Lesaka Technologies - 10-Q quarterly report FY2024 Q3

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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

March 31, 2024

☐

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 May 6,

2024 (the latest

practicable date),

63,599,696

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 March 31, 2024 and June 30,

2023

Unaudited Condensed Consolidated Statements of Operations for the three and nine

months ended March 31, 2024 and 2023

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

three and nine months ended March 31, 2024 and 2023

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

nine months ended March 31, 2024 and 2023

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

months ended March 31, 2024 and 2023

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

Part I. Financial information

Item 1. Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Balance Sheets

March 31,

June 30,

2024

2023

(A)

(In thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

55,223

35,499

Restricted cash related to ATM funding

and credit facilities (Note 8)

4,383

23,133

Accounts receivable, net and other receivables (Note 2)

34,331

25,665

Finance loans receivable, net (Note 2)

40,754

36,744

Inventory (Note 3)

21,789

27,337

Total current assets before settlement assets

156,480

148,378

Settlement assets

29,300

15,258

Total current assets

185,780

163,636

PROPERTY,

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

40,276

June:

36,563

27,918

27,447

OPERATING LEASE RIGHT-OF-USE (Note 16)

5,533

4,731

EQUITY-ACCOUNTED INVESTMENTS

(Note 5)

159

3,171

GOODWILL (Note 6)

133,473

133,743

INTANGIBLE ASSETS, NET (Note 6)

110,798

121,597

DEFERRED INCOME TAXES

9,793

10,315

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

78,035

77,594

TOTAL ASSETS

551,489

542,234

LIABILITIES

CURRENT LIABILITIES

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

4,272

23,021

Short-term credit facilities (Note 8)

9,006

9,025

Accounts payable

19,018

12,380

Other payables (Note 9)

49,470

36,297

Operating lease liability - current (Note 16)

1,763

1,747

Current portion of long-term borrowings (Note 8)

3,269

3,663

Income taxes payable

1,565

1,005

Total current liabilities before settlement obligations

88,363

87,138

Settlement obligations

27,820

14,774

Total current liabilities

116,183

101,912

DEFERRED INCOME TAXES

43,878

46,840

OPERATING LEASE LIABILITY - LONG TERM (Note 16)

3,912

3,138

LONG-TERM BORROWINGS (Note 8)

132,398

129,455

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

2,602

1,982

TOTAL LIABILITIES

298,973

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 - March:

64,466,830

June:

63,640,246

PREFERRED STOCK

Authorized shares:

50,000,000

with $

0.001

par value;

Issued and outstanding shares, net of treasury:

March:

June:

ADDITIONAL PAID-IN-CAPITAL

341,287

335,696

TREASURY SHARES, AT

COST: March:

25,297,772

June:

25,244,286

(288,445)

(288,238)

ACCUMULATED OTHER

COMPREHENSIVE LOSS (Note 11)

(195,096)

(195,726)

RETAINED EARNINGS

315,258

327,663

TOTAL LESAKA EQUITY

173,087

179,478

NON-CONTROLLING INTEREST

TOTAL EQUITY

173,087

179,478

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY

551,489

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

Nine months ended

March 31,

2024

2023

2024

2023

(In thousands, except per share

data)

(In thousands, except per share

data)

REVENUE (Note 15)

138,194

133,968

418,176

394,822

EXPENSE

Cost of goods sold, IT processing, servicing and support

107,854

105,299

329,610

314,651

Selling, general and administration

23,124

24,547

67,146

70,995

Depreciation and amortization

5,791

5,975

17,460

17,892

Transaction costs related to Adumo acquisition (Note 20)

631

665

OPERATING INCOME (LOSS)

794

(1,853)

3,295

(8,716)

REVERSAL OF ALLOWANCE FOR

DOUBTFUL EMI DEBT

RECEIVABLE

250

(LOSS) GAIN ON DISPOSAL OF EQUITY-ACCOUNTED

INVESTMENT (Note 5)

(329)

(193)

INTEREST INCOME

628

469

1,562

1,269

INTEREST EXPENSE

4,581

4,984

14,312

13,408

LOSS BEFORE INCOME TAX EXPENSE (BENEFIT)

(3,159)

(6,697)

(9,205)

(21,048)

INCOME TAX EXPENSE (BENEFIT) (Note 18)

931

(860)

1,881

(465)

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-

ACCOUNTED INVESTMENTS

(4,090)

(5,837)

(11,086)

(20,583)

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS

(Note 5)

(1,319)

(2,582)

NET LOSS ATTRIBUTABLE

TO LESAKA

(4,047)

(5,820)

(12,405)

(23,165)

Net loss per share, in United States dollars

(Note 13):

Basic loss attributable to Lesaka shareholders

(0.06)

(0.09)

(0.20)

(0.37)

Diluted loss attributable to Lesaka shareholders

(0.06)

(0.09)

(0.20)

(0.37)

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

(In thousands)

Net loss

(4,047)

(5,820)

(12,405)

(23,165)

Other comprehensive (loss) income, net of taxes

Movement in foreign currency translation reserve

(5,718)

(9,775)

(450)

(19,713)

Release of foreign currency translation reserve related to

disposal of Finbond equity securities (Note 11)

243

1,543

342

Release of foreign currency translation reserve related to

liquidation of subsidiaries

(952)

Movement in foreign currency translation reserve related

to equity-accounted investments

216

489

2,657

Total other comprehensive

income (loss), net of

taxes

(5,718)

(9,316)

630

(16,714)

Comprehensive loss

(9,765)

(15,136)

(11,775)

(39,879)

Comprehensive loss attributable to Lesaka

(9,765)

(15,136)

(11,775)

(39,879)

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 March 31, 2023 (dollar amounts in thousands)

Balance – January 1, 2023

88,708,191

(24,956,854)

(287,244)

63,751,337

332,537

345,392

(176,238)

214,530

79,429

Shares repurchased (Note 12)

(37,945)

(178)

(37,945)

(178)

Restricted stock granted (Note 12)

11,806

Exercise of stock options

37,500

114

Stock-based compensation charge

(Note 12)

1,667

Reversal of stock-based compensation

charge (Note 12)

(18,798)

(23)

Stock-based compensation charge

related to equity-accounted investment

(Note 5)

(9)

Net loss

(5,820)

Other comprehensive income (Note

11)

(9,316)

Balance – March 31, 2023

88,738,699

(24,994,799)

(287,422)

63,743,900

334,286

339,572

(185,554)

200,965

79,429

For the nine months ended March 31, 2023 (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)

(103,507)

(471)

(103,507)

(471)

Restricted stock granted

1,394,558

Exercise of stock options

147,326

447

Stock-based compensation charge

(Note 12)

5,978

Reversal of stock-based compensation

charge (Note 12)

(18,798)

(23)

Stock-based compensation charge

related to equity-accounted investment

(7)

Net loss

(23,165)

Other comprehensive loss (Note 11)

(16,714)

Balance – March 31, 2023

88,738,699

(24,994,799)

(287,422)

63,743,900

334,286

339,572

(185,554)

200,965

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 March 31, 2024 (dollar amounts in thousands)

Balance – January 1, 2024

89,738,784

(25,295,261)

(288,436)

64,443,523

339,149

319,305

(189,378)

180,723

79,429

Shares repurchased (Note 12)

(2,511)

(9)

(2,511)

(9)

Restricted stock granted (Note 12)

65,525

Exercise of stock option (Note 12)

15,832

Stock-based compensation charge

(Note 12)

2,202

Reversal of stock-based compensation

charge (Note 12)

(55,539)

(112)

Stock-based compensation charge

related to equity-accounted investment

(Note 5)

Net loss

(4,047)

Other comprehensive loss (Note 11)

(5,718)

Balance – March 31, 2024

89,764,602

(25,297,772)

(288,445)

64,466,830

341,287

315,258

(195,096)

173,087

79,429

For the nine months ended March 31, 2024 (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)

(53,486)

(207)

(53,486)

(207)

Restricted stock granted

934,521

Exercise of stock option (Note 12)

23,217

Stock-based compensation charge

(Note 12)

5,782

Reversal of stock-based compensation

charge (Note 12)

(77,668)

(129)

Stock-based compensation charge

related to equity-accounted investment

(Note 5)

(133)

Net loss

(12,405)

Other comprehensive income (Note

11)

630

Balance – March 31, 2024

89,764,602

(25,297,772)

(288,445)

64,466,830

341,287

315,258

(195,096)

173,087

79,429

See Notes to Unaudited Condensed Consolidated Financial

Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

(In thousands)

Cash flows from operating activities

Net loss

(4,047)

(5,820)

(12,405)

(23,165)

Depreciation and amortization

5,791

5,975

17,460

17,892

Movement in allowance for doubtful accounts receivable

843

1,638

3,532

4,167

Fair value adjustment related to financial liabilities

(49)

(21)

(919)

123

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

329

193

(Earnings) Loss from equity-accounted investments

(43)

(17)

1,319

2,582

Movement in allowance for doubtful loans to equity-accounted investments

(250)

Profit on disposal of property, plant and equipment

(89)

(145)

(288)

(466)

Movement in interest payable

1,054

1,827

1,245

3,289

Facility fee amortized

198

381

643

Stock-based compensation charge (Note 12)

2,090

1,644

5,653

5,955

Dividends received from equity-accounted investments

Decrease (Increase) in accounts receivable

5,687

(7,620)

(9,815)

(8,601)

Increase in finance loans receivable

(3,720)

(2,507)

(7,097)

(11,318)

Decrease (Increase) in inventory

5,000

(297)

5,506

(1,769)

Increase in accounts payable and other payables

6,463

1,030

20,566

5,421

Increase in taxes payable

904

1,349

558

1,478

Decrease in deferred taxes

(810)

(2,670)

(2,404)

(5,792)

Net cash provided by (used in) operating activities

19,180

(5,107)

23,137

(9,347)

Cash flows from investing activities

Capital expenditures

(2,943)

(4,717)

(7,950)

(13,210)

Proceeds from disposal of property, plant and equipment

395

394

1,115

1,156

Acquisition of intangible assets

(54)

(125)

(236)

(245)

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

254

3,508

645

Loan to equity-accounted investment (Note 5)

(112)

Repayment of loans by equity-accounted investments

250

112

Net change in settlement assets

(3,088)

11,043

(14,368)

(972)

Net cash (used in) provided by investing activities

(5,690)

6,849

(17,681)

(12,626)

Cash flows from financing activities

Proceeds from bank overdraft (Note 8)

24,893

128,196

153,479

441,488

Repayment of bank overdraft (Note 8)

(43,380)

(135,986)

(172,221)

(448,288)

Long-term borrowings utilized (Note 8)

3,398

12,868

14,426

23,010

Repayment of long-term borrowings (Note 8)

(7,238)

(2,024)

(13,051)

(5,292)

Acquisition of treasury stock (Note 12)

(9)

(178)

(207)

(471)

Proceeds from exercise of stock options

114

447

Guarantee fee

(100)

Net change in settlement obligations

2,469

(10,761)

13,362

807

Net cash (used in) provided by financing activities

(19,819)

(7,771)

(4,141)

11,601

Effect of exchange rate changes on cash and cash equivalents

(1,903)

(3,475)

(341)

(7,156)

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

(8,232)

(9,504)

974

(17,528)

Cash, cash equivalents and restricted cash – beginning of period

67,838

96,776

58,632

104,800

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

59,606

87,272

59,606

87,272

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC

Notes to the Unaudited Condensed Consolidated Financial Statements

for the three and nine months ended March 31, 2024 and 2023

(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 nine

months ended March 31, 2024 and

2023, are not necessarily indicative of

the results for the full year.

The Company believes that the

disclosures are adequate to make the information presented not misleading.

These

unaudited

condensed

consolidated

financial

statements

should

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,

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.

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 March 31, 2024

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 March 31, 2024, and June 30, 2023, are presented in the

table below:

March 31,

June 30,

2024

2023

Accounts receivable, trade, net

12,970

11,037

Accounts receivable, trade, gross

13,055

11,546

Allowance for doubtful accounts receivable, end of period

509

Beginning of period

509

Reallocation to allowance for doubtful finance loans receivable

(418)

Reversed to statement of operations

(435)

(31)

Charged to statement of operations

828

2,005

Utilized

(819)

(1,645)

Foreign currency adjustment

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

net of

allowance: March 2024: $

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

21,361

14,628

Total accounts receivable,

net and other receivables

34,331

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 is 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 nine months ended December 31, 2023. The Company has not yet received the outstanding $

0.75

million related to the sale of the

3.0

million loan, and continues to engage with the purchaser to recover the outstanding

balance.

Investment in

7.625

% of Cedar Cellular

Investment 1 (RF) (Pty) Ltd

8.625

% notes represents the

investment in a note which was

due to mature in August 2022 and forms part of Cell C’s

capital structure. The carrying value as of each of March 31, 2024, and June

30, 2023, respectively was $

(zero).

