10-Q - LSAK - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒

QUARTERLY

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended

December 31, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND

EXCHANGE ACT OF 1934

For the transition period from

Commission file number:

000-31203

LESAKA TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida

98-0171860

(State or other jurisdiction

(IRS Employer

of incorporation or organization)

Identification No.)

President Place, 4

Floor

Cnr. Jan Smuts Avenue and Bolton Road

Rosebank, Johannesburg

2196

South Africa

(Address of principal executive offices, including zip code)

Registrant’s telephone number,

including area code:

343-2000

Not Applicable

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common stock, par value $0.001 per share

LSAK

NASDAQ

Global Select Market

Indicate by check mark whether

the registrant (1) has filed

all reports required to be

filed by Section 13 or

15(d)

the

Securities

Exchange

Act

1934

during

the

preceding

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.

YES

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File

required

submitted

pursuant

Rule

405

Regulation

S-T

(§232.405

this

chapter)

during

the

preceding

months (or for such shorter period that the registrant was required to submit such files).

YES

☒

☐

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”

Rule 12b-2

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

Section 13(a) of the Exchange Act.

☐

Indicate by

check mark

whether the

registrant is

a shell

company (as

defined in

Rule 12b-2

of the

Exchange

Act). YES

☐

☒

As of

February 1,

2024 (the

latest practicable

date),

62,385,662

shares of

the registrant’s

common stock,

par

value $0.001 per share, net of treasury shares, were outstanding.

Form 10-Q

LESAKA TECHNOLOGIES, INC.

Table

of Contents

Page No.

PART

I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Unaudited Condensed Consolidated Balance Sheets as of December 31, 2023 and June

30, 2023

Unaudited Condensed Consolidated Statements of Operations for the three and six

months ended December 31, 2023 and 2022

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the

three and six months ended December 31, 2023 and 2022

Unaudited Condensed Consolidated Statement of Changes in Equity for the three and six

months ended December 31, 2023 and 2022

Unaudited Condensed Consolidated Statements of Cash Flows for the three and six

months ended December 31, 2023 and 2022

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II. OTHER INFORMATION

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.

Other Information

Item 6.

Exhibits

Signatures

EXHIBIT 44

EXHIBIT 45

Part I. Financial information

Item 1. Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Balance Sheets

December 31,

June 30,

2023

(A)

(In thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

44,316

35,499

Restricted cash related to ATM funding

and credit facilities (Note 8)

23,522

23,133

Accounts receivable, net and other receivables (Note 2)

41,114

25,665

Finance loans receivable, net (Note 2)

39,056

36,744

Inventory (Note 3)

27,622

27,337

Total current assets before settlement assets

175,630

148,378

Settlement assets

26,974

15,258

Total current assets

202,604

163,636

PROPERTY,

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

39,667

June:

36,563

28,340

27,447

OPERATING LEASE RIGHT-OF-USE (Note 16)

5,649

4,731

EQUITY-ACCOUNTED INVESTMENTS

(Note 5)

161

3,171

GOODWILL (Note 6)

137,666

133,743

INTANGIBLE ASSETS, NET (Note 6)

117,953

121,597

DEFERRED INCOME TAXES

10,256

10,315

OTHER LONG-TERM ASSETS, including reinsurance assets (Note 5 and 7)

77,963

77,594

TOTAL ASSETS

580,592

542,234

LIABILITIES

CURRENT LIABILITIES

Short-term credit facilities for ATM funding (Note 8)

23,407

23,021

Short-term credit facilities (Note 8)

9,291

9,025

Accounts payable

18,884

12,380

Other payables (Note 9)

45,115

36,297

Operating lease liability - current (Note 16)

1,691

1,747

Current portion of long-term borrowings (Note 8)

3,429

3,663

Income taxes payable

670

1,005

Total current liabilities before settlement obligations

102,487

87,138

Settlement obligations

26,090

14,774

Total current liabilities

128,577

101,912

DEFERRED INCOME TAXES

45,929

46,840

OPERATING LEASE LIABILITY - LONG TERM (Note 16)

4,108

3,138

LONG-TERM BORROWINGS (Note 8)

139,337

129,455

OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 7)

2,489

1,982

TOTAL LIABILITIES

320,440

283,327

REDEEMABLE COMMON STOCK

79,429

EQUITY

COMMON STOCK (Note 10)

Authorized:

200,000,000

with $

0.001

par value;

Issued and outstanding shares, net of treasury - December:

64,443,523

June:

63,640,246

PREFERRED STOCK

Authorized shares:

50,000,000

with $

0.001

par value;

Issued and outstanding shares, net of treasury:

December:

June:

ADDITIONAL PAID-IN-CAPITAL

339,149

335,696

TREASURY SHARES, AT

COST: December:

25,295,261

June:

25,244,286

(288,436)

(288,238)

ACCUMULATED OTHER

COMPREHENSIVE LOSS (Note 11)

(189,378)

(195,726)

RETAINED EARNINGS

319,305

327,663

TOTAL LESAKA EQUITY

180,723

179,478

NON-CONTROLLING INTEREST

TOTAL EQUITY

180,723

179,478

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY

580,592

542,234

(A) – Derived from audited financial statements

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Operations

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

(In thousands, except per share

data)

(In thousands, except per share

data)

REVENUE (Note 15)

143,893

136,068

279,982

260,854

EXPENSE

Cost of goods sold, IT processing, servicing and support

114,266

108,824

221,756

209,352

Selling, general and administration

21,541

23,517

44,056

46,448

Depreciation and amortization

5,813

5,919

11,669

11,917

OPERATING INCOME (LOSS)

2,273

(2,192)

2,501

(6,863)

REVERSAL OF ALLOWANCE FOR

DOUBTFUL EMI DEBT

RECEIVABLE

250

(LOSS) GAIN ON DISPOSAL OF EQUITY-ACCOUNTED

INVESTMENT (Note 5)

(112)

136

INTEREST INCOME

485

389

934

800

INTEREST EXPENSE

4,822

4,388

9,731

8,424

LOSS BEFORE INCOME TAX EXPENSE

(2,064)

(6,303)

(6,046)

(14,351)

INCOME TAX EXPENSE (Note 18)

686

364

950

395

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-

ACCOUNTED INVESTMENTS

(2,750)

(6,667)

(6,996)

(14,746)

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS

(Note 5)

(1,362)

(2,599)

NET LOSS ATTRIBUTABLE

TO LESAKA

(2,707)

(6,649)

(8,358)

(17,345)

Net loss per share, in United States dollars

(Note 13):

Basic loss attributable to Lesaka shareholders

(0.04)

(0.11)

(0.13)

(0.28)

Diluted loss attributable to Lesaka shareholders

(0.04)

(0.11)

(0.13)

(0.28)

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

(In thousands)

Net loss

(2,707)

(6,649)

(8,358)

(17,345)

Other comprehensive income (loss), net of taxes

Movement in foreign currency translation reserve

6,112

12,155

5,268

(9,938)

Release of foreign currency translation reserve related to

disposal of Finbond equity securities (Note 11)

1,543

Release of foreign currency translation reserve related to

liquidation of subsidiaries

(952)

Movement in foreign currency translation reserve related

to equity-accounted investments

489

2,441

Total other comprehensive

income (loss), net of

taxes

6,703

12,252

6,348

(7,398)

Comprehensive income (loss)

3,996

5,603

(2,010)

(24,743)

Comprehensive income (loss) attributable to

Lesaka

3,996

5,603

(2,010)

(24,743)

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Changes in Equity

Lesaka Technologies, Inc. Shareholders

Number of

Amount

Number of

Treasury

Number of

shares, net of

treasury

Additional

Paid-In

Capital

Retained

Earnings

Accumulated

other

comprehensive

loss

Total

Lesaka

Equity

Non-

controlling

Interest

Total

Redeemable

common

stock

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

in thousands)

Balance – October 1, 2022

87,449,136

(24,926,752)

(287,136)

62,522,384

329,365

352,041

(188,490)

205,863

79,429

Shares repurchased (Note 12)

(30,102)

(108)

(30,102)

(108)

Restricted stock granted (Note 12)

1,151,229

Exercise of stock options

107,826

327

Stock-based compensation charge

(Note 12)

2,849

Stock-based compensation charge

related to equity-accounted investment

(Note 5)

(4)

Net loss

(6,649)

Other comprehensive income (Note

11)

12,252

Balance – December 31, 2022

88,708,191

(24,956,854)

(287,244)

63,751,337

332,537

345,392

(176,238)

214,530

79,429

For the six months ended December 31, 2022 (dollar

amounts in thousands)

Balance – July

1, 2022

87,215,613

(24,891,292)

(286,951)

62,324,321

327,891

362,737

(168,840)

234,920

79,429

Share repurchased (Note 12)

(65,562)

(293)

(65,562)

(293)

Restricted stock granted

1,382,752

Exercise of stock options

109,826

333

Stock-based compensation charge

(Note 12)

4,311

Reversal of stock-based compensation

charge (Note 12)

Stock-based compensation charge

related to equity-accounted investment

Net loss

(17,345)

Other comprehensive loss (Note 11)

(7,398)

Balance – December 31, 2022

88,708,191

(24,956,854)

(287,244)

63,751,337

332,537

345,392

(176,238)

214,530

79,429

See Notes to Unaudited Condensed Consolidated Financial

Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Changes in Equity

Lesaka Technologies, Inc. Shareholders

Number of

Amount

Number of

Treasury

Number of

shares, net of

treasury

Additional

Paid-In

Capital

Retained

Earnings

Accumulated

other

comprehensive

loss

Total

Lesaka

Equity

Non-

controlling

Interest

Total

Redeemable

common

stock

For the three months ended December 31, 2023 (dollar amounts

in thousands)

Balance – October 1, 2023

88,883,198

(25,244,286)

(288,238)

63,638,912

337,490

322,012

(196,081)

175,266

79,429

Shares repurchased (Note 12)

(50,975)

(198)

(50,975)

(198)

Restricted stock granted (Note 12)

868,996

Exercise of stock option (Note 12)

592

Stock-based compensation charge

(Note 12)

1,812

Reversal of stock-based compensation

charge (Note 12)

(14,002)

(8)

Stock-based compensation charge

related to equity-accounted investment

(Note 5)

(147)

Net loss

(2,707)

Other comprehensive income (Note

11)

6,703

Balance – December 31, 2023

89,738,784

(25,295,261)

(288,436)

64,443,523

339,149

319,305

(189,378)

180,723

79,429

For the six months ended December 31, 2023 (dollar

amounts in thousands)

Balance – July 1,

2023

88,884,532

(25,244,286)

(288,238)

63,640,246

335,696

327,663

(195,726)

179,478

79,429

Shares repurchased (Note 12)

(50,975)

(198)

(50,975)

(198)

Restricted stock granted

868,996

Exercise of stock option (Note 12)

7,385

Stock-based compensation charge

(Note 12)

3,580

Reversal of stock-based compensation

charge (Note 12)

(22,129)

(17)

Stock-based compensation charge

related to equity-accounted investment

(Note 5)

(133)

Net loss

(8,358)

Other comprehensive income (Note

11)

6,348

Balance – December 31, 2023

89,738,784

(25,295,261)

(288,436)

64,443,523

339,149

319,305

(189,378)

180,723

79,429

See Notes to Unaudited Condensed Consolidated Financial

Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

(In thousands)

Cash flows from operating activities

Net loss

(2,707)

(6,649)

(8,358)

(17,345)

Depreciation and amortization

5,813

5,919

11,669

11,917

Movement in allowance for doubtful accounts receivable

1,164

1,480

2,689

2,529

Fair value adjustment related to financial liabilities

(836)

(870)

144

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

112

(136)

(Earnings) Loss from equity-accounted investments

(43)

(18)

1,362

2,599

Movement in allowance for doubtful loans to equity-accounted investments

(250)

Profit on disposal of property, plant and equipment

(163)

(113)

(199)

(321)

Movement in interest payable

(1,573)

1,436

191

1,462

Facility fee amortized

196

316

445

Stock-based compensation charge (Note 12)

1,804

2,849

3,563

4,311

Dividends received from equity-accounted investments

(Increase) Decrease in accounts receivable

(13,157)

1,962

(15,502)

(981)

Increase in finance loans receivable

(2,889)

(5,230)

(3,377)

(8,811)

Decrease (Increase) in inventory

985

(1,193)

506

(1,472)

Increase in accounts payable and other payables

13,728

4,829

14,103

4,391

(Decrease) Increase in taxes payable

(654)

(513)

(346)

129

Decrease in deferred taxes

(1,032)

(1,728)

(1,594)

(3,122)

Net cash provided by (used in) operating activities

583

3,420

3,957

(4,240)

Cash flows from investing activities

Capital expenditures

(2,198)

(3,992)

(5,007)

(8,493)

Proceeds from disposal of property, plant and equipment

436

345

720

762

Acquisition of intangible assets

(47)

(120)

(182)

(120)

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

3,508

138

3,508

391

Loan to equity-accounted investment (Note 5)

(112)

Repayment of loans by equity-accounted investments

250

112

Net change in settlement assets

(43)

(10,131)

(11,280)

(12,015)

Net cash provided by (used in) investing activities

1,906

(13,760)

(11,991)

(19,475)

Cash flows from financing activities

Proceeds from bank overdraft (Note 8)

69,012

167,224

128,586

313,292

Repayment of bank overdraft (Note 8)

(66,048)

(175,380)

(128,841)

(312,302)

Long-term borrowings utilized (Note 8)

8,557

9,083

11,028

10,142

Repayment of long-term borrowings (Note 8)

(3,184)

(1,688)

(5,813)

(3,268)

Acquisition of treasury stock (Note 12)

(198)

(108)

(198)

(293)

Proceeds from exercise of stock options

327

333

Guarantee fee

(100)

Net change in settlement obligations

197

9,581

10,893

11,568

Net cash provided by financing activities

8,338

8,939

15,678

19,372

Effect of exchange rate changes on cash and cash equivalents

2,005

4,806

1,562

(3,681)

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

12,832

3,405

9,206

(8,024)

Cash, cash equivalents and restricted cash – beginning of period

55,006

93,371

58,632

104,800

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

67,838

96,776

67,838

96,776

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC

Notes to the Unaudited Condensed Consolidated Financial Statements

for the three and six months ended December 31, 2023 and 2022

(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)

Basis of Presentation and Summary of Significant Accounting

Policies

Unaudited Interim Financial Information

The accompanying

unaudited condensed

consolidated financial

statements include

all majority-owned

subsidiaries over

which

the Company exercises

control and have been

prepared in accordance with

U.S. generally accepted accounting

principles (“GAAP”)

and

the rules

and

regulations

the United

States Securities

and

Exchange

Commission

for

Quarterly Reports

on Form

10-Q

and

include all of

the information and

disclosures required

for interim financial

reporting. The results

of operations

for the three

and six

months ended December 31, 2023 and

2022, are not necessarily indicative of

the results for the full year.

The Company believes that

the disclosures are adequate to make the information presented not misleading.

These

unaudited

condensed

consolidated

financial

statements

should

read

conjunction

with

the

financial

statements,

accounting policies and financial notes thereto included in the

Company’s Annual Report on Form 10-K for the fiscal year ended June

30,

2023.

the

opinion

management,

the

accompanying

unaudited

condensed

consolidated

financial

statements

reflect

all

adjustments (consisting only of normal recurring adjustments), which are necessary for a fair

representation of financial results for the

interim periods presented.

References to “Lesaka” are references

solely to Lesaka Technologies,

Inc. References to the “Company” refer

to Lesaka and its

consolidated subsidiaries, collectively,

unless the context otherwise requires.

Recent accounting pronouncements adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance regarding

Measurement of Credit Losses on

Financial Instruments

. The guidance

replaces the incurred

loss impairment

methodology in

current GAAP

with a methodology

that

reflects expected credit losses

and requires consideration of a

broader range of reasonable and

supportable information to inform credit

loss estimates.

For trade and

other receivables,

loans, and

other financial

instruments, an entity

is required

to use a

forward-looking

expected loss

model rather

than the incurred

loss model for

recognizing credit

losses, which reflects

losses that are

probable. Credit

losses relating to

available-for-sale debt securities will

also be

recorded through an

allowance for credit

losses rather than

as a

reduction

in the amortized cost basis of the securities. The guidance became effective for the Company beginning July 1, 2023. The adoption of

this guidance did not have a material impact on the Company’s

financial statements and related disclosures, refer to Note 2.

In November

2019, the

FASB

issued guidance

regarding

Financial

Instruments—Credit

Losses (Topic

326),

Derivatives and

Hedging

(Topic

815),

and

Leases

(Topic

842).

The

guidance

provides

framework

stagger

effective

dates

for

future

major

accounting

standards

and

amends

the

effective

dates

for

certain

major

new

accounting

standards

give

implementation

relief

certain types

of entities,

including Smaller

Reporting Companies.

The Company

is a Smaller

Reporting Company.

Specifically,

the

guidance changes some effective

dates for certain

new standards on

the following topics

in the FASB Codification, namely Derivatives

and Hedging

(ASC 815);

Leases (ASC

842); Financial

Instruments —

Credit Losses

(ASC 326);

and Intangibles

— Goodwill

and

Other

(ASC

350).

The

guidance

defers

the

adoption

date

guidance

regarding

Measurement

Credit

Losses

Financial

Instruments

by the

Company from

July 1, 2020

to July

1, 2023.

The guidance

became effective

for the

Company beginning

July 1,

adoption of

this guidance

did not

have a

material impact

on the

Company’s

financial statements

and related

disclosures,

refer to Note 2.

The Company’s updated accounting

policy regarding allowance for credit losses is as follows:

Allowance for doubtful accounts receivable

Allowance for doubtful finance loans receivable

The Company uses historical default experience over the lifetime of loans in order to calculate a lifetime loss rate for its lending

books. The allowance for credit losses related

to Consumer finance loans receivables is calculated by multiplying the

lifetime loss rate

with

the

month-end

outstanding

lending

book.

The

allowance

for

credit

losses

Merchant

finance

loans

receivables

calculated

adding

together

actual

receivables

default

plus

multiplying

the

lifetime

loss

rate

with

the

month-end

outstanding

lending

book.

Prior to

July 1,

2023,

the

Company

regularly

reviewed

the ageing

of outstanding

amounts

due

from borrowers

and

adjusted its allowance based on management’s estimate of the recoverability of the finance loans

receivable. 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

evident that reasonable recovery procedures, including where deemed necessary,

formal legal action, have failed.

Basis of Presentation and Summary of Significant Accounting

Policies (continued)

Allowance for doubtful accounts receivable (continued)

Allowance for doubtful accounts receivable

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.

Prior to

July 1,

2023, a specific

provision is

established where it

is considered

likely that all or

a portion of

the amount due

from customers renting

safe assets, point of

sale (“POS”) equipment,

receiving support

and

maintenance

transaction

services

purchasing

licenses

SIM

cards

from

the

Company

will

not

recovered.

Non-

recoverability

is assessed

based

on a

quarterly

review

by management

the ageing

of outstanding

amounts,

the

location

and

the

payment history of the customer in relation to those specific amounts.

Recent accounting pronouncements not yet adopted

as of December 31, 2023

November

2023.

the

FASB

issued

guidance

regarding

Segment

Reporting

(Topic

280)

improve

reportable

segment

disclosure

requirements,

primarily

through

enhanced

disclosures

about

significant

segment

expenses.

addition,

the

guidance

enhances

interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit

or loss,

provides

new segment

disclosure

requirements

for entities

with a

single reportable

segment,

and

contains

other disclosure

requirements. This

guidance is

effective

for the

Company beginning

July 1,

2024 for

its year

ended June

30, 2025,

and for

interim

periods commencing from July

1, 2025 (i.e.

for the quarter

ended September 30, 2025).

The Company is currently

assessing the impact

of this guidance on its financial statements and related disclosures.

December

2023,

the

FASB

issued

guidance

regarding

Income

Taxes

(Topic

740)

improve

income

tax

disclosure

requirements. The guidance requires

entities, on an

annual basis, to

(1) disclose specific categories

in the income tax

rate reconciliation

and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect

of those reconciling items

is equal

to or

greater

than

five percent

of the

amount computed

by multiplying

pre-tax

income

or loss

by the

applicable

statutory

income tax rate). This guidance

is effective for the Company

beginning July 1, 2025. The Company

is currently assessing the impact

of this guidance on its financial statements and related disclosures.

