LESAKA TECHNOLOGIES INC

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Lesaka Technologies, Inc. (“Lesaka” and collectively

with its consolidated subsidiaries, the “Company”), formerly named Net 1

UEPS Technologies, Inc., was incorporated in

the State of

Florida on May

8, 1997. The

Company is a

provider of financial technology,

or fintech, products and services, primarily in South Africa and neighboring

countries,

to unbanked and underbanked consumers, and

fintech solutions for

merchants operating in formal

and informal markets.

The Company provides

cash management and digitization

services and

card acquiring to

and has developed

and provides secure

transaction technology

solutions and services,

and

offers transaction processing, including bill payment and value-added services (including prepaid

airtime and electricity products) and

financial solutions to its customers.

Basis of presentation

The accompanying

statements include

subsidiaries over

which Lesaka

exercises control

and have

been

prepared in accordance with accounting principles generally accepted

in the United States of America (“GAAP”).

Reorganization charge - financial services restructuring

during the year ended June 30, 2022

The Company has incurred significant losses since its contract to distribute social grants expired in September 2018. A strategic

imperative for the Company was to

return its South African consumer

business to a breakeven position and

then profitability as soon

as possible.

As part

of

a

cost

optimization

review

completed

in

late

calendar

2021,

performed

a

review

of

its labor

structure and determined that

a number of its defined

employee roles would need to

be terminated due to redundancy.

embarked on a retrenchment process pursuant to Section 189A of the South African Labour Relations Act (“Labour Act”) on January

10, 2022. The Company incurred

cash costs of approximately $

6.7

103.4

million) during the third quarter

of fiscal 2022,

principally consisting of severance and related

payments and the payment of

unutilized leave days. The Company

recorded an expense

of $

5.9

million in the caption reorganization costs in the Company’s

consolidated statement of operations for the year ended June 30,

2022. The primary difference between the

reorganization charge amount and the total

cash paid relates to

leave pay which was

accrued

in prior periods.

July 2021 civil unrest in South Africa impacting

the year ended June 30, 2022

Two

nine provinces

experienced significant

civil unrest

in July

2021 resulting

in mass

looting, loss

of life,

disruption of

transport and

supply routes,

and widespread

destruction of

property.

In total

337 South

Africans lost

their lives

in the

unrest

– fortunately

none of

employees were

injured or

harmed. There

was widespread

damage to

bank and

ATM

infrastructure in the affected provinces. In

total approximately 1,800 ATMs

and 300 branches were damaged across the industry,

and

the Banking Association

Africa (“BASA”), estimates

that total

damage to banking

infrastructure amounted to

ZAR 1.6

billion.

The

South

African

Special

Risks

Insurance

Association

(“SASRIA”),

a

public

and

a

non-life

company

that

provides coverage for damage caused

by special risks such as politically

motivated malicious acts, riots, strikes,

terrorism and public

disorders, estimates that the total damage to property

across South Africa will be between

ZAR 19.0 billion and ZAR 20.0

billion. The

Company suffered

damage at

of its branches

and to

ATMs.

The disruption and

related closure of

branches also impacted

the

Company’s efforts to grow EPE customer numbers.

The Company also saw an impact on transaction volumes through its ATMs

with

July 2021 volumes

% lower than June 2021, and August 2021

% lower than July 2021.

The Company’s insurance claims to recover the cost to repair and replace its branches and ATMs have been met in full, with the

Company receiving ZAR

38.6

million from SASRIA during the year ended June 30, 2022.

As a result

of the disruption

to ATM

coverage and

availability,

BASA and the

banks agreed

that the fee

which

pay

to utilize

other banks’

ATMs

would be

waived for

August and

September 2021.

lost transaction

fee

revenue of approximately ZAR

6.0

0.4

million) during the year ended June 30, 2022, as a result of this decision.

SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The financial statements of

entities which are controlled

by Lesaka, referred to as

subsidiaries, are consolidated. Inter-company

accounts and transactions are eliminated upon consolidation.

The Company, if it is the primary beneficiary,

consolidates entities which are considered to be variable interest entities (“VIE”).

The primary beneficiary is considered

to be the entity that will absorb a

majority of the entity's expected losses,

receive a majority of

the entity's expected residual returns, or both. No entities were required to be consolidated as a result of these requirements during the

years ended June 30, 2024, 2023 and 2022.

Business combinations

The

Company

for

its

under

the

method

of

accounting.

The

total

value

of

the

consideration paid

for acquisitions is

allocated to

the underlying

net assets acquired,

based on their

respective estimated fair

values.

The Company uses a number

of valuation methods to determine

the fair value of assets and

liabilities acquired, including discounted

cash

flows,

external

market

values,

valuations

on

recent

or

a

thereof,

and

believes

that

it

uses

the

most

measure

or

a

of

measures

to

value

each

asset

or

liability.

measurement-period

adjustments in the reporting period in which the adjustment amounts are determined.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions

that

affect

the

amounts

of

assets

and

and

of

assets

and

at

the

date

of

the

and

the reported

amounts

of revenues

and

expenses during

the reporting

period.

Actual results

could

differ

from

those

estimates.

Translation of foreign

currencies

The primary

functional currency

of the

consolidated entities

is the

Rand (“ZAR”)

and the

currency is the U.S. dollar.

Assets and liabilities are translated

at the exchange rates in effect

at the balance sheet date. Revenues

and

expenses are translated at average

rates for the period. Translation

gains and losses are reported in

accumulated other comprehensive

income in total

equity.

The Company releases the

foreign currency translation

reserve included in accumulated

other comprehensive

income attributable

to a foreign

entity upon sale

or complete, or

substantially complete,

liquidation of the

investment in that

foreign

entity and includes the release in the gain or loss reported related to the sale or

liquidation of the foreign entity.

Foreign exchange transactions are translated at the spot rate ruling at the date of the transaction. Monetary items are translated at

spot rate

at the

balance sheet

date. Transactional

gains and

losses are

in selling,

general and

expense on the Company’s consolidated

statement of operations for the period.

Cash, cash equivalents and restricted cash

include cash on hand and funds

deposited in bank accounts with

financial institutions that are liquid,

unrestricted and

readily available.

represents cash

legally or

contractually restricted

as to

use and

cash related to cash withdrawn from the Company’s debt facilities to fund ATMs

as well cash in certain bank accounts that have been

ceded to under certain of the Company’s

borrowings.

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

with

the

lending

book.

The

allowance

for

credit

losses

related

to

finance

loans

receivables

is

by

adding

actual

receivables

in

default

plus

the

loss

rate

with

the

lending book. The Company

writes off microlending

finance loans receivable and

related service fees and interest

if a borrower is

in

arrears with

repayments for

three months

or is

deceased. The

Company writes

off merchant

and working

capital finance

receivables and related

fees when it is

evident that reasonable

recovery procedures,

including where deemed

necessary, formal

legal

action, have failed. 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.

Allowance for credit losses (continued)

Allowance for credit losses (continued)

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

or

or

purchasing

licenses

or

SIM

cards

from

the

Company

will

not

be

recovered.

Non-

recoverability

is assessed

based

on

a

quarterly

review

by management

of

the ageing

of outstanding

amounts,

the

location

and

the

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

is valued

at the

lower of

cost and

net realizable

value. Cost

is determined

on a

first-in,

first-out basis

and includes

transport and handling costs.

Property, plant

and equipment

Property,

equipment are

shown at

cost less accumulated

depreciation. Property,

equipment are

depreciated

on the straight-line basis at rates which

are estimated to amortize the assets to

their anticipated residual values over their useful

lives.

Within the following asset classifications, the expected

economic lives are approximately:

Vaults

years

to

years

Office equipment

to

years

Vehicles

to

years

Furniture and fittings

to

years

The gain or loss arising

on the disposal or retirement

of an asset is determined

as the difference between

the sales proceeds and

the carrying amount of the asset and is recognized in income.

Leases

The Company determines whether an arrangement is a lease at inception.

Operating leases are included in operating lease right-

of-use assets (“ROU”),

operating lease liability

• current, and

operating lease liability

– long term

in its consolidated

balance sheets.

have any

significant finance

leases as

of June

but its

policy is

to include

finance leases in property and equipment, other payables, and other

long-term liabilities in its consolidated balance sheets.

A ROU asset

right to use

an underlying

asset for the

lease term and

the lease liabilities

represent its

obligation to

make lease

payments arising

lease arrangement.

Operating lease

ROU assets

and liabilities

are recognized

at

commencement date based on

the present value of

lease payments over the

lease term. As

most of the

Company’s leases do not provide

an implicit rate,

the Company generally

uses its incremental

borrowing rate

the estimated rate

of interest for

collateralized

borrowing over

a similar term

of the lease

payments at commencement

date. The operating

lease ROU asset

also includes any

lease

prepayments made

and excludes lease

incentives. The terms

lease arrangements may

include options to

extend or

terminate

the

lease

when

it is

reasonably

certain

that

will exercise

that

option.

Lease

expense

for

lease payments

is

recognized on a straight-line basis over the lease term.

The Company does not recognize right-of-use assets and lease liabilities for lease arrangements with a term of twelve months or

less. The Company

accounts for all

components in a

lease arrangement as

a single combined

lease component. Costs

incurred in the

adaptation of leased properties to

serve the requirements of

the Company (leasehold improvements) are

capitalized and amortized over

the shorter of the estimated useful life of the asset and the remaining term of

the lease.

Equity-accounted investments

The Company uses the equity

method to account for

investments in companies when

it has significant influence but

not control

over

of the

company.

Under the

equity method,

initially records

the investment

at cost

and

thereafter

adjusts the carrying value of the investment to recognize its proportional share of the equity-accounted company’s net income or loss.

In addition, when an investment qualifies for the equity

method (as a result of an increase in the level of ownership

interest or degree

of influence),

the cost

of acquiring

the additional

the investee

is added

to the

current basis

of the

previously

held interest and the equity method would be

applied subsequently from the date on which

the Company obtains the ability to exercise

significant influence over the investee.

releases a

pro rata

reserve related

to an

equity-accounted investment

that is

in accumulated

other comprehensive

income to

earnings upon

the sale

of a

its ownership

the

equity-accounted

investment.

The

release

of

the

pro

rata

portion

of

the

foreign

reserve

is

in

the

measurement of

the gain

or loss

on sale

of a

ownership interest

in the

equity-accounted investment.

The

Company does not recognize cumulative losses in excess of its investment or loans in an equity-accounted

investment except if it has

an obligation to provide additional financial support.

Dividends received from an equity-accounted investment reduce the carrying value

of the Company’s investment. The Company

has elected to classify distributions received from equity method investees using the nature of the distribution approach.

This election

requires the Company to evaluate

each distribution received on the

basis of the source of the

payment and classify the distribution

as

either

cash

inflows

or

investing

cash

inflows.

The

Company

reviews

its

equity-accounted

for

whenever events or circumstances indicate that the carrying amount of

the investment may not be recoverable.

the

excess

of

the

price

of

an

over

the

fair

values

of

the

identifiable

assets

acquired and liabilities assumed. The Company tests for impairment

of goodwill on an annual basis and at any other time if events

or

circumstances change that would more likely than not

reduce the fair value of the

reporting unit’s goodwill below its carrying amount.

Circumstances that

could trigger

an impairment test

include but are

not limited to:

a significant adverse

change in the

climate or legal

factors; an adverse

action or assessment

by a regulator;

unanticipated competition; loss

of key personnel;

the likelihood

that a reporting unit or

significant portion of a reporting

unit will be sold

or otherwise disposed; and results

of testing for recoverability

of a significant asset group within a reporting unit. If goodwill is allocated to a reporting unit

and the carrying amount of the reporting

unit exceeds

of that reporting

unit, an impairment

loss is recorded

in the statement

of operations.

Measurement of

the

of a reporting

unit is based

on one

or more

of the following

measures: the amount

at which the

unit as a

whole

could be

bought or sold

in a current

transaction between

willing parties; present

value techniques

of estimated future

cash flows; or

valuation techniques based on multiples of earnings or revenue, or

a similar performance measure.

Intangible assets are shown at

cost less accumulated amortization. Intangible assets

are amortized over the following useful

lives:

Customer relationships

to

years

Software, integrated platform and unpatented technology

to

years

years

Exclusive licenses

years

Brands and trademarks

to

years

are periodically

evaluated for

recoverability,

and those

evaluations take

into account

events or

circumstances

that warrant revised estimates of useful lives or that indicate that impairment

exists.

Debt and equity securities

Debt securities

The Company is required to

classify all applicable debt securities

as either trading securities, available

for sale or held

to maturity

upon investment in the security.

Trading

Debt securities

acquired by

which it

intends

to sell

in the

are classified

as trading

securities and

are

initially measured

at fair

value. These

debt securities

are subsequently

measured at

and realized

and unrealized

gains and

losses

from

these

trading

are

in

the

of

operations.

Classification

of

a

debt

security as a trading

security is not precluded

simply because the Company

does not intend to sell

the security in the

short term. The

Company had no debt securities that were classified as trading securities as of June

30, 2024 and 2023, respectively.