Other receivables include 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 March 31, 2024:

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 March 31, 2024, and June 30, 2023, is presented in the table below:

March 31,

June 30,

2024

2023

Microlending finance loans receivable, net

25,246

20,605

Microlending finance loans receivable, gross

27,000

22,037

Allowance for doubtful finance loans receivable, end of period

1,754

1,432

Beginning of period

1,432

1,394

Reversed to statement of operations

(149)

Charged to statement of operations

1,692

1,452

Utilized

(1,217)

(1,214)

Foreign currency adjustment

(4)

(200)

Merchant finance loans receivable, net

15,508

16,139

Merchant finance loans receivable, gross

18,273

18,289

Allowance for doubtful finance loans receivable, end of period

2,765

2,150

Beginning of period

2,150

297

Reallocation from allowance for doubtful accounts receivable

418

Reversed to statement of operations

(201)

(1,268)

Charged to statement of operations

1,797

3,068

Utilized

(978)

Foreign currency adjustment

(3)

(365)

Total finance

loans receivable, net

40,754

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 $

15.2

million as

of March

31, 2024

have been

pledged

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 March 31, 2024, 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 March 31, 2024.

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

March

31, 2024,

was approximately

1.18

%. The

performing

component (that

is, outstanding

loan payments

not in

arrears), under-

performing

component (that

is, outstanding

loan payments

that are

in arrears)

and non-performing

component (that

is, outstanding

loans

for

which

payments

appeared

to have

ceased)

of the

book represents

approximately

% and

respectively,

the

outstanding lending book as of March 31, 2024.

Inventory

The Company’s inventory

comprised the following categories as of March 31, 2024, and June 30, 2023:

March 31,

June 30,

2024

2023

Raw materials

2,437

2,819

Work-in-progress

299

Finished goods

19,053

24,488

21,789

27,337

As of March 31,

2024 and June 30, 2023,

finished goods includes $

6.0

million and $

8.6

million, respectively,

of Cell C airtime

inventory

that was

previously classified

as finished

goods subject

to sale

restrictions.

In support

of Cell

C’s

liquidity position

and

pursuant

Cell

C’s

recapitalization

process,

the

Company

limited

the

resale

this

airtime

its

own

distribution

channels.

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 March 31,

2024 and June 30, 2023,

respectively,

and valued Cell C at $

0.0

(zero) and $

0.0

(zero) as of

March 31,

2024, 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

% to

% and

the

minority

discount

from

% to

% due

the reduction

in 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, 2027,

for the

March 31,

2024, 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 March 31, 2024

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 - March 31, 2024:

(1)

ZAR

7.4

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 March 31,

2024.

(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% decrease and 1.0%

increase

the

WACC

rate

and

the

EBITDA

margins

respectively

used

the

Cell

valuation

March

31,

2024,

all

amounts

translated at exchange rates applicable as of March 31, 2024:

Sensitivity for fair value of Cell C investment

1.0% increase

1.0% decrease

WACC

rate

553

EBITDA margin

1,241

The fair value of the

Cell C shares as of March

31, 2024, 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 March 31, 2024, and June 30, 2023.

The following table presents

the Company’s

assets measured at fair value

on a recurring basis as

of March 31, 2024,

according

to the fair value hierarchy:

Quoted Price in

Active Markets

for Identical

Assets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

Assets

Investment in Cell C

Related to insurance

business:

Cash, cash equivalents and

restricted cash (included

in other long-term assets)

213

Fixed maturity

investments (included in

cash and cash equivalents)

4,963

Total assets at fair value

5,176

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 in or out of Level

3 during the three and nine

months ended March 31, 2024 and 2023,

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 nine months ended March 31, 2024 and 2023.

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 nine months ended March 31, 2024:

Carrying value

Assets

Balance as of June 30, 2023

Foreign currency adjustment

(1)

Balance as of March 31, 2024

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

South African rand against the U.S. dollar on

the carrying value.

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 nine months ended March 31, 2023:

Carrying value

Assets

Balance as of June 30, 2022

Foreign currency adjustment

(1)

Balance as of March 31, 2023

(1) The

foreign currency

adjustment represents the

effects of

the fluctuations

of the South

African rand

against the U.S.

dollar

on the carrying value.

Assets measured at fair value on a nonrecurring basis

The Company

measures equity

investments without

readily determinable

fair values

at fair value

on a

nonrecurring basis.

The

fair values of

these investments

are determined

based on

valuation techniques

using the best

information available

and may include

quoted market prices, market comparables, and discounted cash flow

projections. An impairment charge is recorded when the cost

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

March 31,

2024,

and

June 30,

2023, was

follows:

March 31,

June 30,

2024

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) were used to repay capitalized interest under our borrowing facilities, refer

to Note 8.

Sale of Finbond shares during the three

and nine months ended March 31, 2023

The Company

sold

17,357,346

and

24,818,937

shares in

Finbond for

cash during

the three

and nine

months ended

March 31,

2023, respectively, and recorded a loss

of $

0.3

million and $

0.4

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

nine months

ended

March 31, 2024 and 2023:

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

Loss on disposal of Finbond shares:

Consideration received in cash

254

3,508

395

Less: carrying value of Finbond shares sold

(349)

(2,112)

(509)

Less: release of foreign currency translation reserve from

accumulated other comprehensive loss

(243)

(1,543)

(342)

Add: release of stock-based compensation charge related

equity-accounted investment

147

Loss on sale of Finbond shares

(329)

(443)

Finbond impairments recorded

during the nine months ended March 31, 2024

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,

2023. The Company recorded an impairment loss of $

1.2

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

difference between

the determined fair value

of the Company’s

interest in Finbond and

the Company’s

carrying value, including

the

foreign currency

translation reserve

(before the

impairment). The

Company used

the price of

ZAR

0.2911

referenced in

the August

2023 agreement referred to above to calculate the determined fair

value for Finbond.

Finbond impairments recorded

during the nine months ended March 31, 2023

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,

2022. The

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,

2022. The

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

closing

and

the

outstanding

balance

due

Etobicoke

was

expected

paid

follows: (i) $

0.25

million on September 30, 2023 (the amount was received in October 2023), and (ii) the remaining amount, of $

0.75

million in March 2024 (the amount has not been received as of March 31, 2024 (refer

to Note 2)). Both amounts were included in the

caption accounts

receivable, net and

other receivables in

the Company’s

unaudited condensed

consolidated balance

sheet as of

June

30,

2023.

The

Company

has

allocated

the

0.25

million

received

closing

the

sale

the

equity

interest

and

allocated

the

subsequent funds received first to the sale of the equity interest and then to the loans.

The Company

believed that

the fair

value of

the Carbon

shares provided

as security

was $

(zero), which

was in

line with

the

carrying value as

of June 30, 2022,

and created an allowance

for doubtful loans receivable

related to the $

1.0

million previously 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 nine months ended March 31, 2024:

Finbond

Other

(1)

Total

Investment in equity

Balance as of June 30, 2023

3,040

131

3,171

Stock-based compensation

Comprehensive income:

(956)

126

(830)

Other comprehensive income

489

Equity accounted (loss) earnings

(1,445)

126

(1,319)

Share of net (loss) earnings

(278)

126

(152)

Impairment

(1,167)

Dividends received

(95)

Disposal of Finbond shares

(2,096)

Foreign currency adjustment

(2)

(3)

(5)

Balance as of March 31, 2024

159

(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 March

31, 2024, and June 30, 2023:

March 31,

June 30,

2024

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)

213

257

Reinsurance assets under insurance contracts (Note 7)

1,525

1,040

Total other long-term

assets

78,035

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 March 31, 2024:

Cost basis

Unrealized

holding

Unrealized

holding

Carrying

gains

losses

value

Equity securities:

Investment in MobiKwik

26,993

49,304

76,297

Investment in CPS

Held to maturity:

Investment in Cedar Cellular notes (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 nine months ended March 31, 2024:

Gross value

Accumulated

impairment

Carrying

value

Balance as of June 30, 2023

152,619

(18,876)

133,743

Foreign currency adjustment

(1)

(297)

(270)

Balance as of March 31, 2024

152,322

(18,849)

133,473

(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)

(270)

Balance as of March 31, 2024

133,473

(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 March 31,

2024, and June

30,

2023:

As of March 31, 2024

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

24,927

(13,021)

11,906

24,978

(11,565)

13,413

Software, integrated

platform and unpatented

technology

110,914

(22,026)

88,888

110,906

(13,711)

97,195

FTS patent

2,030

(2,030)

2,034

(2,034)

Brands and trademarks

13,824

(3,820)

10,004

13,852

(2,863)

10,989

Total finite-lived

intangible

assets

151,695

(40,897)

110,798

151,770

(30,173)

121,597

Aggregate amortization

expense on the finite-lived

intangible assets for the

three months ended March

31, 2024 and 2023,

was

3.6

million and $

3.8

million, respectively.

Aggregate amortization

expense on the

finite-lived intangible assets

for the nine

months

ended March 31, 2024 and 2023, was $

10.8

million and $

11.6

million, respectively. Future estimated annual amortization expense for

the next five

fiscal years and

thereafter,

assuming exchange

rates that prevailed

on March

31, 2024,

is presented in

the table below.

Actual

amortization

expense

future

periods

could

differ

from

this

estimate

result

acquisitions,

changes

useful

lives,

exchange rate fluctuations and other relevant factors.

Fiscal 2024 (three months ended March 31, 2024)

3,594

Fiscal 2025

14,382

Fiscal 2026

14,382

Fiscal 2027

14,327

Fiscal 2028

14,295

Thereafter

49,818

Total future

estimated annual amortization expense

110,798

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

nine

months ended March 31, 2024:

Reinsurance

Assets

(1)

Insurance

contracts

(2)

Balance as of June 30, 2023

1,040

(1,600)

Increase in policy holder benefits under insurance contracts

809

(5,498)

Claims and decrease in policyholders’ benefits under insurance contracts

(319)

4,833

Foreign currency adjustment

(3)

(5)

Balance as of March 31, 2024

1,525

(2,257)

(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

nine months

ended March 31, 2024:

Assets

(1)

Investment

contracts

(2)

Balance as of June 30, 2023

257

(241)

Increase in policy holder benefits under investment contracts

(8)

Claims and decrease in policyholders’ benefits under investment contracts

(44)

Foreign currency adjustment

(3)

(8)

Balance as of March 31, 2024

213

(213)

(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,

March 31, 2024,

was

8.35

%. The prime rate,

the benchmark rate at

which private sector banks

lend to the public

in South Africa, on

March 31, 2024, 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

As of March 31, 2024, the Company had not utilized any of its ZAR

200

million Facility G revolving credit facility.

The interest

rate on this facility as of March 31, 2024, 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 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)

during the nine months ended March 31, 2024, to repay capitalized interest under

Facility G and Facility H.

Available short-term facility -

Facility E

As of March 31, 2024,

the aggregate amount of

the Company’s

short-term South African overdraft

facility with RMB was ZAR

0.9

billion ($

47.7

million). As of March

31, 2024, the Company

had utilized ZAR

0.1

billion ($

4.3

million) of this overdraft

facility.

This overdraft facility

may only

be used to

fund ATMs and therefore the

overdraft utilized and

converted to cash

to fund the

Company’s

ATMs

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

prime rate.

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

As of March 31, 2024, 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

154.6

million has been utilized).

CCC Revolving Credit Facility, comprising

long-term borrowings

As of March 31, 2024,

the amount of the CCC Revolving

Credit Facility was ZAR

300.0

million (of which ZAR

241.0

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

0.95

% per annum.

RMB facility, comprising indirect facilities

As of March 31, 2024,

the aggregate amount of

the Company’s

short-term South African indirect

credit facility with RMB was

ZAR

135.0

million ($

7.1

million),

which includes

facilities for

guarantees,

letters of

credit and

forward

exchange contracts.

As of

March 31, 2024 and June

30, 2023, the Company had

utilized ZAR

33.1

million ($

1.8

million) and ZAR

33.1

million ($

1.8

million),

respectively,

of its indirect

and derivative facilities

of ZAR

135.0

million (June 30,

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 March

31, 2024, the

aggregate amount of

the Company’s

short-term South African

credit facility

with Nedbank Limited

was ZAR

156.6

million ($

8.3

million). The credit facility represents indirect and derivative facilities

of up to ZAR

156.6

million ($

8.3

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

contracts.

As of March 31,

2024 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

March 31,

2024, and

the movement

in the

Company’s

short-

term facilities from as of June 30, 2023 to as of March 31, 2024:

RMB

Nedbank

Facility E

Indirect

Connect

Facilities

Total

Short-term facilities available as of

March 31, 2023

47,680

7,152

10,860

8,294

73,986

Overdraft

10,860

Overdraft restricted as to use for

ATM

funding only

47,680

Indirect and derivative facilities

7,152

8,294

15,446

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

153,477

153,479

Repaid

(172,219)

(2)

(172,221)

Foreign currency

adjustment

(1)

(7)

(19)

(26)

Balance as of March 31, 2024

4,272

9,006

13,278

Restricted as to use for ATM

funding only

4,272

No restrictions as to use

9,006

Interest rate as of March 31, 2024

(%)

(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)

(3)

Balance as of March 31, 2024

1,754

112

1,866

(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 March

31,

2024:

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

2,915

3,439

14,426

Facilities repaid

(7,929)

(1,968)

(3,154)

(13,051)

Non-refundable fees paid

Non-refundable fees amortized

309

381

Capitalized interest

5,420

Capitalized interest repaid

(4,238)

Foreign currency adjustment

(1)

(232)

(130)

(19)

(8)

(389)

Closing balance as of March 31,

2024

50,367

64,342

12,766

8,192

135,667

Included in current

3,269

Included in long-term

50,367

64,342

12,766

4,923

132,398

Unamortized fees

(292)

(185)

(31)

(508)

Due within 2 years

1,656

3,592

5,248

Due within 3 years

50,659

6,953

12,797

1,180

71,589

Due within 4 years

55,918

108

56,026

Due within 5 years

Interest rates as of March 31, 2024 (%):

13.10

12.10

12.70

12.50

Base rate (%)

8.35

11.75

Margin (%)

4.75

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 March 31,

2024 and 2023, was $

4.0

million and

3.0

million, respectively. Prepaid facility fees amortized

included in interest expense during the three months ended March 31, 2024

and 2023, 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

of $

0.4

million

and $

0.3

million,

respectively,

is included

in the

caption

cost of

goods

sold, IT

processing,

servicing

and

support on the condensed consolidated statement of operations for the

three months ended March 31, 2024 and 2023.