Accounts receivable, net and other receivables and

finance loans receivable, net

Accounts receivable, net and other receivables

The Company’s accounts receivable,

net, and other receivables as of December 31, 2023, and June 30, 2023, are presented in

the table below:

December 31,

June 30,

2023

Accounts receivable, trade, net

13,169

11,037

Accounts receivable, trade, gross

13,591

11,546

Allowance for doubtful accounts receivable, end of period

422

509

Beginning of period

509

Reallocation to allowance for doubtful finance loans receivable

(418)

Reversed to statement of operations

(227)

(31)

Charged to statement of operations

586

2,005

Utilized

(458)

(1,645)

Foreign currency adjustment

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

net of

allowance: December 2023: $

750

; June 2023: $

750

Current portion of total held to maturity investments

Investment in

7.625

% of Cedar Cellular Investment 1 (RF) (Pty) Ltd

8.625

% notes

Other receivables

27,945

14,628

Total accounts receivable,

net and other receivables

41,114

25,665

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

these

exposures

often

results

balances

month-end

that

are

disproportionately

small

compared

the

total

invoiced

amounts.

The

month-end

outstanding

balance

are

volatile

than

the

monthly

invoice

amounts

because

they

are

affected

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.

Accounts receivable, net and other receivables and

finance loans receivable, net (continued)

Accounts receivable, net and other receivables (continued)

Credit risk in respect of trade receivables are generally not

significant and the Company has not developed a sophisticated model

for these basic

credit exposures. The

Company determined to

use a lifetime

loss rate by

expressing write-off experience as

a percentage

of corresponding

invoice amounts

(as opposed

to outstanding

balances). The

allowance for credit

losses related to

these receivables

has

been

calculated

multiplying

the

lifetime

loss

rate

with

recent

invoice/origination

amounts.

Management

actively

monitors

performance of these

receivables over short periods

of time. Different

balances have different

rules to identify an

account in distress

but,

generally

speaking,

account

balances

distress

are

identified

very

early

and

specific

allowances

are

immediately

created.

Subsequent recovery from distressed accounts are generally limited.

Current portion of amount outstanding related to sale of interest in Carbon represents the amount due from the purchaser related

to the sale of the Company’s

interest in Carbon Tech

Limited (“Carbon”), an equity-accounted investment of $

0.25

million, net of an

allowance for doubtful loans receivable of $

0.25

million as of June 30, 2023, and an amount due related to the sale of the loan, with a

face value of $

3.0

million, which was sold in

September 2022 for $

0.75

million, net of an allowance for

doubtful loans receivable of

0.75

million, refer

to Note 5 for

additional information.

The Company received

the outstanding $

0.25

million related to

the sale of

the equity-accounted investment in

October 2023, and has

reversed the allowance for

doubtful loans receivable of

0.25

million during

the six months ended December 31, 2023.

Investment in

7.625

% of Cedar Cellular

Investment 1 (RF) (Pty) Ltd

8.625

% notes represents the

investment in a note which was

due to mature

in August 2022 and

forms part of

Cell C’s

capital structure. The

carrying value as of

each of December 31,

2023, and

June 30, 2023, respectively was $

(zero).

Other receivables includes prepayments, deposits, income taxes receivable

and other receivables.

Contractual maturities of held to maturity investments

Summarized below is the contractual maturity of the Company’s

held to maturity investment as of December 31, 2023:

Cost basis

Estimated

fair

value

(1)

Due in one year or less

Due in one year through five years

(2)

Due in five years through ten years

Due after ten years

Total

(1) The estimated fair value of the Cedar Cellular note has been calculated utilizing the

Company’s portion of the assets held by

Cedar Cellular, namely,

Cedar Cellular’s investment in Cell C.

(2) The cost basis is zero ($

0.0

million).

Accounts receivable, net and other receivables and

finance loans receivable, net (continued)

Finance loans receivable, net

The Company’s finance

loans receivable, net, as of December 31, 2023, and June 30, 2023, is presented

in the table below:

December 31,

June 30,

2023

Microlending finance loans receivable, net

25,686

20,605

Microlending finance loans receivable, gross

27,483

22,037

Allowance for doubtful finance loans receivable, end of period

1,797

1,432

Beginning of period

1,432

1,394

Reversed to statement of operations

(86)

Charged to statement of operations

1,188

1,452

Utilized

(787)

(1,214)

Foreign currency adjustment

(200)

Merchant finance loans receivable, net

13,370

16,139

Merchant finance loans receivable, gross

16,315

18,289

Allowance for doubtful finance loans receivable, end of period

2,945

2,150

Beginning of period

2,150

297

Reallocation from allowance for doubtful accounts receivable

418

Reversed to statement of operations

(202)

(1,268)

Charged to statement of operations

1,430

3,068

Utilized

(521)

Foreign currency adjustment

(365)

Total finance

loans receivable, net

39,056

36,744

Total

finance

loans

receivable,

net,

comprises

microlending

finance

loans

receivable

the

Company’s

microlending

operations

in South

Africa as

well as

its merchant

finance loans

receivable related

to Connect’s

lending activities

in South

Africa.

Certain merchant finance loans receivable with an aggregate balance

of $

13.1

million as of December 31, 2023 have been pledged as

security for the Company’s

revolving credit facility (refer to Note 8).

Allowance for credit losses

Microlending finance loans receivable

Microlending finance

loans receivable

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

six months

, with the majority

of loans

originated having

a tenor of

six months

. The Company

analyses this lending

book as a

single portfolio

because the

loans within the

portfolio have similar characteristics and management uses similar processes to monitor and assess

the credit risk of the lending book.

Refer to Note 4 related to the Company risk management process related to

these receivables.

The Company has operated this lending book for more than

five years

and uses historical default experience over the lifetime of

loans in order

to calculate a

lifetime loss rate

for the lending

book. The allowance

for credit losses

related to these

microlending finance

loans receivables

is calculated

by multiplying

the lifetime

loss rate

with the

month end

outstanding lending

book. The

lifetime loss

rate as

of each of

July 1, 2023

and December

31, 2023,

was

6.50

%. The performing

component (that

is, outstanding

loan payments

not in arrears) of the book exceeds more than

% of outstanding lending book as of December 31, 2023.

Merchant finance loans receivable

Merchant

finance loans

receivable related

to the

Company’s

Merchant

lending activities

in South

Africa whereby

it provides

unsecured

short-term loans

to qualifying

customers. Loans

to customers

have a

tenor of

up to

twelve months

, with

the majority

loans originated having a tenor of approximately

eight months

. The Company analyses this lending book as a single portfolio because

the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk

of the lending book.

Refer to Note 4 related to the Company risk management process related to these receivables.

Accounts receivable, net and other receivables and

finance loans receivable, net (continued)

Finance loans receivable, net (continued)

Allowance for credit losses (continued)

Merchant finance loans receivable (continued)

The

Company

has

recently

(in

the

past

two years

)

commenced

lending

merchant

customers

and

uses

historical

default

experience over

the lifetime of

loans generated thus

far in order

to calculate a

lifetime loss rate

for the lending

book. The allowance

for credit losses related to these merchant finance loans receivables

is calculated by adding together actual receivables in default

plus

multiplying the lifetime

loss rate with the

month-end outstanding

lending book. The

lifetime loss rate as

of each of

July 1, 2023 and

December 31, 2023, was approximately

1.18

%. The performing component (that is, outstanding loan payments not in arrears), under-

performing

component (that

is, outstanding

loan payments

that are

in arrears)

and non-performing

component (that

is, outstanding

loans

for

which

payments

appeared

to have

ceased)

of the

book represents

approximately

% and

respectively,

the

outstanding lending book as of December 31, 2023.

Inventory

The Company’s inventory

comprised the following categories as of December 31, 2023, and June 30, 2023:

December 31,

June 30,

2023

Raw materials

2,719

2,819

Work-in-progress

Finished goods

24,821

24,488

27,622

27,337

As of

December

31,

2023 and

June

30,

2023,

finished

goods

includes

7.8

million

and

8.6

million,

respectively,

of Cell

airtime inventory that was previously

classified as finished goods subject

to sale restrictions. In support of

Cell C’s liquidity

position

and pursuant to

Cell C’s

recapitalization process, the

Company limited the

resale of this airtime

to its own distribution

channels. On

September 30, 2022, Cell C

concluded its recapitalization process and

the Company and Cell C

entered into an agreement under which

Cell C agreed to repurchase, from October

2023, up to ZAR

million of Cell C inventory from the

Company per month. The amount

to be repurchased by Cell C is calculated as ZAR

million less the face value of any sales made by the Company during that month.

The Company’s ability to sell this airtime has increased significantly since the acquisition of Connect because Connect is

a significant

reseller of

Cell C airtime.

As a

result, the

Company has

sold higher

volumes of

airtime through

this channel

than it

did prior

to the

Cell C

recapitalization,

however,

continued

sales at

these volumes

is dependent

on prevailing

conditions

continuing in

the airtime

market. If the Company is able to sell at least ZAR

million a month through this channel from October 1, 2023, then Cell C would

not be

required to

repurchase any

airtime from

the Company

during any

specific month.

The Company

has agreed

to notify

Cell C

prior to selling any of this airtime, however, there is no

restriction placed on the Company on the sale of the airtime

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

subject

currency

exchange

risk

because

purchases

components

for

its

safe

assets,

that

the

Company

assembles, and inventories that it is required to settle in other currencies, primarily the euro, renminbi, and U.S. dollar.

The Company

has

used forward

contracts

in order

to limit

its exposure

in these

transactions

to fluctuations

in exchange

rates

between

the South

African rand (“ZAR”), on the one hand, and the U.S. dollar and the euro, on

the other hand.

Translation risk

Translation risk relates to

the risk that

the Company’s results of operations

will vary significantly

as the U.S.

dollar is its

reporting

currency,

but it earns a

significant amount of its

revenues and incurs a

significant amount of its

expenses in ZAR. The

U.S. dollar to

the ZAR

exchange rate

has fluctuated

significantly over

the past

three years.

As exchange

rates are

outside the

Company’s

control,

there can be no

assurance that future fluctuations will

not adversely affect the Company’s results of operations and

financial condition.

Interest rate risk

As a result of its

normal borrowing activities, the Company’s operating results are exposed to fluctuations in

interest rates, which

it manages primarily through regular financing activities. Interest rates in South Africa have been trending

upwards in recent quarters

but have now

stabilized and are

expected to remain

at current

levels, or perhaps

even decline moderately

over calendar 2024.

Therefore,

ignoring the impact of changes to the margin on its borrowings (refer to Note 8),

the Company expects its cost of borrowing to remain

stable,

even

decline

moderately,

the foreseeable

future,

however

the upward

trend

resumes

the Company

would

expect

higher

interest

rates

the

future

which

will

increase

its

cost

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

the

risk

loss

that

the

Company

would

incur

result

non-performance

counterparties.

The

Company

maintains

credit

risk

policies

respect

its

counterparties

minimize

overall

credit

risk.

These

policies

include

evaluation

potential

counterparty’s

financial

condition,

credit

rating,

and

other

credit

criteria

and

risk

mitigation

tools

the

Company’s

management deems appropriate.

With respect

to credit risk on

financial instruments, the

Company maintains a

policy of

entering

into such

transactions only

with South

African

and European

financial

institutions

that have

a credit

rating of

“B” (or

its

equivalent) or better, as determined by credit

rating agencies such as Standard & Poor’s, Moody’s

and Fitch Ratings.

Consumer microlending credit

risk

The Company

is exposed

to credit

risk in

its Consumer

microlending activities,

which provides

unsecured short-term

loans to

qualifying customers.

Credit bureau

checks as

well as

an affordability

test are

conducted as

part of

the origination

process, both

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. A

significant

amount of

judgment is required

to assess the

ultimate recoverability

of these finance

loan receivables,

including ongoing

evaluation

of the creditworthiness of each customer.

Merchant lending

The Company maintains an allowance for

doubtful finance loans receivable related to

its Merchant services segment with

respect

to short-term loans to qualifying merchant customers. The

Company’s risk management procedures include adhering to its proprietary

lending criteria which uses

an online-system loan application

process, obtaining necessary customer transaction-history

data and credit

bureau checks.

The Company considers

these procedures

to be appropriate

because it takes

into account

a variety of

factors such

the customer’s credit capacity and customer-specific

risk factors when originating a loan.

Fair value of financial instruments (continued)

Risk management (continued)

Equity price and liquidity risk

Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price

of equity

securities that

it holds.

The market

price of

these securities

may fluctuate

for a

variety of

reasons and,

consequently,

the

amount that the Company may obtain in a subsequent sale of these securities may significantly differ

from the reported market value.

Equity liquidity risk

relates to the risk

of loss that the

Company would incur as

a result of the lack

of liquidity on the

exchange

which

those

securities

are

listed.

The

Company

may

not be

able

sell some

all

these

securities

one

time,

over

extended period of time without influencing the exchange-traded price,

or at all.

Financial instruments

The following

section describes

the valuation

methodologies the

Company uses

to measure

its significant

financial assets

and

liabilities at fair value.

In general, and where applicable, the Company uses quoted prices in

active markets for identical assets or liabilities

to determine

fair value.

This pricing

methodology would

apply to

Level 1

investments. If quoted

prices in

active markets

for identical

assets or

liabilities are

not available

to determine

fair value,

then the

Company uses

quoted

prices for

similar assets

and

liabilities or

inputs

other

than

the

quoted

prices

that

are

observable

either

directly

indirectly. These

investments

would

be included

Level

investments. In

circumstances

which

inputs

are

generally

unobservable,

values

typically

reflect

management’s

estimates

assumptions that market participants would use in pricing the asset or liability.

The fair values are therefore determined using model-

based techniques that include

option pricing models,

discounted cash flow models,

and similar techniques. Investments

valued using

such techniques are included in Level 3 investments.

Asset measured at fair value using significant unobservable inputs – investment

in Cell C

The Company’s

Level 3 asset represents

an investment of

75,000,000

class “A” shares in Cell

C, a significant

mobile telecoms

provider in South Africa.

The Company used a discounted cash flow model developed by the Company to determine

the fair value of

its investment in Cell C as of December 31, 2023 and June 30, 2023, respectively,

and valued Cell C at $

0.0

(zero) and $

0.0

(zero) as

of December 31, 2023, and

June 30, 2023, respectively.

The Company incorporates the payments

under Cell C’s

lease liabilities into

the cash

flow forecasts

and assumes

that Cell

C’s

deferred tax

assets would

be utilized

over the

forecast period.

The Company

has

increased

the

marketability

discount

from

and

the

minority

discount

from

due

the

reduction

the

Company’s

shareholding percentage

from

% to

% as well

as current

market conditions.

The Company

utilized the latest

revised

business plan

provided by

Cell C

management for

the period

ended December

31, 2025,

for the

December 31,

2023, and

June 30,

2023, valuations. Adjustments have been made to the WACC

rate to reflect the Company’s

assessment of risk to Cell C achieving its

business plan.

The following key valuation inputs were used as of December 31, 2023

and June 30, 2023:

Weighted Average

Cost of Capital ("WACC"):

Between

% and

% over the period of the forecast

Long term growth rate:

4.5

% (

4.5

% as of June 30, 2023)

Marketability discount:

% (

% as of June 30, 2023)

Minority discount:

% (

% as of June 30, 2023)

Net adjusted external debt - December 31, 2023:

(1)

ZAR

billion ($

0.4

billion), no lease liabilities included

Net adjusted external debt - June 30, 2023:

(2)

ZAR

8.1

billion ($

0.4

billion), no lease liabilities included

(1) translated from ZAR to U.S. dollars at exchange rates applicable as of December

31, 2023.

(2) translated from ZAR to U.S. dollars at exchange rates applicable as of June 30,

2023.

The following table presents the impact on the carrying value of the Company’s

Cell C investment of a 1.0% increase and 1.0%

decrease in the

WACC

rate and

the EBITDA margins

respectively used

in the Cell

C valuation

on December

31, 2023, all

amounts

translated at exchange rates applicable as of December 31, 2023:

Sensitivity for fair value of Cell C investment

1.0% increase

1.0% decrease

WACC

rate

489

EBITDA margin

1,140

The fair

value

of the

Cell C

as of

December

31,

2023, represented

% of

the Company’s

total assets,

including

these

shares.

The Company expects

to hold these

shares for an

extended period of

time and that

there will

be short-term equity

price volatility

with respect to these shares particularly given that Cell C remains in a turnaround

process.

Fair value of financial instruments (continued)

Financial instruments (continued)

Derivative transactions - Foreign exchange contracts

As part

the

Company’s

risk

management

strategy,

the Company

enters

into

derivative

transactions

mitigate

exposures

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 or 3 of the fair value hierarchy.

The Company had

outstanding foreign exchange contracts as of December 31, 2023, and June 30,

2023.

The following table

presents the

Company’s assets measured at

fair value on

a recurring

basis as

of December 31,

2023, 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, cash equivalents and

restricted cash (included

in other long-term assets)

217

Fixed maturity

investments (included in

cash and cash equivalents)

2,834

Total assets at fair value

3,051

The following table presents the

Company’s assets measured

at fair value on a recurring basis as of

June 30, 2023, 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)

258

Fixed maturity investments

(included in cash and cash

equivalents)

3,119

Total assets at fair value

3,377

There

have

been

transfers

out

Level

during

the

three

and

six

months

ended

December

31,

2023

and

2022,

respectively.

There was

movement in the carrying value of assets measured at fair value on a recurring basis, and categorized within Level

3, during the six months ended December 31, 2023 and 2022.

Fair value of financial instruments (continued)

Summarized below is the movement in the carrying value of

assets and liabilities measured at fair value on a recurring

basis, and

categorized within Level 3, during the six months ended December 31, 2023:

Carrying value

Assets

Balance as of June 30, 2023

Foreign currency adjustment

(1)

Balance as of December 31, 2023

(1) The foreign currency adjustment represents the effects of the fluctuations of the

South African rand against the U.S. dollar on

the carrying value.

Summarized below is the movement in the carrying value

of assets and liabilities measured at fair value on

a recurring basis, and

categorized within Level 3, during the three months ended December 31, 2022:

Carrying value

Assets

Balance as of June 30, 2022

Foreign currency adjustment

(1)

Balance as of December 31, 2022

(1) The

foreign currency

adjustment represents the

effects of

the fluctuations

of the South

African rand

against the U.S.

dollar

on the carrying value.

Assets measured at fair value on a nonrecurring basis

The Company

measures equity

investments without

readily determinable

fair values

at fair value

on a

nonrecurring basis.

The

fair values of

these investments

are determined

based on

valuation techniques

using the best

information available

and may include

quoted market prices, market comparables, and discounted cash flow

projections. An impairment charge is recorded when the cost

the

asset

exceeds

its

fair

value

and

the

excess

determined

other-than-temporary.

Refer

Note

for

impairment

charges

recorded during the

reporting periods presented

herein. The Company

has

liabilities that

are measured at

fair value

on a

nonrecurring

basis.

Equity-accounted investments and other long-term assets

Refer to Note 9 to the Company’s audited consolidated

financial statements included in its Annual Report on Form 10-K for the

year ended June 30, 2023, for additional information regarding its equity-accounted

investments and other long-term assets.

Equity-accounted investments

The Company’s

ownership percentage in its equity-accounted

investments as of December 31,

2023, and June 30, 2023, was as

follows:

December 31,

June 30,

2023

Finbond Group Limited (“Finbond”)

27.8

Sandulela Technology

(Pty) Ltd ("Sandulela")

49.0

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

50.0

Finbond

In December

2023, the

Company sold

its entire

remaining equity

interest in

Finbond which

comprised of

220,523,358

shares,

and which represented approximately

27.8

% of Finbond’s issued and outstanding

ordinary shares immediately prior to the sale.

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

Equity-accounted investments (continued)

Finbond (continued)

August 2023 agreement to sell entire

stake in Finbond

August

10,

2023,

the

Company,

through

its

wholly

owned

subsidiary

Net1

Finance

Holdings

(Pty)

Ltd,

entered

into

agreement with Finbond to sell its remaining shareholding to Finbond for a cash consideration of ZAR

64.2

million ($

3.5

million), or

ZAR

0.2911

per share. The transaction was subject to certain conditions, including regulatory and shareholder approvals,

which were

finalized in December 2023. The

Company did

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

64.2

million ($

3.5

million) have been used to repay capitalized interest under our borrowing

facilities, refer to Note 8.

Sale of Finbond shares during the three

and six months ended December 31, 2023

The Company

sold

7,379,656

and

7,461,591

shares in

Finbond for

cash during

the three

and six

months ended

December 31,

2022, respectively,

and recorded a loss of $

0.112

million and $

0.114

million, which is included in the

caption net gain on disposal of

equity-accounted investments in the Company’s

unaudited condensed consolidated statements of operations.

