
Impairment
(34 )
(34 )
Foreign currency adjustment
(2)
Balance as of June 30, 2026
$
$
(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.
Other long-term assets
Summarized below is the breakdown of other long-term assets as of June 30, 2026, and June 30, 2025:
June 30,
June 30,
2026
2025
Total equity investments
$
$
Investment in
% of Cowdi at fair value and loan
(1)
Investment in Cell C (June 30, 2025:
%) at fair value (Note 6)
(2)
Investment in
% of CPS (June 30, 2025:
%) at fair value
(1)(3)
Insurance investments
Policy holder assets under investment contracts (Note 11)
Reinsurance assets under insurance contracts (Note 11)
Other long-term assets
Total other long-term assets
$
$
(1) The Company determined that Cowdi and CPS do not have readily determinable fair values and therefore elected to record
its 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) The Company disposed of its entire shareholding in Cell C in December 2025, refer to Note 6 for additional information.
(3) On October 16, 2020, the High Court of South Africa, Gauteng Division, Pretoria ordered that Cash Paymaster Services (Pty)
Ltd (“CPS”) be placed into liquidation.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-47
9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets (continued)
Cowdi
During the year ended June 30, 2026, the Company invested $
% interest in Cowdi Limited (“Cowdi”),
an entity incorporated in England and Wales, with operations through a Kenyan wholly-owned subsidiary offering digital loans to
customers in that country. The Company also extended a $
the year ended June 30, 2026. Cowdi had utilized $
in July 2026.
MobiKwik
The Company signed a subscription agreement with MobiKwik, which is one of India’s largest independent mobile payments
networks and buy now pay later businesses. Pursuant to the subscription agreement, the Company agreed to make an equity investment
of up to $
-month period. The Company made an initial $
and a further $
Company paid $
MobiKwik, which as of June 30, 2024, represented approximately
% of MobiKwik’s issued share capital.
Refer to 6 for additional information regarding the determination of the fair value of Company’s investment in MobiKwik. The
Company disposed of its entire equity interest in MobiKwik for $
loss of $
from $
fourth quarter of fiscal 2025. The loss is included in the caption “Change in fair value of equity securities” in the consolidated statement
of operations for the year ended June 30, 2025.
The Company did not identify any observable transactions during the year ended June 30, 2024, and therefore there was no
change in the fair value of MobiKwik during that year. During the year ended June 30, 2021, MobiKwik entered into a number of
separate agreements with new shareholders to raise additional capital through the issuance of additional shares. The Company used
the valuation from MobiKwik’s June 2021 capital raise as the basis for its fair value determination of $
2024.
Cell C
On August 2, 2017, the Company, through its subsidiary, Net1SA, purchased
aggregate purchase price of ZAR
cash and a borrowing facility. Net1 SA has pledged, among other things, its entire equity interest in Cell C as security for the previous
South African facilities described in Note 12. On September 30, 2022, Cell C completed its recapitalization process which included
the issuance of additional equity instruments by Cell C. The Company’s effective percentage holding in Cell C’s equity reduced from
% to
% following the recapitalization. The Company’s investment in Cell C was carried at fair value as of June 30, 2025. Refer to
Note 6 for additional information regarding changes in the fair value of Cell C.
CPS
The Company deconsolidated its investment in CPS in May 2020. As of June 30, 2026 and 2025, respectively, the Company
owned
% of CPS’ issued share capital.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-48
9. EQUITY-ACCOUNTED INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets (continued)
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, 2026:
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in Cowdi
$
$
$
$
Investment in CPS
Total
$
$
$
$
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, 2025:
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in CPS
$
$
$
$
Held to maturity:
Investment in Cedar Cellular notes
10. GOODWILL AND INTANGIBLE ASSETS, net
Goodwill
Summarized below is the movement in the carrying value of goodwill for the years ended June 30, 2026, 2025 and 2024:
Gross value
Accumulated
impairment
Carrying value
Balance as of July 1, 2023
$
$
(18,876 )
$
Foreign currency adjustment
(1)
(472 )
Balance as of June 30, 2024
(19,348 )
Impairment loss
(17,041 )
(17,041 )
Acquisitions (Note 3)
(2)
-
Foreign currency adjustment
(1)
(325 )
Balance as of June 30, 2025
(36,714 )
Impairment loss
(388 )
(388 )
Acquisition (Note 3)
(3)
-
Deconsolidation of Humble (Note 3)
(1,515 )
-
(1,515 )
Foreign currency adjustment
(1)
(2,550 )
Balance as of June 30, 2026
$
$
(39,652 )
$
(1) – The foreign currency adjustment represents the effects of the fluctuations between the South African Rand against the U.S.
dollar on the carrying value.
(2) – Represents goodwill arising from the acquisition of Adumo, Utilities, Lesaka Nam and Lesaka Fuel Software and translated
at the foreign exchange rates applicable on the date the transactions became effective. This goodwill has been allocated to the Merchant
(a portion Adumo, Lesaka Nam and Lesaka Fuel Software), Consumer (a portion of Adumo) and Enterprise (Utilities) reportable
operating segments.
(3) – Represents goodwill arising from the acquisition of MobileMart and translated at the foreign exchange rates applicable on
the date the transactions became effective. This goodwill has been allocated to the Enterprise reportable operating segment.
Goodwill associated with the acquisitions represents the excess of cost over the fair value of net assets acquired. Goodwill arising
from these acquisitions is not deductible for tax purposes. See Note 3 for the allocation of the purchase price to the fair value of
a
cquired net assets.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-49
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Goodwill (continued)
Impairment loss
The Company assesses the carrying value of goodwill for impairment annually, or more frequently, whenever events occur and
circumstances change indicating potential impairment. The Company performs its annual impairment test as at June 30 of each year.
The Company did not perform a qualitative assessment during the years ended June 30, 2026, 2025 and 2024, respectively. Except as
discussed below, no goodwill has been impaired during the years ended June 30, 2026, 2025 and 2024, respectively.
In order to determine the amount of the goodwill impairments, the estimated fair value of our reporting units’ business assets and
liabilities were compared to the carrying value of their assets and liabilities. The Company used a discounted cash flow model in order
to determine the fair value of the businesses (this is a Level-3 fair value measurement). Based on this analysis, the Company determined
that the carrying value of the reporting units’ business assets and liabilities exceeded their fair value at the reporting date.
In determining the fair value of the reporting units, the Company considered key judgements related to the reporting units’
revenue growth rates, weighted-average cost of capital (“WACC”) applicable to peer and industry comparables of the reporting units,
and the forecast periods used. The Company may record an impairment loss in future if actual growth rates are lower than those
included in the Company’s discounted cash flow model. Furthermore, use of a higher weighted-average cost of capital may also result
in an impairment loss in the future.
Year ended June 30, 2026 goodwill impairment loss
The Company recognized an impairment loss of $
2026, related to goodwill allocated to its SwitchPay reporting unit within its Merchant segment. The impairment is included within
the caption impairment loss in the consolidated statement of operations for the year ended June 30, 2026.
At June 30, 2025, the fair value of the SwitchPay reporting unit exceeded its carrying value by
%. The impairment loss in the
SwitchPay reporting unit resulted from the termination of its sole customer contract during fiscal 2026 which adversely impacted its
future cash flows, growth prospects and its ability to continue as a going concern.
Year ended June 30, 2025 goodwill impairment loss
The Company recognized an impairment loss of $
allocated to its LCM and Lesaka MT reporting units within its Merchant segment, its Lesaka Payouts reporting unit within Consumer
segment and its Lesaka Alternative Digital Products Proprietary Limited, formerly known as EasyPay Proprietary Limited, (“Lesaka
ADP”) reporting unit within its Enterprise segment. The impairments are included within the caption impairment loss in the
consolidated statement of operations for the year ended June 30, 2025.
At June 30, 2024, the fair value of the LCM reporting unit exceeded its carrying value by
%.The impairment loss in the LCM
reporting unit resulted from a reassessment of the business’ growth prospects in the context of its strategic market positioning,
optimized capital expenditures and increase WACC over prior years.
The impairment loss in the Lesaka MT reporting unit resulted from a reassessment of the business’ growth prospects, a strategic
decision to exit low return and sub-optimal merchants’ contracts.
The impairment loss in the Lesaka Payouts reporting unit resulted from a reassessment of the business’ growth prospects of the
reporting unit with lower revenue and therefore lower free cash flow generation expected compared to when performing the purchase
price allocation.
Lesaka ADP was acquired in fiscal 2006. At June 30, 2024, the fair value of the Lesaka ADP reporting unit exceeded its carrying
value by
%. The impairment loss in the Lesaka ADP reporting unit during the year ended June 30, 2025, resulted from a
reassessment of the business’ growth and the expected impact on its future cash flows as a result the cash outflows expected from
initiatives to modernize its existing technology platform to retain and expand its product offering and customer base.
The fair value of the Lesaka Hospitality and Humble reporting units (both allocated to Merchant) included in the Company’s
acquisition of Adumo did not substantially exceed the carrying value of their respective reporting unit. The fair value of the Lesaka
Hospitality reporting unit exceeded the carrying value by
% and Humble exceeded the carrying value by
%. As of June 30, 2025,
carrying value of goodwill allocated to Lesaka Hospitality and Humble was $
reporting units’ fair value exceeded the carrying value of the reporting unit by at least
%.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-50
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Goodwill (continued)
Impairment loss (continued)
Year ended June 30, 2025 goodwill impairment loss (continued)
The table below presents the impairment per reporting unit for the year ended June 30, 2025 and the revenue growth rates, WACC
and forecast period for reporting units used in the discounted cash flow models for the June 30, 2025 and June 30, 2024, and for entities
acquiring during the current fiscal year, the information used in the purchase price allocation:
Segments and reporting units
with impairments
Impairment
Remaining
goodwill
Range of
revenue
growth rates
(%)
Terminal
revenue
growth rates
(%)
WACC (%)
Forecast
period
(years)
Merchant
$
$
Lesaka Cash Management
Used at June 30, 2025
Used at June 30, 2024
Lesaka MT
Used at June 30, 2025
(
) -
(10.0 )
Used at acquisition
N/A
Consumer
Lesaka Payouts
Used at June 30, 2025
Used at acquisition
N/A
Enterprise
Lesaka ADP
Used at June 30, 2025
Used at June 30, 2024
(
) -
Total
$
$
In the event that there is a deterioration in the Company’s operating segments, or in any other of the Company’s businesses, this
may lead to impairments in future periods. Furthermore, the difficulties of integrating acquired businesses may be increased by the
necessity of integrating personnel with disparate business backgrounds and combining different corporate cultures. The Company also
may not be able to retain key customers of an acquired business or realize cost efficiencies or synergies or other benefits that it
anticipated when selecting its acquisition candidates. These factors may also lead to impairments in future periods.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-51
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Goodwill (continued)
Goodwill has been allocated to the Company’s reportable segments as follows:
Merchant
Consumer
Enterprise
Carrying value
Balance as of July 1, 2023
$
$
$
$
Foreign currency adjustment
(1)
Balance as of June 30, 2024
Impairment loss
(9,268 )
(2,197 )
(5,576 )
(17,041 )
Acquisitions (Note 3)
Foreign currency adjustment
(1)
(199 )
Balance as of June 30, 2025
Impairment loss
(388 )
(388 )
Acquisitions (Note 3)
Deconsolidation of Humble (Note 3)
(1,515 )
(1,515 )
Foreign currency adjustment
(1)
Balance as of June 30, 2026
$
$
$
$
(1) – The foreign currency adjustment represents the effects of the fluctuations between the South African Rand, against the U.S.
dollar on the carrying value.
The table presents the components of impairment loss for the years ended June 30, 2026 and 2025:
2026
2025
Goodwill impairment loss
$
$
Impairment of right-of-use assets (Note 8)
Impairment of property, plant and equipment
(1)
Impairment of intangible assets
Total
$
$
(1) During the nine months ended March 31, 2026, the Company commenced the process to wind down its ATM business and
recognized an impairment related to ATMs recorded in property, plant and equipment to reduce the carrying amounts of these assets
to their estimated recoverable values. The recoverable values were determined based on estimated proceeds expected to be realized
primarily through the piecemeal disposal of the assets. The Company’s management estimated the recoverable values based on
observable market pricing for similar assets, adjusted for the condition, age and expected timing of sale. These estimates represent
management’s best estimate of fair value less costs to sell. The fair value measurements associated with the impairment were classified
within Level 3 of the fair value hierarchy, as the valuation incorporates significant unobservable inputs, including assumptions
regarding expected selling prices and market demand for used ATM equipment. Actual proceeds may differ from these estimates
a
rising from changes in market conditions or the timing and manner of disposal.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-52
10. GOODWILL AND INTANGIBLE ASSETS, net
Intangible assets
Intangible assets acquired
Summarized below is the fair value of intangible assets acquired, translated at the exchange rate applicable as of the relevant
acquisition dates, and the weighted-average amortization period:
Fair value as of
acquisition date
Weighted-average
amortization
period (in years)
Finite-lived intangible asset:
Acquired during the year ended June 30, 2025:
Adumo – technology assets
$
Adumo – customer relationships
Adumo – brands
Utilities – technology assets
Utilities – customer relationships
Lesaka Digital Risk – technology assets
$
On acquisition of these businesses, the Company recognized an aggregate deferred tax liability of approximately $
related to the acquisition of intangible assets during the year ended June 30, 2025.