Interest

expense

incurred

during

the

nine

months

ended

March

31,

2024

and

2023,

was

12.1

million

and

5.7

million,

respectively.

Prepaid facility

fees amortized

included

in interest

expense during

the nine

months ended

March 31,

2024 and

2023,

respectively,

were

0.3

million

and

0.4

million,

respectively.

Interest

expense

incurred

under

the

Company’s

K2020

and

CCC

facilities relates to borrowings utilized to fund a portion of

the Company’s merchant finance loans receivable and this interest expense

of $

1.1

million and $

0.5

million, respectively,

is included

in the caption

cost of goods

sold, IT processing,

servicing and support

the condensed consolidated statement of operations for the nine months

ended March 31, 2024 and 2023.

Other payables

Summarized below is the breakdown of other payables as of March

31, 2024, and June 30, 2023:

March 31,

June 30,

2024

2023

Clearing accounts

(1)

9,405

4,016

Vendor

wallet balances

(1)

15,506

9,492

Accruals

8,988

7,078

Provisions

5,590

7,429

Value

-added tax payable

1,344

1,247

Payroll-related payables

828

1,038

Participating merchants' settlement obligation

Other

7,787

5,958

49,470

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 March 31,

2024. Clearing accounts

and vendor wallet

balances may fluctuate

due to day

(weekend or public

holiday) on which

the Company’s

quarter or year

end falls

because certain elements

of transactions

within these accounts

are not

settled over weekends

or public holidays.

Other includes deferred income, client deposits and other payables.

10.

Capital structure

Issue of shares to Connect sellers pursuant to April 2022 transaction

The total purchase consideration pursuant to the Connect

acquisition in April 2022 includes

3,185,079

shares of the Company’s

common stock. These shares of

common stock will be issued

three

equal tranches on each

of the first, second

and third anniversaries

of the April 14, 2022 closing. The Company legally issued

1,061,693

shares of its common stock, representing the second tranche, to

the Connect sellers

in April 2024,

and this had

no impact on

the number of

shares, net of

treasury, presented in the unaudited

condensed

consolidated

statement of

changes during

the nine

months ended

March 31,

2024 because

the

3,185,079

shares are

included in

the

number of shares, net of treasury,

as of June 30, 2023, and March 31, 2024.

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 nine months

ended March 31, 2024 and 2023, respectively,

and the number of

shares, net of treasury,

excluding non-vested equity shares that have not vested as of March 31, 2024 and 2023,

respectively:

March 31,

2024

2023

Number of shares, net of treasury:

Statement of changes in equity

64,466,830

63,743,900

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

3,131,469

3,194,463

Number of shares, net of treasury,

excluding non-vested equity shares that have not

vested

61,335,361

60,549,437

11.

Accumulated other comprehensive loss

The table

below presents

the change

in accumulated

other comprehensive

loss per

component

during the

three months

ended

March 31, 2024:

Three months ended

March 31, 2024

Accumulated

foreign

currency

translation

reserve

Total

Balance as of January 1, 2024

(189,378)

Movement in foreign currency translation reserve

(5,718)

Balance as of March 31, 2024

(195,096)

11.

Accumulated other comprehensive loss (continued)

The table

below presents

the change

in accumulated

other comprehensive

loss per

component during

the three

months ended

March 31, 2023:

Three months ended

March 31, 2023

Accumulated

foreign

currency

translation

reserve

Total

Balance as of January 1, 2023

(176,238)

Release of foreign currency translation reserve related to disposal of Finbond

equity securities

243

Movement in foreign currency translation reserve related to equity-accounted

investment

216

Movement in foreign currency translation reserve

(9,775)

Balance as of March 31, 2023

(185,554)

The

table below

presents

the change

accumulated

other comprehensive

loss per

component

during

the

nine

months

ended

March 31, 2024:

Nine months ended

March 31, 2024

Accumulate

d 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

(450)

Balance as of March 31, 2024

(195,096)

The

table below

presents

the change

accumulated

other comprehensive

loss per

component

during

the

nine

months

ended

March 31, 2023:

Nine months ended

March 31, 2023

Accumulate

d 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

342

Movement in foreign currency translation reserve related to equity

-accounted investment

2,657

Movement in foreign currency translation reserve

(19,713)

Balance as of March 31, 2023

(185,554)

The movement in the

foreign currency translation reserve represents

the impact of translation

of consolidated entities which have

a functional currency (which is primarily ZAR) to the Company’s

reporting currency, which is USD.

During

the

nine

months

ended

March

31,

2024,

the

Company

reclassified

losses

1.5

million

from

accumulated

other

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

Note 5). During

the three and nine

months ended March

31, 2023, the

Company reclassified losses of

0.2

million and $

0.3

million,

respectively, from

accumulated other comprehensive loss (accumulated foreign currency

translation reserve) to net loss related to the

disposal

Finbond.

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 during

the nine months

ended

March 31, 2024.

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 nine months

ended March 31, 2024 and 2023:

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

(23,217)

1.20

Forfeited

(195,739)

3.93

1.39

Outstanding - March 31, 2024

954,318

4.03

5.24

1.78

Outstanding - June 30, 2022

926,225

4.14

6.60

1,249

1.60

Exercised

(147,326)

3.04

190

Forfeited

(66,959)

3.66

Outstanding - March 31, 2023

711,940

4.41

5.42

670

1.64

The

Company

awarded

500,000

stock

options

Ali

Mazanderani,

the

Company’s

Executive

Chair,

during

the

nine

months

ended March 31, 2024. These option

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

months ended March 31, 2024, or during the three and nine months ended

December 31, 2022.

During the three

and nine months

ended March 31,

2024, the

Company received $

0.05

million and

0.07

million from the

exercise

15,832

and

23,217

stock options,

respectively.

During the

three and

nine months

ended March

31, 2023,

an employee

delivered

23,934

shares of the Company’s common stock to exercise

37,500

stock options with an aggregate strike price of $

0.1

million. These

23,934

shares of

common

stock have

been

included

the Company’s

treasury

stock. The

employee

also elected

to deliver

6,105

shares of the

Company’s common

stock to settle income

taxes arising upon exercise

of the stock options,

and these shares have

also

been included in the Company’s treasury stock. During the nine months ended March 31, 2023, the Company received approximately

0.4

million from the exercise of

147,326

stock options.

Employees

and a

non-employee director

forfeited an

aggregate of

8,893

and

195,739

stock options

during the

three and

nine

months ended March 31, 2024. Employees forfeited

66,959

during each of the three and nine months ended March 31, 2023.

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 nine months

ended March 31,

2024 and 2023:

Nine months ended

March 31,

2024

2023

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

March 31, 2024:

Number of

Weighted

average

exercise

price

($)

Weighted

average

remaining

contractual

term

(in years)

Aggregate

intrinsic

value

($’000)

Vested

and expecting to vest - March 31, 2024

954,318

4.03

5.24

These options have an exercise price range of $

3.01

to $

11.23

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

31, 2024:

Number of

Weighted

average

exercise

price

($)

Weighted

average

remaining

contractual

term

(in years)

Aggregate

intrinsic

value

($’000)

Exercisable - March 31, 2024

425,746

4.60

5.69

During the

three months

ended March

31, 2024

and 2023,

respectively,

28,569

and

35,649

stock options

became exercisable.

During the

nine months ended

March 31, 2024

and 2023, respectively,

116,063

and

327,965

stock options became

exercisable. The

Company issues new shares to satisfy stock option exercises.

12.

Stock-based compensation (continued)

Stock option and restricted stock activity (continued)

Restricted stock

The following table summarizes restricted stock activity for the nine

months ended March 31, 2024 and 2023:

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

934,521

3,622

Granted – October 2023

333,080

1,456

Granted – October 2023, with performance conditions

310,916

955

Granted – October 2023

225,000

983

Granted – January 2024

56,330

197

Granted – February 2024

9,195

Total vested

(339,803)

1,274

Vested

– July 2023

(78,800)

302

Vested

– November 2023

(109,833)

429

Vested

– December 2023

(67,073)

234

Vested

– February 2024

(14,811)

Vested

– March 2024

(69,286)

256

Forfeitures

(77,668)

278

Non-vested – March 31, 2024

3,131,469

13,434

Non-vested – June 30, 2022

2,385,267

11,879

Total Granted

1,062,153

4,287

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, with performance awards

257,868

596

Granted – January 2023

11,806

Total vested

(234,159)

1,098

Vested

– July 2022

(78,801)

410

Vested

– November 2022

(59,833)

250

Vested

– December 2022

(7,060)

Vested

– February 2023

(19,179)

Vested

– March 2023

(69,286)

326

Total granted and vested

- December 2022

Granted - December 2022

300,000

1,365

Vested

- December 2022

(300,000)

1,365

Forfeitures

(18,798)

9,235

Non-vested – March 31, 2023

3,194,463

14,822

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 January 2024,

the Company awarded

56,330

shares of restricted stock with time-based vesting conditions to an employee.

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.

In July 2022,

December 2022 and January

2023, the Company

awarded

32,582

430,399

, and

11,806

shares of restricted stock,

respectively,

employees

and

executive

officer

which

have

time-based

vesting

conditions.

December

2022,

the

Company

awarded

257,868

restricted

stock

executive

officers

which

contained

time

and

performance-based

(market

conditions

related to share price performance) vesting conditions. The Company also agreed to match, on a

one

-for-one basis, (1) an employee’s

purchase of

up to $

1.0

million worth of

the Company’s

shares of common

stock in open

market purchases,

and in August

2022, the

Company granted

179,498

shares of restricted stock to the employee, and (2) another employee’s purchase of up to

150,000

shares of

the Company’s common stock, and

in November 2022,

the Company granted

150,000

shares of restricted

stock to the

employee. These

shares of

restricted

stock contain

time-based

vesting

conditions. The

Company

awarded

300,000

shares to

an executive

officer

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

nine months

ended March

31, 2023,

respectively,

which were

ineligible for

transfer until

the earlier

of December

31, 2022,

or the

occurrence of the agreed event.

Vesting

In July 2023,

78,800

shares of restricted stock

granted to Mr.

Meyer vested. In November,

December 2023, February

2024 and

March 2024,

an aggregate

261,003

shares of

restricted stock

granted to

employees vested.

Certain employees

elected for

53,486

shares to be withheld to satisfy

the withholding tax liability on the vesting

of their shares. These

53,486

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, December 2022, February

2023 and March 2023, an

aggregate of

155,358

shares of

restricted stock granted

to employees vested.

Certain employees

elected for

38,008

shares to

be withheld

to satisfy the withholding tax liability on the vesting of these shares.

These

73,468

(

35,460

plus

38,008

) shares have been included in

our treasury shares.

Forfeitures

During the three and

nine months ended

March 31, 2024,

respectively, employees forfeited

55,539

and

77,668

shares of restricted

stock

following

their

termination

employment

with

the

Company.

During

the

three

and

nine

months

ended

March

31,

2023,

employees forfeited

18,798

shares of restricted stock following their termination of employment with the

Company.

Stock-based compensation charge and unrecognized compensation

cost

The Company recorded a stock-based

compensation charge, net during the three

months ended March 31,

2024 and 2023, of

2.1

million and $

1.6

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 March 31, 2024

Stock-based compensation charge

2,202

Reversal of stock compensation charge related to stock

options and restricted stock forfeited

(112)

Total - three months

ended March 31, 2024

2,090

Three months ended March 31, 2023

Stock-based compensation charge

1,667

Reversal of stock compensation charge related to stock

options and restricted stock forfeited

(23)

Total - three months

ended March 31, 2023

1,644

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 nine months ended March 31,

2024 and 2023, of $

5.7

million and $

6.0

million respectively, which

comprised:

Total

charge

Allocated to cost

of goods sold, IT

processing,

servicing and

support

Allocated to

selling, general

and

administration

Nine months ended March 31, 2024

Stock-based compensation charge

5,782

Reversal of stock compensation charge related to stock

options forfeited

(129)

Total - nine months

ended March 31, 2024

5,653

Nine months ended March 31, 2023

Stock-based compensation charge

5,978

Reversal of stock compensation charge related to stock

options and restricted stock forfeited

(23)

Total - nine months

ended March 31, 2023

5,955

The stock-based compensation charges

have been allocated to selling,

general and administration based

on the allocation of the

cash compensation paid to the relevant employees.

