8.625P1Y0.0012000000000500000000.001Accelerated Filer0Yes31.47YesQ120220001041514--06-300false7.625
Derived from audited financial statements.
Certain amounts have been restated to correct the misstatement discussed in Note 1.
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2021

 

OR

 

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

For the transition period from

 

To

 

 

Commission file number: 000-31203

 

NET 1 UEPS 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

UEPS

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 November 5, 2021 (the latest practicable date), 56,996,214 shares of the registrant’s common stock, par value $0.001 per share, net of treasury shares, were outstanding.

 

 


 

 

Form 10-Q

NET 1 UEPS TECHNOLOGIES, INC

Table of Contents

 

 

 

Page No.

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and June 30, 2021

2

 

Unaudited Condensed Consolidated Statements of Operations for the three months ended September 30, 2021 and 2020 (as restated)

3

 

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended September 30, 2021 and 2020

4

 

Unaudited Condensed Consolidated Statement of Changes in Equity for the three months ended September 30, 2021 and 2020

5

 

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2021 and 2020

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

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

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

44

Part II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 6.

Exhibits

46

Signatures

 

46

EXHIBIT 10.40

 

 

 

 

 

1


 

Part I. Financial information

Item 1. Financial Statements

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Balance Sheets

 

 

 

 

 

 

September 30,

 

June 30,

 

 

 

 

 

 

2021

 

2021(A)

 

 

 

 

 

 

(In thousands, except share data)

 

 

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

$

188,495

 

$

198,572

 

Restricted cash related to ATM funding and credit facilities (Note 8)

 

61,926

 

 

25,193

 

Accounts receivable, net and other receivables (Note 2)

 

27,643

 

 

26,583

 

Finance loans receivable, net (Note 2)

 

20,607

 

 

21,142

 

Inventory (Note 3)

 

19,613

 

 

22,361

 

 

Total current assets before settlement assets

 

318,284

 

 

293,851

 

 

 

Settlement assets

 

466

 

 

466

 

 

 

 

Total current assets

 

318,750

 

 

294,317

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - September: $36,163 June: $38,535

 

6,718

 

 

7,492

OPERATING LEASE RIGHT-OF-USE (Note 16)

 

3,890

 

 

4,519

EQUITY-ACCOUNTED INVESTMENTS (Note 5)

 

7,607

 

 

10,004

GOODWILL (Note 6)

 

27,619

 

 

29,153

INTANGIBLE ASSETS, NET (Note 6)

 

321

 

 

357

DEFERRED INCOME TAXES

 

934

 

 

622

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

 

77,916

 

 

81,866

TOTAL ASSETS

 

443,755

 

 

428,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

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

 

51,568

 

 

14,245

 

Accounts payable

 

4,308

 

 

7,113

 

Other payables (Note 9)

 

28,180

 

 

27,588

 

Operating lease liability - current (Note 16)

 

2,674

 

 

2,822

 

Income taxes payable

 

539

 

 

256

 

 

Total current liabilities before settlement obligations

 

87,269

 

 

52,024

 

 

 

Settlement obligations

 

466

 

 

466

 

 

 

 

Total current liabilities

 

87,735

 

 

52,490

DEFERRED INCOME TAXES

 

10,404

 

 

10,415

OPERATING LEASE LIABILITY - LONG TERM (Note 16)

 

1,413

 

 

1,890

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

 

2,477

 

 

2,576

TOTAL LIABILITIES

 

102,029

 

 

67,371

REDEEMABLE COMMON STOCK

 

84,979

 

 

84,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

COMMON STOCK (Note 10)

 

 

 

 

 

 

Authorized: 200,000,000 with $0.001 par value;

 

 

 

 

 

 

Issued and outstanding shares, net of treasury - September: 56,996,214 June: 56,716,620

 

80

 

 

80

PREFERRED STOCK

 

 

 

 

 

 

Authorized shares: 50,000,000 with $0.001 par value;

 

 

 

 

 

 

Issued and outstanding shares, net of treasury: September: - June: -

 

-

 

 

-

ADDITIONAL PAID-IN-CAPITAL

 

302,277

 

 

301,959

TREASURY SHARES, AT COST: September: 24,891,292 June: 24,891,292

 

(286,951)

 

 

(286,951)

ACCUMULATED OTHER COMPREHENSIVE LOSS (Note 11)

 

(152,278)

 

 

(145,721)

RETAINED EARNINGS

 

393,619

 

 

406,613

TOTAL NET1 EQUITY

 

256,747

 

 

275,980

NON-CONTROLLING INTEREST

 

-

 

 

-

TOTAL EQUITY

 

256,747

 

 

275,980

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY

$

443,755

 

$

428,330

 

 

 

 

 

 

 

 

 

 

 

 

(A) – Derived from audited financial statements

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

2


 

 

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Operations

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2021

 

 

2020(A)

 

 

 

 

 

 

 

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

REVENUE (Note 15)

 

$

34,504

 

$

35,136

 

 

 

 

 

 

 

 

 

 

 

EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold, IT processing, servicing and support

 

 

24,207

 

 

26,460

 

Selling, general and administration

 

 

20,627

 

 

18,528

 

Depreciation and amortization

 

 

895

 

 

923

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 

(11,225)

 

 

(10,775)

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

389

 