Impairment loss during the years ended June 30, 2026 and 2025
The Company assesses the carrying value of intangible assets for impairment whenever events occur or circumstances change
indicating that the carrying amount of the intangible asset may not be recoverable.
years ended years ended June 30, 2026, 2025 and 2024, respectively, except for intangible assets of $
respectively, related to Lesaka MT which were fully impaired during the years ended June 30, 2026 and 2025. The impairment was
identified during the Company’s annual goodwill impairment testing. The method for determining fair value is discussed above under
Goodwill—Impairment loss. The impairment loss related to the impairment of the intangible assets is included in the caption
Impairment loss in the consolidated statements of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-53
10. GOODWILL AND INTANGIBLE ASSETS, net (continued)
Intangible assets (continued)
Summarized below is the carrying value and accumulated amortization of the intangible assets as of June 30, 2026, and June 30,
2025:
As of June 30, 2026
As of June 30, 2025
Gross
carrying
value
Accumulated
amortization
and
impairment
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Software, integrated
platform and unpatented
technology
(1)
$
$
(62,220 )
$
$
$
(41,925 )
$
Customer relationships
(1)
(26,084 )
(18,568 )
FTS patent
(2,335 )
(2,158 )
Brands and trademarks
(1)(2)
(19,732 )
(8,993 )
Total finite-lived
intangible assets
$
$
(110,371 )
$
$
$
(71,644 )
$
(1) June 30, 2025, balances include the intangible assets acquired as part of the Adumo acquisition in October 2024, and the
Utilities and Lesaka Digital Risk acquisitions in March 2025.
(2) During early calendar 2025, the Company’s executive considered the unification of the Company’s merchant segments
operations and the realignment of the Company’s brands under the master brand “Lesaka”. The Company’s Board of Directors
approved the realignment of certain of the Company’s brands to the master brand in May 2025. The Company identified the steps and
timing to realign the affected brands under the master brand and expects to have complete alignment by February 2027, with certain
brands aligned in December 2025. The change in brands has resulted in a change in the useful lives of certain of the Company’s brand
and trademark intangible assets which has resulted in an increase (excluding the impact on “Adumo” and “GAAP” brands) in
amortization expense of $
the comparative periods assuming the original useful lives. The change in the useful lives resulted in a $
Company’s net income from continuing operations for the year ended June 30, 2026, and did not have a significant impact on earnings
per share. The change in the useful lives resulted in a $
the year ended June 30, 2025, and did not have a significant impact on loss per share. The change did not impact the year ended June
30, 2024.
Aggregate amortization expense on the finite-lived intangible assets for the years ended June 30, 2026, 2025 and 2024, was
approximately $
Future estimated annual amortization expense for the next five fiscal years and thereafter, using the exchange rates that prevailed
on June 30, 2026, 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 2027
$
Fiscal 2028
Fiscal 2029
Fiscal 2030
Fiscal 2031
Thereafter
Total future estimated annual amortization expense
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-54
11. 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 years
ended June 30, 2026 and 2025:
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of July 1, 2024
$
$
(2,241 )
Increase in policyholder benefits under insurance contracts
(10,127 )
Claims and policyholders’ benefits under insurance contracts
(131 )
Foreign currency adjustment
(3)
(57 )
Balance as of June 30, 2025
(2,644 )
Increase in policyholder benefits under insurance contracts
(13,437 )
Claims and policyholders’ benefits under insurance contracts
(412 )
Foreign currency adjustment
(3)
(297 )
Balance as of June 30, 2026
$
$
(3,688 )
(1) Included in other long-term assets (refer to Note 9);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company has agreements with reinsurance companies in order to limit its losses from large insurance contracts, however, if
the reinsurer is unable to meet its obligations, the Company retains the liability. The value of insurance contract liabilities is based on
the best estimate assumptions of future experience plus a risk adjustment for non-financial risk, as required in the markets in which
these products are offered, namely South Africa. The process of deriving the best estimates assumptions plus risk adjustments include
assumptions related to claim reporting delays (based on average industry experience) and their associated costs as well as assumptions
related to the present value of disability claims in payment.
Assets and policyholder liabilities under investment contracts
Summarized below is the movement in assets and policyholder liabilities under investment contracts during the years ended June
30, 2026 and 2025:
Assets
(1)
Investment
contracts
(2)
Balance as of July 1, 2024
$
$
(216 )
Increase in policyholder benefits under investment contracts
(5 )
Claims and decrease in policyholders’ benefits under investment contracts
(101 )
Foreign currency adjustment
(3)
(5 )
Balance as of June 30, 2025
(125 )
Increase in policyholder benefits under investment contracts
(6 )
Foreign currency adjustment
(3)
(10 )
Balance as of June 30, 2026
$
$
(141 )
(1) Included in other long-term assets (refer to Note 9);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
T
he Company does not offer any investment products with guarantees related to capital or returns.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-55
12. BORROWINGS
Reference rate reform
After 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”) following the cessation of JIBAR after its final publication on
December 31, 2026. ZARONIA reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by
commercial banks. The “No New JIBAR” initiative commenced on May 1, 2026, marking the cut-off date from which market
participants should no longer enter into new financial contracts referencing JIBAR, except in clearly defined and limited circumstances.
Certain of the Company’s borrowings referenced JIBAR as a base interest rate. In February 2026, the Company amended its borrowing
agreement to change the reference rate from JIBAR to ZARONIA from April 1, 2026 in anticipation of the “No New JIBAR” initiative.
The reference rate applicable to Facilities A and B uses ZARONIA plus a credit adjustment spread (“CAS”), which is intended to
place the parties in substantially the same economic position as if JIBAR had not ceased.
South Africa
The ZARONIA rate and CAS on June 30, 2026, was
% and
%, respectively. The prime rate, the benchmark rate at
which private sector banks lend to the public in South Africa, on June 30, 2026, was
%.
Facilities obtained in February 2025
Lesaka SA has obtained four loan facilities from FirstRand Bank Limited (acting through its Rand Merchant Bank division)
(“RMB”), FirstRand Bank Limited (acting through its WesBank division) (“WesBank”), FirstRand Bank Limited being a South
African corporate and investment bank, Investec Bank Limited (acting through its Investment Banking division: Corporate Solutions)
(“Investec” and together with RMB and WesBank, the “Lenders”). These comprise a term loan of up to ZAR
million) (“Facility A”), an amortizing loan of ZAR
up to ZAR
million) (the “GBF”, and collectively with Facility A, Facility B and Senior RCF, the “Facilities”), which are described in more detail
below.
On February 27, 2026, the Company, Lesaka SA and a number of other subsidiaries of Lesaka SA, the Lenders and the Debt
Guarantor entered into a Amended and Restated Common Terms Agreement (“CTA”) which replaced the Original Common Terms
Agreement (“Original CTA ”), and:
●
amended the reference rate from JIBAR to ZARONIA;
●
aligned the annual repayment dates for Facility B from February to March, with the final maturity date unchanged as
February 28, 2029; and
●
updated certain provisions to expressly permit the implementation of interest rate hedging.
The CTA was further amended by a letter dated March 27, 2026, due to a change in the working capital facility discussed below.
The Company, Lesaka SA and the majority of Lesaka SA’s directly and indirectly wholly-owned subsidiaries have agreed to
guarantee the obligations of Lesaka SA and of the other borrowers under the Facilities to the Lenders.
Lesaka has pledged its equity interests in Lesaka SA and the Company’s interests in a certain banking account to the Debt
Guarantor as collateral securing Lesaka's guarantee obligations.
The CTA governing the above contains customary covenants which include a requirement for Lesaka SA to maintain specified
Net Debt to EBITDA and Interest Cover Ratios (as defined in the CTA) and restricts the ability of Lesaka SA, and certain of its
subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional
indebtedness, make investments above specified levels, engage in certain business combinations and engage in other corporate
activities.
Lesaka SA paid non-refundable debt structuring fees of ZAR
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-56
12. BORROWINGS (continued)
South Africa (continued)
Facilities obtained in February 2025 (continued)
Long-term borrowings – Facility A and Facility B Agreements
Lesaka SA may borrow up to an aggregate amount of ZAR
of Lesaka SA and Lesaka Cash Management with RMB, funding transaction costs and for general corporate purposes. Lesaka SA
utilized Facility A in full on February 28, 2025, to settle a portion of its existing facilities with RMB and to settle all of Lesaka Cash
Management’s existing facilities with RMB, as well as to pay certain transaction costs.
Lesaka SA may borrow up to an aggregate of ZAR
including its general banking facilities, with RMB, and for general corporate purposes. Lesaka SA utilized Facility B in full on
February 28, 2025, to repay a portion of its existing facilities as well as to settle a portion of its existing general banking facility.
Facility A is required to be repaid in full on February 28, 2029. Facility A is subject to customary mandatory prepayment terms.
Lesaka SA is permitted to make voluntary prepayments of Facility A, and is permitted to subsequently utilize any voluntary
prepayments made under Facility A under the RCF Agreement. Amounts utilized under the RCF Agreement are required to be repaid
in full on February 28, 2029. No drawdowns has occurred under the RCF.
Facility B is required to be repaid in
31, 2026; (ii) ZAR
(iv) ZAR
SA is permitted to make voluntary prepayments of Facility B, however it is unable to subsequently utilize any amounts prepaid.
Interest on Facility A and Facility B as well as any interest related to utilization under the RCF Agreement is payable quarterly
in arrears at end of March, June, September and December, with the first interest payment commencing on June 30, 2025.
Short-term facility - General Banking Facility
Lesaka SA and certain of its subsidiaries may borrow up to an aggregate of ZAR
(“GBF”) from RMB for general corporate expenditure (including capital expenditure) and working capital purposes of the Lesaka SA
and certain of its subsidiaries. Lesaka SA utilized a portion of the GBF to refinance its existing general banking facility. As of June
30, 2026, the Company had utilized ZAR
Concurrent with the execution of the CTA, Lesaka SA and RMB entered into a General Banking Facility Agreement (the
“Original GBF Agreement”), which was amended by an addendum dated on or about July 16, 2025. On March 27, 2026, Lesaka SA
and RMB entered into an Amended and Restated General Banking Facility (“Restated GBF Agreement”) to amend and replace the
Original GBF Agreement. Pursuant to the Restated GBF Agreement, Lesaka SA and certain of its subsidiaries have access to direct
facilities of ZAR
contingent facilities which cover forward exchange contracts and credit cards; an indirect facility of ZAR
for bank guarantees; and settlement lines of ZAR
facilities, and indirect facilities may be reallocated as direct facilities. As of June 30, 2026, the Company had utilized ZAR
($
Note 22).
The facilities under the Restated GBF Agreement were available for utilization from March 30, 2026, and are subject to annual
review by RMB. Lesaka SA paid and capitalized an upfront fee paid to RMB and legal fees paid to legal advisors totaling ZAR
million ($
Interest on the GBF is payable monthly and is based on the South African prime rate in effect from time to time less
%. The
Company pays a commitment fee of
% (seventy basis points) per annum (excluding VAT) of the unutilized GBF, where utilization
of the GBF is less than
% of available GBF. This fee is calculated daily and payable monthly in arrears.
Wesbank Facilities
The Company, through certain of its South African subsidiaries, has an asset-backed facility of ZAR
of which ZAR
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-57
12. BORROWINGS (continued)
South Africa (continued)
Refinanced Lesaka Capital Loan Document, comprising long-term borrowings
On September 5, 2025, the Company, through its indirect South African subsidiaries Lesaka Capital Proprietary Limited (“Lesaka
Capital”) and Lesaka Fuel, entered into a ZAR
of which ZAR
The Lesaka Capital Loan Document contain customary covenants that require Lesaka Capital and Lesaka Fuel to collectively
maintain a specified capital adequacy ratio, restrict the ability of the entities to make certain distributions with respect to their capital
stock, encumber their assets, incur additional indebtedness, make investments, engage in certain business combinations and engage in
other corporate activities.
Pursuant to the Lesaka Capital Loan Document, Lesaka Capital and Lesaka Fuel collectively may borrow up to an aggregate of
ZAR
million related to an intercompany loan to Lesaka Capital’s direct parent, and paying structuring and execution fee and legal costs.
Interest is payable on the last business day of each calendar month.
The Company paid a non-refundable structuring and execution fee of ZAR
RMB on closing of the Lesaka Capital Loan Document in September 2025.
Certain merchant finance loans receivable have been pledged as security for the revolving credit facility obtained from RMB.
Nedbank facility, comprising short-term facilities
As of June 30, 2026 and June 30, 2025, the Company had utilized ZAR
million), respectively, of its indirect and derivative facilities of ZAR
bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 22).
In terms of a commitment provided to the lender under the CTA, the Company has undertaken not to utilize more than ZAR
million ($
The Company has entered into cession and pledge agreements with Nedbank related to certain of its Nedbank credit facilities
(the general banking facility and a portion of the indirect facility) and the Company has ceded and pledged certain bank accounts to
Nedbank and also provided a cession of Lesaka SA’s shareholding in Cell C. The funds included in these bank accounts are restricted
as they may not be withdrawn without the express permission of Nedbank.
RMB Bridge Facilities, comprising a short-term facility obtained in September 2024 and amended in December 2024 (all
repaid)
On September 30, 2024, Lesaka SA entered into a Facility Letter (the “F2024 Facility Letter”) with RMB to provide Lesaka SA
a ZAR
ZAR
Holdings”) ZAR
14); (iii) pay an amount of ZAR
the transaction described in Note 3, and (iv) pay an origination fee of ZAR
with ZAR
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 provided Lesaka SA with an additional ZAR
GBF Facility”) which could be used for general corporate purposes. The Bridge Facility and 2024 GBF Facility were repaid in full on
February 28, 2025, utilizing funding obtained under the CTA and the agreements were cancelled.