As of March 31, 2024,

the total unrecognized compensation

cost related to stock options

was $

0.6

million, which the Company

expects to recognize over

two years

. As of March

31, 2024, the total

unrecognized compensation cost related to

restricted stock awards

was $

5.9

million, which the Company expects to recognize over

two years

As of

March

31, 2024,

and June

30, 2023,

respectively,

the Company

recorded a

deferred tax

asset of

1.1

million

and $

0.6

million, related to the

stock-based compensation charge

recognized related to employees

of Lesaka. As of

March 31, 2024, and

June

30, 2023, respectively, the Company

recorded a valuation allowance of $

1.1

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 nine months ended March 31, 2024

and 2023. Accordingly,

the

two-class

method

presented

below

does

not

include

the

impact

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 nine

months ended

March 31,

2024 and

2023, 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

42,770

and

185,902

shares of common

stock from the

calculation of diluted

loss per share

during the

nine months ended

March 31,

2024 and 2023, 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.

13.

(Loss) Earnings per share (continued)

The vesting conditions for all awards made are discussed in Note 17 to the Company’s audited consolidated financial statements

included in its Annual Report on Form 10-K for the year ended June

30, 2023.

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

Nine months ended

March 31,

2024

2023

2024

2023

(in thousands except

percent and

per share data)

Numerator:

Net loss attributable to Lesaka

(4,047)

(5,820)

(12,405)

(23,165)

Undistributed loss

(4,047)

(5,820)

(12,405)

(23,165)

Percent allocated to common shareholders

(Calculation 1)

96%

95%

96%

Numerator for loss per share: basic and diluted

(3,868)

(5,605)

(11,816)

(22,130)

Denominator

Denominator for basic (loss) earnings per share:

weighted-average common shares outstanding

60,990

61,492

60,134

60,102

Effect of dilutive securities:

Denominator for diluted (loss) earnings

per share: adjusted weighted average

common shares outstanding and assuming

conversion

60,990

61,492

60,134

60,102

Loss per share:

Basic

(0.06)

(0.09)

(0.20)

(0.37)

Diluted

(0.06)

(0.09)

(0.20)

(0.37)

(Calculation 1)

Basic weighted-average common shares

outstanding (A)

60,990

61,492

60,134

60,102

Basic weighted-average common shares

outstanding and unvested restricted shares

expected to vest (B)

63,805

63,854

63,134

62,913

Percent allocated to common shareholders

(A) / (B)

96%

95%

96%

Options

to purchase

742,543

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 March

31, 2024,

but were not

included in

the computation

of diluted

(loss) earnings

per

because

the

options’

exercise

price

was greater

than

the

average

market

price

of the

Company’s

common

stock.

Options

purchase

293,949

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

March 31,

2023, respectively,

but were

not included

in the

computation of

diluted (loss)

earnings per

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 March 31, 2024.

14.

Supplemental cash flow information

The following table presents supplemental cash flow disclosures for the three and nine months ended March 31, 2024 and 2023:

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

Cash received from interest

624

465

1,551

1,260

Cash paid for interest

3,464

3,157

12,697

10,120

Cash paid for income taxes

436

3,498

3,495

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 March 31, 2024 and 2023, and June 30, 2023:

March 31,

2024

March 31,

2023

June 30, 2023

Cash and cash equivalents

55,223

49,423

35,499

Restricted cash

4,383

37,849

23,133

Cash, cash equivalents and restricted cash

59,606

87,272

58,632

Leases

The following table presents supplemental

cash flow disclosure related to leases

for the three and nine months

ended March 31,

2024 and 2023:

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

Cash paid for amounts included in the measurement of

lease liabilities

Operating cash flows from operating leases

853

695

2,225

2,256

Right-of-use assets obtained in exchange for lease

obligations

Operating leases

718

2,601

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 March 31, 2024:

Merchant

Consumer

Total

Processing fees

28,682

6,353

35,035

South Africa

27,155

6,353

33,508

Rest of world

1,527

Technology

products

1,795

1,803

South Africa

1,751

1,759

Rest of world

Telecom products

and services

87,585

87,668

South Africa

82,484

82,567

Rest of world

5,101

Lending revenue

6,229

Interest from customers

1,553

Insurance revenue

3,178

Account holder fees

1,560

Other

675

493

1,168

South Africa

622

493

1,115

Rest of world

Total revenue, derived

from the following geographic locations

120,290

17,904

138,194

South Africa

113,565

17,904

131,469

Rest of world

6,725

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 March 31, 2023:

Merchant

Consumer

Total

Processing fees

27,541

6,438

33,979

South Africa

26,240

6,438

32,678

Rest of world

1,301

Technology

products

4,322

298

4,620

South Africa

4,254

298

4,552

Rest of world

Telecom products

and services

83,420

83,427

South Africa

79,308

79,315

Rest of world

4,112

Lending revenue

5,052

Interest from customers

1,555

Insurance revenue

2,584

Account holder fees

1,419

Other

1,254

1,332

South Africa

1,205

1,283

Rest of world

Total revenue, derived

from the following geographic locations

118,092

15,876

133,968

South Africa

112,562

15,876

128,438

Rest of world

5,530

The

following

table

presents

the

Company’s

revenue

disaggregated

major

revenue

streams,

including

reconciliation

reportable segments for the nine months ended March 31, 2024:

Merchant

Consumer

Total

Processing fees

87,246

18,261

105,507

South Africa

82,903

18,261

101,164

Rest of world

4,343

Technology

products

7,035

7,074

South Africa

6,901

6,940

Rest of world

134

Telecom products

and services

266,857

176

267,033

South Africa

252,000

176

252,176

Rest of world

14,857

Lending revenue

17,188

Interest from customers

4,526

Insurance revenue

8,686

Account holder fees

4,430

Other

2,321

1,411

3,732

South Africa

2,169

1,411

3,580

Rest of world

152

Total revenue, derived

from the following geographic locations

367,985

50,191

418,176

South Africa

348,499

50,191

398,690

Rest of world

19,486

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 nine months ended March 31, 2023:

Merchant

Consumer

Total

Processing fees

83,121

19,696

102,817

South Africa

79,175

19,696

98,871

Rest of world

3,946

Technology

products

16,057

584

16,641

South Africa

15,871

584

16,455

Rest of world

186

Telecom products

and services

241,352

241,365

South Africa

228,860

228,873

Rest of world

12,492

Lending revenue

14,332

Interest from customers

4,254

Insurance revenue

7,118

Account holder fees

4,240

Other

3,724

331

4,055

South Africa

3,583

331

3,914

Rest of world

141

Total revenue, derived

from the following geographic locations

348,508

46,314

394,822

South Africa

331,743

46,314

378,057

Rest of world

16,765

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 March

31, 2024 and

2023 was $

0.9

million and $

0.7

million, respectively.

The Company’s operating

lease expense during the nine

months ended March 31, 2024 and 2023

was $

2.2

million and $

2.3

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

March 31, 2024 and 2023, was $

0.9

million and $

1.0

million, respectively. The Company’s

short-term lease expense during the nine

months ended March 31, 2024 and 2023, was $

2.8

million and $

3.0

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 March 31, 2024 and June 30, 2023:

March 31,

June 30,

2024

2023

Right of use assets obtained in exchange for lease obligations:

Weighted average

remaining lease term (years)

3.4

1.8

Weighted average

discount rate (percent)

10.1

9.7

16.

Leases (continued)

The maturities of the Company’s

operating lease liabilities as of March 31, 2024, are presented below:

Maturities of operating lease liabilities

Year

ended June 30,

2024 (excluding nine months to March 31, 2024)

639

2025

2,070

2026

1,543

2027

1,318

2028

1,173

Thereafter

120

Total undiscounted

operating lease liabilities

6,863

Less imputed interest

1,188

Total operating lease liabilities,

included in

5,675

Operating lease liability - current

1,763

Operating lease liability - long-term

3,912

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 March 31,

2024 and 2023, is as follows:

Revenue

Reportable

Segment

Inter-

segment

From

external

customers

Merchant

121,013

723

120,290

Consumer

17,904

Total for the three

months ended March 31, 2024

138,917

723

138,194

Merchant

118,092

Consumer

15,876

Total for the three

months ended March 31, 2023

133,968

17.

Operating segments (continued)

The reconciliation of the reportable segment’s revenue to revenue from external customers for the nine months ended March 31,

2024 and 2023, is as follows:

Revenue

Reportable

Segment

Inter-

segment

From

external

customers

Merchant

370,244

2,259

367,985

Consumer

50,191

Total for the nine

months ended March 31, 2024

420,435

2,259

418,176

Merchant

348,508

Consumer

46,314

Total for the nine

months ended March 31, 2023

394,822

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 expenses

(“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 (earnings) 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

acquisitions and transactions consummated or ultimately

not pursued. Unrealized loss FV for currency adjustments

represents foreign

currency mark-to-market adjustments

on certain intercompany

accounts. The Lease adjustments reflect

lease expenses and the Stock-

based compensation

adjustments reflect

stock-based

compensation expense

and are

both excluded

from the

calculation of

Segment

Adjusted EBITDA

and are

therefore reported

as reconciling items

to reconcile

the reportable

segments’ Segment

Adjusted EBITDA

to the Company’s loss before

income tax expense.

The reconciliation of the reportable segments’ measure of profit or loss to loss before income taxes for the three and

nine months

ended March 31, 2024 and 2023, is as follows:

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

Reportable segments' measure of profit or loss

12,752

9,939

34,934

26,136

Operating loss: Group costs

(2,199)

(2,293)

(6,032)

(6,849)

Once-off costs

(907)

(1,141)

(169)

(1,858)

Unrealized Loss FV for currency adjustments

(121)

(43)

(101)

(43)

Lease adjustments

(850)

(696)

(2,224)

(2,255)

Stock-based compensation charge adjustments

(2,090)

(1,644)

(5,653)

(5,955)

Depreciation and amortization

(5,791)

(5,975)

(17,460)

(17,892)

Reversal of allowance of EMI doubtful debt

250

Gain on disposal of equity-accounted investments

(329)

(193)

Interest income

628

469

1,562

1,269

Interest expense

(4,581)

(4,984)

(14,312)

(13,408)

Loss before income tax expense

(3,159)

(6,697)

(9,205)

(21,048)

17.

Operating segments (continued)

The following

tables summarize

supplemental

segment information

for the

three and

nine months

ended March

31, 2024

and

2023:

Three months ended

Nine months ended

March 31,

2024

2023

2024

2023

Revenues

Merchant

121,013

118,092

370,244

348,508

Consumer

17,904

15,876

50,191

46,314

Total reportable segment

revenue

138,917

133,968

420,435

394,822

Segment Adjusted EBITDA

Merchant

(1)

8,394

8,290

25,148

25,303

Consumer

(1)

4,358

1,649

9,786

833

Total Segment Adjusted

EBITDA

12,752

9,939

34,934

26,136

Depreciation and amortization

Merchant

2,050

1,898

6,169

5,522

Consumer

179

288

527

811

Subtotal: Operating segments

2,229

2,186

6,696

6,333

Group costs

3,562

3,789

10,764

11,559

Total

5,791

5,975

17,460

17,892

Expenditures for long-lived assets

Merchant

2,797

3,020

7,638

10,545

Consumer

146

1,697

312

2,665

Subtotal: Operating segments

2,943

4,717

7,950

13,210

Group costs

Total

2,943

4,717

7,950

13,210

(1)

Segment

Adjusted

EBITDA

for

Consumer

includes

retrenchment

costs of

0.01

million

(ZAR

0.1

million)

for

the

three

months

ended

March

31,

2024.

Segment

Adjusted

EBITDA

for

Merchant

includes

retrenchment

costs

0.2

million

(ZAR

4.7

million) and Consumer includes retrenchment costs of $

0.2

million (ZAR

2.9

million) for the nine months ended March 31, 2024.

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

nine months ended March 31,

2024, the Company’s effective tax rate was

impacted by the tax expense

recorded

the

Company’s

profitable

South

African

operations,

non-deductible

expenses,

the

on-going

losses

incurred

certain

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 nine months

ended March 31,

2023, the Company’s effective tax

rate was impacted

by a reduction

in the

enacted

South African corporate income

tax rate from

% to

% from January

2023 (but backdated

to July 1,

2022), the tax

expense recorded

the

Company’s

profitable

South

African

operations,

non-deductible

expenses,

the

on-going

losses

incurred

certain

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

March

31,

2024,

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 March 31, 2024, the Company’s

South African subsidiaries are no longer

subject to income tax

examination by the South

African Revenue Service for

periods before June 30, 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

March 31,

2024) thereby

utilizing part

of the

Company’s

short-term

facilities. The

Company

pays commission

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

March 31,

2024) thereby

utilizing part

of the

Company’s

short-term

facilities. The

Company

pays commission

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

March 31,

2024. 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 March 31, 2024). As

discussed in Note 8, the

Company has ceded and

pledged certain bank accounts

Nedbank

as security

for

the guarantees

issued

by them

with

aggregate

value

of ZAR

2.1

million

0.1

million,

translated

exchange rates applicable as

of March 31, 2024). The guarantees

have reduced the amount available

under its indirect and derivative

facilities in the Company’s short-term

credit facilities described in Note 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.

20.

Subsequent events

April 2024

acquisition of Touchsides

In February 2024, the Company

announced that it had entered into a

Sale and Purchase Agreement with Heineken

International

B.V. to acquire all of the outstanding equity of Touchsides (Pty) Ltd (“Touchsides”). The transaction was subject to

customary closing

conditions

and

the

final

conditions

were

satisfied

April

2024.

The

transaction

closed

April

30,

2024.

The

total

purchase

consideration was

ZAR

42.4

million ($

2.3

million, translated

at exchange

rates applicable

as of

April 30,

2024). The

Company has

commenced the purchase price allocation

related to this transaction

however the process had

not been completed as

of the date of

filing

this Quarterly

Report

on Form

10-Q

May 8,

2024.