Available for sale

Debt

by the

Company

that

have

readily

determinable

are classified

as available

for

sale if

the

Company has not classified them as trading securities or if it does not have

the ability or positive intent to hold the debt security until

maturity.

The Company is

required to make

an election to

account for these

debt securities as

available for

sale. These available

for

sale debt securities

are initially measured

at fair value. These

debt securities are

subsequently measured at

fair value with unrealized

gains

and

losses

from

for

sale

in

debt

as

a

separate

of

other

comprehensive income, net of deferred income

taxes, in shareholders’ equity. The Company had

no

debt securities that were classified

as available for sale securities as of June 30, 2024 and 2023, respectively.

Held to maturity

Debt securities acquired by the Company which it has the ability and the positive intent to hold to maturity are classified as held

to maturity debt securities. The Company is required to make an election to classify these debt securities as held to maturity and these

securities are carried at amortized cost. The amortized cost

of held to maturity debt securities

is adjusted for amortization of premiums

and accretion of discounts to maturity.

Interest received from the held to

maturity security together with this amortization

is included

in interest income in the Company’s consolidated statement of operations. The Company had

a held to maturity security as of

2023, respectively,

refer to

Note 4.

uses historical

default experience

lifetime of

debt securities

in

order to calculate a lifetime loss rate

for its held to maturity debt securities. As

of each of July 1, 2023, and

June 30, 2024, the carrying

value of the Company’s held

to maturity debt securities was $

.

Impairment of debt securities

Up

until

the

adoption

of

Measurement

of

Credit

Losses

on

Instruments

on

July

1,

2023,

the

Company’s available for sale and held to maturity debt securities with unrealized

losses are reviewed quarterly to identify other-than-

temporary impairments in value.

With regard to available for sale and held to maturity debt securities, the Company considers (i) the ability and intent to hold the

debt security for a

period of time to

allow for recovery of

value (ii) whether it

is more likely than

not that the Company

will be required

to sell the debt security;

and (iii) whether it expects

to recover the entire carrying

amount of the debt security.

The Company records

an impairment

loss in its

of operations representing

the difference between

the debt securities

carrying value

and the current fair value as

of the date of the impairment

if the Company determines that

it intends to sell the debt

security or if that

it is

more likely

than not

that it

will be

sell the

debt security

before recovery

of the

amortized cost

basis. However,

the

impairment loss

is split

between a

credit loss

and a

non-credit loss

for debt

securities that

determines that

it does

not

intend to sell or that it is more likely than not that it will

not be required to sell the debt securities before the recovery of the amortized

cost basis. The credit loss portion, which is measured as the difference

between the debt security’s cost

basis and the present value of

expected future cash flows,

is recognized in the Company’s

consolidated statement of operations.

The non-credit loss portion,

which

is measured

as the

difference between

security’s

cost basis and

its current

fair value,

is recognized

income, net of applicable taxes.

Equity securities

Equity

are

measured

at

fair

value.

Changes

in

the

fair

value

of

equity

are

in

the

of operations within

the caption titled

“change in fair

value of equity

securities”. The

Company may elect

to

measure equity securities without readily determinable fair

values at its cost

minus impairment, if any, plus or minus changes resulting

from observable price changes in orderly transactions for the identical or

a similar investment of the same issuer (“cost minus changes

in observable

prices equity

securities”). Changes

cost minus

observable prices

equity

securities are discussed in Note 9. There were

no

changes in the fair value of the Company’s cost minus

changes in observable prices

equity securities during the

year ended June 30,

2024, 2023 and 2022,

The Company performs a qualitative

on a quarterly basis and recognizes an impairment loss if there are sufficient indicators that the fair value

of the equity security is less

than its carrying value.

Policy reserves and liabilities

Reserves for policy benefits and claims payable

The Company determines its reserves for policy benefits under

its life insurance products using a model which estimates claims

not been

and

total

present

value

of disability

claims-in-payment

at

the balance

sheet

date. This

model

allows for

best estimate

assumptions based

on experience

(where sufficient)

plus prescribed

margins,

as required

in the

markets

in

which these products are offered, namely South Africa.

The best estimate assumptions include (i) mortality and morbidity assumptions reflecting the company’s

most recent experience

and (ii) claim reporting delays reflecting Company specific and industry experience. Most of the disability claims-in-payment reserve

is

reinsured

and

the

values

were

based

on

the

reserve

held

by

the

reinsurer.

The

values

of

matured

guaranteed

endowments are increased by late payment interest (net of the asset management

fee and allowance for tax on investment income).

Deposits on investment contracts

For the Company’s interest-sensitive

life contracts, liabilities approximate the policyholder’s account

value.

Reinsurance contracts held

The Company enters into reinsurance

contracts with reinsurers under

which the Company is compensated

for the entire amount

or a portion of losses arising on one or more of the insurance contracts it issues.

The expected benefits to which the Company is

entitled under its reinsurance contracts held are recognized as reinsurance

assets.

These assets consist

of short-term

balances due from

reinsurers (classified within

Accounts receivable,

net and other

receivables) as

well as long-term receivables (classified within other long-term assets) that are dependent on the expected claims and benefits arising

related reinsurance

contracts. Amounts

recoverable from

or due

to reinsurers

are measured

consistently with

the amounts

associated with the reinsured contracts and in accordance with the terms of each reinsurance contract. Reinsurance assets are assessed

for impairment at

each balance sheet

date. If there

is reliable

objective evidence that

amounts due may

not be recoverable,

reduces the carrying amount of the reinsurance asset to its recoverable amount and recognizes that impairment loss in its consolidated

statement of operations. Reinsurance premiums are recognized when

due for payment under each reinsurance contract.

Redeemable common stock

Common stock

that is

redeemable (1)

at a

determinable price

on a

determinable date,

(2) at

the option

of the

holder,

or (3)

upon the

occurrence of

an event

that is

not solely

within the

control of

presented outside

of total

Lesaka

equity (i.e. permanent equity). Redeemable common stock is

initially recognized at issuance date fair value

and the Company does not

adjust

the

issuance date

if redemption

is not

probable.

re-measures

the redeemable

common

stock

to the

maximum

amount

at

the

balance

sheet

date

once

is

probable.

Reduction

in

the

amount

of

the

redeemable common stock is

only appropriate to the

extent that the Company

has previously recorded increases

in the carrying amount

of the

redeemable

equity instrument

as the

redeemable common

stock may

not be

carried at

an amount

that is

less than

the initial

amount reported outside of permanent equity.

Redeemable common stock (continued)

Redeemable common stock is reclassified as permanent equity when presentation outside

permanent equity is no longer required

(if, for example, a redemption

feature lapses, or there

is a modification of the

terms of the instrument). The

existing carrying amount

of the redeemable common

stock is reclassified to permanent

equity at the date of

the event that caused the

reclassification and prior

period consolidated financial statements are not adjusted.

Revenue recognition

The

Company

revenue

upon

of

control

of

promised

or

to

in

an

amount

that

reflects

the

the

Company

expects

to

receive

in

for

those

or

services.

The

Company

enters

into

contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted

for as

separate performance

observable standalone

selling prices.

Revenue is

recognized net

of allowances

for

returns and any taxes collected from customers, which are subsequently remitted

to governmental authorities.

Nature of products and services

The Company purchases airtime vouchers for resale to customers and acts as

a principal in these transactions.

Airtime purchased

for resale is included in inventory and released to cost of goods sold,

IT processing, servicing and support upon sale of the inventory.

The Company negotiates and agrees sales prices for airtime sales

with its customers and revenue is measured at the agreed contractual

price. The Company recognizes revenue when the airtime is delivered

to the customer.

earns processing

fees from

transactions processed

for its

customers. The

Company provides

its customers

with

transaction processing services that

involve the collection, transmittal

and retrieval of

all transaction data

in exchange for

upon completion of the transaction

and recognizes revenue from these

activities at a point in time.

In certain instances, the Company

also provides a funds collection

and settlement service for its

customers and recognizes revenue from these

activities at a point in

time.

The

Company

also

with

cash

and

digitization

which

enables

its

to

deposit

cash into

digital vaults

operated

by the

after which

the funds

are then

accessible by

to

either transfer to their nominated bank account or to pay certain pre-selected suppliers and recognizes revenue from these activities at

a point in time.

The Company considers

each of these services

as a single performance

obligation. The Company’s

contracts specify

a transaction

price for

services provided.

Processing revenue fluctuates

the type and

the volume of

transactions processed.

Revenue is recognized on the completion of the processed transaction.

The Company, as a transaction processor and in the capacity

of an agent, facilitates the delivery of

value added services (“VAS”)

to its

customers (including

vouchers, prepaid

electricity and

gaming vouchers)

and earns

a commission

once these

services are delivered to the

customer. The Company

recognizes revenue from these activities at

a point in time. Revenue

from these

transactions fluctuates based on the volume of VAS

services distributed.

serviced

by the

operating segment

a bank

account managed

by the

Company

are

issued cards that can be utilized to withdraw

funds at an ATM or to transact at a merchant point of sale device

(“POS”). The Company

earns processing fees

from transactions processed

for these customers. The

Company’s contracts

specify a transaction

price for each

service provided (for instance,

ATM

withdrawal, balance enquiry,

etc.). Processing revenue fluctuates based

on the type and

volume

of transactions performed by the customer.

Revenue is recognized on the completion of the processed transaction at

a point in time.

provides bank accounts

to customers

and this service

is underwritten

by a regulated

banking institution

because

the Company is not

a bank. The Company

charges its customers

a fixed monthly

bank account administration

fee for all active

bank

accounts regardless of

whether the account

holder has transacted

or not. The

Company recognizes account

holder fees on a

monthly

basis on

all active

bank

accounts,

which

are earned

over

time and

billed

on a

monthly

basis. Revenue

from account

holders’

fees

fluctuates based on the number of active bank accounts.

Revenue recognition (continued)

Nature of products and services (continued)

The

Company

loans

to

(consumers)

in

South

Africa

and

charges

up-front

initiation

fees

and

monthly service fees.

Initiation fees are

recognized using

the effective interest

rate method, which

requires the utilization

of the rate

of return implicit in the loan, that is, the contractual interest rate adjusted for any net deferred loan fees or costs, premium, or discount

existing at the origination or acquisition of

the loan. Monthly service fee

revenue is recognized under the contractual terms

of the loan.

The

monthly

service

fee

are

earned

over

time

and

is

fixed

upon

initiation

and

does

not

change

over

the

term

of

the

loan

and

is

recognized when billed on a monthly basis.

Interest earned from

The Company provides short-term loans to merchants in South Africa and levies interest on the amount lent. The Company does

not charge

these customers

up-front initiation

fees or

monthly service

fees. Interest

earned from

customers is

recognized using

the

effective interest

rate method,

which requires

of the

rate of

return implicit

in the

loan, that

is, the

contractual interest

rate adjusted

for any net

deferred loan

fees or

costs, premium,

or discount

existing at

the origination

or acquisition

of the

loan. The

interest rate included in the contract with the customer generally changes with changes to benchmark rates of interest set by the South

African Reserve Bank.

The Company supplies hardware and licenses for its customers to use the Company’s

technology. Hardware includes the sale of

POS devices, SIM cards and other consumables which

can occur on an ad

hoc basis. The Company recognizes revenue from hardware

at the transaction price specified

in the contract as the hardware is

delivered to the customer.

Licenses include the right to use

certain

technology developed by the Company and the associated revenue is recognized

ratably over the license period.

The Company writes

life insurance contracts, and

policy holders pay

the Company a

monthly insurance premium at

the beginning

of each month. Premium revenue

is recognized on a monthly basis net of

policy lapses. Policy lapses are provided

for on the basis of

expected non-payment of policy premiums.

Accounts Receivable, Contract Assets and Contract Liabilities

The

Company

receivable

when

its

right

to

under

its

with

becomes

unconditional. The Company has no contract assets or contract liabilities.

Research and development expenditure

Research and

development expenditure

is charged

to net

income in

the period

in which

it is

incurred. During

ended

2023 and 2022, the

Company incurred research

and development expenditures

of $

0.5

0.5

0.5

Computer software development

Product

costs in

respect

of

software

intended

for

sale

to

licensees

are

expensed

as

until

technological

feasibility is attained.

Technological

feasibility is attained

when the Company’s

software has completed

system testing and has

been

to

be

viable

for

its

intended

use.

Once

technological

feasibility

is

reached,

the

Company

capitalized

such

costs

and

amortizes

these costs over

the products’

estimated life. The

time between

the attainment

of technological feasibility

and completion

of software development is generally short with insignificant amounts of development

costs incurred during this period.

Costs in

respect of

the development

of software

for the

internal use

are expensed

as incurred,

except to

the extent

that

these

costs

are

during

the

application

stage.

All

other

costs

those

in

the

project

development and post-implementation stages are expensed as incurred.