Interest on the Bridge Facility and the 2024 GBF Facility was calculated at the prime rate plus
%. The Bridge Facility and
the 2024 GBF Facility were unsecured and were repaid in full on February 28, 2025, the maturity date, pursuant to the refinancing
process.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-58
12. BORROWINGS (continued)
South Africa (continued)
Cancelled RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term borrowings (all repaid)
On July 21, 2017, Lesaka SA entered into a Common Terms Agreement, Subordination Agreement, Security Cession & Pledge
and certain ancillary loan documents (collectively, the “Original Loan Documents”) with RMB, a South African corporate and
investment bank, and Nedbank Limited (acting through its Corporate and Investment Banking division), an African corporate and
investment bank (collectively, the “Lenders”). Since 2017, these agreements have been amended to add additional facilities, including
Facilities G and H, which were obtained to finance the acquisition of Connect. Facilities E, G and H have been repaid and cancelled
in February 2025 and there is
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.
Interest on the overdraft facility was payable on the first day of the month following utilization of the facility and on the final
maturity date based on the South African prime rate. The overdraft facility amount utilized was required to be repaid in full within
% of the amount utilized was to be repaid within
. The overdraft facility was secured by a
pledge by Lesaka SA of, among other things, cash and certain bank accounts utilized in the Company’s ATM funding process, the
cession of Lesaka SA’s shareholding in Cell C, the cession of an insurance policy with Senate Transit Underwriters Managers
Proprietary Limited, and any rights and claims Lesaka SA had against Grindrod Bank Limited.
Long-term borrowings - Facility G and Facility H
On March 16, 2023, the Company, through Lesaka SA, entered into a Fifth Amendment and Restatement Agreement, which
included, among other agreements, an Amended and Restated Common Terms Agreement (“Expired CTA”), an Amended and
Restated Senior Facility G Agreement (“Facility G Agreement”) and an Amended and Restated Senior Facility H Agreement (“Facility
H Agreement”) (collectively, the “Loan Documents”) with RMB. Main Street 1692 (RF) Proprietary Limited (“Debt Guarantor”), a
South African company incorporated for the sole purpose of holding collateral for the benefit of the Lenders and acting as debt
guarantor is also a party to the Loan Documents. Pursuant to the Facility G Agreement, Lesaka SA was entitled to borrow up to an
aggregate of approximately ZAR
of up to ZAR
ZAR
On February 28, 2025, the Company used its new borrowings to settle Facility G and Facility H in full, including accumulated
interest of ZAR
($
million) (of which ZAR
February 28, 2025, utilizing funding obtained under the Expired CTA and the Facility G and Facility H agreements were cancelled.
Amounts translated at rates prevailing on the repayment date. The interest rate on these facilities was JIBAR plus a margin of
%.
Lesaka SA paid a quarterly commitment fee computed at a rate of
% of the Applicable Margin (as defined in the Expired CTA)
on the amount of the revolving credit facility outstanding and such commitment fee was capitalized, subject to the cap discussed above.
The Company used cash proceeds of ZAR
during the year ended June 30, 2024, to repay capitalized interest under Facility G and Facility H.
Cancelled Connect Facilities, comprising long-term borrowings and a short-term facility (all repaid)
On March 22, 2023, the Company, through CCMS, entered into a First Amendment and Restatement Agreement, which included,
among other agreements, an Amended and Restated Facilities Agreement (“CCMS Facilities Agreement”) with RMB. The CCMS
Facilities Agreement was amended to increase the Facility B available under the CCMS Facilities Agreement by ZAR
to ZAR
with the first scheduled repayment commencing from March 31, 2026. These facilities were repaid in full on February 28, 2025,
utilizing funding obtained under the CTA and the agreements cancelled. Prior to settlement and cancellation, the Connect Facilities
included (i) an overdraft facility (general banking facility) of ZAR
million ($
rates prevailing on the repayment date.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-59
12. BORROWINGS (continued)
South Africa (continued)
Cancelled Connect Facilities, comprising long-term borrowings and a short-term facility (all repaid) (continued)
On October 29, 2024, the Company, through CCMS, entered into an addendum to a facility letter with RMB, to obtain a ZAR
of prepaid airtime vouchers. This temporary increase was repayable in equal daily instalments which commenced at the end of October
2024 with the final repayment made on February 15, 2025.
In February 2023, the Company, through CCMS, obtained a ZAR
period of
equal monthly instalments of ZAR
obtained a ZAR
of prepaid airtime vouchers. This temporary increase was repaid in full in June 2023. Interest at the South Africa prime rate less
%
was payable on a monthly basis on both of these temporary facilities.
Interest on CCMS Facility A and CCMS Facility B was payable quarterly in arrears based on JIBAR in effect from time to time
plus a margin.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-60
12. BORROWINGS (continued)
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of June 30, 2026, and the movement in the Company’s short-term
facilities from as of June 30, 2025 to as of June 30, 2026:
RMB
RMB
Nedbank
RMB
RMB
RMB
GBF
Other
Facilities
Connect
Bridge
Facility E
Total
Short-term facilities available as
of June 30, 2026
$
$
$
$
$
$
$
Overdraft
Indirect and derivative
facilities
Movement in utilized overdraft
facilities:
Balance as of June 30, 2024
Utilized
Repaid
(4,311 )
(14,627 )
(39,205 )
(31,028 )
(89,171 )
Foreign currency adjustment
(1)
(379 )
(1,945 )
(1,064 )
Balance as of June 30, 2025
No restrictions as to use
Utilized
Repaid
(129,417 )
(129,417 )
Facility fees paid
(252 )
(252 )
Facility fees amortized
Foreign currency
adjustment
(1)
Balance as of June 30, 2026
No restrictions as to use
Interest rate as of June 30,
2026 (%)
(2)
Interest rate as of June 30,
2025 (%)
(2)
Movement in utilized indirect and
derivative facilities:
Balance as of June 30, 2024
Foreign currency
adjustment
(1)
Balance as of June 30, 2025
Guarantees cancelled
(1,543 )
(1,543 )
Utilized
Foreign currency
adjustment
(1)
Balance as of June 30, 2026
$
$
$
$
$
$
$
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) RMB GBF interest is set at prime less
%.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense
on the consolidated statement of operations during the years ended June 30, 2026 and 2025, was $
respectively.
The Company cancelled Adumo’s overdraft arrangements on October 1, 2024, and settled Adumo’s outstanding overdraft
balance of ZAR
included on the Company’s consolidated statements of cash flows for the year ended June 30, 2025.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-61
12. BORROWINGS (continued)
Movement in long-term borrowings
Summarized below is the movement in the Company’s long-term borrowing from as of June 30, 2025, to as of June 30, 2026:
Facilities
Lesaka A
Lesaka B
Asset
backed
CCC
Lesaka
G & H
Connect
A&B
Total
Opening balance as of June 30,
2024
$
$
$
$
$
$
$
Facilities utilized
Facilities repaid
(4,513 )
(554 )
(60,245 )
(65,910 )
(131,222 )
Non-refundable fees paid
Non-refundable fees amortized
Capitalized interest
Capitalized interest repaid
(11,077 )
(11,077 )
Foreign currency adjustment
(1)
(1,000 )
(937 )
Included in current
Included in long-term
Opening balance as of June
30, 2025
Facilities utilized
Facilities repaid
(8,953 )
(4,788 )
(13,741 )
Non-refundable fees paid
(33 )
(33 )
Non-refundable fees
amortized
Capitalized interest
Capitalized interest repaid
Foreign currency
adjustment
(1)
Closing balance as of
June 30, 2026
Included in current
Included in long-term
Unamortized fees
(799 )
(6 )
(805 )
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
$
$
$
$
$
$
$
Interest rates as of June 30, 2026
(%):
Base rate (%)
Credit adjustment spread (%)
Margin (%)
(0.10 )
Footnote number
(2)(3)
(4)(5)
(6)
(7)
Interest rates as of June 30, 2025
(%):
Base rate (%)
Margin (%)
Footnote number
(3)
(5)
(6)
(8)
(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) From April 1, 2026, interest on Facility A is based on ZARONIA in effect from time to time plus a margin. The margin on
Facility A is determined with reference to the Net Debt to EBITDA Ratio, and the margin will be either (i)
%, if the Net Debt to
EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
(3) Interest on Facility A was based on the JIBAR in effect from time to time plus an initial margin of
% per annum until
June 30, 2025. From July 1, 2025, to March 31, 2026, the margin on Facility A was determined with reference to the Net Debt to
EBITDA Ratio, and the margin would be either (i)
%, if the Net Debt to EBITDA Ratio was greater than or equal to 2.5 times; or
(
ii)
%, if the Net Debt to EBITDA Ratio was less than 2.5 times.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-62
12. BORROWINGS (continued)
Movement in long-term borrowings (continued)
(4) From April 1, 2026, interest on Facility B is calculated based on ZARONIA from time to time plus a margin. The margin on
Facility B is determined with reference to the Net Debt to EBITDA Ratio, and the margin will be either (i)
%, if the Net Debt to
EBITDA Ratio is greater than or equal to 2.5 times; or (ii)
%, if the Net Debt to EBITDA Ratio is less than 2.5 times.
(5) Interest on Facility B was calculated based on JIBAR from time to time plus an initial margin of
% per annum until June
30, 2025. From July 1, 2025, to March 31, 2026, the margin on Facility B was determined with reference to the Net Debt to EBITDA
Ratio, and the margin would be either (i)
%, if the Net Debt to EBITDA Ratio was greater than or equal to 2.5 times; or (ii)
%,
if the Net Debt to EBITDA Ratio was less than 2.5 times.
(6) Interest is charged at prime plus
% per annum on the utilized balance.
(7) Interest is charged at prime less
% per annum on the utilized balance.
(8) Interest was charged at prime plus
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense
on the consolidated statement of operations during the years ended June 30, 2026, 2025 and 2024, was $
and $
2025 and 2024, was $
Interest expense incurred under the Company’s South African long-term borrowings to fund its Consumer lending book and
Lesaka Capital’s merchant finance loans receivable are included in the caption cost of goods sold, IT processing, servicing and support
on the consolidated statement of operations. Total interest expense incurred related to the Consumer lending book (for the year ended
June 30, 2026 and the four months ended June 30, 2025) and interest incurred under the Lesaka Capital’s merchant finance loans
receivable was $
, for the years ended June 30, 2026, 2025 and 2024, respectively.
The Company cancelled Adumo’s long-term borrowings arrangements on October 1, 2024, and settled Adumo’s outstanding
balances of ZAR
borrowings included on the Company’s consolidated statements of cash flows for the year ended June 30, 2025.
13. OTHER PAYABLES
Summarized below is the breakdown of other payables as of June 30, 2026 and 2025:
June 30,
June 30,
2026
2025
Vendor wallet balances
$
$
Accruals
Clearing accounts
Provisions
Value -added tax payable
(A)
Payroll-related payables
Deferred consideration due to seller of Utilities (Note 3)
Other
$
$
(A) Value-added tax payable and the total of Other payables as of June 30, 2025, have each increased by $
of the correction discussed in Note 1.
Clearing accounts and vendor wallet balances may fluctuate due to the day (weekend or public holiday) on which the Company’s
quarter or year end falls because certain elements of transactions within these accounts are not settled over weekends or public holidays.
Other includes deferred income, client deposits and other payables.
In December 2025, the Company determined that the liquidation of CPS is at an advanced stage and released an accrual raised
at the time of deconsolidation. The release has been included in the caption “Other income” in the consolidated statement of operations
f
or the year ended June 30, 2026.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-63
14. COMMON STOCK
Common stock
Holders of shares of Lesaka’s common stock are entitled to receive dividends and other distributions when declared by Lesaka’s
board of directors out of legally available funds. Payment of dividends and distributions is subject to certain restrictions under the
Florida Business Corporation Act, including the requirement that after making any distribution Lesaka must be able to meet its debts
as they become due in the usual course of its business. Upon voluntary or involuntary liquidation, dissolution or winding up of Lesaka,
holders of common stock share ratably in the assets remaining after payments to creditors and provision for the preference of any
preferred stock according to its terms. There are no pre-emptive or other subscription rights, conversion rights or redemption or
scheduled installment payment provisions relating to shares of common stock. All of the outstanding shares of common stock are fully
paid and non-assessable.
Each holder of common stock is entitled to one vote per share for the election of directors and for all other matters to be voted
on by shareholders. Holders of common stock may not cumulate their votes in the election of directors, and are entitled to share equally
and ratably in the dividends that may be declared by the board of directors, but only after payment of dividends required to be paid on
outstanding shares of preferred stock according to its terms. The shares of Lesaka common stock are not subject to redemption.
Issue of shares to Lesaka Cash Management sellers pursuant to April 2022 transaction
The total purchase consideration pursuant to the Lesaka Cash Management acquisition in April 2022 includes
of the Company’s common stock. These shares of common stock were issued in
third anniversaries of the April 14, 2022 closing. The Company legally issued
third and second tranche, to the Lesaka Cash Management sellers in each of April 2025 and 2024, respectively, and this had no impact
on the number of shares, net of treasury, presented in the consolidated statement of changes in equity during the year ended June 30,
2025 and 2024, respectively because these shares were included in the
treasury, as of June 30, 2025 and 2024.