The following

table presents

the calculation

of the

loss on

disposal of

Finbond

shares during

the three

and six

months ended

December 31, 2023:

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

Loss on disposal of Finbond shares:

Consideration received in cash

3,508

138

3,508

141

Less: carrying value of Finbond shares sold

(2,112)

(157)

(2,112)

(160)

Less: release of foreign currency translation reserve from

accumulated other comprehensive loss

(1,543)

(97)

(1,543)

(99)

Add: release of stock-based compensation charge related

equity-accounted investment

147

Loss on sale of Finbond shares

(112)

(114)

Finbond impairments recorded

during the six months ended December 31, 2023

As noted earlier, the Company has entered into an agreement to exit its position in Finbond and the Company considered this an

impairment indicator. The

Company is required to include any foreign currency translation reserve

and other equity account amounts

in its impairment assessment if it considers exiting an equity method investment. The Company performed an impairment assessment

of its

holding in

Finbond, including

the foreign

currency translation

reserve and

other equity

account amounts,

as of September

30,

The Company recorded an impairment loss of $

1.2

million during the quarter ended September 30, 2023, which represented the

difference between

the determined fair value

of the Company’s

interest in Finbond and

the Company’s

carrying value, including

the

foreign currency

translation reserve

(before the

impairment). The

Company used

the price of

ZAR

0.2911

referenced in

the August

2023 agreement referred to above to calculate the determined fair

value for Finbond.

Finbond impairments recorded

during the six months ended December 31, 2022

The Company considered

the combination of

the ongoing losses

incurred and reported

by Finbond and

its lower share price

impairment indicators. The

Company performed an

impairment assessment of its

holding in Finbond

as of September 30,

Company

recorded

impairment

loss

1.1

million

during

the

quarter

ended

September

30,

2022,

the

other-than-

temporary decrease in Finbond’s value, which represented the difference between the determined fair value of the Company’s interest

in Finbond and the Company’s

carrying value (before the impairment).

The Company observed continued

limited trading in Finbond

shares on the JSE during the

three months ended September 30, 2022,

because a small number of shareholders

owned approximately

% of

its issued

and outstanding

shares between

them. The

Company calculated

a fair

value per

share for

Finbond by

applying a

liquidity discount of

% to

the September 30,

2022, Finbond closing

price of

ZAR

0.49

. The

Company increased the

liquidity discount

from

% (used

in the

previous impairment

assessment) to

% as

a result

of the

ongoing limited

trading activity

observed on

the

JSE.

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

Equity-accounted investments (continued)

Carbon

In September

2022, the

Company,

through its

wholly-owned subsidiary,

Net1 Applied

Technologies

Netherlands B.V.

(“Net1

BV”),

entered

into

a binding

term

sheet

with the

Etobicoke

Limited

(“Etobicoke”)

to sell

its entire

interest, or

in Carbon

Etobicoke for

0.5

million and

a loan

due from

Carbon, with

a face

value of

3.0

million, to

Etobicoke for

0.75

million. Both

the

equity

interest and

the loan

had a

carrying value

of $

(zero) at

June 30,

parties have

agreed that

Etobicoke pledge

the

Carbon shares purchased as security for the amounts outstanding

under the binding term sheet.

The Company received $

0.25

million on closing and the outstanding balance due by Etobicoke is expected to be paid

as follows:

(i) $

0.25

million on September 30, 2023 (the

amount was received in October 2023),

and (ii) the remaining amount,

of $

0.75

million

in March 2024. Both

amounts are included

in the caption accounts

receivable, net and other

receivables in the Company’s

unaudited

condensed consolidated balance sheet as of December

31, 2023. The Company has allocated the $

0.25

million received to the sale of

the equity interest and will allocate the funds received first to the sale of the equity

interest and then to the loans.

The Company currently

believes that the fair

value of the Carbon

shares provided as security

is $

(zero), which is

in line with

the carrying value as of June 30, 2022, and has created an allowance for

doubtful loans receivable related to the $

1.0

million due from

Etobicoke. The Company did not incur any significant

transaction costs. The Company has included the gain of $

0.25

million related

to the

sale of

the Carbon equity

interest in the

caption net gain

on disposal of

equity-accounted investments

in the

Company’s unaudited

condensed consolidated statements of operations.

The following table presents the calculation of the gain on disposal of Carbon

in September 2022:

Three months

ended September

30,

2022

Gain on disposal of Carbon shares:

Consideration received in cash in September 2022

250

Less: carrying value of Carbon

Gain on disposal of Carbon shares:

(1)

250

(1) The Company does

not expect to pay taxes

related to the sale of

Carbon because the base cost

of its investment exceeds

the

sales consideration received. The Company does not believe that it will be able to utilize the

loss generated because Net1 BV does not

generate taxable income.

Summarized below is the

movement in equity-accounted investments and

loans provided to equity-accounted

investments during

the six months ended December 31, 2023:

Finbond

Other

(1)

Total

Investment in equity

Balance as of June 30, 2023

3,040

131

3,171

Stock-based compensation

Comprehensive income:

(956)

(873)

Other comprehensive income

489

Equity accounted (loss) earnings

(1,445)

(1,362)

Share of net (loss) earnings

(278)

(195)

Impairment

(1,167)

Dividends received

(54)

Disposal of Finbond shares

(2,096)

Foreign currency adjustment

(2)

(1)

Balance as of December 31, 2023

161

(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.

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

Other long-term assets

Summarized below is the breakdown of other long-term assets as of December

31, 2023, and June 30, 2023:

December 31,

June 30,

2023

Total equity investments

76,297

Investment in

% of Cell C (June 30, 2023:

%) at fair value (Note 4)

Investment in

% of MobiKwik (June 30, 2023:

(1)

76,297

Investment in

87.5

% of CPS (June 30, 2023:

87.5

%) at fair value

(1)(2)

Policy holder assets under investment contracts (Note 7)

216

257

Reinsurance assets under insurance contracts (Note 7)

1,450

1,040

Total other long-term

assets

77,963

77,594

(1)

The Company

determined

that

MobiKwik

and CPS

do not

have

readily

determinable

fair

values and

therefore

elected to

record these investments

at cost minus impairment,

if any,

plus or minus changes

resulting from observable

price changes in orderly

transactions for the identical or a similar investment of the same issuer.

(2) On October 16, 2020,

the High Court of South

Africa, Gauteng Division, Pretoria ordered

that CPS be placed

into liquidation.

Summarized below

are the components

of the Company’s

equity securities without

readily determinable

fair value and

held to

maturity investments as of December 31, 2023:

Cost basis

Unrealized

holding

Unrealized

holding

Carrying

gains

losses

value

Equity securities:

Investment in MobiKwik

26,993

49,304

76,297

Investment in CPS

Held to maturity:

Investment in Cedar Cellular notes (Note 2)

Total

26,993

49,304

76,297

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, 2023:

Cost basis

Unrealized

holding

Unrealized

holding

Carrying

gains

losses

value

Equity securities:

Investment in MobiKwik

26,993

49,304

76,297

Investment in CPS

Held to maturity:

Investment in Cedar Cellular notes

Total

26,993

49,304

76,297

Goodwill and intangible assets, net

Goodwill

Summarized below is the movement in the carrying value of goodwill

for the six months ended December 31, 2023:

Gross value

Accumulated

impairment

Carrying

value

Balance as of June 30, 2023

152,619

(18,876)

133,743

Foreign currency adjustment

(1)

4,308

(385)

3,923

Balance as of December 31, 2023

156,927

(19,261)

137,666

(1) – The foreign currency adjustment represents the effects

of the fluctuations of the South African rand against the U.S.

dollar on the carrying value.

Goodwill has been allocated to the Company’s

reportable segments as follows:

Consumer

Merchant

Carrying value

Balance as of June 30, 2023

133,743

Foreign currency adjustment

(1)

3,923

Balance as of December 31, 2023

137,666

(1) The foreign

currency adjustment represents

the effects

of the fluctuations

of the South

African rand

against the U.S.

dollar

on the carrying value.

Intangible assets, net

Carrying value and amortization of intangible assets

Summarized below is

the carrying value

and accumulated amortization

of intangible assets as

of December 31,

2023, and June

30, 2023:

As of December 31, 2023

As of June 30, 2023

Gross

carrying

value

Accumulated

amortization

Net

carrying

value

Gross

carrying

value

Accumulated

amortization

Net

carrying

value

Finite-lived intangible assets:

Customer relationships

25,715

(12,924)

12,791

24,978

(11,565)

13,413

Software, integrated

platform and unpatented

technology

114,360

(19,849)

94,511

110,906

(13,711)

97,195

FTS patent

2,094

(2,094)

2,034

(2,034)

Brands and trademarks

14,260

(3,609)

10,651

13,852

(2,863)

10,989

Total finite-lived

intangible

assets

156,429

(38,476)

117,953

151,770

(30,173)

121,597

Aggregate amortization

expense on the

finite-lived intangible

assets for the

three months

ended December

31, 2023 and

2022,

was $

3.6

million and $

3.9

million, respectively. Aggregate amortization expense on the

finite-lived intangible assets for

the six months

ended December

31, 2023 and

2022, was $

7.2

million and $

7.8

million, respectively.

Future estimated

annual amortization

expense

for the next

five fiscal years

and thereafter,

assuming exchange

rates that prevailed

on December

31, 2023, 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 2024 (six months ended December 31, 2023)

7,409

Fiscal 2025

14,824

Fiscal 2026

14,825

Fiscal 2027

14,768

Fiscal 2028

14,736

Thereafter

51,391

Total future

estimated annual amortization expense

117,953

Assets and policyholder liabilities under insurance and investment

contracts

Reinsurance assets and policyholder liabilities under insurance contracts

Summarized below

is the

movement in

reinsurance assets

and policyholder

liabilities under

insurance contracts

during the

six

months ended December 31, 2023:

Reinsurance

Assets

(1)

Insurance

contracts

(2)

Balance as of June 30, 2023

1,040

(1,600)

Increase in policy holder benefits under insurance contracts

636

(3,649)

Claims and decrease in policyholders’ benefits under insurance

contracts

(265)

3,172

Foreign currency adjustment

(3)

(59)

Balance as of December 31, 2023

1,450

(2,136)

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

(2) Included in other long-term liabilities;

(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.

The Company has agreements with reinsurance companies in order to limit its losses from various insurance contracts, however,

if the reinsurer is unable

to meet its obligations, the

Company retains the liability.

The value of insurance

contract liabilities is based

on the best estimate assumptions of future experience plus prescribed

margins, as required in the markets in which these

products are

offered,

namely South

Africa. The

process of

deriving the

best estimate

assumptions plus

prescribed margins

includes assumptions

related to claim reporting delays (based on average industry experience).

Assets and policyholder liabilities under investment contracts

Summarized below is the movement

in assets and policyholder

liabilities under investment contracts during

the six months ended

December 31, 2023:

Assets

(1)

Investment

contracts

(2)

Balance as of June 30, 2023

257

(241)

Increase in policy holder benefits under investment contracts

(5)

Claims and decrease in policyholders’ benefits under investment contracts

(44)

Foreign currency adjustment

(3)

(2)

(14)

Balance as of December 31, 2023

216

(216)

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

(2) Included in other long-term liabilities;

(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.

The Company does not offer any investment products with guarantees

related to capital or returns.

Borrowings

Refer to

Note 12

to the

Company’s

audited consolidated

financial statements

included in

its Annual

Report on

Form 10-K

for

the year ended June 30, 2023, for additional information regarding

its borrowings.

South Africa

The

amounts

below

have

been

translated

exchange

rates

applicable

the

dates

specified.

The

3-month

Johannesburg

Interbank

Agreed Rate

(“JIBAR”),

the

rate at

which

private sector

banks borrow

funds from

the

South

African Reserve

Bank,

December 31, 2023, was

8.40

%. The prime rate, the benchmark

rate at which private sector banks

lend to the public in South Africa,

on December 31, 2023, was

11.75

Borrowings (borrowings)

South Africa (continued)

RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term

borrowings

Long-term borrowings - Facility G and Facility H

December

31,

2023,

the

Company’s

had

utilized

ZAR

115.0

million

6.3

million)

its

ZAR

200

million

Facility

revolving credit facility.

The interest rate on this facility as of December 31, 2023, was JIBAR plus

5.50

On November 24, 2023, the Company,

through its wholly owned subsidiary,

Lesaka Technologies

Proprietary Limited (“Lesaka

SA”), entered into an Amendment and Restatement Agreement (the “Amendment”), which includes 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 FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB” or the

“Lenders”).

The Loan Documents were amended to include a Look Through Leverage (“LTL”)

ratio, as defined in the Loan Documents, and

expressed as times (“x”), to calculate the margin used in the determination of the interest rate. The LTL ratio is calculated as the Total

Attributable Net Debt,

as defined in the

Loan Documents, to the

Total Attributable

EBITDA, as defined in

the Loan Documents,

for

the measurement period ending on a specified date.

Interest on Facility G and Facility H is based on the 3-month Johannesburg Interbank Agreed Rate (“JIBAR”) in effect from time

to time plus a margin,

which as a result of the

Amendment, from October 1,

2023, will be calculated as: (i)

5.50

% if the LTL

ratio is

greater than 3.50x; (ii)

4.75

% if the LTL

ratio is less than 3.50x but

greater than 2.75x; (iii)

3.75

% if the LTL

ratio is less than 2.75x

but greater than 1.75x; or (iv)

2.50

% if the LTL ratio

is less than 1.75x.

The Company used cash proceeds

of ZAR

64.2

million ($

3.5

million) received from the

sale of Finbond shares (refer

to Note 5)

to repay capitalized interest under Facility G and Facility H.

Available short-term facility -

Facility E

As of

December 31,

2023, the

aggregate amount

of the

Company’s

short-term South

African overdraft

facility with

RMB was

ZAR

1.4

billion ($

76.5

million). As of December 31,

2023, the Company had utilized ZAR

0.4

billion ($

23.4

million) of this overdraft

facility. This

overdraft facility may only be used

to fund ATMs

and therefore the overdraft utilized

and converted to cash to

fund the

Company’s ATMs

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

On January

22, 2024, the

Company,

through Lesaka SA,

and RMB, entered

into a Letter

of Amendment

to decrease the

Senior

Facility E from ZAR

1.4

billion to ZAR

0.9

billion ($

49.2

million translated at exchange rates applicable as of December 31, 2023).

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

As of December 31, 2023, the Connect Facilities include (i) an overdraft facility (general banking facility) of

ZAR

205.0

million

(of which ZAR

170.0

million has been utilized); (ii) Facility A of

ZAR

700.0

million; (iii) Facility B of ZAR

550.0

million (both fully

utilized); and (iv) an asset-backed facility of ZAR

200.0

million (of which ZAR

157.1

million has been utilized).

CCC Revolving Credit Facility, comprising

long-term borrowings

As of

December

31,

2023,

the amount

the

CCC Revolving

Credit

Facility

was ZAR

300.0

million

(of

which

ZAR

196.5

million has been utilized).

Interest on the Revolving Credit Facility

is payable on the last business

day of each calendar month

and is

based on the South African prime rate in effect from time to time plus

a margin of

0.95

% per annum.

RMB facility, comprising indirect facilities

As of December

31, 2023, the

aggregate amount

of the Company’s

short-term South

African indirect credit

facility with RMB

was ZAR

135.0

million ($

7.4

million), which includes facilities for guarantees, letters of credit and forward exchange contracts. As

December 31, 2023

and June

30, 2023, the

Company had utilized

ZAR

33.1

million ($

1.7

million) and ZAR

33.1

million ($

1.8

million),

respectively,

of its indirect

and derivative facilities

of ZAR

135.0

million (June 30,

2023: ZAR

135.0

million) to enable

the bank

issue guarantees, letters of credit and forward exchange contracts (refer

to Note 19).

Borrowings (borrowings)

South Africa (continued)

Nedbank facility, comprising short-term facilities

As of December

31, 2023, the

aggregate amount of the

Company’s short-term South African credit

facility with Nedbank

Limited

was ZAR

156.6

million ($

8.6

million). The credit facility represents indirect and derivative facilities

of up to ZAR

156.6

million ($

8.6

million), which include guarantees, letters of credit and forward exchange

contracts.

As of

December 31,

2023 and

June 30,

2023, the

Company had

utilized ZAR

2.1

million ($

0.1

million) and

ZAR

2.1

million

0.1

million), respectively, of its indirect and derivative facilities of ZAR

156.6

million (June 30, 2023: ZAR

156.6

million) to enable

the bank to issue guarantees, letters of credit and forward exchange contracts

(refer to Note 19).

Movement in short-term credit facilities

Summarized below are the Company’s short-term facilities as

of December 31, 2023, and

the movement in the Company’s short-

term facilities from as of June 30, 2023 to as of December 31, 2023:

RMB

Nedbank

Facility E

Indirect

Connect

Facilities

Total

Short-term facilities available as of

December 31, 2023

76,510

7,378

11,203

8,556

103,647

Overdraft

11,203

Overdraft restricted as to use for

ATM

funding only

76,510

Indirect and derivative facilities

7,378

8,556

15,934

Movement in utilized overdraft

facilities:

Restricted as to use for ATM

funding only

23,021

No restrictions as to use

9,025

Balance as of June 30, 2023

23,021

9,025

32,046

Utilized

128,584

128,586

Repaid

(128,839)

(2)

(128,841)

Foreign currency

adjustment

(1)

641

266

907

Balance as of December 31, 2023

23,407

9,291

32,698

Restricted as to use for ATM

funding only

23,407

No restrictions as to use

9,291

Interest rate as of December 31,

2023 (%)

(2)

11.75

11.65

Movement in utilized indirect and

derivative facilities:

Balance as of June 30, 2023

1,757

112

1,869

Foreign currency adjustment

(1)

Balance as of December 31, 2023

1,809

115

1,924

(1) Represents the effects of the fluctuations between the

ZAR and the U.S. dollar.

(2) Facility E interest set at prime and the Connect facility at prime less

0.10

Borrowings (continued)

Movement in long-term borrowings

Summarized below is

the movement in

the Company’s

long-term borrowing from

as of as of

June 30, 2023

to as of December

31, 2023:

Facilities

G & H

A&B

CCC

Asset backed

Total

Included in current

3,663

Included in long-term

48,965

64,436

11,802

4,252

129,455

Opening balance as of June 30, 2023

48,965

64,436

11,802

7,915

133,118

Facilities utilized

8,072

537

2,419

11,028

Facilities repaid

(1,847)

(1,968)

(1,998)

(5,813)

Non-refundable fees paid

Non-refundable fees amortized

267

316

Capitalized interest

3,643

Capitalized interest repaid

(3,508)

Foreign currency adjustment

(1)

1,527

1,901

302

252

3,982

Closing balance as of December 31,

2023

57,119

66,361

10,698

8,588

142,766

Included in current

3,429

Included in long-term

57,119

66,361

10,698

5,159

139,337

Unamortized fees

(344)

(204)

(43)

(591)

Due within 2 years

3,797

Due within 3 years

57,463

6,832

10,741

1,266

76,302

Due within 4 years

59,733

59,829

Due within 5 years

Interest rates as of December 31, 2023

(%):

13.90

12.15

12.70

12.50

Base rate (%)

8.40

11.75

Margin (%)

5.50

3.75

0.95

0.75

Footnote number

(2)

(3)

(4)

(5)

(1) Represents the effects of the fluctuations between the ZAR and the

U.S. dollar.

(2) Interest on

Facility G and

Facility H was

calculated based on

the 3-month JIBAR

in effect

from time to

time plus a margin

of, from

January 1,

2023 to

September 30,

2023: (i)

5.50

% for

as long

as the

aggregate balance

under the

Facilities is

greater than

ZAR

800

million; (ii)

4.25

% if the

aggregate balance

under the

Facilities is equal

to or

less than ZAR

800

million, but

greater than

ZAR

350

million; or

(iii)

2.50

% if

the aggregate

balance under

the Facilities

is less

than ZAR

350

million. From

October 1,

2023,

interest

is calculated as described above.

(3) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin,

3.75

%, in effect from time to time.

(4) Interest is charged at prime plus

0.95

% per annum on the utilized balance.

(5) Interest is charged at prime plus

0.75

% per annum on the utilized balance.

Interest expense incurred under the Company’s South African long-term borrowings and included in the

caption interest expense

on the condensed consolidated statement of operations during the three months ended December 31, 2023 and 2022, was $

4.1

million

and $

3.0

million, respectively.

Prepaid facility fees

amortized included

in interest expense

during the three

months ended December

31, 2023

and 2022,

respectively,

were $

0.1

million and

0.2

million, respectively.

Interest expense

incurred under

the Company’s

K2020 and

CCC facilities

relates to

borrowings utilized

to fund

a portion

of the

Company’s

merchant finance

loans receivable

and

this

interest

expense

0.4

million

and

0.3

million,

respectively,

included

the

caption

cost

goods

sold,

processing,

servicing and support on the

condensed consolidated statement of operations

for the three months

ended December 31, 2023 and

2022.

