LESAKA TECHNOLOGIES INC [LSAK] Filings

10-Q 1 form10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from

Commission file number: 000-31203

LESAKA TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida				98-0171860
(State or other jurisdiction				(IRS Employer
of incorporation or organization)				Identification No.)

President Place, 4 Floor, Cnr. Jan Smuts Avenue and Bolton Road,

Rosebank, Johannesburg, 2196, South Africa

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: 27-11-343-2000

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common stock, par value $0.001 per share

LSAK

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

☐	Large accelerated filer	☒	Accelerated filer

☐	Non-accelerated filer	☒	Smaller reporting company

		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

As of February 3, 2023 (the latest practicable date), 60,566,258 shares of the registrant’s common stock, par value $0.001 per share, net of treasury shares, were outstanding.

	Form 10-Q LESAKA TECHNOLOGIES, INC. Table of Contents
		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2022 and June 30, 2022	2
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended December 31, 2022 and 2021	4
	Unaudited Condensed Consolidated Statement of Changes in Equity for the three and six months ended December 31, 2022 and 2021	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three and six months ended December 31, 2022 and 2021	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	56
Part II. OTHER INFORMATION
Item 6.	Exhibits	57
Signatures		57
EXHIBIT 10.47
EXHIBIT 10.48
EXHIBIT 10.49
EXHIBIT 10.50
EXHIBIT 10.51

Part I. Financial information

Item 1. Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Balance Sheets

						December 31,			June 30,
						2022		2022^(A)
						(In thousands, except share data)
					ASSETS
CURRENT ASSETS
	Cash and cash equivalents					$	42,402	$	43,940
	Restricted cash related to ATM funding and credit facilities (Note 8)						54,374		60,860
	Accounts receivable, net and other receivables (Note 2)						28,219		28,898
	Finance loans receivable, net (Note 2)						39,674		33,892
	Inventory (Note 3)						34,105		34,226
		Total current assets before settlement assets					198,774		201,816
			Settlement assets				27,650		15,916
				Total current assets			226,424		217,732
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $36,735 June: $35,249							27,528		24,599
OPERATING LEASE RIGHT-OF-USE (Note 16)							6,021		7,146
EQUITY-ACCOUNTED INVESTMENTS (Note 5)							5,267		5,861
GOODWILL (Note 6)							155,701		162,657
INTANGIBLE ASSETS, NET (Note 6)							142,187		156,702
DEFERRED INCOME TAXES							4,587		3,776
OTHER LONG-TERM ASSETS, including reinsurance assets (Note 5 and 7)							78,054		78,092
TOTAL ASSETS							645,769		656,565

					LIABILITIES
CURRENT LIABILITIES
	Short-term credit facilities for ATM funding (Note 8)						54,250		51,338
	Short-term credit facilities (Note 8)						10,575		14,880
	Accounts payable						26,275		18,572
	Other payables (Note 9)						30,351		34,362
	Operating lease liability - current (Note 16)						2,078		2,498
	Current portion of long-term borrowings (Note 8)						7,425		6,804
	Income taxes payable						2,211		2,140
		Total current liabilities before settlement obligations					133,165		130,594
			Settlement obligations				26,571		15,276
				Total current liabilities			159,736		145,870
DEFERRED INCOME TAXES							50,125		54,211
OPERATING LEASE LIABILITY - LONG TERM (Note 16)							4,116		4,827
LONG-TERM BORROWINGS (Note 8)							135,440		134,842
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 7)							2,393		2,466
TOTAL LIABILITIES							351,810		342,216
REDEEMABLE COMMON STOCK							79,429		79,429

					EQUITY
COMMON STOCK (Note 10)
	Authorized: 200,000,000 with $0.001 par value;
	Issued and outstanding shares, net of treasury - December: 63,751,337 June: 62,324,321						83		83
PREFERRED STOCK
	Authorized shares: 50,000,000 with $0.001 par value;
	Issued and outstanding shares, net of treasury: December: - June: -						-		-
ADDITIONAL PAID-IN-CAPITAL							332,537		327,891
TREASURY SHARES, AT COST: December: 24,956,854 June: 24,891,292							(287,244)		(286,951)
ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 11)							(176,238)		(168,840)
RETAINED EARNINGS							345,392		362,737
TOTAL LESAKA EQUITY							214,530		234,920
NON-CONTROLLING INTEREST							-		-
TOTAL EQUITY							214,530		234,920

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY						$	645,769	$	656,565

	(A) – Derived from audited financial statements
	See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Operations

		Three months ended					Six months ended
			December 31,				December 31,
		2022		2021		2022		2021
		(In thousands, except per share data)				(In thousands, except per share data)