The Company

expects

include its

preliminary

allocation

of the

purchase

consideration related

to this acquisition

in its audited

financial statements to

be included

in its Annual

Report on Form

10-K for

the

year ended June 30, 2024.

The Company incurred transaction

related expenditures of $

0.1

million (ZAR

1.9

million) during the nine

months to March 31, 2024, related to the acquisition of Touchsides.

These transaction related expenditures are included in the caption

selling, general and administration in the Company’s unaudited condensed

consolidated statements of operations.

The Company does

not expect to incur any significant expenditure related to the transaction

during the three months ended June 30, 2024.

20.

Subsequent events (continued)

April 2024

acquisition of Touchsides

(continued)

Touchsides

is a leading data

analytics and insights company,

and highly complementary

with the Company’s

Kazang business.

The acquisition

significantly expands

Kazang’s

footprint in

the informal

market by

adding an

established solution

that has

a strong

presence in

the licensed

tavern market.

Touchsides

has an

installed base

of over

10,000

active POS terminals

across South

Africa’s

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

licensed

tavern

outlets,

enabling

the

measurement

sales

activity

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.

Touchsides has been

allocated to our Merchant operating segment.

May 2024

offer to acquire Adumo

On May 7, 2024,

the Company entered into

a Sale and Purchase Agreement

(the “Sale Agreement”) with

Lesaka SA”), and the

Sellers (as defined

in the Sale

Agreement). Pursuant

to the Sale

Agreement and

subject to its

terms and conditions,

Lesaka, through

its subsidiary, Lesaka SA, agreed to

acquire, and the Sellers agreed to sell, all of the outstanding equity interests and certain claims in

the Adumo (RF) Proprietary Limited (“Adumo”).

The

purchase

consideration

will

settled

through

the

combination

issuance

17,279,803

the

Company’s

common stock and

a ZAR

232

million ($

12.5

million, translated at

the prevailing rate

of $1: ZAR 18.5

as of May 7,

2024) payment

in cash. The share issuance was based off of the Base Purchase

Consideration, as defined in the Sale Agreement, of ZAR

1.59

billion

85.9

million), less the ZAR

232

million cash payment, implying a value per

share of $

4.25

((ZAR

1.59

billion – ZAR

0.232

billion)/

17,279,803

/ ZAR 18.5).

The Sale Agreement includes customary covenants from the Sellers, including

(i) to conduct the business in the ordinary course

during the period between

the execution of the Sale

Agreement and the closing

of the transactions contemplated

thereby, and

(ii) not

to engage in certain kinds of transactions during such period.

The closing of the transaction is subject to customary closing conditions, including (i) approval from the competition authorities

of South Africa and Namibia; (ii) exchange control approval from the financial surveillance department of the South African Reserve

Bank;

(iii)

the

Company

obtaining

confirmation

from

RMB

that

has

sufficient

funds

settle

the

cash

portion

the

purchase

consideration;

(iv)

approval

Adumo

shareholders

(including

preference

shareholders)

with

respect

entering

into

and

implementation

of the

Sale

Agreement,

and

all other

agreements

and

transactions

contemplated

in the

Sale

Agreement

by June

2024; (v)

obtaining the

consent of

Adumo’s

lender regarding

Adumo entering

into and

implementing the

Sale Agreement,

and all

other agreements and transactions contemplated in the Sale Agreement by June 5, 2024, (vi) the release of certain Seller’s shares held

as security by such bank; (vi) obtaining

the consent of the lender of one

of Adumo’s shareholders

regarding Adumo entering into the

transaction by June 6, 2024; (vii) the Company obtaining all necessary regulatory and shareholder approval to issue the Consideration

the

Sellers;

(viii)

before

June

2024,

the

Company

signing

written

addendum

the

Policy

Agreement

with

International Finance Corporation that provides for

the inclusion of the

Consideration Shares attributable to certain

Seller shareholders

in the definition of “Put Shares” under the Policy Agreement, and related changes;

and (ix) obtaining certain third-party consents.

In addition, the closing of the transaction is subject to either: (i) on or before July 6, 2024, the direct and/or indirect shareholders

of one of the

Sellers providing written

unconditional undertakings to

purchase all of certain

of its shareholders

pro rata

entitlements

to the Consideration

Shares in consideration

for an aggregate

amount equal

to ZAR

285,772,238

14.0

million) (the “Replacement

Cash Component”); or

(ii) if the foregoing

does not occur

in a timely manner

then, on or before

October 31, 2024,

Lesaka SA (or

nominee) will enter into a written unconditional agreement with Crossfin SPV in

relation to the acquisition of all

of such entitlements

in respect of

all such Consideration

Shares (other than

those which are

required to be

liquidated in order to

satisfy cash tax

obligations),

provided that the

aggregate consideration for

such entitlements will

be equal to

the Replacement Cash

Component and provided

further

that (i) Lesaka SA (or its nominee) has provided a bank guarantee from RMB or other South African registered

bank in respect of the

settlement of

such aggregate

consideration and

(ii) that,

to the

extent applicable,

Lesaka SA’s

nominee has,

prior to

the conclusion

thereof, obtained all approvals as may be required to conclude and implement

such agreement.

20.

Subsequent events (continued)

May 2024

offer to acquire Adumo (continued)

The

Company

has

agreed

to file

resale

registration

statement

with

the

United

States

Securities

and

Exchange

Commission

(“SEC”) covering

the resale

of the

Consideration

Shares by

the Sellers

following

the closing

of the

transaction. The

Company has

undertaken to use its commercially reasonable efforts to

have the resale registration statement declared effective by

the SEC following

its filing.

The Company incurred transaction-related expenditures of $

0.6

million and $

0.7

million during the three and nine months ended

March 31,

2024, related

to the

process to

acquire Adumo.

The Company

expects to

incur a further

2.2

million in

transaction costs

over the remainder of the 2024 calendar year.

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 we

have filed with

the United States

Securities and

Exchange Commission

(“SEC”) 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

As of the date hereof, we have been successfully executing on our strategic objectives in building a leading fintech platform and

consolidating Southern

African fintech. We

experienced continued improvement

in our financial

performance in the

third quarter of

fiscal 2024 with year-on-year revenue and profitability

improvements in both Merchant and Consumer divisions.

Operating income of $0.8 million (ZAR 15.0 million) improved

145% in ZAR, compared with an operating loss of $1.9 million

(ZAR 33.2 million) during the third quarter of fiscal 2023.

Group

Adjusted

EBITDA, a

non-GAAP

measure,

of $9.7

million

(ZAR 183.3

million) this

quarter,

a 47%

increase

ZAR,

compared to $7.0 million (ZAR 124.6 million) in the third

quarter of fiscal 2023. The continued resilience of our business model

in a

challenging environment for our merchant and consumer customers demonstrates

the value our customers 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 micro-

merchant sector 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 micro-merchants,

with a 12% year-on-year

growth in the number of devices deployed.

had approximately 80,250

devices deployed as of

March 31, 2024, compared

to approximately 71,800 devices

one year ago, and approximately

79,000 devices at the

end of the second quarter

of fiscal 2024. 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.

previously

communicated,

our

product

mix

for

VAS

sales

has

changed

with

low-margin

money

transfers

reducing

significantly

due

change

the

regulatory

environment

impacting

the

industry

as a

whole.

Money

transfers

currently

comprise approximately

5% of

VAS

throughput, compared

to approximately

25% a

year ago.

This change has had limited impact on profitability as money transfers are

a very low margin product.

VAS

throughput, excluding

the low-margin

money transfers, increased

36% year-on-year

and was flat

quarter-on-

quarter,

expected,

which

due

seasonality,

with

second

quarter

our

fiscal

year

being

traditionally

our

strongest quarter due to higher activity over the year-end festive

season benefitting certain product lines.

Whilst we saw

growth in

our traditional VAS

products of

electricity,

airtime and gaming,

much of the

growth has

been driven by the uptake of our supplier payments platform by micro-merchants.

As we bring more suppliers onto

our

platform,

should

see

these

volumes

continue

growing.

Supplier

payment

throughput

volumes

increased

approximately 100%

in the

third quarter

compared to

a year ago

and now

accounts for

approximately 35%

of our

VAS

throughput volumes, compared to approximately 20% a year ago.

●

We provide

card acquiring solutions to

micro-merchants via Kazang Pay

and to small and medium

merchants through Card

Connect. Card-enabled POS devices increased to

approximately 50,200 as of March 31,

2024, a year-on-year growth of 21%.

Throughput on deployed devices increased 21% year-on-year

to R3.9 billion.

●

Our

current

Merchant

Credit

offering

through

Capital

Connect

the

SME

market.

Kazang

Pay

Advance

the

micro-

merchant sector remains

suspended as we

reported in the

previous quarter. Capital Connect

disbursed ZAR 219

million during

this quarter, compared to ZAR 194 million

in the comparable period last year, representing a 13% increase.

●

Our digital cash management

offerings, Cash Connect and Kazang

Vaults, effectively “puts the bank” in approximately 4,460

merchants’ stores, compared to approximately 4,370 merchants’ stores a year ago. We provide robust cash vaults in the

SME

sector and

is building

a presence

in the

micro-merchant sector,

which enables

our merchant

customer base

to significantly

mitigate their operational risks pertaining to cash management and

security.

Acquisition of Touchsides

In February 2024 we announced the

acquisition of Touchsides

(Pty) Ltd (“Touchsides”).

With closing conditions

now satisfied,

the deal closed

on April 30,

2024. Touchsides

is a leading

data analytics and

insights company,

and highly complementary

with our

Kazang business.

The acquisition significantly

expands Kazang’s

footprint in the informal

market by adding an

established solution

that has a strong presence in

the licensed tavern market. Touchsides

has an installed base of over 10,000

active POS terminals across

South Africa’s 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

a range

of clients

including fast-moving

consumer goods

companies, retailers,

wholesalers, route-to-market

suppliers, and

financiers. Touchsides

has

been allocated to our Merchant operating segment.

Acquisition of Adumo

In May 2024

we announced the

acquisition of Adumo

RF (Pty) Ltd, subject

to shareholder and

regulatory approvals. Adumo’s

serves approximately 23,000

active merchants. Its primary

operations include card acquiring,

integrated payments and reconciliation

services processing more than ZAR 24 billion in throughput per year. The company’s corporate card services cover over 245,000 card

holders supporting payroll, incentives, rewards, and expense management. Adumo ISV,

also known as GAAP,

is the largest POS and

Software-as-a-Service solutions provider to the hospitality sector in

Southern Africa.

The acquisition

continues Lesaka’s

consolidation in

the Southern

African fintech

sector.

The Lesaka

ecosystem will

serve 1.7

million active consumers, 119,000

merchants, and processes over ZAR

250 billion in throughput (cash, card

and VAS)

per year. The

Group will have over 3,300 employees operating on the

ground in 5 countries: South Africa, Namibia, Botswana, Zambia,

and Kenya.

The acquisition enhances Lesaka's strengths in both the consumer

and merchant markets.

The purchase

consideration will

be settled

through the

combination of

an issuance

of 17,279,803

shares of

our common

stock

and a ZAR 232 million ($12.5

million, translated at the prevailing rate of

$1: ZAR 18.5 as of

May 6, 2024) payment in cash.

The share

issuance

was

based

off

the

Base

Purchase

Consideration,

defined

the

transaction

agreement,

ZAR

1.59

billion

($85.9

million),

less

the

ZAR

232

million

cash

payment,

implying

value

per

$4.25

((ZAR

1.59

billion

–

ZAR

0.232

billion)/

17,279,803

/ ZAR

18.5).

Adumo

shareholders

include Apis

Growth

Fund I,

private

equity fund

managed

by Apis

Partners

LLP

(“Apis”), African

Rainbow Capital

(“ARC”), the

largest shareholder

of Crossfin

Holdings (RF)

Pty Ltd

(“Crossfin”), as

well as

the

International Finance Corporation and Adumo management.

The transaction is expected

to close in the

third calendar quarter of

2024 and is subject

to shareholder and regulatory

approvals

and satisfaction of customary closing conditions.

Consumer Division

continue

to deliver

against our

strategic focus

areas underpinning

our growth

strategy in

our Consumer

Division and

our

mission

improve

the

lives

South

Africa’s

grant

beneficiaries.

Progress

made

these

levers:

(i)

growing

active

EasyPay

Everywhere

(“EPE”)

account

numbers,

(ii)

increasing

average

revenue

per

user

(“ARPU”)

through

cross-selling

and

(iii)

cost

optimization,

and

(iv)

enhancing

our

product

and

service

offering,

resulted

revenue

and

profitability

growth

the

Consumer

Division in third quarter of fiscal 2024.

The progress on our key initiatives is as follows:

●

Driving customer acquisition

Gross EPE account activations,

for the permanent base, during

our current quarter showed significant

year-on-year

improvement due to various strategic

initiatives. We achieved approximately 63,000 gross account activations in

the

third quarter, compared

to approximately 38,000 in the

third quarter of fiscal 2023.

After accounting for churn, net

active account growth for the quarter

was approximately 28,000 accounts, compared to approximately 1,000

in third

quarter of fiscal 2023.

Our total

active EPE

transactional account

base stood

at approximately

1.46 million

at the end

of March

2024, of

which approximately

1.28 million

(or approximately

87%) 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 year 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.