Other payables

Summarized below is the breakdown of other payables as of December

31, 2023, and June 30, 2023:

December 31,

June 30,

2023

Clearing accounts

(1)

12,644

4,016

Vendor

wallet balances

(1)

10,849

9,492

Accruals

7,915

7,078

Provisions

4,456

7,429

Value

-added tax payable

1,402

1,247

Payroll-related payables

993

1,038

Participating merchants' settlement obligation

Other

6,816

5,958

45,115

36,297

(1) Clearing

accounts and

vendor wallet

balances (previously

defined as

transactions-switching funds

payables) as

of June

30,

2023, were previously included in Other and have been reclassified to separate captions to conform with presentation as of December

31, 2023.

Other includes deferred income, client deposits and other payables.

10.

Capital structure

Impact of non-vested equity shares on number of shares,

net of treasury

The following table presents a

reconciliation between the number of

shares, net of treasury, presented in the

unaudited condensed

consolidated statement of changes in

equity during the six months ended

December 31, 2023 and 2022, respectively,

and the number

of shares, net of treasury,

excluding non-vested equity shares that have not vested as of December

31, 2023 and 2022, respectively:

December 31,

2023

2022

Number of shares, net of treasury:

Statement of changes in equity

64,443,523

63,751,337

Non-vested equity shares that have not vested as of end of period

3,205,580

3,289,920

Number of shares, net of treasury,

excluding non-vested equity shares that have not

vested

61,237,943

60,461,417

11.

Accumulated other comprehensive loss

The table

below presents

the change

in accumulated

other comprehensive

loss per

component

during the

three months

ended

December 31, 2023:

Three months ended

December 31, 2023

Accumulated

foreign

currency

translation

reserve

Total

Balance as of October 1, 2023

(196,081)

Release of foreign currency translation reserve related to the disposal of Finbond

equity securities (Note 5)

1,543

Release of foreign currency translation reserve related to liquidation of subsidiaries

(952)

Movement in foreign currency translation reserve

6,112

Balance as of December 31, 2023

(189,378)

11.

Accumulated other comprehensive loss (continued)

The table

below presents

the change

in accumulated

other comprehensive

loss per

component during

the three

months ended

December 31, 2022:

Three months ended

December 31, 2022

Accumulated

foreign

currency

translation

reserve

Total

Balance as of October 1, 2022

(188,490)

Release of foreign currency translation reserve related to disposal of Finbond

equity

securities

Movement in foreign currency translation reserve

12,155

Balance as of December 31, 2022

(176,238)

The

table

below

presents

the

change

accumulated

other

comprehensive

loss

per

component

during

the

six

months

ended

December 31, 2023:

Six months ended

December 31, 2023

Accumulated

foreign

currency

translation

reserve

Total

Balance as of July 1, 2023

(195,726)

Release of foreign currency translation reserve related to disposal of Finbond

equity securities (Note 5)

1,543

Release of foreign currency translation reserve related to liquidation of subsidiaries

(952)

Movement in foreign currency translation reserve related to equity-accounted

investment

489

Movement in foreign currency translation reserve

5,268

Balance as of December 31, 2023

(189,378)

The

table

below

presents

the

change

accumulated

other

comprehensive

loss

per

component

during

the

six

months

ended

December 31, 2022:

Six months ended

December 31, 2022

Accumulated

foreign

currency

translation

reserve

Total

Balance as of July 1, 2022

(168,840)

Release of foreign currency translation reserve related to disposal of Finbond

equity

securities

Movement in foreign currency translation reserve related to equity

-accounted

investment

2,441

Movement in foreign currency translation reserve

(9,938)

Balance as of December 31, 2022

(176,238)

During the three

and six months

ended December 31,

2023, and the

three and six

months ended December

31, 2022, the

Company

reclassified

losses

1.5

million

and

1.5

million,

and

0.1

million

and

0.1

million,

respectively,

from

accumulated

other

comprehensive loss (accumulated foreign currency translation reserve) to net loss related to the disposal of shares in Finbond (refer to

Note

5).

The

Company

also

reclassified

gain

1.0

million

from

accumulated

other

comprehensive

loss

(accumulated

foreign

currency translation reserve) to net loss related to the liquidation of subsidiaries.

12.

Stock-based compensation

The Company’s

Amended and Restated

2022 Stock

Incentive Plan (“20

22 Plan”)

and the vesting

terms of certain

stock-based

awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on

Form 10-K for the year ended June 30, 2023.

Stock option and restricted stock activity

Options

The following table summarizes stock option activity for the six months

ended December 31, 2023 and 2022:

Number of

Weighted

average

exercise

price

($)

Weighted

average

remaining

contractual

term

(in years)

Aggregate

intrinsic

value

($'000)

Weighted

average

grant date

fair value

($)

Outstanding - June 30, 2023

673,274

4.37

5.14

239

1.67

Granted - December 2023

500,000

3.50

5.17

880

1.76

Exercised

(7,385)

3.07

Forfeited

(186,846)

3.71

1.28

Outstanding - December 31, 2023

979,043

4.07

5.50

1.80

Outstanding - June 30, 2022

926,225

4.14

6.60

1,249

1.60

Exercised

(109,826)

3.04

126

Forfeited

Outstanding - December 31, 2022

816,399

4.29

5.94

689

1.64

The Company

awarded

500,000

stock options

to Ali

Mazanderani,

the Company’s

Executive

Chair,

during

the three

and

six

months ended December

31, 2023.

These options

will vest on

the first anniversary

of the grant

date, provided that

Mr. Mazandarani

continues to provide services as Executive

Chair through the vesting date.

These options will vest immediately

if Mr. Mazanderani’s

employment is

terminated by

the Company

without cause

on or

before the

first anniversary

of the

grant date.

These

500,000

stock

options may only

be exercised during

a period

commencing from January

31, 2028 to

January 31,

2029.

stock options were

awarded

during the three and six months ended December 31, 2022.

During the

three and

six months ended

December 31,

2023, the

Company received

0.002

million and

0.02

million from

the

exercise

592

and

7,385

stock

options,

respectively.

During

the

three

and

six

months

ended

December

31,

2022,

the

Company

received $

0.3

million and $

0.3

million from

the exercise of

107,826

and

109,826

stock options, respectively.

Employees and a

non-

employee director

forfeited an

aggregate of

11,070

and

186,846

stock options

during the

three and six

months ended

December 31,

2023.

stock options were forfeited during the three and six months ended December 31,

2022.

The

fair

value

each

option

estimated

the

date

grant

using the

Cox

Ross

Rubinstein

binomial

model

that

uses the

assumptions noted in the

following table. The estimated

expected volatility is calculated

based on the Company’s

750-day volatility.

The estimated

expected life

of the

option was

determined based

on the

historical behavior

of employees

who were

granted options

with similar terms.

The table below

presents the range

of assumptions used

to value stock

options granted during

the six months

ended December

31, 2023 and 2022:

Six months ended

December 31,

2023

2022

Expected volatility

Expected dividends

Expected life (in years)

Risk-free rate

2.1

0.0

12.

Stock-based compensation (continued)

Stock option and restricted stock activity

Options

The following table presents stock options vested and expected to vest as of

December 31, 2023:

Number of

Weighted

average

exercise

price

($)

Weighted

average

remaining

contractual

term

(in years)

Aggregate

intrinsic

value

($’000)

Vested

and expecting to vest - December 31, 2023

979,043

4.07

5.50

These options have an exercise price range of $

3.01

to $

11.23

The following table presents stock options that are exercisable as of December

31, 2023:

Number of

Weighted

average

exercise

price

($)

Weighted

average

remaining

contractual

term

(in years)

Aggregate

intrinsic

value

($’000)

Exercisable - December 31, 2023

420,719

4.61

5.77

During the three

months ended December

31, 2023 and

2022, respectively,

87,494

and

217,316

stock options became

exercisable.

During the six months

ended December 31, 2023 and

2022, respectively,

87,494

and

292,316

stock options became exercisable. The

Company issues new shares to satisfy stock option exercises.

12.

Stock-based compensation (continued)

The Company’s

Amended and Restated

2022 Stock

Incentive Plan (“2022

Plan”) and the

vesting terms

of certain

stock-based

awards granted are described in Note 17 to the Company’s audited consolidated financial statements included in its Annual Report on

Form 10-K for the year ended June 30, 2023.

Stock option and restricted stock activity (continued)

Restricted stock

The following table summarizes restricted stock activity for the six

months ended December 31, 2023 and 2022:

Number of

shares of

restricted stock

Weighted

average grant

date fair value

($’000)

Non-vested – June 30, 2023

2,614,419

11,869

Total granted

868,996

3,394

Granted – October 2023

333,080

1,456

Granted – October 2023

310,916

955

Granted – October 2023

225,000

983

Total vested

(255,706)

965

Vested

– July 2023

(78,800)

302

Vested

– November 2023

(109,833)

429

Vested

– December 2023

(67,073)

234

Forfeitures

(22,129)

Non-vested – December 31, 2023

3,205,580

13,880

Non-vested – June 30, 2022

2,385,267

11,879

Total Granted

1,050,347

4,230

Granted – July 2022

32,582

172

Granted – August 2022

179,498

995

Granted – November 2022

150,000

605

Granted – December 2022

430,399

1,862

Granted – December 2022 - performance awards

257,868

596

Total vested

(145,694)

689

Vested

– July 2022

(78,801)

410

Vested

– November 2022

(59,833)

250

Vested

– December 2022

(7,060)

Total granted and vested

December 2022

Granted - December 2022

300,000

1,365

Vested

December 2022

(300,000)

1,365

Non-vested – December 31, 2022

3,289,920

15,232

12.

Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Restricted stock (continued)

Grants

In October 2023, the Company

awarded

333,080

shares of restricted stock with time-based

vesting conditions to approximately

150

employees, which

are subject to

the employees

continued employment

with the

Company through

the applicable

vesting dates.

The Company also awarded

225,000

shares of restricted stock

to an executive officer

in October 2023, which

vest on June 30, 2025,

except if the executive officer is terminated for cause, in

which case the award will be forfeited.

In October 2023, the Company

awarded

310,916

shares of restricted stock to

three

of its executive officers

which are subject to

time-based

vesting

condition

and

market

condition

and

vest

full

only

the

date,

any,

that

the

following

conditions

are

satisfied: (1)

a compounded

annual

% appreciation

in the

Company’s

stock price

off a

base price

of $

4.00

over the

measurement

period commencing on September 30, 2023 through November 17, 2026, and (2) the recipient is employed by the Company on a full-

time basis when the condition in (1) is met. If either of these conditions is not satisfied, then none of the shares of restricted stock will

vest and they will be forfeited. The Company’s

closing price on September 30, 2023, was $

3.90

The appreciation levels (times and price) and vesting percentages as of each

period ended are as follows:

●

Prior to the first anniversary of the grant date:

●

Fiscal

2025,

the

Company’s

30-day

volume

weighted-average

stock

price

(“VWAP”)

before

November

17,

2024

approximately

1.10

times higher (i.e. $

4.40

or higher) than $

4.00

●

Fiscal 2026, the Company’s

VWAP before

November 17, 2025 is

1.21

times higher (i.e. $

4.84

or higher) than $

4.00

●

Fiscal 2027, the Company’s

VWAP before

November 1, 2026 is

1.33

times higher (i.e. $

5.32

) than $

4.00

100

The fair value

of these shares

of restricted

stock was calculated

using a Monte

Carlo simulation. In

scenarios where

the shares

do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share

price on

vesting date.

In its calculation

of the

fair value

of the

restricted stock,

the Company

used an

equally weighted

volatility of

48.3

% for

the closing

price (of

4.37

), a

discounting based

on U.S.

dollar overnight

indexed swap

rates for

the grant

date, and

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.

July

2022

and

December

2022,

the

Company

awarded

32,582

and

430,399

restricted

stock,

respectively,

employees and

an executive

officer which

have time

-based vesting

conditions. In

December 2022,

the Company

awarded

257,868

shares of restricted stock to executive

officers which contained time and

performance-based (market conditions related to

share price

performance) vesting conditions. The Company also agreed

to match, on a

one

-for-one basis, (1) an employee’s purchase of up to

1.0

million worth of

the Company’s shares of common

stock in open

market purchases, and

in August 2022,

the Company granted

179,498

shares of restricted

stock to the

employee, and (2)

another employee’s

purchase of up

150,000

shares of the

Company’s common

stock, and

in November

2022, the

Company granted

150,000

shares of

restricted stock

to the

employee. These

shares of

restricted

stock contain

time-based vesting

conditions. The

Company awarded

300,000

shares to

an executive

officer on

December 31,

2022,

which vested on the date of the award.

The

257,868

shares of restricted stock

awarded to executive officers

are subject to a

time-based vesting condition

and a market

condition and vest

in full only

on the date,

if any, that the

following conditions are

satisfied: (1) a

compounded annual

% appreciation

the

Company’s

stock

price

off

base

price

4.94

over

the

measurement

period

commencing

December

2022

through

December 1, 2025, and (2) the recipient is employed by the Company on a full-time basis when the condition in (1) is

met. If either of

these conditions is not satisfied, then none of the shares of

restricted stock will vest and they will be

forfeited. The Company’s closing

price on December 1, 2022, was $

4.08

The appreciation levels (times and price) and vesting percentages as of each

period ended are as follows:

●

Prior to the first anniversary of the grant date:

●

Fiscal 2024, stock price as of December 1, 2023 is

1.1

times higher (i.e. $

5.43

or higher) than $

4.94

●

Fiscal 2025, stock price as of December 1, 2024 is

1.21

times higher (i.e. $

5.97

or higher) than $

4.94

●

Fiscal 2026, stock price as of December 1, 2025 is

1.331

times higher (i.e. $

6.57

) than $

4.94

100

The fair value

of these shares

of restricted

stock was calculated

using a Monte

Carlo simulation. In

scenarios where

the shares

do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share

price on

vesting date.

In its calculation

of the

fair value

of the

restricted stock,

the Company

used an

equally weighted

volatility of

50.1

% for

the closing

price (of

4.08

), a

discounting based

on U.S.

dollar overnight

indexed swap

rates for

the grant

date, and

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.

12.

Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Restricted stock (continued)

As fully described in Note 17 to

the Company’s audited consolidated financial statements included in its Annual Report on Form

10-K for the year ended June 30, 2023, the Company granted a further

12,962

and

32,405

shares to an advisor during the three and six

months

ended

December

31,

2022,

respectively,

which

were

ineligible

for

transfer

until

the

earlier

December

31,

2022,

the

occurrence of the agreed event.

Vesting

In July 2023,

78,800

shares of restricted stock granted

to Mr. Meyer

vested. In November and

December 2023, an aggregate

176,906

shares of restricted stock granted

to employees vested. Certain employees

elected for

50,975

shares to be withheld to satisfy

the withholding tax liability on the vesting of their shares. These

50,975

shares have been included in the Company’s treasury

shares.

In July

2022,

78,801

shares of restricted

stock granted

to Mr.

Meyer vested

and he elected

for

35,460

shares to

be withheld

satisfy the withholding tax liability on the vesting of these shares. In November and December 2022, an aggregate of

66,893

shares of

restricted stock granted

to employees vested

and they elected for

30,102

shares to be withheld

to satisfy the withholding

tax liability

on the vesting of these shares. These

65,562

(

35,460

plus

30,102

) shares have been included in our treasury shares.

Forfeitures

During

the

three

and

six

months

ended

December

31,

2023,

respectively,

employees

forfeited

14,002

and

22,129

restricted stock following their termination of employment with

the Company.

shares of restricted stock were forfeited during the

three and six months ended December 31, 2022.

Stock-based compensation charge and unrecognized compensation

cost

The Company recorded a stock-based compensation charge, net during the three months ended December 31, 2023 and 2022, of

1.8

million and $

2.8

million, respectively,

which comprised:

Total

charge

Allocated to cost

of goods sold, IT

processing,

servicing and

support

Allocated to

selling, general

and

administration

Three months ended December 31, 2023

Stock-based compensation charge

1,812

Reversal of stock compensation charge related to stock

options and restricted stock forfeited

(8)

Total - three months

ended December 31, 2023

1,804

Three months ended December 31, 2022

Stock-based compensation charge

2,849

Total - three months

ended December 31, 2022

2,849

12.

Stock-based compensation (continued)

Stock-based compensation charge and unrecognized compensation

cost (continued)

The Company

recorded a stock-based

compensation charge,

net during

the six months

ended December 31,

2023 and 2022,

3.6

million and $

4.3

million respectively, which

comprised:

Total

charge

Allocated to cost

of goods sold, IT

processing,

servicing and

support

Allocated to

selling, general

and

administration

Six months ended December 31, 2023

Stock-based compensation charge

3,580

Reversal of stock compensation charge related to stock

options forfeited

(17)

Total - six months ended

December 31, 2023

3,563

Six months ended December 31, 2022

Stock-based compensation charge

4,311

Total - six months ended

December 31, 2022

4,311

The stock-based compensation charges

have been allocated to selling,

general and administration based

on the allocation of the

cash compensation paid to the relevant employees.

December

31,

2023,

the

total

unrecognized

compensation

cost

stock

options

was

0.9

million,

which

the

Company expects to

recognize over

two years

. As of

December 31, 2023,

the total unrecognized

compensation cost related

to restricted

stock awards was $

7.4

million, which the Company expects to recognize over

two years

As of December 31, 2023,

and June 30, 2023, respectively,

the Company recorded a

deferred tax asset of $

0.9

million and $

0.6

million, related

to the

stock-based compensation

charge recognized

related to

employees of

Lesaka. As

of December

31, 2023,

and

June 30, 2023, respectively,

the Company recorded a valuation allowance of $

0.9

million and $

0.6

million, related to the deferred tax

asset because

it does

not believe

that the

stock-based compensation

deduction would

be utilized as

it does

not anticipate

generating

sufficient taxable income in the United States. The Company

deducts the difference between the market

value on the date of exercise

by the option recipient and the exercise price from income subject to taxation in

the United States.

13.

(Loss) Earnings per share

The Company

has issued redeemable

common stock

which is redeemable

at an amount

other than

fair value.

Redemption of

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

redemptions of common stock, or

adjustments to the

carrying value

of the redeemable

common stock

during the three

and six months

ended December 31,

2023 and 2022.

Accordingly,

the two-class method

presented below does

not include the impact

of any redemption.

The Company’s

redeemable common stock

described in Note 14 to the Company’s

audited consolidated financial statements included in its Annual Report on Form 10-K

for the

year ended June 30, 2023.

Basic (loss) earnings per share

includes shares of restricted stock that

meet the definition of a

participating security because these

shares are eligible

to receive non

-forfeitable dividend

equivalents at the

same rate as

common stock.

Basic (loss) earnings

per share

has been calculated using

the two-class method and

basic (loss) earnings per

share for the three

and six months ended

December 31,

2023 and

2022, reflects

only undistributed

earnings. The

computation below

of basic

(loss) earnings

per share

excludes the

net loss

attributable

unvested

restricted

stock

(participating

non-vested

restricted

stock)

from

the

numerator

and

excludes

the

dilutive impact of these unvested shares of restricted stock from the denominator.

Diluted (loss)

earnings

per share

has been

calculated

to give

effect

to the

number

of shares

of additional

common

stock that

would have

been outstanding

if the

potential dilutive

instruments had

been issued

in each

period. Stock

options are

included in

the

calculation of diluted (loss) earnings per share utilizing the treasury

stock method and are not considered to be

participating securities,

as the

stock options

do not

contain non-forfeitable

dividend rights.

The Company

has excluded

employee stock

options to

purchase

51,704

and

76,572

shares of common stock

from the calculation of diluted

loss per share during

the six months ended

December 31,

2023 and 2022, because the effect would be antidilutive.

The

calculation

of diluted

(loss) earnings

per

includes the

dilutive

effect

a portion

of the

restricted

stock granted

employees

these

restricted

stock

are

considered

contingently

returnable

for

the

purposes

the

diluted

(loss)

earnings per share calculation and

the vesting conditions in respect of a portion

of the restricted stock had been satisfied.

The vesting

conditions for

all awards

made are

discussed in

Note 17

to the

Company’s

audited consolidated

financial statements

included in

its

Annual Report on Form 10-K for the year ended June 30, 2023.

13.