Impact of non-vested equity shares on number of shares, net of treasury
The Company’s number of shares, net of treasury, presented in the consolidated balance sheets and consolidated statement of
changes in equity includes participating non-vested equity shares (specifically contingently returnable shares) as described below in
Note 17 “— Amended and Restated Stock Incentive Plan—Restricted Stock—General Terms of Awards”. The following table
presents a reconciliation between the number of shares, net of treasury, presented in the consolidated statement of changes in equity
and the number of shares, net of treasury, excluding non-vested equity shares that have not vested during the years ended June 30,
2026, 2025 and 2024:
2026
2025
2024
Number of shares, net of treasury:
Statement of changes in equity – common stock
Less: Non-vested equity shares that have not vested as of end of year (Note 17)
Number of shares, net of treasury excluding non-vested equity shares that have
not vested
Redeemable common stock issued pursuant to transaction with the IFC Investors
Holders of redeemable common stock have all the rights enjoyed by holders of common stock, however, holders of redeemable
common stock have additional contractual rights. On April 11, 2016, the Company entered into a Subscription Agreement (the
“Subscription Agreement”) with International Finance Corporation (“IFC”), IFC African, Latin American and Caribbean Fund, LP
(“ALAC”), IFC Financial Institutions Growth Fund, LP, and Africa Capitalization Fund, Ltd. (collectively, the “IFC Investors”).
Under the Subscription Agreement, the IFC Investors purchased, and the Company sold in the aggregate, approximately
shares of the Company’s common stock, par value $
of approximately $
the put option discussed below.
On May 19, 2020, the Africa Capitalization Fund, Ltd sold its entire holding of
stock and therefore the additional contractual rights, including the put option rights related to these
Company reclassified $
during the year ended June 30, 2020.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-64
14. COMMON STOCK (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors (continued)
During the year ended June 30, 2026, ALAC, made numerous filings on Form 4 Statement of Beneficial Ownership with the
United States Securities and Exchange Commission reporting that ALAC had sold an aggregate of
common stock and therefore the additional contractual rights, including the put option rights related to these
The Company reclassified $
capital during the year ended June 30, 2026.
On August 19, 202 2, the IFC Investors filed an amended Form 13D/A, amendment no. 2, with the United States Securities and
Exchange Commission reporting that in October 2017 and February 2018, the IFC sold an aggregate of
Company’s common stock and therefore the additional contractual rights, including the put option rights related to these
shares, expired. The Company reclassified $
additional paid-in-capital during the year ended June 30, 2022.
The Company has entered into a Policy Agreement with the IFC Investors (the “Policy Agreement”). The material terms of the
Policy Agreement are described below.
Certain IFC Investors were investors in Adumo and the Company issued an aggregate of
common stock at a price of $
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 also accounted for these
Board Rights
For so long as the IFC Investors in aggregate beneficially own shares representing at least
% of the Company’s common stock,
the IFC Investors will have the right to nominate one director to the Company’s board of directors. For so long as the IFC Investors in
aggregate beneficially own shares representing at least
% of the Company’s common stock, the IFC Investors will have the right
to appoint an observer to the Company’s board of directors at any time when they have not designated, or do not have the right to
designate, a director.
Put Option
Each IFC Investor will have the right, upon the occurrence of specified triggering events, to require the Company to repurchase
all of the shares of its common stock purchased by the IFC Investors pursuant to the Subscription Agreement (or upon exercise of their
preemptive rights discussed below). Events triggering this put right relate to (1) the Company being the subject of a governmental
complaint alleging, a court judgment finding or an indictment alleging that the Company (a) engaged in specified corrupt, fraudulent,
coercive, collusive or obstructive practices; (b) entered into transactions with targets of economic sanctions; or (c) failed to operate its
business in compliance with anti-money laundering and anti-terrorism laws; or (2) the Company rejecting a bona fide offer to acquire
all of its outstanding Common Stock at a time when it has in place or implements a shareholder rights plan, or adopting a shareholder
rights plan triggered by a beneficial ownership threshold of less than
price per share paid by the IFC Investors pursuant to the Subscription Agreement (or paid when exercising their preemptive rights)
and the volume weighted average price per share prevailing for the
respect to a put right triggered by rejection of a bona fide offer, the put price per share will be the highest price offered by the offeror.
The Company believes that the put option has no value and, accordingly, has not recognized the put option in its consolidated financial
statements.
Registration Rights
The Company has agreed to grant certain registration rights to the IFC Investors for the resale of their shares of the Company’s
common stock, including filing a resale shelf registration statement and taking certain actions to facilitate resales thereunder.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-65
14. COMMON STOCK (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors (continued)
Preemptive Rights
For so long as the IFC Investors hold in aggregate
% of the outstanding shares of common stock of the Company, each Investor
will have the right to purchase its pro-rata share of new issuances of securities by the Company, subject to certain exceptions.
Common stock repurchases
October 2024 repurchase of common stock and issue of shares in Utilities transaction
On October 1, 2024, the Company, through Lesaka SA, and Crossfin Holdings entered into a share purchase agreement under
which Lesaka SA purchased
was settled in early October 2024, and the shares of the Company’s common stock repurchased have been included in the Company’s
treasury shares included in its consolidated statement of changes in equity for the year ended June 30, 2025, respectively. The
repurchase was made outside of the Company’s then $
The Company, through Lesaka SA, issued
the terms of Recharger Purchase Agreement described in Note 3 during the year ended June 30, 2025. The Company recognized a
gain of $
changes in equity for the year ended June 30, 2025. In March 2026, Lesaka SA delivered
the Company’s common stock to the Seller under the terms of Recharger Purchase Agreement. The Company recognized a loss in
additional paid-in-capital of $
3, 2026, and the price paid per share in October 2024.
Acquisition of Lesaka Hospitality non-controlling interests
During the year ended June 30, 2026, the Company acquired all of the issued share capital of Lesaka Hospitality that it did not
previously own for approximately $
Lesaka’s common stock with a fair value of $
stock were sourced from the
2025. The Company recognized a gain in additional paid-in-capital of $
March 6, 2026, and the price paid per share in October 2024 and December 2025, respectively. The acquisition of the non-controlling
interests was accounted for as an equity transaction with a non-controlling interest and accordingly
the Company’s consolidated statement of operations. The carrying amount of the non-controlling interest was adjusted to reflect the
change in ownership interest in Lesaka Hospitality. The difference between the fair value of the consideration paid and the amount by
which the non-controlling interest was adjusted, of $
Executed under share repurchase authorizations
On September 2, 2025, the Company’s Board of Directors approved a share repurchase authorization to repurchase up to an
aggregate of $
$
used at management’s discretion, subject to limitations imposed by SEC Rule 10b-18 and other legal requirements and subject to price
and other internal limitations established by the Board. Repurchases will be funded from the Company’s available cash. Share
repurchases may be made through open-market purchases, privately negotiated transactions, or both. There can be no assurance that
the Company will purchase any shares or any particular number of shares. The authorization may be suspended, terminated or modified
at any time for any reason, including market conditions, the cost of repurchasing shares, liquidity and other factors that management
deems appropriate. The Company did
t repurchase any of its shares during the years ended June 30, 2026, 2025, and 2024,
respectively, under the share repurchase authorization, however, it did repurchase
,
stock from its employees during the years ended June 30, 2026, 2025, and 2024, respectively, refer to Note 17 for additional
i
nformation regarding these repurchases.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-66
15. ACCUMULATED OTHER COMPREHENSIVE LOSS
The table below presents the change in accumulated other comprehensive (loss) income per component during the years ended
June 30, 2026, 2025 and 2024:
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2023
(A)
$
(195,516 )
$
(195,516 )
Release of foreign currency translation reserve related to liquidation of subsidiaries
(952 )
(952 )
Release of foreign currency translation reserve: disposal of Finbond equity securities
(Note 9)
Movement in foreign currency translation reserve related to equity-accounted
investment
Movement in foreign currency translation reserve
(A)
Balance as of June 30, 2024
(A)
(188,227 )
(188,227 )
Release of foreign currency translation reserve related to liquidation of subsidiaries
Movement in foreign currency translation reserve
(B)
Balance as of June 30, 2025
(B)
(185,626 )
(185,626 )
Release of foreign currency translation reserve related to impairment of equity-
accounted investment (Note 9)
Release of foreign currency translation reserve related to liquidation of subsidiaries
(516 )
(516 )
Movement in foreign currency translation reserve
(C)
Balance as of June 30, 2026
(C)
$
(166,319 )
$
(166,319 )
(A) Accumulated other comprehensive loss and Total as of July 1, 2023, have each decreased by $
correction discussed in Note 1. Accumulated other comprehensive loss and Total for the year ended June 30, 2024, have each decreased
by $
translation reserve. Accumulated other comprehensive loss and Total as of June 30, 2024, have each decreased by $
result of the correction discussed in Note 1.
(B) Accumulated other comprehensive loss and Total for the year ended June 30, 2025, have each decreased by $
a result of the correction discussed in Note 1 to the amount included in the caption Movement in foreign currency translation reserve.
Accumulated other comprehensive loss and Total as of June 30, 2025, have each decreased by $
discussed in Note 1.
(C) Accumulated other comprehensive loss and Total for the year ended June 30, 2026, have each increased by $
a result of the correction, as discussed in Note 1, to the amount included in the caption Movement in foreign currency translation
reserve for the three months ended September 30, 2025. Accumulated other comprehensive loss and Total as of June 30, 2026, have
each increased by $
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 the year ended June 30, 2026, the Company reclassified losses of $
loss (accumulated foreign currency translation reserve) to net loss related to the impairment on liquidation of an equity-accounted
investment. During the year ended June 30, 2026, the Company reclassified an aggregate gain of $
comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the disposal of a subsidiary and the
liquidation of a subsidiary. During the year ended June 30, 2025, the Company reclassified a loss of $
other comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the liquidation of subsidiaries.
During the year ended June 30, 2024, the Company reclassified $
foreign currency translation reserve) to net loss related to the disposal of shares in Finbond (refer to Note 9). The Company also
reclassified a gain of $
n
et loss related to the liquidation of subsidiaries during the year ended June 30, 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-67
16. REVENUE
The Company is a provider of digitized cash management solutions and merchant acquiring services, including an integrated
platform for the distribution of ADP (including value-added services such as prepaid airtime, prepaid electricity and bill payment);
software solutions, transaction processing services; financial inclusion products and services, and secure payment technology. The
Company operates as a payment processor in South Africa. The Company offers debit, credit and prepaid processing and issuing
services for all major payment networks. In South Africa, the Company provides innovative low-cost financial inclusion products,
including banking, lending and insurance.
The Company analyzes its business under a “product” view, for example, its acquiring activities in Merchant are allocated to an
acquiring product view for Merchant. The Company has updated its disaggregation of revenue disclosures to align with this pro duct
view. Comparative periods have been recast.
Disaggregation of revenue
The following table represents our revenue disaggregated by major revenue streams, including reconciliation to operating
segments for the year ended June 30, 2026:
Merchant
Consumer
Enterprise
Total
ADP
$
$
$
$
South Africa
Rest of world
Transactional fees
Acquiring
South Africa
Rest of world
Cash
Software
Utilities
Other
South Africa
Rest of world
Total revenue under ASC 606, derived from the
following geographic location
South Africa
Rest of world
Lending
South Africa
Rest of world
Insurance
Total non-ASC 606 revenue, derived from the
following geographic location
South Africa
Rest of world
Total revenue, derived from the following
geographic locations
South Africa
Rest of world
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-68
16. REVENUE (continued)
The following table represents our revenue disaggregated by major revenue streams, including reconciliation to operating
segments for the year ended June 30, 2025:
Merchant
Consumer
Enterprise
Total
ADP
$
$
$
$
South Africa
Rest of world
Transactional fees
Cash
Acquiring
South Africa
Rest of world
Software
Utilities
Other
South Africa
Rest of world
Total revenue under ASC 606, derived from the
following geographic location
South Africa
Rest of world
Lending
South Africa
Rest of world
Insurance
Total non-ASC 606 revenue, derived from the
following geographic location
South Africa
Rest of world
Total revenue, derived from the following
geographic locations
South Africa
Rest of world
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-69
16. REVENUE (continued)
The following table represents our revenue disaggregated by major revenue streams, including reconciliation to operating
segments for the year ended June 30, 2024:
Merchant
Consumer
Enterprise
Total
ADP
$
$
$
$
South Africa
Rest of world
Cash
Transactional fees
Acquiring
Other
South Africa
Rest of world
Total revenue under ASC 606, derived from the
following geographic location
South Africa
Rest of world
Lending
South Africa
Rest of world
Insurance
Total non-ASC 606 revenue, derived from the
following geographic location
South Africa
Rest of world
Total revenue, derived from the following
geographic locations
South Africa
Rest of world
$
$
$
$
17. STOCK-BASED COMPENSATION
Amended and Restated Stock Incentive Plan
The Company’s Amended and Restated 2022 Stock Incentive Plan (“2022 Plan”) was most recently amended and restated on
November 16, 2022. On each of April 11, 2024, and September 2, 2025, respectively, the Company’s Board amended the 2022 Plan
to increase the number of shares available for issuance by
). On each of June 3, 2024, and
December 8, 2025, respectively, the Company’s shareholders approved the amendment.
