SEC Filing | Lesaka Technologies

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8.625P1Y0.001☐☐☒2000000000500000000.001Accelerated Filer0☒Yes☒31.47YesQ120220001041514--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

☐ 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

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

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

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

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

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

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

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