(Loss) Earnings per share (continued)

The

following

table

presents

net

loss

attributable

Lesaka

and

the

data

used

the

basic

and

diluted

loss

per

computations using the two-class method:

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

(in thousands except

percent and

per share data)

Numerator:

Net loss attributable to Lesaka

(2,707)

(6,649)

(8,358)

(17,345)

Undistributed loss

(2,707)

(6,649)

(8,358)

(17,345)

Percent allocated to common shareholders

(Calculation 1)

96%

95%

96%

Numerator for loss per share: basic and diluted

(2,588)

(6,377)

(7,961)

(16,668)

Denominator

Denominator for basic (loss) earnings per share:

weighted-average common shares outstanding

60,990

60,194

60,134

60,058

Effect of dilutive securities:

Denominator for diluted (loss) earnings

per share: adjusted weighted average

common shares outstanding and assuming

conversion

60,990

60,194

60,134

60,058

Loss per share:

Basic

(0.04)

(0.11)

(0.13)

(0.28)

Diluted

(0.04)

(0.11)

(0.13)

(0.28)

(Calculation 1)

Basic weighted-average common shares

outstanding (A)

60,990

60,194

60,134

60,058

Basic weighted-average common shares

outstanding and unvested restricted shares

expected to vest (B)

63,805

62,763

63,134

62,498

Percent allocated to common shareholders

(A) / (B)

96%

95%

96%

Options

to purchase

755,006

shares of

the Company’s

common

stock at

prices ranging

from $

3.50

to $

11.23

per share

were

outstanding during

the three

months ended

December 31,

2023, but

were not

included in

the computation

of diluted

(loss) earnings

per share because the

options’ exercise price was

greater than the average

market price of the Company’s

common stock. Options to

purchase

324,619

shares of the Company’s

common stock at prices

ranging from $

4.87

to $

11.23

per share were outstanding

during

the three months ended December 31, 2022, respectively, but were not included in

the computation of diluted (loss) earnings per share

because the

options’ exercise

price was greater

than the average

market price of

the Company’s

common stock.

The options, which

expire at various dates through February 3, 2032, were still outstanding

as of December 31, 2023.

14.

Supplemental cash flow information

The following

table presents

supplemental

cash flow

disclosures

for the

three and

six months

ended December

31, 2023

and

2022:

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

Cash received from interest

482

386

927

795

Cash paid for interest

6,308

2,952

9,233

6,963

Cash paid for income taxes

2,806

2,382

3,410

3,059

14.

Supplemental cash flow information (continued)

Disaggregation of cash, cash equivalents and restricted

cash

Cash, cash equivalents and restricted

cash included on the Company’s unaudited condensed consolidated statement of

cash flows

includes restricted cash

related to cash

withdrawn from the

Company’s

debt facilities to

fund ATMs.

This cash may

only be used

fund ATMs

and is

considered restricted

as to

use and

therefore is

classified as

restricted cash.

Cash, cash

equivalents and

restricted

cash also includes cash in certain bank accounts that has

been ceded to Nedbank. As this cash has been pledged

and ceded it may not

be drawn

and is

considered

restricted as

to use

and therefore

is classified

as restricted

cash as

well. Refer

to Note

8 for

additional

information regarding the

Company’s facilities. The following

table presents the

disaggregation of cash,

cash equivalents and

restricted

cash as of December 31, 2023 and 2022, and June 30, 2023:

December 31,

2023

December 31,

2022

June 30, 2023

Cash and cash equivalents

44,316

42,402

35,499

Restricted cash

23,522

54,374

23,133

Cash, cash equivalents and restricted cash

67,838

96,776

58,632

Leases

The following

table presents supplemental

cash flow disclosure

related to leases

for the

three and

six months ended

December

31, 2023 and 2022:

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

Cash paid for amounts included in the measurement of

lease liabilities

Operating cash flows from operating leases

679

756

1,372

1,561

Right-of-use assets obtained in exchange for lease

obligations

Operating leases

340

1,883

15.

Revenue recognition

Disaggregation of revenue

The

following

table

presents

the

Company’s

revenue

disaggregated

major

revenue

streams,

including

reconciliation

reportable segments for the three months ended December 31, 2023:

Merchant

Consumer

Total

Processing fees

29,804

6,175

35,979

South Africa

28,348

6,175

34,523

Rest of world

1,456

Technology

products

3,203

3,215

South Africa

3,164

3,176

Rest of world

Telecom products

and services

91,959

92,011

South Africa

86,957

87,009

Rest of world

5,002

Lending revenue

5,586

Interest from customers

1,453

Insurance revenue

2,897

Account holder fees

1,502

Other

767

483

1,250

South Africa

717

483

1,200

Rest of world

Total revenue, derived

from the following geographic locations

127,186

16,707

143,893

South Africa

120,639

16,707

137,346

Rest of world

6,547

15.

Revenue recognition (continued)

Disaggregation of revenue (continued)

The

following

table

presents

the

Company’s

revenue

disaggregated

major

revenue

streams,

including

reconciliation

reportable segments for the three months ended December 31, 2022:

Merchant

Consumer

Total

Processing fees

28,283

6,723

35,006

South Africa

26,907

6,723

33,630

Rest of world

1,376

Technology

products

7,838

249

8,087

South Africa

7,787

249

8,036

Rest of world

Telecom products

and services

81,812

81,818

South Africa

77,523

77,529

Rest of world

4,289

Lending revenue

4,569

Interest from customers

1,476

Insurance revenue

2,353

Account holder fees

1,410

Other

1,225

124

1,349

South Africa

1,177

124

1,301

Rest of world

Total revenue, derived

from the following geographic locations

120,634

15,434

136,068

South Africa

114,870

15,434

130,304

Rest of world

5,764

The

following

table

presents

the

Company’s

revenue

disaggregated

major

revenue

streams,

including

reconciliation

reportable segments for the six months ended December 31, 2023:

Merchant

Consumer

Total

Processing fees

58,564

11,908

70,472

South Africa

55,748

11,908

67,656

Rest of world

2,816

Technology

products

5,240

5,271

South Africa

5,150

5,181

Rest of world

Telecom products

and services

179,272

179,365

South Africa

169,516

169,609

Rest of world

9,756

Lending revenue

10,959

Interest from customers

2,973

Insurance revenue

5,508

Account holder fees

2,870

Other

1,646

918

2,564

South Africa

1,547

918

2,465

Rest of world

Total revenue, derived

from the following geographic locations

247,695

32,287

279,982

South Africa

234,934

32,287

267,221

Rest of world

12,761

15.

Revenue recognition (continued)

Disaggregation of revenue (continued)

The

following

table

presents

the

Company’s

revenue

disaggregated

major

revenue

streams,

including

reconciliation

reportable segments for the six months ended December 31, 2022:

Merchant

Consumer

Total

Processing fees

55,580

13,258

68,838

South Africa

52,935

13,258

66,193

Rest of world

2,645

Technology

products

11,735

286

12,021

South Africa

11,617

286

11,903

Rest of world

118

Telecom products

and services

157,932

157,938

South Africa

149,552

149,558

Rest of world

8,380

Lending revenue

9,280

Interest from customers

2,699

Insurance revenue

4,534

Account holder fees

2,821

Other

2,470

253

2,723

South Africa

2,378

253

2,631

Rest of world

Total revenue, derived

from the following geographic locations

230,416

30,438

260,854

South Africa

219,181

30,438

249,619

Rest of world

11,235

16.

Leases

The

Company

has

entered

into leasing

arrangements

classified

as operating

leases under

accounting

guidance.

These leasing

arrangements relate primarily

to the lease of

its corporate head office,

administration offices and

branch locations through

which the

Company operates

its consumer

business in

South Africa.

The Company’s

operating leases

have remaining

lease terms

of between

one and

five years

. The Company also operates parts

of its consumer business from

locations which it leases for a period

of less than

one year

. The Company’s operating lease expense during the three months ended

December 31, 2023 and 2022 was $

0.7

million and

0.8

million, respectively.

The Company’s operating lease expense during the

six months ended December 31, 2023 and 2022 was $

1.4

million and $

1.6

million, respectively.

The

Company

has

also

entered

into

short-term

leasing

arrangements,

primarily

for

the

lease

branch

locations

and

other

locations,

to operate its consumer

business in South Africa.

The Company’s

short-term lease expense during

the three months ended

December 31, 2023

and 2022, was $

1.0

million and $

0.9

million, respectively.

The Company’s

short-term lease expense

during the

six months ended December 31, 2023 and 2022, was $

1.9

million and $

2.0

million, respectively.

The following table presents supplemental balance

sheet disclosure related to the

Company’s right-of-use assets and its operating

lease liabilities as of December 31, 2023 and June 30, 2023:

December 31,

June 30,

2023

Right of use assets obtained in exchange for lease obligations:

Weighted average

remaining lease term (years)

3.7

1.8

Weighted average

discount rate (percent)

10.0

9.7

16.

Leases (continued)

The maturities of the Company’s

operating lease liabilities as of December 31, 2023, are presented below:

Maturities of operating lease liabilities

Year

ended June 30,

2024 (excluding six months to December 31, 2023)

1,165

2025

1,863

2026

1,435

2027

1,297

2028

1,210

Thereafter

124

Total undiscounted

operating lease liabilities

7,094

Less imputed interest

1,295

Total operating lease liabilities,

included in

5,799

Operating lease liability - current

1,691

Operating lease liability - long-term

4,108

17.

Operating segments

The Company discloses segment information as reflected in the management

information systems reports that its chief operating

decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in

which the entity holds material assets or reports material revenues. A description of the Company’s operating segments is contained in

Note 21 to

the Company’s

audited consolidated

financial statements

included in

its Annual Report

on Form 10-K

for the year

ended

June 30, 2023.

The

Company

analyzes

its

business

and

operations

terms

two

inter-related

but

independent

operating

segments:

(1) Consumer Division (“Consumer”) and (2) Merchant Division (“Merchant”).

The reconciliation of the reportable segment’s revenue to revenue from external customers for the three months ended December

31, 2023 and 2022, is as follows:

Revenue

Reportable

Segment

Inter-

segment

From

external

customers

Merchant

127,870

684

127,186

Consumer

16,707

Total for the three

months ended December 31, 2023

144,577

684

143,893

Merchant

120,634

Consumer

15,434

Total for the three

months ended December 31, 2022

136,068

17.

Operating segments (continued)

The reconciliation of

the reportable segment’s

revenue to revenue from

external customers for the

six months ended December

31, 2023 and 2022, is as follows:

Revenue

Reportable

Segment

Inter-

segment

From

external

customers

Merchant

249,231

1,536

247,695

Consumer

32,287

Total for the six months ended

December 31, 2023

281,518

1,536

279,982

Merchant

230,416

Consumer

30,438

Total for the six months ended

December 31, 2022

260,854

The

Company

evaluates

segment

performance

based

segment

earnings

before

interest,

tax,

depreciation

and

amortization

(“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”), the Company’s reportable segments’

measure

of profit

or loss.

The Company

does not

allocate once

-off

items, stock-based

compensation

charges,

certain lease

charges

(“Lease adjustments”), depreciation

and amortization, impairment of

goodwill or other intangible

assets, other items (including

gains

or losses on disposal of investments, fair value adjustments to equity securities), interest income, interest expense, income tax expense

or loss from equity-accounted investments to its reportable segments. Group costs

generally include: employee related costs in relation

to employees specifically hired

for group roles

and related directly

to managing the

US-listed entity; expenditures related

to compliance

with the Sarbanes

-Oxley Act

of 2002; non

-employee directors’

fees; legal fees;

group and

US-listed related audit

fees; and

directors

and officer’s

insurance premiums. Once-off

items represents non-recurring

expense items, including

costs related to

acquisitions and

transactions consummated

or ultimately not

pursued. Unrealized loss

FV for currency

adjustments represents foreign

currency mark-

to-market

adjustments

certain

intercompany

accounts.

The

Lease

adjustments

reflect

lease

charges

and

the

Stock-based

compensation adjustments reflect stock-based compensation expense and are both excluded from the calculation of Segment Adjusted

EBITDA

and

are

therefore

reported

reconciling

items

reconcile

the

reportable

segments’

Segment

Adjusted

EBITDA

the

Company’s loss before income

tax expense.

The reconciliation of the reportable

segments’ measure of profit or

loss to loss before income taxes

for the three and six months

ended December 31, 2023 and 2022, is as follows:

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

Reportable segments' measure of profit or loss

11,641

9,698

22,182

16,197

Operating loss: Group costs

(2,011)

(2,256)

(3,833)

(4,556)

Once-off costs

816

(119)

738

(717)

Unrealized Loss FV for currency adjustments

122

Lease adjustments

(678)

(747)

(1,374)

(1,559)

Stock-based compensation charge adjustments

(1,804)

(2,849)

(3,563)

(4,311)

Depreciation and amortization

(5,813)

(5,919)

(11,669)

(11,917)

Reversal of allowance of EMI doubtful debt

250

Gain on disposal of equity-accounted investments

(112)

136

Interest income

485

389

934

800

Interest expense

(4,822)

(4,388)

(9,731)

(8,424)

Loss before income tax expense

(2,064)

(6,303)

(6,046)

(14,351)

17.

Operating segments (continued)

The following tables summarize

supplemental segment information

for the three and six months

ended December 31, 2023 and

2022:

Three months ended

Six months ended

December 31,

2023

2022

2023

2022

Revenues

Merchant

127,870

120,634

249,231

230,416

Consumer

16,707

15,434

32,287

30,438

Total reportable segment

revenue

144,577

136,068

281,518

260,854

Segment Adjusted EBITDA

Merchant

(1)

8,693

9,120

16,754

17,013

Consumer

(1)

2,948

578

5,428

(816)

Total Segment Adjusted

EBITDA

11,641

9,698

22,182

16,197

Depreciation and amortization

Merchant

2,041

1,799

4,119

3,624

Consumer

179

278

348

523

Subtotal: Operating segments

2,220

2,077

4,467

4,147

Group costs

3,593

3,842

7,202

7,770

Total

5,813

5,919

11,669

11,917

Expenditures for long-lived assets

Merchant

2,078

3,652

4,841

7,525

Consumer

120

340

166

968

Subtotal: Operating segments

2,198

3,992

5,007

8,493

Group costs

Total

2,198

3,992

5,007

8,493

(1) Segment

Adjusted EBITDA

for Merchant

includes retrenchment

costs of

0.01

million (ZAR

0.1

million) and

Consumer

includes

retrenchment

costs of

0.1

million (ZAR

1.3

million) for

the three

months ended

December 31,

Segment

Adjusted

EBITDA for Merchant

includes retrenchment costs

of $

0.2

million (ZAR

4.7

million) and Consumer

includes retrenchment costs

0.2

million (ZAR

2.8

million) for the six months ended December 31, 2023.

The segment

information as

reviewed by

the chief operating

decision maker

does not include

a measure of

segment assets per

segment as all of

the significant assets are

used in the operations

of all, rather than

any one, of the segments.

The Company does

not

have dedicated assets

assigned to a

particular operating segment.

Accordingly,

it is not meaningful

to attempt an arbitrary

allocation

and segment asset allocation is therefore not presented.

18.

Income tax

Income tax in interim periods

For the purposes of interim

financial reporting, the Company

determines the appropriate income

tax provision by first

applying

the effective

tax rate

expected to

be applicable

for the

full fiscal

year to

ordinary income.

This amount

is then

adjusted for

the tax

effect

significant

unusual

items,

for

instance,

changes

tax

law,

valuation

allowances

and

non-deductible

transaction-related

expenses that

are reported

separately,

and have an

impact on the

tax charge.

The cumulative effect

of any change

in the enacted

tax

rate, if and when applicable, on the opening balance of deferred tax assets and liabilities

is also included in the tax charge as a discrete

event in the interim period in which the enactment date occurs.

For

the

three

and

six

months

ended

December

31,

2023,

the

Company’s

effective

tax

rate

was

impacted

the

tax expense

recorded by the Company’s

profitable South African operations,

non-deductible expenses, the

on-going losses incurred

by certain of

the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized

regarding net operating losses incurred by these entities.

For

the

three

and

six

months

ended

December

31,

2022,

the

Company’s

effective

tax

rate

was

impacted

the

tax expense

recorded by the Company’s

profitable South African operations,

non-deductible expenses, the

on-going losses incurred by

certain of

the Company’s South African businesses and the associated valuation allowances created related to the deferred tax assets recognized

regarding net operating losses incurred by these entities.

18.

Income tax (continued)

Uncertain tax positions

The Company

had

significant uncertain

tax positions during

the three months

ended December

31, 2023, and

therefore, the

Company had

accrued interest related to uncertain tax positions

on its balance sheet. The Company does

t expect changes related

to its unrecognized tax benefits will have a significant impact on its results of operations

or financial position in the next 12 months.

The Company

has

unrecognized tax benefits.

The Company

files income tax

returns mainly

in South Africa,

Botswana and

in the U.S. federal jurisdiction. As of December 31,

2023, 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, 2019.

The Company

is subject

to income

tax in

other jurisdictions outside

South Africa, none

of which are

individually material to

its financial position,

statement of cash

flows, or

results of operations.

19.

Commitments and contingencies

Guarantees

The South African

Revenue Service and

certain of the

Company’s customers,

suppliers and other

business partners have

asked

the Company

to provide

them with

guarantees, including

standby letters

of credit,

issued by

South African

banks. The

Company is

required to procure these guarantees for these third parties to operate

its business.

RMB has

issued

guarantees

these

third

parties

amounting

ZAR

33.1

million

1.8

million,

translated

exchange

rates

applicable as of December 31, 2023) thereby utilizing part of the Company’s

short-term facilities. The Company pays commission of

between

3.42

% per annum to

3.44

% per annum of the face

value of these guarantees and does

not recover any of the commission

from

third parties.

Nedbank has

issued guarantees

to these

third parties

amounting to

ZAR

2.1

million ($

0.1

million, translated

at exchange

rates

applicable as of December 31, 2023) thereby utilizing part of the Company’s

short-term facilities. The Company pays commission of

between

0.47

% per annum to

1.84

% per annum of the face

value of these guarantees and does

not recover any of the commission

from

third parties.

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

The maximum

potential amount that

the Company could

pay under these

guarantees is ZAR

35.2

million ($

1.9

million, translated

at exchange

rates applicable

as of

December 31,

2023). As

discussed in

Note 8,

the Company

has ceded

and pledged

certain bank

accounts to Nedbank as

security for the guarantees

issued by them

with an aggregate value

of ZAR

2.1

million ($

0.1

million, translated

exchange

rates

applicable

December

31,

2023).

The

guarantees

have

reduced

the

amount

available

under

its indirect

and

derivative facilities in the Company’s

short-term credit facilities described in Note 8.

Contingencies

The

Company

subject

variety

insignificant

claims

and

suits

that

arise

from

time

the

ordinary

course

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.

Item 2. Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year

ended June 30, 2023,

and the unaudited condensed consolidated financial statements and

the accompanying notes included in this Form 10-Q.

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

the

most

directly

comparable

GAAP

measures.

discuss

why

consider

useful

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.

Forward-looking statements

Some of the statements in this Form 10-Q constitute forward-looking

statements. These statements relate to future events or our

future financial performance

and involve known

and unknown

risks, uncertainties and

other factors that

may cause

our or our

industry’s

actual results,

levels of

activity,

performance

or achievements

to be

materially

different

from

any future

results, levels

activity,

performance or achievements expressed,

implied or inferred by these

forward-looking statements. Such factors

include, among other

things, those

listed under Item

1A.—“Risk Factors” in

our Annual

Report on Form

10-K for

the year ended

June 30, 2023.

In some

cases,

you

can

identify forward-looking

statements

by terminology

such as

“may,”

“will,” “should,”

“could,”

“would,”

“expects,”

“plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms

and other

comparable terminology.

Although we believe

that the expectations

reflected in the

forward-looking statements are

reasonable, we do

not know whether

we can

achieve positive

future results,

levels of

activity,

performance, or

goals. Actual

events or

results may

differ

materially.

undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements

to reflect the occurrence of unanticipated events, except as required by applicable

law.

You

should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto

and

thereto

and

which

have

filed

with

the

United

States

Securities

and

Exchange

Commission

completely

and

with

the

understanding that our

actual future results,

levels of activity,

performance and achievements

may be materially

different from

what

we expect. We

qualify all of our forward-looking statements by these cautionary

statements.

Recent Developments

experienced

continued

improvement

our

financial

performance

the

second

quarter

fiscal

2024

with

revenue

and

profitability improving in both Consumer and Merchant divisions.

Revenue of $143.9 million (ZAR 2.7 billion) was within our revenue guidance of ZAR 2.7 billion to ZAR 2.8 billion for second

quarter of fiscal 2024, despite prevailing negative macroeconomic

and socio-political conditions in South Africa.

Operating income of $2.3 million (ZAR 42.5 million) improved

211% in ZAR, compared with an operating loss of

$2.2

million

(ZAR 38.4 million) during the second quarter of fiscal 2023.

We exceeded the upper end of guidance of ZAR 170.0 million to

ZAR 180.0 million for second quarter of

fiscal 2024, delivering

Group Adjusted EBITDA, a non-GAAP measure, of $9.6 million (ZAR180.5 million) this quarter, a 38% increase in ZAR, compared

$7.4

million

(ZAR

130.4

million)

the

second

quarter

fiscal

2023.

The

continued

resilience

our

business

model

challenging environment for our merchant and consumer customers demonstrates

the value they place on our services.