REVENUE (Note 15)		$	136,068	$	31,114	$	260,854	$	65,618

EXPENSE

	Cost of goods sold, IT processing, servicing and support		108,824		20,580		209,352		44,787
	Selling, general and administration		23,517		17,746		46,448		38,188
	Depreciation and amortization		5,919		726		11,917		1,621
	Transaction costs related to Connect acquisition		-		1,489		-		1,674

OPERATING LOSS			(2,192)		(9,427)		(6,863)		(20,652)

UNREALIZED LOSS RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS (Note 4)			-		2,429		-		2,429

(LOSS) GAIN ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 5)			(112)		-		136		-

INTEREST INCOME			389		313		800		702

INTEREST EXPENSE			4,388		765		8,424		1,581
LOSS BEFORE INCOME TAX EXPENSE			(6,303)		(12,308)		(14,351)		(23,960)

INCOME TAX EXPENSE (Note 18)			364		98		395		284

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS			(6,667)		(12,406)		(14,746)		(24,244)

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (Note 5)			18		-		(2,599)		(1,156)

NET LOSS ATTRIBUTABLE TO LESAKA		$	(6,649)	$	(12,406)	$	(17,345)	$	(25,400)

Net loss per share, in United States dollars (Note 13):
Basic loss attributable to Lesaka shareholders		$	(0.11)	$	(0.22)	$	(0.28)	$	(0.44)
Diluted loss attributable to Lesaka shareholders		$	(0.11)	$	(0.22)	$	(0.28)	$	(0.44)

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

						Three months ended				Six months ended
						December 31,				December 31,
					2022		2021		2022		2021
						(In thousands)				(In thousands)

Net loss					$	(6,649)	$	(12,406)	$	(17,345)	$	(25,400)

Other comprehensive income (loss), net of taxes
	Movement in foreign currency translation reserve					12,155		(5,601)		(9,938)		(11,514)
	Release of foreign currency translation reserve related to disposal of Finbond equity securities (Note 11)					97		-		99		-
	Movement in foreign currency translation reserve related to equity-accounted investments					-		-		2,441		(644)
			Total other comprehensive income (loss), net of taxes			12,252		(5,601)		(7,398)		(12,158)

		Comprehensive income (loss)				5,603		(18,007)		(24,743)		(37,558)

				Comprehensive income (loss) attributable to Lesaka	$	5,603	$	(18,007)	$	(24,743)	$	(37,558)

See Notes to Unaudited Condensed Consolidated Financial Statements

LESAKA TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Changes in Equity

	Lesaka Technologies, Inc. Shareholders
	Number of Shares		Amount	Number of Treasury Shares		Treasury Shares	Number of shares, net of treasury		Additional Paid-In Capital		Retained Earnings		Accumulated other comprehensive loss		Total Lesaka Equity		Non-controlling Interest		Total		Redeemable common stock
	For the three months ended December 31, 2021 (dollar amounts in thousands)
Balance – October 1, 2021	81,887,506	$	80	(24,891,292)	$	(286,951)	56,996,214	$	302,277	$	393,619	$	(152,278)	$	256,747	$	-	$	256,747	$	84,979

Restricted stock granted (Note 12)	448,105						448,105								-				-

LESAKA TECHNOLOGIES INC [LSAK] Filings
10-Q	[2023-02-07]
10-Q	[2022-11-08]
10-K	[2022-09-09]
10-Q	[2022-05-10]
10-Q	[2022-02-09]
10-Q	[2021-11-08]
10-K	[2021-09-13]
10-Q	[2021-05-06]
10-Q	[2021-02-04]
10-Q	[2020-11-05]
10-K	[2020-09-10]
10-Q	[2020-05-26]
10-Q	[2020-02-10]
10-Q	[2019-11-07]
10-K	[2019-10-25]
10-Q	[2019-05-09]
10-Q	[2019-02-07]
10-Q	[2018-11-14]
10-K	[2018-09-12]
10-Q	[2018-05-10]
10-Q	[2018-02-08]
10-Q	[2017-11-09]
10-K	[2017-08-24]
10-Q	[2017-05-04]
10-Q	[2017-02-09]
10-Q	[2016-11-03]
10-K	[2016-08-25]
10-Q	[2016-05-06]
10-Q	[2016-02-04]
10-Q	[2015-11-05]
10-K	[2015-08-20]
10-Q	[2015-05-07]
10-Q	[2015-02-06]
10-Q	[2014-11-06]
10-K	[2014-08-28]
10-Q	[2014-05-08]
10-Q	[2014-02-06]
10-Q	[2013-11-07]
10-K	[2013-08-22]
10-Q	[2013-05-09]
10-Q	[2013-02-07]
10-Q	[2012-11-08]
10-K	[2012-08-23]
10-Q	[2012-05-10]
10-Q	[2012-02-09]