●

Progress on cross

selling

EasyPay Loans

originated

approximately 266,000

loans during

the quarter

with our

consumer loan

book, before

allowances,

increasing 28% to ZAR 509 million as at March 31, 2024, compared to ZAR 397

million as of March 31, 2023.

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,

growth

EPE

bank

account

customer

base

and

improved

cross-selling

capabilities.

The

loan

conversion

rate

continues

improve

following

the

implementation

number

targeted

consumer

lending campaigns and encouraging results from our digital channels 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 and

second 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 March

31, 2024, compared to

approximately 28% as of March

31, 2023. Approximately 46,000

new policies were written in the quarter, compared to approximately

36,000 in the comparable period in

fiscal 2023.

The total

number of

active policies

has grown

by 34%

to approximately

414,000 policies

as of

March 31,

2024,

compared to March 31, 2023.

ARPU

ARPU for

our permanent

client base

has increased

to approximately

ZAR 90

for the

third quarter

of fiscal

2024,

from approximately ZAR 78 in the third quarter of fiscal 2023.

Leadership Changes

On February 29, 2024 Mr. Chris Meyer completed his tenure

as Group CEO of Lesaka, a

position he held since July 1,

2021. Mr.

Ali Mazanderani

took

over

the majority

Mr.

Meyer’s

responsibilities

as Executive

Chairman

of Lesaka

March 1,

2024.

Ali

Mazanderani has been

integral to the

development of Lesaka’s

strategy and has

been a Non-Executive

Director since

2020. As part

of the

change in

leadership, Mr.

Kuben Pillay,

step down

as our

Chairman on

January 31,

2024, and

commenced his

role as

Lead

Independent Director of Lesaka on February 1, 2024.

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.

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 March 31, 2024

Refer

Note

our

unaudited

condensed

consolidated

financial

statements

for

full

description

recent

accounting

pronouncements not yet adopted as

of March 31, 2024, including

the expected dates of adoption

and effects on 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

Nine months ended

Year

ended

March 31,

June 30,

2024

2023

2024

2023

ZAR : $ average exchange rate

18.7313

17.7506

18.7536

17.4641

17.7641

Highest ZAR : $ rate during period

19.4568

18.6008

19.4568

18.6008

19.7558

Lowest ZAR : $ rate during period

18.2076

16.7978

17.6278

16.2035

16.2034

Rate at end of period

18.8760

17.7936

18.8760

17.7936

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 March 31, 2024 and 2023, vary slightly

from the averages shown in the table

above.

Except

described

below,

the

translation

rates

use

presenting

our

results

operations

are

the

rates

shown

the

following table:

Three months ended

Nine months ended

Year

ended

Table 2

March 31,

June 30,

2024

2023

2024

2023

Income and expense items: $1 = ZAR

18.8780

17.9318

18.7571

17.4037

17.9400

Balance sheet items: $1 = ZAR

18.8760

17.7936

18.8760

17.7936

18.8376

have translated the

results of operations and

operating segment information

for the three and

nine months ended March

31,

2024, provided in

the tables below using

the actual average exchange

rates per month (i.e.

for each of

January 2024, February

2024,

and March 2024

for the third

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.

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

our

external

financial

reporting

and

leads

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

was our

Group Chief Executive

Officer until February 29,

2024 and is

our Executive Chairman

from March 1,

2024, and each

of them evaluates

segment performance based

on segment earnings

before interest, tax,

depreciation and amortization

(“EBITDA”), adjusted for

items

mentioned in

the next

sentence (“Segment

Adjusted EBITDA”)

for each

operating segment.

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 expenses (“Lease expenses”), 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 expenses reflect lease

expenses (refer to Note

16 to

our

unaudited

condensed

consolidated

financial

statements)

and

the

Stock-based

compensation

adjustments

reflect

stock-based

compensation

expense

and

are

both

excluded

from

the

calculation

Segment

Adjusted

EBITDA

and

are

therefore

reported

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

Lease expenses

and group

costs. Refer

also

“Results of 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.

Third quarter of fiscal 2024 compared to third quarter

of fiscal 2023

The following

factors had

a significant

impact on

our results

of operations

during the

third quarter

of fiscal

2024 as

compared

with the same period in the prior year:

●

Higher revenue:

Our revenues

increased 9%

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

continues to improve

as a result of

the increase in

the trading activity

as noted above off of a stable selling, general and administration base;

●

Lower net

interest charge:

The net

interest charge

decreased to

$4.0 million

(ZAR 74.6

million) from

$4.5 million

(ZAR

81.0 million) primarily due to higher interest rates; and

●

Foreign exchange

movements:

The U.S.

dollar

was 5%

stronger against

the ZAR

during

the third

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 March 31,

2024

2023

$ ’000

change

Revenue

138,194

133,968

Cost of goods sold, IT processing, servicing and support

107,854

105,299

Selling, general and administration

23,124

24,547

(6%)

Depreciation and amortization

5,791

5,975

(3%)

Transaction costs related to Adumo acquisition

631

Operating income (loss)

794

(1,853)

Loss on disposal of equity-accounted investments

329

Interest income

628

469

34%

Interest expense

4,581

4,984

(8%)

Loss before income tax expense (benefit)

(3,159)

(6,697)

(53%)

Income tax expense (benefit)

931

(860)

Net loss before earnings from equity-accounted investments

(4,090)

(5,837)

(30%)

Earnings from equity-accounted investments

153%

Net loss attributable to us

(4,047)

(5,820)

(30%)

Table 4

In South African Rand

Three months ended March 31,

2024

2023

ZAR ’000

change

Revenue

2,609,913

2,402,288

Cost of goods sold, IT processing, servicing and support

2,036,881

1,888,201

Selling, general and administration

436,746

440,172

(1%)

Depreciation and amortization

109,379

107,143

Transaction costs related to Adumo acquisition

11,915

Operating income (loss)

14,992

(33,228)

Loss on disposal of equity-accounted investments

5,900

Interest income

11,861

8,410

41%

Interest expense

86,504

89,372

(3%)

Loss before income tax expense (benefit)

(59,651)

(120,090)

(50%)

Income tax expense (benefit)

17,575

(15,422)

Net loss before earnings from equity-accounted investments

(77,226)

(104,668)

(26%)

Earnings from equity-accounted investments

811

305

166%

Net loss attributable to us

(76,415)

(104,363)

(27%)

Revenue increased

by $4.2

million (ZAR

0.2 billion),

or 3.2% (in

ZAR, 8.6%),

primarily due

to the

increase in

the number

low-margin

prepaid

airtime

vouchers

sold

and

increase

volume

other

value-added

services

provided,

well

higher

transaction volumes processed, insurance premiums collected

and lending revenues following an increase in loan originations,

which

was partially offset

by a lower

number of

hardware sales in

our POS hardware

distribution business

given the

lumpy nature of

bulk

sales. Refer to discussion above at “—Recent Developments”

for a description of key trends impacting our revenue this quarter.

Cost of goods

sold, IT processing, servicing

and support increased

by $2.6 million

(ZAR 0.1 billion), or

2.4% (in ZAR, 7.9%),

primarily due to

the increase in low

margin prepaid airtime

sales and higher

insurance-related claims, which

were partially offset

the lower cost of goods sold related to fewer hardware sales.

Selling, general and administration expenses decreased

by $1.4 million (ZAR 3.4 million),

or 5.8% (in ZAR 0.8%). The modest

decrease in

ZAR was

primarily due

to lower

general and

administration expenses,

which were

partially offset

by higher

employee-

related expenses, higher

stock-based compensation charges

and the

year-over-year impact of

inflationary increases on

certain expenses.

Depreciation and amortization expense

decreased by $0.2 million, or 3.1%

and in ZAR increased by

ZAR 2.2 million or 2.1%.

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

to additional POS devices deployed.

Transaction costs related to Adumo

acquisition includes fees

paid to external

service providers associated

with legal, commercial,

financial and tax due diligence activities performed and other legal

and advisory services procured.

Our operating income (loss) margin for

the third quarter of fiscal 2024 and 2023 was 0.6% and(1.4)

%, 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 third

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.

recorded

loss

$0.3

million

during

the

third

quarter

fiscal

2023

the

disposal

minor

portion

our

investment in Finbond.

Interest

on surplus

cash increased

to $0.6

million

(ZAR 11.9

million)

from $0.5

million (ZAR

8.4

million),

primarily

due

higher interest rates.

Interest expense

decreased to

$4.6 million

(ZAR 86.5

million) from

$5.0 million

(ZAR 89.4

million), primarily

as a

result of

lower interest

expense incurred

on certain

of our

borrowing for

which we

were able

to negotiate

lower rates

of interest

towards the

end of

calendar 2023,

which was partially

offset by

higher overall

base interest rates

and higher

overall borrowings

during the third

quarter of fiscal 2024 compared with comparable period in the prior quarter.

Fiscal 2024 tax

expense was $0.9

million (ZAR 17.6 million)

compared to a tax

benefit of $(0.9) million

(ZAR (15.4) million)

fiscal

2023.

Our

effective

tax

rate

for

fiscal

2024

was

impacted

the

tax

expense

recorded

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 a

reduction in the enacted

South African corporate

income tax rate from

28% to 27% from January 2023 (but backdated to July 1, 2022), 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.

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.

sold our

entire remaining

interest in

Finbond during the

third quarter

of fiscal

2024. The

table

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

Table 5

Three months ended March 31,

2024

2023

$ %

$ ’000

change

Other

153%

Total

loss from equity-accounted investments

153%

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 March 31,

2024

% of

2023

% of

% change

Operating Segment

$ ’000

total

$ ’000

total

Consolidated revenue:

Merchant

121,013

88%

118,092

88%

Consumer

17,904

13%

15,876

12%

13%

Subtotal: Operating segments

138,917

101%

133,968

100%

Eliminations

(723)

(1%)

Total

consolidated revenue

138,194

100%

133,968

100%

Group Adjusted EBITDA:

Merchant

(1)

8,394

87%

8,290

119%

Consumer

(1)

4,358

45%

1,649

24%

164%

Lease expenses

(2)

(850)

(9%)

(696)

(10%)

22%

Group costs

(2,199)

(23%)

(2,293)

(33%)

(4%)

Group Adjusted EBITDA (non-GAAP)

(3)

9,703

100%

6,950

100%

40%

(1) Segment Adjusted EBITDA Consumer includes retrenchment

costs of $0.01 million for the third quarter of fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation. This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting. Comparative information has been adjusted to conform

with the updated presentation.

(3) 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 March 31,

2024

% of

2023

% of

% change

Operating Segment

ZAR ’000

total

ZAR ’000

total

Consolidated revenue:

Merchant

2,285,394

88%

2,117,602

88%

Consumer

338,170

13%

284,686

12%

19%

Subtotal: Operating segments

2,623,564

101%

2,402,288

100%

Eliminations

(13,651)

(1%)

Total

consolidated revenue

2,609,913

100%

2,402,288

100%

Group Adjusted EBITDA:

Merchant

(1)

158,524

86%

148,655

119%

Consumer

(1)

82,330

45%

29,570

24%

178%

Lease expenses

(2)

(16,059)

(9%)

(12,481)

(10%)

29%

Group costs

(41,529)

(23%)

(41,118)

(33%)

Group Adjusted EBITDA (non-GAAP)

(3)

183,266

100%

124,626

100%

47%

(1) Segment Adjusted EBITDA

for Consumer includes retrenchment

costs of ZAR

0.1 million for the

third quarter of

fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation. This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting. Comparative information has been adjusted to conform

with the updated presentation.

(3) 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 prepaid airtime vouchers

sold and other value-added services provided, which

was partially offset

by a lower

number of

hardware sales in

our POS hardware

distribution business

given the

lumpy nature of

bulk

sales as

well as

lower revenue

generated

from a

decrease

in certain

valued-added

services transaction

volumes processed

(such

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 in

revenue (see further below)

and cost of sales,

while only earning

a 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 third quarter of

fiscal 2024 and 2023 was 6.9% and 7.0%, respectively.

Prepaid airtime sales

In South Africa and other countries, mobile network operators (“MNOs”) offer prepaid or contract (or postpaid) services to their

customers to telephony

services using a

mobile telephony network

or networks. MNOs

also offer similar

products (prepaid or

postpaid)

for mobile data

which uses other

wireless network protocols

such as wireless

fidelity (“wifi”).

use the term

“prepaid airtime”

include both of these prepaid products.

Generally speaking, the difference between the two

models is that prepaid is

paid for upfront by the

customer and contract is

paid

in arrears. MNOs sell prepaid products directly to their customers and also indirectly

to their customers through distribution

channels

(which include wholesalers, retailers and other parties, including ourselves).

We sell

a variety of products through our

distribution channels, including prepaid airtime,

prepaid electricity,

gaming vouchers.

We refer to these

products collectively as VAS.

In order to “load” airtime onto

a mobile device an MNOs customer

requires a prepaid airtime voucher. A unique code is

assigned

to each prepaid

airtime voucher and

is required to

activate the prepaid

airtime on a

mobile device. Like

certain tangible goods,

once

sold, our

customers cannot

return prepaid

airtime vouchers

to us (except

of course

if there is

a defect

in the

service provided

by us,

which rarely occurs).

can either

purchase an

agreed quantity

of prepaid

airtime vouchers

upfront directly

from

wholesalers or

other parties

(so

called “Pinned airtime” - these electronic vouchers are stored

on a server owned and maintained by us and we treat

these vouchers as

inventory)

can

“interface”

directly

into

wholesaler

and

deliver

the

airtime

voucher

directly

our

customers

(typically

merchants) as the airtime is sold by the merchant to MNOs customers (so called Pinless airtime).