Our mission at Lesaka is

to enable merchants to compete and

grow, and to improve the lives of

South Africa’s grant beneficiaries

by providing access

to innovative financial

technology and value

creating solutions. We

achieve this through our

vision to build

and

operate the

leading full-service

fintech platform

in Southern

Africa, offering

cash management,

payment processing,

Value

Added

Services (“VAS”),

capital and financial services to merchants and underserved consumers.

Merchant Division

The year-on-year growth achieved by our Merchant Division

is supported by the robust secular trends underpinning financial

inclusion, cash management and digitalization for micro, small and medium

enterprises (“MSMEs”), especially in the informal

markets of South Africa, where we have a leading market position.

Performance in our Merchant division has been driven by:

●

Kazang, our VAS

and supplier payments business,

continues to see adoption

by MSMEs in the informal

sector, with a

23%

year-on-year and 3% quarter-on-quarter growth

in the number of devices deployed.

had

approximately

79,000

devices

deployed

December

31,

2023,

compared

approximately

64,500

devices one year ago, and approximately 77,000 devices at the end

of the first quarter. Core to our device placement

strategy is the decision to focus on quality business and optimizing our existing fleet, which is reflected in a healthy

throughput and margin per device.

VAS

throughput increased

21% year-on-year

and 17% quarter-on-quarter.

The second quarter

of our fiscal

year is

traditionally our strongest quarter due to higher activity over the year-end

festive season benefitting certain product

lines.

As communicated

since the

fourth quarter

of fiscal

2023, our

product

mix for

VAS

sales has

changed

with low-

margin money transfers reducing significantly due to a change in the regulatory environment impacting the

industry

as a whole. Money transfers currently comprise approximately 5% of VAS

throughput, compared to approximately

25%

year

ago.

This

change

has

had

limited

impact

profitability

money

transfers

are

very

low

margin

product.

VAS

throughput,

excluding

the

low-margin

money

transfers,

increased

51%

year-on-year

and

16%

quarter-on-

quarter.

●

We provide card acquiring solutions in the

informal sector via Kazang

Pay and in the

formal sector we through

Card Connect.

Card-enabled POS devices

increased to approximately

48,200 as of December

31, 2023, a year-on-year

growth of 40% and

quarter-on-quarter growth of 4%. Throughput

on deployed devices increased 31%

year-on-year and 15% quarter-on-quarter

to R4.1 billion.

●

Our current

Merchant Credit

offering

is Capital

Connect in

the formal

SME market.

Kazang Pay

Advance in

the informal

sector remains

suspended

as we

reported

in the

quarter.

Capital Connect

disbursed ZAR

170 million

during this

quarter, compared to approximately ZAR 205 million in the comparable period last year, representing a 17% decrease. In the

formal

market

continue

see

demand

for

our

merchant

credit

offering

however

the

deteriorating

performance

and

financial

strength

many

our

merchants

means

they

not

meet

our

credit

criteria,

resulting

fewer

and

smaller

extensions.

Whilst

strict application

our

credit criteria

has

led

negative

growth,

it has

protected

and

maintained

the

quality of our book through this cycle. Our loan book as of December 31, 2023 was R253 million compared to R290 million

as of December 31, 2022.

●

Our

automated

cash management

offering,

Cash Connect,

effectively

“puts

the bank”

in approximately

4,480

merchants’

stores, compared

to approximately

4,320 merchants’

stores a year

ago. Cash

Connect is

a provider

of robust

cash vaults

the formal

sector and

is building

a presence

in the

informal sector.

Cash Connect

enables our

merchant

customer base

significantly mitigate their

operational risks pertaining

to cash

management and security. Our

new ATM recycler is generating

strong interest,

and this business

has been

transferred to

our Merchant

Division, where

it has been

fully integrated

into our

Cash Connect proposition as an alternative to vaults for our merchant

customers.

Acquisition of Touchsides

In February

2024 we

announced the

acquisition of

Touchsides

(Pty) Ltd

(“Touchsides”),

a leading

data analytics

and insights

company,

from Heineken

International B.V.

The Touchsides

and Kazang

businesses are

highly complementary,

and the acquisition

significantly expands

Kazang’s

footprint in

the informal

market by

adding an

established solution

that has

a strong

presence in

the

informal licensed tavern market. Touchsides has an installed base of over 10,000 active POS terminals across South Africa’s informal

licensed taverns,

and processes

more than

1.5 million

transactions per

day.

The business

provides platform-as-a-service

(PaaS) and

software-as-a-service (SaaS) solutions to licensed tavern outlets, enabling the measurement of sales activity in real-time, management

of stock levels and informing commercial decisions, such as pricing

and promotional offers.

The data and insights gathered from these terminals carries significant value and potential to be monetized through relationships

with

range

clients

including

fast-moving

consumer

goods

companies,

retailers,

wholesalers,

route-to-market

suppliers,

and

financiers.

We anticipate the

acquisition to close in March 2024 and it is subject to satisfaction of customary

closing conditions.

Consumer Division

Over the past six quarters we have

consistently referenced the three levers underpinning

our strategy of returning the Consumer

Division to profitability – (i) growing active EasyPay Everywhere (“EPE”) account numbers, (ii) increasing average revenue per

user

(“ARPU”) through cross-selling and (iii) cost optimization. With

the progress made on these levers and the improved performance of

the Consumer division we are now focusing on enhancing our product and

service offering.

The progress on our three key initiatives is as follows:

●

Driving customer acquisition

Gross EPE account activations, for the permanent base, during our current quarter showed significant improvement

due

various

strategic

initiatives.

achieved

approximately

122,000

gross

account

activations

the

second

quarter,

compared

to approximately

43,000

the second

quarter

of fiscal

2023.

After accounting

for

churn,

net

active account

growth for

the quarter

was approximately

92,000 accounts,

compared

to approximately

10,000 in

second quarter of fiscal 2023.

Our total active EPE transactional account base stood at approximately 1.4 million at the end of December 2023, of

which more than

1.2 million (or

more than 85%)

are permanent grant

recipients. The balance

comprises Social Relief

of Distress (“SRD”) grant

recipients, which was introduced

during the COVID pandemic and

extended in calendar

2023.

Our priority

is to grow

our permanent

grant recipient

customers base,

where we

can build

deeper relationships

offering other products such as insurance and lending. We do not offer the same breadth of service to the SRD grant

base due to the temporary nature of the grant.

The

South

African

Post

Office,

which

the

largest

service

provider

South

African

grant

beneficiaries,

experienced

increasing grant

distribution

and financial

challenges during

the last

two quarters,

resulting

in many

grant beneficiaries migrating to alternative financial service providers. The measures taken by EasyPay

Everywhere

over the

past 18

months to

enhance our

products, sales,

onboarding and

customer service

capabilities put

us in

good position to benefit from this migration.

●

Progress on cross

selling

EasyPay Loans

originated

approximately 278,000

loans during

the quarter

with our

consumer loan

book, before

allowances,

increasing 26%

to ZAR

503 million

as at

December 31,

2023, compared

to ZAR

398 million

as of

December 31,

2022.

We have not

amended our credit scoring or other lending criteria and the growth is reflective of the demand

for our

tailored loan product for this market and growth in EPE bank account customer

base

The

loan

conversion

rate

continues

improve

following

the

implementation

number

targeted

consumer

lending campaigns during the current quarter.

The portfolio loss ratio,

calculated as the loans

written off during the

period as a percentage

of the total loan book,

remained at approximately 6% on an annualized basis, in line with the first quarter

of fiscal 2024.

EasyPay Insurance

Our funeral

insurance product continued

its strong growth

and is a

material contributor

to the improvement

in our

overall ARPU. We have been able to improve customer penetration to more than 30% of

our active permanent grant

account base as of December

31, 2023, compared to

approximately 25% as of December

31, 2022. Approximately

42,000

new

policies were

written in

the quarter,

compared to

approximately

29,000

in the

comparable

period

fiscal 2023. The

total number

of active policies

has grown by

31% to approximately

384,000 policies as

of December

31, 2023, compared to December 31, 2022.

ARPU

for

our

permanent

client

base

has

increased

over

ZAR

for

the

second

quarter

fiscal

2024,

from

approximately ZAR 74 in the second quarter of fiscal 2023.

Economic Environment and Impact of loadshedding

Overall, we have

seen no significant change

in the operating environment

during the quarter.

The trading environment

remains

challenging in South Africa

with interest rates

and unemployment remaining at elevated

levels. These factors

are compounded by daily

power cuts

(known as

load-shedding in

South Africa),

although we have

seen a marginal

reduction in

load shedding

during the

last

two quarters. Power disruptions

adversely impact our customers,

especially in our Merchant

Division, where they lose

valuable trading

hours if they

do not have

access to alternative power

supplies and back-up

facilities to process electronic

payments and value-added

services.

The

negative

impact

is,

however,

some

extent

mitigated

our

customer

base

geographically

diversified,

and

the

rotational nature

of load-shedding

results in

localized power

cuts over

shorter time

periods, allowing

merchants to

make up

for lost

trading hours.

Notwithstanding

the

challenging

operating

environment,

our

Merchant

and

Consumer

Divisions

continue

demonstrate

the

resilience of our business model, which is firmly underpinned by the relevance

and value of our offering to our target market.

Management changes

The Board has appointed Ali Mazanderani as Executive Chairman and Kuben Pillay as Lead Independent Director. Chris Meyer

will conclude his

tenure as Group

CEO on February

29, 2024. During

his nearly three

years as Group

CEO, Chris has

led the successful

turnaround

and building

the Lesaka

fintech

platform.

Chris will

remain

director

of Lesaka.

Ali Mazanderani

will assume

the

Executive Chairman

role on

February 1,

has been

a member

of the

Lesaka board

since 2020

and he

played a

lead role

setting the vision to build

the leading fintech platform in

Southern Africa that set Lesaka

on its journey.

He presented this strategy to

the market at

Lesaka’s Q4 2020 earnings call

and has played

a key role

in Lesaka’s evolution, serving as

a board director and

a member

of the Capital Allocation Committee.

Ali

brings

deep

experience

the

Lesaka

executive

team

and

well-known

and

respected

global

fintech

leader

and

entrepreneur.

Ali

co-founder

and

Chairman

Teya,

leading

European

fintech

and

has

served

director

global

fintech

companies, including StoneCo in Brazil and Network International

in the UAE.

Improvement in our Broad Based Black Economic

Empowerment (“B-BBEE”) rating to level 4

B-BBEE is

a key

strategic priority

for us.

Achievement of

B-BBEE objectives

is measured

by a

scorecard which

establishes a

weighting

for

various

elements.

Scorecards

are

independently

reviewed

accredited

BEE

verification

agencies

which

issue

certificate that presents

an entity’s

BEE Contributor Status

Level, with level 1

being the highest and

“no rating” (a level

below level

the

lowest.

During

fiscal

2023,

made

significant

progress

terms

improving

our

empowerment

credentials

and

September

2023

reported

that

our

independently

verified

B-BBEE

rating

improved

level

rating

from

level

rating,

simultaneously setting out our aim to achieve a level 4

rating by the end of fiscal year 2024.

We achieved this target during the second

quarter of fiscal 2024 and have received an independently verified B-BBEE rating

of level 4.

Critical Accounting Policies

Our unaudited condensed consolidated

financial statements have been

prepared in accordance with U.S.

GAAP,

which requires

management

make

estimates

and

assumptions

about

future

events

that

affect

the

reported

amount

assets

and

liabilities

and

disclosure

contingent

assets and

liabilities.

As future

events

and

their

effects

cannot be

determined

with

absolute

certainty,

the

determination

estimates

requires

management’s

judgment

based

variety

assumptions

and

other

determinants

such

historical experience, current and expected market conditions and certain scientific evaluation techniques. Critical accounting policies

are those

that reflect

significant judgments

or uncertainties

and may

potentially result

in materially

different

results under

different

assumptions

and

conditions.

have

identified

the

following

critical

accounting

policies that

are

described

detail

our

Annual Report on Form 10-K for the year ended June 30, 2023:

●

Business Combinations and the Recoverability of Goodwill;

●

Intangible Assets Acquired Through Acquisitions;

●

Revenue recognition – principal versus agent considerations;

●

Valuation

of investment in Cell C;

●

Recoverability of equity securities and equity-accounted investments;

●

Deferred Taxation;

●

Stock-based Compensation;

●

Accounts Receivable and Allowance for Doubtful Accounts Receivable;

and

●

Lending.

form10qp47i0

Recent accounting pronouncements adopted

Refer to Note

1 to

our unaudited condensed

consolidated financial statements

for a full

description of accounting

pronouncements

adopted, including the dates of adoption and the effects on

our unaudited condensed consolidated financial statements.

Recent accounting pronouncements not yet adopted

as of December 31, 2023

Refer

Note

our

unaudited

condensed

consolidated

financial

statements

for

full

description

recent

accounting

pronouncements

not

yet

adopted

December

31,

2023,

including

the

expected

dates

adoption

and

effects

our

financial

condition, results of operations and cash flows.

Currency Exchange Rate Information

Actual exchange rates

The actual exchange rates for and at the end of the periods presented were

as follows:

Table 1

Three months ended

Six months ended

Year

ended

December 31,

June 30,

2023

2022

2023

2022

2023

ZAR : $ average exchange rate

18.7313

17.6279

18.6885

17.3240

17.7641

Highest ZAR : $ rate during period

19.4568

18.3617

19.4568

18.3617

19.7558

Lowest ZAR : $ rate during period

18.2076

16.9840

17.6278

16.2035

16.2034

Rate at end of period

18.2982

17.0212

18.2982

17.0212

18.8376

Translation exchange

rates for financial reporting purposes

We are required

to translate our results of operations from ZAR to U.S. dollars on a monthly

basis. Thus, the average rates used

to translate this

data for

the three and

six months ended

December 31, 2023

and 2022, vary

slightly from the

averages shown

in the

table above. Except as

described below,

the translation rates we

use in presenting our

results of operations are

the rates shown in

the

following table:

Three months ended

Six months ended

Year

ended

Table 2

December 31,

June 30,

2023

2022

2023

2022

2023

Income and expense items: $1 = ZAR

18.7108

17.5160

18.7124

17.2482

17.9400

Balance sheet items: $1 = ZAR

18.2982

17.0212

18.2982

17.0212

18.8376

have translated

the results

of operations

and operating

segment information

for the

three and

six months

ended December

31, 2023, provided

in the tables

below using

the actual average

exchange rates

per month (i.e.

for each of

October 2023, November

2023, and December

2023 for the

second quarter of

fiscal 2024)

between the

USD and ZAR

in order

to reduce the

reconciliation of

information presented to our chief operating

decision maker. The impact of

using this method compared with the average rate for

the

quarter and year to date is not significant, however, it does result in minor differences.

We believe that presentation using the average

exchange

rates

per

month

compared

with

the

average

exchange

rate

per

quarter

and

year

date

improves

the

accuracy

the

information presented in our

external financial reporting and

leads to fewer

differences between our external reporting

measures which

are supplementally presented in ZAR, and our internal management

information, which is also presented in ZAR.

Results of Operations

The discussion

of our

consolidated overall

results of

operations is

based on

amounts as

reflected

in our

unaudited condensed

consolidated financial

statements which

are prepared

in accordance

with U.S.

GAAP.

analyze our

results of

operations both

U.S. dollars, as presented in the unaudited condensed consolidated

financial statements, and supplementally in ZAR, because ZAR is

the functional

currency of

the entities

which contribute

the majority

of our

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

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

“—Results

operations

operating

segment”

represents

total

revenue

per

operating segment before intercompany

eliminations. A reconciliation between

total operating segment revenue and

revenue, as well

the

reconciliation

between

our

segment

performance

measure

and

net

loss

before

tax

(benefits)

expense,

presented

our

unaudited condensed consolidated financial

statements in Note

17 to those

statements. Our chief

operating decision maker

is our

Group

Chief

Executive

Officer

and

evaluates

segment

performance

based

segment

earnings

before

interest,

tax,

depreciation

and

amortization

(“EBITDA”),

adjusted

for

items

mentioned

the

sentence

(“Segment

Adjusted

EBITDA”)

for

each

operating

segment.

do not

allocate once

-off

items (as

defined below),

stock-based

compensation charges,

depreciation

and amortization,

impairment of goodwill or

other intangible assets, certain

lease charges (“Lease

adjustments”), other items (including

gains or losses

on disposal

of investments,

fair value

adjustments to

equity securities,

fair value

adjustments to

currency options),

interest income,

interest expense, income tax expense or loss

from equity-accounted investments to our reportable segments. Once-off items

represents

non-recurring

expense

items,

including

costs related

acquisitions

and

transactions

consummated

or ultimately

not pursued.

The

Lease adjustments reflect lease charges and the Stock-based compensation adjustments reflect stock-based compensation expense and

are both excluded from the calculation of Segment Adjusted EBITDA and

are therefore reported as reconciling items to reconcile the

reportable segments’ Segment Adjusted EBITDA to our loss before income

tax expense.

Group

Adjusted

EBITDA

represents

Segment

Adjusted

EBITDA

after

deducting

group

costs.

Refer

also

“Results

Operations—Use of Non-GAAP Measures” below.

Connect is included for the entire year to date of fiscal 2024 and 2023.

We analyze our business and operations in terms of two

inter-related but independent operating segments: (1) Merchant Division

and (2)

Consumer Division.

In addition,

corporate activities

that are

impracticable to

allocate directly

to the

operating segments,

well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are included

in Eliminations.

Second quarter of fiscal 2024 compared to second quarter

of fiscal 2023

The following factors had

a significant impact on

our results of operations

during the second quarter

of fiscal 2024 as compared

with the same period in the prior year:

●

Higher revenue:

Our revenues increased 13% in

ZAR, primarily due to an increase in

low margin prepaid airtime sales and

other value-added services, as well

as higher transaction, insurance and lending revenues,

which was partially offset by lower

hardware sales revenue in our POS hardware distribution business given the

lumpy nature of bulk sales;

●

Operating

income

generated:

Operating

profitability

was

achieved

following

years

operating

losses

result

of the

various cost reduction initiatives in Consumer implemented in prior periods as well as the

contribution from Connect;

●

Higher net

interest charge:

The net

interest charge

increased to

$4.4 million

(ZAR 81.2

million) from

$4.0 million

(ZAR

70.0 million) primarily due to higher interest rates; and

●

Foreign exchange

movements:

The U.S. dollar

was 7% stronger

against the ZAR

during the second

quarter of fiscal

2024

compared to the prior period, which adversely impacted our U.S. dollar

reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of

operations, both in U.S. dollars and in ZAR:

Table 3

In United States Dollars

Three months ended December 31,

2023

2022

$ ’000

change

Revenue

143,893

136,068

Cost of goods sold, IT processing, servicing and support

114,266

108,824

Selling, general and administration

21,541

23,517

(8%)

Depreciation and amortization

5,813

5,919

(2%)

Operating income (loss)

2,273

(2,192)

Loss on disposal of equity-accounted investments

112

Interest income

485

389

25%

Interest expense

4,822

4,388

10%

Loss before income tax expense

(2,064)

(6,303)

(67%)

Income tax expense

686

364

88%

Net loss before earnings from equity-accounted investments

(2,750)

(6,667)

(59%)

Earnings from equity-accounted investments

139%

Net loss attributable to us

(2,707)

(6,649)

(59%)

Table 4

In South African Rand

Three months ended December 31,

2023

2022

ZAR ’000

change

Revenue

2,694,506

2,383,367

13%

Cost of goods sold, IT processing, servicing and support

2,139,730

1,906,161

12%

Selling, general and administration

403,443

411,923

(2%)

Depreciation and amortization

108,863

103,677

Operating income (loss)

42,470

(38,394)

Loss on disposal of equity-accounted investments

1,962

Interest income

9,080

6,814

33%

Interest expense

90,329

76,860

18%

Loss before income tax expense

(38,779)

(110,402)

(65%)

Income tax expense

12,845

6,376

101%

Net loss before earnings from equity-accounted investments

(51,624)

(116,778)

(56%)

Earnings from equity-accounted investments

805

315

156%

Net loss attributable to us

(50,819)

(116,463)

(56%)

Revenue increased

by $7.8

million (ZAR

0.3 billion),

or 5.8%

(in ZAR,

13.1%),

primarily due

to the

increase in

low margin

prepaid airtime sales

and other value-added

services, as well

as higher transaction, insurance

and lending revenues, which

was partially

offset by lower hardware sales revenue in our POS hardware distribution

business given the lumpy nature of bulk sales.

Cost of goods sold, IT processing, servicing and support increased by $5.4 million

(ZAR 0.2 billion), or 5.0% (in ZAR, 12.3%),

primarily due to the increase in low margin prepaid airtime sales, which were partially offset by

the benefits of various cost reduction

initiatives in Consumer and lower insurance-related claims.