 

611

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

816

 

 

747

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAX EXPENSE (BENEFIT)

 

 

(11,652)

 

 

(10,911)

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE (BENEFIT) (Note 18)

 

 

186

 

 

(1,090)

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS

 

 

(11,838)

 

 

(9,821)

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM EQUITY-ACCOUNTED INVESTMENTS (Note 5)

 

 

(1,156)

 

 

(19,137)

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(12,994)

 

$

(28,958)

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, in United States dollars (Note 13):

 

 

 

 

 

 

Basic loss attributable to Net1 shareholders

 

$

(0.23)

 

$

(0.51)

Diluted loss attributable to Net1 shareholders

 

$

(0.23)

 

$

(0.51)

 

 

 

 

 

 

 

 

 

 

 

(A) Certain amounts have been restated to correct the misstatement discussed in Note 1.

See Notes to Unaudited Condensed Consolidated Financial Statements

 

3


 

 

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

2021

 

2020

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(12,994)

 

$

(28,958)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, net of taxes

 

 

 

 

 

 

Movement in foreign currency translation reserve

 

(5,913)

 

 

6,142

 

Movement in foreign currency translation reserve related to equity-accounted investments

 

(644)

 

 

1,688

 

 

Total other comprehensive (loss) income, net of taxes

 

(6,557)

 

 

7,830

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

(19,551)

 

 

(21,128)

 

 

 

 

Add comprehensive loss attributable to non-controlling interest

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to Net1

$

(19,551)

 

$

(21,128)

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

4


 

 

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Changes in Equity

 

 

Net 1 UEPS 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 Net1 Equity

 

Non-controlling Interest

 

Total

 

Redeemable common stock

 

 

For the three months ended September 30, 2020 (dollar amounts in thousands)

 

Balance – July 1, 2020

82,010,217

$

80

 

(24,891,292)

$

(286,951)

 

57,118,925

$

301,489

$

444,670

$

(169,075)

$

290,213

$

-

$

290,213

$

84,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation charge (Note 12)

 

 

 

 

 

 

 

 

-

 

682

 

 

 

 

 

682

 

 

 

682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reversal of stock-based compensation charge (Note 12)

(480,200)

 

 

 

 

 

 

 

(480,200)

 

(283)

 

 

 

 

 

(283)

 

 

 

(283)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation charge related to equity-accounted investment (Note 5)

 

 

 

 

 

 

 

 

-

 

(40)

 

 

 

 

 

(40)

 

 

 

(40)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from disgorgement of shareholders' short-swing profits

 

 

 

 

 

 

 

 

-

 

98

 

 

 

 

 

98

 

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

-

 

 

 

(28,958)

 

 

 

(28,958)

 

-

 

(28,958)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,830

 

7,830

 

-

 

7,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – September 30, 2020

81,530,017

$

80

 

(24,891,292)

$

(286,951)

 

56,638,725

$

301,946

$

415,712

$

(161,245)

$

269,542

$

-

$

269,542

$

84,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

 

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Changes in Equity

 

 

Net 1 UEPS 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 Net1 Equity

 

Non-controlling Interest

 

Total

 

Redeemable common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30, 2021 (dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – July 1, 2021

81,607,912

$

80

 

(24,891,292)

$

(286,951)

 

56,716,620

$

301,959

$

406,613

$

(145,721)

$

275,980

$

-

$

275,980

$

84,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock granted (Note 12)

279,594

 

 

 

 

 

 

 

279,594

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation charge (Note 12)

 

 

 

 

 

 

 

 

 

 

344

 

 

 

 

 

344

 

 

 

344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reversal of stock-based compensation charge (Note 12)

-

 

 

 

 

 

 

 

-

 

(35)

 

 

 

 

 

(35)

 

 

 

(35)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation charge related to equity-accounted investment (Note 5)

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

9

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(12,994)

 

 

 

(12,994)

 

-

 

(12,994)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,557)

 

(6,557)

 

-

 

(6,557)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – September 30, 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

 

6


 

 

NET 1 UEPS TECHNOLOGIES, INC

Unaudited Condensed Consolidated Statements of Cash Flows

 

 

 

 

Three months ended

 

 

 

 

September 30,

 

 

 

 

2021

 

 

2020

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

$

(12,994)

 

$

(28,958)

 

Depreciation and amortization

 

895

 

 

923

 

Impairment loss

 

140

 

 

-

 

Movement in allowance for doubtful accounts receivable

 

386

 

 

514

 

Loss from equity-accounted investments (Note 5)

 

1,156

 

 

19,137

 

Movement in allowance for doubtful loans to equity-accounted investments

 

-

 

 

78

 

Fair value adjustment related to financial liabilities

 

(90)

 

 

886

 

Interest payable

 

11

 

 

(63)

 

Profit on disposal of property, plant and equipment

 

(165)

 

 

(10)

 

Stock-based compensation charge (Note 12)

 

309

 

 

399

 

Dividends received from equity-accounted investments

 

137

 

 

57

 

Decrease (Increase) in accounts receivable and finance loans receivable

 

1,188

 

 

(8,115)

 

Decrease in inventory

 

1,583

 

 

2,359

 

Decrease in accounts payable and other payables

 

(431)

 

 

(415)

 

Increase (Decrease) in taxes payable