Income taxes

provides for income

taxes using the

asset and liability

method. This

approach recognizes

the amount of

income

taxes payable or refundable

for the current year,

as well as deferred

tax assets and liabilities for

the future tax consequence

of events

recognized in the financial statements and tax returns. Deferred taxes are adjusted

to reflect the effects of changes in tax laws or rates

in the

period of

enactment. The

majority of

income

taxes and

balances arise

in the

The

Company used the enacted statutory

tax rate of

% for the years ended June 30,

2024 and 2023, and the enacted rate

of

% for the

2022 to

measure current

tax expense

(benefit) and

Africa. There

was a

change in the South African

enacted tax rate during the

year ended June 30, 2023,

from

% to

%, and the Company measured

its

South African current tax expense for the years ended June 30, 2023 and 2024 and its South African deferred tax assets and liabilities

as of June 30, 2023 and 2024, using the enacted statutory tax rate in South

Africa of

%.

In establishing the appropriate deferred tax asset valuation allowances, the Company assesses the realizability of its deferred tax

assets, and based on all available evidence, both positive

and negative, determines whether it is more likely than not

that the deferred

tax assets or a portion thereof will be realized.

Unrecognized tax benefits are recorded in the financial statements for positions which are not considered more likely than not of

being sustained based on the

technical merits of the position

on examination by the taxing authorities.

For positions that meet the more

likely than not standard, the measurement of the tax benefit recognized in the financial statements is based upon the largest amount of

tax benefit that, in

management’s judgement, is greater than 50%

likely of being realized

based on a

cumulative probability assessment

of the

possible outcomes.

policy

is to

include interest

related

to income

taxes in

interest expense

and penalties

in

selling, general and administration in the consolidated statements of operations.

The Company has elected the period cost method

and records U.S. inclusions in taxable income related to global

intangible low

taxed income (“GILTI”)

as a current-period expense when incurred.

Stock-based compensation represents the

cost related to

stock-based awards granted.

The Company measures

equity-based stock-

based compensation cost at

the grant date, based on

the estimated fair value of

the award, and recognizes the

cost as an expense on

a

straight-line basis (net of estimated forfeitures) over the requisite

service period. In respect of awards with only service

conditions that

have a graded

vesting schedule, the

Company recognizes compensation

cost on a straight-line

basis over the

requisite service period

for the

entire award.

The forfeiture

rate is

estimated using

historical trends

of the

awards forfeited

prior to

vesting.

The

expense is recorded in

the statement of operations and

classified based on the recipients’

respective functions. The Company

records

assets for awards

that result in

deductions on the

income tax returns,

based on the

amount of compensation

cost recognized and the Company’s

statutory tax rate in the jurisdiction

in which it will receive a deduction.

Differences between the

assets recognized

for financial

reporting purposes

and the

actual tax

deduction reported

on the

income tax

return are recorded in income tax expense in the consolidated statement

of operations.

Equity instruments issued to third parties

Equity instruments issued

to third parties represents

the cost related to

equity instruments granted.

The Company measures this

cost at the grant date, based on the

estimated fair value of the award, and recognizes the cost as

an expense on a straight-line basis (net

of estimated forfeitures) over

the requisite service period. The forfeiture

rate is estimated based on

the Company’s expectation

of the

awards that will

be forfeited

prior to vesting.

records deferred tax

assets for equity

instrument awards that

result

in

deductions

on

the

income

tax

returns,

based

on

the

amount

of

equity

instrument

cost

and

the

statutory

tax

rate

in

the

jurisdiction

in

which

it

will

receive

a

deduction.

Differences

between

the

tax

assets

recognized for financial reporting purposes and the actual tax deduction reported on the Company’s

income tax return are recorded in

the statement of operations.

Settlement assets and settlement obligations

The

Company

with

cash

and

digitization

which

enable

its

to

deposit

cash into

digital vaults

operated

by the

after which

the funds

are then

accessible by

to

either transfer to their nominated bank account or to pay certain pre-selected suppliers.

Settlement assets comprise (1) cash received from merchant customers

from cash deposits into the Company’s safe assets, which

are

then

accessible

by

to

either

to

their

nominated

bank

account

or

to

pay

certain

pre-selected

suppliers,

and

(2)

cash

from

credit

card

companies

(as

well

as

other

types

of

payment

services)

which

have

relationships

with

selling

goods

and

that

are

the

and

on

whose

behalf

it

processes

the

transactions between various parties.

Settlement

comprise

(1)

amounts

that

the

Company

is

obligated

to

disburse

to

or

to

their

nominated pre-selected suppliers, and (2)

amounts that the Company is obligated

to disburse to merchants selling goods

and services

that are the Company’s customers and on whose behalf it processes

the transactions between various parties and settles the funds from

the credit card companies to the Company’s

merchant customers.

The balances

at each reporting

date may vary

widely depending on

the timing of

the receipts and

payments of these

assets and

obligations.

Recent accounting pronouncements adopted

In 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

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 4.

In November

2019, the

FASB

issued guidance

Instruments—Credit

Losses (Topic

326),

Derivatives and

Hedging

(Topic

815),

and

Leases

(Topic

842).

The

a

framework

to

stagger

dates

for

future

major

standards

and

amends

the

dates

for

certain

major

new

standards

to

give

relief

to

certain types

of entities,

including Smaller

Reporting Companies.

is a Smaller

Reporting Company.

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

defers

the

adoption

date

of

Measurement

of

Credit

Losses

on

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

and related

disclosures,

refer to Note 4.

Recent accounting pronouncements not yet adopted

as of June 30, 2024

In

the

FASB

issued

Segment

Reporting

(Topic

to

improve

segment

requirements,

through

enhanced

disclosures

about

segment

expenses.

In

the

enhances

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

or loss,

new segment

requirements

for entities

with a

single reportable

segment,

and

other disclosure

requirements. This

guidance is

for the

Company beginning

July 1,

2024 for

its year

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.

In

2023,

the

FASB

issued

Income

Taxes

(Topic

to

improve

income

tax

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

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.

ACQUISITIONS

The Company did not make any acquisitions during the year ended June 30,

2023. The cash paid, net of cash received related to

the Company’s acquisition during

the years ended June 30, 2024 and 2022, is summarized in the table below:

Total cash paid

$

2,248

$

240,582

Less: cash acquired

38,423

Total cash paid, net

of cash received

(1)

$

1,583

$

202,159

(1) – amount for 2022 represents the cash paid, net of cash acquired, to acquire

a controlling interest in Connect.

proposed acquisition of Adumo

On May 7,

2024, the Company

Sale and Purchase

Agreement (the

“Purchase Agreement”)

with Lesaka SA,

and

Crossfin Apis Transactional

Solutions (Pty) Ltd

and Adumo ESS

(Pty) Ltd (“the

Sellers”). Pursuant to

the Purchase Agreement

and

subject to its terms and

conditions, Lesaka, through its

subsidiary,

Lesaka SA, agreed to

acquire, and the Sellers agreed

to sell, all of

the outstanding equity interests and certain claims in the Adumo (RF) Proprietary

Limited (“Adumo”).

The

will

be

settled

through

the

of

an

of

17,279,803

shares

of

the

common stock (“Consideration Shares”) and a ZAR

12.5

million, translated at the prevailing rate of $1: ZAR

18.5

as of

May

7,

payment

in

cash.

The

share

was

based

off

of

the

base

of

ZAR

1.59

billion

($

85.9

less

the

ZAR

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 Purchase

Agreement includes

customary covenants

Sellers, including

(i) to

conduct the

business in

the ordinary

course during the period between

the execution of the Purchase

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 the following

open conditions (i)

obtaining

certain third-party

consents; and (ii).

Lesaka SA (or

is nominee),

on or before

October 31, 2024,

concluding a written

unconditional

agreement with Crossfin SPV in relation to the acquisition of all (and not

only a portion) of one of the ultimate shareholders’ pro rata

entitlements to

Consideration Shares

(other than

those which

to be

liquidated in

satisfy cash

tax obligations),

provided that the aggregate consideration

for such entitlements will be equal

to an amount of ZAR

285,772,238

and provided further

that: (1)

Lesaka (or

its nominee,

as applicable)

has provided

a bank

guarantee from

Rand Merchant

Bank (a

division of

FirstRand

Bank Limited) or other South African

registered bank in respect of the

settlement of such aggregate consideration

and (2) that, to the

extent applicable,

Lesaka's nominee

has, prior

to the

conclusion thereof,

obtained all

approvals as

may be

conclude and

implement such agreement.

The

closing

have

been

met

as

of

the

date

of

this

Annual

Report

on

Form

10-K

(i)

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)

from

all necessary

bodies

and

from

to

issue the

Consideration

Shares to the

Sellers; (iv) the

Company obtained confirmation

from RMB that it

has sufficient

funds to settle

the cash portion

of the

consideration;

(v)

of Adumo

preference

shareholders)

with respect

to entering

into and

implementation of the Purchase

Agreement, and all other

agreements and transactions contemplated

in the Purchase Agreement;

(vi)

obtained

the consent

of Adumo’s

lender

Adumo entering

into and

implementing

the

Purchase

Agreement,

and

all other

agreements and

transactions contemplated

in the

Purchase Agreement,

(vii) the

release of

certain Seller’s

shares held

by

such bank;

(viii) obtained

the consent

of the lender

of one of

Adumo’s

shareholders regarding

Adumo entering

into the transaction;

and (ix) the

Company signing a written

addendum to the Policy

Agreement with International

Finance Corporation that

provides for

the inclusion of the Consideration Shares attributable to certain Seller shareholders

in the definition of “Put Shares” under the Policy

Agreement, and related change.

The

Company

has

agreed

to file

a

resale

registration

with

the

United

States

and

(“SEC”) covering

the resale

of the

Consideration

Shares by

the Sellers

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

transaction-related

of

$

2.3

million

during

the

year

ended

June

30,

2024,

related

to

the

process

to

acquire

Adumo.

’s

accruals

presented

in

Note

of

as June

30,

2024,

an

accrual

of

related expenditures of

$

0.9

million and the

Company expects to

incur a further

$

1.4

million in transaction

costs over the

remainder

of the 2025 calendar year.

acquisition of Touchsides

In April 2024

the Company closed

the acquisition of

Touchsides (Pty) LTd (“Touchsides”). Touchsides

is a leading

data analytics

and insights company,

and complementary with

Kazang business. The

acquisition 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

platform-as-a-service

(“PaaS”) and

software-as-a-service

(“SaaS”) solutions

to

licensed

tavern outlets,

the measurement

of sales

activity in

real-time,

of stock

levels and

informing

commercial

decisions,

such as

pricing

and

promotional

offers.

The

data

and

insights

gathered

from

these

terminals

carries

value

and

to

be

monetized

through

relationships

with

a

range

of

clients

fast-moving

goods

retailers,

wholesalers,

route-to-market suppliers, and financiers.

Touchsides has been

allocated to our Merchant operating segment.

The final purchase price allocation

of the Touchsides

acquisition, translated at the foreign exchange

rates applicable on the date

of acquisition, is provided in the table below:

$

Accounts receivable

Property, plant and equipment

1,106

Operating lease right of use asset

(53)

Other payables

(279)

Operating lease liability – current

(63)

Deferred income taxes liabilities

(9)

(52)

Fair value of assets and liabilities on acquisition

$

2,248

Pro forma

operations have

not been presented

effect of

the Touchsides

acquisition is

not material

to the

Company. During

the year ended June 30, 2024, the Company

incurred acquisition-related expenditure of

$

0.1

million related to this

acquisition. Since the

closing of the Touchsides

acquisition, it has contributed

revenue and net loss

of $

0.9

0.2

respectively, for the

year ended June 30, 2024.

None.

April 2022 acquisition of Connect

On October 31, 2021, the Company entered into a

Sale of Shares Agreement (the “Sale Agreement”) with the

Sellers (as defined

in

the

Sale

Agreement),

Cash

Connect

Solutions

Limited

(“CCMS”),

Ovobix

(RF)

Limited

(“Ovobix”),

Luxiano

Limited

(“Luxiano”)

and

K2021477132

(South

Africa)

Limited

(“K2021”

and

together with CCMS, Ovobix

and Luxiano, “Connect”).

Pursuant to the Sale

Agreement, and subject

to its terms and

conditions, the

wholly-owned subsidiary,

Lesaka SA (formerly

named Net1 SA),

agreed to acquire,

and the Sellers agreed

to sell, all of

the outstanding equity interests and certain claims in Connect. The transaction

closed on April 14, 2022.

Acquisitions (continued)

April 2022 acquisition of Connect (continued)

The total

purchase consideration

was ZAR

3.8

258.9

million), comprising

ZAR

3.5

240.6

million) in

cash,

of

ZAR

23.8

million

($

1.6

and

ZAR

241.9

million

($

16.7

in

shares

of

the

Company’s common stock. The contingent

consideration related to

a tax matter

which was resolved

in July 2022,

and the consideration

was

settled

in

cash

in

The

is

in

the

caption

other

payables

in

the

consolidated balance

sheet as of

2022, refer

to Note 13.

The

shares of common

issuable in

three

equal

tranches on

each of

the first,

second and

third anniversaries

of the

closing and

as ZAR

350.0

million divided

by the

sum of $

7.50

multiplied by the closing date exchange

rate (as defined in the Sale Agreement)

of $1:ZAR

14.65165

. Refer to Note 14

for issuances during the year

ended June 30, 2024 and

2023, respectively. The fair value of the purchase

consideration settled in shares

of

common

stock

of $

16.7

million

as

shares

of

Lesaka

common

stock

multiplied

by the

April 13,

closing price on the NasdaqGS of $

5.23

.