No evergreen provisions are included in the 2022 Plan. This means that the maximum number of shares issuable under the 2022
Plan is fixed and cannot be increased without shareholder approval, the 2022 Plan expires by its terms upon a specified date, and no
new stock options are awarded automatically upon exercise of an outstanding stock option. Shareholder approval is required for the
repricing of awards or the implementation of any award exchange program. The Plan permits Lesaka to grant to its employees, directors
and consultants incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance-based
awards and other awards based on its common stock. The Remuneration Committee of the Company’s Board of Directors
(“Remuneration Committee”) administers the 2022 Plan.
The total number of shares of common stock issuable under the 2022 Plan is
. The maximum number of shares for
which stock options, stock appreciation rights (other than performance-based awards that are not options) may be granted during a
calendar year to any participant is
be available for the grant of awards under the 2022 Plan, as well as shares that are delivered to us by the holder to pay withholding
taxes or as payment for the exercise price of an award, if permitted by the Remuneration Committee. The shares deliverable in
connection with awards granted under the 2022 Plan may consist, in whole or in part, of authorized but unissued shares or treasury
shares. To account for stock splits, stock dividends, reorganizations, recapitalizations, mergers, consolidations, spin-offs and other
corporate events, the 2022 Plan requires the Remuneration Committee to equitably adjust the number and kind of shares of common
stock issued or reserved pursuant to the 2022 Plan or outstanding awards, the maximum number of shares issuable pursuant to awards,
the exercise price for awards, and other affected terms of awards to reflect such event. No awards may be granted under the 2022 Plan
a
fter September 7, 2032, but awards granted on or before such date may extend to later dates.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-70
17. STOCK-BASED COMPENSATION (continued)
Amended and Restated Stock Incentive Plan (continued)
Options
General Terms of Awards
Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant,
with vesting conditioned upon the recipient’s continuous service through the applicable vesting date and expire
of grant. The options generally become exercisable in accordance with a vesting schedule ratably over a period of
date of grant. The Company issues new shares to satisfy stock option award exercises but may also use treasury shares.
Valuation Assumptions
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 table below. The estimated expected volatility is calculated based on the Company’s
,
-
day volatility (as applicable). The estimated expected life of the option was determined based on the historical behavior of employees
who were granted options with similar terms.
presents the range of assumptions used to value options granted during the years ended June 30, 2025 and 2024:
2025
2024
Expected volatility
%
%
Expected dividends
%
%
Expected life (in years)
Risk-free rate
%
%
Restricted Stock
General Terms of Awards
Shares of restricted stock are considered to be participating non-vested equity shares (specifically contingently returnable shares)
for the purposes of calculating earnings per share (refer to Note 19) because, as discussed in more detail below, the recipient is obligated
to transfer any unvested restricted stock back to the Company for no consideration and these shares of restricted stock are eligible to
receive non-forfeitable dividend equivalents at the same rate as common stock. Restricted stock generally vests ratably over a
circumstances, the achievement of certain performance targets, as described below.
Recipients are entitled to all rights of a shareholder of the Company except as otherwise provided in the restricted stock
agreements. These rights include the right to vote and receive dividends and/or other distributions, however, any or all dividends or
other distributions paid related to restricted stock during the period of such restrictions shall be accumulated (without interest) or
reinvested in additional shares of common stock, which in either case shall be subject to the same restrictions as the underlying award
or such other restrictions as the Remuneration Committee may determine. The restricted stock agreements generally prohibit transfer
of any nonvested and forfeitable restricted stock. If a recipient ceases to be a member of the Board of Directors or an employee for
any reason, all shares of restricted stock that are not then vested and non-forfeitable will be immediately forfeited and transferred to
the Company for no consideration , except as otherwise agreed between the parties. Forfeited shares of restricted stock are available
for future issuances by the Remuneration Committee.
The Company issues new shares to satisfy restricted stock awards.
Valuation Assumptions
The fair value of restricted stock is generally based on the closing price of the Company’s stock quoted on The Nasdaq Global
Select Market on the date of grant.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-71
17. STOCK-BASED COMPENSATION (continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock (continued)
Market Conditions - Restricted Stock Granted in November 2025
In November 2025, the Company awarded
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
% appreciation in the Company’s stock price off a base price of $
period commencing on November 1, 2025 through October 31, 2028, and (2) the recipient is employed by the Company on a full-time
basis through to October 31, 2028. 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 October 31, 2025, was $
.
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:
%;
●
Fiscal 2027, the Company’s 30-day volume weighted-average stock price (“VWAP”) before October 31, 2026 is
approximately
:
%;
●
Fiscal 2028, the Company’s VWAP before October 31, 2027 is
:
%;
●
Fiscal 2029, the Company’s VWAP before October 31, 2028 is
) than $
:
%.
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
% for the closing price (of $
), 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.
Restricted Stock Units
The Remuneration Committee may approve the grant of other stock-based awards. In April 2022, the Company granted
shares of restricted stock to employees of Connect pursuant to the terms of the acquisition. The award included an equalization
mechanism to maintain a return of $
conversion of restricted stock units to shares cannot exceed
% under the terms of the award and therefore no more than
were converted to shares of common stock. Employees elected for
vesting of these and other shares. The
common stock (these shares were included in treasury shares prior to the recast discussed in Note 1).
Stock Appreciation Rights
The Remuneration Committee may also grant stock appreciation rights, either singly or in tandem with underlying stock options.
Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock
(as determined by the Remuneration Committee) equal in value to the excess of the fair market value of the shares covered by the right
over the grant price.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-72
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity
Options
The following table summarizes stock option activity for the years ended June 30, 2026, 2025 and 2024:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - July 1, 2023
Granted – June 2024
Granted – June 2024
Granted – June 2024
Granted – June 2024
Granted – June 2024
Exercised
(54,287 )
-
-
Forfeited
(200,739 )
-
Outstanding - June 30, 2024
Granted – December 2024
Granted – December 2024
Granted – January 2025
Granted – January 2025
Granted – January 2025
Exercised
(38,011 )
-
-
Forfeited
(13,333 )
-
Outstanding - June 30, 2025
Exercised
(21,196 )
-
-
Outstanding - June 30, 2026
These options have an exercise price range of $
.
options to employees during the years ended June 30, 2025 and 2024, respectively.
The Company awarded
.
These 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
The
Executive Chairman, and
to shareholder approval which was obtained on June 3, 2024. The
of the grant date, and were subject to Mr. Mazanderani’s continued services as Executive Chair through the vesting date. The
options were scheduled to vest immediately if Mr. Mazanderani’s employment was terminated by the Company without cause on or
before the first anniversary of the grant date. In March 2025, the Company’s Remuneration Committee amended the exercise terms of
the
exercisable from March 2025, however, any stock options exercised may only be sold during a period commencing from January 31,
2028 to January 31, 2029. The
through to this date. The
31, 2029.
On August 3, 2026, the Company awarded Mr. Mazanderani, an option to purchase
stock at an exercise price of $
2029 to April 1, 2030. Vesting of these stock options is subject to Mr. Mazanderani’s continuous employment with the Company
t
hrough April 1, 2028.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-73
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity (continued)
Options (continued)
During the year ended June 30, 2026,
January 31, 2028 to January 31, 2029. During the years ended June 30, 2025 and 2024, an additional
2025 and 2024, the Company received approximately $
,
,
and
forfeited
.
The following table presents stock options vested and expected to vest as of June 30, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested and expected to vest - June 30, 2026
These options have an exercise price range of $
, and include the
The following table presents stock options that are exercisable as of June 30, 2026:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - June 30, 2026
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-74
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity (continued)
Restricted stock
The following table summarizes restricted stock activity for the years ended June 30, 2025 and 2024:
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2023
Total granted
Granted – October 2023
Granted – October 2023, with performance conditions
Granted – October 2023
Granted – January 2024
Granted – February 2024
Granted - June 2024
Total vested
(1,232,251 )
Vested – July 2023
(78,800 )
Vested – November 2023
(109,833 )
Vested – December 2023
(67,073 )
Vested – February 2024
(14,811 )
Vested – March 2024
(69,286 )
Vested – April 2024
(394,932 )
Vested – May 2024
(88,617 )
Vested – June 2024
(350,247 )
Vested – June 2024, with performance conditions
(58,652 )
Total forfeitures
(299,463 )
Forfeitures - employee terminations
(82,077 )
Forfeitures – May and July 2021 awards with market condition
(217,386 )
Non-vested – June 30, 2024
Total granted
Granted – August 2024
Granted – October 2024
Granted – November 2024, with performance conditions
Granted – January 2025
Granted – April 2025
Total vested
(1,197,944 )
Vested – July 2024
(78,801 )
Vested – November 2024
(213,687 )
Vested – November 2024, with performance conditions
(103,638 )
Vested – December 2024
(77,306 )
Vested – February 2025
(13,922 )
Vested – March 2025
(69,287 )
Vested – April 2025
(385,787 )
Vested – June 2025
(255,516 )
Total forfeitures
(150,712 )
Forfeitures - employee terminations
(121,591 )
Forfeitures – December 2021 awards with market condition
(29,121 )
Non-vested – June 30, 2025
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-75
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
The following table summarizes restricted stock activity for the year ended June 30, 2026:
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2025
Total granted
Granted – July 2025
Granted – August 2025
Granted – September 2025
Granted – October 2025
Granted – November 2025
Granted – November 2025, with performance conditions
Granted – February 2026
Granted – March 2026
Granted – May 2026
Total vested
(400,394 )
Vested – August 2025
(10,933 )
Vested – October 2025
(33,333 )
Vested – November 2025
(120,434 )
Vested – December 2025
(52,479 )
Vested – February 2026
(21,666 )
Vested – April 2026
(12,499 )
Vested – June 2026
(149,050 )
Total forfeitures
(361,413 )
Forfeitures - employee terminations
(103,545 )
Forfeitures - December 2022 award with market conditions
(257,868 )
Non-vested – June 30, 2026
Awards granted
In July, August, September, October and November 2025, and February, March and May 2026, respectively, the Company
granted
;
;
;
;
;
;
; and
time-based vesting conditions and which are subject to the employees’ continued employment with the Company through the
applicable vesting dates. In November 2025, the Company awarded
time and performance-based (market conditions related to share price performance) vesting conditions.
In August 2024, October 2024, January 2025 and April 2025, respectively, the Company granted
;
;
; and
continued employment with the Company through the applicable vesting dates. In November 2024, the Company awarded
shares of restricted stock to executive officers and employees which contained time and performance-based (market conditions related
to share price performance) vesting conditions.
In October 2023, the Company awarded
October 2023, the Company awarded
based (market conditions related to share price performance) vesting conditions. The Company also awarded
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 January 2024, February 2024 and June 2024, the Company awarded
;
;
and
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-76
17. STOCK-BASED COMPENSATION (continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Awards granted (continued)
The Company had previously agreed to grant an advisor
provided to the Company. The Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears,
on a quarterly basis. During the year ended June 30, 2026, the Company recorded a stock-based compensation charge of $
and included the issuance of
2026, the Company and the consultant agreed that
be forfeited and a cash payment of $
Company recorded a stock-based compensation charge of $
in its issued and outstanding share count. Overall, the Company issued a total of
) of the
Company’s common stock to the consultant during the year ended June 30, 2026.
Awards vested
During the years ended June 30, 2026, 2025 and 2024, respectively,
;
; and
with time-based and performance-based vesting conditions vested. The June 30, 2025, shares include
granted to Mr. Meyer, our former Group CEO, which vested in July 2024, and
conditions (share price targets) which vested in November 2024, following the achievement of the agreed performance condition. The
June 30, 2024, shares of stock vesting includes
2021 to 2024 financial services plan. The fair value of restricted stock which vested during the years ended June 30, 2026, 2025 and
2024, was $
In August, November and December 2025 and January and April 2026, an aggregate of
to employees vested and they elected for
shares.
In November 2024,
to satisfy the withholding tax liability on the vesting of these shares. In addition, in November and December 2024 and February,
April, May and June 2025, an aggregate of
shares to be withheld to satisfy the withholding tax liability on the vesting of these shares.
In May 2024,
satisfy the withholding tax liability on the vesting of these shares. In addition, in November and December 2023 and February, April,
May and June 2024, an aggregate of
to be withheld to satisfy the withholding tax liability on the vesting of these shares.
These
,
) and
) shares have been included in the Company’s
shares of common stock (these shares were included in treasury shares prior to the recast discussed in Note 1) for the years ended June
30, 2026, 2025 and 2024, respectively.
Awards forfeited
During the year ended June 30, 2026,
Group CEO) as the market condition (related to share price performance) were not achieved. During the year ended June 30, 2026,
employees forfeited
During the year ended June 30, 2025,
(related to share price performance) were not achieved. During the year ended June 30, 2025, employees forfeited
restricted stock following their termination of employment with the Company.
During the year ended June 30, 2024,
executive officers) as the market condition (related to share price performance) were not achieved. During the year ended June 30,
2
024, employees forfeited
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-77
17. STOCK-BASED COMPENSATION (continued)
Lesaka ESOP Trust
On November 14, 2024, the Company announced that its shareholders voted on and approved the funding and issuance of shares
to the Lesaka ESOP Trust at its annual general meeting. The Lesaka Employee Share Ownership Plan (“ESOP”) is designed to create
alignment with the Company's long-term growth objectives. The Lesaka ESOP Trust is also expected to advance the Company’s
transformation initiatives and plays an important role in improving the company’s Broad-Based Black Economic Empowerment
(“BBBEE”) rating. As of November 2024, when shareholders approved the plan, the Company’s employee base was comprised of
approximately
% designated groups for BBBEE purposes. Through the creation of a broader base of employee ownership, the
Company is helping to promote economic inclusion and contribute to transformation in the broader South African economy. The
Lesaka ESOP Trust is structured as an evergreen trust, ensuring the permanence of the plan and allowing for the inclusion of future
employees as the Company continues to grow.