Consumer

Segment

revenue

increased

primarily

due

higher

transaction

fees

generated

from

the

higher

EPE

account

holders

base,

insurance premiums collected and lending revenues following an increase in loan originations.

This increase in revenue has translated

into improved profitability,

which was partially

offset by higher

insurance-related claims and

higher employee-related

expenses and

the year-over-year impact of inflationary increases on certain expenses.

Our Segment Adjusted EBITDA margin for the

third quarter of fiscal 2024 and 2023 was 24.3%

and 10.4%, 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 modestly

compared with

the prior

period due

to lower

external audit,

legal fees and

lower provision

for executive bonuses,

which was partially

offset by

higher employee

(base salary) costs,

consulting fees and

travel

expenses.

Year

to date fiscal 2024 compared to year to date fiscal 2023

The following factors

had a significant

impact on our

results of operations

during the year

to date fiscal

2024 as compared

with

the same period in the prior year:

●

Higher revenue:

Our revenues increased 14% 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

$12.8 million (ZAR 239.0 million) from

$12.1 million (ZAR

211.3 million) primarily due to higher interest

rates; and

●

Foreign

exchange

movements:

The

U.S.

dollar

was

stronger

against

the

ZAR

during

the

year

date

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

Nine months ended March 31,

2024

2023

$ ’000

change

Revenue

418,176

394,822

Cost of goods sold, IT processing, servicing and support

329,610

314,651

Selling, general and administration

67,146

70,995

(5%)

Depreciation and amortization

17,460

17,892

(2%)

Transaction costs related to Adumo acquisition

665

Operating income (loss)

3,295

(8,716)

Reversal of allowance for EMI doubtful debt receivable

250

Net loss on disposal of equity-accounted investments

193

Interest income

1,562

1,269

23%

Interest expense

14,312

13,408

Loss before income tax expense (benefit)

(9,205)

(21,048)

(56%)

Income tax expense (benefit)

1,881

(465)

Net loss before loss from equity-accounted investments

(11,086)

(20,583)

(46%)

Loss from equity-accounted investments

1,319

2,582

(49%)

Net loss attributable to us

(12,405)

(23,165)

(46%)

Table 9

In South African Rand

Nine months ended March 31,

2024

2023

ZAR ’000

change

Revenue

7,842,078

6,871,364

14%

Cost of goods sold, IT processing, servicing and support

6,181,076

5,476,091

13%

Selling, general and administration

1,259,415

1,235,576

Depreciation and amortization

327,408

311,387

Transaction costs related to Adumo acquisition

12,550

Operating income (loss)

61,629

(151,690)

Reversal of allowance for EMI doubtful debt receivable

4,741

Net loss on disposal of equity-accounted investments

3,359

Interest income

29,309

22,085

33%

Interest expense

268,262

233,349

15%

Loss before income tax expense (benefit)

(172,583)

(366,313)

(53%)

Income tax expense (benefit)

35,245

(8,093)

Net loss before loss from equity-accounted investments

(207,828)

(358,220)

(42%)

Loss from equity-accounted investments

25,041

44,936

(44%)

Net loss attributable to us

(232,869)

(403,156)

(42%)

Revenue increased by $23.4 million (ZAR 1.0 billion), or 5.9% (in ZAR, 14.1%), primarily

due to the increase in the number of

low-margin

prepaid

airtime

vouchers

sold

and

increase

volume

other

value-added

services

provided,

well

higher

transaction volumes processed, insurance premiums collected

and lending revenues following an increase in loan

originations, which

was partially offset

by a lower

number of

hardware sales in

our POS hardware

distribution business

given the

lumpy nature of

bulk

sales.

Cost of goods sold, IT processing, servicing and

support increased by $15.0 million (ZAR

0.7 billion), or 4.8% (in ZAR,

12.9%),

primarily due to

the increase in low

margin prepaid airtime

sales, which were

partially offset by

the lower cost of

goods sold related

to fewer hardware sales.

Selling, general and administration expenses decreased by $3.8 million, or 5.4%, and in ZAR increased by ZAR 23.8 million, or

1.9%.

In ZAR,

the modest

increase

was primarily

due

to higher

employee-related

expenses related

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.

Depreciation and amortization expense decreased by $0.4 million, or 2.4%, and in ZAR increased by ZAR 16.0 million or 5.1%.

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

additional POS devices deployed.

Transaction costs related to Adumo

acquisition includes fees

paid to external

service providers associated

with legal, commercial,

financial and tax due diligence activities performed and other legal

and advisory services procured.

Our operating income (loss) margin for the year to date fiscal 2024 and 2023 was 0.8% and (2.2)%, 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 year to

date fiscal 2024

or 2023, respectively.

During the year to date 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

year to date fiscal

2023. Refer to Note

5 to our

unaudited condensed consolidated financial statements for additional

information regarding this disposal.

We recorded a net

loss of

$0.2 million

comprising a loss

of $0.4

million related to

the disposal

of a

minor portion

of our

investment

in Finbond and a $0.25 million gain related to the disposal of our entire interest in Carbon during the year to

date 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

$1.6 million

(ZAR 29.3

million) from

$1.3 million

(ZAR 22.1

million), primarily

due to

higher interest rates.

Interest expense increased

to $14.3 million

(ZAR 268.3 million)

from $13.4 million

(ZAR 233.3 million),

primarily as a

result

of higher overall interest rates and higher overall borrowings

during the year to date 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

and again towards the end of calendar 2023.

Fiscal 2024 tax expense was $1.9 million (ZAR 35.2 million) compared to a tax benefit of $(0.5) million (ZAR (8.1) 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 a

reduction in the enacted

South African corporate

income tax rate from

28% to 27% from January 2023 (but backdated to July 1, 2022), 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.

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

Nine months ended March 31,

2024

2023

$ %

$ ’000

change

Finbond

(1,445)

(2,631)

(45%)

Share of net loss

(278)

(1,521)

(82%)

Impairment

(1,167)

(1,110)

Other

126

157%

(1,319)

(2,582)

(49%)

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

Nine months ended March 31,

2024

% of

2023

% of

% change

Operating Segment

$ ’000

total

$ ’000

total

Consolidated revenue:

Merchant

370,244

89%

348,508

88%

Consumer

50,191

12%

46,314

12%

Subtotal: Operating segments

420,435

101%

394,822

100%

Eliminations

(2,259)

(1%)

Total

consolidated revenue

418,176

100%

394,822

100%

Group Adjusted EBITDA:

Merchant

(1)

25,148

94%

25,303

149%

(1%)

Consumer

(1)

9,786

37%

833

1,075%

Lease expenses

(2)

(2,224)

(8%)

(2,255)

(13%)

(1%)

Group costs

(6,032)

(23%)

(6,849)

(40%)

(12%)

Group Adjusted EBITDA (non-GAAP)

(3)

26,678

100%

17,032

100%

57%

(1) Segment Adjusted EBITDA for Merchant includes retrenchments costs of $0.2 million and Consumer includes retrenchment

costs of $0.2 million for year to date fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation. This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting. Comparative information has been adjusted to conform

with the updated presentation.

(3) 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

Nine months ended March 31,

2024

% of

2023

% of

% change

Operating Segment

ZAR ’000

total

ZAR ’000

total

Consolidated revenue:

Merchant

6,942,910

89%

6,065,329

88%

14%

Consumer

941,566

12%

806,035

12%

17%

Subtotal: Operating segments

7,884,476

101%

6,871,364

100%

15%

Eliminations

(42,398)

(1%)

Total

consolidated revenue

7,842,078

100%

6,871,364

100%

14%

Group Adjusted EBITDA:

Merchant

(1)

471,640

94%

440,366

149%

Consumer

(1)

183,857

37%

14,497

1,168%

Lease expenses

(2)

(41,739)

(8%)

(39,245)

(13%)

Group costs

(113,172)

(23%)

(119,198)

(40%)

(5%)

Group Adjusted EBITDA (non-GAAP)

(3)

500,586

100%

296,420

100%

69%

(1)

Segment

Adjusted

EBITDA

for

Merchant

includes

retrenchments

costs

ZAR

4.7

million

and

Consumer

includes

retrenchment costs of ZAR 2.9 million for year to date fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation. This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting. Comparative information has been adjusted to conform

with the updated presentation.

(3) 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 prepaid

airtime vouchers sold and other value-added services provided, which

was partially offset

by a lower

number of

hardware sales in

our POS hardware

distribution business

given the

lumpy nature of

bulk

sales as

well as

lower revenue

generated

from a

decrease

in certain

valued-added

services transaction

volumes processed

(such

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

Our Segment Adjusted EBITDA margin for the year

to date fiscal 2024 and 2023 was 6.8% and 7.3%, 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.

Consumer Segment Adjusted EBITDA during the year to date fiscal 2024 was also impacted by higher credit losses (as a

result of an

increase in originations)

and higher insurance-related

claims (as

a result

of a

higher number of

insurance policies) compared

with the year to date fiscal 2023.

Our Segment Adjusted EBITDA margin for the year

to date fiscal 2024 and 2023 was 19.5% and 1.8%, 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 and travel expenses.

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

and

trends.

believe

that

this

measure

helpful

users

our

financial

information

understand

key

operating

performance and

trends in our

business because

it excludes certain

non-cash expenses

(including depreciation

and amortization

and

stock-based compensation charges) and income

and expenses that we consider once-off in nature.

Non-GAAP Measures

Group

Adjusted

EBITDA

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 and

once-off

items. Once-off

items

represents non-recurring income and

expense items, including

costs related to

acquisitions and transactions consummated

or ultimately

not pursued.

Lease expenses

which were

previously excluded

from the

calculation of

Group Adjusted

EBITDA have

now been

included in

the calculation. This

change is in response

to comments received from

the staff of the

SEC in March 2024

regarding our non-GAAP

financial reporting. Comparative information has been adjusted to conform

with the updated presentation.

The table below presents the reconciliation between GAAP net loss attributable

to Lesaka to Group Adjusted EBITDA:

Table 13

Three months ended

March 31,

Nine months ended

March 31,

2024

2023

2024

2023

$ ’000

Loss attributable to Lesaka - GAAP

(4,047)

(5,820)

(12,405)

(23,165)

(Earnings) loss from equity accounted investments

(43)

(17)

1,319

2,582

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

(4,090)

(5,837)

(11,086)

(20,583)

Income tax (benefit) expense

931

(860)

1,881

(465)

Loss before income tax expense

(3,159)

(6,697)

(9,205)

(21,048)

Interest expense

4,581

4,984

14,312

13,408

Interest income

(628)

(469)

(1,562)

(1,269)

Reversal of allowance for doubtful EMI loan receivable

(250)

Net gain on disposal of equity-accounted investment

329

193

Operating income (loss)

794

(1,853)

3,295

(8,716)

PPA amortization

(amortization of acquired intangible assets)

3,562

3,789

10,762

11,559

Depreciation and amortization

2,229

2,186

6,698

6,333

Stock-based compensation charges

2,090

1,644

5,653

5,955

Once-off items

(1)

907

1,141

169

1,858

Unrealized loss FV for currency adjustments

121

101

Group Adjusted EBITDA - Non-GAAP

9,703

6,950

26,678

17,032

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

items for the periods presented:

Table 14

Three months ended

March 31,

Nine months ended

March 31,

2024

2023

2024

2023

$ ’000

Transaction costs

276

470

456

792

Transaction costs related to Adumo acquisition

631

665

(Income recognized) Expenses incurred related to closure of legacy

businesses

(952)

395

Indirect taxes provision

438

Separation of employee expense

183

Employee misappropriation of company funds

Total once-off

items

907

1,141

169

1,858

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.

Indirect tax provision

includes non-recurring indirect

taxes which have been

provided related to

prior periods following an

on-going

investigation from a tax authority. We incurred separation costs related to the termination of certain senior-level employees, including

an executive officer and

senior managers, during the

period and we

consider these specific terminations

to be of

a non-recurring nature.

Employee misappropriation of company funds represents a once-off

loss incurred.

Liquidity and Capital Resources

As of March 31, 2024, our cash and cash equivalents were

$55.2 million and comprised of U.S. dollar-denominated

balances of

$3.4 million, ZAR-denominated balances

of ZAR 942.2

million ($49.9 million), and

other currency deposits, primarily

Botswana pula,

of $2.0 million,

all amounts translated

at exchange rates

applicable as of

March 31, 2024.

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 of

cash reserves

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

March 31, 2024:

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

10,860

205,000

Overdraft restricted as to

use

(1)

47,680

900,000

Total overdraft

47,680

900,000

10,860

205,000

Indirect and derivative

facilities

(2)

7,152

135,000

8,294

156,556

Total

short-term

facilities available

47,680

900,000

7,152

135,000

10,860

205,000

8,294

156,556

Utilized short-term

facilities:

Overdraft

9,006

170,000

Overdraft restricted as to

use

(1)

4,272

80,634

Indirect and derivative

facilities

(2)

1,754

33,107

112

2,110

Total

short-term

facilities available

4,272

80,634

1,754

33,107

9,006

170,000

112

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

We have aggregate long-term borrowing outstanding of ZAR 2.6 billion ($135.7 million translated at

exchange rates as of March

31, 2024)

as described

in Note

8. These

borrowings include

outstanding

long-term borrowings

obtained by

Lesaka SA

of ZAR

1.0

billion,

including

accrued

interest,

which

was

used

partially

fund

the

acquisition

Connect.