The

closing

of

the

was

subject

to

closing

(i)

from

the

authorities of South

Africa, Namibia and

Botswana, (ii) exchange

control approval from

the financial surveillance

department of the

South

African Reserve Bank, and (iii) obtaining certain third-party

consents. In addition, the closing of the transaction was subject to

entry into

definitive financing

agreements by

each of

and CCMS

for an

aggregate of

ZAR

2.4

billion in

debt financing

provided by Rand Merchant Bank and satisfying the conditions precedent

for funding thereunder, of which ZAR

1.1

billion relates to

the financing agreements described below and ZAR

1.3

billion related to finance agreements signed between CCMS

and RMB. Of the

ZAR

1.3

billion related to

CCMS, approximately ZAR

new debt as part

of the funding of

the acquisition. The

definitive loan agreements became effective upon closing the transaction

,

refer to Note 12.

The

South

African

authorities

the

subject

to

certain

public

relating

to

employment, increasing the spread

of ownership by

historically disadvantaged people (“HDPs”)

and workers, and investing

in supplier

and enterprise development. Further to increasing the

spread of ownership by

HDPs, Lesaka is required to

establish an employee share

ownership scheme

(“ESOP”) within

months of

the implementation

of the

Connect acquisition

that complies

with certain

design

principles for the

benefit of the workers

of the merged

entity to receive

a shareholding in Lesaka

equal in value

to at least

% of the

issued

shares

in

Lesaka

at the

date

of the

Connect

acquisition.

If

within

months

of the

date of

the transaction,

Lesaka generates

a positive net

profit for three

consecutive quarters,

the ESOP shall

increase to an

amount equal

in value to

% of

the issued

shares in

Lesaka at

of the

Connect acquisition.

The final

structure of

the ESOP

is contingent

on Lesaka

shareholder

and

and

governance

approvals.

The ESOP

had not

been

established

as of

of the

consolidated annual financial statements.

Acquisitions (continued)

April 2022 acquisition of Connect (continued)

The

Company

transaction-related

of

$

6.0

million

during

the

year

ended

June

30,

2022,

related

to

the

acquisition of Connect. On acquisition, the Company recognized

a deferred tax liability of approximately $

50.3

million related to the

of

Connect

assets

during

the

year

ended

June

30,

The

final

price

allocation

of

the

Connect

acquisition, translated at the foreign exchange rates applicable on the date

of acquisition, is provided in the table below:

Connect

April 2022

$

38,423

Accounts receivable

24,032

Finance loans receivable

15,706

11,431

Property, plant and equipment

20,872

Operating lease right of use asset

Equity-accounted investment

153,693

179,484

Deferred income taxes assets

2,284

Short term facilities

(16,903)

(27,914)

Other payables

(4,793)

Operating lease liability – current

(434)

Current portion of long – term borrowings

Income taxes payable

(982)

Deferred income taxes liabilities

(50,255)

(319)

(86,960)

Settlement assets

13,561

Settlement liabilities

(12,875)

Fair value of assets and liabilities on acquisition

$

258,877

net

Accounts receivable, net and other receivables

accounts receivable,

net, and other

receivables as of

2024, and June

30, 2023, are

table below:

Accounts receivable, trade, net

$

13,262

$

11,037

Accounts receivable, trade, gross

14,503

11,546

Allowance for credit losses, end of period

1,241

Reallocation to allowance for credit losses

(1)

(418)

(511)

(31)

1,305

2,005

(67)

(1,645)

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

net of

allowance: 2024: $

2023: $

1,000

Current portion of total held to maturity investments

7.625

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

8.625

%

notes

Other receivables

23,405

14,628

Total accounts receivable,

net

$

36,667

$

25,665

(1) Represents reallocation

of a portion of

the Merchant allowance for

credit losses as of

June 30, 2022, which

was included in

the allowance for credit losses as of June 30, 2022.

Trade receivables include amounts

due from customers

which generally have

a very

short-term life from

date of invoice

or service

provided to settlement. The duration

is less than a year in all cases and

generally less than 30 days in many

instances. The short-term

nature

of

these

exposures

often

results

in

at

that

are

disproportionately

small

to

the

total

invoiced

The

balance

are

more

volatile

than

the

monthly

invoice

amounts

because

they

are

by

operational timing issues and

the fact that a balance

is outstanding at month-end

is not necessarily an indication

of increased risk but

rather a matter of operational timing.

Credit risk in respect of trade receivables are generally not

significant and the Company has not developed a sophisticated model

for these basic

credit exposures. The

Company determined to

use a lifetime

loss rate by

expressing write-off experience as

a percentage

of corresponding

invoice amounts

(as opposed

to outstanding

balances). The

allowance for credit

losses related to

these receivables

has

been

by

the

loss

rate

with

recent

invoice/origination

actively

monitors

performance of these receivables over

short periods of time. Different

balances have different rules to

identify an account in distress.

Once balances

in distress are

identified, specific

allowances are immediately

created. Subsequent

recovery from distressed

is not significant.

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

to the sale of

the Company’s interest in Carbon Tech Limited (“Carbon”),

which was accounted for

as an equity-accounted investment,

of $

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

$

3.0

million, which was

sold in September

2022 for

$

0.75

million, net of

for

doubtful loans

receivable of

$

0.75

million, refer

to Note 9

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

loans

receivable of

$

0.25

million during

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.

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

respectively was $

(zero).

No

interest income from the Cedar Cellular note was recorded during the years ended June 30, 2024, 2023

Interest, if any,

on this investment

will only be

paid, at Cedar

Cellular’s election, on

its maturity which

is in

the process of being extended beyond its original date of August 2022.

net

Accounts receivable, net and other receivables (continued)

The Company does not expect

to recover the amortized cost

basis of the Cedar

Cellular notes due to its

assessment that the equity

in Cell

C currently

has no

value

which

would

there

being

no future

to be

collected

from

on

maturity.

The Company could

not calculate an

effective interest

rate on the

Cedar Cellular note

because the carrying

value was zero

($

0.0

million) as of June 30, 2024 and 2023. The Company

therefore could not calculate the present value of the expected cash flows

to be collected from the debt security by discounting these cash flows at the interest rate implicit in the security upon acquisition (at a

rate of

24.82

%) because there are no future cash flows to discount.

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 June 30, 2024:

Estimated

fair

value

(1)

Due in one year or less

(2)

$

$

Due in one year through five years

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).

Finance loans receivable, net

The Company’s finance

loans receivable, net, as of June 30, 2024, and June 30, 2023, is presented in the table

below:

Microlending finance loans receivable, net

$

28,184

$

20,605

Microlending finance loans receivable, gross

30,131

22,037

Allowance for credit losses - finance loans receivable, end of period

1,947

1,432

1,432

1,394

(210)

2,454

1,452

(1,795)

(1,214)

(200)

Merchant finance loans receivable, net

15,874

16,139

Merchant finance loans receivable, gross

18,571

18,289

Allowance for credit losses - finance loans receivable, end of period

2,697

2,150

2,150

Reallocation from allowance for credit losses

(1)

(359)

(1,268)

2,479

3,068

(1,672)

(365)

Total finance

loans receivable, net

$

44,058

$

36,744

(1) Represents reallocation of

a portion of the

Merchant allowance for credit losses

• finance loans receivable

as of June 30,

2022,

which was included in the allowance for credit losses as of June 30, 2022.

net

Finance loans receivable, net (continued)

Total finance

loans receivable, net, comprises microlending finance loans receivable related to the Company’s

Africa as

well as

its merchant

to Connect’s

lending activities

Africa.

Certain merchant finance

loans receivable with

an aggregate balance

of $

15.2

million as

2024 have been

pledged as security

for the Company’s revolving

credit facility (refer to Note 12).

Microlending finance loans receivable

Microlending finance loans receivable is related to the Company’s

microlending operations in South Africa whereby it provides

unsecured short-term

loans to qualifying

customers. Loans to customers

have a tenor

of up to

six months

, with the majority

of loans

originated having

a tenor of

six months

. The Company

analyses this lending

book as a

single portfolio

loans within the

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

the credit risk of the lending book.

Refer to Note 6 related to the Company risk management process related to these

receivables.

The Company has operated this lending book for more than

five years

and uses historical default experience over the lifetime of

loans in order

to calculate a

for the lending

book. The allowance

for credit losses

related to these

microlending finance

loans receivables

is calculated

by multiplying

the lifetime

loss rate

month end

outstanding lending

book. The

lifetime loss

rate as of each

of July 1, 2023

and June 30,

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 June 30, 2024.

Merchant finance loans receivable

Merchant finance loans

receivable is related

to the Company’s

Merchant lending activities

whereby it provides

unsecured

short-term loans

customers. Loans

to customers

have a

tenor of

up to

twelve months

, with

of

loans originated having a tenor of approximately

eight months

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

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

of the lending book.

Refer to Note 6 related to the Company risk management process related to these receivables.

The

Company

has

recently

(in

the

past

)

commenced

lending

to

and

uses

historical

default

experience over

the lifetime of

loans generated thus

far in order

to calculate a

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

June

30,

2024,

was

1.18

%.

The

(that

is,

loan

not

in

arrears),

under-

in arrears)

and non-performing

loans

for

which

appeared

to have

ceased)

of the

book represents

%,

% and

%,

of the

outstanding lending book as of June 30, 2024.

INVENTORY

The Company’s inventory

comprised the following categories as of June 30, 2024, and 2023.

Raw materials

$

2,791

$

2,819

Work in

progress

Finished goods

15,364

24,488

$

18,226

$

27,337

2023, finished goods

includes $

1.8

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

to

Cell C’s

recapitalization process,

limited the

resale of

this airtime

to its

own distribution

channels. On

September 30,

2022, Cell C concluded its recapitalization process and the Company and Cell

C entered into an agreement under which Cell C

agreed

to

repurchase,

from

October

2023,

up

to

ZAR

million

of

Cell

C

from

the

Company

per

month.

The

amount

to

be

repurchased by

Cell C was

calculated as

ZAR

million less the

face value

of any

sales made

by the

Company during

that month.

ability to

sell this

airtime increased

significantly since

because Connect

is a

reseller of Cell C airtime. As a result, the Company sold higher volumes of airtime through this channel than it did prior to the Cell C

recapitalization. The Company agreed to notify Cell C prior to selling any of this airtime, however,

there was no restriction placed on

the Company on the sale of the airtime. The Company has sold all of this inventory

as of the end of August 2024.

OF FINANCIAL INSTRUMENTS

Fair value of financial instruments

Initial recognition and measurement

Financial instruments

are recognized

when the

Company becomes

a party

to the

transaction. Initial

measurements are

at cost,

which includes transaction costs.

Risk management

The Company manages its exposure

to currency exchange, translation, interest rate,

credit, microlending credit and equity price

and liquidity risks as discussed below.

Currency exchange risk

The Company is subject to currency exchange risk because it purchases components

for its vaults, that the Company assembles,

and inventories

that it is

settle in other

currencies, primarily

the euro, renminbi,

and U.S. dollar.

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

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

control,

there can be no

assurance that future fluctuations will

not adversely affect the Company’s results of operations and

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,

date of

these consolidated

annual financial

statements, stabilized

and are

expected to

remain at

current levels,

or

perhaps even

decline moderately

towards the last

quarter of calendar

2024. Therefore,

ignoring the impact

of changes to

the margin

on its borrowings (refer to Note 12), the Company expects its

cost of borrowing to remain stable, or even to decline moderately, in the

foreseeable

future, however

if the

upward trend

resumes

would

expect

higher interest

rates in

the future

which

will

increase its

cost of

borrowing. The

Company periodically

evaluates the

cost and

of interest

rate hedging

strategies to

manage

this

risk.

The

Company

maintains

surplus

cash

in

cash

equivalents

and

held

to

maturity

and

has

occasionally invested in marketable securities.

Credit risk

Credit

risk

relates

to

the

risk

of

loss

that

the

Company

would

incur

as

a

result

of

non-performance

by

counterparties.

The

Company

maintains

credit

risk

in

respect

of

its

counterparties

to

minimize

overall

credit

risk.

These

include

an

of

a

counterparty’s

condition,

credit

rating,

and

other

credit

and

risk

mitigation

tools

as

the

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

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

is exposed

to credit

risk in

its Consumer

microlending activities,

which provides

unsecured short-term

loans to

qualifying customers.

Credit bureau

checks as

well as

an affordability

test are

conducted as

part of

the origination

process, both

of

which are in line with local regulations. The Company considers this

policy to be appropriate because the affordability test it

performs

takes into account

a variety of

factors such

as other debts

and total expenditures

on normal household

and lifestyle expenses.

may

should the

ability of

its customers

to make

payments when

due

deteriorate

in the

future. Judgment

is

required to assess

the ultimate recoverability

of these finance

loan receivables, including

ongoing evaluation

of the creditworthiness

of each customer.

Risk management (continued)

The Company maintains an allowance for

doubtful finance loans receivable related to

its Merchant services segment with

respect

to short-term loans to qualifying merchant customers. The

Company’s risk management procedures include adhering to its proprietary

lending criteria which uses

an online-system loan application

process, obtaining necessary customer transaction-history

data and credit

bureau checks.