Selling, general and administration expenses decreased by $2.0

million (ZAR 8.5 million), or 8.4%

(in ZAR 2.1%). The decrease

was primarily due to

the benefits of

various cost reduction initiatives

in Consumer and lower

stock-based compensation charges, which

were partially offset by higher employee-related expenses and the year-over-year impact of inflationary increases on certain expenses.

Depreciation and amortization expense

decreased by $0.1 million, or 1.8%

and in ZAR increased by

ZAR 5.2 million or 5.0%.

In the ZAR, the increase was due to an increase in depreciation expense related

to additional POS devices deployed.

Our operating income (loss)

margin for the second

quarter of fiscal

2024 and 2023 was

1.6% and(1.6)%, respectively. We discuss

the components of operating loss margin under “—Results of operations

by operating segment.”

did not record

any changes in

the fair value

of equity interests

in MobiKwik and

Cell C during

the second quarter

of fiscal

2024 or 2023, respectively. We continue to carry our investment in Cell C

at $0 (zero). Refer to

Note 4 for the methodology and

inputs

used in the fair value calculation for Cell C.

Interest on surplus cash increased

to $0.5 million (ZAR 9.1

million) from $0.4 million (ZAR

6.8 million), primarily due to

higher

interest rates.

Interest

expense increased

to $4.8

million (ZAR

90.3 million)

from $4.4

million (ZAR

76.9 million),

primarily

as a

result of

higher overall interest rates and higher overall borrowings during the second quarter of fiscal 2024 compared with comparable period

in the prior quarter, which was partially offset

by lower interest expense incurred on certain of our borrowing for which we were able

to negotiate lower rates of interest during the latter half of fiscal 2023.

Fiscal 2024 tax expense was $(0.7) million

(ZAR (12.8) million) compared to $0.4 million

(ZAR 6.4 million) in fiscal 2023. 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.

Our effective

tax rate

for fiscal

2023 was

impacted by

the tax

expense recorded

by our

profitable South

African operations,

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.

Finbond is

listed on

the Johannesburg

Stock Exchange

and reports

its six-month

results during

our first

quarter and

its annual

results during our fourth quarter.

We sold our

entire remaining interest in Finbond during the second quarter of fiscal 2024.

The table

below presents the relative (loss) earnings from our equity-accounted investments:

Table 5

Three months ended December 31,

2023

2022

$ %

$ ’000

change

Other

139%

Total

loss from equity-accounted investments

139%

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating

loss are illustrated below:

Table 6

In United States Dollars

Three months ended December 31,

2023

% of

2022

% of

% change

Operating Segment

$ ’000

total

$ ’000

total

Consolidated revenue:

Merchant

127,870

89%

120,634

89%

Consumer

16,707

12%

15,434

11%

Subtotal: Operating segments

144,577

101%

136,068

100%

Eliminations

(684)

(1%)

Total

consolidated revenue

143,893

100%

136,068

100%

Segment Adjusted EBITDA:

Merchant

(1)

8,693

90%

9,120

123%

(5%)

Consumer

(1)

2,948

31%

578

410%

Group costs

(2,011)

(21%)

(2,256)

(30%)

(11%)

Group Adjusted EBITDA (non-GAAP)

(2)

9,630

100%

7,442

100%

29%

(1) Segment Adjusted

EBITDA for Merchant includes

retrenchments costs of

$0.01 million and Consumer

includes retrenchment

costs of $0.1 million for the second quarter of fiscal 2024.

(2) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

Non-

GAAP Measures”.

Table 7

In South African Rand

Three months ended December 31,

2023

% of

2022

% of

% change

Operating Segment

ZAR ’000

total

ZAR ’000

total

Consolidated revenue:

Merchant

2,394,515

89%

2,113,025

89%

13%

Consumer

312,767

12%

270,342

11%

16%

Subtotal: Operating segments

2,707,282

101%

2,383,367

100%

14%

Eliminations

(12,776)

(1%)

Total

consolidated revenue

2,694,506

100%

2,383,367

100%

13%

Segment Adjusted EBITDA:

Merchant

(1)

162,935

90%

159,746

123%

Consumer

(1)

55,225

31%

10,124

445%

Group costs

(37,663)

(21%)

(39,516)

(30%)

(5%)

Group Adjusted EBITDA (non-GAAP)

(2)

180,497

100%

130,354

100%

38%

(1)

Segment

Adjusted

EBITDA

for

Merchant

includes

retrenchments

costs

ZAR

0.1

million

and

Consumer

includes

retrenchment costs of ZAR 1.3 million for the second quarter of fiscal 2024.

(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

increased due

to the increase

in low margin

prepaid airtime

sales and other

value-added services,

which was

partially offset

by lower hardware

sales revenue

given the lumpy

nature of bulk

sales as well

as lower revenue

from certain valued-

added services transactions

(such as international money

transfers). In ZAR, the

increase in Segment Adjusted

EBITDA is primarily

due to

the higher

sales activity,

which was

partially offset

by lower

hardware sales.

Connect records

a significant

proportion of

its

airtime

sales

revenue

and

cost

sales,

while

only

earning

relatively

small

margin.

This

significantly

depresses

the

Segment

Adjusted EBITDA margins shown by the business.

Our Segment Adjusted

EBITDA margin

(calculated as Segment

Adjusted EBITDA divided

by revenue) for

the second quarter

of fiscal 2024 and 2023 was 6.8% and 7.6%, respectively.

Consumer

Segment revenue increased

primarily due to

more transaction fees

generated from the

higher EPE account

holders base, higher

insurance revenues, and an increase

in lending revenue as

a result of an

increase in loan originations.

This increase in revenue,

together

with the cost reduction

initiatives initiated in fiscal

2022 and through

fiscal 2023, have

translated into a turnaround

in the Consumer

Division and the realization of sustained positive Segment Adjusted EBITDA.

Our Segment Adjusted EBITDA margin for the

second quarter of fiscal 2024 and 2023 was 17.6%

and 3.7%, respectively.

Group costs

Our group

costs primarily

include employee

related costs

in relation

to employees

specifically hired

for group

roles and

costs

directly

managing

the

US-listed

entity;

expenditures

compliance

with

the

Sarbanes-Oxley

Act

2002;

non-

employee directors’ fees; legal fees; group and US-listed related audit

fees; and directors’ and officers’ insurance premiums.

Our group costs for

fiscal 2024 decreased compared

with the prior period

due to lower external

audit, legal and consulting

fees

and lower provision for executive bonuses, which was partially offset

by higher employee costs.

First half of fiscal 2024 compared to first half of fiscal 2023

The following

factors had a

significant impact on

our results of

operations during

the first half

of fiscal 2024

as compared with

the same period in the prior year:

●

Higher revenue:

Our revenues increased 16% in

ZAR, primarily due to an increase

in low margin prepaid airtime

sales and

other value added services, as well as

higher transaction, insurance and lending revenues, which was partially offset by lower

hardware sales revenue in our POS hardware distribution business given the

lumpy nature of bulk sales;

●

Operating

income

generated:

Operating

profitability

was

achieved

following

years

operating

losses

result

of the

various cost reduction initiatives in Consumer implemented in prior periods as well as the contribution

from Connect;

●

Higher net interest charge:

The net interest

charge increased to

$8.8 million (ZAR 164.3

million) from $7.6

million (ZAR

131.5 million) primarily due to higher interest rates; and

●

Foreign exchange movements:

The U.S. dollar

was 8%

stronger against the

ZAR during the

first half of

fiscal 2024 compared

to the prior period, which adversely impacted our U.S. dollar reported

results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S. GAAP.

The following tables show the changes in the items comprising our statements of operations,

both in U.S. dollars and in ZAR:

Table 8

In United States Dollars

Six months ended December 31,

2023

2022

$ ’000

change

Revenue

279,982

260,854

Cost of goods sold, IT processing, servicing and support

221,756

209,352

Selling, general and administration

44,056

46,448

(5%)

Depreciation and amortization

11,669

11,917

(2%)

Operating income (loss)

2,501

(6,863)

Reversal of allowance for EMI doubtful debt receivable

250

Net gain on disposal of equity-accounted investments

136

Interest income

934

800

17%

Interest expense

9,731

8,424

16%

Loss before income tax expense

(6,046)

(14,351)

(58%)

Income tax expense

950

395

141%

Net loss before loss from equity-accounted investments

(6,996)

(14,746)

(53%)

Loss from equity-accounted investments

1,362

2,599

(48%)

Net loss attributable to us

(8,358)

(17,345)

(52%)

Table 9

In South African Rand

Six months ended December 31,

2023

2022

ZAR ’000

change

Revenue

5,232,165

4,499,262

16%

Cost of goods sold, IT processing, servicing and support

4,144,195

3,610,946

15%

Selling, general and administration

823,304

801,144

Depreciation and amortization

218,029

205,547

Operating income (loss)

46,637

(118,375)

Reversal of allowance for EMI doubtful debt receivable

4,741

Net gain on disposal of equity-accounted investments

2,346

Interest income

17,448

13,799

26%

Interest expense

181,758

145,298

25%

Loss before income tax expense

(112,932)

(247,528)

(54%)

Income tax expense

17,670

6,813

159%

Net loss before loss from equity-accounted investments

(130,602)

(254,341)

(49%)

Loss from equity-accounted investments

25,852

44,828

(42%)

Net loss attributable to us

(156,454)

(299,169)

(48%)

Revenue increased

by $19.1

million (ZAR

0.7 billion),

or 7.3%

(in ZAR,

16.3%), primarily

due to

the increase

in low

margin

prepaid airtime sales

and other value-added

services, as well

as higher transaction, insurance

and lending revenues, which

was partially

offset by lower hardware sales revenue in our POS hardware distribution

business given the lumpy nature of bulk sales.

Cost of goods sold, IT processing, servicing and

support increased by $12.4 million (ZAR

0.5 billion), or 5.9% (in ZAR,

14.8%),

primarily due to the increase in low margin prepaid airtime sales, which were partially offset by the benefits of various

cost reduction

initiatives in Consumer and lower insurance-related claims.

Selling, general and administration expenses decreased by $2.4 million, or 5.1%, and in ZAR increased by ZAR 22.2 million, or

2.8%. In ZAR, the increase was

primarily due to higher employee-related expenses related to the

expansion of our senior management

team and the year-over-year impact of inflationary increases

on employee-related expenses, which were partially

offset by the benefits

of various cost reduction initiatives in Consumer and lower stock-based

compensation charges.

Depreciation and amortization expense decreased by $0.2 million, or 2.1%, and in ZAR increased by ZAR 12.5 million or 6.1%.

In the ZAR, the increase was due to an increase in depreciation expense related to

additional POS devices deployed.

Our operating income (loss) margin for the first half of fiscal 2024 and 2023 was 0.9% and (2.6)%, respectively.

We discuss the

components of operating loss margin under “—Results of operations

by operating segment.”

We did not record any changes in the fair value of equity interests in MobiKwik and Cell C during the first half of fiscal 2024 or

2023, respectively.

During the first half of fiscal 2024,

we received an outstanding amount of

$0.3 million related to the sale Carbon

in fiscal 2023,

which resulted

in the

reversal of

an allowance

for doubtful

loans receivable

of $0.3

million recorded

in fiscal

2023.

recorded a

gain of $0.3

million related to the

disposal of our

entire interest in Carbon

during the first half

of fiscal 2023.

Refer to Note

5 to our

unaudited condensed consolidated financial statements for additional

information regarding this disposal.

Interest on

surplus cash

increased to

$0.9 million

(ZAR 17.4

million) from

$0.8 million

(ZAR 13.8

million), primarily

due to

higher interest rates.

Interest expense increased

to $9.7 million (ZAR

181.8 million) from

$8.4 million (ZAR

145.3 million), primarily

as a result of

higher overall interest rates and higher overall borrowings during the first half of fiscal 2024 compared with comparable period in the

prior year to

date, which was

partially offset

by lower interest

expense incurred

on certain of our

borrowing for which

we were able

to negotiate lower rates of interest during the latter half of fiscal 2023.

Fiscal 2024 tax expense was $(1.0) million

(ZAR (17.7) million) compared to $0.4 million

(ZAR 6.8 million) in fiscal 2023. 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.

Our effective

tax rate

for fiscal

2023 was

impacted by

the tax

expense recorded

by our

profitable South

African operations,

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.

Finbond is listed on the Johannesburg Stock

Exchange and reports its six-month results during

our first half and its

annual results

during our fourth quarter. The table

below presents the relative (loss) earnings from our equity-accounted

investments:

Table 10

Six months ended December 31,

2023

2022

$ %

$ ’000

change

Finbond

(1,445)

(2,631)

(45%)

Share of net loss

(278)

(1,521)

(82%)

Impairment

(1,167)

(1,110)

Other

159%

(1,362)

(2,599)

(48%)

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating

loss are illustrated below:

Table 11

In United States Dollars

Six months ended December 31,

2023

% of

2022

% of

% change

Operating Segment

$ ’000

total

$ ’000

total

Consolidated revenue:

Merchant

249,231

89%

230,416

88%

Consumer

32,287

12%

30,438

12%

Subtotal: Operating segments

281,518

101%

260,854

100%

Eliminations

(1,536)

(1%)

Total

consolidated revenue

279,982

100%

260,854

100%

Segment Adjusted EBITDA:

Merchant

(1)

16,754

91%

17,013

146%

(2%)

Consumer

(1)

5,428

30%

(816)

(7%)

Group costs

(3,833)

(21%)

(4,556)

(39%)

(16%)

Group Adjusted EBITDA (non-GAAP)

(2)

18,349

100%

11,641

100%

58%

(1) Segment Adjusted

EBITDA for Merchant includes

retrenchments costs of

$0.01 million and

Consumer includes retrenchment

costs of $0.1 million for first half of fiscal 2024.

(2) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

Non-

GAAP Measures”.

Table 12

In South African Rand

Six months ended December 31,

2023

% of

2022

% of

% change

Operating Segment

ZAR ’000

total

ZAR ’000

total

Consolidated revenue:

Merchant

4,657,516

89%

3,974,261

88%

17%

Consumer

603,396

12%

525,001

12%

15%

Subtotal: Operating segments

5,260,912

101%

4,499,262

100%

17%

Eliminations

(28,747)

(1%)

Total

consolidated revenue

5,232,165

100%

4,499,262

100%

16%

Segment Adjusted EBITDA:

Merchant

(1)

313,116

91%

293,444

146%

Consumer

(1)

101,527

30%

(14,075)

(7%)

Group costs

(71,643)

(21%)

(78,583)

(39%)

(9%)

Group Adjusted EBITDA (non-GAAP)

(2)

343,000

100%

200,786

100%

71%

(1)

Segment

Adjusted

EBITDA

for

Merchant

includes

retrenchments

costs

ZAR

0.1

million

and

Consumer

includes

retrenchment costs of ZAR 1.3 million for first half of fiscal 2024.

(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

increased due

to the increase

in low margin

prepaid airtime

sales and other

value-added services,

which was

partially offset by lower

hardware sales revenue given

the lumpy nature of bulk sales.

The increase in Segment Adjusted

EBITDA is

primarily due to the higher sales activity,

which was partially offset by lower hardware sales.

Our Segment Adjusted EBITDA margin for the first half

of fiscal 2024 and 2023 was 6.7% and 7.4%, respectively.

Consumer

Segment revenue increased

primarily due to

more transaction fees

generated from the

higher EPE account

holders base, higher

insurance revenues, and an increase

in lending revenue as

a result of an

increase in loan originations.

This increase in revenue,

together

with the cost reduction

initiatives initiated in fiscal

2022 and through

fiscal 2023, have

translated into a turnaround

in the Consumer

Division and the

realization of sustained

positive Segment Adjusted

EBITDA in year

to date fiscal 2024

compared with year to

date

fiscal 2023.

Our Segment Adjusted EBITDA margin for the first half of fiscal 2024

and 2023 was 16.8% and (2.7)%, respectively.

Group costs

Our group costs for

fiscal 2024 decreased compared

with the prior period

due to lower external

audit, legal and consulting

fees

and lower provision for executive bonuses, which was partially offset

by higher employee costs.

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

non-GAAP

measure.

provide

this

non-GAAP

measure

enhance

our

evaluation

and

understanding

our

financial

performance.

Non-GAAP Measures

Group

Adjusted

EBITDA

earnings

before

interest,

tax,

depreciation

and

amortization

(“EBITDA”),

adjusted

for

non-

operational transactions (including loss on disposal

of equity-accounted investments, gain related to

fair value adjustments to currency

options), (earnings)

loss from equity-accounted investments,

stock-based compensation charges, lease adjustments

and once-off items.

Lease

adjustments

reflect

lease

charges

and

once-off

items

represents

non-recurring

expense

items,

including

costs

acquisitions and transactions consummated or ultimately not pursued.

The table below presents the reconciliation between GAAP net loss attributable

to Lesaka to Group Adjusted EBITDA:

Table 13

Three months ended

December 31,

Six months ended

December 31,

2023

2022

2023

2022

$ ’000

Loss attributable to Lesaka - GAAP

(2,707)

(6,649)

(8,358)

(17,345)

(Earnings) loss from equity accounted investments

(43)

(18)

1,362

2,599

Net loss before (earnings) loss from equity-accounted investments

(2,750)

(6,667)

(6,996)

(14,746)

Income tax (benefit) expense

686

364

950

395

Loss before income tax expense

(2,064)

(6,303)

(6,046)

(14,351)

Interest expense

4,822

4,388

9,731

8,424

Interest income

(485)

(389)

(934)

(800)

Reversal of allowance for doubtful EMI loan receivable

(250)

Net gain on disposal of equity-accounted investment

112

(136)

Operating income (loss)

2,273

(2,192)

2,501

(6,863)

PPA amortization

(amortization of acquired intangible assets)

3,592

3,842

7,200

7,770

Depreciation and amortization

2,221

2,077

4,469

4,147

Stock-based compensation charges

1,804

2,849

3,563

4,311

Lease adjustments

678

747

1,374

1,559

Once-off items

(1)

(816)

119

(738)

717

Unrealized gain FV for currency adjustments

(122)

(20)

Group Adjusted EBITDA - Non-GAAP

9,630

7,442

18,349

11,641

(1) The table below presents the components of once-off

items for the periods presented:

Table 14

Three months ended

December 31,

Six months ended

December 31,

2023

2022

2023

2022

$ ’000

Transaction costs

136

119

214

322

(Income recognized) Expenses incurred related to closure of legacy

businesses

(952)

395

Total once-off

items

(816)

119

(738)

717

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

2022 we

incurred

significant

transaction

costs related

the acquisition

of Connect

over

number of quarters, and the transactions are generally non-recurring.

(Income

recognized)

Expenses

incurred

closure

legacy

businesses

represents

(i)

gains

recognized

the

release of

the foreign

currency translation

reserve on

deconsolidation of

a subsidiaries

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.

Liquidity and Capital Resources

As of December 31, 2023, our cash and cash

equivalents were $44.3 million and comprised of U.S. dollar-denominated balances

of $4.5 million,

ZAR-denominated balances of

ZAR 688.5 million

($37.6 million), and

other currency deposits,

primarily Botswana

pula, of

$2.2 million,

all amounts

translated at

exchange rates

applicable as

of December

31, 2023.

The increase

in our unrestricted

cash

balances

from

June 30,

2023,

was primarily

due

to a

positive

contribution

from

our Merchant

and

Consumer

operations

and

utilization of

our borrowings

facilities to

fund certain

components of

our operations,

which was

partially offset

by the utilization

cash reserves to

fund certain scheduled

and other

repayments of our

borrowings, purchase ATMs and vaults,

and to make

an investment

in working capital.

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,

well

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. For

instance, in

fiscal 2022,

we obtained

loan facilities

from RMB

to fund

a portion

of our

acquisition of

Connect. Following

the acquisition

of Connect,

we now

utilize a

combination of

short

and

long-term

facilities to

fund our

operating

activities and

a long-term

asset-backed

facility to

fund

the acquisition

of POS

devices

and

vaults.

Refer

Note

our

consolidated

financial

statements

for

the

year

ended

June

30,

2023,

for

additional

information related to our borrowings.

Available short-term

borrowings

Summarized below are our short-term facilities available and utilized as of

December 31, 2023:

Table 15

RMB Facility E

RMB Indirect

RMB Connect

Nedbank

$ ’000

ZAR ’000

$ ’000

ZAR ’000

$ ’000

ZAR ’000

$ ’000

ZAR ’000

Total

short-term facilities

available, comprising:

Overdraft

11,203

205,000

Overdraft restricted as to

use

(1)

76,510

1,400,000

Total overdraft

76,510

1,400,000

11,203

205,000

Indirect and derivative

facilities

(2)

7,378

135,000

8,556

156,556

Total

short-term

facilities available

76,510

1,400,000

7,378

135,000

11,203

205,000

8,556

156,556

Utilized short-term

facilities:

Overdraft

9,291

170,000

Overdraft restricted as to

use

(1)

23,407

428,301

Indirect and derivative

facilities

(2)

1,809

33,100

115

2,110

Total

short-term

facilities available

23,407

428,301

1,809

33,100

9,291

170,000

115

2,110

Interest

rate,

based

South African prime rate

11.75%

11.65%

(1) Overdraft may only be used to fund ATMs

and upon utilization is considered restricted cash.