The

Lesaka

borrowing

arrangements

were amended

in March

2023 to

include

a ZAR

200

million

revolving

credit facility.

used this

revolving

credit

facility during the nine

months ended March

31, 2024, and

settled all drawn

in full as

of March 31,

2024, with the

full 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 an outstanding balance as of March 31,

2024,

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

March 31,

2024, includes

restricted cash

of $4.4

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 March 31, 2024, includes restricted cash of $0.1 million

that has been ceded and pledged.

Cash flows from operating activities

Third quarter

Net cash provided by

operating activities during the

third quarter of fiscal

2024 was $19.2 million

(ZAR 362.1 million) compared

to net cash used in operating

activities of $5.1 million (ZAR 91.6

million) during the third quarter of

fiscal 2023. Excluding the impact

income

taxes,

our

cash

provided

operating

activities

during

the

third

quarter

fiscal

2024

was

positively

impacted

the

contribution

from

Merchant

and

Consumer,

which

was

partially

offset

growth

our

consumer

and

merchant

finance

loans

receivable

books

and

temporary

working

capital

movements

within

our

merchant

business

result

quarter-end

transaction

processing activities

closing on

a Sunday,

and further

impacted by a

public holiday

on April 1,

2024, and

which were

settled in the

following week.

We didn’t pay any significant taxes during the

third quarter of fiscal

2024. During the third quarter

of fiscal 2023, we

paid second

provisional South African

tax payments of $0.3

million (ZAR 5.1

million) related to certain

Connect entities’ 2023

tax year that had

not yet been aligned with ours.

Taxes paid during

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

Table 16

Three months ended March 31,

2024

2023

2024

2023

ZAR

‘000

First provisional payments

Second provisional payments

280

691

5,090

Tax refund received

(7)

(128)

Total South African

taxes paid

280

581

5,090

Foreign taxes paid

156

1,072

2,759

Total

tax paid

436

1,653

7,849

Year

to date

Net cash provided by operating activities during the year to

date of fiscal 2024 was $23.1 million (ZAR 434.0 million)

compared

to net cash used

in operating activities of

$9.3 million (ZAR 162.7 million)

during the year to

date of fiscal 2023.

Excluding the impact

income

taxes,

our

cash

provided

operating

activities

during

the

third

quarter

fiscal

2024

was

positively

impacted

the

contribution

from

Merchant

and

Consumer,

which

was

partially

offset

growth

our

consumer

and

merchant

finance

loans

receivable

books

and

temporary

working

capital

movements

within

our

merchant

business

result

quarter-end

transaction

processing activities

closing on

a Sunday,

and further

impacted by a

public holiday

on April 1,

2024, and

which were

settled in the

following week.

During the year to date of

fiscal 2024, we paid first provisional

South African tax payments of

$2.7 million (ZAR 49.5 million)

related to our 2024 tax year and South African tax

payments related to prior years of $0.6

million (ZAR 12.2 million). During the year

to date 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 $0.5

million (ZAR

8.5 million)

related to

our 2022

tax year

and as discussed above.

Taxes paid during

the year to date of fiscal 2024 and 2023 were as follows:

Table 17

Nine months ended March 31,

2024

2023

2024

2023

ZAR

‘000

First provisional payments

2,663

2,955

49,534

50,798

Second provisional payments

471

691

8,461

Taxation paid related

to prior years

641

12,187

180

Tax refund received

(38)

(198)

(768)

(3,540)

Total South African

taxes paid

3,302

3,238

61,644

55,899

Foreign taxes paid

196

257

3,677

4,534

Total

tax paid

3,498

3,495

65,321

60,433

Cash flows from investing activities

Third quarter

Cash used

in investing

activities for

the third

quarter

of fiscal

2024

included

capital expenditures

of $2.9

million (ZAR

55.6

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

Cash used

investing

activities for

the third

quarter

of fiscal

2023

included

capital

expenditures

of $4.7

million

(ZAR 84.6

million), primarily due to

the acquisition of vaults and

POS devices.

During the third quarter of

fiscal 2023, we received proceeds

$0.3 million related to the sale of minor positions in Finbond.

Year

to date

Cash used

in investing

activities for

the year

to date

of fiscal

2024

included capital

expenditures of

$8.0 million

(ZAR 149.1

million), primarily due

to the acquisition

of vaults and

POS devices. During

the year to date

of fiscal 2024,

we received proceeds

$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 year

to date

of fiscal

2023 included

capital expenditures

of $13.2

million (ZAR 229.9

million), primarily

due to

the acquisition

of vaults,

POS devices

and computer

equipment. During

the year

to date

fiscal 2023,

received proceeds

of $0.25

million related

to the

first tranche

(of two)

from the

disposal of

our entire

equity interest

in Carbon

and

$0.4 million related to the sale of minor positions in Finbond.

Cash flows from financing activities

Third quarter

During the third

quarter of fiscal 2024

we utilized $24.9 million

from our South

African overdraft facilities

to fund our

ATMs

and our cash management business through Connect, and repaid

$43.4 million of those facilities. We utilized $3.4 million of our long-

term borrowings to fund

the acquisition of certain

capital expenditures and for

working capital requirements.

We repaid

$7.2 million

long-term

borrowings

accordance

with

our

repayment

schedule

well

settle

portion

our

revolving

credit

facility

utilized.

During the third quarter of fiscal 2023,

we utilized $128.2 million from our South African overdraft facilities to fund

our ATMs

and our

cash management business

through Connect,

and repaid $136.0

million of those

facilities. We

utilized approximately

$12.9

million of our long-term borrowings to fund our merchant

finance loans receivable business, to fund the acquisition

of certain capital

expenditures and for working

capital requirements. We repaid approximately $2.0 million of long-term borrowings

in accordance with

our repayment schedule. We

received $0.1 million from the exercise of stock options. 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 and to settle the strike

price due and taxes due related to the exercise of stock options.

Year

to date

During the year to date

of fiscal 2024, we utilized

$153.5 million from our

South African overdraft facilities to

fund our ATMs

and our

cash management

business through

Connect, and

repaid $172.2

million of

those facilities. We

utilized $14.4

million of

our

long-term borrowings

to fund

the acquisition

of certain

capital expenditures

and for

working capital

requirements. We

repaid $13.1

million of long-term borrowings

in accordance with

our repayment schedule as

well as to

settle a portion

of 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 year to date

of fiscal 2023, we utilized

$441.5 million from our South

African overdraft facilities to fund

our ATMs

and our

cash management business

through Connect,

and repaid $448.3

million of those

facilities. We

utilized approximately

$23.0

million of our long-term borrowings to fund our merchant

finance loans receivable business, to fund the acquisition

of certain capital

expenditures and for working

capital requirements. We repaid approximately $5.3 million of long-term borrowings

in accordance with

our repayment schedule. We

received $0.4 million from the exercise of stock options. We

also paid $0.5 million to repurchase shares

from employees in order for the employees to settle taxes due related to the vesting of shares of restricted stock and to settle the strike

price due and taxes due related to the exercise of stock options.

Off-Balance Sheet Arrangements

We have no off

-balance sheet arrangements.

Capital Expenditures

expect capital

spending for

the fourth

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 third 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

of March 31, 2023, of $0.2 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 March 31,

2024, 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 March

31, 2024. The

effect of a

hypothetical 1% (i.e.

100

basis points)

increase

and

1% decrease

the

interest

rates

applicable

the

borrowings

as of

March

31,

2024,

are shown.

The

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

best- or worst-case scenarios.

Table 18

As of March 31, 2024

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

18,644

20,139

(1%)

17,150

Item 4. Controls and Procedures

Under

the

supervision

and

with

the

participation

our

management,

including

our

executive

chairman

and

our

group

chief

financial officer, we conducted

an evaluation of our disclosure controls and procedures, as such term is defined

under Rule 13a-15(e)

promulgated under the Securities Exchange Act of

1934, as amended, as of March

31, 2024. 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 in evaluating the cost-benefit relationship of possible controls and procedures. Based on

this evaluation,

the executive

chairman

and the

group chief

financial officer

concluded that

our disclosure

controls and

procedures

were effective as of March 31, 2024.

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 March 31, 2024,

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. Except

as set forth below, 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.

Failure

complete,

delays

completing,

the

Adumo

acquisition,

could

materially

and

adversely

affect

our

results of

operations and stock price.

The completion

of the

Adumo acquisition

is subject to

a number of

conditions precedent,

including receipt

of shareholder

and

regulatory approvals and certain third-party consents. Some of these conditions

are outside our control.

will

need

obtain

approval

from

our

shareholders

issues

our

common

stock

the

Adumo

sellers

part

consideration of the purchase price. Under the terms of the of the transaction agreement we need to obtained

this approval by no later

than October

31, 2024.

will need

to prepare

and provide

certain materials

to our

shareholders in

order for

them to

approve the

issuance of

the shares to

the Adumo sellers.

will need to

engage external

service providers

to assist us

with the

preparation and

distribution of these materials.

The transaction may fail if

we are unable to prepare

these materials in a timely manner

and obtain the

necessary shareholder approvals.

complete

the

acquisition,

must

make

certain

filings

with

and

obtain

certain

consents

and

approvals

from

various

governmental and regulatory authorities.

The regulatory approval processes may

take a lengthy period of time to complete,

and there

can be no assurance

as to the outcome

of the approval processes,

including the undertakings

and conditions that

may be required for

approval, or whether the regulatory approvals will be obtained at all.

In addition,

the completion

of the

acquisition is

conditional

on, among

other things,

no action

or circumstance

occurring that

would result in a material adverse effect on the Adumo’s

business operations or financial results.

We cannot

provide any assurance regarding if or

when all conditions precedent to the acquisition

will be satisfied or waived. If,

for any reason, the acquisition is

not completed, or its completion is materially

delayed and/or the transaction agreement is terminated,

the market price of our common stock may be materially and adversely

affected.

In addition, if the acquisition is not completed for any reason, there are risks that (i) the announcement of the acquisition and (ii)

the dedication

of management’s

attention and other

of our resources

to the completion

thereof, could

have a negative

impact on our

relationships with our stakeholders

and could have a material

adverse effect on

our current and future operations,

financial condition

and prospects.

We may not realize some

or all of the anticipated benefits from the Adumo acquisition.

Even if we complete the

Adumo acquisition, we may experience

unforeseen events, changes or

circumstances that may adversely

affect us. For example, we may incur unexpected costs, charges or expenses

resulting from the transaction, including charges to future

earnings if Adumo’s business

does not perform as expected. Our expectations regarding

Adumo’s business and prospects may not

realized,

including

as a

result

changes

the

financial

condition

of the

markets

that

Adumo

serves.

addition,

there

are

risks

associated with

Adumo’s

product and

service offerings

or results

of operations,

including the

risk of

failing to

comply with

certain

regulatory rules required to operate its business.

Further, there are

numerous challenges, risks

and costs

involved with integrating

the operations

of Adumo with

ours. For

example,

integrating Adumo into

our company will require

significant attention from our

senior management which

may divert their attention

from

our

day-to-day

business.

The

difficulties

integration

may

also

increased

cultural

differences

between

our

two

organizations and the necessity of retaining and integrating personnel,

including Adumo’s key employees.

Our Sarbanes-Oxley

Act of

2002 (“Sarbanes”)

management certification

and auditor

attestation regarding

the effectiveness

our internal

control over

financial reporting

as of

June 30,

2024, will

likely exclude

the operations

of Adumo,

as we

only expect

close the transaction in fiscal 2025.

The requirement to evaluate and report on our internal controls

also applies to companies that we

acquire. As a group of South

African private companies, Adumo is not required to

comply with Sarbanes prior to the

time we acquired

it.

The

integration

Adumo

into

our

internal

control

over

financial

reporting would

expected

require

significant

time

and

resources

from

our

management

and

other

personnel

and

expected

increase

our

compliance

costs.

fail

successfully

integrate the operations of Adumo into our internal control over

financial reporting for fiscal 2025, our internal control over financial

reporting may not be effective.

If some or all

of the aforementioned or

other risks materialize, our

ability to realize the

anticipated benefits of

Adumo could be

materially impaired, and as a result, our financial condition, results of operations,

cash flows and stock price could suffer.

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 third 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

Jan-24

100,000,000

Feb-24

(1)

2,511

3.68

100,000,000

Mar-24

(1)

100,000,000

Total

2,511

(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

March 31, 2024,

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

10.46

Letter of Amendment, dated January 22, 2024, among

Lesaka Proprietary Limited and FirstRand Bank Limited

(acting through its Rand Merchant Bank division), as

Agreement

8-K

10.1

January 23, 2024

10.47

Consulting Agreement, dated as of March 1, 2024, between

Lesaka Technologies, Inc. and Chris Meyer

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 May 8, 2024.

LESAKA TECHNOLOGIES, INC.

By: /s/ Ali Mazanderani

Ali Mazanderani

Executive Chairman

By: /s/ Naeem E. Kola

Naeem E. Kola

Group Chief Financial Officer,

Treasurer and Secretary

Lesaka Technologies - 10-Q quarterly report FY2024 Q3

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