The Company considers

these procedures

to be appropriate

because it takes

into account

a variety of

factors such

as

the customer’s credit capacity and customer-specific

risk factors when originating a loan.

Equity price and liquidity risk

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

of equity

securities that

it holds.

The market

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

on

which

those

are

listed.

The

Company

may

not be

able

to

sell some

or

all

of

these

at

one

time,

or

over

an

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

or at all.

Financial instruments

Fair value

is defined

as the price

that would

be received

upon sale

of an

asset or

paid upon

transfer of

a liability

in an orderly

transaction between

market participants

at the

measurement date

and in

the principal

or most

advantageous market

for that

asset or

liability. The

fair value should be calculated based

on assumptions that market participants

would use in pricing the asset

or liability,

not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk

including the Company’s own credit

risk.

Fair value measurements and inputs are categorized into a

fair value hierarchy which prioritizes the inputs into

three levels based

on the

extent to which

inputs used

in measuring

are observable

in the

market. Each fair

value measurement

is reported in

one of the three levels which is determined by the lowest level input that is significant

to the fair value measurement in its entirety.

These levels are:

●

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments

traded in active markets.

●

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar

instruments in

markets that

are not

active, and

model-based valuation

techniques for

which all

significant assumptions

are

in the

market or

can be

corroborated

by observable

market

data for

substantially the

full term

of the

assets or

liabilities.

●

Level

–

inputs

are

unobservable

and

typically

reflect

of

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.

section describes

the valuation

methodologies the

Company uses

to measure

its significant

financial assets

and

liabilities at fair value.

Asset measured at fair value using significant unobservable inputs – investment

in Cell C

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

its investment

in Cell

C as of

and valued Cell

C at $

0.0

(zero) and

$

0.0

(zero) as

of

June 30, 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 assumed a

the marketability

discount of

% and a

minority discount from

of

%. The Company

utilized the latest

business plan provided

by

Cell C management for the period ended December 31, 2027, for the June 30, 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 June 30, 2024 and 2023:

Weighted Average

Cost of Capital ("WACC"):

Between

% and

% over the period of the forecast

Long-term growth rate:

4.5

% (

4.5

Marketability discount:

% (

Minority discount:

% (

Net adjusted external debt - June 30, 2024:

(1)

ZAR

0.4

billion), no lease liabilities included

Net adjusted external debt - June 30, 2023:

(2)

ZAR

8.1

0.4

billion), no lease liabilities included

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

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

June 30, 2023.

of Cell C

30, 2024, utilizing

the discounted

cash flow valuation

model developed

by the Company

is

sensitive to the following inputs: (i) the ability of Cell C to

achieve the forecasts in their business case; (ii) the weighted

average cost

of capital

(“WACC”)

rate used;

and (iii)

the minority

and marketability

discount used.

Utilization of

different inputs,

or changes

to

these inputs, may result in a significantly higher or lower fair value measurement.

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

Cell C investment of a

1.0

% decrease and

1.0

%

increase in the WACC rate and the EBITDA margins used

in the Cell

C valuation on June

30, 2024, all amounts translated at

rates applicable as of June 30, 2024:

Sensitivity for fair value of Cell C investment

1.0% increase

1.0% decrease

WACC

rate

$

$

1,010

EBITDA margin

$

$

The fair value of

the Cell C shares as

of June 30, 2024,

represented approximately

% of the Company’s

total assets, including

these shares.

The Company expects to

hold these shares for

an extended period

of time and that

there will be short-term

equity price

volatility with respect to these shares particularly given the current situation of

Cell C’s business.

Derivative transactions - Foreign exchange contracts

As part

of the

risk management

strategy,

enters into

derivative transactions

to mitigate

exposures to

foreign

currencies

using

foreign

contracts. These

foreign

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.

uses quoted

prices in

active markets

for similar

to determine

(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

no

outstanding foreign exchange contracts as of June 30, 2024 and June 30,

Derivative transactions - Foreign exchange option contracts during the year ended June

30, 2022

The Company held a significant amount of U.S. dollars in early fiscal 2022 and intended to use a portion of these funds to settle

part of the purchase

consideration related to the

Connect acquisition. The purchase

consideration was expected

to be settled in

ZAR.

the

Company

entered

into

foreign

option

with

FirstRand

Bank

Limited

acting

through

its

Rand

Merchant Bank division (“RMB”) in November 2021

in order to manage the risk of currency volatility and to fix

the ZAR amount to

be

for

part

of

the

settlement. These

foreign

option

contracts,

also

known

as

synthetic

forwards, were over-the-counter derivative transactions (Level 2). RMB’s long

-term credit rating is “BB”. The Company used quoted

prices in active markets for similar assets and liabilities to determine fair value

of the foreign exchange option contracts (Level 2).

marked-to-market the synthetic

forwards as of

December 31, 2021,

using a Black-Scholes

option pricing model

which determined

the respective fair

value of the

options utilizing

current market

parameters. During

the year ended

June 30, 2022,

the Company recorded a net gain of $

3.7

million, which comprised a net gain of $

6.1

million (which includes the reversal of the $

2.4

.

million unrealized

loss which

was previously

recognized) recorded

three months

ended March

2022, and

the unrealized

loss of $

2.4

million recorded during

the three months ended

December 31, 2021.

The net gain is

included in the caption

gain related

to fair value adjustment to currency options in the Company’s consolidated statements of operations for the year ended June 30, 2022.

The following table presents the

Company’s assets measured

at fair value on a recurring basis as of

June 30, 2024, according to

the fair value hierarchy:

Quoted Price in

Active Markets for

Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

Assets

Investment in Cell C

$

$

$

$

Related to insurance business:

Cash, cash equivalents and

restricted cash (included in other

long-term assets)

Fixed maturity investments

(included in cash and cash

equivalents)

4,635

4,635

Total assets at fair value

$

4,851

$

$

$

4,851

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

(included in other long-term

assets)

Fixed maturity investments

(included in cash and cash

equivalents)

3,119

3,119

Total assets at fair value

$

3,377

$

$

$

3,377

There have been

no

transfers in or out of Level 3 during the years ended June 30, 2024, 2023 and 2022, respectively.

There was

no

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

3, during the years ended June 30, 2024

and 2023. Summarized below is the movement in

the carrying value of assets measured at fair

value on a recurring basis, and categorized within Level 3, during the year

ended June 30, 2024:

Assets

$

(1)

$

(1) The

of the South

African rand

against the

on the carrying value.

Summarized below is the movement in the carrying value of

assets and liabilities measured at fair value on a recurring

basis, and

categorized within Level 3, during the year ended June 30, 2023:

Assets

Balance as at June 30, 2022

$

(1)

$

(1) The

of the South

African rand

against the

on the carrying value.

Trade, finance loans and other receivables

Trade,

receivables originated

by the

Company

are stated

at cost

less allowance

receivable. The fair value

of trade, finance loans

and other receivables approximates their

carrying value due to

their short-term nature.

Trade and other payables

The fair values of trade and other payables approximates their carrying amounts, due

to their short-term nature.

Assets and liabilities measured at fair value on a nonrecurring basis

measures equity

investments without

readily determinable

at fair

value on

a nonrecurring

basis. The

fair values of

these investments are

determined based on

valuation techniques using

the best information

available, and may

include

quoted market prices, market comparables, and discounted cash flow

projections. An impairment charge is recorded when the cost

of

the

asset

exceeds

its

fair

value

and

the

excess

is

to

be

other-than-temporary.

Refer

to

Note

for

charges

recorded during the

reporting periods presented

herein. The Company

has

no

liabilities that

are measured at

on a

nonrecurring

basis.

PROPERTY,

PLANT AND EQUIPMENT,

net

is the cost,

accumulated depreciation

and carrying amount

of property,

equipment as of

2024 and 2023:

Cost

Vaults

$

24,641

$

19,229

44,538

35,158

9,365

7,508

3,088

2,070

81,698

64,010

Accumulated depreciation:

Vaults

8,838

4,353

32,871

25,645

6,854

5,602

1,165

49,762

36,563

Carrying amount:

Vaults

15,803

14,876

11,667

9,513

2,511

1,906

1,923

1,115

$

31,936

$

27,447

LEASES

The

Company

has

leasing

classified

as operating

leases under

guidance.

These leasing

relate primarily

to the

lease of

its corporate

head

office,

offices,

a manufacturing

facility,

and branch

locations through which the

Company operates its financial services

business in South Africa.

operating leases have

a remaining

lease term

of between

one year

to

five years

. The

Company also

operates parts

of its

business from

locations which it leases for a period of less than

one year

.

operating lease expense

during the years

2022, was $

3.2

2.9

and $

4.0

million, respectively. The Company

does not have any significant leases that have not commenced as of June 30, 2024.

has entered into

short-term leasing

arrangements, primarily

for the lease

of branch

locations and other

locations

its financial

services business

Africa.

short-term lease

expense during

30,

2024, 2023 and 2022, was $

3.6

4.2

4.9

LEASES (continued)

table presents

supplemental

balance sheet

disclosure related

to our

right-of-use assets

and our

operating leases

liabilities as of June 30, 2024 and 2023:

Right-of-use assets obtained in exchange for lease obligations

Weighted average

remaining lease term (years)

3.07

1.77

Weighted average

discount rate

10.5

%

9.7

%

Maturities of operating lease liabilities

$

3,143

2,442

1,864

1,226

Total undiscounted

operating lease liabilities

8,831

Less imputed interest

1,401

Total operating lease liabilities,

7,430

Operating lease liability - current

2,343

$

5,087

INVESTMENTS AND OTHER LONG-TERM ASSETS

Equity-accounted investments

The Company’s ownership percentage

in its equity-accounted investments as of June 30, 2024 and 2023, was as follows:

Sandulela Technology

Proprietary Limited ("Sandulela")

%

%

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

%

%

Finbond Group Limited (“Finbond”)

%

%

Finbond

In December

Company sold

remaining equity

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. Lesaka

SA had pledged, among other things, its entire equity interest in Finbond as security for the South African facilities described in Note

Sale of Finbond shares during the years ended

June 30, 2024, 2023 and 2022

On

August

10,

2023,

the

through

its

wholly

owned

Net1

Finance

Holdings

(Pty)

Ltd,

entered

into

an

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

64.2

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

no

t record a gain or loss on the disposal

because the sale proceeds were equivalent

to

the net carrying

value, including accumulated

reserves, of the

investment in Finbond

as of

the disposal

date. The cash

proceeds received

of ZAR

64.2

3.5

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

to Note 12.

The

Company

sold

25,456,545

and

22,841,030

shares

in

Finbond

for

cash

during

the

years

ended

June

30,

and

2022,

respectively, and recorded a loss of $

0.4

0.4

million in the caption loss

on equity-accounted investment in the

consolidated statement of operations for the years ended June 30,

2023 and 2022.

Finbond (continued)

Sale of Finbond shares during the years ended

June 30, 2024, 2023 and 2022 (continued)

The following table presents the calculation of

the loss on disposal of Finbond

shares during the years ended June

30, 2024, 2023

Year

Loss on disposal of Finbond shares:

Consideration received in cash

$

3,508

$

$

Less: carrying value of Finbond shares sold

(2,112)

(363)

(630)

Less: release of foreign currency translation reserve from accumulated

other comprehensive loss

(1,543)

(252)

(620)

Add: release of stock-based compensation charge related

to equity-

accounted investment

Loss on sale of Finbond shares

$

$

(341)

$

(376)

Finbond impairments

the year ended June 30, 2024

As noted

earlier,

an agreement

to exit

its position

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

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

interest in Finbond and

carrying value, including

the

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

the year ended June 30, 2023

considered the combination

of the ongoing

losses incurred and

reported by Finbond

and its lower

share price as

impairment indicators as of

September 30, 2022. The

Company performed an impairment

assessment of its holding

in Finbond as of

September 30,

2022. The Company

recorded an impairment

loss of $

1.1

million during the

other-than-temporary

decrease

in

Finbond’s

value,

which

the

between

the

fair

value

of

the

Company’s interest

in Finbond and the Company’s

carrying value (before the impairment).

During fiscal 2023, there continued

to be

limited trading

shares on

the JSE

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

% (used in

the September 30,

2022 assessment) as

the ongoing limited

trading activity

observed on the JSE.

Carbon

In September

2022, the

through its

wholly-owned subsidiary,

Net1 Applied

Technologies

Netherlands B.V.

(“Net1

BV”),

entered

into

a binding

term

sheet

Etobicoke

Limited

(“Etobicoke”)

to sell

interest, or

%,

in Carbon

to

Etobicoke for $

0.5

million and a loan

due from Carbon, with

a face value of

$

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 agreed that

Etobicoke pledge the

Carbon shares

purchased as security for the amounts outstanding under the binding term sheet.

The

Company

$

0.25

million

on

closing

and

the

balance

due

by

Etobicoke

was

to

be

paid

as

follows: (i) $

0.25

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

0.75

million in March

2024 (the amount

has not been

received as of

(refer to Note

4)). Both amounts

were included in

the

caption accounts receivable, net and

other receivables in the

Company’s consolidated balance sheet as of June

30, 2023. The Company

has allocated the $

0.25

million received on closing

to the sale of

the equity interest and

allocated the subsequent

funds received first

to the sale of the equity interest and then to the loans.