The Lesaka ESOP Trust was required to have an effective holding of
% of the Company’s issued shares at the date of
implementation, and in February 2025, the Company issued
subscription price payable by the Lesaka ESOP Trust for the shares was vendor funded by the Company through a notional vendor
funding (“NVF”) structure whereby the Company provided a notional loan to the Lesaka ESOP Trust representing the fair value of
the shares, facilitating the acquisition by the Lesaka ESOP Trust of the shares without requiring any upfront payment by the Lesaka
ESOP Trust except for the payment of a nominal value of $
as a traditional loan structure from the Company to the Lesaka ESOP Trust to enable the Lesaka ESOP Trust to subscribe for shares
in the Company, but without any actual flow of funds from the Company to the Trust.
A notional amount on the date of issue was ascribed to each share that the Lesaka ESOP Trust subscribed for, which is equal to
the fair market value of one of the Company shares of common stock (which is the amount the Lesaka ESOP Trust would have paid
for one of the Company’s shares in an ordinary course cash transaction with the Company) less a
% discount. The principal amount
on the NVF loan will accrue interest at a fixed rate of
% per annum. The NVF will have a
five-year
not recognized in the Company’s financial statements because it represents a formula to calculate the number of the Company’s shares
of common stock to be returned by the Lesaka ESOP Trust to the Company after
.
On or about the 5
th
repurchase a portion of the shares held by the Lesaka ESOP Trust at the nominal aggregate amount to settle the total NVF loan
outstanding. The number of shares to be repurchased will be determined by using a formula set out in the transaction documents that
considers the total NVF loan outstanding on the Maturity Date and the market value of one of the Company’s shares held by the Lesaka
ESOP Trust. The purchase consideration that would have been payable for the shares the Company will repurchase (which is the fair
market value the Company would have paid for the shares in an ordinary course cash transaction with the Lesaka ESOP Trust on the
Maturity Date) will be set off against the total NVF loan outstanding. After settlement of the NVF loan,
% of the remaining shares
held by the Lesaka ESOP Trust, if any, will be distributed to eligible employees.
The Lesaka ESOP Trust will hold shares of the Company’s common stock. The Lesaka ESOP Trust will therefore be entitled to
receive its proportionate share of any dividends and other distributions declared by the Company to its shareholders and vote its shares
held on matters requiring shareholder approval.
The Lesaka ESOP Trust is administered by the board of trustees made up of
and the participants in the ESOP. The Company’s Board has the right to nominate
of the trustees,
of trustees may not be members of the Company’s Board or an officer as contemplated in Rule 16a-(f) of the Securities and Exchange
Act of 1934. The nominees of the participants need to meet an election criteria to be eligible for nomination which requires participant
nominees to have been employed by the Group for a continuous and uninterrupted period of at least
. The trustees have the
discretion to determine how the Lesaka ESOP Trust should vote shares of the Company common stock held on matters requiring the
Company’s shareholders approval. The decisions by the trustees are decided by a majority vote.
The Company is responsible for all reasonable operating expenses incurred by the Lesaka ESOP Trust until such time as the
Lesaka ESOP Trust has sufficient cash resources of its own to settle its operating expenses. The Company controls the Lesaka
ESOP
Trust because the Lesaka ESOP Trust is considered to be a variable interest entity (“VIE”) in which the Company has a controlling
financial interest. Accordingly, the Lesaka ESOP Trust is consolidated by the Company. As the Lesaka ESOP Trust is consolidated
by the Company, the
shares at the nominal amount of $
the Lesaka ESOP Trust will be recognized within equity with no profit or loss being recognized in the statement of operations on such
acquisition or disposal.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-78
17. STOCK-BASED COMPENSATION (continued)
Lesaka ESOP Trust (continued)
Qualifying employees were allocated A and B units. An A unit represents an option for the employees to acquire shares of the
Company’s common stock in future. The A unit represents an equity-settled share-based payment, requiring the recognition of a stock-
based compensation charge over a
Scholes valuation model. A B unit represent s an employees’ entitlement to cash payments based on dividends paid by the Company
to the Lesaka ESOP Trust, and consequently distributions that the Lesaka ESOP Trust makes to qualifying employees who are
beneficiaries of the Lesaka ESOP Trust. These payments represent an employee benefit, requiring that the Company to recognize an
expense to the value of the payment made when each payment is made.
Initial qualifying employees are required to have a minimum of
’s service with the Company, with criteria being
determined on December 31, 2024. Initial qualifying employees received invitation and allocation notices on or around April 1, 2025.
As employees complete
’ service to any subsidiary of the Company they will become eligible for consideration as a
beneficiary of the Lesaka ESOP Trust. Qualifying employees include employees of recent acquisitions, including Adumo.
On April 1, 2025, the Lesaka ESOP Trust awarded
closing price on the Nasdaq on April 1, 2025 was $
closing price less a
% discount) and is expected to grow by
% per annum through to April 1, 2030. The Company estimated a
forfeiture rate of
% per annum. The fair value of each A unit is estimated on the date of grant using Black-Scholes model that uses
the assumptions noted in the table below. The estimated expected volatility is generally calculated based on the Company’s
1,251
-day
volatility. The estimated expected life of the option was determined as the period from grant date through to the vesting date in
February 2030.
On April 1, 2026, the Lesaka ESOP Trust awarded
price on the Nasdaq on April 1, 2026 was $
price less a
% discount) and is expected to grow by
% per annum through to April 1, 2030. The Company estimated a forfeiture
rate of
% per annum. The fair value of each A unit is estimated on the date of grant using Black-Scholes model that uses the
assumptions noted in the table below. The estimated expected volatility is generally calculated based on the Company’s
1,251
-day
volatility. The estimated expected life of the option was determined as the period from grant date through to the vesting date in
February 2030.
The table below presents the range of assumptions used to value options granted during the years ended June 30, 2026 and 2025:
2026
2025
Expected volatility
%
%
Expected dividends
%
%
Expected life (in years)
Risk-free rate
%
%
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-79
17. STOCK-BASED COMPENSATION (continued)
Stock-based compensation charge and unrecognized compensation cost
The Company has recorded a net stock compensation charge of $
June 30, 2026, 2025 and 2024, respectively, which comprised:
Total charge
Allocated to IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Year ended June 30, 2026
Stock-based compensation charge
$
$
$
Stock-based compensation charge related to ESOP
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(302 )
(302 )
Total - year ended June 30, 2026
$
$
$
Year ended June 30, 2025
Stock-based compensation charge
$
$
$
Stock-based compensation charge related to ESOP
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(89 )
(89 )
Total - year ended June 30, 2025
$
$
$
Year ended June 30, 2024
Stock-based compensation charge
$
$
$
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(134 )
(134 )
Total - year ended June 30, 2024
$
$
$
The stock-based compensation charges and reversal have been allocated to selling, general and administration based on the
allocation of the cash compensation paid to the relevant employees.
As of June 30, 2026, the total unrecognized compensation cost related to stock options was approximately $
the Company expects to recognize over approximately
. As of June 30, 2026, the total unrecognized compensation cost
related to restricted stock awards was approximately $
.
Income tax consequences
During the years ended June 30, 2026, 2025 and 2024, the Company recorded a deferred tax benefit of $
and $
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. Lesaka recharges its subsidiaries for stock-based compensation
charges related to service provided by employees of its subsidiaries. During the years ended June 30, 2026, 2025 and 2024, these
subsidiaries deducted stock-based compensation charges of $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-80
18. INCOME TAXES
Income tax expense
The table below presents the components of income (loss) before income tax expense (benefit) for the years ended June 30, 2026,
2025 and 2024:
2026
2025
2024
Domestic: South Africa
(A)
$
$
(35,554 )
$
(5,480 )
Foreign:
(7,507 )
(71,629 )
(8,393 )
United States
(11,993 )
(12,322 )
(8,705 )
Other
(1)
(59,307 )
Income (Loss) before income tax expense (benefit)
(A)
$
$
(107,183 )
$
(13,873 )
(A) Income (loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka for the year ended June 30,
2025 and 2024 decreased by $
consolidated statement of operations.
(1) Amount for the year ended June 30, 2025, includes the impact of the change in fair value of equity securities discussed in
Note 6 related to MobiKwik.
Presented below is income tax expense (benefit) by location of the taxing jurisdiction for the years ended June 30, 2026, 2025
and 2024:
2026
2025
2024
Current tax expense
$
$
$
Domestic: South Africa
Foreign:
Other
Deferred tax (benefit) expense
(A)
(9,451 )
(21,739 )
(2,712 )
Domestic: South Africa
(A)
(9,483 )
(11,601 )
(2,716 )
Foreign:
(10,138 )
United States
(10,120 )
Other
(18 )
Foreign tax credits generated - United States
Income tax expense (benefit)
$
$
(15,982 )
$
(A) Deferred tax expense (benefit) and South Africa for the year ended June 30, 2025, have decreased by $
of the correction discussed in Note 1.
There were
jurisdiction in which we incur the majority of our income tax expense . The Company’s current tax expense for the year ended June
30, 2026, was higher than the previous year due to the higher taxable income generated by the Company’s subsidiaries during the year
ended June 30, 2026, primarily due to continued improved profitability generated from the Consumer operating segment compared
with the year ended June 30, 2025, as well as from the contribution to profitability from previous year’s acquisitions for the full year
during the year ended June 30, 2026.
The Company’s deferred tax benefit for the year ended June 30, 2026, was lower compared with the previous year primarily due
to the releases of valuations allowances in the previous year, which was partially offset by a higher benefit recorded in the current year
due to (i) the higher deferred tax benefit recorded during the year ended June 30, 2026, related to the amortization of intangible assets
recognized due to the acquisition of Adumo and Utilities in South Africa, (ii) the change in useful lives of certain brand intangible
assets which result in higher deferred tax benefits in South Africa , (iii) the release of a valuation allowance created related to net
operating losses in the United States following the utilization of net operating losses against taxable income, (iv) and the reversal of
$
Company’s subsidiaries. During the year ended June 30, 2026, the Company recognized a benefit for operating loss carryforwards
generated of $
2026 the Company recognized a valuation allowance related to an operating loss carryforward and other deferred tax assets totalling
$
t
ax assets would not be realized in future years.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-81
18. INCOME TAXES (continued)
Income tax expense (continued)
The Company’s deferred tax (benefit) expense for the year ended June 30, 2025, was higher compared with the previous year
due to reversal of the deferred tax liability (a benefit) related to the change in the carrying amount of our entire investment in
MobiKwik, the inclusion of the deferred tax benefit recorded during the year ended June 30, 2025, related to the amortization of
intangible assets recognized due to the acquisition of Adumo and Utilities and the reversal of $
allowances created in prior years following (i) an improvement in profitability of certain of the Company’s subsidiaries and (ii) a
change in judgment on the need for a valuation allowance of $
achieved sustainable profitability. During the year the Company recognized a benefit for operating loss carryforwards generated of
$
valuation allowance related to an operating loss carryforward of $
considering both positive and negative evidence, that the operating loss carryforward would not be realized.
During the years ended June 30, 2026, 2025 and 2024, the Company incurred net operating losses through certain of its South
African wholly-owned subsidiaries and recorded a deferred tax benefit related to these losses. However, the Company has created a
valuation allowance for certain of these net operating losses which reduced the deferred tax benefit recorded. Net operating losses
incurred during the year ended June 30, 2026, were higher than in previous periods due to losses incurred by certain entities that exited
existing businesses and higher operating costs incurred, but overall associated valuation allowance created during the year ended June
30, 2026, were lower than in previous periods because the Company believes it is more likely than not that certain of these losses will
be utilized in subsequent periods. Net operating losses and associated valuation allowance created during the year ended June 30,
2025, were lower than in previous periods due to the improvement in operating performance by the Company’s subsidiaries.
Adoption of new accounting guidance impacting presentation of the income tax rate reconciliation and income taxes paid
Following the adoption of guidance to enhance annual income tax disclosures the Company has amended its presentation to
provide additional disaggregation of information included in the income tax rate reconciliation and to provide additional disclosure
regarding income taxes paid. The Company adopted the guidance on a prospective basis during the year ended June 30, 2026.