(2) Indirect and derivative facilities may only be used for guarantees, letters of credit and forward

exchange contracts to support

guarantees issued by RMB and Nedbank to various third parties on our behalf.

Long-term borrowings

have

aggregate

long-term

borrowing

outstanding

ZAR

2.6

billion

($142.8

million

translated

exchange

rates

December 31, 2023)

as described in Note

These borrowings

include outstanding

long-term borrowings obtained

by Lesaka SA of

ZAR 1.0 billion,

including accrued

interest, which

was used to

partially fund

the acquisition of

Connect. The Lesaka

SA borrowing

arrangements

were amended

in March

2023 to

include

a ZAR

200

million

revolving

credit facility.

used this

revolving

credit

facility

during

the

six

months

ended

December

31,

2023,

and

ZAR

115.0

million

was

drawn

December

31,

2023,

with

the

remaining balance available for utilization in the future. In contemplation of the Connect transaction, Connect obtained total facilities

of ZAR

1.3 billion,

which were

utilized to

repay its

existing borrowings,

to fund

a portion

of its

capital expenditures

and

to settle

obligations

under the

transaction documents,

and which

has subsequently

been upsized

for its

operational requirements

and has

outstanding

balance as

of December

31, 2023,

of ZAR

1.2 billion,

also have

a revolving

credit facility,

of ZAR

300.0

million

which is utilized to fund a portion of our merchant finance loans receivable

book.

Restricted cash

have credit

facilities with RMB

in order

to access cash

to fund

our ATMs

in South Africa.

Our cash, cash

equivalents and

restricted cash presented in

our consolidated statement

of cash flows

as of December

31, 2023, includes

restricted cash of

$23.5 million

related to cash withdrawn from our debt facility to

fund ATMs. This cash may only be used to fund ATMs and is considered restricted

as to use and therefore is classified as restricted cash on our consolidated

balance sheet.

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 December 31, 2023, includes restricted cash of

$0.1 million that has been ceded and pledged.

Cash flows from operating activities

Second quarter

Net cash provided by operating

activities during the second quarter of

fiscal 2024 was $0.6

million (ZAR 10.9 million) compared

to $3.4 million (ZAR 59.9 million) during the second quarter of fiscal 2023.

Excluding the impact of income taxes, our cash provided

operating

activities

during

the

second

quarter

fiscal

2024

was

positively

impacted

the

contribution

from

Merchant

and

Consumer, which was partially offset by growth in

our consumer and merchant finance loans

receivable books and temporary working

capital movements within

our merchant business

as a result

of quarter-end

transaction processing activities

closing on a

Sunday and

settled in the following week.

During the second quarter of fiscal 2024, we

paid first provisional South African tax payments

of $0.1 million (ZAR 1.3 million)

related to our 2023

tax year and

South African tax payments

related to prior years

of $0.1 million

(ZAR 1.3 million).

During the second

quarter of

fiscal 2023,

we paid

first provisional

South African

tax payments

of $2.5 million

(ZAR 42.6

million) related

to our 2023

tax year,

and additional

second provisional

South African

tax payments

of $0.01

million (ZAR

0.2 million)

related to

our 2022

tax

year.

Taxes paid during

the second quarter of fiscal 2024 and 2023 were as follows:

Table 16

Three months ended December 31,

2023

2022

2023

2022

ZAR

‘000

First provisional payments

2,662

2,463

49,516

42,582

Taxation paid related

to prior years

1,328

180

Tax refund received

(141)

(2,570)

Total South African

taxes paid

2,731

2,332

50,844

40,192

Foreign taxes paid

1,409

889

Total

tax paid

2,806

2,382

52,253

41,081

First half

Net cash provided

by operating activities

during the

first half of

fiscal 2024

was $4.0 million

(ZAR 74.0

million) compared

net cash used

in operating

activities of $4.2

million (ZAR 73.1

million) during

the first half

of fiscal

Excluding

the impact of

income taxes, our cash provided by operating activities during the first half of fiscal 2024 was positively impacted by the contribution

from Merchant

and Consumer,

which was

partially offset

by growth

in our

consumer and

merchant finance

loans receivable

books

and temporary

working capital

movements within

our merchant

business as

a result

of quarter-end

transaction processing

activities

closing on a Sunday and settled in the following week.

During the

first half

of fiscal

2024, we

paid first

provisional South

African tax

payments of

$0.6 million

(ZAR 12.2

million)

related to our 2023 tax year and South African tax payments related to prior years

of $0.6 million (ZAR 12.2 million). During the first

half of fiscal

2023, we paid

first provisional South

African tax payments

of $3.0 million

(ZAR 50.8 million)

related to our

2023 tax

year, and additional second provisional South

African tax payments of $0.2 million (ZAR 3.4 million) related to our 2022 tax

year.

Taxes paid during

the first half of fiscal 2024 and 2023 were as follows:

Table 17

Six months ended December 31,

2023

2022

2023

2022

ZAR

‘000

First provisional payments

2,662

2,955

49,516

50,798

Second provisional payments

191

3,371

Taxation paid related

to prior years

641

12,187

180

Tax refund received

(31)

(198)

(640)

(3,540)

Total South African

taxes paid

3,272

2,958

61,063

50,809

Foreign taxes paid

138

101

2,605

1,775

Total

tax paid

3,410

3,059

63,668

52,584

Cash flows from investing activities

Second quarter

Cash used in

investing activities

for the

second quarter

of fiscal 2024

included

capital expenditures of

$5.0 million

(ZAR 93.7

million), primarily due

to the acquisition of

vaults and POS devices

During the second

quarter of 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.

Cash used in

investing activities

for the

second quarter

of fiscal 2023

included

capital expenditures

of $4.0

million (ZAR 69.9

million), due to the acquisition of vaults and POS devices.

First half

Cash used in investing activities for the

first half of fiscal 2024 included capital

expenditures of $5.0 million (ZAR 93.7 million),

primarily due to

the acquisition of vaults

and POS devices. During

the first half of 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.

Cash used in

investing activities for

the first half

of fiscal

2023 included capital

expenditures of $8.5

million (ZAR 146.5 million),

primarily

due to

the acquisition

of vaults,

POS devices

and

computer

equipment.

During the

first half

of fiscal

2023,

we received

proceeds of $0.25 million related to the first tranche from the disposal of our

entire equity interest in Carbon.

Cash flows from financing activities

Second quarter

During the second quarter of fiscal 2024, we utilized $69.0 million from our South

African overdraft facilities to fund our ATMs

and our cash management business through Connect, and repaid

$66.0 million of those facilities. We utilized $8.6 million of our long-

term borrowings to fund

the acquisition of certain

capital expenditures and for

working capital requirements.

We repaid

$3.2 million

long-term

borrowings

accordance

with

our

repayment

schedule

well

settle

portion

our

revolving

credit

facility

utilized. We

also paid $0.2

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 the second quarter

of fiscal 2023,

we utilized $167.2

million from our South

African overdraft facilities

to fund our

ATMs

and our

cash management

business through

Connect, and

repaid $175.4

million of

those facilities.

utilized $9.1

million of

our

long-term

borrowings

fund

our

merchant

finance

loans

receivable

business

and

fund

the

acquisition

certain

capital

expenditures. We

repaid $1.7 million of long-term borrowings in accordance

with our repayment schedule. We

received $0.3 million

from the exercise of stock options. We also paid $0.1 million to repurchase shares from employees in order for the

employees to settle

taxes due related to the vesting of shares of restricted stock.

First half

During the first half of fiscal 2024, we utilized $128.6 million from our South African overdraft facilities to fund our ATMs

and

our cash management business through

Connect, and repaid $128.8 million

of those facilities. We

utilized $11.0 million

of our long-

term borrowings to fund

the acquisition of certain

capital expenditures and for

working capital requirements. We

repaid $5.8 million

long-term

borrowings

accordance

with

our

repayment

schedule

well

settle

portion

our

revolving

credit

facility

utilized. We

also paid $0.2

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 the first half of fiscal 2023, we utilized $313.3 million from our South African overdraft facilities to fund our ATMs

and

our cash management business through

Connect, and repaid $312.3 million

of those facilities. We

utilized $10.1 million of our

long-

term borrowings

to fund

our merchant

finance loans

receivable business

and to

fund the

acquisition of

certain capital

expenditures.

repaid

$3.3

million

long-term

borrowings

accordance

with

our

repayment

schedule.

received

$0.3

million

from

the

exercise of

stock options.

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.

Off-Balance Sheet Arrangements

We have no off

-balance sheet arrangements.

Capital Expenditures

expect

capital spending

for the

third quarter

of fiscal

2024 to

primarily

include spending

for acquisition

of POS

devices,

vaults,

computer software, computer and office equipment, as well as for

our ATM infrastructure and branch network in South Africa.

Our capital

expenditures for

the second

quarter of

fiscal 2024

and 2023

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,

or,

following

the

Connect

acquisition,

our

asset-backed

borrowing

arrangement.

had

outstanding

capital

commitments as of December 31, 2023, of $0.1 million. We expect

to fund these expenditures through internally generated funds and

available facilities.

Item 3. Quantitative and Qualitative Disclosures About

Market Risk

In addition to the tables below, see

Note 4 to the unaudited condensed consolidated financial statements for

a discussion of

market risk.

have

short and

long-term borrowings

in South

Africa which

attract interest

at rates

that fluctuate

based on

changes in

the

South African prime

and 3-month JIBAR

interest rates. The

following table illustrates

the effect on

our annual expected

interest charge,

translated at exchange rates applicable

as of December 31, 2023,

as a result of

changes in the South

African prime and 3-month JIBAR

interest rates,

using our

outstanding short

and long-term

borrowings as

of December

31, 2023. 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

December 31, 2023,

are shown.

The selected 1% hypothetical change does not reflect what could be considered

the best- or worst-case scenarios.

Table 18

As of December 31, 2023

Annual expected

interest charge

($ ’000)

Hypothetical

change in

interest rates

Estimated annual

expected interest

charge after

hypothetical change

in interest rates

($ ’000)

Interest on South African borrowings

22,345

24,105

(1%)

20,585

Item 4. Controls and Procedures

Under the supervision and

with the participation of our

management, including our

group chief executive officer

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) promulgated

under the Securities

Exchange Act

of 1934,

as amended,

as of December

31, 2023.

Management recognizes

that

any

controls and

procedures, no

matter how

well designed

and operated,

can provide

only reasonable

assurance of

achieving

their

objectives

and

management

necessarily

applies

its

judgment

evaluating

the

cost-benefit

relationship

possible

controls

and

procedures.

Based

this

evaluation,

the

group

chief

executive

officer

and

the

group

chief

financial

officer

concluded

that

our

disclosure controls and procedures were effective as of

December 31, 2023.

Changes in Internal Control over Financial Reporting

There have

not been

any changes

in our

internal control

over financial

reporting during

the fiscal quarter

ended December

31,

2023,

that have materially affected, or are reasonably likely to materially affect,

our internal control over financial reporting.

Part II. Other Information

Item 1A. Risk Factors

See “Item

1A RISK

FACTORS”

in Part

I of

our Annual

Report on

Form 10-K

for the

fiscal year

ended June

30, 2023,

for a

discussion

risk

factors

relating

(i)

our

business,

(ii)

operating

South

Africa

and

other

foreign

markets,

(iii) government

regulation, and (iv) our common stock. There have been no material changes from the risk factors previously disclosed in our Annual

Report on Form 10-K for the fiscal year ended June 30, 2023.

Item 2. Unregistered Sales of Equity Securities and

Use of Proceeds

The table below presents information relating to purchases of shares of our

common stock during the second quarter of fiscal

2024:

Table 19

(a)

(b)

(c)

(d)

Period

Total

number

of shares

purchased

Average price

paid per share

(US dollars)

Total

number of shares

purchased as part of publicly

announced plans or

programs

Maximum dollar value of

shares that may yet be

purchased under the plans

or programs

Oct-23

100,000,000

Nov-23

(1)

26,925

4.55

100,000,000

Dec-23

(1)

24,050

3.14

100,000,000

Total

50,975

(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 the share repurchase

program.

Item 5. 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 December 31, 2023,

no officers or

directors, as defined

in Rule 16a-1(f),

adopted

, modified, or

terminated

a “Rule 10b5-1 trading arrangement” or a “

non-Rule

10b5-1

trading arrangement,”

as defined in Item 408 of Regulation S-K.

Item 6. Exhibits

The following exhibits are filed as part of this Form 10-Q:

Incorporated by Reference Herein

Exhibit

No.

Description of Exhibit

Included

Herewith

Form

Exhibit

Filing Date

10.44

Amendment and Restatement Agreement, dated November

24, 2023, between Lesaka Technologies Proprietary

Limited (as borrower), and FirstRand Bank Limited (acting

through its Rand Merchant Bank division) (as lender), and

FirstRand Bank Limited (acting through its Rand Merchant

Bank division) (as facility agent)

8-K

10.1

December 1,

2023

10.45

Employment Agreement, dated as of December 4, 2023,

between Lesaka Technologies, Inc. and Ali Mazanderani

8-K

10.1

December 4,

2023

31.1

Certification of Principal Executive Officer pursuant to

Rule 13a-14(a) under the Exchange Act

31.2

Certification of Principal Financial Officer pursuant to Rule

13a-14(a) under the Exchange Act

Certification pursuant to 18 USC Section 1350

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy

Extension Schema

101.CAL

XBRL Taxonomy

Extension Calculation Linkbase

101.DEF

XBRL Taxonomy

Extension Definition Linkbase

101.LAB

XBRL Taxonomy

Extension Label Linkbase

101.PRE

XBRL Taxonomy

Extension Presentation Linkbase

104

Cover

page

formatted

Inline

XBRL

and

contained

Exhibit 101

SIGNATURES

Pursuant to

the requirements

of the

Securities Exchange

Act of

1934, the

registrant has

caused this

report to

be signed

on its

behalf by the undersigned, thereunto duly authorized, on February

6, 2024.

LESAKA TECHNOLOGIES, INC.

By: /s/ Chris G.B. Meyer

Chris G.B. Meyer

Group Chief Executive Officer

By: /s/ Naeem E. Kola

Naeem E. Kola

Group Chief Financial Officer,

Treasurer and Secretary

ex311

Exhibit 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

I, Chris G.B. Meyer,

certify that:

I have reviewed this quarterly report on Form 10-Q of Lesaka Technologies,

Inc. (“Lesaka”) for the quarter ended December 31,

2023;

Based

knowledge,

this

report

does

not

contain

any

untrue

statement

material

fact

omit

state

material

fact

necessary to

make the

statements made,

in light

of the

circumstances under

which such

statements were

made, not

misleading with

respect to the period covered by this report;

Based on

my knowledge,

the financial

statements, and

other

financial

information

included

in this

report,

fairly

present in

all

material respects

the financial

condition, results

of operations

and cash

flows of

Lesaka as

of, and

for, the

periods presented

in this

report;

I am

responsible

for

establishing and

maintaining

disclosure controls

and

procedures (as

defined

in Exchange

Act Rules

13a-

15(e)

and 15d-15(e))

and

internal control

over financial

reporting (as

defined

in Exchange

Act Rules

13a-15(f)

and 15d-15(f))

for

Lesaka and have:

(a) Designed

such disclosure

controls and

procedures, or

caused such

disclosure controls

and procedures

to be

designed

under our supervision,

to ensure that material

information relating to

Lesaka, including

its consolidated subsidiaries,

is made known

to us by others within those entities, particularly during the period in which

this report is being prepared;

(b) Designed

such internal

control over

financial reporting,

or caused

such internal

control over financial

reporting to

designed under our supervision, 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;

(c)

Evaluated

the

effectiveness

Lesaka’s

disclosure

controls

and

procedures

and

presented

this

report

our

conclusions about the effectiveness of the disclosure

controls and procedures, as of the end of the period covered by

this report based

on such evaluation; and

(d) Disclosed in this report

any change in Lesaka’s

internal control over financial reporting

that occurred during Lesaka’s

most

recent

fiscal

quarter

that

has

materially

affected,

reasonably

likely

materially

affect,

Lesaka’s

internal

control

over

financial reporting; and

I have

disclosed, based

on our

most recent

evaluation of

internal control

over financial

reporting, to

Lesaka’s

auditors and

the

Audit Committee of Lesaka’s Board

of Directors (or persons performing the equivalent functions):

(a)

All

significant

deficiencies

and

material

weaknesses

the

design

operation

internal

control

over

financial

reporting

which

are

reasonably

likely

adversely

affect

Lesaka’s

ability

record,

process,

summarize

and

report

financial

information; and

(b)

Any

fraud,

whether

not

material,

that

involves

management

other

employees

who

have

significant

role

Lesaka’s internal control over financial

reporting.

Date: February 6, 2024

/s/ Chris G.B. Meyer

Chris G.B. Meyer

Group Chief Executive Officer

ex312

Exhibit 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

I, Naeem E. Kola, certify that:

I have reviewed this quarterly report on Form 10-Q of Lesaka Technologies,

Inc. (“Lesaka”) for the quarter ended December 31,

2023;

Based

knowledge,

this

report

does

not

contain

any

untrue

statement

material

fact

omit

state

material

fact

necessary to

make the

statements made,

in light

of the

circumstances under

which such

statements were

made, not

misleading with

respect to the period covered by this report;

Based on

my knowledge,

the financial

statements, and

other

financial

information

included

in this

report,

fairly

present in

all

material respects

the financial

condition, results

of operations

and cash

flows of

Lesaka as

of, and

for, the

periods presented

in this

report;

I am

responsible

for

establishing and

maintaining

disclosure controls

and

procedures (as

defined

in Exchange

Act Rules

13a-

15(e)

and 15d-15(e))

and

internal control

over financial

reporting (as

defined

in Exchange

Act Rules

13a-15(f)

and 15d-15(f))

for

Lesaka and have:

(a) Designed

such disclosure

controls and

procedures, or

caused such

disclosure controls

and procedures

to be

designed

under our supervision,

to ensure that material

information relating to

Lesaka, including

its consolidated subsidiaries,

is made known

to us by others within those entities, particularly during the period in which

this report is being prepared;

(b) Designed

such internal

control over

financial reporting,

or caused

such internal

control over financial

reporting to

designed under our supervision, 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;

(c)

Evaluated

the

effectiveness

Lesaka’s

disclosure

controls

and

procedures

and

presented

this

report

our

conclusions about the effectiveness of the disclosure

controls and procedures, as of the end of the period covered by

this report based

on such evaluation; and

(d) Disclosed in this report

any change in Lesaka’s

internal control over financial reporting

that occurred during Lesaka’s

most

recent

fiscal

quarter

that

has

materially

affected,

reasonably

likely

materially

affect,

Lesaka’s

internal

control

over

financial reporting; and

I have

disclosed, based

on our

most recent

evaluation of

internal control

over financial

reporting, to

Lesaka’s

auditors and

the

Audit Committee of Lesaka’s Board

of Directors (or persons performing the equivalent functions):

(a)

All

significant

deficiencies

and

material

weaknesses

the

design

operation

internal

control

over

financial

reporting

which

are

reasonably

likely

adversely

affect

Lesaka’s

ability

record,

process,

summarize

and

report

financial

information; and

(b)

Any

fraud,

whether

not

material,

that

involves

management

other

employees

who

have

significant

role

Lesaka’s internal control over financial

reporting.

Date: February 6, 2024

/s/ Naeem E. Kola

Naeem E. Kola

Group Chief Financial Officer

ex32

Exhibit 32

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

connection

with

the

quarterly

report

Lesaka

Technologies,

Inc.

(“Lesaka”)

Form 10-Q

for

the

quarter

ended

December 31, 2023,

as filed with the Securities and

Exchange Commission on

the date hereof (the

“Report”), Chris G.B. Meyer

and

Naeem E.

Kola, Group

Chief Executive

Officer and

Group Chief

Financial Officer,

respectively,

of Lesaka,

certify,

pursuant to

U.S.C. § 1350, that to their knowledge:

The

Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934,

as amended;

and

The information contained in the Report fairly presents, in all material respects, the financial

condition and results

of operations of Lesaka.

Date: February 6, 2024

/s/: Chris G.B. Meyer

Name: Chris G.B. Meyer

Group Chief Executive Officer

Date: February 6, 2024

/s/: Naeem E. Kola

Name: Naeem E. Kola

Group Chief Financial Officer