Carbon (continued)

believed that

the Carbon

shares provided

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.

did not

incur any significant

transaction costs.

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

consolidated statements of operations.

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

during the year ended June 30, 2023:

Year

ended

Gain on disposal of Carbon shares:

Consideration received in cash in September 2022

$

Less: carrying value of Carbon

Gain on disposal of Carbon shares:

(1)

$

(1)

The

Company

did

not

pay

taxes

related

to

the

sale

of

Carbon

because

the

base

cost

of

its

exceeds

the

sales

received.

believe

that it

will be

able to

utilize the

loss generated

because

Net1 BV

does

not

generate taxable income.

Bank Frick

Sale of entire interest in Bank Frick in February 2021 – receipt of cash proceeds during the year ended June 30, 2022

On February 3, 2021,

the Company, through its wholly-owned subsidiary, Net1 Holdings LI

AG (“Net1 LI”), entered

into a share

sales agreement

with the Frick

Family Foundation

(“KFS”) to sell

its entire interest,

or

%, in Bank

Frick to KFS

for $

Lesaka and certain entities within the

IPG group also entered into an

indemnity and release agreement with KFS

and Bank Frick under

which

the

parties

agreed

to

terminate

all existing

with

Bank

Frick

and

settle all

related

to

the

activities with Bank Frick

through the payment of

$

3.6

million to KFS. The Company

received $

15.0

million, net, on closing, which

comprised $

18.6

million less the

$

3.6

million due to

KFS to terminate

all existing arrangements

with Bank Frick

and settle all

related to IPG’s activities with Bank Frick. The outstanding

balance due by KFS of $

11.4

million was received in full during the year

ended June 30, 2022.

V2 Limited

The Company sold its investment in V2 Limited, now named VantagePay,

(“V2”),

an equity accounted investment, on April 22,

2021,

for

one

dollar.

The

Company

had

also

committed

to provide

V2

with

a working

capital

of $

5.0

which

was

the achievement

of certain

pre-defined objectives,

and in

June 2020

it provided

$

0.5

million to

V2 under

this facility.

In

September 2020, the Company and V2 agreed to reduce the $

5.0

million working capital facility to $

1.5

million. In October 2020, V2

drew down the remaining available $

1.0

million of the working capital facility. The Company created an allowance for doubtful loans

receivable of $

1.5

million during the year

ended June 30, 2021,

related to the full

amount outstanding as of

June 30, 2021. This

amount

was still outstanding as of June 30, 2024.

Summarized

below is

the movement

in equity-accounted

investments during

which

includes the investment in equity and the investment in loans provided

to equity-accounted investees:

Finbond

Other

(1)

Total

Investment in equity

$

5,760

$

$

5,861

Comprehensive loss:

(1,271)

(1,182)

Other comprehensive income

3,935

3,935

Equity accounted (loss) earnings

(5,206)

(5,117)

(4,096)

(4,007)

(1,110)

(1,110)

Dividends received

(42)

(42)

Sale of shares in equity-accounted investment

(506)

(506)

(2)

(971)

(17)

(988)

3,040

3,171

Comprehensive (loss) income:

(956)

(790)

Other comprehensive income

Equity accounted (loss) earnings

(1,445)

(1,279)

Share of (loss) net income

(278)

(112)

(1,167)

(1,167)

Dividends received

(95)

(95)

Sale of shares in equity-accounted investment

(2,096)

(2,096)

(2)

(2)

$

$

$

Investment in loans:

$

$

$

Loans repaid

(112)

(112)

Loans granted

$

$

$

Equity

Loans

Total

Carrying amount as of :

June 30, 2023

$

3,171

$

$

3,171

$

$

$

(1) Includes Carbon,

Sandulela and SmartSwitch Namibia;

(2) The foreign

currency adjustment represents

of the ZAR,

Nigerian naira

and Namibian dollar,

Other long-term assets

Summarized below is the breakdown of other long-term assets as of June 30,

2024, and June 30, 2023:

Total equity investments

$

76,297

$

76,297

% (June 30, 2023:

%) of MobiKwik

(1)

76,297

76,297

% of Cell C (June 30, 2023:

%) at fair value (Note 6)

87.50

% of CPS (June 30, 2023:

87.50

%) at fair value

(1)(2)

Policy holder assets under investment contracts (Note 11)

Reinsurance assets under insurance contracts (Note 11)

1,469

1,040

Total other long-term

assets

$

77,982

$

77,594

(1)

that

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.

signed a

subscription agreement

with MobiKwik,

one of

India’s

largest independent

mobile payments

networks and buy now

pay later businesses.

Pursuant to the

subscription agreement, the Company agreed

to make an

equity investment

of up to $

40.0

million in MobiKwik over a

-month period. The Company made an

initial $

15.0

million investment in August 2016

and a

further

$

10.6

million investment

in June

2017,

under this

subscription

agreement.

2019, the

Company paid $

1.1

million to subscribe

for additional shares in

MobiKwik. As of

each of June 30,

2024 and 2023, respectively,

the

Company owned approximately

% of MobiKwik’s issued share capital.

In October

2021, the

Company converted

(at a

rate of

for 1)

its

310,781

compulsorily convertible

cumulative

preferences

shares

to

6,215,620

equity

shares

in

anticipation

of

MobiKwik’s

initial

public

offering.

The

percentage

remained

unchanged

the

conversion.

The

Company

did

not

identify

any

during the years ended June 30, 2024,

2023 and 2022, respectively,

and therefore there was no change in

the fair value of MobiKwik

during these years. Change in the fair value of MobiKwik are included in the caption “Change in fair value of equity securities” in the

consolidated statement of operations. During

the year ended June 30, 2021, MobiKwik

entered into a number of separate agreements

with new

to raise

capital through

the issuance

of additional

shares. The

Company

used the

from

MobiKwik’s June 2021

capital raise as the basis for its fair value determination of $

76.3

Cell C

On

August

2,

2017,

the

through

its

subsidiary,

Net1SA,

purchased

75,000,000

class

“A”

shares

of

Cell

C

for

an

aggregate purchase price of ZAR

2.0

151.0

million) in cash. The Company funded the transaction through

a combination of

cash and a

borrowing facility.

Net1 SA has

pledged, among other

things, its entire

equity interest in

Cell C as

security for the

South

African

in

Note

On

30,

2022,

Cell C

completed

its recapitalization

process

which

the

issuance of additional equity instruments by Cell C. The Company’s effective percentage holding in Cell C’s equity

has reduced from

% to

% following the recapitalization. The Company’s

investment in Cell C is carried at fair value. Refer

to Note 6 for additional

information regarding changes in the fair value of Cell C.

CPS

deconsolidated

its investment

in CPS

in May

2020. As

of June

owned

87.5

% of CPS’ issued share capital.

Other long-term assets (continued)

Revix

In February 2022,

the Company sold its

entire interest in

Revix UK Limited

for cash of

$0.7 million because

the Company did

not consider

the investment

core to

its strategy

in Southern

Africa. The

Company

had

previously written

this

investment to

$

(nil) and recognized

a gain on

disposal of $

0.7

million, which

is included in

the caption gain

on disposal of

equity

securities in the Company’s

consolidated statements of operations for the year ended June 30, 2022.

are the components

without readily

determinable fair

value and held

to

maturity investments as of June 30, 2024:

holding gains

holding losses

Carrying

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

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:

holding gains

holding losses

Carrying

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

ASSETS,

net

Summarized below is the movement in the carrying value of goodwill

for the years ended June 30, 2024, 2023 and 2022:

Gross value

$

42,949

$

(13,796)

$

29,153

Acquisition of Connect (Note 3)

(2)

153,693

153,693

(1)

(21,166)

175,476

(12,819)

162,657

(7,039)

(7,039)

(1)

(22,857)

152,619

(18,876)

133,743

(1)

5,280

(472)

4,808

$

157,899

$

(19,348)

$

138,551

(1) – The

between the South

African Rand and

the Euro,

(2) – Represents

goodwill arising from

the acquisition of

Connect and translated

at the foreign exchange

rate applicable on the

date the transaction became effective. This goodwill has been

allocated to the merchant reportable operating segment.

ASSETS,

net (continued)

Goodwill (continued)

with

the

of

Connect

excess

of

cost

over

the

fair

value

of

net assets.

Connect goodwill

is not deductible

for tax purposes.

See Note 3

for the allocation

of the purchase

price to the

net assets.

The Company assesses the carrying

value of goodwill for impairment

annually, or

more frequently,

whenever events occur and

circumstances change indicating

potential impairment. The Company

performs its annual impairment

test as at June 30 of

each year.

Except as discussed below,

no

goodwill has been impaired during the years ended June 30, 2024, 2023

Year ended

June 30, 2023 goodwill impairment loss

recognized an

impairment loss

of $

7.0

million as

of its

annual impairment

analysis related

to goodwill

to

its

hardware/

software

support

within

its

The

loss

resulted

from

a

reassessment

of

the

business’

growth

prospects

given

the

change

in

demand

as

a

result

of

the

introduction

of

cheaper

hardware devices which incorporate

software widely adopted by our customers

customer-base, coupled with a challenging

environment

in

South

Africa.

The

is

within

the

caption

loss

in

the

of

operations for the year ended June 30, 2023.

In order to determine the

amount of the goodwill

impairment, the estimated fair value

of our hardware/ software support business

assets and liabilities were compared to the carrying

value of its assets and liabilities.

The Company used a discounted cash flow model

to determine

the business.

Based on

this analysis,

determined that

the carrying

the

business’ assets and liabilities exceeded their fair value at the reporting date.

In the event that there is a deterioration in the Company’s operating segments, or in any other of the Company’s

businesses, this

may lead

to impairments

in future

periods.

difficulties of

integrating acquired

businesses may

be increased

by the

necessity of integrating personnel with disparate

business backgrounds and combining different corporate cultures. The

Company also

may not be able to retain key employees or

customers of an acquired business or realize cost

efficiencies or synergies or other benefits

that it

anticipated when

selecting its

acquisition candidates.

Acquisition candidates

may have

liabilities or

adverse operating

issues

that the Company fails to discover through due diligence prior to the acquisition. These factors may also lead to impairments in future

periods.

Goodwill has been allocated to the Company’s

reportable segments as follows:

$

$

29,153

$

29,153

Acquisition of Connect (Note 3)

153,693

153,693

(1)

162,657

162,657

(7,039)

(7,039)

(1)

133,743

133,743

(1)

4,808

4,808

$

$

138,551

$

138,551

(1) –

The foreign

currency adjustment

effects of

the fluctuations

rand and

the Euro,

ASSETS,

net

Intangible assets acquired

is the

of intangible

assets acquired,

translated at

the exchange

rate applicable

as of

the relevant

acquisition dates, and the weighted-average amortization period:

Fair value as of

acquisition date

Weighted-average

period (in years)

Finite-lived intangible asset:

Acquired during the year ended June 30, 2022:

Connect – integrated platform

$

142,981

Connect – customer relationships

20,516

Connect – brands

$

15,987

assesses the carrying

for impairment

whenever events

occur or

circumstances change

indicating that the carrying amount of the intangible asset may not be recoverable.

No

intangible assets have been impaired during the

years ended June 30, 2024, 2023 and 2022, respectively.

Summarized below is the carrying value and accumulated amortization of the intangible assets as of June 30, 2024, and June 30,

2023:

As of June 30, 2024

As of June 30, 2023

Gross

value

Net

value

Gross

value

Net

value

Finite-lived intangible assets:

Customer relationships

$

25,880

$

(14,030)

$

11,850

$

24,978

$

(11,565)

$

13,413

Software, integrated

platform and unpatented

115,213

(25,763)

89,450

110,906

(13,711)

97,195

2,107

(2,107)

2,034

(2,034)

Brands and trademarks

14,353

(4,300)

10,053

13,852

(2,863)

10,989

Total finite-lived

$

157,553

$

(46,200)

$

111,353

$

151,770

$

(30,173)

$

121,597

expense on

the finite-lived

for

the

years

30,

2024,

and

2022,

was

14.4

15.0

3.8

Future estimated annual amortization expense for the next five

fiscal years and thereafter, using the exchange rates that prevailed

on June

30, 2024, is

table below.

Actual amortization

expense in future

periods could differ

from this estimate

as a

result of acquisitions, changes in useful lives, exchange rate fluctuations and other

relevant factors.

Fiscal 2025

$

14,945

Fiscal 2026

14,944

Fiscal 2027

14,888

Fiscal 2028

14,853

Fiscal 2029

14,743

36,980

Total future

estimated annual amortization expense

$

111,353

ASSETS AND POLICYHOLDER LIABILITIES UNDER INSURANCE AND

INVESTMENT CONTRACTS

Reinsurance assets and policyholder liabilities under insurance contracts

Summarized below is the movement in reinsurance assets and policyholder liabilities under

insurance contracts during the years

ended June 30, 2024 and 2023:

Reinsurance

Assets

(1)

Insurance

(2)

Balance as of July 1, 2022

$

1,424

$

(1,955)

Increase in policy holder benefits under insurance contracts

(5,833)

Claims and policyholders’ benefits under insurance contracts

(986)

5,928

(3)

(183)

1,040

(1,600)

Increase in policy holder benefits under insurance contracts

(7,610)

Claims and policyholders’ benefits under insurance contracts

(464)

7,043

(3)

(74)

$

1,469

$

(2,241)

(1) Included in other long-term assets (refer to Note 9);

(2) Included in other long-term liabilities;

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

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

if

the reinsurer is unable to meet its obligations, the Company retains the liability.