On June 7, 2004, Lesaka and Aplitec implemented a transaction under which the former shareholders of Aplitec obtained a
majority voting interest in Lesaka. Aplitec was a holding company established and existing under the laws of Republic of South Africa
and was liquidated and deregistered following the closing of the transaction. GAAP requires that the company whose shareholders
retain a majority interest in a combined business be treated as the acquirer for accounting purposes. Consequently, this transaction was
accounted for as a reverse acquisition. For the period from June 7, 2004, the financial information reported for the Company represents
the consolidated results of Lesaka and Aplitec with Lesaka as the acquired entity. Although Aplitec is deemed to be the acquiring
company for financial and reporting purposes, the legal status of the Lesaka as the surviving corporation did not change. Therefore,
the Company has used the South African income tax rate of
% for purposes of its income tax rate reconciliation and the country of
South Africa for other income tax disclosures.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-82
18. INCOME TAXES (continued)
Incomes taxes rate reconciliation
A reconciliation of income taxes, calculated at the South African income tax rate to the Company’s reported income tax expense,
for the year ended June 30, 2026, is as follows:
2026
Income taxes at the South African statutory income tax rate
%
Foreign Tax Effects
United States
Statutory income tax rate difference between the United States federal and South Africa rates
%
Non-taxable other
(95 )
(2.55 )
%
Non-deductible other expenses
%
Changes in valuation allowances
(5,847 )
(156.92 )
%
Prior years under provision
%
Prior year global intangible low-taxed income ("GILTI")
%
Current year GILTI
%
Botswana
Statutory income tax rate difference between Botswana and South Africa
(94 )
(2.52 )
%
Namibia
Statutory income tax rate difference between Namibia and South Africa
%
Withholding taxes
%
Zambia
Withholding taxes
%
Germany
Statutory tax rate difference between other jurisdictions and South Africa
(27 )
(0.72 )
%
Non-taxable: Other
(156 )
(4.19 )
%
Prior years (over) under provision
(242 )
(6.49 )
%
Netherlands
Non-taxable income related to an allowance for doubtful loans receivable reversed
(479 )
(12.86 )
%
Other jurisdictions
Other
%
Changes in Valuation Allowances: South Africa
%
Nontaxable or Nondeductible Items: South Africa
Non-deductible goodwill impairment
%
Non-deductible interest expense paid on borrowings
%
Non-deductible consulting fees
%
Non-deductible penalties
%
Non-deductible interest expense paid to taxing authorities
%
Non-deductible other expenses
%
Non-deductible rebrand costs
%
Non-deductible loss on disposal of business
%
Non-taxable gain on consolidation
(286 )
(7.68 )
%
Non-taxable other income
(320 )
(8.59 )
%
Deferred tax asset related to capital loss generated
(25,026 )
(671.66 )
%
Other: South Africa
Prior years (over) under provision
(545 )
(14.63 )
%
Withholding taxes
%
Other
(128 )
(3.44 )
%
Income tax expense / Effective tax rate
%
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-83
18. INCOME TAXES (continued)
Income tax rate reconciliation (continued)
For reconciling items equal to or greater than 5% of the amount computed by applying the South African statutory income tax
rate to income (loss) before income tax expense (benefit), additional qualitative information is provided below:
●
Foreign tax rate effects: United States:
losses from foreign jurisdiction, mainly South Africa, (ii) taxes related to current year GILTI, (iii) release of the valuation
allowance related to certain net operating loss carryforwards as a result of utilization of net operating loss carryforwards
against these taxes, and (iv) non-deductible expenses.
●
Foreign tax effects: Botswana, Namibia, Zambia, Germany, Netherlands and other jurisdictions:
the (i) effect of earnings generated in jurisdictions with statutory tax rates different from the South African s statutory rate,
including Botswana, Namibia , Germany and other jurisdictions in which the Company operates, (ii) withholding taxes paid
in foreign jurisdictions, (iii) non-taxable income related an allowance for doubtful loans receivable reversed, and (iv)
inclusion of prior period tax entries in the current year.
●
Changes in valuation allowance:
performance by certain of the Company’s South African subsidiaries, and (ii) recognition of a valuation allowances following
management assessment of the utilization of deferred tax assets in South Africa.
●
Nontaxable or nondeductible items:
purposes under applicable tax laws, including (i) related to goodwill impaired, (ii) interest expense incurred on certain of the
Company’s borrowings, (iii) consulting fees incurred that are not in the production of taxable income (iv) penalties and
interest incurred related the taxing authority, (v) a loss on deconsolidation of a business and (vi) a deferred tax asset related
to capital loss generated on disposal of Cell C (the Company has created a full valuation allowance for this capital loss).
As previously disclosed, a reconciliation of income tax expense (benefit), calculated at the fully-distributed South African income
tax rate to the Company’s effective tax rate, for the years ended June 30, 2025 and 2024, is as follows:
2025
2024
Income taxes at South African income tax rates
%
%
Non-deductible interest expense
(1.29 )
%
(24.55 )
%
Movement in valuation allowance
(A)
%
(22.15 )
%
Non-deductible transaction costs
(4.19 )
%
(5.91 )
%
Goodwill impairment
(4.22 )
%
Capital gains tax rate differential
%
Prior year adjustments
%
(1.37 )
%
Non-deductible items
(A)
(3.42 )
%
%
Foreign tax credits
%
%
Foreign tax rate differential
(2.77 )
%
Effective tax rate
%
(24.24 )
%
(A) Movement in valuation allowance decreased from
% to
%, and non-deductible items increased from (
%) to
(
%) as a result of the correction discussed in Note 1.
Percentages included in the 2024 column in the reconciliation of income tax expense (benefit), presented above are specifically
impacted by the loss incurred by the Company during the years ended June 30, 2024. For instance, for the year ended June 30, 2024,
income tax expense of $
%) multiplied by the loss before tax (benefit) expense of $(
).
Movement in the valuation allowance for the year ended June 30, 2025, includes the impact of the reversal of the allowances
created in previous periods related to certain net operating loss carryforwards which the Company believes are no longer required
following improved and sustained profitability generated by certain of the Company’s subsidiaries. Non-deductible items for the year
ended June 30, 2025, includes transactions costs and interest expense incurred which the Company cannot deduct for income tax
purposes.
Movement in the valuation allowance for the year ended June 30, 2024, includes allowances created related to certain net
operating loss carryforwards generated during the year. Non-deductible items for the year ended June 30, 2024, includes transactions
costs and interest expense incurred which the Company cannot deduct for income tax purposes.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-84
18. INCOME TAXES (continued)
Income tax paid
The Company is required to separately disclose income taxes paid, net of refunds received, to an individual jurisdiction when
the amount paid to that jurisdiction equals or exceeds 5% of total income taxes paid, net of refunds received. Income taxes paid, net
of refunds received, to the jurisdictions that met the threshold for the year ended June 30, 2026, was as follows:
2026
Jurisdiction
Domestic: South Africa
$
Foreign:
Namibia
All other
Total income taxes paid, net of refunds received
$
Deferred tax assets and liabilities
Deferred taxes reflect the temporary differences between the financial statement carrying amount and tax bases of assets and
liabilities and carryforwards measured using enacted tax rates in effect for the year in which the items are expected to reverse. The
primary components of the temporary differences and carryforwards that gave rise to the Company’s deferred tax assets and liabilities
as of June 30, and their classification, were as follows:
June 30,
June 30,
2026
2025
Total deferred tax assets
Net operating loss carryforwards
$
$
Capital loss carryforwards
Provisions and accruals
Equity investments
Operating lease liability
Foreign tax credit carryforwards
Other
Total deferred tax assets before valuation allowance
Valuation allowances
(A)
(92,143 )
(109,468 )
Total deferred tax assets, net of valuation allowance
Total deferred tax liabilities:
Intangible assets
Operating lease right-of-use
Other
Total deferred tax liabilities
Reported as
Long-term deferred tax assets, net
Long-term deferred tax liabilities, net
Net deferred tax liabilities
$
$
(A) Valuation allowances as of June 30, 2025, has increased by $
Decrease in total net deferred tax liabilities
Net operating loss carryforwards
Net operating loss carryforwards have decreased primarily due to the utilization of net operating loss carryforwards in current
year, which was partially offset by the generation of net operating loss carryforwards in the current year from losses incurred by certain
of the Company’s subsidiaries. Net operating loss carryforwards are also impacted by the currency changes between the South African
Rand against the United States dollar. During the year ended June 30, 2026, net operating loss carryforwards related to a South African
subsidiary of $
allowance of $
loss deferred tax asset.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-85
18. INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in total net deferred tax liabilities (continued)
Capital loss carryforwards
Capital loss carryforwards as of June 30, 2026, comprised the losses arising from the disposal of Finbond and Cell C which
resulted in the generation of capital loss carryforwards in South Africa of $
States of $
which resulted in the generation of capital loss carryforwards in South Africa of $
United States of $
States will expire after five years, between 2029 and 2031. The change in Capital loss carryforwards also includes the impact of
currency changes between the South African Rand against the United States dollar.
Equity investments
Equity investments as of June 30, 2026, comprised the temporary differences arising from the difference between the amount
paid for CPS in 2004 and the financial statement carrying amount as of the respective year end, of $
as of June 30, 2025, comprises the temporary differences arising from the difference between the amount paid for Cell C in August
2017 and the financial statements carrying amount as of the respective year end, of $
amount paid for CPS in 2004 and the financial statement carrying amount as of the respective year end, of $
change in Equity investments relates to the derecognition of Cell C following the disposal of the investment (and creation of a capital
loss carryforward – refer above) and the impact of currency changes between the South African Rand against the United States dollar.
Operating lease liability
Operating lease liability as of June 30, 2026, has been presented due to the significant increase in the Company’s operating lease
liabilities during the year ended June 30, 2026 (refer to Note 8 for additional information).
Foreign tax credit carryforwards
There are
foreign tax credits generated from distributions from Lesaka’s subsidiaries. The tax credits as of June 30, 2025, expired during the
year ended June 30, 2026. During the year ended June 30, 2025, foreign tax credits of $
Intangibles assets
Intangible assets have decreased due to the amortization of the intangible assets.
Operating lease right-of-use
Operating lease right-of-use as of June 30, 2026, has been presented due to the significant increase in the Company’s operating
lease right-of-use assets during the year ended June 30, 2026 (refer to Note 8 for additional information).
Decrease in valuation allowance
At June 30, 2026, the Company had deferred tax assets of $
Management believes, based on the weight of available positive and negative evidence it is more likely than not that the Company
will realize the benefits of these deductible temporary differences and carryforwards, net of the valuation allowance. However, the
amount of the deferred tax asset considered realizable could be adjusted in the near term if estimates of taxable income are revised.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-86
18. INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in valuation allowance (continued)
At June 30, 2026, the Company had a valuation allowance of $
assets to the estimated realizable value. The movement in the valuation allowance for the years ended June 30, 2026, 2025 and 2024,
is presented below:
Total
Equity
investments
Capital loss
carry-
forwards
Net
operating
loss carry-
forwards
Foreign tax
credit
carry-
forwards
Other
July 1, 2023
$
$
$
$
$
$
Charged to statement of operations
Reversed to statement of operations
(1,865 )
(1,793 )
(72 )
Foreign currency adjustment
Net change in the valuation allowance
(72 )
July 1, 2024
$
$
$
$
$
$
Charged to statement of operations
Reversed to statement of operations
(A)
(10,630 )
(8,469 )
(2,161 )
Utilized
(25,528 )
(3,226 )
(2,002 )
(20,227 )
(73 )
Acquired in business combinations
Foreign currency adjustment
Net change in the valuation allowance
(5,219 )
(2,159 )
(20,227 )
June 30, 2025
Charged to statement of operations
Reversed to statement of operations
(12,340 )
(631 )
(11,361 )
(348 )
Utilized
(40,243 )
(25,026 )
(977 )
(1,537 )
(12,300 )
(403 )
Foreign currency adjustment
Net change in the valuation allowance
(17,325 )
(23,909 )
(7,403 )
(12,300 )
June 30, 2026
$
$
$
$
$
$
(A) Reversed to statement of operations during the year ended June 30, 2025, has decreased by $
correction discussed in Note 1.
Net operating loss carryforwards and foreign tax credit carryforwards
South Africa
Net operating loss carryforwards generated in South Africa of $
but the loss carryforward that may be used against future taxable income is limited to 80% of taxable income before the net operating
loss deduction.
United States
Net operating loss carryforwards generated in the United States are carried forward indefinitely, but the loss carryforward that
may be used against future taxable income is limited to 80% of taxable income before the net operating loss deduction. The Company
had utilized all of its net operating loss carryforwards as of June 30, 2026. Lesaka had no net unused foreign tax credits that are more
likely than not to be realized as of June 30, 2026 and 2025, respectively.
Unrecognized tax benefits
As of June 30, 2026 and 2025, the Company had
South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of June 30, 2026, 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,
s
tatement of cash flows, or results of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-87
19. EARNINGS (LOSS) PER SHARE
The Company has issued redeemable common stock (refer to Note 14) 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
adjustments to the carrying value of the redeemable common stock during the years ended June 30, 2026, 2025 and 2024. Accordingly,
the two-class method presented below does not include the impact of any redemption.