The value of insurance contract liabilities is based on

the best

estimate assumptions

of future

experience plus

prescribed margins,

as required

in the

markets in

which these

products are

offered, namely

South Africa. The

process of deriving

the best estimates

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 years

30, 2024 and 2023:

Assets

(1)

Investment

(2)

Balance as of July 1, 2022

$

$

(349)

Increase in policy holder benefits under investment contracts

(6)

Claims and decrease in policyholders’ benefits under investment contracts

(69)

(3)

(51)

(241)

Increase in policy holder benefits under investment contracts

(4)

Claims and decrease in policyholders’ benefits under investment contracts

(44)

(3)

(1)

(15)

$

$

(216)

(1) Included in other long-term assets (refer to Note 9);

(2) Included in other long-term liabilities;

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

The Company does not offer any investment products with guarantees

related to capital or returns.

BORROWINGS

The

amounts

below

have

been

at

rates

as

of

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, on June

30, 2024, was

8.4

%. The prime rate, the benchmark

rate at which private sector banks

lend to the public in South

Africa, on June 30,

2024, was

11.75

%.

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

On July 21,

2017, Lesaka SA

Common Terms

Agreement, Subordination

Agreement, Security

Cession & Pledge

and

certain

ancillary

loan

documents

the

“Original

Loan

Documents”)

with

RMB,

a

South

African

and

bank, and

Nedbank Limited

(acting

through its

Corporate

and Investment

Banking division),

an African

and

investment bank (collectively, the “Lenders”).

Since 2017, these agreements have been amended to add

additional facilities, including

Facilities G and H, which were obtained to finance the acquisition of Connect (refer to Note 3). Facilities A, B, C, D and F have been

repaid and cancelled. As of June

30, 2024, the only remaining facilities are

Facility G and Facility H (as defined

below), and Facility

E, an overdraft facility.

Available short-term facility -

Facility E

On

26,

2018,

Lesaka

SA

revised

its

amended

July

agreement

with

RMB

to

include

Facility

E,

an

overdraft facility of up to ZAR

1.5

82.5

million, translated at exchange rates applicable as of June 30, 2024) to fund the cash

in the Company’s

ATMs.

The Facility E overdraft

facility was subsequently

reduced to ZAR

1.2

66.0

million, translated at

exchange rates applicable as

of June 30, 2024) in

September 2019. On August

2, 2021, Lesaka SA and

RMB entered into a Letter

of

Amendment to increase Facility

E from ZAR

1.2

billion to ZAR

1.4

77.0

million, translated at exchange rates

applicable as

of June 30, 2024).

On January 22, 2024,

Lesaka SA and RMB

Letter of Amendment

to decrease Facility E

from ZAR

1.4

billion to ZAR

0.9

49.5

million, translated at exchange rates applicable as of June 30, 2024).

on

the

overdraft

is

payable

on

the

first

day

of

the

month

utilization

of

the

and

on

the

final

maturity date based on the South African prime rate. The overdraft facility amount utilized must be repaid in full within one month of

utilization and

% of

utilized must

be repaid

within

25 days

. The

overdraft facility

is secured

by a

pledge by

of, among

other things,

cash and

certain bank

accounts utilized

in the

ATM

funding process,

the cession

of

Lesaka

SA’s

shareholding

in

Cell

C,

the

cession

of

an

policy

with

Senate

Transit

Underwriters

Managers

Limited, and

any rights

and claims

has against

Grindrod Bank

Limited. As

at June

had utilized

approximately ZAR

0.1

6.7

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.

Long-term borrowings - Facility G and Facility H

16, 2023,

the Company,

through Lesaka

SA, entered

into a

Fifth Amendment

and

Restatement Agreement,

which

includes, among other agreements, an Amended and

Restated Common Terms Agreement (“CTA”), an Amended and Restated Senior

Facility G Agreement (“Facility

G Agreement”) and an

Amended and Restated Senior

Facility H Agreement (“Facility

H Agreement”)

the “Loan

Documents”) with

RMB. Main

Street 1692

(RF) Proprietary

Limited (“Debt

Guarantor”), a

company incorporated

for the sole

purpose of

holding collateral for

the benefit of

the Lenders and

acting as debt

guarantor is also

a

party to

the Loan

Documents. Pursuant

to the

Facility G

Agreement,

may borrow

up to

an aggregate

ZAR

708.6

million. Facility G now

includes a term loan

of ZAR

508.6

million and a

revolving credit facility of

up to ZAR

Pursuant to the Facility H Agreement, Lesaka SA may borrow up to an aggregate

of approximately ZAR

357.4

The Loan

Documents contain

covenants that

require Lesaka

SA to

specified total

asset cover

ratio and

restrict the ability of Lesaka, Lesaka SA, and certain of its subsidiaries to make

certain distributions with respect to their capital stock,

prepay

other debt,

encumber their

assets, incur

additional indebtedness,

make investment

above specified

levels, engage

business combinations and engage in other corporate activities. The

March 16, 2023, amendments to the CTA

include an amendment

to the asset cover

ratio to change the

Covenant Equity Value

(as defined in

the CTA)

definition to include

% of the book

the Lesaka Financial Service Proprietary Limited (formerly known as Moneyline Financial Service Proprietary Limited)

receivables,

and to deduct the net debt

(as defined in the CTA) of Cash Connect Management Solutions

Proprietary Limited (“CCMS”) and K2021

Proprietary Limited (“K2021”) from the respective CCMS and

K2021 valuations. When determining the Covenant Equity Value,

the

value of the aggregate of the CCMS Equity Value

(as defined in the CTA) and the K2021 Equity Value

(as defined in the CTA) must

be at least

per cent of the Covenant Equity Value.

To the extent that the value of the

aggregate of the CCMS Equity Value

and the

K2021 Equity Value

is not at least

per cent of the

Covenant Equity Value,

the Covenant Equity Value

will be reduced so

aggregate of the CCMS Equity Value and the K2021 Equity Value

is

per cent of the Covenant Equity Value. The amendments also

include the removal of a requirement to maintain a minimum group cash balance.

South Africa (continued)

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

long-term borrowings (continued)

Interest on Facility

G and Facility

H (together,

the “Facilities”) was based

on JIBAR in effect

from time to

time plus a margin,

of the amendment,

from January

1, 2023 of:

(i)

5.50

% for as

long as the

aggregate balance

Facilities is greater

million; (ii)

4.25

% if

the aggregate

balance under

is equal

to or

million, but

greater

than ZAR 350

million; or (iii)

2.50

aggregate balance under the

Facilities is less

million. Interest on

may be capitalized

to each of

the facilities, and

will be repaid

on the maturity

date, provided that

the sum of

the outstanding facility

(including interest and fees) plus any accrued interest does

not exceed

1.2

times of the Facilities outstanding balance. Any interest that

exceeds this cap must be settled in full on a quarterly basis.

On

24,

2023,

the

through

Lesaka

SA,

entered

into

an

Amendment

and

Restatement

Agreement

(the

“Amendment”), which

includes an

amendment to

the interest rate

applicable to

Facility G and

Facility H,

Under these

amendments a Look Through Leverage (“LTL”)

ratio, as defined in the Amendment,

was added. The LTL

ratio is expressed as times

(“x”), and was introduced to calculate

the margin used in the determination of

the interest rate. The LTL ratio is calculated as the

Total

Attributable Net

Debt, as defined

in the Loan

Documents, to

the Total

Attributable EBITDA,

as defined

in the

Amendment, for

the

measurement period ending on a specified date.

Facility G

and Facility H

is based

on the

JIBAR in

effect from

time to

time plus

a margin,

which as

the

Amendment, from October 1, 2023,

will be calculated as: (i)

5.50

ratio is greater than 3.50x; (ii)

4.75

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

ratio is less than 1.75x.

Lesaka SA will pay a quarterly commitment fee computed at a rate of

% of the Applicable Margin (as defined in the CTA) on

the amount of the revolving credit facility outstanding

and such commitment fee will also be capitalized,

subject to the cap discussed

above.

The Facilities are repayable in

full on or before

December 31, 2025. The Company

used cash proceeds of ZAR

64.2

3.5

million) received from

the sale of Finbond

shares (refer to Note

9. during the year

ended June 30, 2024,

to repay capitalized interest

under Facility G and Facility H.

The then

amounts available

under

were utilized,

in full,

on April

14,

2022,

to part

In

April 2022,

paid

non-refundable

deal

origination

fees of

ZAR

11.25

million

and

ZAR

5.25

million to the Lenders related to Facility G and Facility H, respectively.

The Facility H

Agreement provides the Lenders

with a right

to discuss the

capitalization of the Lesaka

group with its

and Value

Capital Partners Proprietary

Limited (“VCP”) if Lesaka’s

market capitalization on

the NASDAQ Stock Market

(based on

the closing price

on the NASDAQ Stock

Market) on any day

falls below the USD

equivalent of ZAR

3.250

billion. VCP is required

to maintain an asset cover ratio above

5.00

:1.00, calculated as the total VCP investment fund net

asset value (as defined in the Facility

H agreement) divided by the Facility H borrowings outstanding, measured as of March, June, September and December

each year (as

applicable) (each a

“Measurement Date”). The Lenders

require Lesaka SA to

deliver a compliance certificate

procured from VCP as

of each applicable Measurement Date, which shows the computation

of the asset cover ratio.

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

On March 22, 2023,

the Company, through CCMS, entered

into a First

Amendment and Restatement Agreement, which

includes,

among other

agreements, an

Amended

and Restated

(“CCMS Facilities

Agreement”)

with RMB.

The CCMS

Facilities Agreement was

amended to increase

the Facility B available

under the CCMS Facilities

Agreement by ZAR

200.0

million

to ZAR

550.0

million. The

final maturity

date has

been extended

to December

31, 2027,

and scheduled

principal repayments

have

been amended, with the

first scheduled repayment commencing from March 31, 2026.

30, 2024, the Connect

Facilities include (i) an

overdraft facility (general banking

facility) of ZAR

205.0

11.3

(of which

ZAR

170.0

9.4

million) has

been utilized);

(ii) Facility

A of

ZAR

700.0

38.5

million);

(iii)

Facility B

of ZAR

550.0

30.3

million) (both

fully utilized);

and (iv)

an asset-backed

facility of

ZAR

200.0

11.0

million) (of which ZAR

152.3

8.4

million)has been utilized).

South Africa (continued)

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

(continud)

In February 2023, the Company,

through CCMS, obtained a ZAR

175.0

million temporary increase in its overdraft facility for a

period of

four months

to specifically

purchase of

vouchers. This

temporary increase

was repayable

in

four

equal monthly instalments of ZAR

43.8

million and which commenced

in March 2023. In May 2023,

the Company,

through CCMS,

obtained a ZAR

155.0

million temporary increase

in its overdraft facility

for a period of

one month

to specifically fund the

of prepaid airtime vouchers. This temporary increase was repaid in full in June 2023. Interest at the South Africa prime rate less

0.1

%

was payable on a monthly basis on both of these temporary facilities.

CCMS paid a non-refundable structuring fee of approximately ZAR

5.5

million during the year ended June 30, 2022. Interest on

Facility A and Facility

B is payable quarterly in

arrears based on JIBAR

in effect from time to

time plus a margin.

Interest on the asset-

backed facility is payable quarterly in arrears based on prime in effect

from time to time plus a margin.

Borrowings under

the CCMS

are secured

by a

pledge by

CCMS of,

among other

things, all

of its

equity

shares, its

entire equity

interests in

it owns

and any

claims outstanding.

The CCMS

customary covenants that require CCMS to maintain specified debt service, interest

cover and leverage ratios.

CCC Revolving Credit Facility, comprising

On

29,

2022,

the

through

its

indirect

South

African

Cash

Connect

Capital

(Pty)

Limited

(“CCC”), entered into

a Revolving Credit

Facility Agreement (the

“CCC Loan Document”)

with RMB

and other Company

subsidiaries

within the Connect Group of companies listed therein, as guarantors. The transaction

closed on December 1, 2022.

The CCC Loan Document contains

customary covenants that require CCC and

K2020 to collectively maintain a

specified capital

adequacy ratio, restrict the ability of the entities to make certain distributions with respect to their capital stock,

encumber their assets,

incur additional indebtedness, make investments, engage in certain business

combinations and engage in other corporate activities.

Pursuant

to

the

CCC Loan

Document,

CCC may

borrow

up to

an aggregate

of ZAR

300.0

million

(“CCC Revolving

Credit

Facility”) for the sole purposes of funding CCC’s

consumer lending business, providing a limited recourse loan to

K2020, settling up

to ZAR

35.0

an intercompany

loan to CCC’s

direct parent,

and paying the

structuring and

execution fee and

legal

costs. The Revolving

Credit Facility replaces

K2020’s existing lending arrangement and

increases the

borrowings available to

facilitate

further growth of the

business. Certain merchant finance

loans receivable have been

pledged as security for

the revolving credit

obtained from

RMB. CCMS

also provided

RMB with

an unsecured

limited guarantee

(“the guarantee”)

in respect

of the

credit facility entered into between

K2020 and RMB. The guarantee is limited

to a maximum aggregate amount of ZAR

10.0

million

and will become due and payable should there be any default on any of K2020’s

payment obligations to RMB.

the Revolving

Credit Facility

is payable

on the last

business day

of each

calendar month and

is based on

African prime rate in effect from time to time plus a margin

of

0.95

% per annum.

paid a

non-refundable structuring

and execution

fee of ZAR

1.7

million, or

$

0.1

million, including

value added

taxation, to the Lenders on closing.

As of June 30, 2024, the amount of the CCC

Revolving Credit Facility was ZAR

300.0

million (of which ZAR

215.3

million has

been utilized).

RMB facility, comprising indirect facilities

As of

2024, the

aggregate amount

of the

short-term South

African indirect

credit facility

with RMB

was

ZAR

135.0

7.4

million), which includes facilities for

guarantees, letters of credit

and forward exchange contracts. As

of June

and June

30, 2023, the

Company had

utilized approximately

ZAR

33.1

1.8

million) and ZAR

33.1

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

to Note 22).

South Africa (continued

Nedbank facility, comprising short-term facilities

As of June 30, 2024, the aggregate amount of

the Company’s short-term South African credit facility with Nedbank Limited was

ZAR

156.6

8.6

million). The credit facility represents an

indirect and derivative facilities of up

to ZAR

156.6

8.6

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

contracts.

On November 2, 2020, the Company amended its short-term

South African credit facility with Nedbank Limited to

increase the

indirect

and

derivative

of

the

from

ZAR

150.0

million

to

ZAR

159.0

On

June

1,

2021,

the

Company

further

amended

its short-term

South

African

credit facility

with Nedbank

Limited

to reduce

the indirect

and derivative

facilities component of the facility

from ZAR

159.0

million to ZAR

157.0

million, and to cancel its ZAR

million general banking

facility. During

the year ended June 30, 2022, the Company cancelled its overdraft

facility of up to ZAR

13.0

which was used to fund mobile ATMs

as it no longer operates a mobile ATM

service.

has entered

into cession

and pledge

agreements with

Nedbank related

to certain

of its

Nedbank credit

(the general banking

facility and a

portion of the

indirect facility) and

the Company has

ceded and pledged

certain bank accounts

to

Nedbank and also provided a cession of Lesaka SA’s

shareholding in Cell C. The funds included in these bank accounts are restricted

as they may not be withdrawn without the express permission of Nedbank.

The short-term facility

provided Nedbank with

the right to set off

funds held in certain

identified Company bank

accounts with

Nedbank against any amounts owed to Nedbank under the facility.

As of June 30, 2024, these facilities were no longer available.

the Company had

utilized approximately

ZAR

2.1

0.1

million) and ZAR

2.1

0.1

million), respectively,

of its indirect and derivative facilities of

ZAR

156.6

million (June 30, 2023: ZAR

156.6

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

contracts (refer to Note 22).

On June 30,

2022, the Company’s

ZAR

60.0

million bank guarantee

issued by Nedbank

to a third

party expired and

on July 1,

2022, it was replaced with a ZAR

28.0

million bank guarantee issued by RMB to

the same third party. In July 2022, the Company was

able to release

ZAR

60.0

million in cash

held in a

pledged bank

account with Nedbank

which was held

as security against

the bank

guarantee issued by Nedbank, and the ZAR

28.0

million bank guarantee did not require a cash underpin.

Movement in short-term credit facilities

Summarized below are the Company’s short-term facilities as of June 30, 2024, and the movement in the Company’s

facilities from as of June 30, 2023 to as of June 30, 2024:

RMB

RMB

RMB

Nedbank

Facility E

Indirect

Connect

Total

Short-term facilities available as of June

$

49,503

$

7,425

$

11,276

$

8,611

$

76,815

11,276

11,276

Overdraft restricted as to use for ATM

49,503

49,503

Indirect and derivative facilities

7,425

8,611

16,036

Movement in utilized overdraft facilities:

51,338

14,880

66,218

501,603

18,462

520,065

Repaid

(524,766)

(22,505)

(547,271)

(1)

(5,154)

(1,812)

(6,966)

23,021

9,025

32,046

Restricted as to use for ATM

23,021

23,021

No restrictions as to use

9,025

9,025

182,988

182,990

Repaid

(199,640)

(2)

(199,642)

(1)

6,737

9,351

16,088

Restricted as to use for ATM

6,737

6,737

No restrictions as to use

9,351

9,351

Interest rate as of June 30, 2024 (%)

(2)

11.75

11.65

Movement in utilized indirect and

derivative facilities:

5,654

5,967

1,561

1,561

Guarantees cancelled

(3)

(5,017)

(5,017)

(1)

(117)

(525)

(642)

1,757

1,869

(1)

$

$

1,821

$

$

$

1,937

(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

%.

(3) Represents

the cancellation

of the guarantee

with supplier

amounting to

ZAR

5.0

million) which

is no longer

required due the reduction in the volume and value of transactions processed.

Movement in long-term borrowings

Summarized below is the movement in the Company’s

long-term borrowing from as of June 30, 2023, to as of June 30, 2024:

G & H

A&B

CCC/ K2020

Asset backed

Total

Opening balance as of June 30, 2022

$

63,354

$

64,472

$

8,346

$

5,474

$

141,646

Facilities utilized

10,947

7,377

6,031

24,355

Facilities repaid

(10,543)

(2,151)

(2,149)

(2,669)

(17,512)

Non-refundable fees paid

(500)

(100)

(600)

Non-refundable fees amortized

Capitalized interest

5,078

5,078

Capitalized interest repaid

(514)

(514)

(1)

(8,672)

(8,889)

(1,716)

(921)

(20,198)

Included in current

3,663

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

16,445

2,915

4,368

23,728

Facilities repaid

(12,515)

(3,353)

(4,205)

(20,073)

Non-refundable fees paid

Non-refundable fees amortized

Capitalized interest

7,214

7,214

Capitalized interest repaid

(6,109)

(6,109)

(1)

1,800

2,331

4,861

Closing balance as of June 30, 2024

56,151

66,815

11,841

8,379

143,186

Included in current

3,878

3,878

Included in long-term

56,151

66,815

11,841

4,501

139,308

Unamortized fees

(260)

(180)

(20)

(460)

Due within 2 years

56,411

3,438

3,023

62,872

Due within 3 years

7,563

11,861

1,108

20,532

Due within 4 years

55,994

56,253

Due within 5 years

$

$

$

$

$

Interest rates as of June 30, 2024 (%):

13.10

12.10

12.70

12.50

Base rate (%)

8.35

8.35

11.75

11.75

Margin (%)

4.75

3.75

0.95

0.75

Footnote number

(2)(3)(4)

(5)

(6)

(7)

(

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

(2) Prior

to the

amendment in March

2023, interest

on Facility G

the 3-month

JIBAR in

effect from

time to

time plus a margin

of (i)

3.00

% per annum until January

13, 2023; and then (ii) from

January 14, 2023, (x)

2.50

% per annum if the Facility

G balance outstanding

is less than

or equal to

ZAR

250.0

million, or (y)

3.00

% per annum

if the Facility

G balance is between

ZAR

250.0

million to

ZAR

450.0

million, or

(z)

3.50

% per

annum if

the Facility

G balance

is greater

450.0

million. The

interest rate

shall

increase by a further

2.00

% per annum in the event of default (as defined in the Loan Documents).

(3) Prior to the amendment in

March 2023, interest on Facility

H is calculated based on JIBAR

in effect from time to

time plus a margin

of

2.00

% per annum which increases by a further

2.00

% per annum in the event of default (as defined in the Loan Documents).

(4) Interest on Facility 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

million;

(ii)

4.25

aggregate balance under

the Facilities is

equal to or

million, but greater

million; or (iii)

2.50

aggregate balance under

the Facilities is

million. From October

1, 2023, interest

is calculated as

above.

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

3.75

%, in effect from time to time.

(6) Interest is charged at prime plus

0.95

% per annum on the utilized balance.

(7) 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 consolidated

statement of operations

during the years

and 2022, was

$

16.1

13.1

million

and $

2.3

million, respectively. Prepaid facility fees amortized included in interest expense during the years ended June 30,

and 2022, was $

0.4

0.8

0.2

Interest expense incurred under the

Company’s CCC/K2020

facility relates

to borrowings

utilized to

fund a portion

of the

merchant finance

and interest expense

of

$

1.4

1.4

million, and $

0.2

million is included in the

caption cost of goods

sold, IT processing, servicing

and support on the

consolidated statement of operations for the years ended June 30,

2024, 2023 and 2022, respectively.

OTHER PAYABLES

Summarized below is the breakdown of other payables as of June 30,

2024 and 2023:

Vendor

wallet balances

(1)

$

14,635

$

9,492

Clearing accounts

(1)

17,124

4,016

Accruals

7,173

7,078

Provisions

7,442

7,429

Payroll-related payables

1,038

Participating merchants' settlement obligation

Value

-added tax payable

1,191

1,247

Vendor

consideration due to sellers of Connect (Note 3)

Other

7,563

5,958

$

56,051

$

36,297

(1) Vendor

wallet balances

and clearing

accounts (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

2024. Clearing accounts and

vendor wallet balances may

fluctuate due to

the day (weekend

or public holiday)

on which the

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.

COMMON STOCK

Common stock

Holders of shares of Lesaka’s common stock are entitled to receive dividends and other distributions when declared by Lesaka’s

directors out

of legally

available funds.

Payment of

dividends and

distributions is

certain restrictions

Florida Business Corporation Act, including

the requirement that after making

any distribution Lesaka must be

able to meet its debts

as they become due in

the usual course of

its business. Upon voluntary or

involuntary liquidation, dissolution or winding up

of Lesaka,

holders of

share ratably

in the

assets remaining

after payments

to creditors

and provision

for the

preference of

any

preferred

stock

according

to

its

terms.

There

are

no

pre-emptive

or

other

subscription

rights,

conversion

rights

or

or

scheduled installment payment provisions relating to shares

of common stock. All of

the outstanding shares of common stock

are fully

paid and non-assessable.

Each holder of

common stock is

entitled to one

vote per share

for the election

of directors and

for all other

matters to be

voted

on by shareholders. Holders

of common stock may

not cumulate their

votes in the

election of directors, and

are entitled to

share equally

and ratably in the dividends that may be declared by the board of directors, but only after payment of dividends required to be paid on

outstanding shares of preferred stock according to its terms. The shares of

Lesaka common stock are not subject to redemption.

Issue of shares to Connect sellers pursuant to April 2022 transaction

The total purchase consideration pursuant to the Connect

acquisition in April 2022 includes

shares of the Company’s

common stock. These shares of

common stock will be issued

in

three

equal tranches on each

of the first, second

and third anniversaries

of the

April 14,

2022 closing.

legally issued

1,061,693

its common

stock, representing

the first

and second

tranche, to

the Connect sellers

in each of

April 2024 and

2023, respectively,

and this had

no impact

on the number

of shares, net

of

changes

in equity

during

respectively

shares are included in the number of shares, net of treasury,

as of June 30, 2024 and 2023.

COMMON STOCK (continued)

Common stock (continued)

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

net of treasury

shares, net

of treasury,

balance sheets

and consolidated

equity includes

participating non-vested

equity shares (specifically

contingently returnable

shares) as described

below in

Note

“—

Amended

and

Restated

Stock

Incentive

Plan—Restricted

Stock—General

Terms

of

Awards”.

The

table

presents a reconciliation

between the number

of shares, net of

consolidated statement of

changes in equity

and the

number

of shares,

net of

excluding non-vested

equity shares

not vested

Number of shares, net of treasury:

Statement of changes in equity – common stock

Less: Non-vested equity shares that have not vested as of end of year (Note 17)

2,084,946

2,385,267

Number of shares, net of treasury excluding non-vested equity shares that have

not vested

62,187,297

61,025,827

59,939,054

Redeemable common stock issued pursuant to transaction with the IFC Investors

Holders of redeemable common

stock have all the rights enjoyed by

holders of common stock, however,

holders of redeemable

common

stock

have

rights.

On

April

11,

2016,

the

Company

entered

into

a

Subscription

Agreement

(the

“Subscription Agreement”)

with International

Finance Corporation

(“IFC”), IFC

African, Latin

American and

Caribbean Fund,

LP,

IFC

Institutions

Growth

Fund,

LP,

and

Africa

Capitalization

Fund,

Ltd.

the

“IFC

Investors”).

Under

the

Subscription Agreement,

the IFC Investors purchased,

and the Company

sold in the

aggregate, approximately

9.98

million shares of

the

common

stock,

par

value

$

0.001

per

share,

at

a

price

of

$

10.79

per

share,

for

gross

proceeds

to

the