Basic earnings (loss) 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 earnings (loss) per share
has been calculated using the two-class method and basic earnings (loss) per share for the years ended June 30, 2026, 2025 and 2024,
reflects only undistributed earnings. The computation below of basic earnings (loss) 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 earnings (loss) per share have 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 earnings (loss) 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 calculation of diluted earnings (loss) per share includes the
dilutive effect of a portion of the restricted stock granted to employees during the current and previous fiscal periods as these shares
of restricted stock are considered contingently returnable shares for the purposes of the diluted earnings (loss) per share calculation
and the vesting conditions in respect of a portion of the restricted stock had been satisfied. The vesting conditions are discussed in
Note 17. The Company has excluded employee stock options to purchase
calculation of diluted loss per share during the years ended June 30, 2025 and 2024, respectively, because the effect would be
antidilutive.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-88
19. EARNINGS (LOSS) PER SHARE (continued)
The following table presents net loss attributable to Lesaka and the share data used in the basic and diluted earnings (loss) per
share computations using the two-class method for the years ended June 30, 2026, 2025 and 2024:
2026
2025
2024
(in thousands except percent and per share data)
Numerator:
Net income (loss) attributable to Lesaka
(A)
$
$
(90,957 )
$
(18,515 )
Undistributed income (loss)
(A)
(90,957 )
(18,515 )
Percent allocated to common shareholders
(Calculation 1)
Numerator for earnings (loss) per share: basic and diluted
$
$
(87,894 )
$
(17,678 )
Denominator
Denominator for basic earnings (loss) per share:
weighted-average common shares outstanding
Effect of dilutive securities:
Stock options
Denominator for diluted earnings (loss) per share: adjusted weighted
average common shares outstanding and assumed conversion
Earnings (Loss) per share:
Basic
(A)
$
$
(1.19 )
$
(0.29 )
Diluted
(A)
$
$
(1.19 )
$
(0.29 )
(Calculation 1)
Basic weighted-average common shares outstanding (A)
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest (B)
Percent allocated to common shareholders
(A) Net income (loss) attributable to Lesaka and Undistributed earnings (loss) for the year ended June 30, 2026, has decreased
by $
attributable to Lesaka and Undistributed earnings (loss) for the three months ended September 30, 2025. Net income (loss) attributable
to Lesaka and Undistributed earnings (loss) for years ended June 30, 2025 and 2024, have decreased by $
respectively, as a result of the correction discussed in Note 1.
The correction of the error did not impact Basic and Diluted earnings per share for the year ended June 30, 2026. Basic and
Diluted loss per share for the years ended June 30, 2025 and 2024, decreased by $
respectively.
Options to purchase
,
to $
2024, respectively, but were not included in the computation of diluted earnings (loss) per share because the options’ exercise prices
were greater than the average market price of the Company’s common shares. The options, which expire at various dates through
February 3, 2032, were still outstanding as of June 30, 2026.
20. SUPPLEMENTAL CASH FLOW INFORMATION
The following table presents supplemental cash flow disclosures for the years ended June 30, 2026, 2025 and 2024:
2026
2025
2024
Cash received from interest
$
$
$
Cash paid for interest
$
$
$
Cash paid for income taxes, net of refunds received
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-89
20. SUPPLEMENTAL CASH FLOW INFORMATION (continued)
Disaggregation of cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash included on the Company’s consolidated statement of cash flows includes restricted
cash related to cash withdrawn from one of the Company’s debt facilities to fund ATMs. This facility was cancelled in November
2024. The Company was only permitted to use this cash to fund ATMs and this cash was considered restricted as to use and therefore
was 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 12 for additional information regarding the Company’s facilities. The following
table presents the disaggregation of cash, cash equivalents and restricted cash as of June 30, 2026, 2025 and 2024:
2026
2025
2024
Cash and cash equivalents
$
$
$
Restricted cash
Cash, cash equivalents and restricted cash
$
$
$
Leases
The following table presents supplemental cash flow disclosure related to leases for the years ended June 30, 2026, 2025 and
2024:
2026
2025
2024
Cash paid related to lease liabilities
Operating cash flows from operating leases
$
$
$
Right-of-use assets obtained in exchange for lease obligations
Operating leases
$
$
$
21. OPERATING SEGMENTS
Operating segments
The Company discloses segment information as reflected in the management information systems reports that its chief operating
decision maker (“CODM”) uses in making decisions and to report certain entity-wide disclosures about products and services, and the
countries in which the entity holds material assets or reports material revenues. The Company currently has
Merchant, Consumer and Enterprise. The Company’s CODM is the Company’s Executive Chairman.
The CODM analyzes the Company’s operating performance primarily based on these three operational lines, namely,
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, and, through Recharger, landlords utilizing Recharger’s prepaid electricity metering
solution.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-90
21. OPERATING SEGMENTS (continued)
The Merchant segment includes revenue generated from the sale of ADP (select prepaid solutions, supplier-enabled payments,
international money transfer and other) 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 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. The Merchant segment includes interest earned from
the provision of loans to its customers.
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 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 transaction data. The Company offers landlords access to Utilities prepaid electricity metering
solution through which Enterprise earns commission revenue from prepaid electricity voucher sales to tenants recharging prepaid
meters. 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.
Segment measure of profit or loss
The Company evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization
(“EBITDA”), adjusted for items mentioned in the sentences below (“Segment Adjusted EBITDA”), the Company’s reportable
segments’ measure of profit or loss.
The Company obtained a general lending facility in February 2025, which has been partially used to fund a portion of its
Consumer lending during the year ended June 30, 2026, and interest related to these borrowings have been allocated to Consumer.
The Company also included an intercompany interest expense in its Consumer Segment Adjusted EBITDA for the year ended June
30, 2025.
The Company does not allocate once-off items, stock-based compensation charges, impairment of 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) gain 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 during fiscal 2025. 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
C
ompany’s loss before income tax expense.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-91
21. OPERATING SEGMENTS (continued)
Segment measure of profit or loss (continued)
Our CODM does not review the components of segment selling, general and administration expenses and is presented with
reports which include revenue and segment adjusted EBITDA.
The table below presents the reconciliation of revenue from external customers to the reportable segment’s revenue, significant
expenditures, the Company’s reportable segment’s measure of profit or loss, and certain other segment information for the years ended
June 30, 2026 and 2025, respectively, is as follows:
Year ended June 30,2026
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
(y)
Selling, general and administration
(1)(2)
Segment adjusted EBITDA
$
$
$
$
$
(z) includes interest revenue of:
(y) includes interest expense of:
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
Year ended June 30,2025
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
(y)(A)
Selling, general and administration
(A)(1)(3)
Segment adjusted EBITDA
(A)
$
$
$
$
$
(z) includes interest revenue of:
(y) includes interest expense of:
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-92
21. OPERATING SEGMENTS (continued)
The table below presents the reconciliation of revenue from external customers to the reportable segment’s revenue, significant
expenditures, the Company’s reportable segment’s measure of profit or loss, and certain other segment information for the year ended
June 30, 2024, respectively, is as follows:
Year ended June 30,2024
Merchant
Consumer
Enterprise
Unallocated
Total
Revenue from external customers
$
$
$
$
$
Intersegment revenues
Segment revenue
(z)
Less segment-related expenses:
Cost of goods sold, IT processing, servicing and
support
(y)(A)
Selling, general and administration
(A)(1)(4)
Segment adjusted EBITDA
(A)
$
$
$
$
$
(z) includes interest revenue of:
(y) includes interest expense of:
Merchant
Consumer
Enterprise
Group costs
Total
Depreciation and amortization
$
$
$
$
$
Expenditures for long-lived assets
$
$
$
$
$
(A) Cost of goods sold, IT processing, servicing and support and Selling, general and administration for Merchant and Total for
the year ended June 30, 2026 have each increased by $
discussed in Note 1, to the amount included in the captions Cost of goods sold, IT processing, servicing and support and Selling, general
and administration for the three months ended September 30, 2025. Segment Adjusted EBITDA for Merchant and Total for the year
ended June 30, 2026 have each decreased by $
in the caption Segment Adjusted EBITDA for the three months ended September 30, 2025.
Cost of goods sold, IT processing, servicing and support and Selling, general and administration for Merchant and Total for the
year ended June 30, 2025 have each increased by $
Note 1. Segment Adjusted EBITDA for Merchant and Total for the year ended June 30, 2025 have each decreased by $
a result of the correction discussed in Note 1.
Cost of goods sold, IT processing, servicing and support and Selling, general and administration for Merchant and Total for the
year ended June 30, 2024 have each increased by $
Note 1. Segment Adjusted EBITDA for Merchant and Total for the year ended June 30, 2024 have each decreased by $
a result of the correction discussed in Note 1.
(1) Selling, general and administration includes human capital-related expenses (including base salary and bonus), IT-related
expenses (including software licenses, hardware maintenance, hosting, and communication expenses), professional fees (including
audit, legal, consulting and other fees), lease and utilities expenses, the allowance for credit losses and other operating and support
expenses.
(2) Segment Adjusted EBITDA for the year ended June 30, 2026, includes retrenchment and reorganization costs for Merchant
of $
(3) Segment Adjusted EBITDA for the year ended June 30, 2025, includes retrenchment and reorganization costs for Merchant
of $
(4) Segment Adjusted EBITDA for the year ended June 30, 2024, includes retrenchment costs for Merchant of $
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-93
21. OPERATING SEGMENTS (continued)
The reconciliation of the reportable segments’ measures of profit or loss to income (loss) before income taxes for the years ended
June 30, 2026, 2025 and 2024, respectively, is as follows:
2026
2025
2024
Reportable segments measure of profit or loss
(A)
$
$
$
Operating loss: Group costs
(14,103 )
(10,743 )
(7,844 )
Once-off costs
(5,452 )
(17,826 )
(1,853 )
Interest adjustment
Unrealized gain (loss) for currency adjustments
(23 )
Stock-based compensation charge adjustments
(6,969 )
(9,550 )
(7,911 )
Depreciation and amortization
(47,346 )
(33,721 )
(23,665 )
Loss on disposal of equity-accounted investment (Note 9)
(584 )
(161 )
Impairment loss
(1)
(3,347 )
(18,863 )
Change in fair value of equity securities (Note 3)
(59,828 )
Gain on disposal of equity securities
(730 )
Other income
Reversal of doubtful loan receivable
Interest income
Interest expense
(A)
(18,506 )
(21,824 )
(19,171 )
Income (Loss) before income taxes
(A)
$
$
(107,183 )
$
(13,873 )
(A) Reportable segments’ measure of profit or loss and net loss before taxes for the year ended June 30, 2026, have decreased by
$
Reportable segments’ measure of profit or loss and net loss before taxes for the three months ended September 30, 2025. Interest
expense for the year ended June 30, 2026, has increased by $
amount included in the caption Interest expense for the three months ended September 30, 2025.
Reportable segments’ measure of profit or loss and net loss before taxes for the year ended June 30, 2025, have decreased by
$
has increased by $
Reportable segments’ measure of profit or loss and net loss before taxes for the year ended June 30, 2024, have decreased by
$
has increased by $
(1) Impairment loss excludes an amount of $
ATM business.
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.
Long-lived assets based on their geographic location as of June 30, 2026, 2025 and 2024, are presented in the table below:
Long-lived assets
2026
2025
2024
South Africa
$
$
$
India - Investment in MobiKwik (Note 9)
Rest of world
Total
$
$
$
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-94
22. COMMITMENTS AND CONTINGENCIES
Capital commitments
As of June 30, 2026 and 2025, the Company had outstanding capital commitments of approximately $
million, respectively.
Purchase obligations
As of June 30, 2026 and 2025, the Company had purchase obligations totaling $
purchase obligations as of June 30, 2026, primarily relate to POS devices, components for safe assets and inventory that will be
delivered to the Company and sold to customers in fiscal 2027.
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.
Nedbank has issued guarantees to these third parties amounting to ZAR
applicable as of June 30, 2026) thereby utilizing part of the Company’s short-term facilities. The Company pays commission of
between
% per annum to
% per annum of the face value of these guarantees and does not recover any of the commission from
third parties.
RMB has issued guarantees to these third parties amounting to ZAR
applicable as of June 30, 2026) thereby utilizing part of the Company’s short-term facilities.
The Company has not recognized any obligation related to these guarantees in its consolidated balance sheet as of June 30, 2026.
The maximum potential amount that the Company could pay under these guarantees is ZAR
exchange rates applicable as of June 30, 2026). As discussed in Note 12, the Company has ceded and pledged certain bank accounts
to Nedbank as security for these guarantees with an aggregate value of ZAR
applicable as of June 30, 2026). The guarantees have reduced the amount available under its indirect and derivative facilities in the
Company’s short-term credit facility described in Note 12.
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.
23. RELATED PARTY TRANSACTIONS
Related parties of the Executive Chairman
The Company's Executive Chairman also serves as Chairman of a Teya Holdings Ltd. (“Teya”), a group of privately held entities.
Certain entities within the Teya group engage in transactions with the Company in the ordinary course of business. The Company has
evaluated these arrangements and determined that the related transactions were immaterial, individually and in the aggregate, to the
Company's consolidated financial statements for the periods presented .
Related parties of a non-employee director
One of the Company's non-employee directors (Mr. Dean Sparrow) also serves as director and chief executive officer of Crossfin
Holdings. Crossfin Holdings has an indirect shareholding in VantagePay and Mr. Sparrow is a director of VantagePay. The Company
a
nd VantagePay have engaged in a transaction in the ordinary course of business, refer to Note 4 for additional information.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2026 and 2025 and 2024
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-95
24. SUBSEQUENT EVENTS
New lease obtained
In August 2026, the Company, through Lesaka SA, entered into a binding offer to lease for a new regional office in Umhlanga,
Durban, KwaZulu-Natal, South Africa with SA Sugar Distributors Proprietary Limited, a subsidiary of ABFS, a private company
incorporated in South Africa. The lease commences on November 1, 2026 and is for a period of
a further
. The Company secured beneficial occupation from September 1, 2026, and is expected to record a ROU asset and
an operating lease liability related from the date of taking beneficial occupation. The Company was required to provide a cash deposit
of two month’s rent to the lessor. The Company expects to pay an annual basic lease expense of $
translated at exchange rates applicable as of June 30, 2026), which increases by
% per annum.
Guarantee issued to supplier
In July and August 2026, RMB issued guarantees of ZAR
million, respectively, translated at exchange rates applicable as of June 30, 2026), to third parties thereby utilizing part of the
Company’s short-term facilities.
*
****************************